Effects of Privatization and Ownership in Transition Economies

The paper evaluates the effects of privatization in the post-communist economies and China. In post-communist economies privatization to foreign owners results in a rapid improvement in performance of firms, while performance effects of privatization to domestic owners are less impressive and vary across regions, coinciding with differences in policies and institutional development. In China relatively more estimates suggest that privatization to domestic owners improves the level of performance. Concentrated private ownership has a stronger positive effect on performance than dispersed ownership in the post-communist economies, but foreign joint ventures rather than wholly owned foreign firms have a positive effect in China. Worker or collective ownership does not have a negative effect. In the post-communist economies new firms are equally or more efficient than firms privatized to domestic owners, and foreign start-ups are more efficient than domestic ones. Privatization is not associated with lower employment. When accompanied by complementary reforms, privatization has a positive effect on economic growth. Three factors appear to drive the more positive effect of privatization to foreign than domestic owners. Domestic managers have more limited skills and access to world markets, domestically privatized firms have been more subject to tunneling and in some countries new large shareholders artificially decreased performance. The important policy implication is that privatization per se does not guarantee improved performance, at least not in the short- to medium-run. Type of private ownership, corporate governance, access to know-how and markets, and the legal and institutional system matter for firm performance.

Bibliographic Details

Main Authors:	Estrin, Saul, Hanousek, Jan, Kocenda, Evzen, Svejnar, Jan
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2009-01-01
Subjects:	ACCOUNTING, ACCOUNTING SYSTEMS, ALLOCATION OF RESOURCES, ARREARS, ASSET OWNERSHIP, BANK DEBT, BANKS, BUDGET CONSTRAINT, BUDGET CONSTRAINTS, CAPITAL MARKETS, CAPITALISM, CASE OF PRIVATIZATION, CENTRAL PLANNERS, CENTRAL PLANNING, COLLECTIVE OWNERSHIP, COMMUNIST, COMPANY PERFORMANCE, COMPETITIVE MARKET, CONCENTRATION OF OWNERSHIP, CORPORATE GOVERNANCE, CORPORATE OWNERSHIP, CORRUPTION, CREDIT RATIONING, DEBT, DEPENDENT, DISTRIBUTION OF INCOME, DISTRIBUTION OF OWNERSHIP, DIVESTITURES, DIVIDEND, DIVIDEND POLICY, DOMESTIC FINANCING, ECONOMIC ANALYSIS, ECONOMIC CHANGE, ECONOMIC DEVELOPMENT, ECONOMIC EFFICIENCY, ECONOMIC GROWTH, ECONOMIC OUTPUT, ECONOMIC PERFORMANCE, ECONOMIC POLICY, ECONOMIC REFORM, ECONOMIC SYSTEM, ECONOMICS, ECONOMICS OF TRANSITION, ECONOMIES IN TRANSITION, EFFECT ON EMPLOYMENT, EFFECTIVE GOVERNANCE, EFFICIENCY IMPROVEMENTS, EMERGING MARKETS, EMPLOYEE OWNERSHIP, EMPLOYEE PARTICIPATION, ENFORCEMENT OF LAWS, ENTERPRISE EFFICIENCY, ENTERPRISE PERFORMANCE, ENTERPRISE RESTRUCTURING, ENTREPRENEURSHIP, EXECUTIVE DIRECTORS, EXTENT OF PRIVATIZATION, EXTERNALITIES, FINANCIAL INTERMEDIARIES, FINANCIAL MANAGEMENT, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SYSTEMS, FIRM PERFORMANCE, FOREIGN DIRECT INVESTMENT, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN INVESTORS, FOREIGN MARKETS, FOREIGN OWNERSHIP, FREE ECONOMY, FREE MARKETS, FREE RIDER PROBLEM, FULL EMPLOYMENT, GENERAL EQUILIBRIUM, GLOBAL PRIVATIZATION, GOLDEN SHARE, GOLDEN SHARES, GOVERNMENT OWNERSHIP, HARD BUDGET, HARD BUDGET CONSTRAINTS, HUMAN CAPITAL, IMPACT OF PRIVATIZATION, IMPACT OF PRIVATIZATION ON COMPANY, IMPACT OF PRIVATIZATION ON COMPANY PERFORMANCE, IMPERFECT COMPETITION, INCENTIVE PROBLEMS, INCOME DISTRIBUTION, INFLATION, INSTITUTIONAL DEVELOPMENT, INSTITUTIONAL ENVIRONMENT, INSTITUTIONAL FRAMEWORK, INSTITUTIONAL REFORMS, INSTITUTIONAL SETTING, INTERNATIONAL BANK FOR RECONSTRUCTION, INTERNATIONAL BUSINESS, INTERNATIONAL TRADE, INVESTMENT FUND, INVESTMENT FUNDS, JOB CREATION, JOINT VENTURES, LABOR CONTRACTS, LABOR PRODUCTIVITY, LARGE SHAREHOLDERS, LARGE-SCALE PRIVATIZATION, LEGAL FRAMEWORK, LEGAL REFORM, LEGAL SYSTEM, LOOTING, MACROECONOMIC IMPACT OF PRIVATIZATION, MACROECONOMICS, MAJORITY OWNERSHIP, MARKET ECONOMIES, MARKET ECONOMY, MARKET FORCES, MARKET PRICES, MARKET STRUCTURE, MASS PRIVATIZATION, MASSIVE PRIVATIZATION, METHODS OF PRIVATIZATION, MINORITY SHAREHOLDER, MINORITY SHAREHOLDERS, MIXED OWNERSHIP, MONOPOLY POWER, MUNICIPAL OWNERSHIP, NATURAL MONOPOLY, NOMINAL PRICES, OWNERSHIP CHANGES, OWNERSHIP CONCENTRATION, OWNERSHIP RIGHTS, OWNERSHIP STRUCTURE, OWNERSHIP STRUCTURES, PAYMENT OF DIVIDENDS, PERFORMANCE OF FIRMS, PERFORMANCE OF PRIVATE, POLITICAL ECONOMY OF PRIVATIZATION, POLITICAL OPPOSITION, PREDICTIONS, PRICE LIBERALIZATION, PRICE SETTING, PRIVATE FIRMS, PRIVATE OWNERS, PRIVATE OWNERSHIP, PRIVATE SECTOR, PRIVATIZATION, PRIVATIZATION DATA, PRIVATIZATION IN TRANSITION ECONOMIES, PRIVATIZATION METHODS, PRIVATIZATION OF STATE, PRIVATIZATION ON EMPLOYMENT, PRIVATIZATION PROCEEDS, PRIVATIZATION PROCESS, PRIVATIZATION PROGRAMS, PRIVATIZATION REVENUES, PRIVATIZATION VOUCHERS, PRIVATIZATIONS, PROCUREMENT, PRODUCTIVITY, PROFIT MAXIMIZATION, PROFITABILITY, PROPERTY RIGHTS, PROPERTY TRANSFERS, PUBLIC GOODS, PUBLIC POLICY, RECESSION, REGULATORY CONTROLS, RESOURCE ALLOCATION, RETURN ON ASSETS, SALE OF ASSETS, SALES REVENUES, SHARE OWNERSHIP, SHARE PRICES, SHAREHOLDER PROTECTION, SHAREHOLDING, SOCIALIST ECONOMICS, SOCIALIST ECONOMIES, SOCIALIST SYSTEM, STABILIZATION, STAKEHOLDERS, STATE CONTROL, STATE MANAGERS, STATE OWNERSHIP, STOCK EXCHANGE, TECHNICAL EFFICIENCY, TRADE LIBERALIZATION, TRANSFER OF OWNERSHIP, TRANSFERS OF SHARES, TRANSITION ECONOMIES, TYPE OF OWNERSHIP, VOLATILITY, VOUCHER PRIVATIZATION, WAGES,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090107093820 http://hdl.handle.net/10986/4009
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