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POLICY ARENA: The Economics and Politics of Government Ownership
Author(s) -
Shirley Mary M.
Publication year - 1997
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/(sici)1099-1328(199709)9:6<849::aid-jid488>3.0.co;2-l
Subject(s) - divestment , politics , economics , competition (biology) , government (linguistics) , state (computer science) , market economy , economic reform , business , economic system , finance , political science , law , ecology , linguistics , philosophy , algorithm , computer science , biology
Based in part on a new data set, this article finds that, despite an increase in privatization, state‐owned enterprises (SOEs) shares in GDP and employment had not declined in developing countries, and SOE deficits and inefficiencies were a drag on growth. In a sample of 12 reforming countries, those which improved SOE performance the most followed a comprehensive strategy of divestiture, competition, hard budgets, financial sector reform and changes in the institutional relationship between SOEs and governments. These successful reformers met three necessary political conditions: reform was politically desirable, politically feasible and credible. The article presents a decision tree suggesting how to meet the three political conditions and privatize and reform SOEs. © 1997 John Wiley & Sons, Ltd.