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Ideas, Economic Pressures, and Pension Privatization

Published online by Cambridge University Press:  02 January 2018


Raúl L. Madrid
Affiliation:
University of Texas at Austin

Abstract

This article maintains that the recent wave of pension privatization has been spurred largely by rising pension expenditures and chronic capital shortages. Many policymakers in Latin America and around the world believed that privatizing their public pension systems would boost their domestic savings rate and resolve the systems' financial problems, thereby reducing their dependence on unstable foreign capital and freeing resources for other, more productive uses. There is no clear evidence that pension privatization will bring these economic benefits, however. To understand why policymakers held these beliefs, we must examine how ideas about pension privatization have formed. Two particularly important factors are the Chilean model and the World Bank's growing influence on pension policy. A probit analysis of the determinants of pension privatization provides support for these arguments.


Type
Research Article
Copyright
Copyright © University of Miami 2005

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