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Has Privatization Promoted Efficiency in Ethiopia?: A Panel Data Analysis on Large and Medium Scale Manufacturing Firms

Author

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  • Misganaw Badasa

    (Ethiopian Agricultural Transformation Agency, Addis Ababa, Ethiopia)

Abstract

Privatization, as a program, has been implemented in Ethiopia since EPRDF took power, with the motive, among other things, to increase efficiency of firms. This study aimed at investigating whether the program has promoted efficiency of privatized large and medium scale manufacturing firms. A panel data ranging from 1995 to 2009 was collected from Central Statistical Agency for 71 privatized and 333 publicly remained firm. The results revealed the overall insignificant effect of privatization on the efficiency of large and medium scale manufacturing firms. Based on the findings of the study, one can forward the following recommendations. If the privatization program is being implemented in the motive of increasing efficiency of firms as a major and immediate objective, it is better to stop the process, since it has nothing to do with improvement in efficiency. On the other hand, if the motives other than increasing efficiency such as promoting participation of the private sector and generating reveue outweigh as causes of implementing the program, the assessment of its effect on these goals is important to provide a realistic recommendation.

Suggested Citation

  • Misganaw Badasa, 2019. "Has Privatization Promoted Efficiency in Ethiopia?: A Panel Data Analysis on Large and Medium Scale Manufacturing Firms," Economic Research Guardian, Weissberg Publishing, vol. 9(2), pages 55-74, December.
    • Handle: RePEc:wei:journl:v:9:y:2019:i:2:p:55-74
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    References listed on IDEAS

    as
    1. Bos, Dieter, 1991. "Privatization: A Theoretical Treatment," OUP Catalogue, Oxford University Press, number 9780198283690.
    2. Alemu, Mekonnen, 1992. "Efficiency of Ethiopia in Public Manufacturing Enterprises and the policy Environment," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 1(2), pages 1-85.
    3. Brada, Josef C & King, Arthur E & Ma, Chia Ying, 1997. "Industrial Economics of the Transition: Determinants of Enterprise Efficiency in Czechoslovakia and Hungary," Oxford Economic Papers, Oxford University Press, vol. 49(1), pages 104-127, January.
    4. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-319, March.
    5. Padmasai Arora, 2014. "Reforms, Ownership and Determinants of Efficiency: An Empirical Study of Commercial Banks in India," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 13(1), pages 103-138, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Privatization; Efficiency; Panel Data; Ethiopia;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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