The main goal of presentation is to explain contextual differences of privatisation’s costs and benefits, providing some evidence

2. Structure of presentation
Slides
What is the privatisation?...........................................................................................3
1. Evidence
Benefits………………………………………………………………………………....….
4
Perceptions……………………………………………………………………………5-6
Costs………………………………………………………………………………………...7
2. Contextual differences…………………………………………………………….8-13
Conclusion…………………………………………………………………………………….14
References……………………………………………………………………………….15-16
The main goal of presentation is to explain contextual
differences of privatisation’s costs and benefits
28.11.12 MPA: Comparative Public Policy 2

3. What is the privatisation?
It is an “umbrella term”(Butcher, 1995, p. 108)
o Techniques through which
private, rather than public,
activity can be increased
o Strategies
o Transfer of responsibilities
o Alteration in the nature of
decision making
o Shifting the balance between
public and private spheres
Drakeford, M., 2000, pp. 18-19
As privatisation may be considered any material transaction by which the state’s
ultimate ownership of corporate entities is reduced
OECD, 2009
28.11.12 MPA: Comparative Public Policy 3

4. Benefits of privatisation
Accumulated Proceeds as Share of 2000 GDP,
by Region and Sector, 1988–2005
World Bank Privatization Database; World Development Indicators
28.11.12 MPA: Comparative Public Policy 4

5. Perceptions of privatisation
1991: Do you support the following actions of the Russian
government? ( % of respondents)
VCIOM (All-Russia Public Opinion Research Center), 1991 [In Russian]
However, 10 years later…
2001: More than 60% of 1,600 Russians interviewed thought that
they had lost more than gained from the privatization of state
property; only 5% said the opposite
Birdsall, N. and Nellis, J., 2003
28.11.12 MPA: Comparative Public Policy 5

6. Perceptions of privatisation
Negative Views of Privatization in Latin America, 1998 and 2005
% of respondents who don’t agree that privatisation has been beneficial for the
country
Bourguignon, F. and Sepúlveda, C., 2009
28.11.12 MPA: Comparative Public Policy 6

7. Costs of privatisation
Changes in income inequality in selected
transition economies
Negative
distributional
effects
On the
employment and
returns to labor
On the access to
utility and
infrastructure
services
On the prices of
utility and
infrastructure
services
Source: World Bank, 2000
28.11.12 MPA: Comparative Public Policy 7

8. Context 1: Role of SOEs
The social The agency The political-
view view economy view
SOEs as SOEs seek to maximize SOEs represent
institutions social welfare but a mechanism
focuses on the
created by a discrepancy between for pursuing
social welfare, the objectives of the individual
managers (the agents)
maximizing and of owners (the goals of
government principals) politicians
Bourguignon, F. and Sepúlveda C., 2009
28.11.12 MPA: Comparative Public Policy 8

9. Context 2: Type of ownership
Impact of Ownership on Performance,
Fixed-Effects Coefficients,
Czech Republic, Hungary, and Poland, 1990–93
15
10
5
0
-5 Revenue Employment Productivity
-10
-15
Firms privatized, owned by outsiders
Firms privatized, owned by insiders
Frydman et al., 1999
28.11.12 MPA: Comparative Public Policy 9

10. Context 3: Level of economic development
Extent of Different
development of: objectives of
privatisation
• Legal framework • e.g. To create better
• Human Capital services and lower
• Public institutions prices
• Financial institutions • e.g. To improve the
public sector's financial
• Political situation
health
28.11.12 MPA: Comparative Public Policy 10

11. Context 4: Underlying models
Schumpeterian Model Model of Marketization
Importance of Private Market conditions rather than
ownership, per se ownership
Private rather than public Competition
“Load-shedding” “Empowerment”
Financing by
Financing, delivery and
government, Production and
production by private sector
delivery by private sector
Cost and benefits of private Cost and benefits of
ownership market conditions
Drakeford, M., 2000, pp. 21-22
28.11.12 MPA: Comparative Public Policy 11

12. Context 5: Dimensions of performance
Ownership, Compet Efficiency vs. Equity
ition and
E.g. Soviet
Regulation
Union, Russia
Hodge, G.A., 2000 Birdsall, N. and Nellis, J., 2003
28.11.12 MPA: Comparative Public Policy 12

13. Context 6: Focus of studies
Perceptional
Technical studies
studies
focus on perception that
focus only on shifts post-sale in
privatization is fundamentally
operational and financial
unfair in both concept and
performance at the level of the firm
implementation
Benefits Costs
Negative effect on the distribution
Improvement of efficiency and
of wealth, income and political
financial performance
power
Birdsall, N. and Nellis, J., 2003
28.11.12 MPA: Comparative Public Policy 13

14. Conclusion
Context matters
- it matters a lot how privatization is done The following contexts also
Costs and benefits are different in each should be discussed:
of explained contexts:
Role of SOEs Preconditions
Causality
Type of ownership
Traditional public policy
Level of economic values
development
Stakeholders
Underlying models
Economic system and
political movement
Dimension of performance The post-privatization
environment
Focuse of studies
Etc.
28.11.12 MPA: Comparative Public Policy 14

15. References
0 Alexeev, M. (1999) The effect of privatization on wealth distribution in
Russia, Economics of Transition, Vol. 7 (2) 1999, pp. 449–465.
0 Birdsall, N. and Nellis, J. (2003) Winners and losers: assessing the distributional
impact of privatization, World Development, Vol. 31, No 10, pp. 1617-1633.
0 Bitzenis, A. (2003) What Was Behind the Delay in the Bulgarian Privatization
Process? Determining Incentives and Barriers of Privatization as a Way of Foreign
Entry, Emerging Markets Finance and Trade, vol. 39, no. 5, September–October
2003, pp. 58–82.
0 Boubakri, N. and Cossett, J.C. (1998) Privatization in developing countries: an
analysis of the performance of newly privatised firms, Public Policy for the Private
Sector, Issue 156, World Bank Group: Finance, the private sector and infrastructure
network, pp. 1-4.
0 Bourguignon, F. and Sepúlveda C. (2009) Privatization in Development: Some
Lessons from Experience, Policy Research Working Paper 5131, The World Bank, 34 p.
0 Chang, R., Hevia, C. and Loayza N. (2009) Privatization and Nationalization
Cycles, Policy Research Working Paper 5029, The World Bank, 57 p.
0 Crivelli, E. (2012) Local Governments’ Fiscal Balance, Privatization, and Banking
Sector Reform in Transition Countries, International Monetary Fund WP/12/146, 27 p.
0 Drakeford, M. (2000) Privatisation and Social Policy, Longman, 242 p.
0 Estrin, S., Hanousek, J., Kˇocenda, E. and Svejnar, J. (2009) Effects of Privatization
and Ownership in Transition Economies, Policy Research Working Paper 4811, The
World Bank, 51 p.
28.11.12 MPA: Comparative Public Policy 15

16. References
0 Frydman, R., Gray, W., Hessel, M. and Rapaczynski, A. (1999) When Does Privatization Work?
The Impact of Private Ownership on Corporate Performance in the Transition
Economies, Quarterly Journal of Economics, 114 (4): 1153–91.
0 Gaidar, E. and Chubais, A. (2011) The fork of the modern history of Russia, Moscow: OGI, 168 p.
[in Russian]
0 Hodge, G.A. (2000) Privatization: an international review of performance, Westview Press, 312 p.
0 Kikeri, S. and Perault, M. (2010) Privatization Trends, Viewpoint, Public policy for the private
sector, The World Bank, note number 322, 4 p.
0 OECD (2000) Privatisation, Competition and Regulation, OECD Centre for Cooperation with Non-
members, printed in France, 214 p.
0 OECD (2009) Privatization in the 21st Century: Recent Experiences of OECD Countries, Report on
Good Practices, Paris, January 2009, 75 p.
0 OECD (2010) Privatization in the 21st Century, Summary of recent experiences, 36 p.
0 Sheshinski, E. and López-Calva, L.F. (2003) Privatization and Its Benefits: Theory and
Evidence, CESifo Economic Studies, Vol. 49, 3/2003, pp. 429–459.
0 Shpilko S.P. et al (1991) Population assessment of socio-economic situation in the country
(according to the polls in 1991), Scientific report, Moscow: VCIOM (All-Russia Public Opinion
Research Center), p. 8. [In Russian]
0 Turcotte, S. and Faucher, P. (1999) How Markets and Business Power Influenced
Privatization in Latin America, Draft, 33 p.
28.11.12 MPA: Comparative Public Policy 16