<< Chapter < Page Chapter >> Page >

When a Brazilian or Chinese SOE in banking or finance lends to a SOE in other fields, what happens when the borrowing SOE runs into trouble and cannot repay the loans?

The borrowing bank says to its owner, the state as shareholder, we cannot pay. The state stockholder, the government, instructs the SOE s who lent to the troubled firm, “Let it Ride.”

When this happens, problem also multiplies for the SOE s in banking, who have to carry heavy loads of non-performing loans, endangering the health of the entire financial system. This happened in India 1970-80. It was happening in China and Brazil in 2014.

Notwithstanding the long-standing problems of SOE s , many of the lessons learned about the performance of state capitalism in the earlier period (1945-85) have been forgotten. Even the Economist of London can go overboard on the issue of state capitalism. A quote from an issue in 2008:

State capitalism looks like the coming trend.

Perhaps one reason for such statements has been the emergence of the so called Chinese model of STATE capitalism.

One very salient point - SOE s now heavily dominate the world’s holdings of reserves of oil and gas. These are called NOIs (National Oil Companies). This group includes NIOC (Iran) Aramco (Saudi), Gazprom (Russia), CNPC (China), Pertamina (Indonesia), Pemex (Mexico), Petronas (Malaysia). By 2012 NOIs held almost 90% of oil reserves. However, if in the coming year Whatever might be the future of SOE the U.S. fully taps its now huge reserves of oil shale reserves in Texas, North Dakota, Pennsylvania and Ohio, the dominance of the NOIs will diminish, at least for a time.

In critiquing the performances of SOE s , it is important to recognize that many, management is quite competent, and equal to the best anywhere, except when they are subjected to political pressure from the government-as- owner .

Indeed, there are several examples of reasonably well managed SOE s in oil and gas sectors across the world.

Statoil Norway (oil)
Aramco Saudi - especially proficient in IT and in promoting health and safety in operations.
Petronas Malaysia (oil)
Ecopetrol Columbia (oil)

Until recently, PETROBRAS of Brazil would have to be included in this list. In any case the movement for privatization of SOEs in energy nations had largely passed by the year 2000.

China: Annual Report on Assets

Why many soe s Are unprofitable

Profitability in SOE s tends to be low because the government-as-owner often utilizes them to typically pursue other aims of the state, including:

  • Employment, sometimes leading to excessive payrolls.
  • Political rewards to government officials.
  • Military needs (there military-owned SOE s in Iran, Pakistan, etc.)

And often SOE s pursue social aims unrelated to their businesses.

In China large private firms in 2012 had an average return on equity of 13%. The reported return in SOE s was 8.2%, and even that may have been inflated.

What can be said about recent profitability in SOE s ? What can be said about efficiency in SOE s , in big countries such as Brazil, China and India?

Over the period 1996-2012, the average return on assets for Chinese SOE s was less than 5% from 1996-2010, and barely above 5% thereafter. By 2010, returns to private firms were 3 times higher (see Table 11-1).

Questions & Answers

where we get a research paper on Nano chemistry....?
Maira Reply
what are the products of Nano chemistry?
Maira Reply
There are lots of products of nano chemistry... Like nano coatings.....carbon fiber.. And lots of others..
learn
Even nanotechnology is pretty much all about chemistry... Its the chemistry on quantum or atomic level
learn
Google
da
no nanotechnology is also a part of physics and maths it requires angle formulas and some pressure regarding concepts
Bhagvanji
Preparation and Applications of Nanomaterial for Drug Delivery
Hafiz Reply
revolt
da
Application of nanotechnology in medicine
what is variations in raman spectra for nanomaterials
Jyoti Reply
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
Damian
yes that's correct
Professor
I think
Professor
Nasa has use it in the 60's, copper as water purification in the moon travel.
Alexandre
nanocopper obvius
Alexandre
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
Rafiq
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
Damian
How we are making nano material?
LITNING Reply
what is a peer
LITNING Reply
What is meant by 'nano scale'?
LITNING Reply
What is STMs full form?
LITNING
scanning tunneling microscope
Sahil
how nano science is used for hydrophobicity
Santosh
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
Rafiq
what is differents between GO and RGO?
Mahi
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
Rafiq
if virus is killing to make ARTIFICIAL DNA OF GRAPHENE FOR KILLED THE VIRUS .THIS IS OUR ASSUMPTION
Anam
analytical skills graphene is prepared to kill any type viruses .
Anam
Any one who tell me about Preparation and application of Nanomaterial for drug Delivery
Hafiz
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
Bob
The nanotechnology is as new science, to scale nanometric
brayan
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Damian
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
Renato
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
?
Kyle
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
Adin
why?
Adin
what school?
Kyle
biomolecules are e building blocks of every organics and inorganic materials.
Joe
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
Privacy Information Security Software Version 1.1a
Good
Got questions? Join the online conversation and get instant answers!
Jobilize.com Reply

Get the best Algebra and trigonometry course in your pocket!





Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Economic development for the 21st century' conversation and receive update notifications?

Ask