ABSTRACT
This chapter reviews the circumstances that have led to the wide sectoral coverage of public enterprise in developing countries and examines the implications of it for public policy determinations. Basically what governments face is not the problem of individual enterprises but that of a substantial cross-section of the economy as a whole, to which is applied some degree of deliberate substitution of governmental decision for market forces. The difficulties encountered in fixing financial targets are traceable substantially to lack of clarity in the determination of the objectives of the individual enterprises, both financial and social. Widely diversified public sector coverage develops in the minds of the government and the general public the vague concept of overall viability of public enterprises. This, critically speaking, has limited validity – in the arithmetic context of the finance minister being interested in budget balance in relation to the large government investments.
