Evolution and Design in the East European Transition

Abstract

Most of the work on privatization in Eastern Europe to date has concentrated on the change of ownership issue and its importance for the restructuring process (2). In our previous papers (3), we have linked these issues to a broader question of the future corporate governance structure in Eastern Europe. But all of the studies so far have looked at the impact of privatization primarily in terms of its effect on each enterprise taken as a unit. The aggregate effects of privatization have usually been left out of account, presumably on the assumption that the interaction among firms and the effect of their restructuring on the economy as a whole had no particular bearing on the appropriate method and scope of privatization to be pursed on the enterprise level (4).

We would like to thank the following persons for stimulating conversations on the topics related to this paper: Bruce A. Ackerman, Fabrizio Coricelli, Irena Grosfeld, William P. McCauley, Edmund Phelps, George Soros, Stanislaw Wellisz, Charles Wilson. Central European University provided generous support for a broader research project in Eastern Europe, of which this paper is a part. Martin Gargiulo and Markus Kreuzer were very helpful with their research assistance.