Public Enterprise Revisited

Public Enterprise Revisited

A Closer Look at the 1954–79 UK Labour Productivity Record

Chrisafis H. Iordanoglou

The book compares the 1954–79 labour productivity record of 5 expanding public sector industries to that of 24 expanding, capital intensive, mass-production industries in the British private sector. The author shows that the public sector industries’ labour productivity growth was significantly faster than that of the private sector industries. Strikingly, he also finds that the state-owned industries were narrowing their productivity gap with their US counterparts at a significantly faster rate than the private sector industries. Dr Iordanoglou concludes that it is possible that public ownership had – in the historical period investigated – a long-term positive effect on these industries.

Chapter 2: Selection of the Sample

Chrisafis H. Iordanoglou

Subjects: economics and finance, industrial organisation, labour economics


2.1 PRELIMINARIES The industries that have been included in my sample were the ones that were simultaneously satisfying three criteria: (a) relatively fast market expansion for their products; (b) relatively large plant size; and (c) relatively large amounts of funds required to finance investment per employee. The 155 three-digit-level industries of manufacturing, mining, utilities, transport and communications were ranked according to these criteria in the way I shall describe in this chapter. From each ranking I have taken the set of industries that were ranked at or above the median. These were the industries that were considered as candidates for the final sample. The final sample was determined by the intersection of those three sets. The result is a sample of 29 industries. The sample is deliberately biased in favour of the growing segment of the economy’s ‘capital-hungry’ industries. The object of the above exercise is to identify the private sector industries sharing with the public sector industries the three characteristics I wish to focus upon: G G For reasons explained in the Introduction, my intention is to focus upon the growing public sector industries. The private sector side of the comparison must equally involve the industries that expanded relatively faster. Practically all public sector industries are characterised by the presence of substantial scale economies and large capital investment requirements. Their major investment decisions take the form of investment programmes rather than a series of independent projects. These programmes consist of many interrelated projects, involve large indivisible equipment, result in...

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