the results of a recent survey of published academic studies. Of the 22 studies surveyed, 20 found that businesses performed better after they had been privatised
Surveying the evidence
The empirical literature almost invariably shows that privatisation has increased business efficiency,enhanced the competitiveness of markets and increased overall economic welfare.
The balance of evidence conclusively indicates that:
• private firms tend to be more efficient than their state-owned counterparts, especially in
competitive industries;
• privatisation of an SOE is likely to lead to improvements in the efficiency of the enterprise and to a more open and competitive market, to the benefit of consumers, taxpayers and the economyas a whole.
The evidence does not suggest that private ownership is always more efficient. Some state enterprises can perform very well, at least for a period. Conversely, as the case of Air New Zealand has highlighted,
private companies can and do make mistakes. But the balance of evidence clearly demonstrates that, on average and over time, the private sector is likely to be more efficient than the public sector at running commercial enterprises.