What makes privatization work the case of china

The Communist Party had converted all private schools to public institutions soon after taking power in Individuals and social organizations were urged to establish schools; schools themselves gained more autonomy; and parents gained more freedom of choice.

By the mids, many minban schools had transmuted into conventional private schools charging considerable tuition. Though funded by parents paying such tuition, these schools were subsidized by the state through free or low-fee property leases. The incentive for the government to subsidize private schools in this manner was twofold: to advance academic achievement through competition among schools; and to offload educational expenditures to private citizens who could afford to pay tuition for their children.

In , there were 2, minban schools enrolling just over , students. By , there were 16, minban schools enrolling just over 12,, students. Finally, in analyzing the school day and system of accountability, Wang exposes the grim reality of private schools in China as pressure-cookers for students and teachers alike.

In the name of preparing students for the high-school entrance exam, the zhongkao , middle schools compromise on promised extracurricular activities to make more time for test prep. To hold teachers responsible, school administrators assess and pay teachers according to student results. Privatization by Management Buy-Out The number of SOEs decreased by more than half from approximately , in to , in The largest, centrally administered SOEs were kept under state control, but most of the local SOEs were sold to private hands.

Most of the new owners of the privatized firms were the managers of the same SOEs before privatization. Whether a given SOE became the target of off-loading was a decision made by the central planners, but the exact mode and outcome of restructuring were often negotiable. For example, both Huajing Electronics and Northeast Pharmaceutical were large SOEs, but part of the former was privatized in the form of joint venture with a Hong Kong firm, whereas the latter managed to turn around as an SOE and became one of the world's top makers of vitamin C Yuan , ch.

Bei conducted systematic in-depth interviews of the owners and managers of seven newly privatized firms, six of which went through privatization by management buy-out MBO despite the government's initial inclination to shut them down.

The prevalence of MBO among those successfully privatized firms does not mean the managers of SOEs could freely choose to privatize. Wu chronicles the business history of 38 famous firms between and , 24 of which belonged to the public sector, according to Watanabe's analysis.

Only one of them was successfully privatized by MBO, whereas eight others experienced some sort of conflict with the government and typically ended in the arrest of managers and in liquidation. The government clearly has the upper hand. Privatization does not change everything overnight. In fact, all seven successful cases in Bei feature former SOEs that retained their core technologies, management teams, physical assets, and the majority of their labor force from the SOE era.

What changed was the increase in managerial freedom, including product choice, technology choice, marketing, investment, and the design of incentive schemes. Productivity Dynamics after Privatization Measuring privatization and productivity is not an easy task. Privatization involves a political process, and the state and SOEs each have their own agenda and priorities.