Privatization in Competitive Sectors: The Record to Date

The paper reviews recent evidence on the impact of privatization. It focuses on traditional privatization efforts involving firms in competitive markets. It shows that privatization improves firms' financial and operating performance, yields positive fiscal and macroeconomic benefits (proceeds are saved rather than spent, transfers decline, and governments start collecting taxes from privatized firms), and improves overall welfare. The popular view that privatization always leads to layoffs is unfounded. While highly protected firms have seen significant declines in net employment, competitive firms generally experienced slight declines if any. Privatization's effects on wealth and income distribution have only recently been receiving the attention of analysts, and research is just getting underway. The paper highlights the conditions for successful privatization: strong political commitment combined with wider public understanding of and support for the process; creation of competitive markets through removal of entry and exit barriers, financial sector reforms that create commercially oriented banking systems, effective regulatory frameworks that reinforce the benefits of private ownership; transparency in the privatization process; and measures to mitigate adverse social and environmental effects.

Bibliographic Details

Main Authors:	Kikeri, Sunita, Nellis, John
Language:	English en_US
Published:	World Bank, Washington, D.C. 2002-06
Subjects:	ACCOUNTING, BANKING SYSTEM, BANKRUPTCY, CAPITAL MARKETS, COMMERCIAL BANKS, CORPORATE GOVERNANCE, DEBT, DEREGULATION, ECONOMIC CONDITIONS, ECONOMIC REFORM, ECONOMIC REFORMS, EMPLOYMENT, FINANCIAL CRISIS, FINANCIAL INSTITUTIONS, FISCAL DEFICITS, FOREIGN EXCHANGE, FOREIGN OWNERSHIP, HARD BUDGET CONSTRAINTS, HIGH INCOME COUNTRIES, INCOME DISTRIBUTION, INDUSTRIALIZED COUNTRIES, INFLATION, INSTITUTIONAL DEVELOPMENT, INSURANCE, INTEREST RATES, INTERNATIONAL FINANCE, INVESTMENT SPENDING, LEGAL SYSTEMS, MARKET ECONOMY, MERGERS, MIDDLE INCOME COUNTRIES, MIXED ENTERPRISES, NET ASSETS, OPERATING EFFICIENCY, PRIVATE ENTERPRISES, PRIVATE OWNERSHIP, PRIVATE SECTOR, PRIVATIZATION, PRODUCTIVITY, PROFITABILITY, PUBLIC ENTERPRISES, PUBLIC EXPENDITURES, PUBLIC OWNERSHIP, PUBLIC SECTOR, PUBLIC SERVICES, RETIREMENT, SHAREHOLDERS, SHAREHOLDING, STATE BANKING, STATE ENTERPRISES, STATE OWNERSHIP, TRADING, TRANSITION ECONOMIES, TRANSPORT, UNEMPLOYMENT INSURANCE, VOUCHER PRIVATIZATION PRIVATIZATION, COMPETITIVENESS, FINANCIAL PERFORMANCE INDICATORS, REVENUE SOURCES, TAX COLLECTION, UNEMPLOYMENT, UNEMPLOYMENT LEVELS, WEALTH, GOVERNMENT COMMITMENTS, PUBLIC AWARENESS, PUBLIC CONSULTATION, BARRIERS TO ENTRY, FINANCIAL SECTOR REFORM, BANKING SYSTEMS, REGULATORY FRAMEWORK, ENVIRONMENTAL MITIGATION, SOCIAL EFFECTS OF PROJECTS,
Online Access:	http://documents.worldbank.org/curated/en/2002/06/1953633/privatization-competitive-sectors-record-date https://hdl.handle.net/10986/14257
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