Determinants of privatization levels in developing countries

Objective. The pace of privatization of government functions has increased in frequency and intensity in developing countries in recent years. The goal of this exploratory study is to examine the impact of several factors repeatedly identified in previous empirical work (in country case studies) as important factors that influence privatization: public sector size, economic well-being, and strength of labor forces. Methods. Data were gathered from a variety of international sources on 50 developing nations. The predicted relationships between privatization level and the three independent variables were tested using correlation and multiple regression analysis. Results. The results do not support any of the proposed relationships. Among these weak predictors, strength of labor force appears closest to statistical strength and significance. Conclusions. While the findings may appear to support the value of situation-specific privatization research, other possibilities raised by this study such as the relative importance of labor force strength and possible errors in operationalization need to be explored further.