| This study analyzes fiscal impacts of the privatization of state-owned enterprises (SOE's). It is intended to test Pinherio's privatization model that is used to demonstrate that privatization is marginally value-creating. A five-country privatization group and a nine-country non-privatization group were formed using World Bank data bases. Among privatization countries, I found that SOE's commonly generated losses and that pre-privatization trends were deteriorating as were public sector debt trends. The two groups were then compared to determine whether respective fiscal conditions differed. I found that the study groups did not differ concerning SOE's operational losses and loss trends, or deteriorating public sector debt trends. I concluded that fiscal stress is a necessary, yet not sufficient, condition leading to privatization.;I then analyzed privatization as an ARIMA intervention variable to determine whether privatization was associated with SOE or country-level budget performance improvements or decreases in public sector debt levels. Among privatization countries, I did not find a statistically significant association between privatization and SOE budget improvements, but SOE operating loss trends were more distinct among non-privatization countries than privatization countries. I did not find a statistically significant association between country-level budget performance and privatization, and patterns did not differ between the privatization and non-privatization groups. Concerning public sector debt levels, I did not find a statistically significant association with privatization, however, results here were marginal. Furthermore, where post-privatization public sector debt among privatization countries generally trended to lower debt levels, the trends among non-privatization countries consistently increased, suggesting that privatization countries channeled divestiture revenues to SOE debt redemption.;The results of this research are generally consistent with the findings of other researchers that have incorporated the Pinherio privatization model. That is, privatization generates slight, but discernible, improvements in the public long-term fiscal accounts. On the other hand, I did not find privatization to be associated with public current account improvements. |
