Why Do Governments Dump State Enterprises?

David D. Li and Francis T. Lui

in Governance, Regulation, and Privatization in the Asia-Pacific Region

Published by University of Chicago Press

Published in print March 2004 | ISBN: 9780226386799
Published online February 2013 | e-ISBN: 9780226386966 | DOI:
Why Do Governments Dump State Enterprises?

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This chapter tests competing theories of why governments dump (i.e., privatize or liquidate) state-owned enterprises (SOEs). The main finding is that governments dump SOEs not to increase efficiency but to enhance tax revenue, or relieve themselves of the financial burden of subsidizing unprofitable state enterprises. The chapter is organized as follows. Section 8.2 describes the simple model of privatization and its predictions. Section 8.3 explains the design of the empirical tests and measurement of variables. Test results are presented in Section 8.4, and Section 8.5 summarizes the chapter with discussions on some policy implications. Two commentaries are also included at the end of the chapter.

Keywords: government policy; state-owned enterprises; privatization; liquidation

Chapter.  7771 words.  Illustrated.

Subjects: Business and Management

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