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Objectives:
To provide a conceptual framework to relate the
observed differences in privatization outcomes
across countries to different political and
institutional settings.
To develop comprehensive
databases on the functioning of political
systems, on the partisan orientation of
government and privatization activity for a
comprehensive sample of established democracies
suitable to test empirically the predictions
developed in the theoretical part
Research Activity:
This workpackage will
build a theoretical model of electoral
participation and voting behaviour that explains
the links between policies and its citizens’
electoral decisions and a theoretical foundation
for the argument that stronger incentives are
present under proportional systems as opposed to
majoritarian ones to delay and eventually block
privatization and reform.
A joint group of
researchers in political science and economics
will deliver suitable measures for the working
of political institutions in developed and
transition economies.
A comprehensive database of
political institutions and political orientation
for a comprehensive sample of established
democracies and transition countries will be
then assembled using primary data on electoral
outcomes. A preliminary list of variables to be
included are (i) the degree of dis-proportionality
generated be electoral rules, (ii) the effective
number of parties, (iii) indicators on the type
of government, (iv) district size a nd
(v) electoral thresholds. This database will be
delivered at
The political datasets will
be used to test empirically (i) the role of
political institution in the timing and extent
of privatization and (ii) the role of the
privatization method in explaining the
likelihood of re-election of the incumbent
government. Duration analysis and GMM estimators
will be employed in a panel data setting.
Workpackage N. 3
Title:
Privatization and regulatory reform in the
Middle East and North Africa (MEDA) area
Objectives:
To examine the track record of different forms
of public ownership and control in MEDA
countries
To evaluate the determinants, methods and
outcomes of privatization in this area
Research Activity:
This workpackage will analyse
the contribution of State-owned Enterprises (SOEs)
to growth, macroeconomic policy,
competitiveness, and technological accumulation.
Then it will investigate why, how and by whom
were/are privatization policies initiated,
trying to explain differences across countries,
the importance of external pressures, including IMF conditionality.
This workpackage will study
the effect of privatization on fiscal revenues
(in terms of flows of sale proceeds, cuts in
subsidies, and increase in tax revenues), on
financial performance indicators before and
after the main changes were introduced, and on
the stakeholders such as consumers, employees.
This workpackage will
evaluate how privatization policies contributed
to the development of the local private sector
and of financial markets, to the improvement of
corporate governance and regulatory reform,
including in major factor and product/service
markets, and how they policies interacted with
efforts aimed at improving the public
administration system, the political system and
political culture (transparency, patronage,
etc.), and private law
This work package aims at
creating a comprehensive database covering the
evolution, the sectoral breakdown and the
methods of privatization processes, as well as
detailed information on number of transaction
and proceeds of the divestitures. The
methodology for data collection will draw on a
previous study OECD Development Centre
on privatization in sub-Saharan Africa (Berthélemy
et al. 2004). The information will be gathered
through questionnaires, various media sources,
as well as the most recent papers published on
the subjects.
Workpackage N. 4
Title: Public
vs. private ownership and control
Objectives:
To develop a theoretical
models analysing the trade-offs between private
and public ownership and control of corporations
To analyse empirically the
evolution of ownership and control structure of
a large sample of privatised firms in developed
economies, and to assess empirically the long
term effect of changes of ownership structure on
firm value.
To analyse the different
patterns of ownership and control as compared
with the level of divesting government (central,
intermediate, local), with special reference to
utilities and public services and taking into
account legal and statutory constraints and the
different incentives to privatise at the
central, intermediate (agencies,
state-controlled financial institutions), local
(regional, municipal, etc.) level.
Research Activity:
This workpackage will develop
a model to establish the “optimal” size of state
ownership according to the relevance of private
and public commitment problems, which in turn
depend upon on the notion of regulatory
governance, namely the institutional and
regulatory endowment of a given jurisdiction.
A multidisciplinary group of
legal scholars, political scientists and
economists will analyse constitutional
structures, statutory constraints, and golden
shares provisions to identify a list of
quantitative indicators to be used in the
empirical analysis.
This workpackage will then
assemble a comprehensive dataset using
ShareWorld, Global Access and primary sources
about the evolution of ultimate (i.e. direct and
indirect) ownership for a large sample of
privatised firms in OECD economies, possibly for
the 1996-2004 period, identifying the types of
ultimate owners (taking into account national
and sub-national levels), and about their
ownership and control rights in these companies.
These data will be used to test the empirical
predictions established by the theoretical
models.
This workpackage will develop
an empirical based on political economy argument
to analyse the different incentives and
constraints affecting privatizations at these
various levels, such as at the central
government level, at the local government level
(federal states, regions, or municipalities),
and at the company level, when State-owned
corporations divest or spin off their assets.
Workpackage N. 5
Title: Company
performance from transition to EU integration
Objectives
To explore how various
ownership and management structures affect
corporate performance in a main transition
country such as the Czech Republic.
To improve theoretical
framework to model firms’ performance in the
presence of endogeneity of ownership structures.
To identify specifications
suitable for the estimation of company
performance in a transition economy that has
been integrated into the European Union.
Research Activity:
In analysing the corporate
performance and firm efficiency, this
workpackage will:
- use panel data on a
complete population of medium and large firms
that went through the mass privatization in the
Czech Republic and that constitute the bulk of
the country’s economic activity,
- cover the period from the
end of privatization to today, and
- control for endogeneity of
ownership using a first-difference specification
together with instrumental variables from rare
data on pre-market initial conditions of these
firms.
A systematic analytical
framework for evaluating the performance effect
of post-privatization ownership will be
established to distinguish between instantaneous
and permanent effects of ownership changes, and
to use more detailed data on the extent of
ownership by specific types of owners.
Workpackage N. 6
Title: The
welfare effects of privatization on consumers
Objectives:
To study the welfare impact
on consumer wealth of privatization,
liberalisation and regulation of public
utilities under different policy regimes, with
special reference to services such as water
supply, gas, electricity and telecommunications.
To study the welfare impact
on of privatization on employees
Research Activity:
A first part of the
workpackage will analyze the change in
consumers’ welfare “with” and “without”
privatizations by means of the tools of applied
welfare economics. The crucial variables are the
prices, quantities and some characteristics of
the demand functions. In particular, a series of
welfare measure only base on aggregate
information can be used. These welfare measures
can then be used for the evaluation of the
welfare effects related to price variations in
privatised European public utilities.
A second part of the
workpackage aims to evaluate the level of
consumer satisfaction with privatization
policies, by assessing the privatization
discontent in European countries using the
Eurobarometer public opinion surveys. This
survey includes detailed questions about the
level of satisfaction of telephone services,
electricity, gas and water supply, postal and
public transport services, as well as
information about the characteristics of each
respondent. This analysis would serve as a
complement to the analysis of losers and gainers
of privatization using household expenditure
data sets.
A third part of the
workpackage will build long time series of
different measures of employment levels and
labour earnings using administrative data
normally used for annual publication on labour
earnings by industries in the United Kingdom
extending the data collection and analysis to
other large EU countries including France,
Italy, Spain and possibly Germany.
Workpackage N. 7
Title: The
fiscal effects of privatization
Objectives:
To consider the fiscal impact of privatization
on the current and the long-term budget and to
relate it with the incentives for government
policy by means of theoretical and empirical
analysis
Research Activity:
A first part of the
workpackage consists of a theoretical analysis
of privatization incentives for government
policy in an intertemporal context with special
emphasis on the role of budgetary institutions.
This analysis asks, which kind of budgetary
institutions will prevent policymakers from
exploiting short-term liquidity gains from
privatization in order to shift the burden of
current fiscal policy into the future.
A second part will consist
in an empirical investigation of the fiscal
consequences of privatization using panel data
for national governments and sub-national
governments. This part utilises a framework for
the analysis of fiscal adjustment originally
proposed by Bohn (1991) and applied to the case
of sub-national governments by Buettner and
Wildasin (2002), which will determine the time
path for each budget component in response to
privatization.
A subsequent analysis will
then investigate to what extent differences in
the incentives faced by policymakers can explain
revealed differences in the long-term fiscal
consequences of privatization. In particular,
the analysis will be concerned with the question
of whether specific rules are associated with
privatization efforts which favour short-run as
compared to long-run fiscal balance. The
empirical analysis will
consider privatization using panel data for
sub-national governments in the US, Germany,
and some other European countries. This is
complemented by an analysis of fiscal adjustment
in Europe at the national level.
Workpackage N. 8
Title: The stock
price performance of privatization-related
indexes
Objectives:
To construct several privatization-related indexes to measure the
(adjusted) stock market performance of listed
privatised firms in the EU
To analyse the risk and return characteristics
of these indexes using multifactor analysis
To identify – if any - an
undiversifiable risk factor associated with the
residual influence of the State in the economic
system.
Research Activity:
This
workpackage will develop a series of
(capitalisation weighted) financial indexes,
where the constituents are the all stocks of the
privatised companies of the enlarged European
Union, grouped by regions and sectors, and will
then assemble a dataset with daily data on total
return of these indexes, respective benchmarks
and control variables for the period 1995-2005.
These data will be used to
estimate the 4-factor model. The four factors to
be included are: (i) the excess return on a
broad market portfolio; (ii) the difference
between the return on a portfolio of small
capitalisation stocks and on a portfolio of
large capitalisation stocks (SMB); (iii) the
difference between the return on a portfolio of
high book-to-market stocks (“value firms”) and
on a portfolio of low book-to-market stocks
(“growth firms”). The residual performance
measures will be studied to assess the effect of
specific features of companies such as their
historical function, their industry, the form of
privatization, or the evolution of political
demands on their activities since privatization
Workpackage N. 9
Title: Expert
interviews and targeted surveys
Objectives:
To develop
a joint / harmonised
interviewing and survey methodology to be
implemented in at least the 5 countries - Czech
Republic, Germany, Italy, Netherlands, Spain –
represented in the consortium on privatization
choices and outcomes as perceived by the most
relevant stakeholders
Research
Activity:
This workpackage aims at
generating comparable data and information on
privatization in a number of European countries.
This will be an important asset for the project,
as it helps to analyse where and how
privatization policies are conducted, and to
assess the impact of various forms of
privatization and liberalisation on competition,
growth, employment and gender as well as on
various stakeholders and sections of the
population in different national contexts. For
that purpose a joint / harmonised interviewing
and survey methodology to be implemented in
several European countries. This will not only
be beneficial for data and other information
gathering it also will facilitate comparisons
across industries and countries. It will provide
a scope for each country team to incorporate
questions which will be asked in all considered
countries and various sectors. By this approach
cross-country and cross-sectoral
multidisciplinary comparisons will be possible
on a systematic scale.
Preliminary target groups for
the interviews and surveys are:
·
Privatised /
liberalised service providers (of selected
sectors)
·
Linked
(forward, backward) enterprises
·
Representatives
of relevant municipalities or other communal
organisations
·
Representatives
of relevant consumer and labour organisations
·
Other relevant
public and private stakeholders or key
informants
The interviews and surveys
will complement other attempts to obtain data on
attitudes, motivations, interests and
stakeholder judgements. They will be composed of
a standardised (pre-structured) part to permit
comparison between sectors and countries and a
non standardised part (in-depth interviews) to
take care of different economic, political and
institutional contexts and of information which
can not easily be gained otherwise (e.g. on
gender issues). Organisation and implementation
in each country will be under the supervision of
the country specific research team. The IFO
Institute will take care for the development of
a joint concept and coordinated methodological
approach.
Workpackage N. 10
Title: Making
privatization deliver
Objectives:
To
identify using the results of the survey
developed in WP9 and the results obtained from
the research WPs policy recommendations for
successful implementation of privatization
policies, with special reference to the enlarged EU and MEDA countries
To
identify the most appropriate complementary
policies in order to making privatization
deliver the desired outcomes with special
reference to corporate governance,
liberalisation, and financial and economic
regulation.
Research Activity:
Analysis and cataloguing of
the specific policy issues and policy
recommendations raised in the WPs (WP2 on
electoral rules and constitutional reform; WP3
on liberalisation and regulation in MEDA region;
WP 4 and 5 on company law, takeover regulation,
federalism and devolution of political decision
making; WP 6 on liberalisation and regulation in
Services of General Interest (SGI) in the
European Union; WP7 on fiscal rules and Eurostat
principles; WP8 on financial services
regulation)
Study of the relevant legal
documents of the European countries involved in
the project and European Community law in order
to identify possible interference and
compatibility between the policy recommendation
and the existing legislation at the national,
sub- and super- national level
Analysis of regulation by
organisational type (public entrepreneurial
bodies, qualified public holding joint-stock
companies, common law joint-stock companies,
etc.) with specific attention to deviations from
standard rules of corporate governance.
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