Privatization or Cooperativ-ization

Changing the ownership of the firms from governmental to other forms, along with the emphasis on cooperative ownership and increasing the share of this sector to 25% in Iran’s economy, is one of the main aims of the comprehensive policies of Principle 44 of the Constitution of Islamic Republic of Iran. Therefore if such a change is supposedly true, to prove the preference of the change to cooperative sector as a sector through which the Islamic economics could be spread in the society, it should be shown that the firms operating under this kind of ownership had a better or at least equivalent performance as compared to the private or government sectors. And if no noticeable distinction in the performance of the economic firms is observed from this aspect, the emphasis on the ownership change, at least from an economic view would not be supportable.This paper strives to examine the distinctions in performance of the manufacturing industries of the cooperative sector with the two government and private sectors.. Using plant-level data, labor productivity, value added per unit of paid wages and salaries, employment generated, and finally the speedy growth of the employees of the manufacturing units during the Second and Third Development Plans towards segregation of ownership, are the analytical basis of this study. The results of this study show that changing to cooperatives in place of privatization is only possible through [handsome] productivity in the cooperative sector in comparison with the private sector, and consequently through the achievement of a level of profits equal to that of the private sector.