an empirical analysis of state and private sector provision of water services in africa under pressure from donor agencies and international financial institutions such as the world bank some developing countries have experimented with the privatization of water services this article reviews the econometric evidence on the effects of water privatization in developing economies and presents new results using statistical data envelopment analysis and stochastic cost frontier techniques and data from africa the analysis fails to show evidence of better performance by private utilities than by state owned utilities among the reasons why water privatization could prove problematic in lower income economies are the technology of water provision and the nature of the product transaction costs and regulatory weaknesses

privatisation in developing countries a review of the evidence and the policy lessons privatisation is widely promoted as a means of improving economic performance in developing countries however the policy remains controversial and the relative roles of ownership and other structural changes such as competition and regulation in promoting economic performance remain uncertain this article reviews the main empirical evidence on the impact of privatisation on economic performance in developing economies the evidence suggests that if privatisation is to improve performance over the longer term it needs to be complemented by policies that promote competition and effective state regulation and that privatisation works best in developing countries when it is integrated into a broader process of structural reform

semi targeted all pay auctions a partial exclusion principle abstract this paper studies the effects of a specific affirmative action policy in complete information all pay auctions when players differ in ability the contest organizer splits the overall prize of the competition into a targeted and an untargeted prize the targeted prize is exclusively for disadvantaged low ability agents and excludes advantaged agents partially from the overall prize we consider a setting with one high ability and two low ability contestants and fully characterize equilibrium assuming that the contest organizer aims to maximize expected total effort we show that i almost any targeted prize is preferable to a standard all pay auction without targeted prize ii the exclusion principle baye et al 1993 can be implemented by a wide range of sufficiently large targeted prizes and iii partial exclusion by means of an appropriately chosen targeted prize benefits the organizer more than complete exclusion we also discuss the robustness of our results in settings with more than three agents

privatization in developing countries a review of the issues abstract the theory and early experience of privatization in developing countries are reviewed privatization has been spurred by widespread dissatisfaction with the performance of public enterprises and the need to cut government expenditures unless it is accompanied by liberalization measures privatization of public enterprises is unlikely to result in significant gains in economic efficiency the sequencing of privatization and liberalization reforms will often determine their impact on efficiency but the correct order of implementation is not clear political opposition to privatization is likely to be limited to the state bureaucracy which will often be able to mobilize in order to limit the impact of reforms early implementation experiences suggest technical difficulties are as constraining as political factors

how different is the efficiency of public and private water companies in asia several studies have compared the efficiency of publicly and privately owned water utilities and reached conflicting conclusions on the impact of ownership on efficiency this article provides further evidence by estimating a stochastic cost frontier for a sample of asian and pacific regional water companies the results show that efficiency is not significantly different in private companies than in public ones

optimal crowdsourcing contests abstract we study the design and approximation of optimal crowdsourcing contests crowdsourcing contests can be modeled as all pay auctions because entrants must exert effort up front to enter unlike all pay auctions where a usual design objective would be to maximize revenue in crowdsourcing contests the principal only benefits from the submission with the highest quality we give a theory for optimal crowdsourcing contests that mirrors the theory of optimal auction design the optimal crowdsourcing contest is a virtual valuation optimizer the virtual valuation function depends on the distribution of contestant skills and the number of contestants we also compare crowdsourcing contests with more conventional means of procurement in this comparison crowdsourcing contests are relatively disadvantaged because the effort of losing contestants is wasted we show that the total wasted effort is at most the maximum effort which implies that crowdsourcing contests are a 2 approximation to an idealized model of conventional procurement

toward a theory of regulation for developing countries following jean jacques laffont s lead the efficient operation and expansion of infrastructures in developing countries is crucial for growth and poverty reduction however recent reforms aimed at improving the performance of these sectors have had limited success evidence suggests that in many instances this was because the traditional regulatory theory relied on by policymakers was not suitable for the institutional context in developing countries this article surveys more recent theoretical work focusing on problems with regulation in these countries at the heart of the survey is the work of jean jacques laffont who in the last decade of his life set about developing a theoretical framework for regulation in developing countries we consider the implications of his work which focused on the key institutional limitations faced in developing countries we then discuss where experience suggests that there are important omissions from this modeling bringing in extensions and alternative approaches pursued by other authors we conclude by summarizing the key ways in which regulatory policy will be different when institutions are weak overall we find that an understanding of the institutional context and its implications are crucial when designing a regulatory framework for developing countries

state divestiture as a policy instrument in developing countries abstract reducing the size and role of the public sector in developing countries and emphasizing prices and markets as allocative mechanisms has led to increased privatization measures of which divestiture has been the most common variant the paper examines this experience and indicates that ownership transfer is neither a necessary nor sufficient condition for achieving more efficient use of resources in the design of divestiture the weighting given to enhancing freedom of entry and intensity of competition remains critical at the same time the paper notes the existence of multiple constraints including profitability and capital market limitations that continue to impede the implementation of divestiture measures the conditions for divestiture to be both appropriate and successful are shown to be restrictive

privatization and employment a study of the jute industry in bangladesh this paper analyzes the effect of privatization upon employment in the bangladeshi jute textile industry privatization was partia and the selection of mills which were privatized was not based on current economic performance this provides us with a panel data set which permits reliable estimates of the effects of ownership on employment and output privatization has reduced employment of all categories of permanent workers significantly but the extent of employment reduction has been substantially greater among clerical workers and managers as compared to manual workers this implies that public sector excess employment benefited white collar workers who were both better off and better educated and suggests that public sector behaviour was clientelist rather than welfarist

a macro micro analysis of the effects of electricity reform in senegal on poverty and distribution abstract this paper uses a computable general equilibrium cge macro micro model to explore the distributional effects of price reform in the electricity sector of senegal in the first part of the paper we analyse the distribution of electricity in senegal by income quintiles between 1995 and 2001 the analysis demonstrates that poor and rural households are not the main beneficiaries of the expanded network the results of the cge model show that direct price effects are weaker than general equilibrium effects on poverty and inequality moreover compensatory policies tested can help attenuate some adverse effects

optimal prize rationing strategy in all pay contests with incomplete information abstract a contest organizer e g a government regulatory agency is endowed with the capacity to provide unlimited homogeneous prizes e g medals that he can use to incentivize contestants to exert productive effort in an all pay auction with incomplete information each agent at most wins one prize we study the optimal number of prizes the organizer should grant in order to induce maximal expected total effort or expected highest effort from agents both are single peaked under mild regularity conditions when players abilities follow a family of beta distributions expected highest effort maximization requires a smaller set of prizes to be awarded for both goals the optimal number of prizes weakly increases when the pool of contestants expands or contestant quality improves

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

privatization in rent seeking societies abstract four latin american countries have devoted particular attention though not equal action to privatization policies the implementation of which has shed considerable light on the dynamics of rent seeking societies the fact that democratization in some form is also underway in each of the four has intensified the interplay of forces that shape the implementation of privatization programs the experiences of mexico and chile in particular demonstrate how important it may be to privatize the private sector by reforming macroeconomic policies and opening the economy to external competition before or at least concurrently with tackling the privatization of the public sector the obstructive force of rent seeking behavior is shown most clearly in the argentine case while the brazilian experience is useful along with that of mexico as a reminder that rent seeking dynamics are not necessarily incompatible with structural transformation and high rates of growth

testing the limits of privatization argentine railroads abstract just how far can privatization be pushed and with what consequences based on a study of argentine railroads this paper concludes that even large unprofitable firms in developing countries faced with market failures can be privatized but the gains from doing so depend on how badly the state enterprise was performing to begin with and the potential for introducing competition in the market and for the market the broader lesson is that when both market failures and government failures are present a public private solution is preferable to a purely private or a purely public solution privatization is not a panacea but potentially a palliative when it comes to reducing subsidies or coping with regulatory failures

disclosure policy in a multi prize all pay auction with stochastic abilities this paper investigates whether a contest organizer should disclose private information about bidders abilities in a multi prize all pay auction bidders abilities are randomly distributed and observed by the contest organizer the organizer decides whether to disclose this information publicly we find that concealing the information elicits higher expected total effort regardless of the distribution of abilities in addition we find that the rent dissipation rate of the contest does not depend on the disclosure policy

the benefits of privatization evidence from mexico critics of privatization often argue that its benefits come at a high cost to society the authors test the validity of this criticism for mexico s privatization program one of the world s largest case by case programs assessing the performance of newly privatized firms in such areas as profitability and efficiency they find that these firms quickly close the gap with their peers in the private sector their findings suggest that the firms profit gains come from productivity gains 52 percent layoffs 33 percent and higher prices 15 percent

privatization of electricity distribution in the northeast of brazil the good the bad the ugly or the naive this paper analyzes the evolution of five electricity distribution companies in the northeast of brazil using technical and financial indicators three privatized and two public firms were analyzed between 1997 and 2008 the financial indicators are used as proxies for the capacity of the business to generate value for shareholders while the technical indicators are used as proxies for service quality provided to consumers we observed that the privatized firms had their financial indicators improved after privatization increasing the value of the firm for the shareholders however there is no evidence that privatization affected the quality of service provided to consumers

state owned and privately owned firms an empirical analysis of profitability leverage and labor intensity for some it is an article of faith that governmentowned firms must be less efficient or at least less profitable than privately owned firms maxim boycko et al 1996 argue that politicians cause government owned firms to employ excess labor inputs anne o krueger 1990 suggests that such firms may be pressured to hire politically connected people rather than those best qualified to perform desired tasks more generally government owned firms are thought to forgo maximum profit in the pursuit of social and political objectives such as wealth redistribution in addition the residual cash flow claims of these firms are not readily transferable like the shares of a private corporation this impairs residual claimant incentives to monitor managers and ultimately degrades firm performance as a consequence one expects government owned firms to be technically less efficient and therefore less profitable than private firms the implication is that in competitive markets without significant externalities private ownership is the superior organizational form the view that government firms are inherently less efficient than private ones however remains controversial among economists john vickers and george yarrow 1991 among others point out that agency problems arise in private firms as well as public ones in most large private corporations managers own little of the stock because monitoring managers is costly a divergence arises between their objectives and those of private shareholders private shareholders typically hold a small stake in any one firm and it may not pay any shareholder to bear the cost of monitoring management it follows from this discussion that whether government firms are more or less efficient than private firms is primarily an empirical issue to date the body of empirical evidence is mixed in this paper we report further empirical evidence on the relative efficiency of public and private enterprises we build on previous work by studying larger samples over longer time periods and by allowing for additional factors that influence firm performance in particular our analysis controls for time series variation in the general level of economic activity that may otherwise confound performance comparisons between government and private firms 2 we approach the issue in two different ways first using accounting numbers we conduct a large sample cross sectional comparison of government owned and privately owned corporations this comparison is similar in design to that of boardman and vining 1989 but our sample is three times the size of theirs and includes three

the rip tide of privatization lessons from chile abstract chile is one of the rare exceptions where the voluble enthusiasm for privatization has been put into effect of the 500 companies that were under state ownership in the early 1970s only 19 remained under public control at the end of the decade moreover a land reform which had affected 43 of the country s cultivable area was rolled back by almost 40 privatization indisputably increased the economic power of a number of conglomerates and fostered the concentration of assets however the complexity of the liberalization package that accompanied privatization makes it difficult to establish strict causality for the economic collapse that followed in the early 1980s the chilean experience with privatization reveals some interesting lessons that other countries may wish to consider

the optimal allocation of prizes in contests we study a contest with multiple not necessarily equal prizes contestants have private information about an ability parameter that affects their costs of bidding the contestant with the highest bid wins the first prize the contestant with the second highest bid wins the second prize and so on until all the prizes are allocated all contestants incur their respective costs of bidding the contest s designer maximizes the expected sum of bids our main results are 1 we display bidding equlibria for any number of contestants having linear convex or concave cost functions and for any distribution of abilities 2 if the cost functions are linear or concave then no matter what the distribution of abilities is it is optimal for the designer to allocate the entire prize sum to a single first prize 3 we give a necessary and sufficient conditions ensuring that several prizes are optimal if contestants have a convex cost function

privatization and economic growth an empirical investigation from a sample of developing market economies this paper explores the economic determinants of privatization programmes and the macroeconomic impact of this institutional reform on the growth rate of the gdp a sample of thirty five developing market economies is considered over the 1988 92 period probit and tobit models are used to identify the determinants of successful privatization programmes then regressions are run where probabilities probit and expected values tobit are successively included as additional regressors beside the potential influence of other economic policy variables a significant positive effect is highlighted giving evidence of the importance of divestiture the economic effect is found to be stronger when this institutional reform took place in industry or infrastructure

privatization technical efficiency and welfare consequences the case of the cote d ivoire electricity company cie abstract in 1990 cote d ivoire privatized the management of its electric power company lease contracting in this paper we are interested in identifying the economic effect of this institutional change by estimating a stochastic production frontier we have found that productive efficiency improved after privatization thanks to organizational innovations total factor productivity gains have been closely associated with a cost reduction strategy the way these gains have been distributed in a monopoly context suggests that consumers have been the main beneficiaries through a significant decrease of the relative price of electricity

the pitfalls of water privatization failure and reform in malaysia summary this paper examines why private participation in infrastructure ppi in water continues to be promoted despite poor results in developing countries it argues that the main characteristics of infrastructure discourage private investment and necessitate state subsidies which dilute private risks and incentives and facilitate rent seeking as a result ppi is characterized by public financing selective private investments and inconclusive efficiency gains this is reflected globally and in malaysia where ppi continues to be promoted because it provides captive rents the political factors that drive ppi invariably compromise institutional solutions as malaysia s water sector reforms illustrate

infrastructure public private partnerships in the developing world lessons from recent experience abstractseeking to address inefficient and costly infrastructure delivery governments over the past two decades have turned to public private partnerships ppps to build and operate infrastructure the key characteristic of ppps is the outsourcing and bundling of project delivery components for example design build finance operate structured to incentivise the builder operator to incorporate long term operating cost considerations in the design and construction phases of a project and reduce coordination costs this article reviews the benefits and drawbacks of ppps and the experience to date focusing in particular on developing economies relative to traditional procurement ppps are complex and require governments to anticipate and plan for contingencies and conduct monitoring and enforcement of long term contracts we argue that institutional capacity is a key determinant of ppp success and in mitigating potentially welfare reducing contract renegotiations evident in the latin american exp

an econometric analysis of telecom competition privatization and regulation in africa and latin america this paper explores the effects of privatization competition and regulation on telecommunications performance in 30 african and latin american countries from 1984 through 1997 fixed effects regressions reveal that competition measured by mobile operators not owned by the incumbent is correlated with increases in the per capita number of mainlines payphones and connection capacity and with decreases in the price of local calls privatization combined with an independent regulator is positively correlated with telecom performance measures privatization alone however is associated with few benefits and is negatively correlated with connection capacity

when does privatization work the impact of private ownership on corporate performance in the transition economies this paper compares the performance of privatized and state firms in the transition economies of central europe while controlling for various forms of selection bias it argues that privatization has different effects depending on the types of owners to whom it gives control in particular privatization to outsider but not insider owners has significant performance effects where privatization is effective the effect on revenue performance is very pronounced but there is no comparable effect on cost reduction overlooking the strong revenue effect of privatization to outsider owners leads to a substantial overstatement of potential employment losses from postprivatization restructuring

effects of environmental regulation on foreign and domestic plant births is there a home field advantage abstract whether environmental regulations alter capital flows remains a hotly debated issue this paper uses county level data to examine the location decisions of domestic and foreign firms in a single empirical model and tests for asymmetries by firm origin in the degree to which capital flows are influenced by environmental standards we find that while domestic firms are influenced by environmental regulations foreign firms are not since the benefits of foreign investment are well documented foreign plants typically provide more jobs and increase local wages by more than domestic plants this result suggests a double dividend is available foreign plants provide an economic stimulus and are not unduly influenced by environmental protections

when less is more rationing and rent dissipation in stochastic contests this paper shows how to maximize revenue when a contest is noisy we consider a case where two or more contestants bid for a prize in a stochastic contest where all bidders value the prize equally we show that whenever a tullock contest yields under dissipation the auctioneer s revenue can be increased by optimally fixing the number of tickets in particular in a stochastic contest with proportional probabilities it is possible to obtain almost full rent dissipation we test this hypothesis with a laboratory experiment the results indicate that as predicted revenue is significantly higher in a lottery with rationing than in a standard lottery on the other hand an alternative rationing mechanism that does not limit total expenditures fails to increase revenue relative to a standard lottery

the financial and operating performance of privatized firms during the 1990s this study compares the pre and postprivatization financial and operating performance of 85 companies from 28 industrialized countries that were privatized through public share offerings for the period from 1990 through 1996 we document significant increases in profitability output operating efficiency and dividend payments and significant decreases in leverage ratios for our full sample of firms after privatization and for most subsamples examined capital expenditures increase significantly in absolute terms but not relative to sales employment declines but insignificantly combined with results from two previous directly comparable studies these findings strongly suggest that privatization yields significant performance improvements during the past two decades the privatization of state owned enterprises has moved from being a radical almost desperate policy initiative of the thatcher government in britain to being an accepted economic policy for governments of all ideological stripes according to gibbon 1998 860 billion has been raised by governments worldwide through privatizations with the bulk of this total coming since 1987 and at least one commentator roche 1996 predicts that no less than 6 trillion will be raised through privatizations over the next two decades in 1997 alone sales of public enterprises totaled a record 161 billion worldwide with more than 110 billion of the total coming during the second half of the year and 1998 s total of almost 140 billion indicates that the pace shows no sign of slackening as we approach a new millennium

a theory of privatisation public enterprises around the world have proved to be highly inefficient primarily because they pursue strategies such as excess employment that satisfy the political objectives of politicians who control them privatization of public enterprises can raise the cost to politicians of influencing them since subsidies to private firms necessary to force them to remain inefficient are politically harder to sustain than wasted profits of the state firms in this way privatization leads to efficient restructuring of firms moreover privatization is more effective when combined with a tight monetary policy and when the new owners of firms are profit maximizing investors rather than their employees or even managers copyright 1996 by royal economic society

the effort maximizing contest with heterogeneous prizes we establish the effort maximizing rule of allocating heterogeneous prizes when contestants privately observe their effort efficiencies with ex ante symmetric players and increasing virtual effort efficiency an all pay auction maximizes the total expected effort

state and development the need for a reappraisal of the current literature this essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state it refers to a broader range of development goals including the structural transformation of the economy and focuses on problems like the resolution of coordination failures and collective action problems the conflicting issues of commitment and accountability and the need for balancing the trade offs they generate some ingredients of state capacity and political coalition building usually missed in the literature the possible importance of rent sharing in a political equilibrium the advantages and problems of political centralization and decentralization and the multidimensionality of state functions that may not be addressed by markets or private firms

characteristics of privatization evidence from developed less developed and former communist countries a privatization wave has swept the world starting in the u k in the early 1980s and then progressing to other developed and less developed nations this study examines how the country characteristics for the formerly state owned enterprises relate to the nature of the privatization deal and the strategy of the acquiring firm in particular this paper examines how country characteristics affect government privatization policies and in turn firm strategy results indicate that there are differences with respect to the characteristics of privatization and government policies that translate into differences in firm strategy in former communist less developed and developed countries

private sector participation and performance of urban water utilities in china abstractin the early 1990s china began opening its urban water sector to nonstate capital to meet increasing urban water demand by 2007 more than 30 of large and medium urban water utilities had attracted private sector participation psp of which two thirds have a majority of nonstate shareholders to understand the factors that drive psp in urban water supply and to answer the key policy question of how psp has affected water utility performance we assemble and analyze a unique data set consisting of 208 urban water utilities servicing more than 300 million urban residents from 1998 to 2007 we find that a utility s profitability and liability level and a host city s road infrastructure in the prior year play important roles in driving private investors both to enter and to withdraw from the sector it is further found that psp utilities and mainly those with majority nonstate shareholders have made substantial cost savings through employment downsizing and cutting managerial expenses which le

the financial and operating performance of newly privatized firms evidence from developing countries this paper examines the change in the financial and operating performance of 79 companies from 21 developing countries that experienced full or partial privatization during the period from 1980 to 1992 we use accounting performance measures adjusted for market effects in addition to unadjusted accounting performance measures both unadjusted and market adjusted results show significant increases in profitability operating efficiency capital investment spending output employment level and dividends we also find a decline in leverage following privatization but this change is significant only for unadjusted leverage ratios our results are generally robust when we partition our data into various subsamples

privatization and efficiency differentiating ownership effects from political organizational and dynamic effects this paper argues that the private public ownership factor should be differentiated from other factors that also influence the effect of privatization on efficiency this is empirically confirmed in a longitudinal study of 24 spanish firms for which several political and organizational factors are found to influence the estimated effects of privatization on efficiency the analysis of the timing of the effects reveals a strong significance for post privatization years 5 6 negative and 7 8 positive this suggests that the negative effect of these factors is transitional being eventually offset by the positive effects of the change to private ownership 2000 elsevier science b v all rights reserved jel classification l33

bureaucrats in business chinese style the lessons of market reform and state entrepreneurialism in the people s republic of china in the 1990s parts of the state bureaucracy in china have been setting up new profit seeking risk taking businesses some of these businesses are entrepreneurial rather than rent seeking and are an unplanned and unanticipated development in china s market oriented economic reforms what are the lessons of this phenomenon for the developing world state entrepreneurialism may create problems such as reduced government control over departmental finance loss of state assets and uneven provision of services it is nevertheless an innovative solution to the politically difficult problem of bureaucratic restructuring and confounds the development orthodoxy fostered by neoliberalism that states will resist market reform it also demonstrates that to understand fully the politics of market reform we must research the activities of subcentral state bureaucrats as well as central leaders and policymakers

an analysis of the war of attrition and the all pay auction we study the war of attrition and the all pay auction when players signals are affiliated and symmetrically distributed we a find sufficient conditions for the existence of symmetric monotonic equilibrium bidding strategies and b examine the performance of these auction forms in terms of the expected revenue accruing to the seller under our conditions the war of attrition raises greater expected revenue than all other known sealed bid auction forms journal of economic literature classification numbers d44 d82 1997 academic press

the impact of regulation on economic growth in developing countries a cross country analysis summary the role of an effective regulatory regime in promoting economic growth and development has generated considerable interest among researchers and practitioners in recent years in particular building effective regulatory structures in developing countries is not simply an issue of the technical design of the most appropriate regulatory instruments it is also concerned with the quality of supporting regulatory institutions and capacity this paper explores the role of state regulation using an econometric model of the impact of regulation on growth the results based on two different techniques of estimation suggest a strong causal link between regulatory quality and economic performance