“Privatization – what’s next?”: Discussions on privatization with experts from around the world
Privatization is one of the driving forces behind a market economy, but in order to have an effective and long-lasting impact on economic development, it should take into account local conditions and public opinion. This was the conclusion reached by delegates at the conference “Privatization – what’s next?”, organized by Poland’s Ministry of Treasury OECD Secretariat and CASE.
During several panel discussions, the conference delegates discussed the benefits and costs of privatization, whether companies from all sectors of the economy should be privatized, and how to define strategic enterprises that should remain under state control, in other words, owned by citizens. The panelists and participants included officials from ministries and government agencies dealing with privatization and corporate governance in countries like Croatia, Finland, Greece, Hungary, Israel, Norway, Poland, Russia, Serbia, Sweden, Turkey, and the United Kingdom.
In his opening remarks, Mr. Paweł Tamborski, Undersecretary of State at the State Treasury, underlined that “one of the key achievements of the individuals and teams working on privatization in Poland in recent years is the fact that, today, it is openly acknowledged as a success. The process is now slowly coming to an end, which will in turn give rise to a number of important questions.”
Prof. Barbara Błaszczyk presented the common goals underlying the decision to privatize, both in emerging and market economies. She also spoke about the case of Poland, bringing to the fore the immense scope of the process and the radical shift towards private sector involvement in the Polish economy, which has taken place over the past two decades. “Whereas in 1989 the public sector accounted for 81% of Polish GDP, by 2008 the figure had dropped to 23%, which, on the one hand, pays testament to the exceptional progress made in privatization, while, on the other, shows that there is still a lot to be done,” stated Prof. Błaszczyk, Vice-Chairwoman of the CASE Supervisory Council.
Similar conclusions can be drawn from the report presented by the representative of Ernst & Young. Though Poland, alongside Estonia, was mentioned as a leader in privatization, the experts notice that there is still room for further sale of state-owned companies.
It was noted that the future of privatization does not merely depend on economic factors or macroeconomic indicators. Representing the OECD Secretariat, Hans Christiansen specified three fundamental groups of factors impacting the success of the process. First, in order for privatization to be successful, there needs to be political will among those controlling public companies. Second, the aim of privatization should be to improve general economic conditions. And third, appropriate regulations must be in place to protect the interests of citizens.
“History has given us examples of ineffective privatization. A typical example is the privatization of companies which are monopolies in their sectors. Implemented purely and simply to generate revenue, this gives rise to negative consequences for citizens. For this reason, to ensure that privatization processes are successful, they must be implemented with the full support and understanding of the general public,” said Christiansen.
In his summary of the conference, Mr. Tamborski pointed to the fact that the event provided a unique platform for exchanging insights and experiences connected with privatization processes. “Despite the hazards and costs connected with privatization, as outlined during the conference, there is no doubt that it is a driving force for progress, and we could not imagine economic growth without it,” Tamborski said.
The conference materials are available here.
