Privatization in Developing Countries: An Analysis of the Performance of Newly Privatized Firms
Author: Narjess Boubakri and Jean-Claude Cosset Date: 11/1/1998 (PDF, 200KB)
This Note reports on a study of the financial and operating performance of a large sample of newly privatized firms drawn from a wide set of developing countries. Studies of privatization in industrial countries have reported very positive results in firms' performance. But few studies have looked at results in developing countries, where privatization efforts tend to be frustrated by thin financial markets, weak regulatory capacity, a large public sector, and a lack of entrepreneurs and good managers. The study reviewed here shows significant increases in profitability, operating efficiency, capital spending, output, and employment. But privatization yields the greatest benefits in countries with higher per capita income.