Case Studies: Foreign Capital and “Strategic” Enterprise Privatization

Abstract

This chapter builds on the results in chapter 5 by examining state-level policy outcomes. I focus on policy and practice regarding foreign investment in large enterprise privatization in Ukraine and Russia, 1990–1999. The privatization (denationalization) of major industrial assets represents a fundamental economic policy choice. The decision whether or not to allow foreign capital to participate in this process represents a fundamental foreign polity choice. This chapter seeks to explain what seems a puzzling fact: since the fall of the USSR, Russia has had a greater preference than Ukraine for foreign ownership of large enterprises, including “strategic” enterprises designated as important for national security.