Public sector reform in emerging economies: Does privatisation matter?

Abstract

BACKGROUND: Privatisation policies have aroused enormous interest in both developed and developing countries. Previous research findings reveal that privately owned companies are more efficient and profitable than comparable state owned enterprises (SOEs). Moreover, it has been argued that these reforms would be even more effective if accompanied by privatisation. As a result, privatisation that aims to enhance the performance of SOEs has been regarded as one of the key features of emerging economies. OBJECTIVE: The purpose of this study is to examine the extent to which the benefits of privatisation have been achieved in emerging economies. In particular, the study assesses the developmental changes and improvements in the performance of privatised companies in Egypt as an emerging economy. METHODS: This study was carried out in three stages. First, it was felt necessary to obtain a broad overview of the effect of the Egyptian privatisation programme on the performance of the privatised companies by analyzing secondary data of privatized companies. Second, in an attempt to obtain a more precise understanding of the impact of privatisation, an online questionnaire survey was distributed to the finance managers of 56 privatised companies during the period September 2020 to January 2021. Third, a series of semi-structured interviews were undertaken with senior managers in 8 different privatised companies. The purpose of these interviews was to supplement and amplify the themes and issues that had arisen from stages I and II of the research. RESULTS: The findings reveal that privatisation improved the process of accountability within the company and efficiency gains is the most important advantage of privatisation. CONCLUSIONS: The study concludes that privatisation leads to more difficulty in safeguarding the interests of the weaker groups in society.