The Political Economy of Privatization in Rich Democracies

Obinger, Herbert; Schmitt, Carina; Traub, Stefan

doi:10.1093/acprof:oso/9780199669684.001.0001

Cited by 33 publications

(28 citation statements)

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“…Finally, principal-agent theory has reconsidered the previous hyptheses, pointing to information asymmetries between owners and managers (Laffont andTirole, 1993, 2000) in both public and private organizations, with ambiguous predictions on the relative efficiency. Obinger et al (2016) review some more recent literature on the political economy of privatization, which is to a certain extent related to the conflicting views on SOEs, although they do not explicitlt focus on productivity issues.…”

Section: Accepted Manuscriptmentioning

confidence: 99%

Quality of institutions and productivity of State-Invested Enterprises: International evidence from major telecom companies

Castelnovo

Florio

2019

European Journal of Political Economy

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The quality of institutions is at the core of the differences in the growth of income and productivity of nations. A growing body of evidence shows how this is also true at the firm level. After taking stock of earlier theoretical and empirical literature on the efficiency of state-owned versus private enterprises, while we consider ownership as the core internal governance mechanism of firms, we add quality of government as a determinant of the external institutional environment. To disentangle the effect of internal and external institutions on firms' productivity, we use different sets of ownership and institutional environment indicators. After having identified the top 350 private, state-invested (i.e. partially state-owned) and state-owned enterprises in the telecommunications industry in EU28 and in more than 60 other countries between 2007 and 2015, we empirically investigate models of firms' productivity augmented with ownership and quality of government. Our findings suggest that, after controlling for the regulatory and competitive conditions at the country level, on average, public ownership has a negative impact on firm-level TFP. This effect is however mitigated by high external institutional quality and even reversed in some countries with a particularly favourable institutional environment.

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Section: Accepted Manuscriptmentioning

confidence: 99%

Quality of institutions and productivity of State-Invested Enterprises: International evidence from major telecom companies

Castelnovo

Florio

2019

European Journal of Political Economy

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“…Borghi et al 2016, Polemis andStengos 2017), as well as in political economy studies (see e.g. Obinger et al 2016).…”

Section: As Shown Inmentioning

confidence: 99%

“…Empirical analyses can be divided into two distinct groups, depending on whether the PFR proxy enters the econometric specification as dependent or as explanatory variable. 6 The first class of models, with PFR as dependent variable, is representative of the political economy literature on the historical determinants, success and failure of reforms surveyed by Obinger et al (2016).…”

Section: The Econometrics Of Policy Framework Reformsmentioning

confidence: 99%

The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues

2017

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Some regulatory reforms do not change just a specific signal that can be represented by a quantitative continuous variable, such as a tax rate, a price cap, or an emission threshold. The standard theory of reform in applied welfare economics (going back to contributions by e.g. Ramsey, Samuelson and Guesnerie) asks the question: What is the marginal effect on social welfare of changing a policy signal?However, reforms such as privatization, unbundling or liberalization of network industries are often described by 'packages' shifting a policy framework. It is increasingly frequent in the empirical evaluation of such reforms to use categorical variables, often in polytomous form, for instance describing unbundling steps (vertical integration, accounting, functional, legal, ownership separation) on a discrete numerical scale, such as those proposed by the OECD and other international bodies. We review recent econometric literature evaluating regulatory reforms using such variables (40 papers) and we discuss some methodological issues arising in this context. standards, administrative guidance and circulars (OECD, 2010). For instance, in the case of the European Union (EU), regulation of network services involves the adoption of both legislative and non-legislative acts, the so-called soft law (Maresca, 2013), 1 with complex implementation mechanisms (Goldberg, 1976). Moreover, the aim of such tools and procedures is often not to induce an immediate change in a signal, but rather to provide mechanisms that, under certain circumstances, should pave the way for such a change.A case in point is the regulation of segments of the telecom industry. For instance, "local loop unbundling" in European member states gives the right to entrants to use the incumbent telecom operator's local broadband network to offer their services directly to customers. 2 Clearly, the implementation of such a legislation cannot be described as a change in the vector of signals (Guthrie, 2006 and Nardotto et al., 2015). Rather, local loop unbundling can be interpreted as a modification of the regulatory policy framework that is expected to create the conditions for a change in signals and is thus not well approximated as a problem belonging to the RSG tradition.We discuss the empirical assessment of "packages" or reforms of policy framework (PFR) and focus on network industries, given the pervasiveness of the economic services they provide (e.g. energy, water, telecommunications, transport). The aim is to provide a consistent analytical scheme to help researchers and policy makers avoiding methodological pitfalls and interpretational errors that might bias the evaluation of reforms when the RSG approach is neither applicable, nor appropriate. We show that, notwithstanding the analysis of PFR cannot rely on well-established theoretical foundations, such as the RSG approach, empirical analyses are feasible and necessary, albeit interpretation of results and therefore design of policy recommendations requires caution.

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“…I am in favour of interdisciplinary studies in this area. For example, I think that the best approach to the study of privatization in principle should be a comparative political economy, which would blend together the perspectives of history, political sciences and applied economics (a review may be found in Obinger et al, 2016). However, without a definition of privatization or liberalization in the form of measurable variables, the contribution of an applied economist to the possible interdisciplinary policy evaluation would be severely constrained.…”

Section: Defining the Object Of Analysismentioning

confidence: 99%

The empirical evaluation of regulatory policy reforms in network industries: some methodological issues

Florio¹

2017

The Reform of Network Industries

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The Political Economy of Privatization in Rich Democracies

Cited by 33 publications

References 0 publications

Quality of institutions and productivity of State-Invested Enterprises: International evidence from major telecom companies

Quality of institutions and productivity of State-Invested Enterprises: International evidence from major telecom companies

The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues

The empirical evaluation of regulatory policy reforms in network industries: some methodological issues

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