State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly

28 Pages Posted: 1 Dec 2017

See all articles by Uwe Böwer

Uwe Böwer

European Central Bank (ECB) - Directorate General International and European Relations

Date Written: October 2017

Abstract

State-owned enterprises (SOEs) play an important role in Emerging Europe's economies, notably in the energy and transport sectors. Based on a new firm-level dataset, this paper reviews the SOE landscape, assesses SOE performance across countries and vis-a-vis private firms, and evaluates recent SOE governance reform experience in 11 Emerging European countries, as well as Sweden as a benchmark. Profitability and efficiency of resource allocation of SOEs lag those of private firms in most sectors, with substantial cross-country variation. Poor SOE performance raises three main risks: large and risky contingent liabilities could stretch public finances; sizeable state ownership of banks coupled with poor governance could threaten financial stability; and negative productivity spillovers could affect the economy at large. SOE governance frameworks are partly weak and should be strengthened along three lines: fleshing out a consistent ownership policy; giving teeth to financial oversight; and making SOE boards more professional.

Keywords: Public enterprises, Corporate governance, Economic sectors, European Union, Poland, Sweden, Bulgaria, Romania, Croatia, Slovenia, Latvia, Czech Republic, Hungary, Estonia, Lithuania, Slovak Republic, State-Owned Enterprises, Emerging Europe

JEL Classification: G38, H63, L33

Suggested Citation

Böwer, Uwe, State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly (October 2017). IMF Working Paper No. 17/221, Available at SSRN: https://ssrn.com/abstract=3079544

Uwe Böwer (Contact Author)

European Central Bank (ECB) - Directorate General International and European Relations ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

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