The Impact of Privatization (Industrial Economic Strategies for Europe)

Are resources allocated more efficiently through private ownership than through the public sector? The experiences of eleven newly privatised companies are examined to evaluate this hypothesis. With the Government's pro-privatization policies in place for over a decade, this is a prime time to evaluate theory versus reality. BOOK COVER......Page 1 HALF-TITLE......Page 2 TITLE......Page 4 COPYRIGHT......Page 5 CONTENTS......Page 6 FIGURES......Page 9 TABLES......Page 10 PREFACE......Page 12 ABBREVIATIONS......Page 14 INTRODUCTION......Page 16 PROPERTY RIGHTS, PUBLIC CHOICE AND INCOMPLETE CONTRACTS: AN AGENT-PRINCIPAL FRAMEWORK......Page 19 Ownership and competition......Page 21 Property rights......Page 23 Public choice, incomplete contracts and agency relationships......Page 24 Motivation......Page 27 The private capital market......Page 29 PRIVATISATION AND REGULATION......Page 33 CONCLUSION......Page 37 NOTES......Page 38 INTRODUCTION......Page 39 BRITISH AIRWAYS (BA)......Page 40 BRITOIL......Page 41 BRITISH GAS......Page 42 BRITISH AEROSPACE......Page 44 JAGUAR......Page 45 NATIONAL FREIGHT CORPORATION (NFC)......Page 46 ASSOCIATED BRITISH PORTS (ABP)......Page 47 BRITISH TELECOM (BT)......Page 48 NOTE......Page 49 INTRODUCTION......Page 50 ECONOMISTS AND PERFORMANCE MEASUREMENT......Page 51 Productivity......Page 56 Costs of production......Page 57 TESTING FOR THE IMPORTANCE OF OWNERSHIP......Page 58 THE COUNTERFACTUAL PROBLEM AND THE DATA SET......Page 61 NOTES......Page 64 INTRODUCTION......Page 66 INTERNATIONAL STUDIES......Page 67 UK STUDIES......Page 79 UK PRIVATISATION STUDIES......Page 81 NOTES......Page 88 INTRODUCTION......Page 90 LABOUR AND TOTAL FACTOR PRODUCTIVITY GROWTH......Page 92 CONTROLLING FOR NATIONAL PRODUCTIVITY TRENDS......Page 96 CONCLUSION......Page 100 NOTES......Page 101 INTRODUCTION......Page 102 RESULTS......Page 104 CONCLUSION......Page 111 NOTES......Page 112 INTRODUCTION......Page 113 DATA ENVELOPMENT ANALYSIS......Page 114 THE DATA......Page 116 The constant returns to scale model......Page 118 The variable returns model......Page 128 Incorporating technology and business cycle effects......Page 130 CONCLUSION......Page 131 NOTES......Page 133 INTRODUCTION......Page 135 HYPOTHESES AND METHOD......Page 136 Employment......Page 138 Income distribution and rates of return......Page 141 CONCLUSION......Page 146 NOTES......Page 149 INTRODUCTION......Page 150 THE INTERNAL ENVIRONMENT......Page 151 The rule book......Page 153 Formalised strategy formulation and implementation......Page 154 PRIVATISATION AND THE MANAGEMENT OF CHANGE......Page 155 Goals......Page 157 Management......Page 159 Employment and labour relations......Page 162 Organisational structure......Page 164 Nature and location of the business......Page 167 CONCLUSION......Page 170 NOTES......Page 174 INTRODUCTION......Page 175 British Airways (BA)......Page 176 Britoil......Page 177 British Steel......Page 178 British Aerospace......Page 179 Rolls-Royce......Page 180 British Telecom (BT)......Page 181 OVERALL VIEW......Page 182 NOTE......Page 187 ASSOCIATED BRITISH PORTS (ABP)......Page 188 BRITISH STEEL CORPORATION (BSC)......Page 189 ECONOMY/MANUFACTURING......Page 190 REFERENCES......Page 191 INDEX......Page 209 "Over the past decade economic policy in the UK and elsewhere has been guided by the belief that resources are used more efficiently in the private sector than under state ownership. Consequently, many formerly state-owned companies have been transferred to the private sector. After surveying the theoretical arguments for and against this hypothesis, this book examines the experience of eleven firms, including British Airways, Rolls-Royce and British Telecom. Various indicators are used to measure each firm's performance before and after privatisation to assess whether this policy has brought about improvements in efficiency." "The first four chapters provide background material for the empirical work that follows. Chapter 1 outlines the theoretical arguments for and against the idea that private ownership will be more efficient than state control. Chapter 2 provides brief histories of the eleven organisations studied and chapter 3 discusses how their performance can be measured. Chapter 4 reviews the literature on the relative efficiency of public and private ownership. Chapter 5 considers the impact of privatisation on each of the eleven firms' labour and total factor productivity growth. Chapter 6 performs a similar analysis using two standard accounting ratios (value-added and the rate of profit). Chapter 7 assesses the impact of privatisation on technical efficiency using data envelopment analysis. In chapter 8 the impact of ownership on employment, wage levels and the distribution of business income is considered. The penultimate chapter discusses the restructuring that has followed each company's move into the private sector, and the final chapter summarises the results."--BOOK JACKET

Are resources allocated more efficiently through private ownership than through the public sector? Encouraged by the Government's pro-privatization policies, in place for over a decade, many cities are experimenting with privatization of buildings and services in an attempt to improve efficiency and stave off mounting debt. Obviously, this is a prime time to evaluate theory versus reality. Improve Efficiency By Privatization is the first text to provide a detailed analysis of the impact of privatization on individual firms. In this unique volume, the experiences of eleven newly privatized companies are examined to evaluate the hypothesis that privatization improves efficiency.