Empirical Evidence on Satisfaction with Privatization in Latin America: Welfare Effects and Beliefs

Since the 1980s, privatization of formerly state-owned firms has been extensively implemented by governments across Latin America. Despite the fact that most evaluations of the process fail to find significant adverse welfare effects, there has been a strong surge in public discontent with such policy in the region. This paper performs a systematic empirical analysis of the determinants of such discontent with privatizations in Latin America, using survey data from Latinobarometro covering 18 countries over the period 1995-2005, complemented by country level data on macroeconomic, political, and institutional aspects as well as data on privatization. Dissatisfaction appears to respond to absolute and relative welfare effects, as well as to individual beliefs and expectations