This book examines privatization and the relationship between
macroeconomic financial distress in emerging market countries. The study
was undertaken to investigate the rationales of privatization and to
explain the pattern and behavior of privatization in emerging market
countries (EMCs). The central hypothesis under investigation is that
countries with fiscal pressures such as high debt levels, significant
budget deficits, and large current account deficits, ceteris paribus,
are more likely to increase their privatization activities. The study
begins by providing a background on privatization and state-
owned-enterprises (SOEs) in EMCs. It then reviews the theoretical
literature underlying privatization and financial distress. Next it
provides a comparative profile of EMCs that privatized. The empirical
analysis supports the hypothesis of a positive relationship between
financial distress (with an emphasis on debt as a primary driver of
distress) and privatization. In particular, higher levels of debt caused
financial distress which caused countries to privatize relatively more.