Enterprise Performance, Privatization and the Role of Ownership in Finland

Motasam Tatahi

doi:10.22610/jebs.v5i3.387

Abstract

In both economically developed and developing countries, privatisation, budget austerity measures and market liberalisations have become key aspects of structural reform programs in the last three decades. These three recommended policies were parts of strong revival of classical and newclassical school of thought since the middle of 70s. Such programs aim to achieve higher microeconomic efficiency and foster economic growth, whilst also aspiring to reduce public sector borrowing requirements through the elimination of unnecessary subsidies. For firms to achieve superior performance a change in ownership from public (state ownership) to private has been recommended as a vital condition. To assess the ownership role, the economic performances of private, public and mixed enterprises in Finland is compared through the use of factor analysis method. The extracted factors, using data of two years, 1998 and 2000, do not pick ownership as a key performance factor.

Highlights

Both developed and developing countries have progressively engaged in ambitious privatisation programs for several decades
Frydman et al (1997) reported improvement in corporate performance that was consistent with the results shown above, in the case of transition economies
For the last three decades, the characteristic of ownership has been at the centre of economic debates and polices all over the World

Summary

Introduction

Both developed and developing countries have progressively engaged in ambitious privatisation programs for several decades. The number of privatisation transactions has grown. From 2000 to 2007, the sale of state-owned assets reached $497.7 billion in OECD countries. To illustrate the relevance of this policy, table 1 shows how the change in European state-owned enterprises shares in GDP for the year 2006, and is grouped with income level in accordance with the OECD’s classification. Largest relative to size of domestic economy Country Amount (US$ bn.). Per cent of 2006 GDP France Slovak Republic Finland Czech Republic Germany

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Conclusion