Over the last two decades privatization programs in different countries radically reduced the role of the State as a …'s principal-agent structure following privatization, and incentives to invest in R&D and to patent. We compare the pre and post … privatization R&D effort and patenting behavior of 35 companies that were fully or partially privatized in 9 European countries …

above average size, initial profitability and initial labor productivity. After controlling for this selection bias, we find … that foreign investment has a positive, but statistically insignificant, impact on TFP (Total Factor Productivity) growth …

Even though it is well documented that privatization leads to an improvement in the performance of state … because it does not consider the performance of control firms of similar pre-privatization situations, i.e. the performance of … following privatization. Matching sample firms (privatized) to control firms (SOEs), I document that privatized firms do not …

efficiency gains result from better incentives and productivity, rather than from wholesale firing of employees and profitability …