Economics, ideas or institutions? Agencification through government-owned enterprises in illiberal contexts

Abstract

Corporate state agencies (CSAs) are government/state-owned enterprises (GOEs) that perform public tasks. The main objective of this article is to better understand the drivers of governments’ changing reliance on CSAs in performing public tasks. We pursue this ambition in a particular context: one characterized by the illiberal transformation of political and state institutions. Based on a review of the applicable but thus far largely disconnected streams of research we proposed and subsequently tested several hypotheses using a unique data set of Hungarian corporate state agencies that existed between 1995 and 2014. The empirical analysis revealed, firstly, that in line with theories rooted in mainstream economics, economic factors do affect governments’ reliance on this type of agencies (albeit to a limited extent). Secondly, we conclude that organizational myths such as the “myth of central control” of Viktor Orbán’s governments explain a large proportion of changes in our outcome of interest. However, notably, we found no direct empirical support for either the effect of illiberal transformation of government or administrative reform doctrines.