The Business of the State

The Business of the State

The state is one of the main subjects of the economy.

The state participates in economic life in various formats: from control over the production of goods and services to investment. State-established companies compete with the private sector at the level of individual firms, the market and the economy as a whole. The degree of influence of such participation depends on the type of ownership, markets, institutions and regulations. There is an opinion that the state. companies can mitigate the consequences of the global financial crisis and the COVID-19 pandemic and become a driver of decarbonization and national growth.

 The purpose of a new study by the World Bank (WB) is to analyze the organizational and legal features of the state. companies, their effectiveness in terms of attracting investment, productivity, technology adoption and job creation. The authors analyze how government mechanisms affect the economy's ability to respond to modern challenges, from pandemics to climate change. The study is based on data from 76,000 companies with varying degrees of government participation from 91 countries.

 The results show that the share of participation in the economy has increased. More than 70% of state-owned companies operate in non-traditional markets: food industry, construction and hotel business. Regulatory analysis also shows that in these competitive markets, state-owned companies are often granted exclusive rights. Nevertheless, the assessment shows that the state. companies tend to be less dynamic. And they often affect the overall performance of sectors, making it difficult for new players to enter the market. At the same time, state companies pay significantly higher salaries than comparable private firms.


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