The Economics of Enterprise Restructuring in Central and Eastern Europe

Philippe Aghion, Olivier Blanchard and Wendy Carlin ()
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Philippe Aghion: University of Oxford

Chapter 11 in Property Relations, Incentives and Welfare, 1997, pp 271-325 from Palgrave Macmillan

Abstract: Abstract The early debates about the transition of the enterprise sector in eastern Europe centred on the thesis that the transfer of property rights to private agents was both necessary and sufficient to achieve efficient restructuring. Several years into the transition, it seems that the relationship between privatization and restructuring is not simple. Three features of the transition stand out: first, forms of privatization that did produce rapid increases in efficiency were very slow; second, fast privatization has only been possible when it left — or was expected to leave — control in the hands of insiders (employers and managers). Such insider privatization produces only limited restructuring activity (labour-shedding, closure of unprofitable activities, and shedding of non-production-related activities). Third, managers of enterprises which have not been privatized have engaged in some restructuring, as documented, for example, by Estrin, Gelb and Singh (1993b) and Pinto, Belka and Krajewski (1993). These observations suggest putting restructuring behaviour rather than privatization at the centre of the analysis of enterprise sector reform.

Keywords: Budget Constraint; Private Firm; Supervisory Board; Soft Budget Constraint; Case Study Evidence (search for similar items in EconPapers)
Date: 1997
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Working Paper: The Economics of Enterprise Restructuring in Central and Eastern Europe (1994)
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DOI: 10.1007/978-1-349-25287-9_11

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