Evaluating crowding out effects of borrowing by SOEs on private sector borrowing from Financial Institutions in Bhutan (2014-2018).
Chimi Dorji, Kuenzang Dechen
As a fallout of the market-failure debate in economic theory, particularly from the mid twentieth century, high expectations were placed on state enterprises especially in the Third World to stimulate economic growth and to promote industrialization. This contributed to a remarkable expansion of large state-owned enterprises (SOEs) in many sectors of the economy and the public sector came to dominate many of the less developed and developing countries (Nunnenkamp, 2000). However, international experience showed over time that extensive government involvement in investment, enterprises, finance, and infrastructure provision may, in fact, constrain economic development. Historically it has also resulted in lower productivity, resource inefficiency, poor service delivery and corrupt practices (Onodugo et. al. 2014). As a result, there is now an effort by most developing countries to shift away from public-sector-based centrally planned economy to a market driven private sector based economy. To achieve this, these countries are encouraging the development of small and medium scale enterprises (SME) along with large-scale industries.
Evaluating crowding out effects of borrowing by SOEs on private sector borrowing from Financial Institutions in Bhutan (2014-2018).. Chimi Dorji, Kuenzang Dechen. 2023. IJIRCT, Volume 9, Issue 6. Pages 1-17. https://www.ijirct.org/viewPaper.php?paperId=2312002