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The Privatization Origins of Political Corporations

Author

Listed:
  • Felipe González
  • Mounu Prem
  • Francisco Urzúa I.

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.

Suggested Citation

  • Felipe González & Mounu Prem & Francisco Urzúa I., 2019. "The Privatization Origins of Political Corporations," Working Papers ClioLab 30, EH Clio Lab. Instituto de Economía. Pontificia Universidad Católica de Chile.
    • Handle: RePEc:ioe:clabwp:30
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    File URL: http://cliolab.economia.uc.cl/docs/wp/wp_30.pdf
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    Cited by:

    1. Gonzalez, Felipe & Prem, Mounu & von Dessauer, Cristine, 2023. "Empowerment or Indoctrination? Women Centers Under Dictatorship," SocArXiv 64mf9, Center for Open Science.
    2. Monica Martinez-Bravo & Leonard Wantchekon, 2021. "Political Economy and Structural Transformation: Democracy, Regulation and Public Investment," Working Papers wp2021_2110, CEMFI.
    3. Aldunate, Felipe & González, Felipe & Prem, Mounu & Urzúa, Francisco, 2020. "Privatization and business groups: Evidence from the Chicago Boys in Chile," Explorations in Economic History, Elsevier, vol. 78(C).
    4. Aldunate, Felipe & Gonzalez, Felipe & Prem, Mounu, 2021. "Make the Economy Scream? U.S. Banks and Foreign Firms During the Cold War," SocArXiv bhwk7, Center for Open Science.
    5. González, Felipe & Muñoz, Pablo & Prem, Mounu, 2021. "Lost in transition? The persistence of dictatorship mayors," Journal of Development Economics, Elsevier, vol. 151(C).
    6. González, Felipe & Prem, Mounu, 2018. "The value of political capital: Dictatorship collaborators as business elites," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 217-230.
    7. Bautista, M. A. & Gonzalez, F & Martinez, L. R & Muñoz, P & Prem, M, 2022. "The Intergenerational Transmission of College: Evidence from the 1973 Coup in Chile," Documentos de Trabajo 20503, Universidad del Rosario.
    8. Felipe González & Mounu Prem, 2020. "Losing your dictator: firms during political transition," Journal of Economic Growth, Springer, vol. 25(2), pages 227-257, June.
    9. Gonzalez, Felipe & Prem, Mounu, 2021. "The Legacy of the Pinochet Regime," SocArXiv v5yjf, Center for Open Science.
    10. Gonzalez, Felipe & Coy, Felipe & Prem, Mounu & von Dessauer, Cristine, 2022. "Uncertainty from dictatorship to democracy: Evidence from business communications," SocArXiv gz934, Center for Open Science.
    11. Javier Cortes Orihuela & Juan D. Díaz & Pablo Gutiérrez Cubillos & Pablo A. Troncoso, 2023. "Intergenerational earnings persistence and the provision of public goods: evidence from chile’s constitutional process," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(1), pages 47-81, March.
    12. Bautista, María Angélica & González, Felipe & Martínez, Luis R. & Muñoz, Pablo & Prem, Mounu, 2023. "The intergenerational transmission of higher education: Evidence from the 1973 coup in Chile," Explorations in Economic History, Elsevier, vol. 90(C).
    13. Aldunate, F & González, F & Prem, M & Urzúa, F, 2019. "The Evolution of Ownership Structures: Privatization, Business Groups, and Pyramids," Documentos de Trabajo 17348, Universidad del Rosario.
    14. González, Felipe & Prem, Mounu & von Dessauer, Cristine, 2024. "Empowerment or Indoctrination? Female Training Programs under Dictatorship," IZA Discussion Papers 17163, Institute of Labor Economics (IZA).
    15. Aldunate, Felipe & González, Felipe & Prem, Mounu, 2024. "The limits of hegemony: U.S. banks and Chilean firms in the Cold War," Journal of Development Economics, Elsevier, vol. 166(C).

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