the features of the transformational economy and is
based on international experience in building modern market relations and
mechanisms for increasing the efficiency of the economic system, has been
substantiated. The dynamics of the public sector share in the country's economy
is analyzed, and the possible causes and consequences of these structural and
dynamic changes are characterized. The results of the study are the proposed
classification of types from state-owned enterprises, which is the basis for
differentiating their functions and tasks depending on the goals of education,
the characteristics of the activity, the structure of ownership, and the
strategic priorities of the country's development. The necessity of the
state-owned enterprises' sector reforming in the context of global integration
is substantiated, as well as general directions and tools for implementing the
reform of state-owned enterprises.
Keywords: State-Owned Enterprise; State Regulation;
Regulatory Mechanism; Reform of State-Owned Enterprises; Management
1.
INTRODUCTION
The experience of industrially
developed countries shows that in the context of economic globalization,
dynamic competition, transition to an innovative way of development,
state-owned enterprises play a significant role in certain areas of activity.
Scientific research and practice show that the effective implementation of
functions is possible only with an adequate state regulation system and
state-owned enterprise management.
This requires not only the
improvement of existing regulatory mechanisms for transforming state
institutions of a financial, fiscal, social nature but also the development of
fundamentally new effective approaches to the functioning of the state
entrepreneurship system, based on international experience in building modern
market relations and mechanisms for increasing the efficiency of the economic
system.
Allowance for the experience of many
developed countries demonstrates the need and feasibility of public-sector
involvement in the economy, especially for those activities that provide
economic security and are strategic for the economy as a whole.
2.
LITERATURE REVIEW
The role and importance of state
development of the country's economy was studied in the work of Chinese
scientists (Lin, Lu & Zheng, 2020),
who identified priority areas for increasing the efficiency of their activities
through improving corporate governance, optimizing financial support from the
state, developing a state program for reforming state enterprises, developing
corporate social responsibility of business.
Taking into account the
peculiarities of the public sector development in countries with transformational economy, Russian scientists (Abramov, Radygin & Chernova, 2017) have proved that in conditions of
instability and high financial volatility, state-owned enterprises have certain
advantages associated with access to long-term concessional lending and other
forms of state support. Despite the higher performance indicators of private
enterprises compared with state ones, recently there has been a
tendency towards equalization of performance indicators in the public and
private sectors in the context of the effective management mechanisms use.
Lithuanian scientists (Klovienė & Gimžauskienė, 2014) substantiated the
need to develop specific criteria and indicators for assessing the state-owned
enterprises performance by various regulatory bodies, taking into account their
special functions and tasks. Piret Tõnurist (2015) proposed a new
theoretical approach to analyze the special role of
state-owned enterprises in state innovation policy.
The policy of economic reforms in a
market economy provides for the transformation of state-owned enterprises, the
main tasks of which are strategic reorientation, change in the organizational
structure, reform of logistics policy, and staff renewal (Baliga;
Santalainen, 2006).
The peculiarities of the development
of the public sector in countries with transitional economies were studied in
the work of Nguyen (2015). It has been
proven that enterprises with state ownership are, as a rule, less profitable,
but have higher social support for workers, and generally increase the
competitiveness of companies.
The issue of strategic development
peculiarities in the state enterprises activities within the global integration
was studied by Reddy, Xie, Huang (2016). They proved that the purchase of
private enterprises by state-owned companies in other countries with a
trasitional economy in resource-scarce industries contributes to the
diversification of risks, increases the economic efficiency of their own
activities and their competitiveness.
The study of the evolution of the
development of state-owned enterprises in Finland at the stage of their
internationalization, arises from the implementation of their venture
opportunities and the transition from the state to the market direction,
provided the basis of
the following scientists (Cheungac, Aaltoc & Nevalainen, 2020) to argue that the
internationalization of state-owned enterprises due to a change in activities
priorities (including geographic and partnership) has a positive impact on
public policy and forms an inverse relationship between the state and state
enterprises.
Hofmann, Sæbøa,
Braccinib Am, Za (2019) studied the changing role and the importance of
state-owned enterprises in the context of modern transformation, proving that
in modern conditions the role of a state-owned enterprise as a regulatory lever
is less important than the ability and necessity of the state to take on the
role of a consumer, supplier and platform provider. That is, modern
transformational processes contribute to strengthening the role of the state in
economic processes and expanding the range of tasks facing state enterprises by
providing support for public value in the context of professional, efficiency,
service, and engagement.
The problems of developing and
forming a strategy for the development and functioning of state-owned
enterprises in the specific conditions of Iran's transitional economy were
studied by Tajeddini and Trueman (2016) on the example of 127 state-owned
companies. It was proved that under such conditions, to ensure an effective
level of functioning, it is important to influence top managers on the
organizational culture for innovation, a normative and cognitive dimension, as
well as staff training. This direction provides an opportunity for state-owned
companies to improve the quality, competence and speed of work, which will help to improve partnerships due to the sanctions
restrictions in force against the country.
The issues of accounting and
analytical support for managing the state-owned enterprise activities in the
context of IFRS application have become especially relevant.
3.
METHODOLOGY
The
methodological and methodical
basis was the provisions of the Economic Code, the Classifier of institutional sectors of the economy.
In the research, the following methodological techniques as comparison, modeling, series of dynamics, grouping, structural-dynamic and
coefficient analysis were used.
The
information base of the empirical study is the data of the official website of
the Ministry of Economic Development, Trade and Agriculture of Ukraine for
2014-2020.
The
purpose of the article is to
study the conditions and development prospects of the Ukrainian
economy state sector and determine the functions and tasks of state-owned
enterprises in the transformation stage.
4.
RESULTS
State-owned enterprises are an
influential force in the world economy and have become an effective tool for
strengthening the competitive positions of countries in the global market in
modern conditions. Even though state-owned enterprises play a special role in a
transformational economy, there is a general trend towards a reduction in state
ownership. At the same time, this trend does not mean a decrease in the
influence of government structures on economic transformations in the countries
of the world.
Effective restructuring measures of
state-owned enterprises in Ukraine have not yet received a proper scientific
and theoretical justification, considering the peculiarities of the
transformation processes of the national economy. Now, this process is aimed
mainly at changing the subjects of ownership and its redistribution, which
contradicts the global strategic goals of enhancing the efficiency of the country's
economy and its development through the intensification of innovation processes
and improvement of public administration.
Effective restructuring of the
country’s economic infrastructure requires a scientific substantiation of the
optimal volumes of the public economic sector, the identification of priority
activities, and the main tasks facing state enterprises, considering the goals
of strategic development and the characteristics of the national economy.
According to the research of scientists, the share of the public economy in
various European countries differs significantly: the share of public sector
enterprises in the GDP of Austria is - 28%, Germany - 25%, Sweden - 14%, Italy
- 12% Kindzersky (2013).
Table 1 and Figure 1
outline the trend in the share of the public sector in Ukrainian economy.
Table 1: Trend in the Share of the Public
Sector in Ukrainian Economy During 2014-2020
|
Type of economic activity
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
The first half of 2020
|
deviation
|
|
2020
from
2014
|
2019
from
2015
|
|
Total
|
10,3
|
11,3
|
11,1
|
9,4
|
8,9
|
8,3
|
11,5
|
+1,2
|
-3,0
|
|
including
|
|
|
|
|
|
|
|
|
|
|
Agriculture, forestry and
fisheries
|
4,6
|
4,4
|
4
|
4
|
4,1
|
3,8
|
–
|
-
|
-0,6
|
|
Production
|
15,1
|
15,1
|
14,6
|
10,9
|
10,5
|
9,6
|
11,6
|
-3,5
|
-5,5
|
|
Mining and quarrying
|
7,9
|
7,9
|
6,7
|
6,6
|
6,8
|
7,3
|
6,2
|
-1,7
|
-0,6
|
|
Processing industry
|
4,6
|
4,4
|
4
|
3,6
|
3,5
|
2,9
|
3,9
|
-0,7
|
-1,5
|
|
Electricity, gas, steam and
air conditioning supply
|
47,9
|
50,7
|
48,4
|
36,2
|
35,1
|
28,6
|
32
|
-15,9
|
-22,1
|
|
Water supply; sewerage,
waste management
|
3,3
|
1,4
|
2
|
1,9
|
2
|
3
|
4,9
|
+1,6
|
+1,6
|
|
Construction industry
|
0,5
|
0,6
|
0,6
|
0,6
|
0,6
|
0,7
|
0,3
|
-0,2
|
+0,1
|
|
Wholesale and retail trade;
repair of motor vehicles and motorcycles
|
0,7
|
0,6
|
1,1
|
1
|
0,3
|
0,5
|
0,8
|
+0,1
|
-0,1
|
|
Transport, warehousing,
postal and courier activities
|
34,5
|
32,6
|
31
|
27,4
|
28,7
|
29,4
|
29,7
|
-4,8
|
-3,2
|
|
Temporary accommodation and
catering
|
2,7
|
2,8
|
2,8
|
2,7
|
2,4
|
1,8
|
5,1
|
+2,4
|
-1,0
|
|
Information and
telecommunications
|
3,8
|
3
|
3,4
|
3,2
|
3,2
|
4
|
5,9
|
+2,1
|
+1,0
|
|
Financial and insurance
activities
|
0,7
|
1
|
0,4
|
0,2
|
0,2
|
0,2
|
0,5
|
-0,2
|
-0,8
|
|
Real estate transactions
|
1,8
|
1,6
|
1,6
|
1,2
|
1,1
|
1
|
1,9
|
+0,1
|
-0,6
|
|
Professional, scientific and
technical activities
|
28,3
|
33,4
|
33,8
|
33,8
|
32,3
|
30,6
|
57,2
|
+28,9
|
-2,8
|
|
Activities in the field of
administrative and support services
|
0,4
|
0,5
|
0,5
|
0,6
|
0,7
|
0,6
|
1,4
|
+1
|
-0,1
|
|
Education
|
3
|
1,3
|
1,2
|
1,1
|
1,1
|
1
|
-
|
-
|
-0,3
|
|
Health care and social
assistance
|
1,9
|
1,4
|
1,4
|
1,7
|
1
|
0,5
|
1,5
|
-0,4
|
-0,9
|
|
Arts, sports, entertainment
and recreation
|
12,5
|
12,7
|
13,7
|
14,4
|
14
|
14,3
|
35,7
|
+23,2
|
+1,6
|
Source: Developed by the authors according to the
official website of the Ministry of Economic Development, Trade and Agriculture
(2020)
Figure 1: The
Share of the Public Sector in the Economy of Ukraine in 2020 (%)
Source: developed by the authors according to
the official website of the Ministry of Economic Development, Trade and Agriculture (2020)
According to the above data, there
has recently been a clear tendency towards a decrease in the share of the
public sector in Ukraine as a whole and for certain types of activity during
2015-2019.
In general, during this five-year
period, the share of the public sector in Ukraine as a whole decreased from
11.3% in 2015 to 8.3% in 2019, or by 3 percentage points. The most rapid
decline in the share of state-owned enterprises was observed in such activities
as electricity, gas, steam, and air conditioning supply, where in 2015 the
public sector accounted for 50.7%, and in 2019 its share decreased to 28.6%,
i.e. decreased by 22.1 percentage points, or almost twice as much. Not so
rapid, however, a stable decline in the share of the public sector in the
country's economy was observed in industry, from 15.1% in 2015, it decreased to
9.6% in 2019, or by 5.5 percentage points. At the same time, in 2020, the
dynamics of the share of the public sector slightly changed towards its
significant increase, which can be explained by the crisis phenomena in the
private sector caused by the Covid-19 pandemic (Table 4).
The opposite trend towards an
increase in the share of the public sector was observed for professional,
scientific, and technical activities, as well as for art, sports,
entertainment, and recreation. The share of the public sector in the field of
professional, scientific and technical activities increased in 2020 to 57.2%,
or increased compared to 2014 (28.3%) by 28.9 percentage points. A significant
increase in the share of state-owned enterprises also occurred in such sectors
of the economy as arts, sports, entertainment and recreation, which increased
from 12.5% in 2014 to 35.7% in 2020 or increased by 23.2 percentage points (Figure 1
and 2).
Figure 2: Dynamics of the share of the public
sector by individual activities (2014-2020)
Source:
Developed by the authors according to the official website of the Ministry of
Economic Development, Trade and Agriculture (2020)
It should be noted that the
activities of state-owned enterprises have the same megatrends that are
characteristic of other businesses, they are characterized by similar
opportunities and threats, because they operate in the same economic
environment. However, given the different purposes of state-owned enterprises,
their mission and strategic goals in terms of realization of national interests
and maximization of social effect, their functioning has certain features.
Therefore, there is no doubt that
state enterprises play a special role in the economic and social development of
the country, however, given the transformational nature of the domestic
economy, when reorganizing the public sector and determining its optimal size,
certain features of the transition period should be considered. At the time the
Ukrainian independent state was created, it actually did not have its own
economic system – it was a subsystem of the unified national economic complex
of the USSR, which was formed to serve it and did not include many elements
necessary for an independent system. The main content of the reforms in the
country is the transition to an integrated economic system that operates on a
market basis.
According to Petryshyna (2014), it
is customary to substantiate the importance of theoretical research on the
transformational economy by the processes of the country's integration into the
global economic space, but it is not advisable to reject the need for research
as an important stage in the formation of the national economy. The process of
market transformations makes us look for new ways to increase the level of
well-being and income of the population; economic growth; increasing the
productivity and quality of labor, its forms and methods; rational use,
distribution and redistribution of resources. Each new round in national or
global processes (crises, the emergence of innovative technologies, scientific
breakthroughs, economic challenges, etc.) provokes the emergence of chaos and
destruction of established economic and social processes, well-functioning
activities of large and small companies, corporations and even countries.
The beginning of the transformation
in Ukraine can be considered by the adoption of "Concepts Of The
Transition of Ukraine to a Market Economy" (1990), on
November 16, 1990 in
Kiev. This process was accompanied by a deep economic crisis and provided for
the weakening of some types and forms of ownership and the strengthening of
others, a change in the economic structure, and consequently, weakening of some
economic laws and strengthening of others Transformation processes in Ukraine
have their own specifics associated with transformations of property relations
and the role of the state in the economy.
Ukraine, as a post-Soviet country,
began its stage of transformation from the position of reducing the role of the
state in the economy, it was erroneous, since the experience, for example, of
the post-war revival, shows that an increase in the role of the state in the
economy contributes to its development. However, government intervention should
be limited, since significant growth of the public sector can narrow the market
environment, have a negative impact on the competitive environment and the
development of the country's economy as a whole.
At the same time, exceeding the role
of the state also has a number of disadvantages. Therefore, the reform of the
Ukrainian economy was carried out in the direction of narrowing the public
sector, expanding the competitive market environment, increasing the role of the
market, as opposed to the Soviet concept of concentration of state property. As
a consequence of the radical comparison, there was a decrease in the role of
the state, a decline in production and a deterioration in the standard of
living of the population, which made the government pay more attention to the
development of the country in the context of transformation.
According to Fukuyama (2004), world
experience proves the growth of the economic role of the state as a principle
of managing a modern globalized economy in which national interests become
decisive.
After all, starting in 2010, Ukraine
enters a new stage of transformation in the economy from the position of
strengthening the role of the state in the economy, manifested through the
development and implementation of the functioning of state programs for
modernization, development and planning, based on the successful examples of
other developed countries.
Today, the state acts as a
strategist for the modernization and development of the economy and society,
through planning, as an important element in regulating the economy and
balancing the influence of the state and the market in regulating the country's
economy. At the same time, it should be remembered that there is no ideal model
for the relationship between the public and private sectors, but each
government is able to develop the best model for its countries.
According to Heyets (1999), transformational economy involves
changing the structure of the economy and creating new forms of development.
According to Stanko and
Shavaliuk (2014), such a transformation should not be reduced only to
market reforms, it is complex, including transformations in the political,
institutional and cultural spheres that are synchronized with each other in
space and time.
At the same time, the restructuring
of state-owned enterprises in Ukraine as a special stage of transformation
processes in the economy has its own features that should be considered in the
process of changing the form of ownership. Today, the process of restructuring
state-owned enterprises is a simple change of ownership, which is aimed mainly
at the redistribution of ownership without the introduction of innovative
management technologies.
Moreover, increasing the economic
independence of enterprises, the introduction of effective motivational tools
aimed at improving management can help increase the efficiency of state-owned
enterprises without changing the ownership form. When formulating a strategy
for the functioning and development of the public sector, it should be borne in
mind that in a transformational economy, market mechanisms are not yet
established and, as a rule, their action differs from the developed economies
of the world.
The course of our state on the
privatization of public sector enterprises should take place gradually,
considering the goals and objectives of each industry and the country as a
whole.
Kindzersky (2013) emphasizes that
the complete renunciation of state property through its final privatization
cannot and should not be seen as a panacea in solving the problem of improving
economic efficiency. The process of privatization and the formation of the
economy solely on the basis of the private sector should not be seen as an
irreversible movement in one direction.
In the long term, the phenomena of
privatization and nationalization should be considered as adjacent cyclical
processes that are closely related to STP cycles and lead to the formation of a
new quality of production and a higher level of the entire economic system.
Moreover, the expansion of the public sector should take place at the
depressive (development of new technologies), at the beginning of the upward
(formation of new sectors and industries) or at the end of the downward
(prevention of the rapid destruction of old industries) stage of the scientific
and technological wave, while in other periods the private sector should prevail
(Kindzersky, 2013).
The conclusions of scientists who
have studied the economic reforms of developed countries and those that are
just developing, cross out the market fundamentalism theory and boil down to
the hypothesis that the rapid and effective economic development is directly
related to the presence of a significant share of the public sector in the
country, while economic “failures” – on the contrary – with its absence or
insignificant size (Popov, 2020).
For the group of developed countries
that can be considered successful, despite their temporary difficulties due to
the global crisis, the share of the public sector in GDP creation in the 2000s
ranged from significant (over 25% – in France and Italy) to dominant (80% – in
Finland). In the countries with emerging markets which are considered
successful, this figure was also quite high (in 2010 in Brazil – 30%, China –
29.7%, Poland – 28%, Thailand – 26%, Turkey – 14%, Vietnam –
33.7%) (Musacchio & Lazzarini, 2012).
In contrast, countries that did not
achieve much economic success had a small share of the public sector. For
example, as shown by a World Bank study, in Argentina before the mass
privatization of the 1990s, the share of the public sector in GDP was less than
half the average for the 40 developing countries analysed and was only 4.7%
compared to 10.7% (Bureaucrats in Business, 1995).
In the Philippines, which is also an
example of poor development, the public sector was even smaller at 1.9% of GDP.
Meanwhile, the failures of these two countries are traditionally, but, as noted
by researchers, unreasonably associated with too large public
sector (Popov, 2020).
The global financial crisis of
2008-2009 caused a new wave of public interventionism, an increase in the
public share in the economy, and private companies in many developed and
developing countries. According to well-known international organizations, new
state-owned enterprises (SOEs), state-supported enterprises (SSEs) or “national
champions”, which have become serious global competitors, have appeared in many
developed countries, as well as in developing ones to overcome the consequences
of the 2008-2009 global financial crisis. The transition from the free market
model to state capitalism, the advantages of which are the use of open global
markets, while limiting the sectors of national industry from foreign
competitors’ influence, is happening again (Fabulous, 2012).
Since world experience shows the
importance of implementing competent and effective management using such an
instrument as state-owned enterprises, it is important to note that a high
level of denationalization carries several threats to the domestic economy that
are equivalent to threats of a high level of state concentration. At the same
time, state-owned enterprises are aimed at making a profit, which can be an
additional source of budget replenishment for the state, but at the same time,
they almost or completely do not provide the functions of state regulation and
are not instruments of direct influence on economic processes.
According to experts of the audit
company PwC, if the leaders do not want to use modern management methods and
ownership of state property, there is a risk of its ineffective use contrary to
national interests, which are accompanied by such negative phenomena as
corruption, bribery, and inefficiency of the economy as a whole (Derzhavni
Pidpryiemstva, 2015).
Despite the various advantages of
state ownership as an economically attractive option, the activities of
state-owned enterprises in Ukraine are accompanied by some negative events that
lead to ineffective use of state property and, as a result, a decrease in
the country's economic potential.
Petryshyna (2015) to the
negative factors that lead to inefficient activities of state-owned enterprises
includes the following:
·
implementation of schemes for the shadow privatization
of state property under the cover of state (national) joint-stock and holding
companies;
·
transfer of state shares of some enterprises included
in the list of objects of state property rights that are not subject to
privatization to state joint-stock and holding companies;
·
insufficient qualification of board members of
state-owned enterprises who are civil servants;
·
internal control weakness;
·
lack of a typical corporate structure and goals;
·
cumbersome bureaucratic procedure for approving
financial plans of state enterprises;
·
deliberate reduction of the state’s share in state
blocks of shares transferred to the management of joint-stock and holding
companies;
·
violation of financial and tax discipline;
·
limited information on the activities of state-owned
enterprises for both society and shareholders;
·
lack of objective audit of state-owned enterprises by
external auditors;
·
improperly adjusted work of enterprises to collect
receivables, etc.
The list of factors that negatively
affect the financial performance of state-owned enterprises can also include
the fact that state-owned enterprises, as a rule, are created in specific
industries that are at the stage of formation, development, or need additional
funding. Such industries are disadvantageous for private capital, and therefore
the economic performance of such enterprises is low (however, as the experience
of the American system of state-owned enterprise shows, the economic benefit
can be delayed in the future for more than 10 years).
When determining the key tasks set
for state enterprises, it is necessary to take into account their types, the
systematization of which can be carried out by developing a classification,
which we propose to comduct with the allocation of such classification signs:
by types of state property; on an institutional basis; by the goals of
education; by structure and number of owners; by the size of the state property
share; by organizational and legal form; by type of financing (Figure 3) (Parasiy-Vergunenko, Samborska-Muzychko and
Gnylytska, 2020).
Taking into account the types of
state ownership, according to the Economic Code of Ukraine (Economic Code of
Ukraine, 2020), state enterprises are divided into: state enterprises, which
operate on the basis of state ownership (Article 63); state-owned, which are
created by the decision of the Cabinet of Ministers of Ukraine and in sectors
of the economy in which the law allows the implementation of economic
activities only by state-owned enterprises and the main consumer is the state
(Art. 76); communal, which operate on the basis of communal property of the
territorial community (Art. 63).
However, according to the
Classification of Institutional Sectors of The Economy (KISE, 2017),
state-owned enterprises are divided into: non-financial and financial
corporations. In turn, non-financial corporations are represented by
profit-oriented organizations and non-profit non-profit organizations.
Financial corporations are represented by banking institutions (including the
NBU), investment and insurance companies, pension funds, etc.
Figure 3: Classification of state
enterprises in Ukraine
Source:
Inspired by the authors based on Parasiy-Vergunenko, Samborska-Muzychko,
Gnylytska (2020)
In each classification group, the
division of state-owned enterprises can be carried out depending on the
ownership structure. If an enterprise has one owner (represented by the state),
then such an enterprise is called unitary; if more - corporate. Therefore,
according to the goals of education, enterprises are divided into: enterprises
with commercial goals (aimed at making a profit); enterprises with
non-commercial goals (non-profit organizations); enterprises with mixed
objectives.
By the size of the share of state
ownership, enterprises are divided into the following types: corporate
formations fully owned by the state (state share is 100%); corporate
formations, or other types of partnership formations, in which the state owns
more than 50% of the shares; enterprises where the state has a decisive
influence when making important decisions.
According to the organizational and
legal form, state-owned enterprises can be divided into: open shares In each
classification group, the division of state-owned enterprises can be carried
out depending on the ownership structure. If an enterprise has one owner
(represented by the state), then such an enterprise is called unitary; if more
- corporate. Accordingly, according to the goals of education, enterprises are
divided into: enterprises with commercial goals (aimed at making a profit);
enterprises with non-commercial goals (non-profit non-profit organizations);
enterprises with mixed objectives.
By the size of state ownership
share, enterprises are divided into the following types: corporate formations
fully owned by the state (state share is 100%); corporate formations, or other
types of partnership formations, in which the state owns more than 50% of the
shares; enterprises where the state has a decisive influence when making
important decisions.
According to the organizational and
legal form, state-owned enterprises can be divided into: open joint stock
companies; closed joint stock companies; business associations (corporations;
holdings; concerns, etc.).
Depending on the availability of
state support, it is proposed to distinguish the following types of state-owned
enterprises: subsidized state-owned enterprises (those that can be attributed
to priority socio-economic areas for the implementation of state policy and
always need and are guaranteed to be financed by the state from the budget or
local budgets); not subsidized (those that do not require state financial
support); conditionally subsidized (which can receive government support under
certain conditions and opportunities, or for individual budget programs).
This classification makes it
possible to differentiate methodological approaches and principles for
assessing the effectiveness of state enterprises, depending on the
characteristics and directions of their activities, ownership structure, goals
of education. Energetic societies; closed joint stock companies; business
associations (corporations; holdings; concerns, etc.).
It is widely known that the
importance of the role of state-owned enterprises in the national economy is
due to the special functions and tasks assigned to them by society.
Peculiarities of the state-owned enterprise activity, which identify the
spheres (Fig. 4) of its functioning and determine
the main tasks, are:
·
state-owned enterprises are created by the state to
achieve certain goals;
·
types of economic activity of the state-owned
enterprise are determined under the legally defined order according to the
certain purposes of creation;
·
the state, as the founder, has the opportunity to
influence and control the state-owned enterprise activities;
·
the state share in the enterprise capital depends on
the purpose of the enterprise and its objectives (the minimum state share in
the enterprise capital is enshrined in law to enable the state the right to
influence decisions in its activities);
·
state-owned enterprises are created to ensure two main
goals: the creation of socially necessary goods (the fulfilment of the set
goals of creating a state-owned enterprise and making a profit).
Figure 4: Key areas of
creation and operation of state-owned enterprises
Source: developed by the authors
The main functions of state-owned
enterprises traditionally include the following:
·
support
of strategically important types of economic activity in order to ensure the
economic development of the country and increase the efficiency of the economy
as a whole;
·
acceleration
of scientific and technological progress and strengthening the position of the
national economy in the foreign market;
·
rehabilitation
of segments of activity that are sensitive to the impact of crises;
·
economic
socialization.
Considering the experience of the
developed European countries, Kindzersky (2013) proposes to expand the functions of state-owned enterprises and to take
as a basis the Norwegian model of state property management, which according to
the national economy is the most acceptable for use in Ukrainian realities.
This model identifies four key goals of the state property, which can serve as
functions of state-owned enterprises:
·
monitoring
the usage of national resources and revenues, which belong to society as a
whole;
·
implementation
of regional development policy, transport, culture and health care;
·
guaranteeing
the creation of new value and jobs within the country;
·
implementation
of other macroeconomic and policy objectives, in particular, development of
transport infrastructure and electricity networks, culture and health sectors.
Thus,
considering the political and economic situation in Ukraine, the goals of the
creation and operation of state-owned enterprises are a necessity to fulfil
important tasks on the state level, such as:
·
support
of those important sectors of the economy that provide the necessary level of
economic development, scientific and technological progress (strategic
directions of the economy);
·
supporting
and ensuring the enterprise activities, industries, sectors of the economy that
are unprofitable and unattractive to private business or are on the brink
of elimination;
·
recovery
of those industries, sectors of the economy that are in crisis because of the
use of government instruments (subsidies, renewal, specialization);
·
assistance
to those enterprises that control the environment and its improvement,
environmental protection, combating global climate processes, to implement
state strategies related to participation in international agreements, through
the construction of treatment plants, raw material processing plants, the
introduction waste-free production, development of alternative energy sources,
etc.;
·
provision
and development of those activities that perform specific functions, including
strengthening the military and civil security of the population, the country's
defence capabilities, the fight against natural disasters and pandemics, or
aimed at supporting them.
It is
widely believed in scientific circles that the trend towards a decrease in the
share of state participation in property due to a decrease in the number and
share of state-owned enterprises in the country's economy will lead to a
decrease in the government's ability to influence these enterprises and perform
the necessary functions for the effective functioning of the economy. On the
other hand, according to the experience of the developed countries, the problem
of state property management, which requires the development of scientific
approaches to understanding the tasks of public entities as tools of economic
development in globalization, is a key factor in reducing the effect.
Inefficient
work of state-owned enterprises in terms of reforming this sector of the
economy has led to the stage of the need to implement reforms in this area. The
key goal of the reform is to ensure “transparency of activity and reporting of
state-owned enterprises, improve operational and financial results through the organization of
corporate governance of state-owned enterprises, reduce the state share in the
economy and eliminate non-operating enterprises” (High-Performance State Enterprises, 2020).
The note of the Cabinet of Ministers
Of Ukraine (High-Performance State
Enterprises, 2020) demonstrates that reducing the
share of state-owned enterprises is a necessary and important procedure for
optimization of the structure by focusing on the number of enterprises that are
“strategically important, transparent and efficient in their functions” and
will ensure the process of effective public administration.
The implementation of the reform is
envisaged to be implemented in key blocks (Table 2). At the stage of reforming all spheres of the country, in Ukraine,
there are relevant processes for state-owned enterprises, which are implemented
through instruments of liquidation, restructuring, reorganization,
privatization, mergers, changes in corporate governance, etc.
Table 2: Directions
and Implementation Tools of the State-Owned Enterprise Reform
|
Section
|
Content
|
Implementation
tools
|
|
Transparency
and reporting
|
State-owned
enterprises must provide financial statements in electronic form through a
single electronic system, conduct independent external audits, publish
complete and accurate information about their activities on a publicly
accessible portal, including financial statements prepared in accordance with
IFRS and audit opinions. Business leaders must take responsibility for
non-disclosure of information or disclosure of inaccurate information.
|
Creating a risk management system
(introduction of red flags if some indicators of enterprises are suddenly
knocked out)
|
|
Establishment of a public portal with
aggregate results of state-owned enterprises
|
|
Development and launch of a public module of
business intelligence on the portal
|
|
Corporative management
|
The
current model of state-owned enterprise management involves the introduction
of corporate governance tools, including strategic planning, development and
approval by the state as a shareholder of separate ownership policies for
each enterprise, appointment of independent supervisory boards and
development of incentives for supervisory boards and management. This is a
key factor in ensuring the effective operation of the enterprise, as
evidenced by the experience of many state-owned enterprises in other
countries. This approach will not only create financial benefits for the
state budget, but also improve the quality of services provided to citizens,
have a positive impact on the national economy and business environment,
increase Ukraine's attractiveness to investors, eliminate corruption risks.
|
Development and approval of ownership
policies for state-owned enterprises that are especially important for the
economy
|
|
Distinguishing the function of the state as
the owner and the state as the regulator of the enterprise
|
|
Introduction of modern corporate governance
tools
|
|
Election of competent managers and members of
supervisory boards of state enterprises
|
|
Privatization
|
According
to the strategic vision, the state should sort state-owned enterprises into
categories – those that remain in state ownership, those that will be
privatized, liquidated or transferred to concession. For those enterprises
that need to be privatized, it is necessary to provide conditions for fair
and transparent privatization – large enterprises should be privatized with
the involvement of an investment adviser, and small objects should be sold at
transparent electronic auctions through ProZorro, as well as reduce the list
of state-owned objects that are not subject to privatization.
|
Sorting of state-owned enterprises depending
on their functions and status into those that will remain in state ownership,
will be transferred to concession, privatized, or liquidated
|
|
Reduction of the list of state-owned
enterprises prohibited from privatization
|
|
Introduction of an effective procedure for
restructuring and liquidation of unprofitable, unpromising, and non-operating
enterprises
|
|
Sale of state assets through small and large
privatization mechanisms
|
|
Providing conditions for the transfer of
state property for rent under a transparent procedure
|
|
Continuation of the process of
corporatization of state-owned enterprises
|
|
Liquidation
|
Half
of state-owned enterprises are non-functioning or have been in liquidation
for years. Even if the company does not operate, its maintenance requires
labour and financial costs. Most of these enterprises bear, in addition to
fiscal, a number of corruption risks, due to lack of information about their
actual activities, as well as inefficient use (non-use) of state property.
Completion of the liquidation of such state-owned enterprises will bring
order to the state portfolio and have a positive impact on the entire system
of state property management.
|
Commencement of active liquidation of non-operating state-owned
enterprises by simplifying the procedure of their liquidation at the
legislative level and by involving professional independent liquidators.
|
|
Leasing
|
Leasing is a way to increase
the efficiency of the use of state property. Leasing income from state
property can provide regular revenue to the state budget. However, the lease
sphere was unregulated for many years and left ample room for abuse.
|
Development and adoption of a new law on the lease of state and
municipal property, preparation of bylaws aimed at implementing its
provisions
|
|
Conducting the first transparent auctions for the right to lease state
property
|
|
Development and adoption of a draft law on concessions and launch of
concession pilot projects
|
Source: developed by the authors on the basis
of the resource of the Cabinet of Ministers of Ukraine (High-Performance State
Enterprises, 2020)
Thus, despite attempts to reform the management system as a whole,
Ukraine does not have an effective system of state-owned enterprise management
yet, and, therefore, there are problems with the functioning of such
enterprises that need the development of a state-level strategy to support state
entrepreneurship.
Optimization of the public sector in Ukraine through privatization has
not yet yielded positive results. The issues of developing effective mechanisms
for improving the efficiency of state-owned enterprise management remain out of
the focus of state institutions. State-owned entrepreneurship has proved its
importance in times of crisis for the country's economy, and thus in the
context of globalization, measures aimed at improving the organization of
effective management of state-owned enterprises, the proper use of their
resource potential are becoming especially important. The entry of state-owned
enterprises into the international market indicates the evolution of
state-owned entrepreneurship and its role in managing the country's economy. As
a result, state-owned enterprises acquire special significance as a tool for
influencing the socio-economic processes of the country.
Areas of further research are the development of methodological
approaches to the analysis of the efficiency of state-owned enterprises
depending on their types, strategic goals of their activities and functional
direction. To do this, it is necessary to develop a system of key performance
indicators, including financial and non-financial indicators, which should be reflected
in the management report. Issues related to the development of a normative
document regulating the principles of corporate governance in the public sector
also remain relevant. This will contribute to the formation of conditions for
the effective functioning of state-owned enterprises through structural and
technological modernization of production organization and optimization of the
management process.
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