Balance Sheet or Ballot Box? : Incentives to Privatize in Emerging Democracies

When do political leaders in newly industrializing countries initiate needed economic reforms? This paper examines nine presidential or prime ministerial terms in Argentina, Mexico, Brazil, and India, 1982-1992. Among the cases examined, neither the reasonable hope of improving the performance of state-owned enterprises nor the crush of fiscal deficits or foreign debt necessarily led to meaningful privatization. However, the prospect of domestic and/or international political benefits for the chief executive from privatization by firm, sector, or organizational task easily predicted decisions to transfer production to private owners. A rational choice model of policymaking accounts quite well for outcomes