EFFICIENCY IN PRODUCTION UNDER PRIVATE AND PUBLIC OWNERSHIP: TECHNIQUES OF MEASUREMENT AND EVIDENCE FROM PAKISTAN (PUBLIC ENTERPRISE, INDUSTRY STUDY, PERFORMANCE, ORGANISATIONAL FORM, PUBLIC POLICY)

The Vegetable Oil Industry of Pakistan was in the Private Sector prior to its nationalisation in 1973-74. It is now the largest industry in Pakistan's entire Public Sector. This study is an inquiry into the consequences of public ownership on the operational performance of the industry. The study utilises data on eighteen firms over a ten year period covering three years under private ownership, three years of public ownership under the provincial governments and four years of public ownership under the Federal government.;A decomposition of performance--by econometric estimation of the technology of production--reveals that much of the increase in observed performance is due to improved productivity of Capital. When the period of public ownership is disaggregated on the basis of the external control structure, it is discovered that performance of the industry has been relatively superior for the period under the Federal government. The source of this observed superiority is not only a higher rate of capacity utilisation but also improved productivities of Labor and Working capital. It is also found that the relatively older group of firms were performing inferior while the location of the firms is not a major determinant of Enterprise performance.;The observed results are carefully analysed and detailed explanations are provided. The explanations rely upon the prevalent institutional arrangements, pricing policies, and behavioural responses by the management of public firms.;National Income Accounting principles and Economic concepts are combined to convert privately relevant accounting data into publicly relevant measures of Enterprise performance. Then a series of adjustments are undertaken for factors beyond the control of the management to isolate the trend in Managerial performance. It is found that the average level of performance--after adjusting for changes in prices and capital stock--has been higher for the period under public ownership and has improved over time.