Skip to main content
SpringerLink
Log in

Delayed privatization

  • Published:
Public Choice Aims and scope Submit manuscript

    We’re sorry, something doesn't seem to be working properly.

    Please try refreshing the page. If that doesn't work, please contact support so we can address the problem.

Abstract

This paper studies the timing of privatization in 21 major developed economies in the 1977–2002 period. Duration analysis shows that political fragmentation plays a significant role in explaining government’s decision to privatize: privatization is delayed longer in democracies characterized by a larger number of parties and operating under proportional electoral rules, as predicted by war of attrition models of economic reform. Results are robust to various assumptions on the underlying statistical model and to controlling for other economic and political factors.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Alesina, A., & Drazen, A. (1991). Why are stabilizations delayed? American Economic Review, 81, 1170–1188.

    Google Scholar 

  • Alesina, A., Perotti, R., & Tavares, J. (1998). The political economy of fiscal adjustments. Brookings Papers on Economic Activity, 1998(1), 197–266.

    Article  Google Scholar 

  • Armingeon, K., Leimgruber, P., Beyeler, M., & Menegale, S. (2006). Comparative political dataset, 1960–2004. Bern: Universität Bern.

    Google Scholar 

  • Banks, A. S., Day, T. C., & Muller, W. R. (2002). Political Handbook of the World 2000–2002. CSA publications. New York: State University of New York.

    Google Scholar 

  • Beck, T., Clarke, G., Groff, A., Keefer, P., & Walsh, P. (2001). New tools in comparative political economy: The database of political institutions. World Bank Economic Review, 15, 165–176.

    Article  Google Scholar 

  • Beck, T., Demirgüç-Kunt, A., & Levine, R. (1999). A new database on financial development and structure (updated 2003). World Bank Policy Research Working paper n. 2146.

  • Belke, A., Baumgartner, F., Schneider, F., & Setzer, R. (2007, submitted). The different extent of privatization proceeds in EU countries: A preliminary explanation using a public choice approach. Finanzarchiv.

  • Boehmer, E., Nash, R. C., & Netter, J. M. (2005). Bank privatization in developing and developed countries: Cross-sectional evidence on the impact of economic and political factors. Journal of Banking and Finance, 29, 1981–2013.

    Article  Google Scholar 

  • Bortolotti, B., Fantini, M., & Siniscalco, D. (2003). Privatization around the world: Evidence from panel data. Journal of Public Economics, 88, 305–332.

    Article  Google Scholar 

  • Bortolotti, B., & Siniscalco, D. (2004). The challenges of privatization: An international analysis. Oxford/New York: Oxford University Press.

    Book  Google Scholar 

  • Conway, P., & Nicoletti, G. (2006). Product market regulation in the non-manufacturing sectors of OECD countries: Measurements and highlights. OECD Economics Department Working paper No. 530.

  • Cox, D. R. (1972). Regression models and life tables. Journal of the Royal Statistical Society, Series B, 24, 187–220.

    Google Scholar 

  • Clarke, G., & Cull, R. (2002). Political and economic determinants of the likelihood of privatizing Argentine public banks. Journal of Law and Economics, 45, 165–197.

    Article  Google Scholar 

  • Dinc, S., & Gupta, N. (2007). The decision to privatize: The role of political competition and patronage. Mimeo, Northwestern University.

  • Drazen, A. (2002). Political economy in macroeconomics. Cambridge: MIT Press.

    Google Scholar 

  • Gallagher, M. (1991). Proportionality, disproportionality and electoral systems. Electoral Studies, 10, 33–51.

    Article  Google Scholar 

  • Haltinwanger, J., & Singh, M. (1999). Cross-country evidence on public sector retrenchement. World Bank Economic Review, 13, 23–66.

    Google Scholar 

  • Hibbs, D. (1977). Political parties and macroeconomic policy. American Political Science Review, 71, 1467–1478.

    Article  Google Scholar 

  • Huber, J., & Inglehart, R. (1995). Expert interpretations of party space and party locations in 42 societies. Party Politics, 1, 73–111.

    Article  Google Scholar 

  • Huber, G., Kocher, M., & Sutter, M. (2003). Government strength, power dispersion in governments and budget deficits in OECD-countries. A voting power approach. Public Choice, 116, 333–350.

    Article  Google Scholar 

  • Kiefer, N. M. (1988). Economic duration data and hazard functions. Journal of Economic Literature, 26, 646–679.

    Google Scholar 

  • Laakso, M., & Taagepera, R. (1979). Effective number of parties: A measure with application to West Europe. Comparative Political Studies, 12, 3–27.

    Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance. Journal of Political Economy, 106, 1113–1155.

    Article  Google Scholar 

  • Lijphart, A. (1999). Patterns of democracy. New Haven/London: Yale University Press.

    Google Scholar 

  • Megginson, W. L., & Netter, J. (2001). From state to market: a survey of empirical studies on privatization. Jounal of Economic Literature, 39, 321–389.

    Google Scholar 

  • Megginson, W. L., Nash, R. C., & van Randenborgh, M. (1994). The financial and operating performance of newly privatized firms: An international empirical analysis. Journal of Finance, 49, 403–452.

    Article  Google Scholar 

  • Padovano, F., & Venturi, L. (2001). Wars of attrition in Italian government coalitions and fiscal performance: 1948–1994. Public Choice, 109, 15–54.

    Article  Google Scholar 

  • Perotti, R., & Kontopoulos, Y. (2002). Fragmented fiscal policy. Journal of Public Economics, 82, 191–222.

    Article  Google Scholar 

  • Persson, T., & Tabellini, G. (2000). Political economics. Cambridge: MIT Press.

    Google Scholar 

  • Persson, T., & Tabellini, G. (2003). The economic effects of constitutions. Cambridge: MIT Press.

    Google Scholar 

  • Persson, T., Roland, G., & Tabellini, G. (2007). Electoral rules and government spending in parliamentary democracies. Quarterly Journal of Political Science, 2(2), 155–188.

    Article  Google Scholar 

  • Robinson, C. (1992). Privatising the British energy industries: The lessons to be learned. Metroeconomica, 43, 1–2.

    Article  Google Scholar 

  • Roubini, N., & Sachs, J. (1989). Political and economic determinants of budget deficits in the industrial democracies. European Economic Review, 33, 903–933.

    Article  Google Scholar 

  • Spolaore, E. (2004). Adjustments in different government systems. Economics and Politics, 16(2), 117–146.

    Article  Google Scholar 

  • Tsebelis, G. (2002). Veto players: How political institutions work. Princeton: Princeton University Press.

    Google Scholar 

  • Van den Berg, G. J. (2001). Duration models: Specification, identification, and multiple durations. In J. J. Heckman & E. Leamer (Eds.), Handbook of econometrics (Vol. V). Amsterdam: North-Holland.

    Google Scholar 

  • Velasco, A. (1997). Debts and deficits with fragmented fiscal policymaking. NBER Working paper No. W6286.

  • Vickers, J., & Yarrow, G. (1988). Privatization: An economic analysis. Cambridge: MIT Press.

    Google Scholar 

  • Weibull (1951). Statistical distribution function of wide applicability. Journal of Applied Mechanisms, 18, 293–302.

    Google Scholar 

  • Woo, J. (2003). Economic, political, and institutional determinants of public deficits. Journal of Public Economics, 87, 387–426.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Turin and FEEM, Corso Magenta 63, 20123, Milan, Italy

    Bernardo Bortolotti

  2. Bank of Italy, Via Nazionale 91, 00184, Roma, Italy

    Paolo Pinotti

Authors
  1. Bernardo Bortolotti
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Paolo Pinotti
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Bernardo Bortolotti.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Bortolotti, B., Pinotti, P. Delayed privatization. Public Choice 136, 331–351 (2008). https://doi.org/10.1007/s11127-008-9299-5

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11127-008-9299-5

Keywords

JEL Classification

Search

Navigation