Determinants of corporatization in Togo: capital, credit, and sectoral disparities

This article explores the determinants of corporatization in Togo, focusing on access to credit, capital, and the domain of operation. Corporatization aims to enhance efficiency, transparency, and financial performance of public enterprises by aligning them with private sector practices. This transformation is influenced by various economic, political, and institutional factors. The theories used to analyze these determinants include public choice theory, which examines the principal-agent relationships between policymakers and public enterprise managers, and transaction cost theory. The article employs a Probit model to assess the marginal effects of different explanatory variables on corporatization using data from the 2018 General Enterprise Census (RGE) in Togo. The results show that access to credit has a positive and significant marginal effect, suggesting that improved credit access is associated with increased corporatization. Similarly, capital has a positive effect, indicating that an increase in capital correlates with a rise in corporatization. However, the domain of operation shows a negative marginal effect, potentially reflecting sectoral disparities or specific conditions that negatively impact corporatization. The article concludes by emphasizing the importance of improving credit access and increasing capital to boost corporatization, while considering the specificities of different sectors. Policymakers and researchers should focus on targeted interventions to maximize the benefits of corporatization and attract foreign investments by creating a stable and regulated environment.