Productive Efficiency and Welfare Gains from Privatization in Malaysia

Literature shows that privatized firms generally gain financially, and privatization leads to production efficiency gains since performance outcomes are largely conditioned by externalities like ownership. Our approach linking privatization to welfare gain measures reveals three interesting results. First, there is a significant positive effect on welfare gains from privatization. Second, corporate ownership control appears to condition production efficiency and welfare gains. Finally, privatized firms also gain financially. Linking privatization to welfare gain measures is an important research and policy objective since governments cite ensuring welfare as a reason for controlling privatized firms after privatization