The Productivity Effects of Privatization in Ukraine: Estimates from Comprehensive Manufacturing Firm Panel Data, 1989-2005

Authors

J. David Brown, Heriot-Watt UniversityFollow
John S. Earle, W.E. Upjohn Institute for Employment ResearchFollow

Publication Date

5-1-2007

Series

Upjohn Institute Working Paper No. 07-137

DOI

10.17848/wp07-137

Abstract

This paper estimates the effect of domestic and foreign privatization on multifactor productivity (MFP) using long panel data for nearly the universe of initially state-owned manufacturing firms in Ukraine. The longitudinal dimension of the data is used to measure and control for pre-privatization selection bias and to estimate long-run impacts. The data imply steadily increasing MFP as a result of domestic privatization, reaching about 25 percent relative to state-owned firms after six years. Until recently, Ukraine has had relatively few cases of privatization to foreign investors, and estimates of the MFP impact are more sensitive to controls for selection bias, but the results suggest foreign privatization produces a productivity advantage of about 40 percent in 2004–2005.

Issue Date

May 2007

Sponsorship

Research supported by the National Council for Eurasian and East European Research and carried out in cooperation with OECD, which provided support for research assistance, and EROC (Economic Research and Outreach Center at the Kyiv School of Economics), which provided support for data collection.

Subject Areas

INTERNATIONAL ISSUES; International labor comparisons; Transition economies