The sale of state-owned enterprises to foreign\ninvestors will encourage the attraction of private investment, which is a key\ndriver of economic growth. Moreover, the success of investment attraction\ndepends on the method of privatization and on who will be the new owner of the\nenterprise.<\/p>\n\n\n\n
This conclusion is made by the analysts of the Center\nfor Economic Strategy, the authors of the analytical note \u201cHOW TO INCREASE\nINVESTMENTS IN THE ECONOMY OF UKRAINE THROUGH PRIVATIZATION?”
\n
\nBased on the foreign experience and research of privatization practices in\nUkraine, the authors of the analytical note indicate the following factors that\ncontribute to the successful work of a state-owned enterprise after its sale to\na private investor:
\n
\nBuying an enterprise by a foreign investor;<\/p>\n\n\n\n
Absence of previous relations of the buyer with the\nactivities and management of the company;<\/p>\n\n\n\n
Substitution of the previous managerial staff;<\/p>\n\n\n\n
Minimization of control and share of the enterprise in\nthe property of the state after its privatization;<\/p>\n\n\n\n
Increase of a competitive pressure as a result of loss\nof the state support and equalization of rules of the game;<\/p>\n\n\n\n
Providing guarantees and respecting the property\nrights of buyers of state-owned enterprises;<\/p>\n\n\n\n
Transparency of the contract and reduction of\ninformation asymmetry.<\/p>\n\n\n\n
In particular, the study [1] of the privatization effects in Ukraine shows that during 6 years the state-owned enterprises were able to increase productivity by 16-18%. The effect of privatization for the enterprises acquired by foreign buyers was by 17-33% higher compared to the enterprises purchased by national owners. It is worth noting that this effect was much weaker for the enterprises bought by owners from offshore countries and Russia.
Now, with the start of a new wave of \u201cbig\u201d and \u201csmall\u201d privatization in Ukraine, it is too early to state for sure about the amount of investment. It would be possible to estimate its amount in 5-10 years. However, the new procedure with open auctions has a positive effect on competition in the process of sale, thus increasing the volume of revenues for the company. In this case, the most favourable option for purchasing a state-owned enterprise is its acquisition by the investor a) from a foreign country; b) not related to the activity of the enterprise; c) the one who will completely substitute the old management.
<\/p>\n\n\n\n
The authors of the analytical brief state that the\nprivatization of state-owned enterprises can become a source of investment\ninflow either directly through the acquisition of a business by a new owner or\nthrough additional investment needed to restructure predominantly inefficient\nstate-owned enterprises.<\/p>\n\n\n\n
Thus, the authors conclude that privatization can\naccelerate economic growth under the following conditions:
\n
\nActive involvement of foreign investors in the privatization.<\/p>\n\n\n\n
Reducing the level of information asymmetry by\nattracting investment advisers.<\/p>\n\n\n\n
Linking the system of financial and non-financial\nincentives for the top management to fulfil privatization plans.<\/p>\n\n\n\n
First of all, to privatize the enterprises operating\nin the competitive markets.\n\nThe state will not retain the\nownership of its share at the state-owned enterprises.
\n[1] Brown, J. D., Earle, J. S., Shpak, S., & Vakhitov, V. (2015). Is\nPrivatization Working in Ukraine? New Estimates from Comprehensive\nManufacturing Firm Data, 1989-2013. SSRN Electronic Journal.\ndoi:10.2139\/ssrn.2641200\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"
The sale of state-owned enterprises to foreign investors will encourage the attraction of private investment, which is a key driver of economic growth. Moreover, the success of investment attraction depends on the method of privatization and on who will be the new owner of the enterprise. This conclusion is made by the analysts of the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[176,404,197,143],"tags":[556],"experts":[169],"news_type":[140],"class_list":["post-8311","post","type-post","status-publish","format-standard","hentry","category-macroeconomics-en","category-business-en","category-research-list-en","category-home-news-en","tag-privatisation-en","experts-dmytro-yablonovskyy","news_type-researches"],"acf":[],"_links":{"self":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/8311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/comments?post=8311"}],"version-history":[{"count":0,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/8311\/revisions"}],"wp:attachment":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/media?parent=8311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/categories?post=8311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/tags?post=8311"},{"taxonomy":"experts","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/experts?post=8311"},{"taxonomy":"news_type","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/news_type?post=8311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}