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Privatization in Italy 1993-2002: Goals, Institutions, Outcomes, and Outstanding Issues

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  • Andrea Goldstein

Abstract

This paper describes the privatization program in Italy during the 1990s and puts that policy in the context of macroeconomic adjustment, general market deregulation, and promotion of private investment in the provision of public infrastructure. The wave of state divestitures reached Italy later than other OECD countries. A deep-rooted tradition of state intervention, coupled with the use of public enterprises as a source of employment and political support, hindered the timid attempts at privatization of the 1980s, delaying until 1992 the start of largescale privatizations. These were imposed on Italian politicians and electorate by a host of factors: the financial crisis affecting both the general government and, sometimes irreversibly, state-owned enterprises (SOEs); the increasing aversion of the European Commission towards state aid to ailing firms; and the discredit thrown on public enterprises by their involvement in corruption scandals. An evaluation of its results in manufacturing, performed on the basis of a set of operative and restructuring performance indicators for a representative sample of privatized firms, indicates the lack of statistically significant improvements in efficiency scores. The analysis of the consequences of privatization on corporate governance show that, notwithstanding considerable changes in the structure of ownership and a sizeable contribution to capitalization and liquidity growth, the market for corporate control remains insufficiently transparent. These results appear to relect multiple factors – the preference accorded to quantitative targets in the context of EMU convergence, the weakness of the executive and its dependence on shaky parliamentary majorities in the Italian political system, and finally the resistance of politicians to relinquish control over SOEs. In the broader framework of fiscal decentralization, this last factor seems if anything reinforced by recent normative changes and proposals.

Suggested Citation

  • Andrea Goldstein, 2003. "Privatization in Italy 1993-2002: Goals, Institutions, Outcomes, and Outstanding Issues," CESifo Working Paper Series 912, CESifo.
    • Handle: RePEc:ces:ceswps:_912
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    2. Pareja-Alcaraz, Pablo, 2017. "Chinese investments in Southern Europe's energy sectors: Similarities and divergences in China's strategies in Greece, Italy, Portugal and Spain," Energy Policy, Elsevier, vol. 101(C), pages 700-710.
    3. Marco Simoni, 2019. "Institutional Roots of Economic Decline: Lessons from Italy," LEQS – LSE 'Europe in Question' Discussion Paper Series 143, European Institute, LSE.
    4. Boggio, Margherita, 2011. "From Reluctant Privatization to Municipal Capitalism: an Overview on Ownership, Political Connections and Decentralization," MPRA Paper 46232, University Library of Munich, Germany.
    5. Marianna Brunetti & Costanza Torricelli, 2010. "Population age structure and household portfolio choices in Italy," The European Journal of Finance, Taylor & Francis Journals, vol. 16(6), pages 481-502.
    6. John Nellis, 2012. "The International Experience with Privatization: Its Rapid Rise, Partial Fall and Uncertain Future," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 5(3), January.
    7. Raul Caruso & Andrea Locatelli, 2013. "Company Survey Series Ii: Finmeccanica Amid International Market And State Control: A Survey Of Italian Defence Industry," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(1), pages 89-104, February.
    8. Robert MILLWARD, 2010. "Public enterprise in the modern western world: an historical analysis," Departmental Working Papers 2010-26, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    9. Senderski, Marcin, 2015. "Inhibited privatization: a hurdle race over vested interests," MPRA Paper 65482, University Library of Munich, Germany.

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