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The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine

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  • J. David Brown
  • John S. Earle
  • Almos Telegdy

Abstract

This paper estimates the effect of privatization on multifactor productivity using comprehensive panel data on initially state-owned manufacturing firms in four economies. We exploit the data's longitudinal dimension to control for preprivatization selection and estimate long-run impacts. The estimates are robust to functional form but sensitive to selection controls. Our preferred random growth estimates imply positive multifactor productivity effects of 15 percent in Romania, 8 percent in Hungary, and 2 percent in Ukraine, but a -3 percent effect in Russia. The foreign privatization effect is larger (18–35 percent) in all countries. Positive domestic effects appear immediately in Hungary, Romania, and Ukraine and continue growing thereafter, but emerge only five years after privatization in Russia.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 114 (2006)
Issue (Month): 1 (February)
Pages: 61-99

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Handle: RePEc:ucp:jpolec:v:114:y:2006:i:1:p:61-99

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  1. Earle, John S. & Telegdy, Almos, 2002. "Privatization Methods and Productivity Effects in Romanian Industrial Enterprises," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 657-682, December.
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  11. J. David Brown & John Earle & Almos Telegdy, 2004. "Does Privatization Raise Productivity? Evidence from Comprehensive Panel Data on Manufacturing Firms in Hungary, Romania, Russia, and Ukraine," CERT Discussion Papers 0410, Centre for Economic Reform and Transformation, Heriot Watt University.
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