Government Privatization Strategies in Emerging Economies: Whether to Go or All of the Way
Jonathan Doh, Hildy Teegen
We investigate factors that contribute to governmental decisions to fully versus partially privatize state-owned infrastructure services. Drawing from financial economics and strategic management, we develop a model of the decision to partly or fully privatize a given state-owned asset. Using a proprietary database of telecommunications projects in emerging economies, we find that governments are more likely to fully privatize in countries with higher per capita income and lower existing telecommunications infrastructure penetration, and in countries that have made substantial international investment commitments. We also find full privatizations more prevalent in projects associated with local (versus national or international) phone service. The overall findings support a strategic choice perspective of governments??use of privatization as a vehicle to accelerate economic development in technology-intensive industries.