Privatization and Nationalization Cycles
This paper studies the cycles of nationalization and privatization in resource-rich economies as a prime instance of unstable institutional reform. The authors discuss the available evidence on the drivers and consequences of privatization and nati...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090831142301 http://hdl.handle.net/10986/4227 |
| Summary: | This paper studies the cycles of
nationalization and privatization in resource-rich economies
as a prime instance of unstable institutional reform. The
authors discuss the available evidence on the drivers and
consequences of privatization and nationalization, review
the existing literature, and present illustrative case
studies. This leads to the main contribution of the paper: a
static and dynamic model of the choice between private and
national regimes for the ownership of natural resources. In
the model, the basic tradeoff is given by equality (national
ownership) versus efficiency (private ownership). The
connection between resource ownership and the
equality-efficiency tradeoff is given by the incentives for
effort that each regime elicits from workers. The resolution
of the tradeoff depends on external and domestic conditions
that affect the value of social welfare under each regime.
This leads to a discussion of how external conditions such
as the commodity price and domestic conditions such as the
tax system-- affect the choice of private vs. national
regimes. In particular, the analysis identifies the
determinants of the observed cycles of privatization and nationalization. |
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