Public Enterprise Reform: Private Sector Solutions

Abstract

‘Bureaucrats are still in business’ lamented a 1995 review of public enterprises in developing countries (World Bank, 1995b). The reason for this pessimistic tone was that after a decade of public enterprise divestiture and a growing consensus that governments performed less well than the private sector in many business-type activities, the size of the public enterprise sector remained the same — too large. The number of such enterprises and their share of the GDP vary between countries but as we have already noted, they provide a far greater percentage of public sector employment than in the OECD economies and generally account for a larger percentage of GDP (see Box 8.1). They are engaged in a diverse range of activities such as steel manufacture, tractor-making, grain milling, bakeries, crop marketing, the provision of public utilities, banking, airlines, hotels, oil refining, chemicals, textiles and any other business venture in which government has decided to become involved. While the profile of the public enterprise sector is different for each country, the impulse to reform is common for all countries.