East Europe: New Holding Institutions

Abstract

The need for increasing the efficiency of state-owned enterprises of the transforming economies of East Europe has been clearly acknowledged by their governments. It is equally clearly expressed by these governments today that the principal vehicle for achieving this is a change in ownership, through privatization. Gradualist solutions are not sought, because in addition to the efficiency objective, the path of privatization serves the ideological objectives of creating private property and supporting new political beliefs. There is a danger that, if the moment is not seized, and irreversible reforms are not introduced, political and social momentum for the transformation may be lost. Budgetary pressures are not the driving force and indeed revenue may be sacrificed rather than gained in order to bring about rapid change.¹ Why, in such a context, should state holding institutions be examined?