Privatization and liberalization in the context of Paris III

Privatization: where are we at? Privatization was central to Paris II. One of the primary stated goals of privatization is

the reduction of the public deficit and fiscal debt. Another goal is the purported improvement in

productivity and product quality Most of the projected privatization measures of

Paris II have not yet been implemented. The Paris III document reiterates the government’s

commitment to privatize the mobile telecommunications industry over the next 2 years

Privatization: where are we at? The privatization of the power sector is a

medium term plan. In the short-run, the stated objective is to

focus on strengthening sector capacity and reducing losses.

MEA has undergone radical restructuring and the government has reiterated its desire to privatize the national airline company when market conditions are deemed to be adequate.

Privatization: what do we know? Li and Xu (2002)

use a panel of cross-country data and find that privatization of telecom contributed to labor shedding, output growth, network expansion, and improvements in labor and total factor productivity.

find evidence of complementarity between privatization and competition (competition increased the gains from privatization and vice versa).

competition appeared to have a larger impact on labor and total factor productivity than privatization.

Privatization: what do we know? Bortolotti, D’souza, Fantini and Megginson (2001)

Use data on telecommunications privatization to verify that privatization is associated with higher profitability, output and efficiency.

Find, surprisingly, that competition reduces profitability, employment and efficiency after privatization

Efficiency gains from better incentives rather than wholesale firing of employees

Profitability increases result from reduction in costs, not increase in prices

Privatization: what do we know? Chong and Galdo (2003)

Use a cross-country panel of telecommunication privatization to show that the sale method in privatization matters: government administration of labor downsizing may result in adverse selection

Privatization: lessons

Evidence is mixed on the relative effects of privatization and competition in any liberalization package.

As useful as these cross-country panel studies may be, we need to know more about the specific context of Lebanon. So we turn to our distinguished panel.

Privatization: a closer look at two sectors Privatizing Middle East Airlines

Dr. Faisal Nsouli, Founding member of LEA

Dean, American University of Science and Technology

The case for privatizing telecommunications in Lebanon

Ms. Hana Habayeb

Senior Consultant

Connexus Consulting