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State ownership - a residual role?

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Author Info
Perotti, Enrico

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Abstract

The author reviews the state of thinking on the governance role of state ownership. He argues that a gradual transfer of operational control and financial claims over state assets remains the most desirable goal, but it needs to be paced to avoid regulatory capture, and the capture of the privatization process itself. In addition, the speed of transfer should be timed on the progress in developing a strong regulatory governance system, to which certain residual rights of intervention must be vested. In many countries institutional weakness limits regulatory capacity and reliability, yet the author's conclusion is that in such environments, maintaining state control undermines the very emergence of institutional capacity, and so the balance should tip toward progressively less direct state control. After all, what are"institutions"if not governance mechanisms with some degree of autonomy from both political and private interests? The gradual creation of institutions partially autonomous from political power must become central to the development of an optimal mode of regulatory governance. The author offers some suggestions about creating maximum accountability in regulatory governance, in particular creating an internal control system based on a rotating board representative of users, producers, and civic organizations, to be elected by a process involving frequent reporting and disclosure.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3407.

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Date of creation: 01 Sep 2004
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Handle: RePEc:wbk:wbrwps:3407

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Related research
Keywords: Decentralization; National Governance; Financial Crisis Management&Restructuring; Banks&Banking Reform; Municipal Financial Management; National Governance; Financial Crisis Management&Restructuring; Governance Indicators; Banks&Banking Reform; Municipal Financial Management;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Andrei Shleifer, 1998. "State Versus Private Ownership," NBER Working Papers 6665, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Schmidt, Klaus M, 1996. "The Costs and Benefits of Privatization: An Incomplete Contracts Approach," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 1-24, April.
  3. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-58, December. [Downloadable!] (restricted)
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  4. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March. [Downloadable!] (restricted)
  5. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December. [Downloadable!] (restricted)
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  6. Shirley, Mary & Walsh, Patrick, 2000. "Public versus private ownership : the current state of the debate," Policy Research Working Paper Series 2420, The World Bank. [Downloadable!]
  7. Timothy Besley & Stephen Coate, 2003. "Elected Versus Appointed Regulators: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1176-1206, 09. [Downloadable!] (restricted)
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  8. Hart, Oliver, 1995. "Corporate Governance: Some Theory and Implications," Economic Journal, Royal Economic Society, vol. 105(430), pages 678-89, May. [Downloadable!] (restricted)
  9. Che, Jiahua, 2002. "Rent Seeking and Government Ownership of Firms: An Application to China's Township-Village Enterprises," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 787-811, December. [Downloadable!] (restricted)
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  10. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January. [Downloadable!] (restricted)
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  11. Andrei Shleifer & Robert W. Vishny, 1993. "Corruption," NBER Working Papers 4372, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May. [Downloadable!] (restricted)
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  13. Enrico C Perotti, 1994. "A taxonomy of post-socialist financial systems: decentralized enforcement and the creation of inside money," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 71-81, 03. [Downloadable!] (restricted)
  14. Hart, Oliver & Shleifer, Andrei & Vishny, Robert W, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1127-61, November.
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  15. Enrico C. Perotti & Luc Laeven & Pieter van Oijen, 2000. "Confidence Building in Emerging Stock Markets," William Davidson Institute Working Papers Series 366, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  16. Enrico Perotti & Paolo Volpin, 2007. "Investor Protection and Entry," Tinbergen Institute Discussion Papers 07-006/2, Tinbergen Institute. [Downloadable!]
  17. Bruno Biais & Enrico Perotti, 2002. "Machiavellian Privatization," American Economic Review, American Economic Association, vol. 92(1), pages 240-258, March. [Downloadable!]
  18. Perotti, Enrico C, 1995. "Credible Privatization," American Economic Review, American Economic Association, vol. 85(4), pages 847-59, September. [Downloadable!] (restricted)
  19. John Nellis, 2003. "Privatization in Africa: What has Happened? What is to be Done?," Working Papers 25, Center for Global Development. [Downloadable!]
  20. Nellis, J., 1999. "Time to Rethink Privatization in Transition Economies?," Papers 38, World Bank - International Finance Corporation.
  21. David E. M. Sappington & Joseph E. Stiglitz, 1988. "Privatization, Information and Incentives," NBER Working Papers 2196, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  22. Franco Modigliani & Enrico Perotti, 2000. "Security Markets versus Bank Finance: Legal Enforcement and Investors' Protection," International Review of Finance, International Review of Finance Ltd., vol. 1(2), pages 81-96. [Downloadable!] (restricted)
  23. 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. [Downloadable!] (restricted)
  24. William L. Megginson & Jeffry M. Netter, 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. [Downloadable!] (restricted)
  25. Perotti, Enrico, 2002. "Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints," International Finance, Blackwell Publishing, vol. 5(3), pages 359-99, Winter. [Downloadable!] (restricted)
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  26. Oliver Hart, 2002. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," The Centre for Market and Public Organisation 02/061, Department of Economics, University of Bristol, UK. [Downloadable!]
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  27. Shleifer, Andrei & Vishny, Robert W, 1994. "Politicians and Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 995-1025, November. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yakovlev, Andrei, 2009. "State-business relations and improvement of corporate governance in Russia," BOFIT Discussion Papers 26/2008, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
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