The Pros and Cons of Privatisation in the Eyes of Russia, China and Vietnam
University of the Caribbean
Degree: MBA
Level: Master
Subject: ECONOMICS
Student ID: 12944
Student Name: Patrick NAMBAJIMANA
Topic: Examine the economic condition of Russia, China and Vietnam after opening up their market to the private sector. While privatization has been a successful venture in Vietnam and China, Russia was not able to reap benefits immediately. Discuss the pros and cons of privatization with regard to those counties.
Date of Assignment submission: 25th October 2012
Name of Instructor: Professor Syed Ahmed
INTRODUCTION
Privatization is one of the major economic phenomena in recent economic history. The extant evidence from privatizations in many developed and developing countries shows that privatization usually results in an increased productivity and positive effects on the society. The effect of privatization depends however on economic institutions in place, in particular on rule-of-law, competition, hard budget constraints, quality of governance and regulation. This presentation pays a special attention to the cases of Russia, Vietnam and China and show that their experience is consistent with the conventional wisdom once one accounts for an appropriate counterfactual.
In Russia (and some other CIS countries), privatization seems to have produced few benefits for the privatized firms or for society, whereas China has managed to pursue a reform package that has not so far included the mass privatization of state-owned enterprises and yet has produced very impressive results. We argue that in both cases–as well as in other controversial privatization examples such as Latin America–the outcomes can be explained within the conventional framework once one accounts for an appropriate counterfactual.
For a better tackle of the topic, some key terms need to be defined:
Market: is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.
Degree: MBA
Level: Master
Subject: ECONOMICS
Student ID: 12944
Student Name: Patrick NAMBAJIMANA
Topic: Examine the economic condition of Russia, China and Vietnam after opening up their market to the private sector. While privatization has been a successful venture in Vietnam and China, Russia was not able to reap benefits immediately. Discuss the pros and cons of privatization with regard to those counties.
Date of Assignment submission: 25th October 2012
Name of Instructor: Professor Syed Ahmed
INTRODUCTION
Privatization is one of the major economic phenomena in recent economic history. The extant evidence from privatizations in many developed and developing countries shows that privatization usually results in an increased productivity and positive effects on the society. The effect of privatization depends however on economic institutions in place, in particular on rule-of-law, competition, hard budget constraints, quality of governance and regulation. This presentation pays a special attention to the cases of Russia, Vietnam and China and show that their experience is consistent with the conventional wisdom once one accounts for an appropriate counterfactual.
In Russia (and some other CIS countries), privatization seems to have produced few benefits for the privatized firms or for society, whereas China has managed to pursue a reform package that has not so far included the mass privatization of state-owned enterprises and yet has produced very impressive results. We argue that in both cases–as well as in other controversial privatization examples such as Latin America–the outcomes can be explained within the conventional framework once one accounts for an appropriate counterfactual.
For a better tackle of the topic, some key terms need to be defined:
Market: is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.
References: 1. Boutchkova, Maria K. and William L. Megginson. 2000. “Privatization and the Rise of Global Capital Markets.” Financial Management 29: 31-76 2. Boycko, Maxim, Andrei Shleifer and Robert Vishny. 1995. Privatizing Russia. Cambridge: MIT Press. 3. Megginson, William L. 2005. The Financial Economics of Privatization (First edition, New York: Oxford University Press). 4. Syed Sohail Ahmed notes of economics. 5. Morris, David. "The Downside of Privatization." Journal of Commerce and Commercial. February 9, 1996. 6. ECONOMIC POLICY, April 1994. IMF, Vietnam-Reform and Stabilization, 1986-92, 1993 ---, IBRD, OECD, EBRD, the Economy of the USSR, 1990 7. www.answer.com.