Abstract
This article tests alternative hypotheses about why developing countries are pursuing privatization, a policy that gained considerable popularity in the 1980s. Univariate and multivariate analysis indicate that privatization was more likely to be pursued by countries with high budget deficits, high foreign debt, and high dependence on international agencies like the World Bank and the IMF. In regions such as Latin America and Asia, the trend was also more likely in countries (a) that seemed to have “overused” state enterprises in the past, and (b) those in which the private sector had grown faster than average and was thus more ready to assume tasks once assigned to state enterprises. In Africa, however, the policy may have been imposed by external agencies on countries that were not necessarily ripe for privatization. For multinational firms, the international opportunities created by privatization are likely to be greater in the 1990s than in the 1980s.
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*Ravi Ramamurti is Associate Professor of Business Administration, Northeastern University, and an Associate at the Harvard Center for International Affairs (1991–92). His research and consulting focus on topics in business-government relations, particularly the question of privatization. A volume he co-edited with Raymond Vernon, Privatization and Control of State-Owned Enterprise, was published last year by the World Bank.
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Ramamurti, R. Why are Developing Countries Privatizing?. J Int Bus Stud 23, 225–249 (1992). https://doi.org/10.1057/palgrave.jibs.8490266
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DOI: https://doi.org/10.1057/palgrave.jibs.8490266