The policy-fit view on the efficiency effects of privatization

The road to liberalization: Policy design and implementation of Taiwan’s privatization

“…Although the performance implications of privatization in Taiwan conform in general to the Western experience, the data in Table 7 also show that ownership change itself cannot guarantee absolute success, according to the three types of performance indicators. As Wu (2006) argues from a policy-fit perspective, matching the privatization policy with other industry-wide or company-specific policies collectively determines the outcome of privatization. In an empirical analysis of privatization cases in Taiwan, he concludes that post-privatization market openness and pre-privatization corporate health, along with the privatization of certain SOEs, relate positively to efficiency gains after privatization, which implies the indispensability of market deregulation and SOE reforms in government divestiture policy designs.…”

“…A detailed and rigorous analysis of post-privatization performance changes in Taiwan already appears in some research in this field (e.g., Wu 2006Wu 2007 and is beyond the scope of this paper.…”

“…Although Taiwan soon encountered its first two SOE bankruptcies in the mid-1980s, the concept of market liberalization was not incorporated into the government's decision to reduce its presence in the market until the late 1980s, when Taiwan's government finally revamped its blueprint for privatization 2 (Wu 2006). Although privatization of SOEs gradually became a major plank of its economic policy, the policy generally was carried out by trial and error because of inexperienced execution and immature institutional settings.…”

Liberalization policy, production and cost efficiency in Taiwan’s telecommunications industry

“…Many economists, policy-makers, and corporate managers have long believed that the operational performance of private enterprises is much more efficient than that of public utilities (Sueyoshi, 1998;Wu, 2006). Consequently, many government policy-makers deregulated gradually their public utilities, including electricity, water, bus, rail, aviation transportation, and telecommunications service.…”

“…However, only a few studies have been made on pre-and post-privatization efficiencies in companies operating in the telecommunications industry in Taiwan. In view of this, Wu (2006) examined empirically 34 privatized entities before and after privatization in Taiwan using the ANCOVA approach from the policy-fit viewpoint. As his report indicates, the efficiency of privatized entities is much higher than that of public sectors before privatization.…”