Since the mid-1980s, there has been a global movement away from state ownership towards private ownership of companies. An important aspect of this trend has been the privatisation of State-owned enterprises with the goal of improving their in general unsatisfactory performance. Initially, the prevailing view was in favour of a fast privatisation process as the only realistic way to combat the problems related to a lack of adequate corporate governance. It was also widely believed that market institutions could be built after the private ownership was created. Recently, reflecting on the disappointing privatisation results in some of the transition economies, policymakers have realised the need to strengthen market institutions prior to privatisation. This insight was further supported by growing evidence from the developed countries that privatisation alone has been insufficient to stimulate performance improvement. This research contributes to the recent debate on privatisation and its prerequisite restructuring. The focus is on developing countries, in particular Libya. Currently, Libya is turning from a socialist- to a market-oriented economy which is open to foreign competition. This means that privatisation in Libya includes the need for creating an environment conducive to the development of the private sector. This process provides an opportunity to study how privatisation, competition, and regulation are related. The main objective of the research is: to gain insight into the privatisation processes in the context of developing countries by studying privatisation in Libya. To be able to understand privatisation and its related restructuring, the central research problem is defined as: How did the privatisation process in Libyan industrial firms take place with respect to the first stage of the third wave? To address these research questions, a literature review and a case study design were selected as the appropriate research strategy. A conceptual model for the process of privatisation was developed based on the literature review. Four cases were analysed for this research. The cases showed a slightly different process from the conceptual model which was based on the literature. However, as part of the overall Libyan privatisation process, the government introduced some degree of market liberalisation and deregulation. The case studies showed mixed results with respect to privatisation. Two cases out of four companies experienced a slight increase in most of the performance indicators, while one case experienced drop in most of the performance measures and even ceased operation two years later. For the remaining case financial data were not available after privatisation, but it also ceased operations. Based on the research findings, several conclusions can be drawn and recommendations can be made. The change in ownership alone was insufficient to stimulate performance improvements and that efficiency is related to prerequisite firm and market restructuring. The case firms were prematurely confronted with foreign competition due to the opening of the market. The firms did not have an opportunity to adjust themselves to this type of market economy. The following recommendations are made. The government should gradually open markets so that the privatised companies have time to adjust to their new environment. The government should also be aware of the financial markets, the impact of privatisation and whether new owners have the ability to invest in newer technologies so that the companies can become competitive. Because of a limited sector scope future research could focus on extending these findings by using the same methodological approach in other Libyan firms and sectors in order to generate additional insight into the privatisation process in Libya and increase the possibility of generalising the findings. For further research also is recommended to focus on a refinement of the methods of asset valuation and firm performance, as they turned out to be a pivotal point in the studied cases.

Since the mid-1980s, there has been a significant movement toward global markets, especially the privatisation of the State-Owned Enterprises. Recently, after a more than three decades of excessive reliance on the public sector, Libya has pursued privatisation of its public sector. This paper explores the underlying forces of the economic reform, especially with respect to the privatisation of industrial sector, in Libya. It is found that privatisation has been pursued in Libya as result of its own policy plan, rarely after pressures from the international lending agencies. It has been embarked on with more pragmatic and less ideological base

Libya has become a transition economy due to global industrial and political changes in the past decades. Being for long time under government control has created a number of challenges for the management of the SOEs. The most challenging aspect is firm performance improvement. Based on a pilot study, this paper develops a conceptual model that determines the firm performance after transition. The results show that despite the change of managerial incentive, behaviour and relationship; the performance of investigated firms did not improve. This can be explained by firm's restructuring, privatisation method, trade openness, and the weak enforcement of law.