The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Privatization Impacts in Transition Economies

  • Saul Estrin
Reference work entry


This article addresses the large-scale privatization processes in central and eastern Europe. It explains why reformers placed such emphasis on privatization and the practical problems posed by the scale of state ownership under communism, leading to the widespread use of mass privatization. As a result ownership changes were huge and extremely rapid but the improvement in corporate governance was more questionable. The empirical findings about the impact on enterprise performance are patchy, though on balance the effect has been positive, especially in countries with stronger institutions or where the new owners have been foreigners.


Agency chains Asymmetric information Capital market Company performance Concentration of ownership Corporate governance Corruption Foreign direct investment Free rider problem Growth Insider ownership Intermediate agents Management–employee buyouts Monitor Opportunity costs Outsider ownership Ownership and control Privatization Privatization in transition economies Privatization vouchers Productive efficiency Property rights Rent seeking Restitution Soft budget constraint Takeovers Transition economies 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Bennett, J., S. Estrin, and G. Urga. 2007. Privatization and economic growth in transition economies. Economics of Transition 15: 661–683.CrossRefGoogle Scholar
  2. Bevan, A., and S. Estrin. 2004. The determinants of foreign direct investment into European transition economies. Journal of Comparative Economics 32: 775–787.CrossRefGoogle Scholar
  3. Blanchard, O., R. Dornbusch, P. Krugman, R. Layard, and L.H. Summers. 1991. Reform in Eastern Europe. Cambridge, MA: MIT Press.Google Scholar
  4. Blasi, J., M. Kroumova, and D. Kruse. 1997. Kremlin capitalism: Privatizing the Russian economy. Ithaca: Cornell University Press.Google Scholar
  5. Bortolotti, B., and M. Faccio. 2006. Reluctant privatization. Working paper no. 40/ 2004, ECGI.Google Scholar
  6. Boycko, M., A. Shleifer, and R. Vishny. 1995. Privatizing Russia. Cambridge, MA: MIT Press.Google Scholar
  7. Canning, A., and P. Hare. 1994. Hungary. In Estrin (1994).Google Scholar
  8. Coffee, J. 1996. Institutional investors in transitional economies: Lessons from the Czech experience. In Corporate governance in Central Europe and Russia, ed. R. Frydman, C. Gray, and A. Rapaczynski, vol. 1. Budapest: Central European University Press.Google Scholar
  9. Djankov, S., and P. Murrell. 2002. Enterprise restructuring in transition: A qualitative survey. Journal of Economic Literature 40: 739–793.CrossRefGoogle Scholar
  10. Earle, J., S. Estrin, and L. Leschenko. 1996. Ownership structures, patterns of control and enterprise behaviour in Russia. In Enterprise restructuring and economic policy in Russia, ed. S. Commander, Q. Fan, and M. Schaffer. Washington, DC: Economic Development Institute and World Bank.Google Scholar
  11. EBRD (European Bank for Reconstruction and Development). 1998. Various years. EBRD transition report. London: EBRD.Google Scholar
  12. Estrin, S., eds. 1994. Privatization in Central and Eastern Europe. London: Longman.Google Scholar
  13. Estrin, S. 2002. Competition and corporate governance in transition. Journal of Economic Perspectives 16(1): 101–124.CrossRefGoogle Scholar
  14. Estrin, S., and V. Perotin. 1991. Does ownership always matter? International Journal of Industrial Organization 9: 55–72.CrossRefGoogle Scholar
  15. Estrin, S., and M. Wright. 1999. Corporate governance in the former Soviet Union: An overview. Journal of Comparative Economics 27: 398–421.CrossRefGoogle Scholar
  16. Gregory, P.R., and R.C. Stuart. 2004. Comparing economic systems in the twenty-first century. New York: Houghton Mifflin.Google Scholar
  17. Johnson, S., R. La Porta, F. Lopez-de-Silanes, and A. Shleifer. 2000. Tunneling. American Economic Review 90: 22–27.CrossRefGoogle Scholar
  18. Kornai, J. 1990. The road to a free economy. Shifting from a socialist system: The example of Hungary. New York/Budapest: Norton/HVG Kiadó.Google Scholar
  19. Megginson, W.L. 2005. The financial economics of privatization, 1st ed. New York: Oxford University Press.Google Scholar
  20. Meyer, K. 1998. Direct investment in economies in transition. Aldershot: Edward Elgar.Google Scholar
  21. Plane, P. 1997. Privatization and economic growth: An empirical investigation from a sample of developing market economies. Applied Economics 29: 161–178.CrossRefGoogle Scholar
  22. Sabirianova, K., J. Svejnar, and K. Terrell. 2005. Distance to the efficiency frontier and foreign direct investment spillovers. Journal of the European Economic Association 3: 576–586.CrossRefGoogle Scholar
  23. Shleifer, A., and R. Vishny. 1994. Politicians and firms. Quarterly Journal of Economics 46: 995–1025.CrossRefGoogle Scholar
  24. United Nations. 2004. World investment report. New York: United Nations.Google Scholar
  25. Vickers, J., and G. Yarrow. 1985. Privatisation and the natural monopolies. London: Public Policy Centre.Google Scholar
  26. World Bank. 1996. World development report. Washington, DC: World Bank.Google Scholar
  27. Zinnes, C., Y. Eilat, and J. Sachs. 2001. The gains from privatization in transition economies: Is change of ownership enough? IMF Staff Papers 48: 146–170.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Saul Estrin
    • 1
  1. 1.