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Lessons to be learnt from International Comparisons

Lessons to be learnt from International Comparisons. Jeremy Colman. Outline. Objectives of privatisation Privatisation methods and schemes Institutional and regulatory framework Economic dilemmas Conclusions. Objectives. To secure improved economic efficiency

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Lessons to be learnt from International Comparisons

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  1. Lessons to be learnt from International Comparisons Jeremy Colman

  2. Outline • Objectives of privatisation • Privatisation methods and schemes • Institutional and regulatory framework • Economic dilemmas • Conclusions

  3. Objectives • To secure improved economic efficiency • Rapid change of economic regime • To raise money and human resources for firms • To increase state income • Social acceptance

  4. Economic efficiency versus Social acceptability • Economic efficiency promotes welfare but… • Economic efficiency requires “redeployment of factors of production” = factory closures, dismissals, unemployment

  5. Economic efficiency versus State budgets 1 • Selling monopolies = high proceeds but • Selling monopolies = economic inefficiency

  6. Economic efficiency versus State budgets 2 • Quick sales = low proceeds + rapid gains in economic efficiency • Slow sales = (maybe) higher proceeds • NB probably not worthwhile spending state revenues on restructuring

  7. Privatisation Methods • “Traditional” • Direct sale • Trade sale by invitation • Public auction • Tender • Initial public offer

  8. Privatisation methods • “Non-traditional” • Sale to “insiders” • MBO/MEBO • Coupon/voucher

  9. Summary evaluation

  10. Institutional environment • Legal framework • Soft budgets • Soft banking

  11. Conclusions • No one privatisation method better than others on all counts • Insider methods not good for economic efficiency • Coupon systems not clearly advantageous • Banking reform and elimination of subsidies needed to come sooner • Outsider sales generate most efficiency but also greatest social dissatisfaction.

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