The Political Economy of Privatization in Sub‐Saharan Africa^*

Abstract

Objective. Few studies have examined the determinants of privatization in Sub‐Saharan Africa. This study examined the macroeconomic, political, and institutional factors that drive the privatization process in Sub‐Saharan Africa. Method. We used pooled ordinary least squares regression estimation technique to analyze the determinants of privatization in 22 Sub‐Saharan African countries over a period of 12 years (1991–2002). Results. We found that inflation, income inequality, and the institutional or governance infrastructure are key determinants of privatization in Sub‐Saharan Africa. On the other hand, we did not find democracy and debt to be significantly correlated with privatization. However, countries with high debt levels that were also experiencing high inflation were more likely to privatize. Conclusion. Government leadership and, consequently, politics play a significant role in the privatization decision in Sub‐Saharan African countries.

Privatizations around the world: economic or political determinants?

“…() construct a variable to measure government commitment to private property rights as an average of the country ranking by the ICRG in terms of rule of law, risk of expropriation and risk of repudiation of contracts, and find that it is an important factor in determining the revenues from privatization. Adams and Mengistu () rely on governance indicators (Kaufmann et al., ) and confirm that institutional quality measured in this way is significantly correlated with privatization. To characterize the institutional environment, we use the law and order component of the political risk rating from the ICRG database.…”

“…Privatization in major industrialized economies is analyzed in Bortolotti and Pinotti (2008). Developing countries are the focus of Banerjee and Munger (2004), while the specificity of Sub-Saharan Africa is examined in Adams and Mengistu (2008). Bortolotti et al (2003) cover both developed and developing countries but exclude transition economies.…”

Privatization and National Development: A Case Study of Ghana

“…Although some studies have been done, the results of these studies are ambiguous (Adams and Mengistu 2008;Filipovic 2005;Plane 1997). While Plane (1997) and Barnett (2000) report a positive effect of privatization on the economy, Adams and Mengistu (2008) and Filipovic (2005) report otherwise.…”

“…Although some studies have been done, the results of these studies are ambiguous (Adams and Mengistu 2008;Filipovic 2005;Plane 1997). While Plane (1997) and Barnett (2000) report a positive effect of privatization on the economy, Adams and Mengistu (2008) and Filipovic (2005) report otherwise. Because of these ambiguous results, many authors point to bottom-up or country-specific studies, for example, use of citizens' perception of the process (Islam and Farazmand 2008;Battaglio and Legge 2008;Battaglio and Legge 2009) in understanding of the process.…”

The role of governance in privatisation reforms: A European analysis

“…Secondly, to the best of our knowledge, this study is the first attempt in analysing whether governance affects privatisations in the European context. Only Adams and Mengistu () suggested governance infrastructure is one of the key determinants of privatisation, but they are focused on Sub‐Saharan Africa over the years 1991–2002. Our research deals with a sample of European countries, and also serves as an update to the period of analysis (2002–2013).…”