The retreat of the state from entrepreneurial activities: an extended survey

There is a huge body of literature in the social sciences that deals with the privatization of public enterprises in developed OECD countries after World War II. In the first part of this article, we present and critically examine empirical findings of comparative inquiries on the factors influencing cross-national differences in privatization efforts across the OECD world. Although these empirical studies provide valuable and interesting evidence, it turns out that these studies are incomplete insofar, as they mostly focus just on one dimension of privatization: the monetary or ‘material’ aspect typically measured with privatization proceeds raised by governments. Against this background, in the second part of this paper we point out that there are also formal privatization (i.e., ‘privatizing’ the legal form of a public enterprise) and functional privatization (i.e., contracting out public service production). Moreover it is emphasized that privatization does not automatically imply a retreat of the state from entrepreneurial activities. From there we plead for taking into account the development of regulatory policies and public subsidies to private enterprises over time as well, in order to get a more comprehensive picture of the development of the entrepreneurial state in the OECD world. Therefore, for each of these dimensions of entrepreneurial activity the current ‘state of the art’ regarding theory and empirics is surveyed and enriched by own empirical data.