Empirical Evidence on
in Nontransition Economies
Since privatization has been part of government policy toolkits for almost two decades now, academic researchers have had enough time to execute many empirical studies of the effect of divestment on the operating performance of former SOEs. This chapter and the next will survey the rapidly growing body of scientific evidence on privatization’s economic effectiveness, but the sheer number of well-executed studies to be examined presents us with a monumental organization challenge. These studies employ many different empirical methodologies, cover many different regions and time periods, and vary greatly with respect to the type and quality of data employed. Over 150 empirical studies performed by academic and professional researchers will be surveyed in this chapter and the next, but only about half of these have been published to date. This also complicates our task, as we must assess which of these unpublished studies are likely to pass the academic market test of peer review to ultimately be published in top academic journals.
Our task, therefore, is to categorize the studies of privatization’s effectiveness in a way that allows us to assess the impact of privatization on different countries and on different economic agents. For example, it is likely that privatization has had a much different impact in transition countries than in nontransition economies and, within the much broader latter group, it is likely that the impact has been different in developed versus developing countries. Even within fairly homogeneous groupings such as developed economies, it is very likely that privatization will be viewed differently by consumers, by state-owned enterprise employees, and by the newly created class of shareholders. In other words, we must assess the distributive effect of privatization as well as the effect of privatization on firm performance. Given the vast difference between the experiences, we first categorize papers according to whether they examine privatization in transition or nontransition economies. This dichotomization is necessary, since both direct observation and published research suggest that reforming transition economies invariably requires embracing a great many economic and political changes si