Why haven't developing countries privatized deeper and faster?

Despite a decade of privatization in the developing world, the vast majorit y of state-owned enterprise (SOE) assets continue to be in government hands . Bureaucrats lit Business (World Bank, 1995) correctly identifies politics as one reason for the slow pace of privatization but it underestimates the role of institutional and economic constraints, Success stories of privati zation are rare in low-income countries, and the long-term promise of priva tization in sectors posing regulatory complications remains to be establish ed. Countries in crisis may reform SOEs quickly and deeply despite these un certainties, but others may opt fbr gradual reform, which need not be altog ether bad. If speedy privatization results in poorly conceived schemes, the cure can be worse than the illness. Finally, bureaucrats are likely to sta y ill business for years to come, and therefore it is important to improve their effectiveness in the roles they are unlikely to shed in the future. A market-friendly approach to SOE reform need not be government-unfriendly. (C) 1998 Elsevier Science Ltd. All rights reserved.