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Privatization, Liberalization and Destruction Recreating the Market in Central and Eastern Europe

Privatization, Liberalization and Destruction

This volume is based on revised papers selected from the 160 presentations delivered at the Second Biannual Conference of the European Association for Comparative Economic Studies, convened in Groningen, The Netherlands in October 1992. It is devoted to strategic issues of transition in Central and Eastern Europe, „in statu nascendi". Auhtors of the volume have been active participants and moulders of the process. Their contributions aim at specific issues going beyond the universally accepted stabilization-liberalization-privatization agenda.

Béla Kádár, minister of international economic affairs in the Hungarian government at the time of writing, and later member of the Hungarian Academy of Sciences highlihted the need to elaborate nation-specific policies and a focus on growth and its conditions, while relegated the contemporary hits, such as the speed of transition and technologies of privatization among the side issues. Marek Dabrowski, Secretary of State for Finances in the Polish Government and later Chairman of the CASE Foundation in Warsaw analyzed the role of the government on managing transition. He highlighted the difference between activist and strong government. He also called for transparent, rule-based and non-captive, non-partisan government in bringing about sustaibanle outcomes.

Paul Welfens, Professor at Münster University in Germany underscored the focal role of foreign direct investment in bringing about microfoundations of growth and corporate restructuring. Silvana Malle, head of division at OECD/Paris and Professor at the Verona Univerity analyzed peculiarities of Russian privatization. She has highlighted the inadequate institutional backup for property change, that was bound to create ambiguous outcomes in terms of equity and efficiency alike. Wladimir Andreff, Professor at Sorbonne University and Pekka Sutela, Head of the BOFIT Institute in Helsinki analyzed foreign economic aspects of transition and highighted the unfavorable and lasting heritage of closed economy and the related interst structures, sabotaging liberalization.

Joze Mencinger, former Deputy Prime Minister of Slovenia argued in his article against constructed models of mass privatization and advocated organic solutions. Miroslav Hrncir, longtime member of the Monetary Policy Council of the Czech National Bank was one among the first in the international literature to emphasize the need for transparent financial regulation in order to ensure efficiency of privatization. This finding received multiple empirical support via the scandalous cases of the follow-up years.

Reflecting on the experience of laggards in transition Daniel Daianu, later Minister of Finance in Romania and Tatiana Houbenova, senior fellow of the Institute of Economics in Sofia both emphasized the relevance of structural constraints on successful stabilization. What is optimal in normative terms may or may not be feasible if social and economic structures resist radical change.

In the last part Professor Morris Bornstein of the University of Michigan/USA and author of the globally perhaps most widely used textbooks on Comparative economics provided a functional analysis of privatization techniques, concluding that strategies and policy commitment matters more than the proper choice of technology. There is no single optimal solution, as the appropriate solution is dependent on the context. Finally Klaus Schrader of the Kiel Intitute of World Economics/Germany provided one of the first comparative institutional analyses of the post-Soviet reform initiatives. His conclusion is still valid in pinpointing, that the dominant trend of policy drift was bound to produce less efficient outcomes than a professional policy based on coherence and consistency considerations, as would follow from mainstream insights. In the concluding chapter the editor stressed the importance of the instituitonal heritage and of social acceptance for sustaining outcomes. It takes time and a lot of trial and error until theoretically forward- looking but culturally and traditionally alien solutioins take root in a post-Communist environment, itself being quite diverse by the country/having more or less market memoory, having more or less reform hostory/. This posed a new challenge for economics, also against the experience of Latin American stabilization tasks, that followed from the holistic nature of post-Communist change.

These insights might have contributed to the re-emergence of interest in institutional diversity and the relevance of regulation, as later canonized in the Post-Washington Consensus.

Publisher: Dartmouth

Year: 1994

Number of pages: 304

ISBN: 1 85521 398 2

Reviews

Wolfgan QuaisserJournal of Comparative Economics, vol. 21, no. 2, pp249-250, 1995Details

USALanguage: English

Pál MajorosEurope-Asia Studies, vol. 47, no. 5, pp889-900, 1995
Brunoa DallagoActa Oeconomica, vol. 47, nos. 3-4, pp427-429, 1995Details

Language: English

Kosta JiriOsteuropa Wirtschaft, no. 2, p182, 1995Details

StuttgartLanguage: German

Journal of Economic Literature, vol. 32, no. 4, 1994Details

USALanguage: English

Transition - the Newsletter about Emerging Economies, vol. 4, no. 6, pp22-23, 1993Details

Washington, World BankLanguage: English

Privatization, Liberalization and Destruction