The paper examines the performance of privatised enterprises in developing countries since privatisation. There are three main differences introduced in this paper compared to earlier work. First, the paper concentrates on an analysis of enterprises drawn from a wide range of developing countries, with a larger sample than used in previous studies. Second, a distinction is drawn between privatised enterprises that are in regulated and non-regulated sectors of the economy. By regulated industries is meant the privatised public utilities that are subjected to various forms of economic regulation. The performance of privatised enterprises, whether in regulated sectors or not, is also compared to the performance of enterprises in the private sector which have not previously been owned by the public sector. Third, a comparison of performance is made between different periods of privatisation and not with pre- and post-privatisation episodes. New data is available which extends the period over which performance can be measured. In some cases this allows us to compare periods that are at least ten years apart. Findings show that much of the earlier optimism about privatisation, and indeed the effectiveness of regulation in respect to the utility industries, may have been premature. In part, this is supported by the declining trend in infrastructure investment after 1997 in developing countries as indicated by the World Bank. It may also have been the case that the mixing of industrialised and developing country experience, with a bias in samples towards the former, masked what had been happening to privatised enterprises in developing countries. In keeping with other prominent studies, the analysis is focused on operating and financial variables, while recognising that these will not provide a complete picture of the economic performance and contribution of privatised enterprises. Studies relying on financial variables alone for assessing enterprise performance have been criticised for using data that would tend to inflate the results in favour of privatisation. This analysis indicates that the use of financial data can just as easily reveal poor as well as good performance, and therefore, is a useful component for assessing the overall performance of privatised enterprises. In the next section the paper briefly reviews the relevant literature. Section three discusses the methods and data used in the analysis. Section four presents the main findings and analyses the results for each of the performance measures. Section five examines the correlation statistics and introduces factor analysis in order to more critically assess the relationship between performance indicators. The final section draws conclusions.
Manchester, UK, CRC Working Paper, No. 105, 30 pp.