The Privatization Origins of Political Corporations

55 Pages Posted: 15 May 2018 Last revised: 19 May 2019

See all articles by Felipe González

Felipe González

Pontifical Catholic University of Chile - Institute of Economics

Mounu Prem

Universidad del Rosario

Francisco Urzúa I.

City University London - Sir John Cass Business School

Date Written: May 16, 2019

Abstract

We show that the sale of state owned firms in dictatorships can help political corporations to emerge and persist over time. Using new data, we characterize Pinochet’s privatizations in Chile and find that some firms were sold underpriced to politically connected buyers. These newly private firms benefited financially from the Pinochet dictatorship. Once democracy arrived, they formed connections with the new government, financed political campaigns, and were more likely to appear in the Panama Papers. These findings reveal how dictatorships can influence young democracies using privatization reforms.

Keywords: firms, privatization, dictatorship, democracy

JEL Classification: D2, G2, G3, M2, N86

Suggested Citation

González, Felipe and Prem, Mounu and Urzua, Francisco, The Privatization Origins of Political Corporations (May 16, 2019). Available at SSRN: https://ssrn.com/abstract=3171595 or http://dx.doi.org/10.2139/ssrn.3171595

Felipe González

Pontifical Catholic University of Chile - Institute of Economics ( email )

Casilla 76
Correo 17
Santiago
Chile

Mounu Prem (Contact Author)

Universidad del Rosario ( email )

Casa Pedro Fermín
Calle 14 # 4-69
Bogota
Colombia

Francisco Urzua

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

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