Public Management and Administration - Owen E.hughes

5
Public Enterprise
Introduction
Public enterprise was for a long time an important part of the public sector in most
developed or developing countries (Farazmand, 1996), but, with privatization, the
size and importance of the sector is declining. It now seems in some danger of disappearing
altogether as countries have rapidly moved away from government production
through public enterprise. There are two reasons for looking at public
enterprise as part of public sector management. First, the sector is particularly
important for arguments about the scope of government activity and the debate
and outcome of privatization of public enterprise has implications for the public
sector as a whole. Secondly, public enterprises pose particular management problems
even compared to the rest of the public sector, most noticeably the control
and accountability of government organizations aiming to make money.
Public enterprises were the first target of those aiming to reduce the size of
the public sector in the 1980s. Even though major public enterprises such as the
post office still exist in many Western countries, including the United States,
there seems little doubt that the idea of government-owned organizations selling
goods and services to the public has passed its heyday. Although the public
enterprise sector was large in many countries its activities formed only a minor
part of political discourse. Starting in the early 1980s it became a focus of political
controversy, with its very existence in question. One of the key, and quite
unresolvable, political questions concerns the allowable limit of government
activity. Matters of ideology about the overall role of government became bound
up with the ownership of public enterprise. As public enterprises operated at the
boundary of public and private sectors in mixed economies, arguments about
them were often about the desirable role of government itself. The answer in the
debate was overwhelming, in developed and developing countries alike, that
governments should dispose of their public enterprises: and they did. The most
significant of the early programmes of privatization was in the United Kingdom.
Between 1979 and 1993 nationalized industries in that country fell from 11 per
cent of GDP to 2 per cent, and from 1.8 million employees in 1980 it fell to less
than 400 000 in 1994 (Kamarck, 2000, p. 240). The privatization movement
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