1. Project Co-ordinator: Bernardo Bortolotti (Università di Torino and FEEM) Understanding Privatization Policy: Political Economy and Welfare Effects

2. 2 Background: Global Privatization Revenues Source: Privatization Barometer

3. 3 Privatization: What we know  Strong post-privatization performance improvements  Macroeconomic effects: public finance, financial market development  Privatization methods politically motivated  Controversial welfare effects on consumers

4. 4 Privatization: What we do not know  What triggers privatization and make it politically acceptable?  Are performance improvements robust to counterfactual analyses?  Do governments relinquish ownership and control in privatized firms?  What are the overall welfare effects of divestiture in EU?  Is privatization per se or associated policies (liberalization, regulation, corporate governance reforms) that matter more?

5. 5 UPP: Strategic Objectives  Identifying the political and institutional determinants of privatization  Analyzing the evolution of corporate governance in privatized firms and their effects on perfomance  Evaluating the welfare effects of privatization on society  Finding the most suitable policies to make privatization deliver efficiency and growth

6. 6 UPP: The building blocks  Part I. The determinants of privatization  Part II. The methods of privatization  Part III. the welfare effects of privatization  Methodology: political economy- multidisciplinary approach (economics, finance, political science, legal disciplines)

7. 7 WPs implementation

8. 8 The UPP Consortium Partic. Role* Participant nameParticipant short name Country COFondazione Eni Enrico MatteiFEEMIT CRUniversitat Pompeu FabraUPFSP CRUniversity of MilanUMILIT CRUniversiteit van AmsterdamUvA-CIFRANL CRIFO Institute for Economic Research at the University of Munich IFODE CRStiftung Wissenschaft und Politik - Deutsches Institut für Internationale Politik und Sicherheit SWPDE CRCenter for Economic Research and Graduated Education, Charler University CERGECZ CRUniversity of PaduaUNIPDIT

9. 9 WP2: The determinants of privatisation policy Objectives: To provide a conceptual framework to relate the observed differences in privatisation outcomes across countries to different political and institutional settings. Deliverables:  Two theoretical papers on the determinants of privatisation policy (month12 and 20)  Guidelines for data collection on political institutions (month 6)  Database on political institutions and political orientation (month14)  Two empirical papers on the determinants of privatisation policy (month18 and 20)

10. 10 WP3: Privatisation in MEDA countries Objectives:  To examine the track record of different forms of public ownership and control in MEDA countries  To evaluate the determinants, methods and outcomes of privatization in this area Deliverables:  Four reports on privatization and regulatory reform in the MEDA region (month 10, 12, 18, and 20)  Database on the privatization transactions in the MEDA region (month 20)

11. 11 WP4: Public vs. private ownership and control Objectives:  To develop a theoretical models analysing the trade-offs between private and public ownership and control of privatized firms and to study their evolution overtime Deliverables:  Guidelines for data collection on ownership and control structures (month 6)  A theoretical paper on the trade offs between public and private ownership and control (month14)  Database on ownership and control structures in OECD economies (month 14)  Two empirical papers on the evolution of ownership an control in privatised firms (month 18 and 20)

12. 12 WP5: Performance from transition to EU integration Objectives:  To explore how various ownership and management structures affect corporate performance in a main transition country such as the Czech Republic. Deliverables  A panel data set on corporate ownership and performance in the Czech Republic (month10)  A theoretical paper on the effect of ownership changes in performance (month 14)  Two empirical papers on company performance in a transition economy (month 18 and 20)

13. 13 WP6: Welfare effects I Objectives:  To study the welfare impact on consumer and employees wealth of privatisation, liberalisation and regulation of public utilities under different policy regimes with special reference to SGI Deliverables  Databases on welfare measures for consumers and employees (month 8)  Three empirical papers on the welfare effects of privatisation on consumers (month 8, 14 and 20)

14. 14 WP7: Welfare effects II Objectives  To consider the fiscal impact of privatisation on the current and the long-term budget and to relate it with the incentives for government policy by means of theoretical and empirical analysis Deliverables  A panel database on fiscal measures and institutions for European countries (month 8)  Three empirical papers on the fiscal effects of privatization (month 12, 18, 20)

15. 15 WP8 Welfare effects III Objectives:  To analyse the risk and return characteristics of these indexes using multifactor analysis  To identify – if any - an undiversifiable risk factor associated with the residual influence of the State in the economic system. Deliverables:  A database with daily series of privatization indexes (month 12)  An empirical paper on the stock price performance of privatization-related indexes (month 20)

16. 16 WP9: Expert interviews and targeted surveys Objective:  To develop a joint / harmonised interviewing and survey methodology to be implemented in at least the 5 countries - Czech Republic, Germany, Italy, Netherlands, Spain – represented in the consortium on privatisation choices and outcomes as perceived by the most relevant stakeholders Deliverables  Standardised questionnaire to be used for enterprises in all 5 countries (month 6)  Frame for in-depth interviews with key informants and other relevant stakeholders in all 5 countries (month 6)  Report on judgements and qualitative other information on politics of privatisation user in the individual countries as well in a synthesised cross country comparison (month 21)

17. 17 WP10: Making privatisation deliver Objectives:  To identify policy recommendations for successful implementation of privatisation policies, with special reference to the enlarged EU and MEDA countries Deliverables  Policy report summarising the main recommendations (month 24)  Regulatory guidelines on Corporate Governance, Institutional Reform and European Financial and Economic Integration (month 24)