Privatization in Latin America: New Roles for the Public and Private Sectors

By Werner Baer; Melissa H. Birch | Go to book overview

7
Privatization with Share Diffusion:
Popular Capitalism in Chile, 1985-1988

William F. Maloney

Close on the heels of the decision to privatize segments of the public sector follows the question of how to do it most efficiently and fairly. The state control of many economies often exceeds a third of GNP, and substantially more in Eastern Europe, so the manner in which national patrimony is distributed (whether through auctions, giveaways, or debt/equity swaps) can be expected to have significant and persistent effects on industrial concentration and the distribution of wealth.

In several countries, high-profile programs of "Popular Capitalism" have been implemented with the announced goal of diffusing shareholding in former state enterprises more broadly throughout the society. This chapter looks at the Chilean variant of Popular Capitalism and two accompanying policies often included under the same moniker, Indirect Popular Capitalism and Worker Capitalism, as implemented during the far-reaching privatizations of 1985-1988. Ideally, the success of these programs could be evaluated and general lessons could be extracted for similar efforts elsewhere. However, the project is not entirely straightforward. In the same way that privatization is a policy with multiple and shifting motivations, these programs also served several masters, and their outcomes must be evaluated in that light. This requires an understanding of the particular political and economic conjunctures in which they were conceived and implemented.


THE PRIVATIZATION EXPERIENCE IN CHILE

The implementation of Popular Capitalism in Chile must be viewed against the dramatic cycle of nationalization, privatization, and then renationalization that occurred from 1970 to 1984. On assuming power, the military government

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Privatization in Latin America: New Roles for the Public and Private Sectors
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Figures and Tables vii
  • Preface xi
  • Notes xiii
  • 1 - Privatization and the Changing Role Of The State in Brazil 1
  • References 18
  • 2 - Privatization and the Role of the State In Post-Isi Mexico 21
  • Notes 41
  • 3 - The Regulation of Newly Privatized Firms: an Illustration from Argentina 45
  • References 68
  • 4 - Privatization: the Role of Domestic Business Elites 71
  • Notes 91
  • 5 - Foreign Direct Investment in Latin America During the 1990s 95
  • Conclusion 112
  • Notes 113
  • References 114
  • 6 - The Financial Sector in Latin American Restructuring 117
  • Notes 131
  • Notes 132
  • 7 - Privatization with Share Diffusion: Popular Capitalism in Chile, 1985-1988 135
  • Conclusion 153
  • Appendix 155
  • Acknowledgements 158
  • Notes 159
  • Refferences 160
  • 8 - Liquid Equity Markets as an Engine For Long-Term Growth in Latin America 163
  • Notes 177
  • Notes 180
  • 9 - Privatization in Spain 183
  • References 200
  • Selected Bibliography 201
  • Index 207
  • About the Contributors 213
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