The distributional impact of privatization in developing countries: the role of democratic institutions

Lidia Ceriani () and Simona Scabrosetti ()

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: Focusing on developing countries which have recently experienced political and economic transitions, we study how income inequality is affected by privatization in the light of the democratization process. We find that privatization is negatively and significantly correlated with the inequality in the income distribution when, thanks to democratic institutions, the protection of the civil liberties and the guarantee of the political rights are widely ensured to all citizens. In fact, privatization generates revenue which well mature democracies can use to satisfy the redistributive pressures from the poor. Then, our evidence suggests an interesting policy implication for developing countries: only after having established mature representative political institutions, privatization can be implemented without producing a negative distributional impact.

Keywords: Gastil index; civil liberties; political rights; Gini index (search for similar items in EconPapers)
JEL-codes: D30 O15 P16 P35 P36 P50 (search for similar items in EconPapers)
Date: 2011-11-30
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Citations: View citations in EconPapers (1)

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