Download State Ownership: Are Hungarian nationalizations unique?

STATE OWNERSHIP: ARE
HUNGARIAN NATIONALIZATIONS
UNIQUE?
Éva Voszka, University of Szeged
COMPARISON WITH THE EU COUNTRIES
A snapshot: the lack of fully-fledged models
1.
The starting position
2.
Expansion after 2008
3.
Timing
4.
Declared goals
5.
Sectors concerned
6.
Methods
7.
Directions
8.
Conclusions
1A. RATHER LOW LEVEL OF STATE
OWNERSHIP BEFORE THE CRISIS
Government assets in % of GDP
1999
2007
2014
EU
average
CEE
average
Hungary
13,6
16,3
15,2
32,1
19,9
18,9
23,0
11,1
14,8
Poland
22,6
23,5
16,2
Source: Eurostat
1.B. SOE SHARE IN SELECTED EU
COUNTRIES, 2008-09
Number of Share in
firms
employment
EU 13
average
CEE 5
average
Hungary
Poland
Asset share
in GDP
50
3,5
8,2
264
379
712
3,7
4,4
3,5
12,9
7,4
23,7
Source: Christiansen (2011) OECD
2A. FRONTRUNNER IN EXPANSION
Recapitalization Nationalization
of banks/GDP
/GDP
EU avarage
CEE average
Hungary
Poland
3,4x/
1,1xx/
0,0
2,4-3,1
n.d.
5,2
0,0
n.d
x/ High: Ireland 38%, Greece 22%, United Kingdom, Spain,
Belgium 5-6%
xx/ Slovenia 8,9%, Latvia 2%, Lithuania 1%, all
others 0%
Source: Recapitalization DG Competition, Crisis related
state aid used 2008-2013, Nationalization own
estimation
2.B. SOE SHARE IN 2012
Number
of firms
EU 13
average
CEE 5
average
Hungary
Poland
Share in
employment
Asset
share in
GDP
41
3,6
10,4
186
373
336
4,4
4,4
1,5
15,9
10,6
15,6
Source: OECD (2013)
3. DELAYED NATIONALIZATIONS
(Per cent of total expenditure)
2008-2010
EU
67,4
(recapitalization)
HU
0,0
(nationalization)
201132,6
100,0
Source: European Commission (2014): State aid scoreboard
4. A NEW MODEL OF CAPITALISM
Declared goals of nationalizations
EU
smooth operation of financial
markets
restoration of confidence
alleviate recession
crisis management
HU
the crisis of neoliberal market economy;
public interest, sovereign economic policy
remedy of market failures (monopolies)
rearrangement of property and income
distribution (to correct „unfair”
privatization)
“creation of a new system”
5. BROADER SECTORIAL COVERAGE
HU
EU
- financial
institutions
- „aftershock”:
public services
energy sector
Non-tradable
sectors:
- Banks (other
than bailout)
-Public utilities
- Pension
funds
Other sectors:
Energy
manufacturing
transport
communication
real estate,etc.
6. OWNERSHIP CHANGES EMBEDDED INTO
LEGISLATIVE AND REGULATORY MEASURES
EU
- purchase
(increase of
capital in
banks),
-termination of
contracts
- ‘nationalization
of profits’
(rarely)
HU
- purchase – value of
firms depressed by
regulation (special taxes),
administrative prices
- direct economic pressure
- ‘expropriation’
7. NATIONALIZATION ACCOMPANIED BY
PRIVATIZATIONS
EU
Soruce:
Privatization
Barometer
New state
investments:
banks (to
original and
new owners)
Old state
assets:
Other sectors
(60% of total
EU priv.
income 200914) –Poland
2., following
Portugal
HU
New state
ownership to new
owners:
Banks
Tobacco shops
Old state
assets:
Broadband
spectrum
Airport
services
Agricultural
land
CONCLUSIONS
Similarities





The presence of state ownership before the crisis
It’s expansion after 2008
Different sectors, including banks
Mainly purchase
Nationalization and privatization parallely
Differences – quantitative indicators

Extent, proportions
Unique in qualitative aspects


the goal is to set up a new form of capitalism,
with the decisive role of the state – rather than a
short-term crisis management tool
embedded into a wide range of regulatory and
policy measures
IS IT REALLY A NEW MODEL?
Counter arguments
- State ownership is still around European average, although in
some sectors (public services, energy, banking) it became
rather high
- Nationalization did not concern major sectors (construction,
different kinds of services, export oriented manufacturing) –
market economy and foreign ownership persist
- Privatization is modest: income less than 1% of GDP, reprivatization to selected domestic groups insignificant
But
- Constraints of the market (admin. prices, regulation, new
monopolies, etc.)
- Expansion in the role of the state (also by regulation and state
subsidies), centralization of decision-making
- Domestic entrepreneurial groups, selected by the government
are being enriched also by making business with new or old
state enterprises, by state orders or other subsidies.