Privatization and Nationalization Cycles

Roberto Chang, Constantino Hevia and Norman Loayza ()

No 47, Working Papers from Peruvian Economic Association

Abstract: This paper studies the cycles of nationalization and privatization in resource-rich economies. It starts with a discussion of available evidence on the drivers and consequences of privatization and nationalization. Then it develops a static and dynamic model of the choice between private and national regimes for the ownership of natural resources. In the model, the choice is driven by a basic equality-efficiency tradeoff: national ownership results in more redistribution of income and more equality but undermines incentives for effort. The resolution of the tradeoff depends on external and domestic conditions that affect social welfare under each regime. We characterize how external variables –such as the commodity price– and domestic ones –such as the tax system– affect the choice of private vs. national regimes. Our analysis therefore identifies the determinants of the observed cycles of privatization and nationalization and is consistent with key stylized facts.

Keywords: Privatization; Nationalization; Institutions; Natural Resources; Oil (search for similar items in EconPapers)
Date: 2015-06
New Economics Papers: this item is included in nep-ene
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: PRIVATIZATION AND NATIONALIZATION CYCLES (2018)
Working Paper: Privatization and Nationalization Cycles (2010)
Working Paper: Privatization and nationalization cycles (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:apc:wpaper:2015-047

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