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DIME Seminar: Workhorses or White Elephants? The Effects of Earned Autonomy on State Owned Enterprises

January 29, 2019

MC 4-100

  • Public sector firms comprise an important proportion of economic activity in many developing countries. Despite this importance however, relatively little is known about which policies or practices optimize SOE outcomes.

    Using newly digitized data, I evaluate how an earned autonomy program that decentralized certain decisions to Indian public sector firms affected their performance. 

    The results indicate that autonomy allows SOEs to increase their capital stock (fixed assets value as well as increased capital works in progress), as well as increase both the number and average value of new capital expansion projects. Firms also increase their sales and profits,y large increases in liabilities relative to assets.

    These results indicate that large gains in SOE performance are possible without privatization, by giving well-running SOEs more autonomy over their decisions.


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    Assistant Professor, MIT Sloan School of Management

    Namrata Kala is an Assistant Professor in Applied Economics at the MIT Sloan School of Management. Her research interests are in environmental and development economics. From fall 2015 to 2017, Namrata was a Prize Fellow in Economics, History, and Politics at Harvard University and a Postdoctoral Fellow at J-PAL. She received her PhD in environmental economics from Yale University in 2015. She also holds a BA (Honors) in economics from Delhi University, and an MA in international and development economics from Yale University.

  • DIME is a World Bank-wide program to generate knowledge on the effectiveness of development policies. Working across 18 thematic areas, DIME collaborates with 300 agencies in 72 countries to improve the effectiveness of policies and programs and strengthen country capacity for real-time evidence-based policy-making. More »