Assessing efficiency differences between Thai public and private firms

This paper investigates the relative performance of a small number of public and private firms in Thailand. The main aim is to assess recent privatisation efforts in Thailand by examining the influence of ownership on performance. The empirical investigation is initially focused on a matched-pair combination of (public vs. private) firms, mainly in the insurance and banking sectors, but later we also examine the performance of a small number of recently privatised organisations, mainly in the commercial sector. Additionally, we estimate by pooled regression the productivity of labour and capital for an extended group of firms in the financial services industry, and explain the public-private factor productivity differences derived thereof. Although we find some basic underlying efficiency differences between the two groups of firms, it is hard to attribute such differences purely to ownership as other factors like market competition might have played a part. This leads us to argue that efficiency gains from on-going privatisation efforts in Thailand may not be realised without adequate measures designed to promote competition.