Privatization of the Public Enterprises: Assessing its Impact on Economic Development and Socioeconomic Outcomes

Abstract

This research aims to quantitatively assess the relationship between the privatization of public enterprises and financial progress using time-series data spanning from 1990 to 2025. The study focuses on both short-term and long-term impacts of privatization on economic development. By incorporating key economic variables such as Gross Domestic Product, privatization, gross capital formation, labor force participation rate, total reserves, foreign direct investment, and inflation, the analysis seeks to provide a comprehensive understanding of these dynamics. Utilizing a unit root test to ascertain the stationarity of the variables and an Auto-Regressive Distributed Lag model to analyze the relationships between the dependent and independent variables, this study uncovers critical insights. The findings indicate a long-term negative association between privatization and Gross Domestic Product, while highlighting the significant role of monetary growth in shaping economic outcomes. Conversely, gross capital formation and Foreign Direct Investment exhibit positive correlations with Gross Domestic Product, whereas labor force participation, total reserves, and inflation are negatively related to economic growth. Through this nuanced examination, the research sheds light on the complexities of privatization and its varying impacts on different facets of economic development, offering valuable implications for policymakers and stakeholders in shaping future economic strategies.