In this article we investigate the role both the old large enterprises sector and the new SME sector have played during transition in Romania. In the first part, based on micro data for the large SOE sector, we document how heavily loss-making enterprises have been able to survive for a decade, through initially direct and later increasingly indirect subsidies from the state. We show concretely how the 'survival of the unfittest' has led to the emergence of pervasive chains of arrears in the economy, with large negative consequences not only for the budget and state-owned energy suppliers but also for general economic efficiency. We thus show that the lagging privatisation of large SOEs has had negative systemic effects on the Romanian economy, well beyond the question of increased enterprise efficiency. In the second part we show that--in spite of the drain of resources from the large SOEs and a difficult business climate--a sector of SMEs has emerged that has been the main contributor to employment and export growth in recent years. However, the development of the SME sector has been severely constrained by the aforementioned negative forces, as documented by its underdevelopment in comparison with those of other Eastern European transition countries.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 15 (2003) Issue (Month): 3 (September) Pages: 331-356 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
Related research
Keywords:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)