Is there a ´privatization trap´?: the case of the manufacturing industries in Eritrea

Stifanos Hailemariam, Henk von Eije and Jos van der Werf
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Jos van der Werf: Groningen University

No 02A04, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)

Abstract: Privatization is a popular topic in many countries. However, the more a country needs development, efficiency and the proceeds of the sales, the more difficult privatization will be. This can result in a long period of privatization in developing countries. But when privatization takes a long time, the vitality of companies may reduce. In this paper we present the case of the manufacturing industries in Eritrea, where privatization has been slow. After the privatization announcement the companies deteriorated quickly with respect to operations, investments and finance. This makes it even more difficult to sell the companies and the implied vicious circle results into a 'privatization trap'.

Date: 2002
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