Enterprise Reform in Eastern Europe
Eastern Europe is not well served with straightforward textbook advice. The common wisdom on privatization fails to address the problems created by diffuse ownership and control prior to privatization. Cash auctions may not efficiently match managers and capital stock because of wealth constraints. Standard advice on enterprise restructuring fails to incorporate the effect of the sheer scale of the problem, and the reasons why current profits are a poor guide to future profit opportunities. Finally, introducing Western style unemployment insurance, while lowering the social costs of unemployment, would almost certainly also contribute to its indefinite extension. This paper shows how such problems can be addressed by incorporating incentive problems specific to Eastern Europe into policy design. Sometimes the resulting advice is novel and as yet untried; in some cases successful examples exist. Thus some experimentation is unavoidable. The alternative, however, is declining incomes and increasing social unrest as the consensus underlying the reforms erodes.
|Date of creation:||Nov 1992|
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- Philippe Aghion & Oliver D. Hart & John Moore, 1994.
"The Economics of Bankruptcy Reform,"
in: The Transition in Eastern Europe, Volume 2: Restructuring, pages 215-244
National Bureau of Economic Research, Inc.
- Philippe Aghion & Oliver Hart & John Moore, 1992. "The Economics of Bankruptcy Reform," NBER Working Papers 4097, National Bureau of Economic Research, Inc.
- Aghion, P. & Hart, O. & Moore, J., 1992. "The Economics of Bankruptcy Reform," Working papers 92-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Philippe Aghion & Oliver Hart & John Moore, 1992. "The Economics of Bankruptcy Reform," CEP Discussion Papers dp0093, Centre for Economic Performance, LSE.
- Graham Bird (ed.), 1992. "Economic Reform in Eastern Europe," Books, Edward Elgar Publishing, number 44, June.
- Jean Tirole, 1991. "Privatization in Eastern Europe: Incentives and the Economics of Transition," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 221-268 National Bureau of Economic Research, Inc.
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