| By: |
J. David Brown (Heriot-Watt University and CEU Labor Project);
John S. Earle (W.E. Upjohn Institute for Employment Research and Central European University);
Almos Telegdy (Central European University and Institute of Economics of the Hungarian Academy of Sciences) |
| Abstract: |
We analyze the impact of privatization on multifactor productivity (MFP) using
long panel data for nearly the universe of initially state-owned manufacturing
firms in four economies. Controlling for firm and industry-year fixed effects
and employing a wide variety of measurement approaches, we estimate that
majority privatization raises MFP about 28 percent in Romania, 22 percent in
Hungary, and 3 percent in Ukraine, with some variation across specifications,
while in Russia it lowers it about 4 percent. Privatization to foreign rather
than domestic investors has a larger impact (about 44 percent) and is much
more consistent across countries. The positive effects emerge within a year in
Hungary, Romania, and Ukraine and continue to grow thereafter, but are still
ambiguous even after 5 years in Russia. Pre-privatization MFP exceeds that of
firms remaining state-owned in all countries, implying that cross-sectional
estimates overstate privatization effects. The patterns of the estimated
effects cast doubt on a number of explanations for "when privatization works." |
| Keywords: |
privatization, productivity, foreign ownership, Hungary, Romania, Russia, Ukraine, transition |
| JEL: |
D24 G34 L33 P31 |
| Date: |
2004–11 |
| URL: |
http://d.repec.org/n?u=RePEc:upj:weupjo:04-107&r=cis |