Economic performance of state-owned enterprises in emerging economies: A cross-country study

By Peter Tabak & Sanja Borkovic

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The share of state ownership was an important measure of economic transition in the 1990s, but is now less closely followed. Although, in general, the private sector has been growing as a share of the economy in countries where the EBRD invests, state ownership remains prevalent in many sectors and has even been increasing in some countries such as Hungary, Poland and Turkey.
 
What is more, many larger-scale privatisation plans have stalled, been delayed or been very slow to implement (for example, in Cyprus, Kazakhstan, Slovenia and Ukraine). Measuring the size, scope and effectiveness or efficiency of state ownership is still important.
 
The EBRD diagnostic studies of Croatia, Serbia and Slovenia, for instance, have uncovered many areas ripe for improvement, from corporate governance to financial management. The large footprint and low efficiency of state-owned enterprises (SOEs) can also have significant and various negative effects on the private sector. SOEs can have unfair competitive advantage from subsidies, get away with providing low-quality services to private customers, or create financial problems for suppliers by not paying bills on time.
 
The aim of this study is to provide a much-needed snapshot of state ownership in economies where the Bank invests and to identify those countries and sectors that most need to improve SOE performance. The study focuses on data from 2014 to 2016. 
 

 

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