Ms. Anja Baum, Clay Hackney, Paulo Medas, and Mouhamadou Sy
State-owned enterprises (SOEs) are present in key sectors of the economies around the world. While they can provide an important public service, there is widespread concern that their activities are negatively affected by corruption. However, there is limited cross-country analysis on the costs of corruption for SOEs. We present new evidence on how corruption affects the performance of SOEs using firm level data across a large number of countries. One striking result is that SOEs perform as well as private firms in core sectors when corruption is low. Taking advantage of a novel database reforms, we also show that SOE governance reforms can generate significant performance gains.
Christine J. Richmond, Ms. Dora Benedek, Ezequiel Cabezon, Bobana Cegar, Mr. Peter Dohlman, Michelle Hassine, Beata Jajko, Piotr Kopyrski, Maksym Markevych, Mr. Jacques A Miniane, Mr. Francisco J Parodi, Gabor Pula, Mr. James Roaf, Min Kyu Song, Mariya Sviderskaya, Rima Turk, and Mr. Sebastian Weber
The Central, Eastern, and South Eastern European (CESEE) region is ripe for a reassessment of the role of the state in economic activity. The rapid income convergence with Western Europe of the early 2000s was not always equally shared across society, and it has now slowed dramatically in many countries of the region.
Economic growth is broadening in Central, Eastern, and Southeastern Europe. Further ahead, however, growth prospects are tested by a dwindling workforce and weak productivity. Reaching Western European income levels would thus take longer, says the IMF in its Regional Economic Issues update on the region.
Following the 2014-15 crisis, the economy is growing again and tight fiscal and monetary policies have greatly reduced internal and external imbalances. Inflation has been successfully brought down and reserves-while still being relatively low-have doubled to US$15 billion. The pace of the recovery, however, has been modest, and faster growth is needed if Ukraine is to catch up with its regional peers and lift per capita income levels that have declined to among the lowest in the region.