The Development And Performance Of State-owned Enterprises In Emerging Market Countries

In the late1980s, after a wave of privatization, state-owned economy in emergingmarket countries started to show a different trend, Brazil as one of the "BRICS"economies and Latin America’s largest economy, followed by the privatization trend,,promoted the process of privatization of state-owned enterprises from the1990s.andstarted establishment of a market economy mode, and made the privatization strategiesin industry of iron and steel, petroleum, agriculture, chemical industry,telecommunications, electricity, transport and health sector to make private enterprisesoccupy the major market share of the national economy, and then the transformation ofgovernment functions, focusing on decentralization in the privatization process ofderegulation, service coordination and policy guidance. Government’s role in theeconomic transited from active participant to the regulatory framework setter; however,at the beginning of the21st century, with the negation of the neo-liberal model ofdevelopment, Brazil’s privatization trend has slowed down, the federal governmentconstructed more than30state-owned enterprises, in a bid to re-strengthen the abilityto control the oil, natural gas, electricity, finance, transportation and other strategic andwelfare fields, to make state-owned enterprises still dominate.The majority of state-owned enterprises improved the economic efficiency afterbeing reformed. Privatization improved the efficiency and operating performance ofBrazil’s economy, and brought the competition, new enterprises adopted a series ofmeasures to improve work efficiency and economic benefits, such as Reducingagencies and workers, strengthening management, saving money, increasinginvestment, updating equipment and improving technology. Many enterprises became profitable after a long-term loss in the past, the total assets of the enterprise increased,and also achieved an impressive leap in net profit, and promoted the growth of thecapital market, as well as the formation of a wide-range share ownership. In addition,in the area of social benefits, direct government revenue grew, the governmentabsorbed more investment; Secondly, in the range of operating at a loss to reduce thefederal government deficit and debt, and then it is better for the government toimplement fiscal policy; moreover, it could change the operating conditions of thestate-owned enterprises, help to improve performance by learning advanced productiontechnology and management, to increase the government’s future tax revenue, and toenhance the future financial balance ability, and to improve the competitiveness ofBrazilian companies in the international market; finally, with adapting to economicglobalization and needs of the neo-liberal reforms, using market adjusting mechanismmore fully and more widely to change the import substitution strategy of economicdevelopment, promote Brazil’s macroeconomic stability.Factors which affect Brazilian firm performance, different corporate ownership isan important factor to affect corporate performance, privatized state-owned enterpriseshave higher level of performance than those non-privatized state-owned enterprises;due to the unreasonable tax burden, it has a negative impact on the economicperformance of Brazilian companies; Brazil’s annual GDP growth rate has a significanteffect on the improvement of enterprise performance; finally, corporate governance, inother words, company chairman is or not concurrently chief executive officer isanother important factor to affect corporate performance.Because of Brazil and China belong to the "BRICS" facing the same internationaleconomic and political environment and economic reform, which is different fromother Latin American countries, it belongs to the moderate reform style, so research onBrazil’s state-owned enterprises could provide reference to the development andtransformation of China’s state economy. China’s state-owned enterprises should be scaled up to achieve economies of scale; at the same time, the company chairman andCEO be served by different people, to achieve the separation of ownership and theright to operate, and to avoid a person has too much power in the enterprise; targetedtax cuts and tax incentives to reduce the cost of doing business, to make them morecompetitive in the context of the global economic environment, and improve businessperformance through asset restructuring and structural adjustment, to achieve in-depthreform of state-owned enterprises in China.This essay is divided into five parts: The first part is an introduction to recount theStatus and Progress of the domestic and foreign scholars on the overall development ofthe emerging market countries, as well as factors affect Brazil’s state-ownedenterprises reform and performance and analysis methods, and pointed out theshortcomings, to clear this article’s research framework and the main innovations;second part, respectively, to introduce the Brazilian state-owned enterprises andindustrial structural readjustment of the situation from the initial development, theprocess of privatization of state-owned enterprises, and the structural readjustment ofdetails of the overall development in recent years; the third part to analyze recenteconomic performance and social contribution of the growth of the state-ownedenterprises and statistical descriptions; fourth part is an empirical analysis ofinfluencing factors on the performance of Brazil’s state-owned enterprises, andresearch methods, data sources, and the selection of model variables and model studyon firm performance factors such as firm size, the level of taxation, corporategovernance; Part V is conclusion and policy recommendations, firstly, a summary ofdescriptive and empirical research, and then to make some suggestions to the Chinesestate-owned enterprise reform.