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Is there a ´privatization trap´? : the case of the manufacturing industries in Eritrea

  • Hailemariam, Stifanos
  • Eije, Henk von
  • Werf, Jos van der

    (Groningen University)

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    Privatization is a popular topic in many countries. However, the more a country needs development, efficiency and the proceeds of the sales, the more difficult privatization will be. This can result in a long period of privatization in developing countries. But when privatization takes a long time, the vitality of companies may reduce. In this paper we present the case of the manufacturing industries in Eritrea, where privatization has been slow. After the privatization announcement the companies deteriorated quickly with respect to operations, investments and finance. This makes it even more difficult to sell the companies and the implied vicious circle results into a 'privatization trap'.

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    File URL: http://irs.ub.rug.nl/ppn/238232255
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    Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 02A04.

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    Date of creation: 2002
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    Handle: RePEc:dgr:rugsom:02a04
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    1. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 889-906, August.
    2. Yarrow, George, 1999. "A theory of privatization, or why bureaucrats are still in business," World Development, Elsevier, vol. 27(1), pages 157-168, January.
    3. Barbara G. Katz & Joel Owen, 1993. "Designing an Optimal Privatization Plan for Restructuring Firms and Industries in Transition," Working Papers 93-24, New York University, Leonard N. Stern School of Business, Department of Economics.
    4. repec:reg:rpubli:398 is not listed on IDEAS
    5. Wendy Carlin & Philippe Aghion, 1996. "Restructuring outcomes and the evolution of ownership patterns in Central and Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 371-388, October.
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    8. Ravi Ramamurti, 1992. "Why are Developing Countries Privatizing?," Journal of International Business Studies, Palgrave Macmillan, vol. 23(2), pages 225-249, June.
    9. Gordon, David F., 1996. "Sustaining economic reform under political liberalization in Africa: Issues and implications," World Development, Elsevier, vol. 24(9), pages 1527-1537, September.
    10. Ramamurti, Ravi, 1997. "Testing the limits of privatization: Argentine railroads," World Development, Elsevier, vol. 25(12), pages 1973-1993, December.
    11. 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.
    12. Ariyo, Ademola & Jerome, Afeikhena, 1999. "Privatization in Africa: An appraisal," World Development, Elsevier, vol. 27(1), pages 201-213, January.
    13. Narjess Boubakri & Jean-Claude Cosset, 1998. "The Financial and Operating Performance of Newly Privatized Firms: Evidence from Developing Countries," Journal of Finance, American Finance Association, vol. 53(3), pages 1081-1110, 06.
    14. J Earle & S Estrin & L Leshchenko, 1996. "Ownership Structures," CEP Discussion Papers dp0315, Centre for Economic Performance, LSE.
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