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Privatization in East European Transformation

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  • Stanley Fischer

Abstract

Privatization of state assets is an essential step to the creation of a viable private sector in the formerly socialist economies of Eastern Europe and the Soviet Union. A standard approach to the problem has rapidly emerged. Small firms are being privatized by sale very rapidly. The strategy then turns to larger industrial firms, which are to be corporatized as soon as possible, moved out of the shelter of the ministries that now in principle control them, and put under the direction of corporate boards; at the next stage the intention is to distribute shares, through sale or free transfer, to some combination of current workers in the firms, current management, mutual funds, holding companies, banks, insurance companies, pension funds, citizens, and the government. I analyze the standard approach and alternatives, as well as progress in implementing privatization, with emphasis on Poland, Hungary, and Czechoslovakia. Progress in privatizing small firms has been rapid in several East European countries, but privatization of large firms has been slow, with most success to date in Hungary.

Suggested Citation

  • Stanley Fischer, 1991. "Privatization in East European Transformation," NBER Working Papers 3703, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3703
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    References listed on IDEAS

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    1. Laffont, Jean-Jacques & Tirole, Jean, 1991. "Privatization and Incentives," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 84-105, Special I.
    2. Edgar L. Feige, 1990. "A Message to Gorbachev: Redistribute the Wealth," Challenge, Taylor & Francis Journals, vol. 33(3), pages 46-53, May.
    3. 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.
    4. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, December.
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    Cited by:

    1. R. Daviddi, 1994. "Privatisation in the transition to a market economy," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 399-429.
    2. Tirole, Jean, 1991. "Ownership and Incentives In a Transition Economy," Institute for Policy Reform Working Paper Series 294679, Institute for Policy Reform.
    3. R. Daviddi, 1994. "Privatisation in the transition to a market economy," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 399-429.
    4. 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.
    5. Schmidt Klaus M. & Schnitzer Monika, 1993. "Privatization and Management Incentives in the Transition Period in Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 17(2), pages 264-287, June.
    6. Colombatto Enrico, 1992. "The Integration Of The East And The Options For The West," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(2-3), pages 273-288, June.

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