The Politics of State-Owned Enterprise Reform in South Korea, Laos, and Vietnam

The privatization stampede represented the ascendancy of neoclassical economics and the view that governments should get out of business and leave the invisible hand of the market to either generate efficiency in often poorly performing enterprises or simply close them down (World Bank 1995, 1996, 1997). Privatization was slow to gain traction in Asia, where the idea of state ownership was firmly entrenched (Cheung 2002; Deutsch 1988; Gomez 1997; Gupta 2008), but driven by the need to fix government budgets and the unrelenting promotion of privatization by the international financial institutions, Asian governments began to accept SOE reform. The first case involves the privatization of Korea Electric Power Corporation (KEPCO), the giant SOE that had a national monopoly on electricity generation and supply. Seung-Ho Kwon and Joseph Kim trace the long history of KEPCO's privatization and highlight the political battles that have taken place in which the proponents justify their actions in terms of efficiency gains while the opposition utilizes the notion of public value to question official intentions. In both cases we see the mounting political pressures for economic reform that derived from poor economic performance under central planning.