Joaquim Vergés

Privatisations in Spain: Process, Policies and Goals

This paper analyses the privatisation process carried out in Spain through the period 1985–1998. Firstly, an updated overview of the magnitude of the process is presented, paying also attention to the legal background, the economic features of the privatised firms, and the ways and procedures. And secondly, the paper provides a critical assessment of the objectives that the successive governments have actually pursued through privatisations; so, we attempt to verify to which extent privatisations carried out could be related to the usual explanatory hypotheses based in the property rights theory. As a result it is argued here that the main goals actually pursued by Spanish governments (given the features of the privatised firms) do not fit well with such hypotheses.

Why governments sell public firms: The Spanish case

This paper compares the goals that the successive Spanish governments have actually pursued (as deduced from the set of privatizations carried out over the last fifteen years) with the standard hypotheses used in economic literature to explain privatization in general. The results show that the cash-collecting goal appears as the relevant explanatory hypotheses for most of the privatizations carried out. Also, all of the state-owned firms that operated under monopoly conditions have actually been privatized but retain, at least partially, their monopoly position (they involve activities where natural monopoly features are present). This has led to establishing new regulatory rules (reregulation) and that privatization, per se, has not resulted in substantial improvements in competition.

What We Talk About When We Talk of Productivity

The common understanding for ‘Productivity’ is quite straightforward: Its value increases if a company either produce more of some goods or services with the same resources (personnel and the rest of productive factors), or produce the same quantities of good and services with less of some of the resources. Or a given mix of both types of moves, including trade-offs between favourable and unfavourable moves. In the above quite intuitive formulation -- which, broadly coincides with experts’ -- you may substitute ‘a company’ by ‘any organisation producing goods or delivering services’, or by an ‘industry’ or economic sector, or by the entire country (the whole of its sectors). Newspapers and media in general talk frequently on productivity. For example, in terms of “...the problem of our economy is that productivity is comparatively low/is-lagging-behind (and here the figure for a productivity index referred to the country)”. Or “…There is a need for serious reforms be undertaken addressed to increase productivity, in order our economy become more competitive and so…”; or “...industry’s Unions and Employers Association representatives agreed finally on an increase on salaries for this year equal to the last year increase in productivity less half a point. The agreement comes subject to...”. In any case, data on productivity levels - be it at an industry or country level - have last years become one familiar component in the media news and in socio-political debate. Do those data on productivity (usually referred to labour productivity) talk us actually of productivity in the sense stated at the beginning, which is the implicit meaning media and experts transmit about? Surprisingly the answer is: not actually. That in spite of the fact that those data are presented as out-of-discussion, since the acknowledged source for them are some official statistics institution, national or international, as Eurostat - for the EU countries, OECD, BLS (US), ...etc.By way of example: According to Eurostat, the EU’s country with the highest labour productivity level in 2013 was Luxembourg: 163,9; and the following one in the ranking was Ireland (135,5). Quite below appear Germany (107), France (116) and Spain (111), for example. One certainly gets surprised by reading that Luxembourg workers are about 64% more efficient that German workers. Where are those Luxembourg’s set of factories or services companies whose employees work with a so much productivity (that is, producing so much more goods o delivering so much more services per-person) that their German counterparts? Direct observations show that obviously this is not the case. The above productivity differences, 163,9 vs. 107 are against all evidence. Or the above indexes do not refer actually to the common-knowledge concept of productivity stated at the beginning - in spite they being so used in the media and the political arena. Then, what do actually mean those ‘productivity indexes’ for such and such country? How are they in fact calculated by the specialised agencies (first the nationals ones, then the Eurostat, OECD, etc.)? The present notes, written for non-professionals, try to answer such questions. They start by presenting a summary on the way economists and statisticians calculate the more frequently used productivity measures, at enterprises level -- namely, Total productivity and Labour productivity -- which are the conceptual basis. And then, attention is driven to how their adaptations to sector (‘industry’) and whole-country level are calculated by statistics agencies. This allows finally to discuss and make clear the real meaning of these indexes, and so to prevent against the frequently misleading use and interpretation of productivity statistical data in the media and the socio-political arena that are leading to distorted conclusions regarding the real world.

Eficiencia Comparativa Empresa Pública vs. Empresa Privada: La Evidencia Empírica (Comparative Efficiency of Public-Owned vs. Private-Owned Companies: The Empirical Evidence)

Spanish Abstract: ? Las Empresas Publicas funcionan en general con una menor eficiencia que sus equivalentes Privadas, como reza el topico al respecto? Se trata de un lugar comun utilizado profusamente como un axioma indiscutible, principalmente desde posiciones politicas conservadoras. Aunque tambien frecuentemente asumido por publicaciones, comentaristas o politicos que no pretenden serlo. A este topico contribuye, sin duda, que desde la teoria economica dominante, la especifica ‘teoria de los derechos de propiedad’ sostiene en su tesis principal la prediccion de que en el caso de una empresa publica la persona que la gestione (Director/a General, o el equipo directivo) sera necesariamente menos eficaz que en caso de una empresa privada principalmente porque el sistema de control e incentivos sobre su gestion (por parte de la instancia publica propietaria) sera a su vez o inexistente o muy poco eficaz.Independientemente de que las premisas en que se basa tal teoria pueda estimarse que no se dan en muchos casos, ?Que nos muestra la observacion de la realidad? ?Que nos dice la evidencia empirica sobre tal lugar comun respecto a si las empresas publicas son en general o ‘por naturaleza’ menos eficientes?El objetivo del presente trabajo es presentar y analizar la evidencia empirica acumulada durante decadas al respecto a escala internacional (apartados 2 y 3). Es decir, estudios empiricos que tratan de comparar, utilizando ciertos indicadores, la eficiencia de empresas publicas (EP) con la de empresas privadas (PR). Se trata en cualquier caso de investigaciones publicadas en revistas academicas reconocidas internacionalmente, o en publicaciones equivalentes de instituciones economicas como el Banco Mundial, el Banco de Espana, etc.Puede anticiparse que entre las conclusiones generales aqui derivadas del analisis de ese conjunto de estudios empiricos (alrededor de 160) –y expuestas en el apartado 4- destaca la de que en una parte mayoritaria de esos estudios –entre 2/3 y un 58%- sus autores concluyeron que las empresas privadas de la muestra examinada presentaban un mayor nivel de eficiencia -segun el indicador utilizado- que en el caso de las empresas publicas incluidas en la muestra. Y que en el resto de los estudios recopilados –entre 1/3 y un 42% de ellos- los autores concluyeron que no detectaron diferencias significativas, o bien que las empresas publicas de la muestra presentaban mejores niveles para los indicadores de eficiencia que los de las privadas con las que se comparaban.Esto permite afirmar pues que la referida prediccion de la teoria de los derechos de propiedad -sobre que siempre o en general o por naturaleza las empresas publicas seran menos eficientes- no se cumple en la realidad en un numero significativo de casos: entre 1/3 y un 42%; (por lo que cabe suponer que tal teoria debe estar desde hace tiempo en curso de ser reformulada en las agendas de los correspondientes teoricos).Por otra parte, un analisis mas detallado de los 160 estudios referidos -considerando solo aquellos en que consta explicitamente que el indicador de eficiencia utilizado para basar las conclusiones no era tipo beneficios (dado sus limitaciones en cuanto a medir la eficiencia, discutidas aqui)- permite anadir que la proporcion anterior (2/3 - 1/3) pasa al 50-50%: Es decir, igual numero de estudios que concluyen que las empresas publicas estudiadas fueron menos eficientes como de estudios que concluyen que no.El presente informe finaliza con un resumen del ‘estado de la cuestion’ segun lo anterior (punto 5.1), asi como con un intento de contestar unas peguntas relevantes que tal estado de la cuestion sugieren (punto 5.2): ?De que depende que una determinada empresa que, como la EP, no es gestionada por sus propietarios (situacion que de hecho es la dominante tambien en medianas y grandes empresas privadas) sea mas o menos eficiente? ?Cuales son las condiciones que hacen que esa empresa –sea publica o privada- pueda mejorar su eficiencia? O, visto desde otra perspectiva ?Cuales son los ‘defectos’ que explicarian una menor eficiencia comparativa -y cuya eliminacion permitirian que la empresa en cuestion mejorase su eficiencia?Disculpas anticipadas al/a lector/a si encuentra que la respuesta que encontrara al final para tales preguntas no es corta y perfectamente definida sino un tanto compleja.English Abstract: Do the Public Owned Enterprises operate generally with a lower efficiency than their Private equivalents, as the topical on the matter goes? It is certainly a common place, profusely used as an unquestionable axiom, mainly from conservative political positions. Although frequently also assumed by publications, commentators or politicians that do not consider themselves to be so. Of course, It contributes to that topical statement the fact that from the dominant economic theory, the specific one “theory of the property rights” supports in its main thesis the prediction that in the case of a public owned company the person who manages it (President, CEO, or the top-managers team) will be necessarily less effective than in case of a private enterprise; mainly because the control-and-incentive system – which will be applied by the public-property representatives (Administration) – in order to assess and motivate the company’s management will be either nonexistent or very little effective.Independent of the fact that the premises on which is based such prediction can be considered that they do not hold in many cases, What in the end the observation of reality shows to us about? What says to us the empirical evidence on such a common place – regarding if the public owned enterprises (PE) are generally or “by nature” less efficient than the private ones (PR)? The objective of this work is to present and analyze the empirical evidence on the matter that has been accumulated at international scale along last decades (sections 2 and 3): I.e., those empirical studies that try to compare, using certain indicators, the efficiency level of PE with the one of PR. Which means comparative research published in academic internationally-recognized journals, or equivalent publications by economic institutions like the World Bank, the Bank of Spain, etc.It can be anticipated that, among the general conclusions derived here (set out in section 4) from the analysis of the set of available empirical studies (around 160), it highlights the following one: In most of those studies – between 2/3 and 58% of them – their authors concluded that PR enterprises of the samples under analysis presented an efficiency-indicator level better than in the case of the PE in the sample. And that in the remaining compiled studies – between 1/3 and 42% – the authors conclude that they either did not detect significant differences or that the PE in the respective sample presented better indicators of efficiency than the PR they were compared with.This therefore allows to say that the referred prediction of the ‘theory of the property rights’ regarding PE always or in generally or by nature will perform as less efficient, is not fulfilled in the reality for a significant number of cases; (hence, it can be assumed that such theory must be since time ago on the way of being reformulated – as a task in the agendas of the corresponding theoreticians).On the other hand, a more detailed analysis of the referred 160 studies – by considering just those in which it is sure that the efficiency indicator used for drawing the conclusions was not benefits-type (because its limitations for efficiency measures, here discussed), allows to add that the above proportion (2/3-1/3) happens to change to 50-50%: That is, the same number of studies concluding that PE companies were less efficient, that studies concluding they do not.The present report finalizes with a summary on the “state of the question” according to the evidence presented and discussed (point 5,1), as well with an attempt to answer some relevant questions aroused by such state of the art (point 5,2). Thus: What it makes that a certain company, like a PE, which is not managed by its proprietors (a situation which is in fact dominant also among middle and large private enterprises), be more or less efficient? Which are the conditions that make that company – be it public or private – may improve its efficiency? Or, from another perspective, which are the shortcomings that would explain a lower comparative efficiency (and whose elimination would allow the referred company to improve its efficiency)?Apologies in advance to the reader if s/he feels that the answers to such questions that s/he will find at the end are not short and clear-cut but somewhat complex.

The Impact of Management Reforms on the Performance of Publicly Owned Enterprises

In this work we analyse to what degree the efficiency of a State owned non-monopolistic enterprise improves as a result of the introduction of strategic reforms consisting of adopting ‘private-firm-like’ management practices, criteria, and governance structure; i.e.: corporatization, commercialization or ‘organizational privatization’ measures . The subject is addressed here through an in-depth analysis of a case study, which presents fours moments of significant internal strategic reforms of the above type over the course of 22 years. The present work also presents an original methodological approach for the identification and characterization of this type of organizational reforms, together with a novel quantitative approach to the evaluation of those changes in the firm’s efficiency that can be attributed to the introduction of such measures. Our results give support to the hypothesis that the economic efficiency of State owned firms improve as a consequence of such organizational privatization strategic reforms, though the improvement may depend to some extent on the discrete measures that encompasses a given strategic reform.