Macroeconomic Impacts of Privatization: The Case of Turkey

Abstract

State owned enterprises and privatization have long been a major economic concern for Turkey. The main philosophy of privatization is to confine the role of the state in the economy in the areas like health, basic education, social security, national defense, large scale infrastructure investments; provide legal and structural environment for free enterprise to operate and thus to increase the productivity and the value added to the economy. Originally the privatization ideology was based on economic efficiency of the private sector whereas inherently corrupt structure of the public sector. Over the course of time, main objective of privatization had shifted towards mainly revenue generation and financing of the public debt. The literature on privatization has emphasized the microeconomic aspects of privatization and especially concentrates on the efficiency gains. However, there is less empirical work about fiscal and macroeconomic impact of privatization. In this paper, we tried to investigate the relationship between the privatization revenue, capital stock, foreign direct investment, human capital, external debt, and economic growth. Although Turkey is a developing country with high growth rates in recent years, in the empirical analysis, no evidence of long run relationship between privatization revenue and economic growth has been detected

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