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State ownership - a residual role?

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  • Perotti, Enrico

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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Bibliographic Info

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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References

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  21. Nellis, J., 1999. "Time to Rethink Privatization in Transition Economies?," Papers, World Bank - International Finance Corporation 38, World Bank - International Finance Corporation.
  22. David McKenzie & Dilip Mookherjee, 2003. "The Distributive Impact of Privatization in Latin America: Evidence from Four Countries," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
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Citations

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Cited by:
  1. Chisari, Omar O. & Ferro, Gustavo, 2009. "Gobierno Corporativo: los problemas, estado actual de la discusión y un ejercicio de medición para Argentina
    [Corporate Governance: the problems, the current stage of the discussion and a measure
    ," MPRA Paper 15630, University Library of Munich, Germany.
  2. Yakovlev, Andrei, 2008. "State-business relations and improvement of corporate governance in Russia," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 26/2008, Bank of Finland, Institute for Economies in Transition.

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