State-owned Enterprise Reform

Abstract

Throughout the world, the commercialization of state-owned enterprises (SOEs) has led to increased efficiencies, reduced costs, improved service delivery, and better outcomes for the economy in terms of resource allocation and productivity. Why? Because commercialization allows SOE performance to be better measured in terms of results. Commercial governance structures bring about greater transparency and accountability, and create incentives for managers that are aligned with maximizing the value of an organization in behalf of its stakeholders. The next step beyond commercialization is full or partial privatization. While not a necessary outcome of commercialization, privatization can, among other benefits, ensure that gains achieved through commercialization are not reversed.