Publication: Finding Real Owners : Lessons from Estonia's Privatization Program
The Estonian government has quickly privatized more than 90 percent of its industrial and manufacturing enterprises. The Estonian privatization agency batches 30-40 firms and advertises them for sale. The prime goal is to find "real owners" capable of running a durable, productive firm. Purchase offers are judged not only on price, but also on the quality of business plans submitted. In 17 sales, the Estonians have combined strategic investment with voucher exchanges. An unresolved problem is that the face value of the vouchers outstanding far exceeds the likely value of assets being sold. This Note concludes that Estonian privatization has been a success in scope and pace. No private firm has yet failed, and the privatization agency reports that most divested firms are expanding their employment. However, these promising results are tempered by the fact that the 70 privatized firms experiencing problems with installment purchase payments are only being admonished. But this problem, though significant, is not overwhelming.
“Nellis, John. 1996. Finding Real Owners : Lessons from Estonia's Privatization Program. Viewpoint. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/cad7fbd3-ffba-5383-9a66-79183f7e3109 License: CC BY 3.0 IGO.”
Other publications in this report series
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PublicationExport Competitiveness: Why Domestic Market Competition Matters(World Bank, Washington, DC, 2015-06)This review of the empirical literature shows that industries with more intense domestic competition will export more. Competition law enforcement can be traced to export performance and is complementary to trade reforms. Pro-competition market regulation that reduces restrictions and promotes competition, where it is viable, is an important determinant for trade. The elimination of barriers to entry and rivalry, and a level playing field in upstream sectors contributes to export competitiveness in downstream manufacturing sectors. In some sectors, effective competition policy can directly lower trade costs.
PublicationPrimary Care for the Poor: The Potential of Micro-Health Markets to Improve Care( 2015-01)Much of the primary curative care provided to the poor by the private sector occurs not at large hospitals but at small, single-person clinics. While such micro-health providers increase access, questions persist about quality. Some have argued that the micro-health sector needs to be better regulated. This note cites recent studies in arguing that the micro-health sector needs to be better understood. A more evidence based approach may enable the World Bank Group to better target investments and interventions and help these providers fulfill an important role serving the poor. The following recommendations are made at the conclusion of this paper: (1) Effort, rather than hardware or training, may count the most. (2) Scaling up interventions to improve quality requires understanding and addressing market failures. (3) Changing the way impacts are measured will lead to smarter investments.
PublicationSmall Business Tax Regimes(World Bank, Washington, DC, 2016-02)Simplified tax regimes for micro and small enterprises in developing countries are intended to facilitate voluntary tax compliance. However, survey evidence suggests that small business taxation based on simplified bookkeeping or turnover is sometimes perceived as too complex for microenterprises in countries with high illiteracy levels. Very simple fixed tax regimes not requiring any books or records tend to be overly popular but prone to abuse. System reforms will require more precise tailoring of the simplified regimes to their target beneficiaries, coupled with strong compliance management to detect and deter abuse. The overall objective of simplified taxation for micro and small enterprises (MSEs) in developing countries is generally to facilitate voluntary tax compliance and remove obstacles in moving toward business formalization and growth.
PublicationCompetition and Poverty(World Bank, Washington, DC, 2016-04)A literature review shows competition policy reforms can deliver benefits for the poorest households and improve income distribution. A lack of competition in food markets hurts the poorest households the most. Competition in input markets and between buyers helps farmers and small businesses. And more competitive markets bolster job growth over the longer term. More research is needed, however, to better understand the impact of competition reforms and antitrust enforcement on poverty and shared prosperity.