Doctoral Dissertation Research in Political Science: The Political Economy of Privatization

University Of New Mexico, Albuquerque NM

Investigators

Abstract

The political economy of economic reform has been a fertile topic for comparative research, emphasizing the difficulties of reform given immediate, concentrated costs and long-term, diffuse benefits (Haggard and Kaufman 1992; Nelson, 1993; Williamson 1998). Entrenched interests are expected to pressure politicians and impede reforms, particularly in states with weak institutions, poorly insulated policy makers, and a diffuse concentration of power (Nelson 1990; Przeworski 1991; Waterbury 1992). However, the empirical evidence suggests that previous research has been theoretically misspecified; countries have introduced and sustained economic reforms despite expected opposition. What accounts for the variation in the introduction and implementation of reforms? The proposed research examine this question by exploring the variation in one element of the neoliberal reform package: privatization. To understand why countries have such varied experiences, individual elements of reform packages (e.g., tax reform, trade policy, fiscal policy) must be examined as distinct policies, and then reassembled to gain a complete understanding of the political economy of reform. The proposed research project builds on the theoretical work in the field of economic reform to develop a multi-causal theoretical model to be tested empirically. The objectives of the project are threefold: first, to determine how international factors are interacting with domestic characteristics to affect the creation of privatization agencies; second, to analyze the domestic environment in which privatizations are sought and realized to identify those factors that most significantly impact the transfer of public enterprises; and third, to examine the domestic environment in-depth to unearth the causal processes identified in the statistical analyses. To complete these objectives, data are gathered on the creation of privatization agencies from 1975-1995 in the 183 IMF-member countries, on individual privatizations and on state-owned enterprises in Mexico and Brazil. Two statistical models are created and tested using survival analysis, a statistical technique appropriate for questions concerning the causes of events occurring through time. The first model examines how long countries take to create privatization agencies; the second examines when state-owned enterprises are sold to private interests. A qualitative analysis of the domestic environment surrounding privatization in Mexico and Brazil is nested within the study to provide greater insight into the privatization event. The broader uses of this project include the collected data. It could be used to examine how international pressures and norms are interacting with domestic characteristics to affect the occurrence of privatization agencies in any country, N, and then what factors affect the transfer of interests from the public to the private sector. Together, these components of the proposed research provide a clearer understanding of why privatization is sought by states and what factors affect its implementation, further elucidating our understanding of the political economy of economic reform.