Privatisation and economic growth in developing countries

This article re-examines the relation between privatisation and economic growth. Previous studies that have attempted to measure this relationship have concluded that privatisation has had a sizeable positive effect on economic growth. Our study uses data for 63 developing countries over the time period 1988–97. It uses the framework of an extreme-bounds analysis (EBA) to conduct a cross-country growth regression analysis. Our findings contradict earlier results, but reaffirm the view that effective competition and its regulation may need to accompany privatisation to make a positive impact on economic growth.     

Economic rights and government in developing countries: Cross-national evidence on growth and development

Most analysts assume that economic rights (especially to property and to contracts) help foster economic development, but the relationship is rarely studied empirically. Using three recently developed indexes of economic freedom, this article explores this issue for the mid-1980s to the mid-1990s. It finds that developing countries that score better in protecting economic rights also tend to grow, faster and to score higher in human development. In addition, economic rights are associated with democratic government and with higher levels of average national income. Arthur A. Goldsmith is professor of management at the University of Massachusetts, Boston. During the 1998 academic year he is a Visiting Scholar at the Harvard Institute for International Development. Professor Goldsmith has published widely on global economic and management issues, and has consulted for several international development agencies. His most recent articles have appeared inInternational Review of Administrative Sciences, World Development, Journal of Development Studies, andDevelopment and Change. Professor Goldsmith's latest bookBusiness, Government, Society: The Global Political Economy was published in 1996.     

Foreign patent monopolies in developing countries: An empirical analysis

This paper presents data on the patenting practice of patent holders resident in industrialized countries in Africa. It is confined to such patents taken out by Algeria, Libya, Morocco, Tanzania, and the states whose patent legislation is administered by the Office Africain et Malgache de la Propriété Indus‐trielle (OAMPI): Cameroon, Central African Republic, Chad, Congo, Dahomey, Gabon, Ivory Coast, Malagasy Republic, Mauritania, Niger, Senegal, Togo, and Upper Volta. These countries account for nearly four‐fifths of the total patents in force andlor applied for in Africa (excluding Rhodesia and South Africa).¹

In particular, the paper tries to throw some light on the importance of developing countries for foreign patenting, the motivation of foreign patent‐holders to take out patents in these countries, the actual transfer of patented technology, and the reasons for the lack of such a transfer. The paper complements the extensive work on foreign technology and foreign patents in Latin America, especially by C. V. Vaitsos [1972] and the Junta del Acuerdo de Cartagena [1971]. It also seeks to test the theoretical assumption that patents in developing countries support the transfer of technology.²     

Foreign direct investment and technology capabilities in the developing countries: a review

Economically developing countries are facing the very difficult problems of mastering the skills involved in newly emerging science-intensive industries. To improve technological capabilities, they must expend resources to establish themselves in industries that are technologically mature. Transfer of knowledge is the crux of the direct investment, so in this context transfer of technology (ToT) plays a vital role in the economic and technological development. So, the wide spread discussion of “economic globalization” has involved an important debate on the role of technology in “economic globalization” and economic growth. Much of that debates has concentrated of corporate behaviour within the developed countries but transfer of technology (ToT) combines the development of indiginous technological capabilities also. At the same time, organizational skills, procedure, and assumptions within the globalization of technology need to be adapted to fit the new technology in the developing countries. Thus this paper try to explain the story of foreign direct investment (FDI) in the economic growth and development of technology through technological capabilities that provides for an increasingly intense end of domestic competition. The paper also analysis and review the effect of access to technology and level of competition, on the level of technological capabilities by inference a strategy for the success acquisition of technology in developing countries.     

Financial development and economic growth: Additional evidence

This note suggests that, contrary to the conclusions reached in several recent studies, the empirical evidence does not support the view that financial development promotes economic growth. It is first noted that the predominant pattern in the data for 95 individual countries is that of a negligible or weakly negative covariation between financial development and growth of real GDP per capita. Second, the individual‐country correlational picture is a sharp contrast to the correlations based on crosscountry data that have been used in most research on the subject. Third, individual‐country estimates of a basic multiple‐regression growth model also do not indicate a positive association between financial development and growth. Fourth, in cross‐country data and models of the kind that have been used in most studies, when the regression structure is permitted to vary across three subgroups, a huge parametric heterogeneity is observed, and the overall indication is that of a negligible or negative association between financial development and growth.     

Suicide in developing countries (2): risk factors

The majority of studies on risk factors for suicide have been conducted in developed countries, and less work has been done to systematically profile risk factors in developing countries. The current paper presents a selective review of sociodemographic, clinical, and environmental/situational risk factors in developing countries. Taken together, the evidence suggests that the profiles of risk factors in developing countries demonstrate some differences from those in developed countries. In some developing countries, at least, being female, living in a rural area, and holding religious beliefs that sanction suicide may be of more relevance to suicide risk than these factors are in developed countries. Conversely, being single or having a history of mental illness may be of less relevance. Risk factors that appear to be universal include youth or old age, low socioeconomic standing, substance use, and previous suicide attempts. Recent stressful life events play a role in both developing and developed countries, although their nature may differ (e.g., social change may have more of an influence in the former). Likewise, access to means heightens risk in both, but the specific means may vary (e.g., access to pesticides is of more relevance in developing countries). These findings have clear implications for suicide prevention, suggesting that preventive efforts that have shown promise in developed countries may need to be tailored differently to address the risk factor profile of developing countries.     

Suicide in developing countries (3): prevention efforts

Until now, suicide prevention efforts have been limited in developing countries, although there are pockets of excellent achievement. Various universal, selective, and indicated interventions have been implemented, many of which target a different pattern of risk factors to those in developed countries. In the absence of sufficient mental health services, developing countries rely heavily on nongovernment organizations (NGOs) to provide crisis interventions for suicidal individuals, as well as proactive interventions aimed at raising community awareness and building resilience. Often these NGOs work within a social and public health framework, collaborating with others to provide nested suicide prevention programs that are responsive to local community needs. There is a clear need to develop appropriate, relevant and effective national suicide prevention plans in developing countries, since, to date, only Sri Lanka has done so. These plans should focus on a range of priority areas, specify the actions necessary to achieve positive change in these priority areas, consider the range of collaborators required to implement these actions, and structure their efforts at national, regional, and local levels. The plans should also promote the collection of accurate data on completed and attempted suicide, and should foster evaluation efforts.     

Regime changes,economic policies and the effect of aid on growth

This study finds that on average aid has little impact on economic growth, although a robust finding is that aid promotes growth only in a politically stable environment irrespective of the quality of the country's economic policies. Aid is ineffective in an unstable environment even in the presence of good policies. The results, however, indicate that policy is more effective in promoting growth when supported by increased aid flows rather than aid being more effective in good policy environment. The empirical results also provide some tentative support for the presence of an aid Laffer curve in the politically stable countries. The allocation of aid is found to be influenced by the country size and its state of development, rather than the quality of policy.     

Foreign direct investment,financial development and economic growth

This article argues that the development of the financial system of the recipient country is an important precondition for FDI to have a positive impact on economic growth. A more developed financial system positively contributes to the process of technological diffusion associated with FDI. The article empirically investigates the role the development of the financial system plays in enhancing the positive relationship between FDI and economic growth. The empirical investigation presented in the article strongly suggests that this is the case. Of the 67 countries in data set, 37 have a sufficiently developed financial system in order to let FDI contribute positively to economic growth. Most of these countries are in Latin America and Asia.     

Fixed capital stock depreciation in developing countries: Some evidence from firm level data

Abstract

Previous growth accounting studies suggest severe capital underutilisation and mismeasurement of the stocks of capital in some developing countries. Using the firm level data sets from the World Bank surveys, this paper estimates the economic depreciation rates of fixed capital stocks in the manufacturing industries of seven developing countries. The findings indicate that the stocks of fixed capital may depreciate at higher rates in these countries, as compared with the normal rates usually assumed for advanced industrial countries. This study also discusses the economic and social forces that may influence the incentive to maintain capital appropriately and the implications of high depreciation for the total factor productivity (TFP) growth estimates and volatility of capital accumulation.     

The use of export projections in allocating foreign aid among and domestic resources within developing countries

Foreign exchange shortages have been considered by many economists as the effective restraint to growth in the developing world. This is especially the case insofar as less developed countries (LDC's) are limited in their capacity to purchase imports from abroad that are needed to complement domestic factors of production. Exports obviously play an important role in this context since they constitute the primary source of foreign exchange for most LDC's. It is for this reason that a number of projections of future export earnings of LDC's have been made. These projections are presumably useful in decision making of various kinds. However, there is not much evidence that would indicate ways in which the projections have been or might conceivably be used. The purpose of this paper, accordingly, is to examine two such possible uses of export projections in connection with: (i) the allocation of foreign aid by donor countries among LDC's; and (2) the allocation of resources over time in individual LDC's.     

Deficiencies in education and poor prospects for economic growth in the Gulf countries: The case of the UAE

Abstract

Our paper shows that the deficient educational system and the large share of unskilled foreign workers in the Gulf countries are serious impediments to a successful implementation of the strategies of these countries to reduce their dependence on foreign technologies and to restructure their economies in order to make them less dependent on oil exports. A novel element in our analysis is that we emphasise the role of the deficient educational system as an important problem, next to the well-documented quandary of a high incidence of unskilled foreign workers in the workforce. We use new survey data, both at an establishment level and economy-wide, to provide evidence on how the poor educational facilities lead to a poor provision of training, low skill levels, serious skills mismatch and deficient transfer of knowledge. These inadequate facilities and the lack of incentives to improve them also lead to low R&D efforts to promote local technologies and hamper a restructuring of the economy.     

Privatization in developing countries: ideal and reality

In both developed and developing countries, governments finance, produce, and distribute various goods and services. In recent years, the range of goods provided by government has extended widely, covering many goods which do not meet the purist's definition of “public” goods. As the size of the public sector has increased steadily there has been a growing concern about the effectiveness of the public sector's performance as producer. Critics of this rapid growth argue that the public provision of certain goods is inefficient and have proposed that the private sector replace many current public sector activities, that is, that services be privatized. Since Ronald Reagan took office greater privatization efforts have been pursued in the United States. Paralleling this trend has been a strong endorsement by international and bilateral donor agencies for heavier reliance on the private sector in developing countries.

However, the political, institutional, and economic environments of developing nations are markedly different from those of developed countries. It is not clear that the theories and empirical evidence purported to justify privatization in developed countries are applicable to developing countries.

In this paper we present a study of privatization using the case of Honduras. We examine the policy shift from “direct administration” to “contracting out” for three construction activities: urban upgrading for housing projects, rural primary schools, and rural roads. The purpose of our study is threefold. First, we test key hypotheses pertaining to the effectiveness of privatization, focusing on three aspects: cost, time, and quality. Second, we identify major factors which affect the performance of this privatization approach. Third, we document the impact of privatization as it influences the political and institutional settings of Honduras. Our main finding is that contracting out in Honduras has not led to the common expectations of its proponents because of institutional barriers and limited competitiveness in the market. These findings suggest that privatization can not produce goods and services efficiently without substantial reform in the market and regulatory procedures. Policy makers also need to consider carefully multiple objectives at the national level in making decisions about privatization.