Working Paper: CEPR ID: DP5673
Authors: Nauro F. Campos; Roman Horvath
Abstract: We construct objective measures of privatization, internal and external liberalization reform efforts, across countries over time, and investigate their determinants, reversals and macroeconomic impacts. We find that GDP growth determines external liberalization and privatization, concentration of political power drives internal liberalization, and democracy underpins all three. We find that FDI inflows reduce the probability of privatization reversals, labour strikes increase that of internal liberalization reversals, and OECD growth increase that of external liberalization reversals. We replicate previous studies and find that the macroeconomic effects of reform (when measured objectively) tend to be larger and more precisely estimated.
Keywords: Political Economy; Privatization; Reform; Transition
JEL Codes: D72; E23; H26; O17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| GDP growth (O49) | external liberalization (F69) |
| GDP growth (O49) | privatization (L33) |
| concentration of political power (D72) | internal liberalization (P39) |
| democracy (D72) | external liberalization (F69) |
| democracy (D72) | privatization (L33) |
| democracy (D72) | internal liberalization (P39) |
| FDI inflows (F21) | privatization reversals (L33) |
| labor strikes (J52) | internal liberalization reversals (P39) |
| negative terms of trade shocks (F14) | external liberalization reversals (F69) |