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Privatization in Bolivia: The Impact on Firm Performance

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Author Info

  • Mauricio Garrón B.
  • Carlos Gustavo Machicado
  • Katherina Capra

Abstract

This report studies the change in performance of Bolivian State Owned Enterprises (SOEs) that have been transferred to the private sector. The paper focuses particularly on how ownership affects management by measuring the characteristics of management and relating them to both ownership structure and performance. It argues that the characteristics of private management that follow privatization are a key factor in determining the effects of privatization on performance. To determine the impact of privatization on the performance of the 31 firms studied, the authors performed two ratio analyses, one with unadjusted and the other with adjusted ratios. For this purpose, they undertook two regression analyses, one with panel data and the other with a cross section analysis. Two methods were used to conduct privatization of Bolivian SOEs, and the process took place in three stages. The methods were traditional, or standard, privatization and capitalization. Traditional privatization consisted of the complete transfer (assets and shares) to the private sector of companies operating in competitive markets. Capitalization involved attracting private firms to invest in and manage key SOEs. SOEs were not sold outright. Instead, private investors gained managerial control but no more than 50 percent of equity.

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Bibliographic Info

Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 3154.

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Date of creation: Oct 2003
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Handle: RePEc:idb:wpaper:3154

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References

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  1. Nicolas Barberis & Maxin Boycho & Andrei Shleifer & Natalia Tsukanova, 1995. "How Does Privatization Work? Evidence from the Russian Shops," Harvard Institute of Economic Research Working Papers 1721, Harvard - Institute of Economic Research.
  2. Rafael La Porta & Florencio López-De-Silanes, 1999. "The Benefits Of Privatization: Evidence From Mexico," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1193-1242, November.
  3. Andrei Shleifer & Robert W. Vishny, 1996. "A Survey of Corporate Governance," NBER Working Papers 5554, National Bureau of Economic Research, Inc.
  4. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
  5. Barja, Gover & Urquiola, Miguel, 2001. "Capitalization, Regulation and the Poor: Access to Basic Services in Bolivia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1997. "Privatization in the United States," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 447-471, Autumn.
  7. Newbery, David M & Pollitt, Michael G, 1997. "The Restructuring and Privatization of Britain's CEGB--Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 269-303, September.
  8. Maria Rosa Battagion & Lucia Tajoli, 1999. "Ownership Structure, Innovation Process and Competitive Performance: the Case of Italy," KITeS Working Papers 120, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2000.
  9. Andrei Shleifer, 1998. "State Versus Private Ownership," Harvard Institute of Economic Research Working Papers 1841, Harvard - Institute of Economic Research.
  10. Eckel, Catherine & Eckel, Doug & Singal, Vijay, 1997. "Privatization and efficiency: Industry effects of the sale of British Airways," Journal of Financial Economics, Elsevier, vol. 43(2), pages 275-298, February.
  11. Shapiro, C. & Willing, D.R., 1990. "Economic Rationales For The Scope Of Privatization," Papers 41, Princeton, Woodrow Wilson School - Discussion Paper.
  12. Stijn Claesens & Simeon Djankov & Gerhard Pohl, 1997. "Ownership and Corporate Governance : Evidence from the Czech Republic," World Bank Other Operational Studies 11584, The World Bank.
  13. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. " The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-52, June.
  14. Steven Barnett, 2000. "Evidenceon the Fiscal and Macroeconomic Impact of Privatization," IMF Working Papers 00/130, International Monetary Fund.
  15. Ramamurti, Ravi, 1997. "Testing the limits of privatization: Argentine railroads," World Development, Elsevier, vol. 25(12), pages 1973-1993, December.
  16. Gedajlovic, E.R. & Yoshikawa, T. & Hashimoto, M., 2001. "Ownership Structure, Investment Behavior and Firm Performance in Japanese Manufacturing Industries," ERIM Report Series Research in Management ERS-2001-09-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
  17. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
  18. Claessens, Stijn & Djankov, Simeon, 1998. "Politicians and firms in seven central and eastern European countries," Policy Research Working Paper Series 1954, The World Bank.
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Cited by:
  1. Carlos Gustavo Machicado & Juan Cristóbal Birbuet, 2009. "Misallocation and Manufacturing TFP in the Market Liberalization Period of Bolivia," Development Research Working Paper Series 06/2009, Institute for Advanced Development Studies.

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