Inequality, Privatization and Democratic Institutions in Developing Countries

Lidia Ceriani (), Simona Scabrosetti () and Francesco Scervini
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Lidia Ceriani: Georgetown University
Simona Scabrosetti: University of Pavia and Università Bocconi

Hacienda Pública Española / Review of Public Economics, 2022, vol. 240, issue 1, 95-124

Abstract: Privatization of state-owned enterprises in low- and middle-income countries is regarded as an indispensable first step for the consolidation of national accounts, the development of financial markets, and the improvement of firms’ efficiency. However, privatizations may also have a relevant distributional impact, particularly in developing countries, where proceedings from privatization may be a sizable resource for redistribution. This article is a first attempt to investigate the relationship between privatization and income inequality, focusing on the role of democratic institutions. We find that an increase in privatization proceeds is correlated with a reduction in income inequality in countries where representative political institutions are mature.

Keywords: Inequality; Democracy; Privatization; Developing countries; State-Owned Enterprises (search for similar items in EconPapers)
JEL-codes: D30 O15 P5 (search for similar items in EconPapers)
Date: 2022
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Related works:
Working Paper: Inequality, Privatization and Democratic Institutions in Developing Countries (2018)
Working Paper: Inequality, Privatization and Democratic Institutions in Developing Countries (2016)
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