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1. Six years after Ukraine’s Euromaidan: reforms and challenges ahead

Author:
Marek Dabrowski, Marta Dominguez-Jimenez, and Georg Zachmann
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Since the Euromaidan protests (2013-2014), Ukraine has had two presidents and four governments. In a difficult environment of external aggression, they have initiated various reforms aimed at bringing the country closer to the European Union and boosting growth. Progress has been partial and relies on international backing, with limited domestic appetite for reform.
Topic:
Corruption, Privatization, Foreign Aid, Governance, Reform, European Union, Finance, and Macroeconomics
Political Geography:
Europe and Ukraine

2. Economic Transformation and Privatization

Author:
Richard J. Hunter Jr. and Leo V. Ryan
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Warsaw East European Review (WEER)
Institution:
Centre for East European Studies, University of Warsaw
Abstract:
In its simplest form, privatization is de-statism – that is, removing the state as the owner of property and assets. From the outset of the transformation process in Poland, significant systemic limitations to the privatization process existed1. A developed market infrastructure was absent. Businesses that were being prepared for privatization lacked the ability to conduct market research, and advisory and consulting services were in short supply. Procedures and benchmarks for property valuation were almost non-existent. The financial infrastructure was immature and data on the profitability of firms being prepared for privatization was problematic. In addition, both the quality and level of competency of civil servants (the nomenklatura) and private managers remained low-largely due to the negative legacy of Poland’s communist past.
Topic:
Economics, Privatization, Governance, and Economic Transformation
Political Geography:
Europe and Poland

3. The Privatization and Financialisation of Social Care in the UK

Publication Date:
10-2020
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
Even before the arrival of COVID-19, the care sector was already in long-term crisis, in large part due to insufficient funding, but the sector has also been under pressure from structural changes resulting from privatisation and financialisation.3 Social care is one of many elements of everyday life which, over the past few decades, have been repackaged to suit the needs of global capital. The process has transformed a social need into a financial issue which in turn translates into new social relations where narratives are constructed in terms of markets and efficiency. Care sector workers are treated as a financial overhead rather than integral to the quality of care provided. The financialisation of social care is an ongoing systemic process, which is accentuated in the increasingly challenging current global investment climate as investors seek alternatives to the low returns from traditional secure investments such as government bonds. This paper is concerned with the tensions resulting in the private provision of social care services. Some of the larger care providers are owned by financial investors that have earned substantial profits via opaque corporate practices. Discussion in the paper shows that while social care offers relatively low risk and high return investment opportunities, structuring care services as a private sector endeavour risks major adverse social outcomes, potentially resulting in: Extensive transfers to the world’s richest via the servicing of basic needs for some of society’s most vulnerable people, financed by taxes and lifetimes’ savings A two tier system of residential care where private providers seek to serve only self-funders Increasing strain on a largely female and minority ethnic un-unionised work force Increasing pressures on (largely female) informal carers that pick up the pieces of the failings in the care system In the inequitable practices of social care providers. However, the paper demonstrates that in the long term, tweaking the margins of regulation will not be sufficient to address the fundamental structural flaws underlying our current care system. Social care services are not competitive and the sector does not work as a conventional market. The analysis acknowledges the complexities of restructuring the care system and therefore offers both short and long term policy suggestions: • Conditions for financial support to the sector in the wake of the COVID-19 pandemic should be imposed to curtail the current extractive practices of some care providers. Tighter regulation should promote socially responsible care provision, backed up with additional financial resources and long-term political commitment. • Additional financial support is needed for local authorities to enable them to provide social care and reduce their reliance on private companies. • Consideration should be given to innovative alternative provider models that draw on international examples of good practice. The current structure of social care provision inevitably promotes inequality, while transparency and accountability are lacking. Moreover, the care system is increasingly moulded to suit the priorities of investors rather than social care needs. In the wake of the pandemic, more resources are urgently needed for social care but this is an opportunity for a radical rethink of the ways in which we support the most vulnerable in our society.
Topic:
Privatization, Governance, Finance, Welfare, and Social Services
Political Geography:
United Kingdom and Europe

4. Privatization and the Postsocialist Fertility Decline

Author:
Gabor Scheiring, Bryant Hui, Darja Irdam, Aytalina Azarova, and Eva Fodor
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
In this article, we analyze the privatization of companies as a potential but so far neglected factor behind the postsocialist fertility decline. We test this hypothesis using a novel database comprising information on the demographic and enterprise trajectories of 52 Hungarian towns between 1989-2006 and a cross-country dataset of 28 countries in Eastern Europe. We fit fixed and random-effects models adjusting for potential confounding factors and control for time-variant factors and common trends. We find that privatization is significantly associated with fertility decline, explaining approximately half of the overall fertility decline across the 52 towns and the 28 countries.
Topic:
Privatization, Capitalism, Post-Socialist Economies, and Fertility
Political Geography:
Europe and Hungary

5. The Privatisation of the Polish Banking Sector

Author:
Hubert A. Janiszewski
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
Warsaw East European Review (WEER)
Institution:
Centre for East European Studies, University of Warsaw
Abstract:
The Polish banking sector, at the outset of the Balcerowicz reform plan, was com- posed of the central bank (NBP), 9 regional commercial banks (which had spun out from NBP back in 1988): the state savings bank – PKO BP; the state bank handling foreign com- merce – Bank Handlowy SA; the state bank handling retail foreign exchange transfers – PeKaO SA; the state bank for financing the agriculture sector – BGZ; and a number of small cooperative banks – BRE SA a bank financing export industries established in 1986; and a single private bank, albeit with equity provided by state enterprises – BIG SA. The Ministry of Finance faced a formidable task, firstly to restructure the banking sec- tor – primarily commercial banks and at a later stage privatize the whole sector in order to i.a make it market oriented, flexible and serve large chunks of the rapidly privatizing economy as well as to cater to the needs of the population. It should be stressed – to give the full description of the sector, that the percentage of bad loans in all the above-mentioned banks (except BIG, BRE and probably PKO BP) was between 30 to 50% of their portfolios! It was therefore decided by Finance Minister Leszek Balcerowicz and his key staff, that prior to their privatization, restructuring of the banks was the key for their success. The major problem with restructuring was a lack of funding, which was not available as the Polish state was bankrupt and private resources were by far too small, and politi- cally inaccessible; moreover the parliament would not allow creation of additional debt by way of equity injections to the ailing banking sector. Under those difficult conditions Balcerowicz managed to pass through parliament a set of legislation on restructuring the economy including banks, which allowed for the provision of banks with so-called restructuring bonds (a special law had been enacted called the “Law on financial restructuring of banks and enterprises”) to strengthen their balance sheets and force them to individually, over time, repay such new debts. In order to guide and help the banks with the restructuring, with the assistance of the British Government, the so-called British Know How Fund was created, whose purpose was to provide professional advice and assistance to all commercial banks. This advice was strengthened by a so-called “twinning arrangement”, under which each of the nine commercial banks was provided with a “twin partner” in the form of an established western bank. Among the banks that participated in this scheme were the Allied Irish Bank (twinned to WBK based in Poznan), ING (Bank Śląski in Katowice) and the Midland Bank (Bank Za- chodni in Wroclaw). The whole operation was launched in early 1990 and was completed by early 1993, thus most of the commercial banks were potentially ”ready” for privatization with substan- tially improved balance sheets. Parallel to the above, all the other banks embarked on the restructuring of their balance sheets, if only in order to stay competitive in the market.
Topic:
Privatization, Finance, State Capitalism, and Banking
Political Geography:
Europe, Eastern Europe, and Poland

6. Consolidating Neoliberalism through Privatisation: The Case of the EU after the Eurozone Crisis

Author:
Özgün Sarimehmet Duman
Publication Date:
09-2019
Content Type:
Journal Article
Journal:
Uluslararasi Iliskiler
Institution:
International Relations Council of Turkey (UİK-IRCT)
Abstract:
This article offers an inquiry into the increasing importance of privatisation policies in the European Union (EU). It evaluates the emphasis on international competitiveness and market efficiency to offer a comparative analysis of commodification, marketisation, liberalisation and privatisation policies in the pre- and post-crisis EU. It states that the EU introduced new mechanisms to explicitly promote privatisation policies in its member states after the Eurozone crisis. The article concludes that the EU’s lead in privatisation has functioned as a disciplinary mechanism for the member states to introduce and implement extensive privatisation policies. The EU has tended to consolidate neoliberalism through privatisation after the Eurozone crisis.
Topic:
Economics, Privatization, Financial Crisis, European Union, and Neoliberalism
Political Geography:
Europe

7. The Invisible Hand? Critical Information Infrastructures, Commercialisation and National Security

Author:
Riccardo Alcaro, Giampiero Giacomello, and Johan Eriksson
Publication Date:
05-2018
Content Type:
Journal Article
Journal:
The International Spectator
Institution:
Istituto Affari Internazionali
Abstract:
Corporatisation of critical information infrastructure (CII) is rooted in the ‘privatisation wave’ of the 1980s-90s, when the ground was laid for outsourcing public utilities. Despite well-known risks relating to reliability, resilience, and accountability, commitment to efficiency imperatives have driven governments to outsource key public services and infrastructures. A recent illustrative case with enormous implications is the 2017 Swedish ICT scandal, where outsourcing of CII caused major security breaches. With the transfer of the Swedish Transport Agency’s ICT system to IBM and subcontractors, classified data and protected identities were made accessible to non-vetted foreign private employees – sensitive data could thus now be in anyone’s hands. This case clearly demonstrates accountability gaps that can arise in public-private governance of CII.
Topic:
Privatization, Science and Technology, Infrastructure, Public Sector, and Private Sector
Political Geography:
Europe, Sweden, and European Union

8. Change in Economic Policy Paradigm: Privatization and State Capture in Poland

Author:
Piotr Kozarzewski and Maciej Bałtowski
Publication Date:
07-2016
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
Piotr Kozarzewski and Maciej Bałtowski analyse the causes and manifestations of Poland’s recent shift in economic policy towards a more active role of the state, and use privatization policy as an example. The authors examine the effects of the privatization policy and point to a large unfinished agenda in ownership transformation that has had an adverse impact on the institutional setup of the Polish state, creating grounds for rent seeking and cronyism, which, in turn, impede the pace of privatization. They find out that it is the increasing capture of the state by rent-seeking groups, and not, contrary to popular opinion, the global financial crisis, that most contributes to the growing statist trends of Poland’s economic policy. The publication is a part of a CASE Working Papers series.
Topic:
Privatization, Financial Crisis, Reform, State, Economic Policy, Institutions, and Macroeconomics
Political Geography:
Europe and Poland

9. Post-privatisation Corporate Performance in Poland. Evidence from Companies Privatized in 2008-2011

Author:
Barbara Błaszczyk and Wiktor Patena
Publication Date:
11-2015
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The study concerns the effects of Polish privatisation program conducted in the years 2008-2011. After drawing a broad picture of this process we investigate the performance of 59 privatised companies, and finally focus on a deeper analysis of three companies, which is the core part of our study. We test the hypotheses that privatisation increases a company's profitability, labour productivity, capital investment spending, plow-back ratio and leverage. In case studies, we additionally explore the effect of privatization on each company’s value. The outcomes concerning the larger group of companies are partly ambiguous (with four hypotheses confirmed and four rejected). Profitability has been not visibly improved, although a number of positive initiatives and improvements in performance occurred. By contrast, the three case studies showed a significant improvement of profitability and all other performance indicators observed, as well as a considerable increase of company value. Our results show that privatisation works, though its full effects need time to occur.
Topic:
Privatization, Financial Markets, Economy, Economic Growth, State, Innovation, and Trade
Political Geography:
Europe, Central Asia, Caucasus, Eastern Europe, and Poland

10. Private Sector Development in the South and East Mediterranean Region

Author:
Mehdi Safavi and Richard Woodward
Publication Date:
10-2012
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This report is concerned with the analysis of privatization and private sector development for the eastern and southern Mediterranean countries partnered with the European Union and collectively known as MED-11. Noting that the analysis applies to the situation prior to the dislocations of the Arab Spring, we review the shift in the relative shares of the public and private sectors in these countries, as well as the business climate affecting the development of the private sector, examine a number of cultural factors that may influence the development of the private sector, and discuss some alternative scenarios for future developments. In the last 20 years, efforts have been made in all countries of the MED-11 to encourage private sector development and, to a greater or lesser extent, privatization of stateowned assets. However, there is a great deal of differentiation among the countries in the group. In the MED-11, Israel has not only the most business-friendly policy environment but also the most developed private sector, accounting for almost 80% of employment. The other countries of the region can be divided into two groups: one, including Algeria, Libya, and Syria, where reforms promoting privatization and private sector development have been very limited, and the rest, in which they have been much more extensive (the Palestine Authority is, for obvious reasons, a rather special case). A generally poor business environment makes for a large informal sector in almost every country in the region; however, generally speaking, we do not find the cultural factors we examine to be hostile to private sector development. Optimistic, reference and pessimistic scenarios are discussed; which of these is realized in any particular MED-11 country will depend greatly on the direction of change following the events of 2011’s Arab Spring.
Topic:
Development, Privatization, Economy, Innovation, and Private Sector
Political Geography:
Europe and Mediterranean