Commission also suggests that Romanian SOEs have lower labor productivity than their private peers (EC 2015). In a study across the Central, Eastern, and Southeastern European (CESEE) region, IMF (2019) found that SOEs in Romania exhibited lower revenue per worker compared to POEs but had a more than 80 percent wage premium over POEs. These findings align with EC (2015), which indicatesthat despite being less productive, Romanian SOEs paid higher salaries than their POE peers. Further, OECD (2023) found that Romanian SOEs underperformed significantly in terms of sales and profitability when compared to POEs.

**Outside Romania, studies find that SOEs grow jobs faster but underperform POEs on several dimensions** . In a study across European countries, Szarzec, Dombi, and Matuszak (2021) found that SOEs are positively associated with employment growth, with the effect diminishing with  institutional quality. Cerdeiro and Ruane (2022) highlighted that Chinese SOEs  exhibit lower revenue productivity than POEs. Harrison et al. (2019) indicated that SOEs had significantly less profitability than POEs and even privatized SOEs exhibited slightly higher profitability than SOEs. The authors also found that SOEs were less innovative when compared to  former SOEs and POEs that were never state-owned ones.

**The literature on the SOE performance dimension has also focused on the differential performances between SOEs of different ownership degrees and control levels relative to POEs** . SOEs are not uniform. Some are majority owned, with 50 percent or more ownership stakes, and others are minority owned with different degrees of ownership stakes  less than 50 percent. While some SOEs are directly owned under the direct supervision of government agencies and line ministries, others are indirectly owned because they are subsidiaries of the directly owned SOEs. Yet, others are owned by national or central governments and others by subnational, municipal, or local governments. As such, SOEs under different ownership and control levels may face different governance structures, entrusted with distinct objectives, and may be differentially targeted for government support in ways that could generate differences in their measured performances relative to POEs. Jurzyk and Ruane (2021) assessed whether the productivity differential between listed SOEs and POEs in China varied by SOEs owned by the central government and those owned by local governments. Their results suggest that, despite differences in governance and incentives, central and local SOEs both exhibit a similar productivity gap of about 30 percent relative to POEs.

**Other studies have assessed whether SOEs get preferential treatment by receiving more state support through subsidies than POEs** . SOEs can benefit disproportionately from government subsidies because they need to compensate for their higher costs of meeting policy mandates. In China, a study by Harrison et al. (2019), using 1998-2013 data on medium and large firms, found that SOEs were 3 times more likely to receive government subsidies and other support, such as low interest rates on loans, than POEs.They also tended to receive larger values of subsidies compared to POEs. Even when SOEs are privatized, they tend to be favored more by government subsidies and support compared to POEs that were never state-owned. Former SOEs were twice more likely to receive subsidies and in larger values, than POEs that were never state-owned.

**Regarding the role of SOEs during economic downturns, recent literature analyzed whether SOEs acted as buffers during economic downturns** . SOEs and state-owned banks or other financial institutions (SOBs or SOFIs) can act as economic stabilizers in  economic crises by attenuating job losses and sustaining workers’ wages in ways that POEs **c** annot do. Even if governments during various crises aspired to stabilize demand, employment, and investment through state support to SOEs, the evidence on the effectiveness of SOEs in fulfilling those objectives is not clear cut (Beuselinck et al., 2017; Vitoria et al., 2020; Lazzarini and Musachio, 2018, IMF, 2019; Vagliasindi, 2022; Kopelman and Rosen, 2014, Jaslowitzer et al, 2018; Jie et al, 2021, Szarzec, Dombi, and Matuszak, 2021). IMF (2019) found mixed evidence across several

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