Article

Privatization Methods and Economic Growth in Transition Economies

04/2004;
Source: RePEc

ABSTRACT

We investigate, using dynamic panel data techniques, the impact of differences in privatization methods, and in private sector and capital market development, on economic growth in transition economies. Mass privatization is found to be the only privatization method to have had a significant positive effect on growth. Stock market development has also had a significant positive impact. Our analysis suggests that in economies with underdeveloped capital markets, the matching of owners to firms under full privatization will be inefficient. This finding has important implications for current privatization policy in developing economies.

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    • "This is probably due to the fact that in most developed economies the share of the private sector in GDP does not vary to a great extent. Bennett [5] examined the effects of PSD on economic performance, using a panel data on 26 transition economies for the period (1991-2003). The methodology was aimed at examining the effect of growth in factor inputs (capital market and private sector development) on GDP growth. "

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    • "The EBRD Transition Report series contain the latest information on the countries in transition. The data offered by this prominent organization is based on a wide network of sources obtained from national and international authorities (Bennett et al., 2004a, b; Zinnes et al., 2001). EBRD tracks reforms and assesses the overall process of transition "

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    • "The privatization processes due to existing theory and lack of practice, triggered three basic methods of privatization depending on the country, institutional and intellectual environment (Bennett, 2004a, 2004b) : 1. MASS privatization -firms sold at a zero (or nominal) price 2. FULL privatization -firms sold to outsiders for positive prices 3. MIXED privatization -manager-employee buyouts (MEBOs), leased buyouts and all other cases. "
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