IDEAS home Printed from
   My bibliography  Save this article

Efficiency effect of privatization in the developing countries


  • Abdullah Al-Obaidan


Privatization gained considerable momentum in the developing world in the 1980s. The motives were many, but the hope for higher economic efficiency underlined the expectations of the implementing governments and agencies in the developing countries. While the merits of a market-based economic system are well established under certain theoretical conditions, far less is known of its empirical relevance in the developing world. Yet, to the best of the author's knowledge, no empirical study has examined the macro-efficiency effect of privatization in the developing countries. Studies concerned with this issue often limit themselves to the impact of privatization at the firm level for a small number of companies and countries. Thus, the current study is an attempt to provide a systematic quantitative measure of the magnitude of the macroeconomic effect of privatization in 45 developing countries. Using the concept of frontier production function, efficiency differences between developing countries with differing degrees of private sector contribution in the economy are estimated. The empirical findings suggest, ceteris paribus, that developing countries can increase the utility of their national resources by approximately 45% simply by converting to market-based economies.

Suggested Citation

  • Abdullah Al-Obaidan, 2002. "Efficiency effect of privatization in the developing countries," Applied Economics, Taylor & Francis Journals, vol. 34(1), pages 111-117.
  • Handle: RePEc:taf:applec:v:34:y:2002:i:1:p:111-117
    DOI: 10.1080/00036840010007948

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Abdelhak Senhadji, 1997. "Two common problems related to the use of the Armington aggregator in computable general equilibrium models," Applied Economics Letters, Taylor & Francis Journals, vol. 4(1), pages 23-25.
    2. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, March.
    3. Brown, Drusilla K., 1987. "Tariffs, the terms of trade, and national product differentiation," Journal of Policy Modeling, Elsevier, vol. 9(3), pages 503-526.
    4. Zhuang, Juzhong, 1996. "Estimating Distortions in the Chinese Economy: A General Equilibrium Approach," Economica, London School of Economics and Political Science, vol. 63(252), pages 543-568, November.
    5. Wang, Zhi, 1997. "The Impact of China and Taiwan Joining the World Trade Organization on U.S. and World Agricultural Trade: A Computable General Equilibrium Analysis," Technical Bulletins 184382, United States Department of Agriculture, Economic Research Service.
    6. Dewatripont, Mathias & Michel, Gilles, 1987. "On closure rules, homogeneity and dynamics in applied general equilibrium models," Journal of Development Economics, Elsevier, vol. 26(1), pages 65-76, June.
    7. Bandara, Jayatilleke S, 1991. " Computable General Equilibrium Models for Development Policy Analysis in LDCs," Journal of Economic Surveys, Wiley Blackwell, vol. 5(1), pages 3-69.
    8. Dirk Willenbockel, 1999. "On apparent problems with the use of the Armington aggregator in computable general equilibrium models," Applied Economics Letters, Taylor & Francis Journals, vol. 6(9), pages 589-591.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. Haselip, James & Hilson, Gavin, 2005. "Winners and losers from industry reforms in the developing world: experiences from the electricity and mining sectors," Resources Policy, Elsevier, vol. 30(2), pages 87-100, June.
    2. Samuel Adams & Berhanu Mengistu, 2008. "The Political Economy of Privatization in Sub-Saharan Africa," Social Science Quarterly, Southwestern Social Science Association, vol. 89(1), pages 78-94.
    3. Mohamed Jellal & François-Charles Wolff, 2003. "Privatisation et négociation collective," Revue d’économie du développement, De Boeck Université, vol. 11(1), pages 73-99.
    4. Ghulam, Yaseen & Jaffry, Shabbar, 2015. "Efficiency and productivity of the cement industry: Pakistani experience of deregulation and privatisation," Omega, Elsevier, vol. 54(C), pages 101-115.
    5. Månsson, Jonas & Salas, Osvaldo, 2006. "Productivity development and privatisation of the potable water and sewage sector in Chile," CAFO Working Papers 2006:5, Linnaeus University, Centre for Labour Market Policy Research (CAFO), School of Business and Economics.
    6. Hongbin Li & Qian Wang, 2005. "Partial privatization and screening," Applied Economics Letters, Taylor & Francis Journals, vol. 12(11), pages 653-655.

    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:taf:applec:v:34:y:2002:i:1:p:111-117. 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: (Chris Longhurst). 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.