Political Bias in Policy Convergence: Privatization Choices in Latin America

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Abstract
Since the early 1980s privatization has spread in Latin America under both right-wing rulers and populist presidents. This regional convergence toward privatization seemed to announce the end of partisan policy-making. However, not all governments implement privatization in the same way even in the context of policy convergence. Technocrats propose similar policy options in countries where capital dearth creates pressures for convergence. Yet politicians build the electoral and government coalitions that make these policies possible, and their preferences shape the institutions chosen at implementation. The “bias” introduced by politicians depends on their prior beliefs and constituencies, which shape their institutional preferences. Beliefs about economic nationalism and state intervention influence the selection of regulations at the time of privatization, whereas coalition buildingwith political constituencies shapes the definition of selling conditions in privatized companies. This “political bias,” which is contingent on the privatizing government, explains that the regional policy convergence toward privatization did not extend to its implementation. That is, although politicians may be losing influence about whether to privatize, they still have a say in the choice of how to privatize. This article analyzes the impact of this “political bias” by focusing on the choice of regulatory institutions and selling conditions in five cases of privatization of electricity and telecommunications in Latin America.