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Privatisation in the European Union and in Italy: Some
Preliminary Results Using the Public Choice Approach
by
Friedrich Schneider (University of Linz)1)
1) Professor of Economics, Department of Economics, Johannes Kepler University Linz,
Altenbergerstrasse 69, A-4040 Linz-Auhof/AUSTRIA, Tel: 0043/732/2468-8210, Fax: -8209, email: [email protected], http://www.econ.jku.at/schneider
Parts from this presentation especially chapters 3 to 5 are taken from the paper “The Different Extent of
Privatisation Proceeds in EU Countries: A Preliminary Explanation Using a Public Choice Approach” jointly written
with Ansgar Belke, Frank Baumgärtner (both University of Stuttgart) and Ralph Setzer (Germand Bundesbank,
Frankfurt)
© Friedrich Schneider
1
The Different Extent of Privatisation Proceeds in EU Countries:
A Preliminary Explanation Using a Public Choice Approach
1: Introduction and Motivation
2: Previous Research and Some Empirical Facts of
Privatization
3: Some Theoretical Considerations to Explain the
Pattern of Privatisation from a Political-Economic
Perspective.
4: Explanation of Econometric Estimation Procedure
and Presentation of Results
5: Summary and Conclusion
© Friedrich Schneider
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1. Introduction and Motivation
(1) Strong increase in privatisation proceeds in EU
countries during the 1990s (compare Figures 2.1 and
2.2).
(2) However: Large discrepancies of privatisation proceeds
between countries have been observed.
(3) Idea: Political and institutional constraints should have a
major influence on the degree of privatisation proceeds.
(4) Each type of government weights the costs and benefits
of privatisation differently.
 Aim of this study: apply public choice approach to
explain different patterns in privation proceeds
among EU countries for time period 1990-2000 with
the help of a panel analysis.
© Friedrich Schneider
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2. Previous Research and Some
Empirical Facts on Privatisation
(A)
Many case-study approaches emphasizing the peculiarities of single
countries.
(B) Some research on the way of privatisation, utilisation of privatisation
proceeds and impact of privatisation on economic performance (OECD
2003a, Clifton et al. 2003, Belke/Schneider 2005).
(C) Few empirical multi-country studies:
(1) Boix (1997): differences in privatisation efforts in OECD countries
from 1979 to 1992 due to political determinants. According to the
results of this study,
(i) there is a significant positive impact on privatisation proceeds
under right-wing parties, whereas significantly lower efforts to
privatise are observed under left-wing regimes.
(ii) Moreover, the internal fragmentation of the cabinet and the status
as minority government seems to significantly hamper inhibit
privatisations.
(iii) Finally, a kind of problem pressure seems to matter as well, since
a weak economic performance prior to the period of observation is
significantly enhancing the extent of sales of state-owned enterprises.
© Friedrich Schneider
4
2. Previous Research and Some
Empirical Facts on Privatisation
(2) Bortolotti/Fantini/Siniscalco (2003) and Bortolotti/Siniscalco
(2004) compare the privatisation pattern of 48 countries
between 1977 and 1999. Their results:
(i) They cannot reject empirically that political institutions
and political parties have a significant impact on
privatisation
effort.
(ii) Specifically, a right-wing orientation of the government
significantly fosters privatisation proceeds.
(iii) Moreover, higher proceeds can predominantly be
observed in majoritarian democracies and less so in
countries where power is fragmented horizontally and
vertically.
(iv) In addition, privatisation revenues are significantly lower
in autocracies than in democracies.
© Friedrich Schneider
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2. Previous Research and Some Empirical
Facts on Privatisation – cont.
(3) Obinger/Zohlnhöfer (2004): Investigation of differences in the
privatisation proceeds raised by EU and OECD countries
between 1990 and 2000. Their results:
(i) They show that privatisations are one element of a process
of economic liberalisation in previously highly regulated
economies.
(ii) Moreover, privatisation can be interpreted as a reaction to
the fiscal policy challenges imposed by European integration
and, more generally, to the globalisation of financial markets.
(iii) Finally, their results imply significant and negative effects
of institutional pluralism and union militancy yield on
privatisation proceeds. Interestingly, partisan differences only
emerge if economic problems appear to be moderate,
whereas pressing economic, in particular fiscal problems seem
to make differing partisan strategies less relevant.
© Friedrich Schneider
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2. Previous Research and Some Empirical
Facts on Privatisation – cont.
(4) Obinger/Zohlnhöfer (2004) use classic OLS
regression with a single cross-section set of data.
However, it is by now generally accepted that such
a procedure has several limitations. It is therefore
preferable to use panel data and more sophisticated
estimation methods.
(5) Hence, a coherent empirical multi-country
assessment of statistical significance of the driving
forces behind the different country pattern of
privatisation proceeds has still to be done.
This paper tries to do this: a test of theoretically
derived hypotheses, richer dataset, empirically
more sophisticated.
© Friedrich Schneider
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2. Some Empirical Facts
Table 2.1: Privatisation Proceeds in 23 OECD Countries over 1990/91 to 2000
Country
Privatisation Proceeds in billion USD
1990/91
1992/93
1994/95
1996/97
1998/99
2000
1,061
3,950
10,144
36,011
22,366
6,239
Austria
80
191
1,735
3,954
2,564
2,083
Belgium
-
956
3,297
3,039
2,277
-
Canada
2,312
2,004
4,488
1,768
11
-
644
122
239
411
4,521
111
Finland
-
229
1,529
1,746
5,713
1,827
France
-
12,160
9,615
13,288
22,460
17,438
325
435
240
14,353
7,098
-
Great
Britain
34,731
9,127
8,032
12,154
-
-
Greece
-
35
117
1,953
8,772
1,384
Ireland
515
344
157
293
4,846
1,458
-
1,943
(1.8%)
13,927
(10.5%)
33,984
(13.6%)
39,230
(14.2%)
9,728
(15.0%)
Australia
Denmark
Germany
Italy (in %
of all
OECDCountries)
Source: OECD, Paris, various ©
years.
Friedrich Schneider
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2. Some Empirical Facts
Table 2.1: Privatisation Proceeds in 23 OECD Countries over
1990/91 to 2000 – cont.
Country
Privatisation Proceeds in billion USD
1990/91
1992/93
1994/95
1996/97
1998/99
2000
Japan
-
15,919
13,773
10,388
21,497
-
Luxemburg
-
-
-
-
-
-
New
Zealand
3,912
1,597
293
1,839
1,772
-
Poland
194
806
1,826
3,485
5,501
5,993
2,390
2,826
3,557
7,932
5,884
3,256
172
4,043
4,399
15,201
12,582
1,079
Sweden
-
630
3,165
1,840
2,243
8,082
Switzerland
-
-
-
-
4,426
-
Tschech.
Republic
-
-
2,282
1,436
1,176
544
Turkey
730
989
1,973
758
1,816
2,712
Ungarn
508
2,562
4,830
3,123
441
66
62,423
107,332
133,873
249,562
275,804
65,063
Portugal
Spain
Total OECD
Source: OECD, Paris, various years.
© Friedrich Schneider
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2. Some Empirical Facts
Figure 2.1: Privatization revenues in EU countries
(1990-2000)
80
70
in billion USD
60
50
40
30
20
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Note: Luxembourg is excluded.
Source: OECD (2002), Paris.
© Friedrich Schneider
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2. Some Empirical Facts
Table 2.2: The Extent of Privatisation Proceeds
Country
Privatisation revenues (1990-2000)
Total
(Mio. USD)
% of GDP
per capita
(USD)
10,436
5.06
1,273
Belgium
9,611
3.74
925
Denmark
6,048
3.63
1,110
Finland
11,000
9.02
2,103
France
75,488
5.50
1,240
Germany
21,711
0.99
263
Great Britain
42,808
3.96
706
Greece
12,329
10.12
1,154
Ireland
7,613
9.02
1,875
108,642
9.46
1,869
Netherlands
13,641
3.63
827
Portugal
25,292
25.30
2,385
Spain
37,660
6.71
932
Sweden
17,295
7.26
1,918
Austria
Italy
Source: OECD (2002), Paris. © Friedrich Schneider
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2. Some Empirical Facts
25,30
Figure
30,00 2.2: The Extent of Privatisation Proceeds in % of GDP over 1990 to 2000
25,00
10,12
9,46
9,02
9,02
7,26
5,50
5,06
3,96
3,74
0,99
5,00
3,63
3,63
10,00
6,71
15,00
Source: OECD (2002), Paris. © Friedrich Schneider
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12
2. Some Empirical Facts
Table 2.3: Privatisation Proceeds from public enterprises in Italy
Year
Annual Proceeds billion Euro (in %)
Total cumulative proceeds (billion Euro)
1992
0.6 (0.5%)
0.6
1993
2.6 (2.2%)
3.2
1994
7.6 (6.5%)
10.8
1995
8.4 (7.2%)
19.2
1996
9.5 (8.1%)
28.7
1997
21.6 (18.4%)
50.3
1998
12.93 (11.0%)
63.23
1999
24.37 (20.8%)
87.6
2000
10.8 (9.2%)
98.4
2001
4.2 (3.6%)
102.6
2002
1.5 (1.3%)
104.1
2003
5.6 (4.8%)
109.7
2004
7.6 (6.5%)
117.3
SUM
117.3 (100%)
117.3
Source: OECD Country Study, Italy, Paris, November 2005.
© Friedrich Schneider
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3. Some Theoretical Considerations
3.1. Privatisation as means to cope with
macroeconomic pressure
(1) Privatisation efforts as a reaction of governments to
economic challenges, such as high unemployment, decent
economic growth and excessive public debt (Hall 1993,
Boix 1997).
→ Privatisation Revenues increase
(2) Imperative of supply side economics: privately owned firms
are more efficient than state owned enterprises (SOE)
(Megginson/Netter 2001, Belke/Schneider 2005).
(3) Negative impact of economic growth and economic freedom
on privatisation proceeds.
(4) Privatisation efforts are able to markedly improve the
budgetary stance without hampering taxpayers even further
or incur spending cuts.
© Friedrich Schneider
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3. Some Theoretical Considerations
3.2. Government ideology, partisanship and
privatisation
(5) Political attractiveness of privatisation varies according
to the macroeconomic preferences of the party in
power.
(6) Right-wing parties favour market solutions.
(7) Right-wing governments with re-election concerns
design privatisation to spread share ownership among
domestic voters.
(8) Left-wing governments with lack of confidence in the
stability of the private sector (SOE as “employment
buffers” during recessions).
(9) SOE employees (main losers of privatisation)
represent an important part of left-wing parties’ core
clientele.
© Friedrich Schneider
15
3. Some Theoretical Considerations
3.3. Institutional constraints and privatisation
(10) Privatisation as a political process: The probability of one
player vetoing the privatisation decision increases with
growing number of players involved.
 The amount of privatisation revenues declines with
an increasing number of coalition partners.
(11) On the other hand: privatisation option most passable way
considering the resistance against expenditure cuts or tax
increases.
 If coalition governments aim at a containment of the
budgetary deficits, they will possibly select the most
uncontroversial consolidation path.
(12) state-owned enterprises are allocated on different national
levels.
 Federalism could both reduce or increase privat.
activity.
© Friedrich Schneider
16
3. Some Theoretical Considerations
3.4. Interest groups and privatisation
(13) Employers’ and unions’ interests concerning
privatisation policies are sharply opposed to each
other.
(14) Enterprises are in favour of privatization: expectation
of efficiency gains.
(15) Labour unions tend to oppose privatisations:
employees of SOEs profit from safe jobs with well
above-average working conditions and payment
(Schwartz 2001).
 Privatisation revenues should be lower if union
strength is large and vice versa.
© Friedrich Schneider
17
3. Some Theoretical Considerations
3.5. Supra-national impacts on privatisation
(16) National economic policy is subject of increasing
control by the international capital markets.
 privatisation revenues of a country are expected
to increase with a rising openness of its capital
market.
(17) European integration also forces privatisation politics:
1. single market program, which
liberalisation of many sectors, and
led
to
the
2. through the Maastricht fiscal criteria
© Friedrich Schneider
18
4. Empirical/Econometric Results
Table 4.1: Theoretically derived test equation explaining privatization proceeds
Dependent variable
Independent variables
(1) PRIV/GDP i,t = (Priv.
Proceeds in % of GDP)
i  country-specific intercept +
Expected signs
1  GDP (-1)i,t +
(Annual growth rate of GDP, lagged)
+
2  UNER (-1)i,t +
(Unemployment rate, lagged)
+
3  ECOFREE i,t +
(Economic freedom)
+
4  GGFB (-1)I,t +
(general government financial balances; surplus+, deficit-, lagged)
-
5  RPCAP i,t +
(Right parties cabinet portfolios as a % of all cabinet portfolios)
+
6  VETO i,t +
(Number of veto players)
-
7  FED i,t +
(Intensity of federalism)
-
8  STRIKE (-1)i,t +
(Number of working days lost through strikes, lagged)
-
9  OPEN (-1)i,t +
(economic openness, lagged)
+
10  SOE i,t +
(Size of the State-Owned-Enterprises (SOE)-sector)
+
 i,t
(error term)
with the expected signs= 1<0; 2>0; 3>0; 4<0; 5>0; 6<0; 7<0; 8<0; 9>0; 10>0; i= country,t = time (year); index
© Friedrich Schneider
19
number corresponds to hypothesis number in section 3.
4. Empirical/Econometric Results
4.2. Empirical/Econometric method
(1) Application of standard panel analysis (adequacy
confirmed by Breusch-Pagan test).
(2) Stationarity of all variables checked by Levin-Lin panel
unit root test.
 all variables used are in levels.
(3) Benchmark regression: Feasible Generalized Least
Squares (FGLS) to account for heteroskedasticity.
(4) Large number of robustness tests with respect to time
dimension, country sample, and estimation technique.
© Friedrich Schneider
20
4. Empirical/Econometric Results
Table 4.2: Determinants of privatization proceeds in 14 EU countries, 1989-2000,
feasible generalized least squares
GDP(-1)
UNER(-1)
GGFB(-1)
ECOFREE
RPCAB
VETO
FED
STRIKE(-1)
OPEN(-1)
SOE
Constant
Observations
Number of countries
Wald chi2
Prob>chi2
AIC
BIC
(1)
-0.023
(0.024)
0.048***
(0.018)
-0.002
(0.016)
-0.328*
(0.182)
0.000
(0.001)
-0.025
(0.033)
-0.067***
(0.023)
-0.000
(0.001)
0.002
(0.002)
-0.016
(0.020)
2.793*
(1.507)
97
14
48.97
0.00
162.44
190.76
(2)
-0.040*
(0.022)
0.034*
(0.018)
-0.009
(0.017)
-0.000
(0.001)
-0.040
(0.033)
-0.076***
(0.024)
-0.000
(0.001)
0.002
(0.002)
0.018*
(0.011)
0.184
(0.232)
97
14
39.10
0.00
162.35
188.09
(3)
-0.031
(0.022)
0.040***
(0.015)
(4)
-0.025
(0.020)
0.039**
(0.015)
-0.034
(0.031)
-0.093***
(0.021)
-0.093***
(0.022)
0.002
(0.001)
0.030***
(0.009)
0.064
(0.218)
114
14
52.01
0.00
199.85
219.00
0.028***
(0.009)
0.051
(0.171)
114
14
46.44
0.00
198.48
212.16
Note: Dependent variable is yearly privatization proceeds in percent of BIP. *, **, *** indicate
significance at the 10%, 5%, 1% level, ©
respectively.
deviations are reported below each value
FriedrichStandard
Schneider
in brackets.
21
4. Empirical/Econometric Results
4.3. Results
4.3.1 Benchmark Regression results:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
All economic and most political variables perform as predicted:
Some support for the positive impact of low economic growth (H1)
and lax fiscal policy (H4) on PR.
As expected, positive relationship between unemployment and
privatization revenues (H2).
In line with theory, economic freedom is negatively related to
privatization revenues (H3).
Only weak support for partisan motives (H5).
Higher degree of federalism is associated with lower privatization
proceeds (H7) – however, the result is mainly driven by Germany.
Only the coefficient of the initial level of state ownership (SOE)
enters with the opposite sign. Removing ECOFREE results in a
more consistent picture. As is evident from model (2), the variable
SOE changes sign and turns out to be significant indicating that
privatisation proceeds in the 1990s were higher in countries
where the level of state ownership was high at the beginning of
the decade (hypothesis 10).
© Friedrich Schneider
22
4. Empirical/Econometric Results
4.3.1 Benchmark Regression results:
(8) No clear evidence for economic integration (H9) and
the number of veto players (H6) to influence PR.
(9) The remaining variables are not significant at standard
levels.
(10) The models (3) and (4) check for alternative
specifications removing those variables that are not
significant throughout our estimations. Both the sign
and the statistical significance of the remaining
variables do hardly change.
The most notable change is that the variable SOE
turns out to be significant even at the 1 percent level
now.
© Friedrich Schneider
23
4. Empirical/Econometric Results
4.3.2. Robustness Checks
(1) Given the heterogeneity in the sample, we
conducted a number of robustness checks to
see whether our results are robust
to the sample period,
the countries in the sample, and
the estimation procedure.
(2) A first robustness check adds interval dummies
to the specification for three different subperiods in order to model time effects (19901994, 1995-1997, 1998-2000). Results in
Table 4.3.
© Friedrich Schneider
24
4. Empirical/Econometric Results
Table 4.3: Determinants of privatization proceeds in 14 EU countries, 1989-2000,
feasible generalized least squares, robustness check in time dimension
GDP(-1)
UNER(-1)
GGFB(-1)
ECOFREE
RPCAB
(1)
-0.022**
(0.011)
-0.026*
(0.015)
-0.054***
(0.017)
-0.571***
(0.181)
0.005***
(0.001)
(2)
-0.027**
(0.012)
-0.031*
(0.016)
-0.058***
(0.018)
(3)
-0.027**
(0.012)
-0.027*
(0.016)
-0.053***
(0.018)
0.005***
(0.001)
0.006***
(0.001)
LPCAB
VETO
FED
STRIKE(-1)
OPEN(-1)
SOE
p9597
p9800
Constant
Observations
Number of countries
Wald chi2
Prob>chi2
AIC
BIC
(4)
-0.023**
(0.011)
-0.021
(0.015)
-0.046***
(0.017)
-0.005***
(0.000)
0.045
(0.032)
-0.091***
(0.020)
0.000
(0.001)
0.004***
(0.001)
-0.025
(0.019)
0.115**
(0.054)
0.714***
(0.066)
4.215***
(1.498)
97
14
429.65
0.00
148.79
182.26
0.029
(0.033)
-0.101***
(0.022)
0.000
(0.001)
0.005***
(0.001)
0.030***
(0.011)
0.049
(0.050)
0.640***
(0.065)
-0.486**
(0.225)
97
14
410.27
0.00
153.92
184.81
-0.112***
(0.021)
-0.119***
(0.021)
0.005***
(0.001)
0.036***
(0.010)
0.066*
(0.037)
0.624***
(0.062)
-0.441**
(0.217)
97
14
394.84
0.00
150.79
176.53
0.004***
(0.001)
0.027***
(0.010)
0.093***
(0.036)
0.666***
(0.060)
0.167
(0.221)
97
14
452.40
0.00
143.16
168.91
Note: Dependent variable is yearly privatization proceeds in percent of BIP. *, **, *** indicate
© Friedrich
Schneider
significance at the 10%, 5%, 1% level, respectively.
Standard
deviations are reported below each value
in brackets.
25
4. Empirical/Econometric Results
4.3.2. Robustness Check – Test of Sample Period
(1)
(2)
(3)
(4)
(5)
(6)
The magnitude of the estimated coefficients and their
significance levels increase notably.
Again, the coefficients of the level of federalism and the
initial level of state ownership display the expected sign and
enter in a statistically significant fashion.
The negative and statistically significant parameter
coefficients of the variables GDP(-1) and GGFB(-1) confirm
that poor macroeconomic conditions such as low growth or
a lax fiscal policy stance increase the incentive to privatise.
However, the negative sign for UNER(-1) is not plausible!
The partisan variables both gain statistical significance,
indicating that right-wing parties are more likely to privatise
than their left-wing counterparts.
Additionally, privatisation revenues increase with a
country’s international economic integration (variable
OPEN).
© Friedrich Schneider
26
4. Empirical/Econometric Results
Table 4.4: Determinants of privatization proceeds, 1989-2000, Portugal (models (1) and
(2)) and Germany (models (3) and (4)) are excluded from the regression, feasible
generalized least squares
GDP(-1)
UNER(-1)
GGFB(-1)
RPCAB
VETO
FED
STRIKE(-1)
OPEN(-1)
SOE
Constant
Observations
Number of countries
Wald chi2
Prob>chi2
AIC
BIC
(1)
-0.040*
(0.022)
0.041**
(0.018)
-0.008
(0.017)
-0.000
(0.001)
-0.027
(0.032)
-0.064***
(0.024)
0.000
(0.001)
0.002
(0.001)
0.010
(0.011)
0.110
(0.230)
88
13
37.14
0.00
122.79
147.57
(2)
-0.024
(0.020)
0.045***
(0.015)
-0.078***
(0.022)
0.019**
(0.010)
0.030
(0.169)
104
13
41.67
0.00
154.71
167.93
(3)
-0.015
(0.021)
0.058***
(0.021)
0.017
(0.016)
0.002*
(0.001)
-0.014
(0.033)
0.220***
(0.060)
0.000
(0.001)
-0.005***
(0.002)
0.004
(0.010)
-0.035
(0.198)
88
13
33.87
0.00
153.26
178.04
(4)
0.032*
(0.017)
0.002**
(0.001)
0.168***
(0.046)
-0.004***
(0.001)
0.010
(0.009)
-0.026
(0.178)
93
13
25.12
0.00
157.70
172.90
Note: Dependent variable is yearly privatization proceeds in percent of BIP. *, **, *** indicate
significance at the 10%, 5%, 1% level, respectively. Standard deviations are reported below each value
© Friedrich Schneider
in brackets.
27
4. Empirical/Econometric Results
4.3.2. Robustness Check – Test of Countries in the Sample
(1)
(2)
(3)
(4)
(5)
The stability of the results in terms of the country dimension is
tested by alternately removing countries with the highest and the
lowest privatisation revenues.
The EU member country with the highest privatisation proceeds in
relation to GDP is Portugal.
The “new” results show many similarities with the results obtained
by the benchmark regression in Table 4.2.
When Germany, the country with a highly decentralised structure
and with the lowest relative privatisation revenues, is removed
from the sample, the degree of openness and the level of
federalism change sign, but still enter statistically significantly.
This result suggests that the positive relationship between
centralisation and privatisation revenues found in our benchmark
regression in Table 4.2 is exclusively driven by Germany.
© Friedrich Schneider
28
4. Empirical/Econometric Results
Table 4.5: Prais-Winsten regression, corrected for contemporaneous correlation, serial
correlation, and heteroskedasticity
GDP(-1)
UNER(-1)
GGFB(-1)
ECOFREE
RPCAB
VETO
FED
STRIKE(-1)
OPEN(-1)
SOE
p9597
p9800
Constant
Observations
Number of countries
Wald chi2
Prob>chi2
(1)
0.027
(0.048)
0.017
(0.041)
0.022
(0.046)
-0.160
(0.301)
-0.001
(0.003)
-0.084
(0.073)
-0.095**
(0.039)
-0.001
(0.001)
-0.003
(0.003)
0.055***
(0.016)
0.265
(0.251)
0.332
(0.310)
1.719
(2.421)
97
14
54.39
0.00
(2)
0.023
(0.047)
0.023
(0.047)
0.009
(0.048)
(3)
(4)
0.021
(0.047)
0.010
(0.048)
0.018
(0.046)
0.003
(0.046)
-0.001
(0.003)
-0.001
(0.003)
-0.000
(0.002)
-0.081*
(0.044)
-0.001*
(0.001)
-0.004
(0.003)
0.068***
(0.021)
0.184
(0.219)
0.369
(0.318)
-0.010
(0.375)
97
14
61.43
0.00
-0.092**
(0.043)
-0.001*
(0.001)
-0.003
(0.003)
0.069***
(0.021)
0.233
(0.191)
0.432
(0.263)
-0.025
(0.369)
97
14
62.18
0.00
-0.107***
(0.038)
-0.001*
(0.001)
0.074***
(0.022)
0.243
(0.190)
0.455*
(0.256)
-0.339
(0.440)
97
14
30.03
0.00
Note: Dependent variable is yearly privatization proceeds in percent of BIP. *, **, *** indicate
significance at the 10%, 5%, 1% level,©respectively.
deviations are reported below each value
FriedrichStandard
Schneider
in brackets.
29
4. Empirical/Econometric Results
4.3.3. Robustness Check – Test of the Estimation Method
(1)
(2)
(3)
(4)
(5)
→
Beck/Katz (1995) propose that analysts deal with the complicated
panel error process by using Prais-Winsten parameter estimates
with asymptotic standard errors that are corrected for correlation
between the panels (“panel corrected standard errors”, PCSE).
In order to use this procedure, any serial correlation of the data
must be eliminated before. We preferred to impose the restriction
of a common AR(1) across countries in all cases.
As before, the degree of federalism displays the expected sign
and enters statistically significant.
Moreover, the findings reveal that privatisation revenues increase
with strike activity.
The remaining variables are not statistically significant. GDP
growth, government balance, and the partisan variable even
change sign.
Overall, the relatively low robustness with respect to the
empirical specification is an important caveat to bear in mind
when interpreting the results.
© Friedrich Schneider
30
5. Summary and Conclusions
(1) Apparently, the differences in privatisation proceeds of
EU countries can primarily be traced back to the specific
economic problems these countries face, like a high
unemployment rate, and/or a low GDP growth.
(2) The significant and expected findings for the right parties
cabinet portfolios as a share of all cabinet portfolios
suggest that the political variable “partisan ideology of
government” also plays a significant role.
(3) We also have identified a certain kind of pathdependence that should have fostered privatisations,
namely an initially high level of state-owned enterprises.
Hence, we can confirm the hypothesis that privatisation
proceeds are particularly low if the government
traditionally owned few enterprises or sold most of them
before 1990.
© Friedrich Schneider
31
5. Summary and Conclusions
(4) The extent of privatisation efforts can also be
interpreted as a reaction to an increasing economic
integration of the EU countries since our variable
measuring the share of overall exports and imports
over GDP is significant with the expected sign in most
of our specifications.
(5) Opposite to the growing significance of supranational
impacts on national privatisation policies, domestic
institutional settings like federalism and constitutional
rigidity are not as important as expected.
Only when Germany is included federalism is
important and the number of veto players is never
significant throughout all of our different estimations.
© Friedrich Schneider
32
5. Summary and Conclusions
(6) Finally, to summarise: This paper empirically investigates
the differences in the motives of raising privatisation
proceeds for a sample of EU countries for the time period
1990 to 2000. Privatisations can be mainly interpreted
(a) as ingredients of a larger reform package of economic
liberalisation in formerly overregulated economies,
(b) as a reaction to an increasing macroeconomic problem
pressure and
(c) as a means to foster growth and, thus, increase tax
income and relax the fiscal stance with an eye on the
demands by integration of economic and financial markets.
Whereas we are able to corroborate claim (a) only
partly, we gain consistent evidence in favour of claims
(b) and (c).
© Friedrich Schneider
33