Rent-seeking by politicians in state-owned enterprises

Abstract

Motivation: Notwithstanding the privatization processes, state-owned enterprises (SOEs) continue to play an important role in Poland and other post-socialist countries. Governments declare that privatization is completed and that they do not intend to sell any more enterprises. They justify this by pointing to the national security and strategic sectors in which companies should remain state-owned. Unfortunately, SOEs are used by politicians for economic and personal rent-seeking. Aim: This article aims to discuss the idea of economic rent-seeking by politicians, particularly its impact on SOEs. We claim that politicians, being a group of interest, capture SOEs in order to achieve private gains for themselves and their parties, which compromises economic performance of these companies. We analyze the mechanism of influence that politicians have on SOEs, including the processes related to rotations of managers