Privatization and the Logic of Coalition Building

Abstract

Privatization has emerged as a global phenomenon during the 1980s. Rather paradoxically, however, the extent of privatization, both in terms of the scale of divestitures as well as the pace of implementation, has with notable exceptions remained quite restricted. This article seeks to develop a framework for explaining the pattern of limited privatization. The central argument is that the possibilities for utilizing privatization as an instrument for mobilizing an electoral coalition and establishing a form of “popular capitalism” are rather remote in the context of most developing countries. Alternative forms of privatization, involving direct sale to domestic or foreign corporations, are either not feasible or politically unattractive. The U.K. experiment is, in many ways, unique. The conditions that facilitated extensive privatization in the United Kingdom are not likely to be reproduced in other national contexts in the Third World. The author attempts to demonstrate the validity of this argument via a comparative analysis of the British and Turkish experiments in state divestiture.

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