EVALUATION OF PERFORMANCE OF INDUSTRIAL PUBLIC ENTERPRISES: CRITERIA AND POLICIES

The industrial public enterprise sector plays an important role in the economies of developing countries. It spans a whole variety of industries from petrochemicals to textiles. It has produced over 50 per cent of industrial output in countries such as Egypt, Somalia or the United Republic of Tanzania and over 25 per cent in India and Turkey. Its share in total manufacturing investment has been as high as 90 per cent in Egypt and 50 per cent in Mexico. Relatively vast resources are therefore made available to this sector so that a given country’s economic welfare is likely to be substantially affected by the nature and the size of the output that public enterprises generate out of these resources. It is thus important to be able to assess the net contribution of public enterprise operations in the country’s welfare and to ensure that they work towards maximizing benefits. A public enterprise is expected to fulfill many objectives: generate a financial surplus; help reduce unemployment; develop skills; and contribute to growth, technical progress and the correction of regional imbalances. The important issue that is addressed in this paper is how to evaluate public enterprise performance in view of the multiplicity of objectives thrust upon it.