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This publication is a first response of the OECD to the issue of what role is, or can be, assigned to SOEs as part of national development strategies. The first part of the publication overviews the experiences of five countries (Brazil, China, India, Singapore and South Africa) with using SOEs, and other government-controlled entities as agents of their development strategies. The second part reviews the growing internationalisation of SOEs through foreign trade and investment. These show implications that the usefulness of SOEs in promoting economic development hinges on a number of factors, not least the level of economic development at the beginning of the process. Indeed, if the government’s ambition is to follow a development path already trod by numerous comparable nations it is relatively easy to hammer out a strategy and provide the SOEs with company-specific objectives toward the fulfilment of the strategy. However, experience also shows that some crucial conditions generally need to be met for such SOE-based strategies to be successful, taking into account the capacity of national bureaucracies and avoiding possible adverse impacts on international trade and investment.
The role of state-owned enterprises (SOEs) in countries’ development process, an integral part of the political economy in most of the emerging economies with which the Organisation for Economic Co-operation and Development (OECD) partners, is not without controversy. The issue gains importance on policy-makers’ agenda because of separate, but related, concerns about how to maintain a level playing field (as addressed by previous OECD publications discussing the issue of ”competitive neutrality”) in a global economy where SOEs from emerging economies increasingly coexist with privately owned companies.
Policies for the business sector are back in fashion. In highly developed countries, this has been the case at least since the most recent economic crisis forced a rethinking of industrial competitiveness and structural priorities. In developing countries, the process has been underway for much longer. In their case, policy action has traditionally been guided by broad-ranging structural reform priorities, set forth in national developmental strategies and policies. The question has been whether to supplement these with a specific and targeted “industrial policy” aimed at nurturing industrial development; very often also furthering the interests of certain priority sectors and/or prioritising individual “national champion” enterprises. This has been the case increasingly over the past decade.
This chapter was prepared by the OECD Secretariat based on original work by Grant Kirkpatrick, Paris, France.
This chapter was prepared by the OECD Secretariat based on original work by Dr. Zhenjun Zhang, Parallel Consulting, Beijing, China.
This chapter was prepared by the OECD Secretariat based on original work by Prof. Sergio Lazzarini, Insper Institute of Education and Research, Brazil, and Aldo Musacchio, Harvard Business School, United States.
A renaissance of government development strategies? Policies for the business sector are back in fashion, not least in developing countries. At the same time, ”statist” approaches – whereby most important activities should be planned by the state – have been dropped in favour of more market-based strategies. The underlying cause is a disappointment in many countries with the outcomes of both the free-market model and the planned economies of yore. Governments increasingly look to the apparent success of a number of Asian countries whose economies have grown through strategies involving state intervention in economies that have remained essentially market-based. The tools of intervention have varied from the regulation of private-sector activities, to the control over financial intermediation and in some cases direct controls over financial institutions, to the pursuit of industrial policy through directly state-owned enterprises (SOEs). A key question raised in this report is the extent of the role that governments choose to assign to SOEs.
This chapter was prepared by the OECD Secretariat based on original work by Edwin Ritchken, Pretoria, South Africa.
This chapter was prepared by Premyslaw Kowalski of the Directorate for Trade and Agriculture, OECD Secretariat. The views expressed here are strictly those of the author and do not implicate the OECD Secretariat or any of the OECD member countries. The topic is an area of ongoing policy debate.
This chapter was prepared by Michael Gestrin and Yuri Shima, Directorate of Finance and Enterprise Affairs, OECD Secretariat.
This chapter was prepared by the OECD Secretariat based on original work by Prof. Ram Kumar Mishra, Institute for Public Enterprises, Hyderabad, India.
The mission of the Organisation for Economic Co-operation and Development (OECD) is to promote policies that will improve the well-being of people around the world. We refer to this as working toward ”Better Policies for Better Lives”. We work with governments to identify good policies for supporting economic growth, job creation, social cohesion and environmental protection. These are obviously priorities for all policy makers, but nowhere more than in emerging economies searching for ways to advance economic and societal development.