The Determinants of Privatization: a Comparative Analysis of Developing Countries

Privatization has altered the traditional relationship between the state and the productive sector. However, only a handful of empirical studies concerned with the determinants of privatization exist, and explanations have tended to diverge. Drawing on the new World Bank database on privatization transactions, we estimate the main determinants of privatization across 77 developing world economies, between the years 1988 and 2008. Our findings indicate that the initial decision to privatize is driven primarily by exogenous factors while the extent and scale of privatization is shaped by a range of domestic political and economic conditions.