Performance Evaluation for Public Enterprises

摘要

Public enterprise inefficiency imposes great costs in terms of forgone social welfare. Economists stress that the root of the problem lies in the separation of ownership from control. That is, managers are unlikely to make the difficult decisions to improve efficiency if they do not share in the resulting benefits. Their solution is to marry ownership and control through privatization on the capitalist model. The paper is sympathetic to the conservative analysis of the source of the problem, but suggests an alternative solution, namely the introduction of a signaling system to guide and motivate managers to act in the interest of society as a whole. The link between performance evaluation and efficiency is first elaborated upon. The body of the paper then specifies the elements of such a system. Performance evaluation of public enterprise is not a simple matter, and a workable system cannot be imposed arbitrarily overnight. Accordingly, a phased system of implementation is proposed.