The productivity effects of privatization: Longitudinal estimates from Hungary, Romania, Russia, and Ukraine

TitleThe productivity effects of privatization: Longitudinal estimates from Hungary, Romania, Russia, and Ukraine
Publication TypeJournal Article
AuthorsBrown, J. D., J. S. Earle, and A. Telegdy
Journal titleJournal of Political Economy
Year2006
Pages61 - 99
Volume114
Issue1
Abstract

This paper estimates the effect of privatization on multifactor productivity using comprehensive panel data on initially state-owned manufacturing firms in four economies. We exploit the data's longitudinal dimension to control for preprivatization selection and estimate long-run impacts. The estimates are robust to functional form but sensitive to selection controls. Our preferred random growth estimates imply positive multifactor productivity effects of 15 percent in Romania, 8 percent in Hungary, and 2 percent in Ukraine, but a -3 percent effect in Russia. The foreign privatization effect is larger (18-35 percent) in all countries. Positive domestic effects appear immediately in Hungary, Romania, and Ukraine and continue growing thereafter, but emerge only five years after privatization in Russia.

Languageeng
Notes

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Unit: 
Department of Economics and Business