State-Owned Enterprises in Europe - Firm Performance and Aggregate Effects

Bruno Merlevede and Pablo Muylle
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Pablo Muylle: -

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: Since the late 2000s, shocks and crises of various types have led to a revival of state intervention around the world. This paper builds a large firm-level dataset to analyze state ownership of firms in Europe for the period 2002-18. We confirm the underperformance of state-owned enterprises (SOEs) relative to privately-owned enterprises (POEs) found in earlier literature for this recent period for a range of firm-level performance indicators. We also examine the impact of SOEs on private firms. We find that larger SOE presence in an industry is associated with lower productivity growth and lower productivity levels among private firms in that industry, but does not affect industry dynamics in terms of entry and exit. This suggests potential aggregate productivity gains from reallocating resources from SOEs to POEs. Further, we show that employment is more stable and crisis-resistant at SOEs, and that SOEs are a more stable source of downstream input demand for other firms. Leveraging our dataset's cross-country nature, we find that SOEs are complements to, rather than substitutes for, lower quality institutions.

Keywords: State ownership; Firm performance; Productivity; Spillover e ects; Privatization; Business dynamism (search for similar items in EconPapers)
JEL-codes: H11 L25 L32 O47 P31 P52 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2025-02
New Economics Papers: this item is included in nep-cfn, nep-eec, nep-eff, nep-ent, nep-eur, nep-fdg, nep-mac and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:25/1105

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