Narrow Results

In this paper using the global Hurst exponent, the impact of privatization of public companies in Iran on the degree of efficiency in Tehran Stock Exchange is assessed. The results show that selling public companies' share in Tehran Stock Exchange (TSE) leads to a structural break in degree of market development. To model this phenomenon a catastrophe approach is used and it is demonstrated that this structural break can be better explained by a cusp catastrophe model.

In this paper, we study a large sample of 507 privatization offerings from 39 countries over the period 1979–1996. Our objectives are twofold. First, we document the extent of short-run underpricing of these privatization offerings and measure their variation across countries, industries, and years, as well as drawing comparisons to private company IPOs. Second, we test alternative explanations of the determinants of short-run underpricing drawing on various models of maximizing behavior by underwriters, augmented by variables that proxy for national political objectives. Overall, we find support for elements of asymmetric information theory, investor sentiment theory and the reputation building hypothesis. With the exception of the Gini coefficient, our political proxy variables are typically not significant. Thus to a significant degree, the investment banking strategies believed to characterize IPOs of private companies in industrial countries may also play a role in the IPO strategies of state-owned-enterprises in both industrial and lesser developed economies.

This article studies competitive bidding by strategic investors to buy enterprises that are being privatized through sealed-bid auctions. The bidders use a real options approach to enterprise valuation that accounts for asset quality given their private information. It is shown that the optimal bidding strategy under first-price sealed-bid auctions defines a Bayesian Nash equilibrium in which each strategic investor bids only a fraction of its prior valuation and competition decreases the bidder's profit margin. The greater the transparency and information disclosure on asset quality, the higher the seller's expected receipts will be.

Since 1995, China's industrial sector has quietly experienced a surge of firm privatization. This paper reviews prior studies that examine the determinants, the process and the effect of privatization. It is found that privatization is more likely when the market becomes more competitive and banks have harder budget constraint towards government-owned firms. Moreover, leaders have devised a way to elicit information from the manager about the value of the firm at the time of privatization. The analysis shows that the performance of firms with new owners that paid a full price for the firm far exceeds that of firms with new owners who underpaid to buy out.

South Korea launched electricity reform in the 1990s but had continued to struggle with instituting an effective free market. In order to bolster economic growth, the development of the electricity industry has long been a fundamental issue for the state. The case in Korea is distinctive because it is part of a large-scale privatization project as the political regime had just shifted to democracy. The state spun off and corporatized the state-owned power enterprise with very limited privatization. The Korean government has chosen to control the power companies as the largest shareholder. Nonetheless, the reform process was suspended in 2004 without encountering major problems. This has created a major puzzle for analysts: why did the reform result in this outcome? I argue that as a politically driven reform project, power reform in Korea was destined to fail. The economic and social responses elicited by reform implementation all contributed to the failure of the power reform. This paper describes the dynamics of Korea’s electricity reform and details the industrial restructuring during the reform. It examines the political logic of the reform and how it shaped the power industry and in turn led to a stalled agenda. The paper concludes with a discussion of the broader implications for the roles of the state, industrial policy, and state-business relations.

This paper examines the impact of privatization on stock market size and liquidity in a multinational sample of 31 emerging markets. We find that the intensity of privatization and the use of privatization offerings (POs) on the stock market contribute to enhance stock market development, but the documented effects vary across geographical regions, owing to the specificities of the divestiture process. We use GMM procedure in order to estimate dynamic panel specifications and find that privatization appears to be the most beneficial in the Asian sub-sample where most favorable conditions were put in place before privatization actually started. In other regions, however, similar positive outcomes are yet to materialize. We derive several policy implications from our results.

The reconstruction of Gaza after the latest war between Israel and Hamas creates an opportunity to approach the problem from a purely economic viewpoint. The vision of CEESMENA is to treat internal MENA problems from a purely economic perspective. In that light, the solution to the Gaza problem can be found by focusing narrowly on the investment solution to a failed experiment. This is a common approach that economists address in a post-bankruptcy situation. The Hamas experiment, since Israel’s unilateral withdrawal in 2005, has proven to be a complete failure. It has left Gaza in a devastating bankruptcy. To solve this bankruptcy problem, we suggest an approach based on the classic build–operate–transfer (BOT) framework. The countries that invest in this project will become equity shareholders with a 50-year lease. The civil administrators that will be brought into Gaza will develop an economic model based on the principle of “private provision of public services”. It will also create the common law principles known as the “rule of law” as it is applied to property, contract, criminal and tort law under a market system. The sovereignty of the residents will be addressed only after the 50-year lease arrangement is complete along with the formation of a robust civil administration (e-Government) and common law paradigm referred to as “rule of law” is finalized. A revitalized education system will be instituted based on a reformed UAE, Bahrain and Saudi Arabian curriculum. A computable general equilibrium (CGE) model presented in the paper will be used to track a three-sector Gaza economy (tourism, agriculture and high-tech) and will be implemented to address alternative pathways for the development of this sovereign non-militarized green economy. The approach presented in this paper is a continuation of innovative thinking which was manifest when former President Trump perused the groundbreaking and successful “Abraham Accords” in complete rejection of the outdated and unsuccessful “Washington Consensus”.

An increasing number of Chinese enterprises and citizens are going abroad, which exposes them to risks threatening their personal safety and security of their property. With the expansion of Chinese overseas interests, traditional protection methods fall short of a demand for diverse services, revealing a major shortfall in the Chinese government’s capability to provide overseas security protection for its citizens. New service providers are therefore urgently needed, and private security company are becoming an increasingly popular choice. As this is a fairly new demand, only a small number of Chinese private security companies are operating overseas at present. Difficulties abound for them, such as absence of regulatory clarity on business operation and gun control. The presence of private security providers could also pose a challenge to host nation authority and trigger conflicts. To serve as true protectors of overseas Chinese interests, Chinese private security companies have a long way to go.

Water system revenue losses, inefficiency, mismanagement, lack of productivity, and federal mandates are rapidly escalating the cost of water and wastewater for Baltimore consumers. Baltimore’s water and wastewater systems are municipally owned and poorly managed by Baltimore City. Due to a lack of maintenance, these systems are plagued by an immense number of leaks, main breaks, and sewage backups. In addition, the billing system has a long history of errors. The overall deterioration of the systems, inadequate capital management, and operational problems are symptomatic of the fact that the Baltimore City Department of Public Works lacks proper accounts, including a balance sheet. Despite these glaring flaws, the systems have been politicized and are now protected by an amendment to the Baltimore City Charter that prohibits the assistance of private enterprise and markets in addressing Baltimore’s endemic water and wastewater problems by tapping the competency and skills available in the private marketplace. In order to reverse the politicization of Baltimore’s water system, which will only make operation and capital mismanagement problems worse as well as increase costs for the citizens of Baltimore, the charter amendment must be eliminated, allowing for the private provision of infrastructure and its maintenance. We recommend that this private provision is based on the centuries-old tried and tested French model.

This article takes a critical view at the process of economic change and transformation in Poland since 1989. Its describes the creation and implementation of these changes, initially referred to as the Balcerowicz Plan, in the decidedly negative context of the system of central planning. The article takes a detailed look at growth, international trade, privatization, and foreign direct investment, as well as outlining some "persistent negatives" such as transition costs, technology and infrastructure lapses, and inflation. It concludes with possible suggestions for Poland's future as a full member of the EU, participating in the euro-- perhaps as early as 2008 or 2009.

This article provides a comprehensive look at the area of privatization in Poland. It provides a context and discusses the two major forces that have spurred the privatization process, as well as privatizations carried out in developing countries under the auspices of the World Bank and the IMF.The article begins with an explanation of the background to privatization in the context of state central planning, a discussion of the derivative traits of the command-and-control economy, the collapse of the system in the 1990s, the actions necessitated in society in an attempt to reform and change the system, and the reform strategies that were implement as a response to both the economic and political challenges.The article includes a discussion of the core objectives of the privatization process, the requirements of the privatization process, and an important section dealing with the actions that are necessary and complementary in preparing society and individual entities for privatization. The article concludes with an analysis of the models of privatization that were adopted in the region, along with tables delineating proceeds from privatization; the number of privatizations carried out both world-wide and in the region.

Aim: The aim of this study was to analyze the barriers in the implementation of the Framework Convention on Tobacco Control (FCTC) in China and present recommendations on ways to address these challenges in tobacco control in China.

Methods: We review the available literature on progress and explore the barriers and challenges that impede a speedier pace in the adoption of the effective tobacco control measures, and present recommendations based on in-depth knowledge of decision-making process on the implementation of FCTC in China.

Results: The pace of progress in China is too slow. China faces intractable political, structural, economic and social barriers in tobacco control, which make the wholehearted implementation of FCTC measures a painstaking process.

Discussion: The authors recommend a comprehensive approach to speed up the implementation of tobacco control measures. This includes strong political leadership from the top, structural changes to the tobacco industry and government oversight of the tobacco industry, as well as advocacy and support for tobacco control from civil society at the grassroots level. (Global Health Promotion, 2014; 20(4): 13–22).

Using China’s Annual Survey of Industrial Production, we estimate the marginal revenue product of labor (MRPL) for all state-owned and above-scale non-state manufacturing firms for 2001-2004 and 2004-2007. We find that labor productivity varies systematically within industries by ownership type and thai non-state firms face implicit labor taxation relative to state-owned enterprises (SOEs). We also find that, in keeping with ongoing reforms of the state sector, ownership differentials fall over time, with gaps between non-state enterprises and SOEs falling by about half over time. Within the non-state sector, enterprises registered as legal persons have higher MRPL, on average, than do firms registered as collective or private enterprises. Disaggregating this group using information on equity shares reveals that firms registered as legal persons and majority owned by legal persons have the highest MRPL relative to SOEs. Indeed, these enterprises show significantly higher MRPL than those firms directly controlled by the state. Legal-person firms with majority state ownership have MRPL differentials similar to those for legal-person firms with majority private or majority collective ownership. This evidence is consistent with continuing, albeit diminishing, implicit labor subsidies for directly SOEs but not for firms whose shares are owned by the state, even if those shares are registered to legal persons.

Since 1978 when China liberalized its economy and moved from a central planning to a socialistic market economy, its health care system has gone through two major cycles of reform oscillating from relying on the market to fund and deliver health care, to one in which the government plays a central role in financing health care, prioritizes prevention and primary care, and redistributes resources to poorer and rural regions. Consequently, performance of the Chinese health system improved and China was finally able to extend a basic health safety net to more than 95% of its 1.3 billion people over the last decade. Then, in 2013, China launched its new cycle of reform, and vigorously pushed privatization and marketization as a core strategy to reform its public hospitals. What explains China’s oscillating health policies and performances? This paper examines the thesis that ideologies of the government and the market are the main drivers for the reforms. The social value that undergirds the government actions, especially how much priority it gives to equity vis-à-vis economic growth has exerted a major influence on whether China chooses a pro-government or pro-market approach.

The aim of this study is to examine the institutional organization of the water sector. The Mediterranean area provides diverse examples of water sector organization. This chapter focuses more particularly on two aspects of the water sector organization: the recent introduction of private sector participation and the institutional framework. Five countries have been reviewed in detail: Tunisia, Algeria, Egypt, Morocco and Jordan. The chapter analyzes institutional arrangements of the water sector for each of these countries, It not only presents the theoretical legal framework but also the practice. It shows that "independent" regulatory agencies have been set up only in a few countries. However, a closer look confirms that these regulatory agencies are rarely independent. The study also reveals that in most of the countries, the management of water supply suffers from political interference and is overly centralized. Experience with corporatization has also been limited. While the corpo-ratization of local operators has been legalized in most countries, only few have implemented it. Experience with private sector participation in water supply has been relatively positive and therefore expected to expand in the future.