Is Privatization Working in Ukraine? New Estimates from Comprehensive Manufacturing Firm Data, 1989-2013

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents inIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper estimates the relative multi-factor productivity (MFP) of privatized and stateowned enterprises using a long panel on all initially state-owned manufacturing firms in Ukraine. The large size and length of the time series in the data permit us to track the privatization process and to estimate the impact of privatization within industry-year cells and with controls for firm fixed effects and trends. Results with these methods imply an average 5-10% relative MFP for majority privatized versus state-owned firms. The gap increases with time since privatization, reaching about 15-17% five years after privatization. It also increases with calendar time although recent privatizations are associated with smaller relative MFP. We find no evidence of "sequencing" of privatization based on 1992 relative MFP, but the data suggest a higher survival rate for privatized versus state firms and one that is more closely linked to 1992 MFP. The results also imply that MFP gains from privatization are decreasing in pre-privatization MFP. The relatively few cases in which foreign investors take control result in much higher relative MFP, 22-40% on average, compared to domestic private ownership, but the gap is much lower when the foreign source country is "offshore" -an indirect channel for Ukrainian nationals -and it is also lower when the source is Russia. Privatization of 100% ownership has much larger effects than partial privatization of either minority or majority stakes, ownership structures that have largely...

The Dynamics of Private Sector Development in Natural Resource Dependent Countries

“…Mikesell (2013) claims that privatization may reduce the government's role in the economy as it makes the government spend more without producing services. Privatization of SOEs also provides large revenue to the government (Mikesell 2013), and firms that completely privatize are more productive as compared to partially privatized ones (Brown et al 2019). Megginson and Netter (2001) believe that the lure of revenue from selling SOEs is one reason for privatization happening quickly.…”

“…Manufacturing has led the economic transformation in many successful developing countries such as China, Vietnam, and Ukraine. This transformation increases private firms' productivity by providing quality products to the domestic market (Brown et al 2019;Dinh et al 2012). The coefficient of manufacturing production is positive and highly statistically significant.…”

“…Its negative sign might be related to the size and speed of a privatization program. However, it has been proven that firms which are completely privatized are more productive as compared to partially privatized firms (Brown et al 2019). The speed of privatization must be consistent with a deliverable program in a flexible business environment.…”

Effects of corporatization on the financial performance of non-financial state-owned enterprises in Latin America between 1999 and 2018

“…Regarding partial privatization through the issuance of shares in the stock market, Rakham 37 , Chakrabart and Mondali 38 , Cavaliere et al 39 , Astami et al 40 , Sam 41 , Bilodeau et al 42 , Richter et al 43 , Gupta 44 , Aivazian et al 45 , Teo 46 and Kole and Mulherin 47 , conclude that this process has a positive effect on the profitability, productivity and investment of state-owned enterprises in Indonesia, India, Italy, Singapore, Canada, Germany, China, Australia and the United States based on different quantitative methodologies (which typically use fixed effects and/or instrumental variables). On the other hand, Brown et al 48 and Qi et al 49 claim that in Ukraine and China, partial privatization of minority or majority interests has significantly lower effects than total privatization.…”