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84-406: The terminology around the term state-owned enterprise is murky. All three words in the term are challenged and subject to interpretation. First, it is debatable what the term "state" implies (e.g., it is unclear whether municipally owned corporations and enterprises held by regional public bodies are considered state-owned). Next, it is contestable under what circumstances a SOE qualifies as "owned" by

168-423: A spillover is a positive or a negative, but more often negative, impact experienced in one region or across the world due to an independent event occurring from an unrelated environment. For example, externalities of economic activity are non-monetary spillover effects upon non-participants. Odors from a rendering plant are negative spillover effects upon its neighbors; the beauty of a homeowner's flower garden

252-524: A bottom-up method, which is an opposite to the top-down method in MRIO. The LCA are less suitable to assess spillover effects. They have to face the "truncation problem" and also requires vast volumes of data, which can be hard to get. These analyses track specific material flows along supply chains and across countries. The tracking is primarily done for raw or less processed commodities. It cannot be as globally comprehensive as MRIO, because it also suffers from

336-600: A closed-off economy has begun to feel the spillover effects from intermittent Chinese slowdowns. Certain developed economies are sensitive to some economic phenomena that can overwhelm spillover effects, regardless of their strength. For example, Japan, the United States, and the Eurozone, all influenced by spillover effects from China, this influence is partly offset by investors seeking safety in their respective markets during global market uncertainties. So, if one of

420-536: A developing nation is invested into. Examples of how this may occur are a US corporation establishes a production site in Vietnam. Around this production site is the positive spillover of increased investment in local transport infrastructure as well as a food district for the workers. The unconnected economies are these which are not influenced or just a little bit by spillover effects from the global market. These economies are though rarer and rarer. Even North Korea as

504-518: A global shortage of oil production, global supply and demand would interact to put upward pressure on oil and in turn fuel prices. This occurs as consumers are effectively bidding for the remaining oil which is more scarce than before, forming a new equilibrium price in the market. Hence fuel stations and consumers are impacted by the spillover effect of oil shortages. External spillover effects are similar to general equilibrium effects in that they impact third parties which are not directly participating in

588-415: A government owning all or a controlling stake of the company's shares . This form is often referred to as a state-owned enterprise . A state-owned enterprise might variously operate as a not-for-profit corporation , as it may not be required to generate a profit; as a commercial enterprise in competitive sectors; or as a natural monopoly . Governments may also use the profitable entities they own to support

672-446: A large amount of data to accurately function and many countries do not have the data available to do such an analysis. On the other hand, MFA is commonly used especially in matters of Sanitation and can be used to determine the best sanitation technology. It is especially well suited to planning and decision making. It has been proven to be a suitable tool for detection of environmental problems and adequate solutions. The index assesses

756-660: A public objective. For that reason, SOEs primarily operate in the domain of infrastructure (e.g., railway companies), strategic goods and services (e.g., postal services, arms manufacturing and procurement), natural resources and energy (e.g., nuclear facilities, alternative energy delivery), politically sensitive business, broadcasting, banking, demerit goods (e.g., alcoholic beverages ), and merit goods (healthcare). SOEs can also help foster industries that are "considered economically desirable and that would otherwise not be developed through private investments". When nascent or 'infant' industries have difficulty getting investments from

840-494: A regular enterprise, state-owned enterprises are typically expected to be less efficient due to political interference, but unlike profit-driven enterprises they are more likely to focus on government objectives. In Eastern Europe and Western Europe , there was a massive nationalization throughout the 20th century, especially after World War II . In the Eastern Bloc , countries adopted very similar policies and models to

924-588: A specific context, such as a local area where the interactions take place. General equilibrium effects can happen when there is an impact in the market either positively or negatively creating a spillover effect through interdependence of firms and households in the economy. This occurs as entities do not operate in a bubble, hence when there is a financial shock or boon to a business or industry, this impacts factors including pricing, costs and wages for other entities. Rather, entities experience shocks or boons in relation to other entities. For example, if there were to be

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1008-423: A specific state institution or branch of government, used exclusively by that branch, such as a research laboratory. The latter refers to assets and resources owned by the population of a state which are mostly available to the entire public for use, such as a public park (see public space ). In neoclassical economic theory , the desirability of state ownership has been studied using contract theory . According to

1092-417: A spillover effect, creating an economic shortfall. Studies from BIS Quarterly on spillover effects in the pandemic showed that confinement measures implemented by countries to limit the number of people contracting the virus showed there is no immunity from economic spillover and spillback effects between regions. The paper notes this is true even for regions that have domestic policy measures in place to reduce

1176-399: A state (SOEs can be fully owned or partially owned; it is difficult to determine categorically what level of state ownership would qualify an entity to be considered as state-owned since governments can also own regular stock , without implying any special interference). Finally, the term "enterprise" is challenged, as it implies statutes in private law which may not always be present, and so

1260-431: A transaction borne upon a party/parties that are non participants in the transaction (i.e., Production costs do not consider the cost of pollution on society at large). Furthermore, Mill argues that Government intervention in the market can be a useful tool when necessary to prevent or mitigate spillover effects when necessary as opposed to Adam Smith who believed a competitive market with little to no intervention provides

1344-504: A transaction. Thus, in the diagram below, if the market was functioning properly by accounting for negative externalities, society would produce at quantity 2 (Q2) and a higher price (P2). Without considering negative externalities, society would produce at Quantity 1 (Q1) and at a lower price (P1). Hence, due to negative externalities (social costs) being excluded from transactions, society overproduces products with negative externalities and underprices them. For positive externalities, see

1428-418: A way to earn profit easily. However, as investors began to purchase stock through loans, the stock market began overpriced and highly financed through investor debt. Once prices fell, investors rushed to sell stock in order to limit losses leading to the spillover effects of low consumer confidence and in turn low consumer spending , investment, production and high unemployment. The 2007–2008 financial crisis

1512-406: A whole. As such, state ownership is only one possible expression of public ownership, which itself is one variation of the broader concept of social ownership. In the context of socialism, public ownership implies that the surplus product generated by publicly owned assets accrues to all of society in the form of a social dividend , as opposed to a distinct class of private capital owners. There

1596-550: Is a natural monopoly or because the government is promoting economic development and industrialization . State-owned enterprises may or may not be expected to operate in a broadly commercial manner and may or may not have monopolies in their areas of activity. The transformation of public entities and government agencies into government-owned corporations is sometimes a precursor to privatization . State capitalist economies are capitalist market economies that have high degrees of government-owned businesses. Public ownership of

1680-539: Is a correlation between China's trade activity with OECD nations and improved domestic productivity. Firms who seek to minimise costs in supply chains by using resources from overseas have been shown to invest in local infrastructure. This is classified as foreign direct investment. This dynamic is common as firms from advanced economies expand their production base overseas to take advantage of cheaper labor and capital costs. Studies have shown that foreign direct investment creates productivity gains as local infrastructure of

1764-474: Is a positive correlation between trade openness and carbon dioxide emissions (negative externality), there could also exist benefits from globalisation impacting the environment through factors including spread of technology and knowledge beyond borders. Systems in society are built on relationships and interactions that create mutual value for a wide range of stakeholders. This has created circumstances where impacts to one or more of these entities can spillover to

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1848-411: Is a positive spillover effect upon neighbors. The concept of spillover in economics could be replaced by terminations of technology spillover, R&D spillover and/or knowledge spillover when the concept is specific to technology management and innovation economics. Moreover, positive or negative impact often creates a social crisis or a shock in the market like booms or crashes. In the same way,

1932-416: Is a process of transferring private or municipal assets to a central government or state entity. Municipalization is the process of transferring private or state assets to a municipal government. A state-owned enterprise is a commercial enterprise owned by a government entity in a capitalist market or mixed economy . Reasons for state ownership of commercial enterprises are that the enterprise in question

2016-561: Is a viable argument for SOEs is debated. SOEs are also frequently employed in areas where the government wants to levy user fees , but finds it politically difficult to introduce new taxation. Next, SOEs can be used to improve efficiency of public service delivery or as a step towards (partial) privatization or hybridization. SOEs can also be a means to alleviate fiscal stress, as SOEs may not count towards states' budgets. Compared to government bureaucracy, state owned enterprises might be beneficial because they reduce politicians' influence over

2100-416: Is a wide variety of organizational forms for state-run industry, ranging from specialized technocratic management to direct workers' self-management . In traditional conceptions of non-market socialism, public ownership is a tool to consolidate the means of production as a precursor to the establishment of economic planning for the allocation of resources between organizations, as required by government or by

2184-493: Is an example of how spillover effects occur both in terms of the mechanisms of a system but also geographically. Academics have found a correlation between the impact of a shock to a system and its impacts on other systems which have dependency. Due to the 2007–2008 financial crisis , many spillover effects occurred including a strong correlation between the volatility of the United States stock markets and other global markets. This impact shows how high default rates on home loans in

2268-759: Is approximately 70% of total employment. State-owned enterprises are thus a major factor behind Belarus's high employment rate and a source of stable employment. In most OPEC countries, the governments own the oil companies operating on their soil. A notable example is the Saudi Arabian national oil company , Saudi Aramco , which the Saudi government bought in 1988, changing its name from Arabian American Oil Company to Saudi Arabian Oil Company. The Saudi government also owns and operates Saudi Arabian Airlines , and owns 70% of SABIC as well as many other companies. China's state-owned enterprises are owned and managed by

2352-563: Is desirable. In their model, the government and a private firm can invest to improve the quality of a public good and to reduce its production costs. It turns out that private ownership results in strong incentives to reduce costs, but it may also lead to poor quality. Hence, depending on the available investment technologies, there are situations in which state ownership is better. The Hart-Shleifer-Vishny theory has been extended in many directions. For instance, some authors have also considered mixed forms of private ownership and state ownership. In

2436-521: Is due to the US' dominant role in the global economic system, impacting all other countries simultaneously and leading to cross-country effects which amplify the global impact. The extent of spillover effects can vary depending on the country from which the shock originates and the recipient country. For instance, China's spillovers impact mostly through trade, while the US impacts the rest of the world mostly through financial channels, and other major economies like

2520-467: Is generated by information. For example, when more information about someone generates more information about people related to her, and that information helps to eliminate asymmetries in information, then the spillover effects are positive (this issue has been found constantly in the economics and finance literature, see for instance the case of local banking markets ). 19th century economists John Stuart Mill and Henry Sidgwick are credited with founding

2604-616: Is highlighted in the predominant local terminology, with SOEs in Canada referred to as a " Crown corporation ", and in New Zealand as a " Crown entity ". The term " government-linked company " (GLC) is sometimes used, for example in Malaysia , to refer to private or public (listed on a stock exchange) corporate entities in which the government acquires a stake using a holding company . The two main definitions of GLCs are dependent on

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2688-460: Is one of the categories of analysis which combines internationally harmonized input-output tables and trade statistics for sectors or groups of products or services of environmental use (e.g. land, water, timber), pollution (e.g. reactive nitrogen), or socioeconomis impacts (e.g. child labor, labor accidents, gender pay gap). The biggest advantage is the relative ease with which analyses can be performed for different countries. The disadvantage could be

2772-452: Is the ownership of an industry , asset , property , or enterprise by the national government of a country or state , or a public body representing a community, as opposed to an individual or private party . Public ownership specifically refers to industries selling goods and services to consumers and differs from public goods and government services financed out of a government's general budget . Public ownership can take place at

2856-712: The State-owned Asset Supervision and Administration Commission (SASAC) . China's state-owned enterprises generally own and operate public services, resource extraction or defense. As of 2017, China has more SOEs than any other country, and the most SOEs among large national companies. China's SOEs perform functions such as: contributing to central and local governments revenues through dividends and taxes, supporting urban employment, keeping key input prices low, channeling capital towards targeted industries and technologies, supporting sub-national redistribution to poorer interior and western provinces, and aiding

2940-423: The means of production is a subset of social ownership , which is the defining characteristic of a socialist economy. However, state ownership and nationalization by themselves are not socialist, as they can exist under a wide variety of different political and economic systems for a variety of different reasons. State ownership by itself does not imply social ownership where income rights belong to society as

3024-436: The national , regional , local , or municipal levels of government; or can refer to non-governmental public ownership vested in autonomous public enterprises . Public ownership is one of the three major forms of property ownership, differentiated from private, collective / cooperative , and common ownership . In market-based economies, state-owned assets are often managed and operated as joint-stock corporations with

3108-635: The 21st century through taxes including excise tax on purchasing alcohol and cigarettes which can cause damages to the health and wellbeing of citizens. There are different types of spillover effects which can take place. According to the Corporate Finance Institute, spillover effects can be categorised in the following ways: 1. Social Interaction Spillover Effect 2. Context Equilibrium Effect 3.General Equilibrium Effect 4. Externalities Spillover Effect Social interaction spillover effect occurs when community programs and initiatives have

3192-519: The EU, China, India, Japan, South Korea, Indonesia, the Philippines, Brazil and Indonesia) alongside sector-specific analyses of spillovers embodied in trade flows. The Great Depression that began in 1929 is a significant example of how spillover effects can occur. It all started in the United States, but spread to the rest of the world and influenced local economies for many years. Economists debate

3276-501: The Euro area, UK, and Japan have more regional impacts. There are opposing views on the aggregate impact of globalisation as having either positive or negative spillover effects for the global economy. For instance, studies by Applied Economics journal indicates that globalisation has been impactful in promoting economic growth across nations in part due to the spillover. However studies by find that despite there being evidence that there

3360-498: The Hart-Shleifer-Vishny model it is assumed that all parties have the same information, while Schmitz (2023) has studied an extension of their analysis allowing for asymmetric information . Moreover, the Hart-Shleifer-Vishny model assumes that the private party derives no utility from provision of the public good. Besley and Ghatak (2001) have shown that if the private party (a non-governmental organization) cares about

3444-882: The Minister of Finance II, the Minister in the Prime Minister's Department in charge of the Economic Planning Unit, the Chief Secretary to the Government, Secretary General of Treasury and the heads of each of the GLICs (the Employees Provident Fund, Khazanah Nasional Berhad , Lembaga Tabung Angkatan Tentera (the armed forces pension fund), Lembaga Tabung Haji and Permodalan Nasional Berhad . Khazanah Nasional Berhad provided

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3528-560: The US did not have isolated impacts. Rather it resulted in spillover effects into equity markets domestically as well as internationally. The accident at the Fukushima nuclear power statition in 2011 is another example of spillover effect. There has been a sharp decline in the stock prices of utilities that own nuclear power plants, which were observed on the Tokyo Stock Exchange. Such a catastrophe has always an impact on

3612-1017: The USSR. Governments in Western Europe, both left and right of centre, saw state intervention as necessary to rebuild economies shattered by war. Government control over natural monopolies like industry was the norm. Typical sectors included telephones , electric power , fossil fuels , iron ore , railways , airlines , media , postal services , banks , and water . Many large industrial corporations were also nationalized or created as government corporations, including, among many others: British Steel Corporation , Equinor , and Águas de Portugal . A state-run enterprise may operate differently from an ordinary limited liability corporation. For example, in Finland, state-run enterprises ( liikelaitos ) are governed by separate laws. Even though responsible for their own finances, they cannot be declared bankrupt ;

3696-480: The accident, shareholders earned, on average, significant negative anbormal returns. A high-profile example of spillover effects is the COVID-19 pandemic . The global economy has become more interdependent in the 21st century as globalisation has enhanced countries' reliance on other parts of the world for economic growth. Therefore, when the emergence of the pandemic forced countries to close their borders, this had

3780-426: The atmosphere. As we know, pollution leads to global warming , which affects all of us. Global warming causes the melting of ice, which leads to raising sea levels. Another example could be demand for commodities (such as palm oil or osy) in one country that cause deforestation in other countries. Negative spillovers impact both the participants and non-participants. Externalities in the supply and demand curve: Note

3864-470: The diagram below. Note there are no social costs (negative externalities) that have been excluded from the private cost as there is a single cost line. In this case, social benefit (MSB) exceeds private benefit (MPB). In effect, this means the private benefit of a transaction (i.e., profit for a newly established business) is only part of the benefit accrued as an additional social cost (i.e., Surrounding cafes and restaurants gain more customers as employees from

3948-418: The early concepts related to spillover effects. These ideas extend upon Adam Smith's famous ‘ Invisible Hand ’ theory which is a price that suggests prices can be naturally determined by the forces of supply and demand to form a market price and market quantity where buyers and sellers are willing to make a transaction. Spillover effects, also known as externalities in market theory are the costs associated with

4032-574: The economic benefits of increased trade are the spillover effects anticipated in the formation of multilateral alliances of many of the regional nation states: e.g. SAARC (South Asian Association for Regional Cooperation), ASEAN (Association of South East Asian Nations). In an economy in which some markets fail to clear, such failure can influence the demand or supply behavior of affected participants in other markets, causing their effective demand or effective supply to differ from their notional (unconstrained) demand or supply. Another kind of spillover

4116-453: The economies has some difficulties, investments shift to the remaining safe-havens. This effect was seen with the U.S. investment inflows during the EU's struggles with the Greek debt crisis in 2015. As funds flowed into U.S. Treasuries, yields decreased, reducing borrowing costs for American consumers, borrowers, and businesses. This serves as an illustration of a positive spillover effect from

4200-462: The effect of benefiting the welfare of people and in turn the community at large. For example, free education, social welfare payments and other public goods are designed to improve the social behaviour, education and employability of citizens which in turn could lower crime rates and poverty in the community in theory. Context equilibrium effect Context equilibrium effect emerges from interventions that influence social norms or behaviors within

4284-471: The exact cause of the Great Depression however, it is mostly regarded as a confluence of events including the stock market crash of 1929, banking panics and monetary contraction, decreased international lending and tariffs. A contributing factor which led to the Great Depression and Spillover effects was the stock market crash of 1929. As the stock market boomed during the 1920s it was regarded as

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4368-524: The fact that MRIO does not consider context-specific technologies, efficiencies or resource- or pollution- intensities but instead use average impacts. So, MRIO methods are best suited to asssessing spillover effects of aggregate sectors or product groups at country level. These assessments are used to evaluate the environmental impact of individual products and their production processes across geographic and temporal scales. Moreover, they can also measure socieconomic impacts. These assessments are provided with

4452-637: The financial system. In the same way that financial crises and recessions can cause negative spillover effects through increased dependency between nations, trade policy can create positive spillover effects. It has been observed that one of the main positive spillover effects occurs as developing economies trade more with advanced economies leading to technology, information and investment flows (Dixon & O’Mahony, 2019). Data shows that China trading with more advanced economies has increased its access to new technology and information leading to improved competitiveness in global markets. It has been shown that there

4536-507: The form of Public Sector Undertakings (PSUs). The Malaysian government launched a GLC Transformation Programme for its linked companies and linked investment companies ("GLICs") on 29 July 2005, aiming over a ten-year period to transform these businesses "into high-performing entities". The Putrajaya Committee on GLC High Performance ("PCG"), which oversaw this programme, was chaired by the Prime Minister , and membership included

4620-467: The general budget. The creation of a state-owned enterprise from other forms of public property is called corporatization . In Soviet-type economies , state property was the dominant form of industry as property. The state held a monopoly on land and natural resources, and enterprises operated under the legal framework of a nominally planned economy , and thus according to different criteria than enterprises in market and mixed economies. Nationalization

4704-427: The global economy. Due to rising economic interactions including trade and investment between economies, the likelihood has risen that events impact one economy will in turn impact others who have economic ties and dependencies. Recent research suggests that even a small change in US monetary policy can have significant ripple effects on economies worldwide, particularly those that are financially open or trade open. This

4788-445: The government. Students become smarter, gain knowledge and experience. This leads to more educated population, which can move out to the other countries. Negative Spillover Negative spillover is the opposite of positive spillover, meaning unwanted social, political, and economic impacts. An example is pollution caused by industrial plants, releasing smoke, carbon dioxide gas , oil wastewater, and other harmful waste materials into

4872-407: The graph representing a negative externality below. To illustrate this concept the ‘marginal social cost’ (MSC) is used in comparison to the ‘marginal private cost’ (MPC). Marginal social cost is the line which includes all externalities including the social cost of pollution in addition to regular production costs. Alternatively, marginal private cost also considers the regular production costs used in

4956-484: The impact of economic slowdown and are not economically immune from other countries without effective measures. On the other hand, the COVID-19 pandemic caused also some positive spillover effects. Due to the fact that many industrial plants were shut down because of the lockdown measures, pollution fell all over the world significantly. Globalisation has been a prominent influence on the economic spillover effect in

5040-411: The leading application of the incomplete contract theory to the issue of state-owned enterprises. These authors compare a situation in which the government is in control of a firm to a situation in which a private manager is in control. The manager can invest to come up with cost-reducing and quality-enhancing innovations. The government and the manager bargain over the implementation of the innovations. If

5124-533: The means of production may be labelled state socialism . State ownership was recognized by Friedrich Engels in Socialism: Utopian and Scientific as, by itself, not doing away with capitalism, including the process of capital accumulation and structure of wage labor. Engels argued that state ownership of commercial industry would represent the final stage of capitalism, consisting of ownership and management of large-scale production and manufacture by

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5208-545: The most adequate outcome. These ideas on spillover effects later became extended upon further by other economists, notably Arthur Pigou. Pigou developed the concept of externalities in 1920 through ‘The Economics of Welfare’. Essentially, Pigou argued negative externalities (spillover) of an activity should incur an extra cost or tax while activities that produce a positive externalities (spillover) should be subsidized to further encourage this activity. Taxes on these activities that create negative externalities are used commonly in

5292-591: The negotiations fail, the owner can decide about the implementation. It turns out that when cost-reducing innovations do not harm quality significantly, then private firms are to be preferred. Yet, when cost-reductions may strongly reduce quality, state-owned enterprises are superior. Hoppe and Schmitz (2010) have extended this theory in order to allow for a richer set of governance structures, including different forms of public-private partnerships . SOEs are common with natural monopolies , because they allow capturing economies of scale while they can simultaneously achieve

5376-403: The newly established business buy lunch). Hence if the market was functioning properly to include social benefits, the market would produce at quantity 2 (Q2) and at price 2 (P2) which represents the true equilibrium quantity and prices. Quantifying spillover effects presents a number of challenges. Firstly, it is important to identify and measure the presence of these externalities: for instance,

5460-496: The other countries. One study shows that alternative energy stocks in French and German exhibit abnormal returns during the event window. This happened because market expected a change in policy towards alternative energies. On the other hand, the effect on the U.S. stocks was not confirmed. Similar spillover effect was observed during Chernobyl nuclear-power accident . It has been shown that during 20-day period immediately following

5544-528: The other entities that depend on the system. This can be examined in the 2007–2008 financial crisis . As banks granted loans to borrowers with a high chance of default, banks suffered from liquidity risk which led to significant macroeconomic impacts including losses for shareholders across all markets, significantly increased unemployment, bailouts from the Government and low investor and consumer confidence. Hence, entities like large banks can not operate in isolation, they are depended upon by many other entities in

5628-522: The positive and negative spillover effects of each UN Member State, based on indicators tracking environmental and social spillovers embodied into trade, economic and financial spillovers, and spillover effects related to security. Using the MRIO trade data, environmental research, and industrial ecology, the Global Commons Stewardship Index features a global ranking and detailed features for ten countries and regions (the US,

5712-399: The private sector (perhaps because the good that is being produced requires very risky investments, when patenting is difficult, or when spillover effects exist), the government can help these industries get on the market with positive economic effects. However, the government cannot necessarily predict which industries would qualify as such 'infant industries', and so the extent to which this

5796-479: The process since a conflict may arise among varying stakeholder perspectives. Lastly, ethical dilemmas are likely to arise in the process of quantifying spillover effects since this process involves placing a value to inherently invaluable aspects like biodiversity. It can therefore be argued that the process diminishes the intrinsic worth of these aspects. There are three main categories which contains methods for assessing international trade-related spillovers. MRIO

5880-399: The property rights approach based on incomplete contracting (developed by Oliver Hart and his co-authors), ownership matters because it determines what happens in contingencies that were not considered in prevailing contracts. The work by Hart, Shleifer and Vishny (1997) is the leading application of the property rights approach to the question whether state ownership or private ownership

5964-423: The proportion of the corporate entity a government owns. One definition purports that a company is classified as a GLC if a government owns an effective controlling interest (more than 50%), while the second definition suggests that any corporate entity that has a government as a shareholder is a GLC. The act of turning a part of government bureaucracy into a SOE is called corporatization . In economic theory ,

6048-504: The public good, then the party with the larger valuation of the public good should always be the owner, regardless of the parties' investment technologies. More recently, some authors have shown that the investment technology also matters in the Besley-Ghatak framework if an investing party is indispensable or if there are bargaining frictions between the government and the private party. Spillover effect In economics ,

6132-450: The question of whether a firm should be owned by the state or by the private sector is studied in the theory of incomplete contracts developed by Oliver Hart and his co-authors. In a world in which complete contracts were feasible, ownership would not matter because the same incentive structure that prevails under one ownership structure could be replicated under the other ownership structure. Hart, Shleifer, and Vishny (1997) have developed

6216-483: The secretariat to the PCG and managed the implementation of the programme, which was completed in 2015. As of 2024, Philippines Amusement and Gaming Corporation (PAGCOR) is the most profitable state-owned enterprise in the Philippines. It is the third largest contributor to government revenues, following taxes and customs. State ownership State ownership , also called public ownership or government ownership ,

6300-467: The service. Conversely, they might be detrimental because they reduce oversight and increase transaction costs (such as monitoring costs, i.e., it is more difficult and costly to govern and regulate an autonomous SOE than it is the public bureaucracy). Evidence suggests that existing SOEs are typically more efficient than government bureaucracy, but that this benefit diminishes as services get more technical and have less overt public objectives. Compared to

6384-461: The spillover effects which result from the process of production often necessitate robust data collection and analysis. In order to assign a monetary value to the spillover effects of production it might be necessary to estimate such variables as healthcare costs from pollution or the value of clean water access. This presents a challenge because some of these variables lack direct market valuation. Moreover, subjectivity and uncertainty can intervene with

6468-461: The state answers for the liabilities. Stocks of the corporation are not sold and loans have to be government-approved, as they are government liabilities. State-owned enterprises are a major component of the economy of Belarus . The Belarusian state-owned economy includes enterprises that are fully state-owned, as well as others which are joint-stock companies with partial ownership by the state. Employment in state-owned or state-controlled enterprises

6552-484: The state's management policies, though these rights are not property rights as they are not transmissible. For example, if a family is allocated an apartment that is state owned, it will have been granted a tenancy of the apartment, which may be lifelong or inheritable, but the management and control rights are held by various government departments . There is a distinction to be made between state ownership and public property. The former may refer to assets operated by

6636-493: The state's response to natural disasters, financial crises and social instability. China's SOEs are at the forefront of global seaport-building, and most new ports constructed by them are done within the auspices of the Belt and Road Initiative . As of at least 2024, an Ethiopian SOE is Africa's largest and most profitable airline, as well as Ethiopia's largest earner of foreign exchange. In India , government enterprises exist in

6720-577: The state. Within the United Kingdom, public ownership is mostly associated with the Labour Party (a centre-left democratic socialist party), specifically due to the creation of Clause IV of the "Labour Party Manifesto" in 1918. "Clause IV" was written by Fabian Society member Sidney Webb . When ownership of a resource is vested in the state, or any branch of the state such as a local authority , individual use "rights" are based on

6804-527: The state. State ownership is advocated as a form of social ownership for practical concerns, with the state being seen as the obvious candidate for owning and operating the means of production. Proponents assume that the state, as the representative of the public interest , would manage resources and production for the benefit of the public. As a form of social ownership, state ownership may be contrasted with cooperatives and common ownership. Socialist theories and political ideologies that favor state ownership of

6888-540: The term "corporations" is frequently used instead. Thus, SOEs are known under many other terms: state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, government-owned company, government controlled company, government controlled enterprise, government-owned corporation, government-sponsored enterprise , commercial government agency, state-privatised industry public sector undertaking, or parastatal, among others. In some Commonwealth realms , ownership by The Crown

6972-620: The transaction. However, the key difference is that externalities are represented by social costs that are not reflected in a price change without government intervention. An example of an externality may be pollution resulting from production of goods and services. This cost does not appear in the cost of production, rather it exists outside of the market supply and demand schedule. Positive and Negative Spillover Effects Positive Spillover Positive spillover occurs when changes in one behavior influence favorably changes in subsequent behaviors. An example can be free public education offered by

7056-457: The truncation problem like LCA. MFA is based on the quantification and measuring of matter and substances in relation to the processes in a system such as a city or country. It is confined to a specific period of time. Flows are expressed in kg/year or, alternatively, in kg/capita/year. MFA is based on the principle of matter conservation. The aim is to identify problems and quantifying the exact impact of potential spillovers. However, it needs

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