IDEAS home Printed from
   My bibliography  Save this article

Why and When Do Governments Initiate Public Enterprise Reform?


  • Campos, Jose Edgardo
  • Esfahani, Hadi Salehi


Initiating public enterprise reform is a complex decision influenced by economic factors as well as the ideological biases and personalities of political leaders. Nevertheless, the use of a contracting framework yields important generalizations about what drives the decision. This article argues that the decision depends fundamentally on the potential efficiency gains from the reform and its associated transactions costs. Costs arise because of asymmetries in information and opportunism, problems that usually plague contract negotiations. The article identifies observable variables that may affect either the potential gains or the transactions costs, uses them to construct a simple probit decision-making model, and tests the model using data from fifteen developing countries over a twenty-year period. Copyright 1996 by Oxford University Press.

Suggested Citation

  • Campos, Jose Edgardo & Esfahani, Hadi Salehi, 1996. "Why and When Do Governments Initiate Public Enterprise Reform?," World Bank Economic Review, World Bank Group, vol. 10(3), pages 451-485, September.
  • Handle: RePEc:oup:wbecrv:v:10:y:1996:i:3:p:451-85

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Mounir Mahmalat & Declan Curran, 2018. "Do Crises Induce Reform? A Critical Review Of Conception, Methodology And Empirical Evidence Of The €˜Crisis Hypothesis’," Journal of Economic Surveys, Wiley Blackwell, vol. 32(3), pages 613-648, July.
    2. Campos, Jose Edgardo & Esfahani, Hadi Salehi, 2000. "Credible Commitment and Success with Public Enterprise Reform," World Development, Elsevier, vol. 28(2), pages 221-243, February.
    3. Radygin, Alexander & Simachev, Yury & Entov, Revold, 2015. "The state-owned company: “State failure” or “market failure”?1," Russian Journal of Economics, Elsevier, vol. 1(1), pages 55-80.
    4. Ghosh Banerjee, Sudeshna & Rondinelli, Dennis A., 2003. "Does Foreign Aid Promote Privatization? Empirical Evidence from Developing Countries," World Development, Elsevier, vol. 31(9), pages 1527-1548, September.
    5. Kubo, Katsuyuki & Phan, Huu Viet, 2019. "State ownership, sovereign wealth fund and their effects on firm performance: Empirical evidence from Vietnam," Pacific-Basin Finance Journal, Elsevier, vol. 58(C).
    6. Yermakov, Yuri Y., 1997. "Credibility of economic reform and foreign direct investment in the former Soviet Union region," ISU General Staff Papers 1997010108000012835, Iowa State University, Department of Economics.
    7. Syn, Tan Wooi, 2002. "Capital Accumulation, State Intervention and Privatisation," Centre on Regulation and Competition (CRC) Working papers 30687, University of Manchester, Institute for Development Policy and Management (IDPM).

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:wbecrv:v:10:y:1996:i:3:p:451-85. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.