Czech enterprises: the barriers to restructuring

Much of the literature on changes in Czech enterprises has been developed around a neo-classical framework with the emphasis on the effects of hard budget constraints and privatization. That, however, provides a limited view of the choices available to enterprises and of the constraints that have been imposed by a weak institutional environment, an often inappropriate policy framework and an approach to privatization that has, in a number of different ways, made subsequent rationalization and modernization more difficult. The effects on, and changes in, enterprises are analysed around experience in four different sectors; light industry, engineering and transport equipment, milk-processing and brewing. This points to the need to place more emphasis on enterprise access to financial resources for modernization and, above all, on the ability of managements to formulate coherent and appropriate long-term strategies. It also points to the desirability of a more active policy framework.