Reference no: EM13769564
The typical right wing/free market argument that leads to privatisation of government assets is that the government assets will be far more efficiently managed when in the hands of profit seeking capitalists, rather than being owned by the government.
Certainly it's fair to say that government departments are inefficient - a department that is directly funded by the government can't go bankrupt, so long as the government keeps funding it.
However, for a SOE the company still needs to stand on its own right, the SOE doesn't receive funding directly from the government.
The SOEs management structure is exactly the same as a privately owned company, except that the government is choosing who the board of directors is.
So the question is, unless the government is electing a board of directors that have different priorities to profit seeking capitalists, how is it that a SOE would be less efficient than a privately owned company?
Is there any research showing that SOEs are less profitable than privately owned companies?
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