Social and Behavioral Sciences Commons^™

The Productivity Effects Of Privatization: Longitudinal Estimates From Hungary, Romania, Russia, And Ukraine, J. David Brown, John S. Earle, Álmos Telegdy

Upjohn Institute Working Papers

This paper estimates the effect of privatization on multifactor productivity (MFP) using long panel data for nearly the universe of initially state-owned manufacturing firms in four economies. We exploit the key longitudinal feature of our data to measure and control for pre-privatization selection bias and to estimate long-run impacts. We find that the magnitudes of our estimates are robust to alternative functional forms, but sensitive to how we control for selection. Our preferred random growth models imply that majority privatization raises MFP about 15% in Romania, 8% in Hungary, and 2% in Ukraine, while in Russia it lowers it 3%. …