State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly
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Summary:
State-owned enterprises (SOEs) play an important role in Emerging Europe’s economies, notably in the energy and transport sectors. Based on a new firm-level dataset, this paper reviews the SOE landscape, assesses SOE performance across countries and vis-à-vis private firms, and evaluates recent SOE governance reform experience in 11 Emerging European countries, as well as Sweden as a benchmark. Profitability and efficiency of resource allocation of SOEs lag those of private firms in most sectors, with substantial cross-country variation. Poor SOE performance raises three main risks: large and risky contingent liabilities could stretch public finances; sizeable state ownership of banks coupled with poor governance could threaten financial stability; and negative productivity spillovers could affect the economy at large. SOE governance frameworks are partly weak and should be strengthened along three lines: fleshing out a consistent ownership policy; giving teeth to financial oversight; and making SOE boards more professional.
Series:
Working Paper No. 2017/221
Subject:
Contingent liabilities Economic sectors Energy sector Production Productivity Public enterprises Public financial management (PFM) Services sector
English
Publication Date:
October 30, 2017
ISBN/ISSN:
9781484315163/1018-5941
Stock No:
WPIEA2017221
Pages:
27
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