دانلود رایگان مقاله تحریک چرخه مالی سیاسی توسط خصوصی سازی در اقتصاد

Abstract

This paper provides insight into the widely studied phenomenon of political business cycles by analyzing the impact of elections on the privatization of public assets in transition economies. The hypothesis of this article is that incumbents opportunistically schedule privatizations to take place close to the next elections in order to finance higher public expenditures, aiming to please voters and increase the chances of being re-elected, particularly when their ability to borrow is constrained by high public debt. We consider the case of Albania, which is a transition and small open economy with a relatively high public debt. We find significant increases of income from privatization before elections. Despite often being trumpeted in the context of structural reforms, the intentional privatization of public assets in times of election is most likely a sub-optimal choice for the public interest. Studying the impact of elections on the privatization of public assets could be of interest to other transition economies facing fiscal constraints.

5. Conclusions

Transition countries are characterized by massive privatizations during the first decade(s) of transition. Privatization, in addition to improving the efficiency of formerly publicly owned economic units, may serve as a source of income for the economy. Therefore it may be assumed that when an elected official needs funds to finance certain public expenditures, there is a stronger incentive to engage in privatization. Elections are a typical example of a time in which public investments and other types of public expenditures increase. As predicted by the political business cycles theory, a political incumbent may engage in fiscal expansion before elections in order to increase the likelihood of re-election. This was found to be true for Albania in previous research. In this study, we found a statistically significant increase in income from privatization before elections, providing the incumbents with funds to finance the increased expenditures before elections. The empirical evidence unambiguously indicates that the privatization of public assets in Albania systematically shifts close to parliamentary elections. Namely, privatization receipts increase significantly before elections and drop significantly immediately afterwards. The privatization of public assets is an important part of a country’s structural reforms, especially in those transition countries that had centralized economies and are moving toward free market economies. However, while transition countries do not necessarily have to privatize all kinds of public assets, they should make very careful assessments of what is really worth privatizing and, most importantly, seek the “best” deal for each public asset it chooses to privatize.