Forecasting Asset Returns in some MENA Countries: Impact on Privatization

The road to a free market economy entails the selling of publicly owned enterprises. It has long been recognized that publicly owned companies suffer from poor management, poor efficiency, and poor performance. Many governments, however, have been reluctant to relinquish economic control by selling public enterprises. Public enterprises have been always regarded as a policy tool available to punish or reward public employees. They were never run to generate profits, but were used to generate political influence (Campos and Esfahani, 1996). Some governments have been forced or convinced to follow privatization programs. While the lessons derived from the experience of privatization differ considerably from on country to another (White and Bhatia, 1988; Guilain, 1997), there is strong evidence for all countries that privatized companies dramatically improve corporate performance (Frydman, et al., 1997).