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State ownership - a residual role?

  • Perotti, Enrico

The author reviews the state of thinking on the governance role of state ownership. He argues that a gradual transfer of operational control and financial claims over state assets remains the most desirable goal, but it needs to be paced to avoid regulatory capture, and the capture of the privatization process itself. In addition, the speed of transfer should be timed on the progress in developing a strong regulatory governance system, to which certain residual rights of intervention must be vested. In many countries institutional weakness limits regulatory capacity and reliability, yet the author's conclusion is that in such environments, maintaining state control undermines the very emergence of institutional capacity, and so the balance should tip toward progressively less direct state control. After all, what are"institutions"if not governance mechanisms with some degree of autonomy from both political and private interests? The gradual creation of institutions partially autonomous from political power must become central to the development of an optimal mode of regulatory governance. The author offers some suggestions about creating maximum accountability in regulatory governance, in particular creating an internal control system based on a rotating board representative of users, producers, and civic organizations, to be elected by a process involving frequent reporting and disclosure.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3407.

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Date of creation: 01 Sep 2004
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Handle: RePEc:wbk:wbrwps:3407
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  1. Hart, Oliver & Shleifer, Andrei & Vishny, Robert W, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1127-61, November.
  2. Acemoglu, Daron & Johnson, Simon & Robinson, James A & Thaicharoen, Yunyong, 2002. "Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth," CEPR Discussion Papers 3575, C.E.P.R. Discussion Papers.
  3. Perotti, Enrico C, 1995. "Credible Privatization," American Economic Review, American Economic Association, vol. 85(4), pages 847-59, September.
  4. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May.
  5. Schmidt, Klaus M, 1996. "The Costs and Benefits of Privatization: An Incomplete Contracts Approach," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 1-24, April.
  6. Jihua Che, 2002. "Rent Seeking and Government Ownership of Firms: An Application to China’s Township-Village Enterprises," William Davidson Institute Working Papers Series 497, William Davidson Institute at the University of Michigan.
  7. Besley, Timothy J. & Coate, Stephen, 2000. "Elected Versus Appointed Regulators: Theory And Evidence," CEPR Discussion Papers 2381, C.E.P.R. Discussion Papers.
  8. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March.
  9. Bruno Biais & Enrico Perotti, 2002. "Machiavellian Privatization," American Economic Review, American Economic Association, vol. 92(1), pages 240-258, March.
  10. Andrei Shleifer, 1998. "State Versus Private Ownership," Harvard Institute of Economic Research Working Papers 1841, Harvard - Institute of Economic Research.
  11. Shirley, Mary & Walsh, Patrick, 2000. "Public versus private ownership : the current state of the debate," Policy Research Working Paper Series 2420, The World Bank.
  12. Oliver Hart, 2002. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," The Centre for Market and Public Organisation 02/061, Department of Economics, University of Bristol, UK.
  13. Simeon Djankov & Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2003. "The New Comparative Economics," Harvard Institute of Economic Research Working Papers 2002, Harvard - Institute of Economic Research.
  14. repec:dgr:uvatin:20070006 is not listed on IDEAS
  15. 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.
  16. Enrico Perotti, 2001. "Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints," William Davidson Institute Working Papers Series 379, William Davidson Institute at the University of Michigan.
  17. David E. M. Sappington & Joseph E. Stiglitz, 1987. "Privatization, Information and Incentives," NBER Working Papers 2196, National Bureau of Economic Research, Inc.
  18. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
  19. John Nellis, 2003. "Privatization in Africa: What has Happened? What is to be Done?," Working Papers 25, Center for Global Development.
  20. Dilip Mookherjee & David McKenzie, 2001. "The Distributive Impact of Privatization in Latin America: Evidence from Four Countries," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-128, Boston University - Department of Economics, revised 2002.
  21. Shleifer, Andrei & Vishny, Robert W, 1994. "Politicians and Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 995-1025, November.
  22. Hart, Oliver, 1995. "Corporate Governance: Some Theory and Implications," Economic Journal, Royal Economic Society, vol. 105(430), pages 678-89, May.
  23. Enrico C. Perotti & Luc Laeven & Pieter van Oijen, 2000. "Confidence Building in Emerging Stock Markets," William Davidson Institute Working Papers Series 366, William Davidson Institute at the University of Michigan.
  24. Enrico C Perotti, 1994. "A taxonomy of post-socialist financial systems: decentralized enforcement and the creation of inside money," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 71-81, 03.
  25. Nellis, J., 1999. "Time to Rethink Privatization in Transition Economies?," Papers 38, World Bank - International Finance Corporation.
  26. Franco Modigliani & Enrico Perotti, 2000. "Security Markets versus Bank Finance: Legal Enforcement and Investors' Protection," International Review of Finance, International Review of Finance Ltd., vol. 1(2), pages 81-96.
  27. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
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