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Privatization, Efficiency and Economic Growth

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  • Gylfason, Thorvaldur

Abstract

Privatization is shown to increase national economic output in a two-sector full-employment general-equilibrium model by enhancing efficiency as if a relative price distortion were being removed through price reform, trade liberalization, or stabilization. The static output gain from reallocation and reorganization through privatization is captured in a simple formula in which the gain is a quadratic function of the original distortion stemming from an excessive public sector. Substitution of plausible parameter values into the formula indicates that, in practice, the static output gain from privatization may be large. The potential dynamic output gain from privatization also appears to be substantial.

Suggested Citation

  • Gylfason, Thorvaldur, 1998. "Privatization, Efficiency and Economic Growth," CEPR Discussion Papers 1844, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1844
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    Cited by:

    1. Andrzej Cieślik & Łukasz Goczek, 2018. "Corruption, Privatisation and Economic Growth in Post-communist Countries," Europe-Asia Studies, Taylor & Francis Journals, vol. 70(8), pages 1303-1325, September.
    2. , Aisdl, 2017. "Privatization of Vietnam Airlines: a successful reform or a timid policy step," OSF Preprints wknfq, Center for Open Science.
    3. Mai, Nhat Chi, 2022. "Privatization of Vietnam Airlines: A successful Reform or A Timid Policy Step," OSF Preprints duwym, Center for Open Science.
    4. Innocent U Duru & Millicent Adanne Eze & Abubakar Sadiq Saleh & Benedict I Uzoechina & Gabriel O Ebenyi & Ekechi Chukwuka, 2022. "Exchange Rate Volatility and Exports: The Nigerian Scenario," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 12(1), pages 11-28.
    5. Kant, Chander, 2018. "Privatization and growth: natural experiment of European economies in transition," MPRA Paper 96080, University Library of Munich, Germany, revised 28 Sep 2019.
    6. Emanuele Bacchiocchi & Massimo Florio, 2008. "Privatisation and aggregate output: testing for macroeconomic transmission channels," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(5), pages 525-545, December.

    More about this item

    Keywords

    Economic Growth; Efficiency; Privatization;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform

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