Decades of reform: an economic analysis of the Impact of commercialisation on the performance of state owned enterprise’s (SOEs) in Ireland.

State Owned Enterprises (SOEs) operating in strategically important sectors such as energy, communications and transport make a substantial contribution to the Irish economy. This thesis presents an original analysis of the performance of the nine largest non-financial SOEs that remain under state ownership as of 2016. The analysis is conducted over the 2002-2014 period in the context of changes faced by each company as they increased their commercial orientation and dealt with the challenges posed by greater product market competition and new regulatory institutions. Performance is measured in terms of financial indicators, labour productivity and total factor productivity. In this regard the analysis represents the first productivity based analysis of the SOE sector in Ireland. The analysis of all nine SOEs shows that, with the exception of the three public transport companies (bus and rail), SOEs were profitable over the period 2002-2014. The poor financial performance of the public transport companies can largely be attributed to reductions in the subvention received for fulfilling public service obligations. Productivity results, however, varied across companies. In most cases the productivity growth followed the wider business cycle with a general trend of efficiency gains recorded prior to the onset of the global and domestic economic crisis in 2008 and a reversal of this trend recorded thereafter. For the majority of companies where a decline in total factor productivity was measured this result was heavily influenced by substantial capital investment programmes that were undertaken. In order to gain a deeper understanding of the factors that influence SOE performance two case studies were conducted using a model of commercialisation that embraced changes to the company’s capital market status (while under public ownership), competitive and regulatory settings and internal organisational environment. The case studies involved the Dublin Airport Authority (DAA) and An Post and in both cases the evidence shows that changes in performance were associated with measures of commercialisation as well as changes to regulatory institutions and/or the degree of market competition. The case of the DAA also highlighted the impact of lumpy capital investment on productivity levels in the short run. With regard to government policy the research shows how priorities have shifted over time and how the complex challenges involved in governing SOEs have, in some instances, led to inconsistencies in the conduct of policy.