British privatization: Evaluating the results

The 24 studies reviewed here reveal that nine of the 13 primary objectives of the U.K.'s privatization program have substantially been achieved. Privatization has reduced the size and scope of government, reduced political interference in management decisions, freed government funds so they can be used in sectors of the economy other than state-owned businesses, created a free market economy, promoted domestic investment, benefited the economy through higher returns on capital invested in privatized businesses, generated new sources of tax revenue, broadened domestic equity ownership and promoted equity ownership among employees of privatized businesses. Most of the research reviewed concludes that privatization has reduced the government's budget deficit; provided consumers with improved service, better quality, more choices, new products and lower prices; and improved the efficiency and performance of privatized firms. Finally, most of the studies reviewed report mixed results regarding the privatization program's success at reducing government control of business.     

The privatization of telecommunications services: The case of Argentina

The Argentine telecommunications system is characterized by its poor quality of service. A deep national economic crisis and a huge fiscal deficit, combined with worldwide changes in the telecommunications sector, lead the Argentine government to the privatization of ENTel beginning in 1989. Herrera provides a detailed account of the economics surrounding the decision to privatize and the privatization program itself.     

Assessing privatization investment opportunities in Thailand

Executive Summary Multinational corporations (MNCs) can find lucrative opportunities to invest in emerging‐market countries by participating in the privatization of state‐owned enterprises. The ability of MNCs to form joint ventures or acquire state enterprises in most countries, however, depends on the characteristics of the government's privatiza‐tion policies and plans, the pace of their implementation, and the mechanisms allowed for foreign investment. In order to assess the feasibility of privatization policies in emerging‐market countries, and especially those undergoing dynamic reforms of their economies, MNCs need a framework for analyzing privatization efforts. The appli‐cation of such a framework is illustrated using the experience with privatization and economic reform in Thailand. © 2000 John Wiley & Sons, Inc.     

Selling privatization politically

The number of privatization transactions occurring in the world continues to grow apace. Predictions are that over $6 trillion in privatization assets will be sold over the next 20 years.¹ And while the academic debate continues, practitioners continue to garner lessons on how to overcome both technical and political obstacles to implementing privatization transactions. The emerging lessons indicate that it is possible to achieve considerable efficiency and welfare gains from privatization. The real challenges are in finding creative mechanisms for overcoming the political impediments to privatization. The author analyzes the shift in focus from whether efficiency gains are possible with privatization to how to distribute the benefits. Recent innovations to address political constraints are analyzed, such as the greater use of markets to assess the value of firms, the use of giveaways to garner political support, and the array of instruments available to appease nationalistic fears of foreign takeover.     

The privatization program of the city of St. Petersburg

The privatization program of the City of St. Petersburg is unique in its approach. With over 15,000 enterprises in the City's portfolio, a select group of companies were chosen for pilot transactions prior to creating overarching institutional framework. Drawn from field experience, Bogdanowicz-Bindert and Ryan analyze program progress to date and attempt to draw lessons applicable to a wider spectrum of companies, not only in St. Petersburg, but in Russia in general.     

Has the acceleration of privatization become inevitable in Bahrain?

Bahrain remains the most vulnerable Gulf country due to its limited savings and sharp rise in debt levels, leaving it exposed to high financing risks. The financial crisis has been deepened by the economic double blow of the decline in oil prices and the effects resulting from the outbreak of the coronavirus pandemic. Bahrain has decreased subsidies and increased taxes on many products. Those measures seem, however, insufficient to mitigate the negative impacts on the economy. This paper presents a model based on a comparison between fast privatization and gradual privatization strategies undertaken in some Bahraini economic sectors. It shows that the contribution of privatization to economic restructuring is only as effective as the commitment of the government to maintain a high pace of privatization. This condition can provide needed revenues, and can particularly foster private investments and initiatives. Therefore, it may represent an appropriate context to elevate Bahrain out of the present equilibrium characterized by slow privatization and government dominance on the economy.     

Rigorous privatization: The New Zealand experience

New Zealand's experience with privatization is considered by many to be as near “textbook” as the circumstances of politics and business will permit. Franks' analyzes the privatization strategies followed in radically reforming an economy driven by state-owned enterprises.     

Policy transfer and policy inertia: privatization in Taiwan

In recent years, privatization seems to have been more talked about than carried out in a number of countries. This study looks at the progress of privatization in Taiwan in the light of the literature on policy transfer. Although the government of Taiwan announced a privatization programme in the late 1980s, by the end of 1998 sales of state-owned enterprises had occurred much more slowly than planned. The first part of the article reviews the literature on policy transfer. Policy transfer has been described as the process by which policies transfer from one country to another due to mimetic, normative or coercive effects. Taiwan's privatization programme is then reviewed and the main barriers to change are identified. The study concludes by considering the implications of Taiwan's record on privatization for our understanding of policy transfer in an international context.     

Optimal trade,industrial, and privatization policies in a mixed duopoly with strategic managerial incentives

Abstract

This paper examines optimal trade, industrial, and privatization policies in a home-market model of mixed international duopoly with strategic managerial incentives. Under linear demand and constant marginal costs, the optimal degree of privatization is shown to depend crucially on cost and demand parameters and on the availability of strategic trade and industrial policies. If both firms are equally efficient, optimal trade and industrial policies drive out the foreign firm and the privatization policy loses its effect on national welfare; however, if the home firm is less efficient, then full privatization combined with an import tariff and a production subsidy is optimal for the home country, while an export subsidy is optimal for the foreign country. If trade and industrial policies are unavailable and if both firms are equally efficient, full state-ownership, which drives out the foreign firm, becomes optimal; however, if the home firm is less efficient, only partial privatization is optimal, The state-ownership share is increased if either the market size grows, the home firm's efficiency increases, or the foreign firm's efficiency decreases. Further, the paper demonstrates the potential conflict between privatization and trade liberalization policies.     

The making of an African success story: The privatization of Kenya Airways

This article explores the transformation of Kenya Airways from a loss‐making stateowned enterprise (SOE) to a very successful, profitable African airline and its relationship with KLM‐Royal Dutch Airlines. First, it analyzes the circumstances leading to the creation of Kenya Airways and then discusses the managerial and financial problems it encountered from the period it was set up until it was privatized. It also attempts to explain why and how Kenya Airways has been able to use privatization to avert liquidation. In this regard, it explores the benefits of privatization for the airline and the country as a whole and highlights lessons learned from this experience for the privatization process and strategies in Africa. © 2005 Wiley Periodicals, Inc.     

Attitudes to privatization of UK public utilities: Anticipating industrial practice and environmental effects

Attitudes toward the impending privatization of the UK electricity supply and water industries were assessed by means of a questionnaire distributed to 225 visitors to holiday beaches in SW England as part of a broader survey of perceptions of coastal pollution. The water industry was evaluated more negatively than the electricity industry in terms of both its present performance and the changes in its practice anticipated after privatization. The levels of pollutants in the immediate environment were expected to increase, with those individuals most opposed to privatization being especially pessimistic. The results suggest that respondents did not consider privatization to be a corrective for poor previous industrial practice, but rather that it would lead to improvement where an industry was seen as performing well, and deterioration where it was seen as performing badly. At worst, this was seen as likely to involve the privatized industries putting their own financial interests ahead of those of the public and the environment. It is argued that individuals based their attitudes on previous experience and on assumptions about the effects of market forces on behaviour that differed from those implicit in the policy of privatization.

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Einstellungen gegenüber der Privatisierung von öffentlichen Strom- und Wasserlieferanten: erwartetes unternehmerisches Verhalten und erwartete Umweltwirkungen

Zusammenfassung Als in Grossbritannien die Privatisierung der öffentlichen Strom- und Wasserversorger bevorstand, wurde die Einstellung zu diesem Vorgang im Rahmen einer umfassenderen Umfrage zur Wahrnehmung der Küstenverschmutzung anhand eines Fragebogens erhoben, der an 225 Gästen an südenglischen Ferienstränden ausgegeben wurde.Bei einem Vergleich wurden die Wasserversorger weniger gut als die Stromversorger bewertet, und zwar sowohl hinsichtlich ihres gegenwärtigen Leistungsniveaus als auch hinsichtlich der Veränderungen, die als Folge der Privatisierung vermutet wurden. Es wurde erwartet, dass die Schadstoffemission in der unmittelbaren Umbebung zunehmen würde, wobei die Befragten mit der stärksten Vorbehalte gegen die Privatisierung in dieser Hinsicht besonders pessimistischen waren.Nach den Befunden betrachten die Befragten die Privatisierung weniger als Korrektiv bisherigen mangelhaften unternehmerischen Verhaltens als vielmehr als Anlass für eine scherenförmige Entwicklung, nach der bislang schon gut bewertete Anbieter noch besser werden, wogegen bislang schlecht bewertete noch schlechter werden. Schlimmstenfalls wurde angenommen, dass die privatisierten Unternehmen ihre eigenen finanziellen Interessen über allgemeine und Umweltinteressen stellen würden. Dere Beitrag folgert, dass die Befragten ihre Einstellungen auf bisherige Erfahrungen gründeten und auf Annahmen über die Verhaltenswirkungen der Marktkräfte, die von den entsprechenden Annahmen der Privatisierungspolitik abweichen.

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J. Richard Eiser is Professor of Psychology, Steven D. Reicher is Senior Lecturer in Psychology and Tessa J. Podpadec is Research Fellow in the Department of Psychology, University of Exeter, Exeter EX4 4QG, UK.This research was supported by a grant from the Economic and Social Research Council, UK, Ref. no. WL104251006.     

Privatizing a distressed state-owned enterprise: Lessons learned through privatization work in Argentina's steel sector

Governments and private investors often widely differ on the definition of value in the privatization of a state-owned enterprise. Many governments attempt to privatize businesses that have questionable potential of creating value from future operation. Mooney and Griffith discuss the issues which arise during the privatization of a “distressed” enterprise through the case experience of Sociedad Mixta Siderurgia Argentina (SOMISA).     

The privatization of swarzedz furniture company (SFM): Lessons from Poland's first underwritten public offering

The sale through public offering of Poland's Swarzedz Furniture Company demonstrates that relatively complex privatization transactions can be successfully implemented in economies where capital market institutions have not yet fully emerged. However, the company's performance before and after privatization suggests that a change of ownership is a necessary, but not a sufficient, requirement for effective restructuring of a state-owned enterprise in a formerly socialist economy.     

Law and industrial buyer-seller relationships: The privatization of a Mexican State-Owned steel company

This article examines the impact of privatization on the purchasing practice of a state-owned steel company in Mexico. It looks first at the changes in the law which affect the relationships of state-owned enterprises with their suppliers. It then presents possible implications of these legal changes for buyer-seller relationships drawn from transaction-cost and institutional theory. Finally, it compares the predicted and actual impact of privatization and draws some preliminary conclusions. © 1993 John Wiley & Sons, Inc.     

Serving those going private: The role of accountancy in privatization

Privatization, as a term and as an art, has been growing steadily in importance since the 1980s. But what is it, and how is it actually accomplished? Mastrangelo and McPhail set forth a primer explaining the basic concepts of privatization, and the roles taken on by the “Big Six” accounting firms and, to a lesser extent, consultancies and investment banks.     

Privatization: The theme of the 1990s

Privatization has clearly become the development issue of the 1990s. While not an end in itself, privatization of state owned enterprises should be viewed as a critical element of economic adjustment. Distilled from his extensive involvement with privatization programs, Lieberman identifies the underlying rationale for privatization, presents lessons to be learned in program design, and cautions against pitfalls to successful program implementation.     

The role of government in Poland's economic transition: Ideas and experience from the recent past

Privatization is undoubtedly the sine qua non longrun mechanism for revitalization and modernization of the Polish economy. Weak governance and institutional weaknesses inherent with the political and economic transition have manifested in poor performance of the privatization program. Krawczyk and Lopez-Lopez summarize personal experience with the Polish restructuring and privatization programs and provide insightful comment for policy makers and program designers modelling the Polish experience.     

The effects of privatization on the performance of newly privatized firms in emerging markets

Our study examines changes in the financial and operating performance of 103 firms worldwide that were privatized through public share offerings during 1993–2003 in both emerging markets and developed countries. The empirical results from the Wilcoxon and proportion tests show increases in profitability, operating efficiency, capital spending, output, and dividend payments as well as decreases in leverage and total employment. Our results indicate that privatization helps improve firm performance in a wide variety of countries, industries, and competitive environments.     

Do outside directors and new managers help improve firm performance? An exploratory study in Russian privatization

In the context of privatization and restructuring in Russia, we test two standard agency theory hypotheses, namely, (1) outside board members and (2) new managers are positively related to firm performance. Based on a survey of 314 privatized firms, the evidence offers little support for the hypotheses. Historically, results refuting theories have been launch pads for scientific progress. Our findings, therefore, raise interesting questions about whether the underlying theory is appropriate, whether there are methodological problems, or whether there are institutional factors in Russia’s transition economy that need to be accounted for when we test agency theory in a new setting. We address these questions and discuss their implications for corporate governance theory, practice, and public policy.     

The Impact of the Concession of 14 Regional Greek Airports on Passenger Traffic

Journal of Industry, Competition and Trade - Greece implemented an extensive privatization program in the past decade, which included the concession of 14 regional airports for a period of...