Privatisation reforms can create political corporations

The sale of state-owned firms can help political corporations to emerge and persist over time. Felipe Gonzalez, Mounu Prem, and Francisco Urzua show that the Pinochet dictatorship sold many firms to politically connected buyers at a price below market value. These newly private firms benefited financially from the dictatorship and, once democracy arrived, they formed connections with the new democratic government, financed political campaigns, and many appeared in the Panama Papers.