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State-Invested Enterprises in the Global Marketplace: Implications for a Level Playing Field

Author

Listed:
  • Hans Christiansen

    (OECD)

  • Yunhee Kim

    (OECD)

Abstract

State-owned and other state-invested enterprises (SIEs) have become more prominent in the global economy over the last decade. A growing role for state-invested enterprises in the marketplace is not in itself onerous. According to an OECD consensus, as expressed through the Organisation’s legal instruments, SOEs can be operated according to similarly high standards of governance, transparency and efficiency as private companies, in which case the ownership issue is moot. However, only some of the world’s most advanced economies, following decades of reform of their SOE sectors, have approached this point. Moreover, when SOEs operate across borders the challenges may multiply. With this background, this paper compares the difference between SIEs and non- SIEs in five sectors: air transportation, electricity, mining, oil & gas and telecommunication. The empirical analysis indicates that, in addition to any financing advantages, large state-invested enterprises also seem to benefit from an unusually favourable position in their home markets. A comparative analysis further shows that, in the course of the last ten years, SIEs have generally enjoyed higher rates of return than comparable private companies. The paper concludes that the growing role of state-invested enterprises in the international marketplace does not yet present a serious macroeconomic challenge. However, since it is likely to keep growing for some time, challenges need to be addressed relatively soon. This makes for a strong case for enhanced policy coordination and information sharing. If legally binding instruments cannot be developed in the near to medium-term to ensure competitive neutrality, consultation mechanisms could be established through which the main players in international trade and investment can exchange views on matters of common concern related to the state in the marketplace. The ultimate purpose would be ensuring that the international trade and investment environment remains open, non-discriminatory and offering a level playing field.

Suggested Citation

  • Hans Christiansen & Yunhee Kim, 2014. "State-Invested Enterprises in the Global Marketplace: Implications for a Level Playing Field," OECD Corporate Governance Working Papers 14, OECD Publishing.
  • Handle: RePEc:oec:dafaae:14-en
    DOI: 10.1787/5jz0xvfvl6nw-en
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    File URL: https://doi.org/10.1787/5jz0xvfvl6nw-en
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    Citations

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    Cited by:

    1. Paolo Castelnovo, 2016. "State-invested enterprises in the European telecommunications industry: Are they competitive players?," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2016(3), pages 219-240.
    2. Stefano CLÒ & Matteo FERRARIS & Massimo FLORIO, 2015. "Public Enterprises in a Global Perspective in the Last Decade," Departmental Working Papers 2015-03, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    3. Katarzyna Szarzec & Wanda Nowara, 2017. "The economic performance of state-owned enterprises in Central and Eastern Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 29(3), pages 375-391, July.
    4. Luc Bernier & Massimo Florio & Johan Willner, 2016. "Rationales, performance and governance of public entreprises. Editorial introduction," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2016(3), pages 5-10.
    5. Clò, Stefano & Fiorio, Carlo V. & Florio, Massimo, 2017. "The targets of state capitalism: evidence from M&A deals," European Journal of Political Economy, Elsevier, vol. 47(C), pages 61-74.
    6. Del Bo, Chiara D. & Ferraris, Matteo & Florio, Massimo, 2017. "Governments in the market for corporate control: Evidence from M&A deals involving state-owned enterprises," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 89-109.
    7. Stefano Clò & Matteo Ferraris & Massimo Florio, 2015. "Public Enterprises in a Global Perspective in the Last Decade," L'industria, Società editrice il Mulino, issue 1, pages 111-138.
    8. Castelnovo, Paolo & Del Bo, Chiara F. & Florio, Massimo, 2019. "Quality of institutions and productivity of State-Invested Enterprises: International evidence from major telecom companies," European Journal of Political Economy, Elsevier, vol. 58(C), pages 102-117.

    More about this item

    Keywords

    competition; competitive neutrality; international investment; multinational firms; state-owned enterprises;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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