Randhawa: A Level Playing Field? An Examination of Financing Issues Among Internationalised State Owned Enterprises


Debate on the boundaries of the state in economic activity has been a subject of long-standing interest. This discourse has assumed increasing importance in view of the rapid expansion of SOEs in international trade and investment. In this paper an effort is made to conceptualize the issue of state intervention altering the level playing field. In a preliminary effort to assess the consequences of state ownership on financial operations, this study provides draws upon standard metrics of financial performance that offer indication of subsidised finance, the extent of leverage that state ownership may facilitate, and some preliminary indicators of profitability. The paper first outlines a series of stylized facts depicting the landscape in which state enterprises compete across national borders with private sector firms. It then examines the sectors in which competition with or acquisitions by state enterprises have led to concerns about unfair advantage. However the framework that helps ascertain the legal ramifications of state intervention for fair competition; the record of cases brought up to the WTO, and national competition commissions are beyond the scope of this paper. We examine a narrow range of financial indicators to ascertain if state affiliation endows SOEs with a competitive advantage. Our preliminary findings do not point to systemic differences in financing costs.


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