The Fundamental Privatization Theorem: Ideology, Evolution, Practice

Radygin, Alexander; Entov, Revold

doi:10.2139/ssrn.2398960

Cited by 5 publications

(4 citation statements)

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“…4 First, we should specify the subject of research for analyzing SOEs efficiency. It may be unexpected, but academic sources and official documents issued by 1 Various ideas on this matter have been cited in literature on multiple occasions, including those mentioned in the lengthy discourse about "government failures" (Radygin and Entov, 2012), in theoretical privatization effectiveness models (Polterovich, 2012;Radygin and Entov, 2013), and following numerous empirical studies of the efficiency of private and public goods production from the 1970s to the 1990s (Radygin, 2014).…”

Section: Introduction: Soe Analysis Methodologymentioning

confidence: 99%

State-owned enterprises in the Russian market: Ownership structure and their role in the economy

Abramov¹,

Radygin²,

Chernovà³

2017

Russian Journal of Economics

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This article analyzes the ownership structure of state-owned companies and their role in the Russian economy. Using a sample of 114 of the largest Russian companies, we estimated direct and indirect state participation as a percentage of shareholdings for direct and indirect federal property during the time period of 2006-2014. We used two methods to estimate the role of state-owned enterprises (SOEs), which allowed us to compare our results with OECD and Rosstat statistics for a broader sample of Russian companies owned by the public sector. This study revealed a decline in SOEs' share in the capitalization of the Russian stock market and a slight increase in their share of total revenues and employment. The results indicated that public SOEs demonstrated significantly higher productivity compared to non-public SOEs and private companies had a distinct advantage in productivity compared with public SOEs. Despite the significant advantages in productivity of private companies over the SOEs, over a 9-year period, we observed that this gap narrowed. This may be due to conditions of high financial volatility and stagnation of the economy that result in certain advantages for SOEs in terms of access to sources of long-term funding and other forms of state support. However, SOEs with indirect state control experienced a rapid growth in revenue and productivity compared to other firms. This may indicate the presence of a specific stock selection mechanism for transferring more effective SOEs from direct state ownership to indirect control as an alternative to privatization.

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Section: Introduction: Soe Analysis Methodologymentioning

confidence: 99%

State-owned enterprises in the Russian market: Ownership structure and their role in the economy

Abramov¹,

Radygin²,

Chernovà³

2017

Russian Journal of Economics

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“…In this case, the actual reason behind the poor efficiency of such firms may, for example, be the excessively strict requirements of supervisory agencies. 4 Various ideas on this matter have been cited in the literature on multiple occasions, including those mentioned in the discourse about "government failures" (Radygin and Entov, 2012;Radygin et al, 2015), in theoretical models studying the effectiveness of privatization (Radygin and Entov, 2013), and following numerous empirical studies of the efficiency of private and public goods production between the 1970s and the 1990s (Radygin, 2014).…”

Section: "Neutral" Theory and "Pro-privatization" Empiricismmentioning

confidence: 99%

State ownership and efficiency characteristics

Abramov¹,

Radygin²,

Entov³

et al. 2017

Russian Journal of Economics

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This study examines the influence of state participation in the ownership structure of companies on their financial efficiency using a sample of 114 largest companies in Russia. As an indirect indicator of efficiency, we used a variety of financial indicators: revenue per employee (gross margin), return on equity, profit margin and debt burden. The effects of direct and indirect state ownership are considered separately. Using econometric analysis, we conclude that the dominance of the block of shares owned by the state has a negative effect on the performance characteristics, and its increase is associated with an increase in the debt burden of the companies. According to our criteria, state-owned enterprises (SOEs) perform worse on average than private companies. The mechanism of how changes in the "real sector" affect profitability is examined parti cularly closely. The study shows that a change in the profitability of private companies is characterized by a significant dependence on the movement of labor productivity characteristics. At the same time, for SOEs, a similar correlation was not revealed. These companies demonstrated no visible relationship between their profitability and performance characteristics. The study shows that increases in the size of direct government ownership lead to lower labor productivity and profitability; the impact of indirect ownership is, seemingly, more complicated.

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“…There are only a few articles devoted to the recent privatisation trends and the increasingly statist ownership policy of the state in transition economies. Two of them deserve special attention: the one on the Russian economy (Radygin -Entov 2014), in which changes in the government's policy are analysed from the perspective of the evolution of contemporary theoretic approaches to the choice of an optimal form of ownership, and the study (Szanyi 2016) of the changing role of state, ownership, and privatisation in Hungary and Poland as a contribution to the development of the theory of Central and Eastern European capitalism models. Two other articles were devoted to selected issues of the statist shift: vested interests in privatisation (mostly in Poland) (Senderski 2015) and the differences between formal and real share of the state in the enterprise sector of the Polish economy (Bałtowski -Kozarzewski 2016).…”

Section: Introductionmentioning

confidence: 99%

Change in the ownership policy paradigm in Poland: State control vs. privatisation

Kozarzewski

Bałtowski

2017

Acta Oeconomica

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The paper presents an analysis of the shift in the ownership policy of the Polish government in office since 2015 towards a more active role of the state and a more reluctant attitude towards privatisation. This shift reflects a general change in the paradigm of the role of the state towards the concept of the state as a strong market player, which includes the strengthening of its ownership functions. Among others, it has led to stalling the privatisation process and concentrating only on its fiscal goals. Possible factors causing this statist shift are divided into two dichotomic groups: the government’s good faith vs. the impact of rent-seeking interest groups and endogenous vs. exogenous factors. Our main conclusion is that despite similarities with the trends observed in some other countries, endogenous factors such as increasing capture of the state by rent-seeking groups, and not the exogenous ones, including the global financial crisis, contributed most to the growing statist trends in the Polish state’s ownership policy.

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The Fundamental Privatization Theorem: Ideology, Evolution, Practice

Cited by 5 publications

References 50 publications

State-owned enterprises in the Russian market: Ownership structure and their role in the economy

State-owned enterprises in the Russian market: Ownership structure and their role in the economy

State ownership and efficiency characteristics

Change in the ownership policy paradigm in Poland: State control vs. privatisation

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