Annals of Public and Cooperative Economics 00:0 2018 pp. 1–5 THE CONTINUING IMPORTANCE OF STATE-OWNED ENTERPRISE IN THE TWENTY-FIRST CENTURY: CHALLENGES FOR PUBLIC POLICY by Luc BERNIER University of Ottawa, Canada and Eoin REEVES * University of Limerick, Ireland The period 1940–80 is generally regarded as the heyday of state-owned enterprise (SOEs). Millward (2005, 2011) shows that by the 1940s, SOEs in Europe accounted for 10 per cent of GDP in most countries, 20 per cent of annual capital formation and 10 per cent of employment. The same writer notes that the scope of SOEs in Europe did not change much over the following 30 years. Further afield, SOEs also played an extensive role especially in sectors that governments considered essential and strategic. For example, SOEs dominated the oil sectors of Saudi Arabia, Norway, Indonesia and Brazil. Although less visible in the US the SOE sector has been important in the other NAFTA countries (Canada and Mexico). In the early 1980s, the spread of privatization policies that commenced under the Thatcher-led governments in the UK, resulted in a major re-configuration of the role of the state in economic activity. As governments withdrew from full ownership of SOEs the direct role of the state, especially in Europe, diminished as they directed their efforts to ‘steering instead of rowing the boat’. Sectors that had been dominated by SOEs (for example, energy, transport, telecommunications) were exposed to competition as markets were liberalised and the ‘regulatory state’ emerged (Majone 1994, Lodge 2008). With the level of privatization activity (measured by revenues and number of transactions) decreasing in the early 2000s it appeared that privatization in Europe was ‘exhausted’ suggesting that the role and importance of SOEs had been greatly reduced (Bortolotti and Sinsilasco 2004, Palcic and Reeves 2011). Appearances can be deceptive however and subsequent events and analysis demonstrates that SOEs are still signifi- cant players in many national economies. Kowalski et al (2013) report that SOEs and their activities have significantly increased and they now represent 10 per cent of global gross domestic product with joint sales of USD3.5 trillion (in 2011). More recently, the OECD (2017) compiled a comprehensive international study on the characteristics of * E-mail: eoin.reeves@ul.ie © 2018 The Authors Annals of Public and Cooperative Economics © 2018 CIRIEC. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA