and scope of the database. Section 6 presents a set of facts of SOE performance and sectoral participation, using the BOS database. Finally, section 7 concludes.

# 2. Conceptual Framework

This section introduces the three criteria that are the foundation of the conceptual framework of the Global BOS database:(i) a harmonized definition of SOEs, (ii) an identification of direct and indirect state ownership linkages at the national and subnational levels across the corporate sector, and (iii) a classification of economic activities depending on their efficiency rationale.<sup>8</sup> Together, these three criteria guarantee data comparability across countries and sectors.

A caveat of previous academic literature and policy-related workstreams is the lack of congruence with respect to the definition of SOEs across countries and economic activities. Often, the analysis of SOEs is connected to a local legal definition of companies that according to the national legal forms are defined as state-owned companies. However, this legal definition can vary substantially across countries.<sup>9</sup> This hinders the analyses of SOE performance within markets and distorts the aggregate economic implications of state participation. Academic attempts to identify SOEs in a systematic manner and assess their footprint usually define SOEs as firms which the state directly owns and in which governments have a majority share-holding percentage (Freund & Sidhu, 2017; Harrison et al, 2019; among others). Institutions that carry out economic and development policy work do not have a consensus on the definition of state-ownership. For example, the OECD, through the Product Market Regulation Indicator, defines SOEs according to the level of control of national or subnational governments, but also considers cases in which the government has special voting powers (i.e. nominating board of directors).<sup>10</sup> In 2020, the IMF Fiscal Monitor considered state-owned firms as those with state participation as low as 20 percent and also relied on other criteria to define SOEs, such as national legal forms (IMF, 2020).

To resolve this lack of harmonization, we propose an economic definition to define a firm as an SOE based on the government’s control as well as their role in the market. That is, an entity is considered a stateowned enterprise for the purpose of the Global BOS database if it satisfies the following conditions:

- I. It is controlled by government units or by other public corporations, proxied by a level of direct or indirect (i.e., through subsidiaries) participation of above 10%;<sup>11</sup>

- II. It is recognized by law as a legal entity separate from its owners;<sup>12</sup>

- III. It can generate profit or other financial gain for its owners;<sup>13</sup>

> 8 This classification is described in further detail in Dall’Olio et. al. (2022).

> 9 For instance, in Indonesia the state-owned enterprises are denoted as two different legal forms controlled by the governments: Badan Usaha Milik Negara (national) and locally owned (Badan Usaha Milik Daerah). For instance, SOEs are defined in Azerbaijani as public interest entities (PIEs), and in Mozambique as public enterprises and shareholding companies (World Bank, 2016).

> 10 Even within different OECD workstreams, there is no harmonized definition. For example, an SOE survey conducted in 2015 denoted SOEs as corporate entities recognized by the national law in which only the central government exercised ownership and control (OECD, 2017), which differs from the criteria defined within the Product Market Regulation Indicator.

> 11 The WB SOE policy tracker revealed that during the COVID-19 pandemic firms with as low as 10% could indeed receive significant support visà-vis their full privately-owned competitors. For instance, Lufthansa with 14% participation of the government received one of the largest programs in the aviation industry with a loan for over € 9 billion.

> 12 In Poland, for instance, some municipal enterprises are registered as “municipal budget entities” ( _samorządowy zakład budżetowy_ ). These entities are legally separate from the local governments that control them, but they are not separate legal persons. In this case, the entities are not considered as SOEs following the definitions here.

> 13 It refers to the ability of the company to generate revenues and profits itself, but it does not limit the analysis to those actually reporting profits.

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