Privatization and the Rational Ownership Structure. Part 1. Privatization: the Problem of Efficiency
The paper considers the problem of public sector governance, aimed to rationalize the structure of ownership in an economy. The first part of the paper includes a brief overview of the theory of privatization. Arguments of supporters and opponents of privatization are compared with the results of privatization campaigns in developing countries as well as in developed ones, including their recent and past experience. The costs and possible benefits of privatization are analyzed, focusing on the current Russian conditions. The analysis suggests that these costs and benefits depend on the quality of state governance and the quality of market; the efficiency of privatization increases in both variables. Negative influence of privatization campaigns on both, enterprise efficiency and economic growth, is observed in developing countries more often than in developed ones. Thus, the decisions on privatization have to be considered in the context of a more general problem, that is of finding a rational property structure in an economy.