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Privatization and Capital Accumulation: Empirical Evidences from Ethiopia

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  • Jesiah, Selvam
  • A, Meenakshi sunararajan
  • T, Iyappan

Abstract

This paper examines the connectivity between privatization and private capital accumulation. Many previous studies have proved that privatization has had a direct and positive effect on capital accumulation through attracting private investment. Ethiopia, which is one of the least developed countries (LDCs), and having spent a two decades of communism, has implemented privatization programme as a means of attracting a sizable investment including the foreign direct investment (FDI). We used data over ten years, 1994/95-2003/04, and applied correlation and regression analyses to find out the effect of the Ethiopian privatization programme on capital accumulation. The empirical results show that privatization was insignificant to capital accumulation. We suggest that the country needs to improve economic and political stability and openness coupled with re-vitalizing the privatization programme to prevent the Ethiopian economy from the further capital sabotage.

Suggested Citation

  • Jesiah, Selvam & A, Meenakshi sunararajan & T, Iyappan, 2004. "Privatization and Capital Accumulation: Empirical Evidences from Ethiopia," MPRA Paper 73943, University Library of Munich, Germany, revised Dec 2004.
    • Handle: RePEc:pra:mprapa:73943
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    References listed on IDEAS

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    3. World Bank, 2004. "African Development Indicators 2004," World Bank Publications - Books, The World Bank Group, number 13918, April.
    4. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    5. Patrick Plane, 1997. "Privatization and economic growth: an empirical investigation from a sample of developing market economies," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 161-178.
    6. World Bank, 2004. "World Development Indicators 2004," World Bank Publications - Books, The World Bank Group, number 13890, April.
    7. John Nellis, 2003. "Privatization in Africa: What has Happened? What is to be Done?," Working Papers 25, Center for Global Development.
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    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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