This study examines the characteristics of the privatization of public enterprises between 1968 and 1983, and analyzes how policy for the privatization of public enterprises has affected the Korean economy and the production efficiency of individual enterprises.
There have been three distinct periods in the privatization of public enterprises in Korea. First, during the late 1960s when public enterprises built by Japan were privatized including Korean Machinery Industry, Korea Express Corporation, Korea Line Corporation, Korea Shipbuilding Corporation, Incheon Heavy Industries, Korea Iron Ore Development Corporation, Korea Mining Corporation and five commercial banks. During the next period, public enterprises, established after liberation, were privatized as they were believed to need improvement through management involvement by the private sector. In such cases as the Korean Air, Korea Salt Manufacturing Association, Korea Maritime Industry Development Corporation, Korea Reinsurance Corporation, Korea Oil Corporation, Korea Dredging Corporation, et cetera, the government sold off shares directly or let industrial banks sell off government shares. During the final period, since the 1980s, some of the shares the government owned for Pohang Iron & Steel Co (POSCO) and Korea Electric Power Corporation (KEPCO) have been privatized.
Eleven privatized public enterprises were analyzed and it was found that privatization of Korea Express Corporation, the Korean Air, Korea Reinsurance Corporation and Korea Oil Corporation had a positive impact on increasing production efficiency, while the privatization of the five commercial banks were evaluated to have little effect for production efficiency improvement and a low statistical reliance as they were subject to governmental strong control, on par with state-owned banks even after full privatization. In this regard, it is difficult to find a realistic ground for discussion on regarding whether the policy for privatization of public enterprises contributed to improving an individual company’s production efficiency.
In order to produce a positive production efficiency effect based on policy for the privatization of public enterprise, true privatization is required that transfers not only legal ownership of a public enterprise but also practical management rights to private entities. Moreover, public enterprises will be able to grow into privatized enterprises only when governmental regulations—including entry restrictions, price regulation, business activity regulations, and governmental interference in HR, budgeting, and organization—are excluded from internal management.
공기업민영화의 정책효과분석(Analysis on policy effect of privatization of public enterprises)
|Series Title; No||정책포럼 / 제48호(9418)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Economic Administration
Industry and Technology < Entrepreneurship
|Holding||KDI; KDI School|