THE FUTURE OF PUBLIC ENTERPRISES: PERSPECTIVES FROM THE CANADIAN EXPERIENCE

ABSTRACT: Public enterprises have been an integral part of the involvement of the state in the economy for most of the 20th century. After 1980, privatization has been the dominant trend until the 2008–2010 economic crisis when new nationalizations happened. Ownership is only an element of a complex system of relations between a public enterprise and its institutional environment where the role of the board of directors, the mechanisms of coordination, the role of senior civil servants, etc. come to play. Using the Canadian experience with public enterprises, we suggest in this article that public enterprises could be interesting economic policy instruments in the future as in the past if such an economic policy exists. In other words, privatization did not solve the control issue over many large enterprises. Improved corporate governance should be considered. This article aims at improving the understanding of how by focusing on various aspects of the governance of public enterprises on their potential use and work. In Canada, public enterprises have been used to face the recent global crisis but they also come from a long tradition of intervention in the economy, a tradition closer to the European than the American. After reviewing recent developments in their governance, paths for future research are proposed.     

The results of ‘mass privatization’in Romania: A first empirical study1

This paper provides an assessment of the contribution to privatization in Romania of the 1995-96 Mass Privatization Programme (MPP), which offered shares in nearly 5,000 companies to citizens in exchange for coupons. Analysing a comprehensive database of MPP companies, we find that an average of only 18.7 per cent of these companies' shares were actually transferred to Romanian citizens, and only 7.8 per cent of the companies were majority privatized (on a size-weighted basis). We estimate that the MPP accounted for only about 5.5 per cent of the value of state-owned enterprise assets inherited from the socialist period. The design of the programme created highly dispersed ownership structures, which is likely to generate particularly difficult problems in the many small companies in the programme. We place our findings in the context of the history of Romanian privatization policies since 1990, and provide some comparisons with mass privatization programmes in other countries. We also analyse the implications of the MPP for the corporate governance and the restructuring of enterprises.     

民营化改革的普适性解析:拉美新自由主义路径的批判

20世纪70年代以来,以新自由主义为旗帜的公共领域民营化改革已成为席卷全球的且无法抗拒的浪潮。尽管拉美等国被动的民营化实践证明:缺乏普适性的西式休克疗法并不能使公共事业改革走向善治,然而随着皮埃尔.布迪厄的去世和乔姆斯基的投降,对新自由主义的思考已经走到了尽头,在新自由主义蔓延的野火之中,欧美民营化的典范被无限制复制,甚至在中国,民营化也渐趋成为一种主流思想,反思的声音越来越微不足道,但布迪厄们的批判却警告我们:在对新自由主义民营化的普世价值——公民社会、自由市场、民主等主张顶礼膜拜时,更应该反思普世价值的普适性,重新审视新自由主义之于中国发展的意义。     

Public Enterprise Privatization: A General Equilibrium Analysis

This paper develops a general equilibrium model to examine the short‐run and long‐run optimal privatization policies. By assuming that all firms are public firms initially, the paper focuses on how the degree of product differentiation γ and the average efficiency of the industry influence the determination of the optimal privatization policy. The paper shows that privatization decreases the more efficient firms' outputs while increases the less efficient firms' outputs in the short run, and reduces all firms' outputs in the long run. The paper also shows that the larger is γ and the smaller is the number of firms, the more privatized will be the public firm in the short run. Moreover, as γ or the entry barrier f_E is sufficiently small, full privatization is the best policy in the long run. On the contrary, as γ and f_E are large enough, partial privatization is optimal.     

The nexus of market concentration and privatization policy in mixed oligopoly

We analyze the nexus of privatization policy and market concentration ratio in a mixed oligopoly where one public enterprise competes against n private firms with asymmetric costs. It is shown that the nexus of privatization policy and market concentration ratio is highly sensitive to the curvature of the market demand. When the market demand is concave (convex) to the origin, a higher concentration ratio leads to a higher (smaller) degree of privatization; whereas in the case of linear demand, the privatization ratio is independent of market concentration ratio.     

Privatization Methods and Productivity Effects in Romanian Industrial Enterprises

Comprehensive panel data on privatization transactions and labor productivity in Romanian industrial corporations are used to describe the postprivatization ownership structure and to estimate the effect of Romania's diverse privatization policies on firm performance. The econometric results show consistently positive, highly significant effects of private ownership on labor productivity growth; the point estimates imply an increased 1.0 to 1.7% growth for a 10% rise in private shareholding. The strongest estimated impacts are associated with sales to outside blockholders; insider transfers and mass privatization are estimated to have significantly smaller, although still positive, effects on firm performance. J. Comp. Econ., December 2002, 30(4), pp. 657–682. Upjohn Institute for Employment Research, Central European University; and Budapest University of Economic Sciences, Central European University. © 2002 Association for Comparative Economic Studies. Published by Elsevier Science (USA). All rights reserved.Journal of Economic Literature Classification Numbers: G32, G34, L32, L33, P20, P31.     

西方国家民营化改革及其对我国的启示

民营化改革是西方国家20世纪80年代以来行政改革的主要趋势之一。本文从民营化概念的基本内涵入手，在对西方民营化改革原因、条件和特点以及我国的民营化改革实践及其障碍进行深入分析的基础上，探讨了西方民营化改革对于我国的启示。     

Optimal privatization of vertical public utilities

Abstract We examine restructuring, divestiture, and deregulation of a vertically integrated public utility, (e.g., electricity), from a public finance perspective. How an optimal restructuring plan for the utility depends on the cost of public funds and on the X‐efficiency gains from privatization, how the optimal degree of competition in the upstream and downstream segments are connected, and implications of privatization for consumer prices are examined. The higher the cost of public funds, the more likely the post‐privatization price will exceed the regulated public utility price. The greater the X‐efficiency gains from privatization, the more likely the post‐privatization price will fall.     

Partial Privatization in a Differentiated Mixed Oligopoly

A model of differentiated mixed oligopoly is developed to systematically discuss the welfare consequences of partial privatization of a public firm. We analytically derive the optimal degree of partial privatization not only in the short run with restricted entry but also in the long run with free entry. It is shown that the short-run optimal policy is non-monotonic in the degree of love of variety, while the optimal degree of privatization is monotonically increasing in the consumer's preference for variety in the long run.      

THE GOVERNANCE OF PUBLIC ENTERPRISES: THE QUEBEC EXPERIENCE

ABSTRACT ** ** Résumé en fin d'article; Zusammenfassung am Ende des Artikels; resumen al fin del artículo.
: Have public enterprises become obsolete policy instruments? Should they be privatized or can their governance be radically transformed so that they could still be used as policy instruments? The world around them has changed and forced governments to move. After a discussion on the arguments in favour of privatization, this article suggests an analysis of three cases in the Canadian province of Quebec. Considering the pressures linked to the liberalization of trade resulting from NAFTA, this article suggests that the governance of public enterprises can be transformed and adapted and that consequently, it is not useful or necessary to privatize them. There is in reality a lot of room in the public enterprise governance to reform them, room that has been neglected over the last decades.     

An analysis of entry-then-privatization model: welfare and policy implications

This study formulates a new model of mixed oligopolies in free entry markets. A state-owned public enterprise is established before the game, private enterprises enter the market, and then the government chooses the degree of privatization of the public enterprise (termed the entry-then-privatization model herein). We find that under general demand and cost functions, the timing of privatization does not affect consumer surplus or the output of each private firm, while it does affect the equilibrium degree of privatization, number of entering firms, and output of the public firm. The equilibrium degree of privatization is too high (low) for both domestic and world welfare if private firms are domestic (foreign).     

Price control and privatization in a mixed duopoly with a public social enterprise

We explore the issue of the optimal degree of privatization for a public firm that does not need to care about its rival’s profit completely. We find that the optimal privatization of a public social enterprise under exogenous price control depends on the level of the regulated price. Namely, when the regulated price is low (medium, high), the optimal privatization is partial privatization (complete privatization, completely public owned). If the price control is optimized by maximizing social welfare, then the optimal privatization is complete privatization. For the case of the traditionally defined public firm, its optimal privatization is completely public owned when the price control is exogenously given. If the price control is endogenously determined, then privatization policy is redundant.     

Share Ownership and Employee Attitudes: Some Evidence from China''s Postprivatization Rural Industry

In this paper, we report the impacts of share ownership on employee attitudes in China's privatized rural industries based on a survey administered in the Provinces of Jiangsu and Shandong. Our results indicate that, in general, employee shareholders have higher levels of job satisfaction, perceive greater degrees of participation in enterprise decision-making, display stronger organizational commitment, and have more positive attitudes towards the privatization process than nonshareholders in privatized firms. J. Comp. Econ., June 2002 30(4), pp. 812–835. Department of Economics, University of Winnipeg, Winnipeg, Manitoba, Canada; Economics Program, University of Northern British Columbia, Prince George, British Columbia, Canada; and Department of Economics, University of British Columbia, Vancouver, British Columbia, Canada. © 2002 Association for Comparative Economic Studies. Published by Elsevier Science (USA). All rights reserved.Journal of Economic Literature Classification Numbers: P3, P2, J5.     

NEW ORGANIZATIONAL MODELS IN EUROPEAN LOCAL PUBLIC TRANSPORT: FROM MYTH TO REALITY*

ABSTRACT: The Europeanization of public services is frequently considered to have created pressure for Member States to progressively converge towards a new dominant organizational model, based on deregulation, de‐integration and privatization. However, while in some sectors European directives played a crucial role in boosting a common evolutionary path, in other cases, mainly related to local public services, this influence remained feeble and more uncertain. The empirical insight on EU Local Public Transport Services carried out in this paper aims at investigating if and to what extent this new dominant paradigm actually emerges, or if and to what extent more fragmented and heterogeneous outcomes prevail. The main outcome is that the public role in Local Public Transport is still widespread and that a major theoretical and analytical focus should be directed to the ability of the principal‐competent public administration to play its role in an effective and sound manner, while often too much attention is paid to the characteristics of the agent‐operator (public‐private, big or small, foreign or national, etc.).     

Does Autonomy Matter in State Owned Enterprises? Evidence from Performance Contracts in India

Empirical evidence on the effect of managerial autonomy on the performance of state‐owned enterprises (SOE) is surprisingly scant despite autonomy being a preferred reform instrument over partial privatization in many countries. Using longitudinal data on performance contracts of state‐owned enterprises in India, this paper finds that managerial autonomy is associated with significant increases in enterprise profitability and efficiency. Further, using India's unique reform experience where both managerial autonomy and partial privatization were pursued side by side, the paper finds that while the positive effects of autonomy continue post‐partial privatization, the effects of partial privatization on performance are ambiguous. Specifically, once autonomy is controlled for, partial privatization has a positive effect on SOE profitability only after it crosses a critical level of government disinvestment. The findings suggest that organizational reforms such as granting managerial autonomy can be an important policy instrument in improving SOE performance particularly in cases where governments are unable to make substantial disinvestments.     

Of Carts and Horses: Regulation and Privatization in Telecommunications Reforms

In the early 1990s, many advocated quick privatization of state‐owned monopolies in developing countries, assuming that market institutions would develop once firms were privately owned. More recent thinking emphasizes establishing institutions conducive to promoting competition before privatization. To date little empirical work has informed the debate. This paper addresses this gap by testing whether establishing a regulatory authority prior to privatizing incumbent telecommunications firms matters. I find that countries that established regulatory authorities prior to privatization saw increased telecom investment and telephone penetration compared to countries that did not. Moreover, investors paid more for telecom firms in countries that established a regulator prior to privatization.     

Determinants of privatization of public corporations: evidence from the Japanese experience

The main purpose of this study is to find factors affecting privatization decisions. This study investigates the determinants of privatization by applying the probit model for a data set of special public corporations in Japan. In December 2001, the Japanese government made a resolution to consider the privatization of special public corporations, evaluating 74 special public corporations for possible privatization. In the empirical analysis on the determinants of privatization, we find that among several factors affecting privatization decisions, two are important—the market condition factor and the policy/regulation factor. As for market conditions, a public corporation which exists in a commercialized industry is about 20% more likely to be privatized than others. As for the policy and regulation factor, the public corporation’s privatization under a single regulator is about 25% more likely, compared with the public corporation’s privatization under multiple regulators.     

Property,Power, and Public Choice: An Inquiry into Law and Economics

This article briefly describes the evolution of the recent economic crisis based on different theories toward my own interpretation of it. The deregulation wave of the last decades has created new profit opportunities in various contexts — from labor flexibility to privatization and from financialization to globalization — so promoting a renewed process of capitalist accumulation after the stagflation of the 1970s. This has taken place at the cost of a wide-ranging increase in inequality and instability, thus bringing a cascade of crises, including the latest one of 2008.     

WELFARE-IMPROVING PRIVATIZATION POLICY IN THE TELECOMMUNICATIONS INDUSTRY

This article considers the vertical structure of the telecommunications industry and examines the welfare effects of privatization on the public enterprise, where the public enterprise supplies the essential network service of the upstream market and competes against private, independent firms in a mixed downstream market. It is shown that the cost advantage of the independent rivals improves welfare postprivatization. Several relevant and current policy issues on the process of privatization in the telecommunications industry are also discussed. (JEL L50, D42)     

The effect of infrastructure on invention : Innovative capacity and the dynamics of public construction investment

The association between public infrastructural investment and invention is explored in this study, analyzing expenditure and patenting trends and cycles over much of the 20th century. First, innovative capacity, an endogenous indicator of US innovation potential based on invention patent output, is conceptualized and discussed. A major shift in invention modes is shown to have occured over seven decades (1920–1989) as corporate, rather than individual, invention became the most important national source of innovative capacity. The support of public infrastructure for invention is then analyzed, considering its most important characteristics and supportive functions, and its expenditure patterns over seven decades. The analysis of the infrastructural investment and the innovative capacity age cycle dynamics reveals a remarkable association between educational infrastructure construction and both aggregate and corporate innovative capacity. Time-series statistical analyses provide further insights on the effects of infrastructural investment on invention, showing that corporate patenting tends to benefit more from public infrastructural construction and that educational infrastructure expenditures provide a stronger association with both aggregate and corporate inventive performance.