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The results of 'mass privatization'in Romania: A first empirical study

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  • John S. Earle
  • Almos Telegdy

Abstract

This paper provides an assessment of the contribution to privatization in Romania of the 1995-96 Mass Privatization Programme (MPP), which offered shares in nearly 5,000 companies to citizens in exchange for coupons. Analysing a comprehensive database of MPP companies, we find that an average of only 18.7 "per cent" of these companies' shares were actually transferred to Romanian citizens, and only 7.8 "per cent" of the companies were majority privatized (on a size-weighted basis). We estimate that the MPP accounted for only about 5.5 "per cent" of the value of state-owned enterprise assets inherited from the socialist period. The design of the programme created highly dispersed ownership structures, which is likely to generate particularly difficult problems in the many small companies in the programme. We place our findings in the context of the history of Romanian privatization policies since 1990, and provide some comparisons with mass privatization programmes in other countries. We also analyse the implications of the MPP for the corporate governance and the restructuring of enterprises. Copyright The European Bank for Reconstruction and Development, 1998.

Suggested Citation

  • John S. Earle & Almos Telegdy, 1998. "The results of 'mass privatization'in Romania: A first empirical study," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(2), pages 313-332, November.
  • Handle: RePEc:bla:etrans:v:6:y:1998:i:2:p:313-332
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    References listed on IDEAS

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    1. Earle, John S & Estrin, Saul, 1997. "After Voucher Privatization: The Structure of Corporate Ownership in Russian Manufacturing Industry," CEPR Discussion Papers 1736, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Linz, Susan J., 2004. "Motivating Russian workers: analysis of age and gender differences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(3), pages 261-289, July.
    2. Earle, John S. & Telegdy, Almos, 2002. "Privatization Methods and Productivity Effects in Romanian Industrial Enterprises," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 657-682, December.
    3. Murrell, Peter, 2003. "Firms facing new institutions: transactional governance in Romania," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 695-714, December.
    4. J. David Brown & John S. Earle & Almos Telegdy, 2005. "Does Privatization Hurt Workers? Lessons from Comprehensive Manufacturing Firm Panel Data in Hungary, Romania, Russia, and Ukraine," Upjohn Working Papers and Journal Articles 05-125, W.E. Upjohn Institute for Employment Research.
    5. Andren, Daniela & Earle, John S. & Sapatoru, Dana, 2005. "The wage effects of schooling under socialism and in transition: Evidence from Romania, 1950-2000," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 300-323, June.
    6. Skoufias, Emmanuel, 2003. "The structure of wages during the economic transition in Romania," Economic Systems, Elsevier, vol. 27(4), pages 345-366, December.
    7. Brown, David J. & Earle, John S. & Telegdy, Almos, 2016. "Where does privatization work? Understanding the heterogeneity in estimated firm performance effects," Journal of Corporate Finance, Elsevier, vol. 41(C), pages 329-362.
    8. J. David Brown & John S. Earle & Almos Telegdy, 2006. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 61-99, February.
    9. Ádám Szentpéteri & Álmos Telegdy, 2010. "Political Selection Of Firms Into Privatization Programs. Evidence From Romanian Comprehensive Data," Economics and Politics, Wiley Blackwell, vol. 22(3), pages 298-328, November.
    10. Laki, Mihály, 2000. "The Governance of Privatization Funds. Experiences of the Czech Republic, Poland and Slovenia. Szerkesztette: Marko Simonetti, Saul Estrin, Andreja Böhm Edward Elgar, Cheltenham, Egyesült KirályságNor," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1032-1036.

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