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ISRN Economics
Volume 2012 (2012), Article ID 723536, 9 pages
http://dx.doi.org/10.5402/2012/723536
Research Article

The Political Economy of SOE Privatization and Governance Reform in the MENA Region

College of Business Administration, Rafik Hariri University (RHU), P.O. Box 10 Damour, Chouf 2010, Lebanon

Received 23 September 2012; Accepted 10 October 2012

Academic Editors: F. R. Fitzroy, C. A. Gallet, and E. Yeldan

Copyright © 2012 Ibrahim Akoum. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

The purpose of this paper is to shed light on the political economy aspects of state-owned-enterprises (SOEs) governance and privatization in the Middle East and North Africa (MENA) region. In particular, the paper presents an overview of privatization in the region and examines the extent to which SOEs operate at arm's length from the public sector and the motives for this behavior. Showing empirically the region’s relative reticence on privatizing public assets, the paper highlights the political economy aspects contributing to this impasse, offers Lebanon as a case study, and suggests a policy framework for successful reform of SOEs. Highlighting the lack of sustainable drives for SOEs reform and privatization in the region and the need for better governance systems based on the rule of law, property rights protection, and combating corruption, the paper proposes policy options to deal with privatization and improve the governance of SOEs through advocating a state-owned enterprise governance framework. This framework suggests subjecting SOEs to regulation and supervision of more than one government entity as opposed to only one ministry of custody. This should help to ensure a level-playing field in the industry and reduce the pressure on SOEs to heed to political pressures.