No. 7 (1984): Public companies

The Central American Institute of Public Administration (ICAP) begins a new era of its periodical, the Central American Journal of Public Administration, with the central theme dedicated to public enterprises. 

Public enterprises have been the subject of much debate in recent years around the world, but especially in underdeveloped countries. In this debate, various approaches have emerged regarding the foundations and purposes of public enterprises. It is in this environment and with the purpose of questioning the Central American public enterprise that we offer the topic in this issue of the Journal.

The role of public enterprises in postcolonial societies has acquired considerable importance as an instrument of development. When the liberal State abandons its abstentionist posture and initiates the first economic and social interventions, the notion of public service makes its appearance and at the end of World War II its contribution is decisive in the nationalization movements and serves as initial justification for the first manifestations of the entrepreneurial activity of the State, even when these are progressively freed from their link with the public service to affirm the configuration of a new concept of imprecise contours, but whose economic and legal purpose is irreversible: the public enterprises.

The State's decision to create corporate entities to perform functions it had not previously performed, and the intention to remove the new institutions from excessive centralization that would prevent, among other things, timely decision-making and the efficient provision of public services, is undoubtedly the point of reference around which the most decisive phenomenon for the transformation of the legal system has gravitated since the last years of the 19th century: direct State intervention in the economy.

The importance of public enterprises as a whole is such that the direction and form of action they adopt not only affects their development, but also the rest of the macroeconomic variables: the level of economic activity, balance of payments, investment, inflation, etc. Hence the need to focus the actions of public enterprises not only as an instrument of socioeconomic growth and development, but also as an instrument of economic policy, stems from the magnitude and importance, both quantitative and qualitative, that the State's business sector has attained in recent years.

Notwithstanding the important role that is consciously assigned to the public enterprise in the process of economic development and some advantages that "theoretically" are intrinsic to it, there are also some problems that must be considered and taken into account. In fact, they affect in an important way not only the relationship between public enterprises and the government, but also their relationship with the private sector and their relations with the outside world.

Despite recent efforts and important definitions, there is still no general policy for SOEs. That is, there is still no objective definition of the substantive social and economic role of these companies in order to establish the parameters for evaluating their performance, both in their internal management and in relation to the group or sector to which they belong and also with respect to the community they serve. Consequently, the establishment of a general policy necessary to opt for a development strategy with more or less clearly defined objectives, order of priority, goals and clearly stipulated instruments constitute elements that define the role of public enterprises.

In addition, recent intense and controversial debates have reopened the issue in new aspects. Although the controversy is not new, it has acquired particular importance since it has reappeared with singular vigor and, in some cases, has become official doctrines, formulations that propose a profound critical review of the role played by these entities in the evolution of national economies. Moreover, the questioning of these tendencies is no longer restricted to partial aspects, such as, for example, the limits and expansion of the field of activity of state enterprises or the efficiency and effectiveness of their operation, but is part of the broader discussion on the definition of the functions of the State in the economy.