Funding Economic Transition in China: The Privatization Option

An American specialist on the economy of China examines whether gradual and partial privatization remains a viable option for the future, or whether rapid privatization of remaining state-owned enterprises is now necessary. The paper presents estimates indicating that rising expenditures stemming from changes in the country's economy, demographics, and technology will increase fiscal pressure on government revenues, resulting in fiscal shortfalls and exposing other vulnerabilities. Privatization is then assessed in terms of its potential to generate additional resources to support the next round of economic growth in China. Journal of Economic Literature, Classification Numbers: E62, H10, P20. 1 table, 54 references.     

The Politics and Administration of Privatization

Privatization grows out of the theoretic constructs of public choice theory. Through the nurturing efforts of those such as E. S. Savas, privatization has been transplanted from the academic greenhouse to the fields of practical government Against the field of fads–empowerment, total quality management, reengineering, strategic planning, and benchmarking–privatization stands out.
Privatization has endured and spread. To many, privatization restores the dynamic balance of government and individual freedom. To others, privatization, like kudzu (initially a solution to soil erosion in the South), threatens to crowd out all other forms of "public" service delivery.     

Privatizing the Crown: The Exceptional Fate of Alberta's Liquor Control Board

A dramatic policy shift provides a means for understanding decision-making in governments. The privatization of the Alberta Liquor Control Board (ALCB) in 1993 is an example of a radical governance reform whereby most of a policy sector was turned from a state bureaucracy to a marketplace of private firms. This article examines the decision of Ralph Klein's government to privatize the ALCB and the central roles that history, institutional configurations, and path dependencies, among other factors, played in shaping its policy decisions. Of all the provinces, only Alberta has fully privatized its liquor board. The rest of the provinces, to varying degrees, have both retained and reformed their publicly owned and operated liquor boards, the largest of which is the Liquor Control Board of Ontario (LCBO). The unique policy outcome in Alberta was primarily a result of province-specific, temporally significant institutional and political factors. Liquidating the ALCB and establishing a private market to sell alcohol were relatively easy policies for the Klein Tories to implement given the weakness of the affected stakeholders in the liquor distribution industry. The liquidation of the ALCB was intended to demonstrate to the public that the new Klein government was dedicated to reducing the size and scope of Alberta's provincial state.     

Stabilizing neoliberalism in Bolivia: popular participation and privatization

Neoliberal theorists and development practitioners contend that economic liberalization and privatization lead to increased private sector productivity and decentralization accompanied by administrative reforms lead to greater democracy, more efficient public sector investment, and faster local development. Examination of the Bolivian case, which has been promoted as a global model for neoliberal restructuring, presents a different picture. There, economic restructuring and privatization have led to a decline in government revenues and a continuing economic crisis. Privatization of public services has led to rate hikes, which, in turn, have generated massive social protests. Political restructuring through decentralization has as often resulted in the entrenchment of local elites as in increases in truly democratic control of resources and social investments. This economic and political restructuring has also served to territorialize opposition to privatization and neoliberal economic policies and, in some areas, reinforce regional social movements. When examined together, it becomes clear how economic and administrative restructuring has sought to provide transnational firms both access to Bolivian natural resources as well as the social stability necessary in which to operate. As privatization through the Law of Capitalization further opened the country’s borders to global capital, the decentralization program through the Law of Popular Participation served to focus the attention of popular movements from national to local arenas. While foreign investment has increased, the lack of benefits for the majority of the country has led to mounting regional social protests in the face of reduced government spending on social programs and increased prices for basic services.     

Getting the China Story Right: Insights from National Economic Censuses

Two Hong Kong-based geographers critically interrogate competing interpretations of the nature and dynamics of China's ongoing economic transformation. Based on the data gathered from China's first and second national economic censuses, they examine the pattern and process of ownership transformation in the Chinese economy, focusing on employment, capital assets, and output as well as productivity and industrial innovation. Emphasis is placed on the following critical issues: (1) after three decades of opening, China's national economy continues to be dominated by domestic enterprises (with foreign and overseas Chinese-invested enterprises limited to only a few industrial sectors and highly specific locales); (2) the bulk of capital assets and key large-scale industrial sectors remain in state ownership; and (3) spontaneous, bottom-up privatization of the labor market has occurred without a corresponding privatization of the capital market. In examining these and other issues, the authors argue that the evolving, complex "China story" can be better understood only after abandoning reliance on preconceived theoretical models derived primarily from Western experience. They support their case by first challenging the conventional neoliberal view of privatization as an independent force or predetermined condition, arguing instead that it is conditioned by prevailing social and political influences. Likewise, they posit that rapid expansion of private and individual businesses at the grassroots level has owed more to relaxed state control than to active state involvement envisioned by the thesis of state corporatism. Journal of Economic Literature, Classification Numbers: E22, E23, E24, O11, P20. 8 figures, 6 tables, 87 references.     

Multi-actor Initiatives after Rana Plaza: Factory Managers’ Views

The Rana Plaza factory disaster in April 2013, which resulted in the death of a large number of factory workers and injured many more in Bangladesh's ready-made garment industry, highlighted the sustained failure of the government of Bangladesh to address safety in the workplace. In the wake of the tragedy two significant transnational governance initiatives emerged — the Accord on Fire and Building Safety in Bangladesh (hereafter the Accord) and the Alliance for Bangladesh Workers’ Safety (hereafter the Alliance). For the first time, different key stakeholders worked together to address fire, electrical and structural safety of factory buildings. This study analyses the perceptions of factory managers in Bangladesh regarding the Accord and Alliance agreements. The article argues that although there have been significant breakthroughs in terms of developing a culture of safety adhered to by the government and entrepreneurs, the suppliers have encountered difficulties in implementing these initiatives. The limited support from buyers has posed a major challenge for the sustainability of these two multi-stakeholder agreements.     

Democracy,Equity and Common Property Resource Management in the Indian Subcontinent

This article addresses the relationship between democracy, equity and common property resource management in South Asia, both at the national and at the local level. Its substantive focus will be largely on forests, and its geographical concentration mostly on India, although other sectors (primarily water) and areas (Nepal and Bangladesh) will also be included. The article opens by looking at Garrett Hardin's (1968) three strategies to preserve the commons. It finds that democratic politics is compatible with both privatization and centralization as conserving strategies (although not necessarily successful). With the third approach—local control—democracy has at best a problematic relationship, for where governmental units are the relevant actors, there tends to be more interest in consuming than in conserving or preserving resources at the local level. Local user groups, however, do much better at common property resource management, because they can restrict membership and thus avoid free riders, and they can establish a close linkage in their members' minds between benefits and costs of participating in group discipline to maintain the resource.     

Land Privatization and Enterprises in Georgia

An American attorney directing a U.S. Agency for International Development (USAID) program supporting privatization of urban and industrial land in Georgia since autumn 1997 describes the procedure whereby previously privatized enterprises can acquire the land beneath and surrounding those enterprises. This program, incorporating experience derived in commercial land privatization elsewhere in the former USSR and designed to emphasize transparency and minimize fees and paperwork, is compared with alternative approaches utilized in other republics. A procedure whereby enterprises not meeting land privatization criteria may lease land from the state, and whereby local authorities may sell vacant land, also is described. Journal of Economic Literature, Classification Numbers: D23, R33, R52. 20 references.     

Economic Resources and Political Power at the Local Level in Post-Soviet Russia

In the 1990s in local government in Russia, the dominant trends might be described as neo-Soviet because of their apparent continuity with patterns that prevailed before the end of communist rule in that country. The promise of independence for "local self-government," as set forth in the Russian Constitution of 1993 and subsequent legislation, largely has been frustrated. The tendency of privatized economic enterprises to divest themselves of responsibility for social benefits, and the lack of an adequate base for financial independence for local governments, have made it necessary for local officials to rely heavily on the regional authorities for support. Within local government, the elected legislature usually is subordinate to a dominant executive leadership. Those features of contemporary local government in Russia are explained by the consequences of decisions adopted by the country's post-Communist leadership, including the method and content of economic reform. The results are unfavorable both for the resurgence of the local economy and the growth of democracy at the local level.     

Rude Accountability: Informal Pressures on Frontline Bureaucrats in Bangladesh

This article is about ‘rude’ forms of accountability — the informal pressures used by citizens to claim public services and to sanction service failures. Rude accountability is characterized by a lack of official rules or formal basis and a reliance on the power of social norms and rules to influence and sanction official performance. The article draws on evidence from Bangladesh, a state which has not reformed its social sector governance, to explore when and why poor citizens resort to ‘rude’ accountability, whether they have a comparative advantage in the use of informal mechanisms, and whether these work, in terms of gaining better service. It asks what informal accountability mechanisms imply for governance reform in social services, and discusses lessons for other ‘unreformed’ states like Bangladesh.     

Optimizing Productivity Through Privatization and Entrepreneurial Management

Efficiency and economy have become the forces driving both, public and private organizations in the 1990s. Competition and legal mandates constrict managers' abilities to use their traditional options in delivering goods and services to their citizens and customers. Privatization and entrepreneurial management are being utilized increasingly to improve productivity. This is creating a genuine transformation in the way we manage our organizations, it also changes the nature of the relationship between our organizations and their citizens, clients, and customers.
In this article we explore this unfolding transformation and analyze its significance. An entrepreneurial management productivity optimization model is also developed. Productivity is explored in terms of efficiency and effectiveness. The mechanisms for improving productivity, privatization, and entrepreneurial management are then examined. After noting the changing rotes that public policy and competition now play, the more prominent managerial models are explored, including reinventing and reengineering.
The article then presents examples of federal, state, and local entrepreneurial strategies and innovations. It concludes by alerting us to endangered public policy priorities and sets forth significant public management caveats to which we increasingly should become sensitive. The entrepreneurial management productivity optimization model has been developed to assist in clarifying and analyzing the issues involved in this article. It should also help those working in this arena to formulate optimal choices when building entrepreneurial management models for their own organizations or for those of their citizens, clients, or customers.     

The locus of financial regulation: home versus host

If the G's are the world's steering committee, the step from G7 to G20 deepened the democratic legitimacy of this committee. However, it also shifted influence to a group that share little else other than economic power: they have diverse experiences, challenges, cultural perspectives and starting points. This is particularly the case in the field of financial regulation, where action across these countries in recent months—despite all the language of global regulation—is increasingly local. The prospect of the new global being quite local has dismayed some. But it need not. This article challenges the dichotomy of more global versus more local. It argues that financial internationalism—greater cooperation by nations for the benefit of all—is better served by institutions that help to integrate diverse systems than those which try to enforce one‐size‐fits‐all approach to very different economies. International banks persuaded regulators of the benefits of home country regulation and a level playing field for bankers. But the benefits accrued largely to the banks in the boom and proved an avenue for contagion during the crash. Host country regulation may prove a safer way to regulate financial systems, in particular by allowing regulation to be more responsive to national economic conditions and cycles. It is likely that a shift back to host country regulation will act as a drag on international capital flows. The instinct of economists is that the cost of this is uncertain, suspect and conditional, especially when compared to the costs of financial crashes. Host country regulation does not mean there is no role for international institutions, such as the newly minted Financial Stability Board. Instead, it suggests a more nuanced role, potentially encompassing the policing of international market infrastructure, financial protectionism, information free flow between regulators and the convergence of regulatory principles and the consolidation of regulatory instruments. An informed and collegiate process of integrating different financial systems will be a more resilient system than one which tries to apply a single rule book across inherently different countries.     

PUBLIC OWNERSHIP OF LAND AND THE "SAGEBRUSH REBELLION"

Advocates of “privatization” argue that the sale of public lands to private owners would significantly improve the management of natural resources. Experience from the first round of land sales suggests that the government, responding to the politics of the Sagebrush Rebellion, will continue to subsidize preferred uses of “privatized” lands through give–aways, below–par purchases, preference sales, and imperfect sales. Even though the federal government may go ahead with the land sales program, political compromises will not allow the free market goals of privatization to be realized.     

China's Economic Policy Today: The New State Activism

A noted American authority and investigator of China's economy outlines the general features of the ongoing reorientation of Chinese economic policymaking toward increased state activism, which has gained momentum in the aftermath of the global financial crisis. An initial section of the paper describes the marketization and privatization initiatives of China's late reform period to provide a baseline against which to measure the subsequent shift toward increased state intervention and guidance in the economy. The author traces the shift in three critical policy arenas (social policy, state-owned enterprises, and industrial and technology policy) and demonstrates how state involvement in each intensified during the global financial crisis. He then proceeds to explore the implications of accelerated state activism in the future, identifying potential rewards as well as large risks. Among the latter are macroeconomic imbalances, a "softening" of budget constraints, difficulties in recognizing and terminating unsuccessful economic programs, and tensions with trading partners.     

The political economy of economic reform in North Korea

For over 10 years, North Korea has undergone a severe economic crisis, including food shortages, which has inflicted great suffering upon the North Korean people. Given such dire realities, it is beyond all doubt that the North Korean government should actively carry out comprehensive economic reforms as quickly as possible which aim to transform North Korea's present inefficient socialist planned economic system into a market economic system. Many argue that such reforms would give rise to successful economic growth in North Korea, which could enhance the legitimacy of the North Korean regime. Yet, the North Korean regime has consistently avoided implementing economic reforms, even though it has had a number of opportunities to do so. The July 1st reforms, which were introduced in 2002, have been half-hearted and inconsistently applied. This then raises an important question: Why has the North Korean government avoided adopting comprehensive economic reforms? In other words, what is the crucial barrier that has hindered North Korea's implementation of economic reforms? This article pinpoints North Korea's unique political system—i.e. its monolithic system of political control and policy making which exhibits the highest level of power concentration in one individual among all political systems—as the biggest barrier to economic reforms. No doubt North Korea desperately needs comprehensive economic reforms, in light of its economic crisis and food shortages. Nonetheless, the current North Korean regime has avoided adopting such reforms since they will undermine North Korea's monolithic system. In conclusion, North Korea's monolithic system has been the biggest obstacle to North Korea's economic reforms.     

Capital Subsidies and their Impact on Total Factor Productivity: Firm‐Level Evidence from Northern Ireland*

Abstract. Manufacturing industry in Northern Ireland receives extensive financial support from government with the objective of improving the economic performance of the plants that are directly assisted. Many studies have tried to assess the impact of such assistance, but without the counterfactual evidence it is difficult to ascertain whether or not such support does improve performance. The aim of this paper is to use a unique matched data set to establish if such assistance has made a difference to total factor productivity in Northern Ireland manufacturing plants.     

The economic consequences of economists

During 1991, disquiet with the policy recommendations and ultimate economic effects of economists began to feature in debates over economic policy in Australia. One example was the emergence of a conservative critique of economic liberalism; another was the publication of Michael Pusey's research showing that ‘econocrats’, notably those in the federal bureaucracy, have distinctive, politically significant attitudes to the role of government. This paper considers the influence of economic orthodoxy as part of a broader phenomenon—the peculiarity and underdevelopment of our public institutional framework. In Australia, forms of intervention required for full employment simply do not exist. This partially explains both our comparatively poor macroeconomic performance since the 1970s and the propensity of government to embrace policies that abrogate social democratic commitments while economic conditions worsen.     

Land Privatization and Pastoralist Well‐being in Kenya

East African pastoralists have well‐developed systems of communal land management that have been challenged by recent demands from some pastoralists for land privatization. This article analyses the impact on household well‐being of privatizing land among a community of Samburu pastoralists in northern Kenya. Using longitudinal data from household surveys conducted in 2000 and 2005, trends in wealth, income, stratification and livelihood strategies are analysed comparing the privatized community and a community where land remains communally managed. Results indicate few significant differences in wealth and income between the privatized and communal areas, although cultivation has become an important additional strategy in the privatized community. Significant levels of wealth stratification are present in both communities but are mitigated to some extent by mobility across wealth quintiles over time. Wealthy and poor groups exhibit different livelihood strategies with wealthier groups relying more on livestock trade and home consumption while poorer groups depend on wage labour and trade for their income. Policy implications of this analysis include the need for development strategies specific to different wealth groups, greater investment in education and infrastructure, and more attention to employment creation in pastoral areas.     

Twenty‐first Century Industrial Policy in a Small Developing Country: The Challenges of Reviving Manufacturing in Rwanda

The Rwandan government — widely lauded for its political commitment to development — has refocused its efforts on reviving growth in the manufacturing sector. This article examines how pressures from different levels — international, regional and domestic — have shaped the evolving political economy of two priority sectors (apparel and cement). To achieve its goals of manufacturing sector growth, the Rwandan government aims to access foreign markets (on preferential terms) and larger regional markets while developing effective state–business relationships with locally based firms. Despite the government's political commitment to reviving its manufacturing sector, its strategy has been both shaped and impeded by shifting pressures at the international level (through Rwanda's recent suspension from the African Growth and Opportunity Act), the regional level (through competition from regional firms) and the domestic level (through over‐reliance on single firms). Within the current industrial policy literature, there is limited reflection on how developing countries are dealing with the multi‐scalar challenges of enacting industrial policy in a much‐changed global trading environment. This article contributes to the industrial policy literature by addressing this lacuna.     

Labour Productivity and Energy Use in a Three‐Sector Model: An Application to Egypt

This article presents a model of a developing economy with three sectors — industry, agriculture and energy. Industry and energy are assumed to be demand‐constrained, but agriculture supply‐constrained. The model highlights: (a) structural transformation, through labour transfer from agriculture to industry; (b) inflation, driven by the interaction of demand and the supply constraint in agriculture; and (c) the link between energy use and labour productivity. Employing a Kaldor‐Verdoorn productivity rule in industry augmented with energy intensity — energy per unit of labour — as an argument, we emphasize that labour productivity growth is driven by energy intensity rather than energy productivity growth. As a consequence, emissions reduction without North–South technology transfer and financial assistance costs growth.