Investment, Wages and Corporate Governance during the Transition: Evidence from Slovenian Firms

Janez Prašnikar and Jan Svejnar

Chapter 7 in Transition and Beyond, 2007, pp 149-173 from Palgrave Macmillan

Abstract: Abstract As the transition to a market economy unfolded, investment and wage determination became important issues in virtually all the post-communist economies. The Soviet bloc countries as well as Yugoslavia displayed high rates of investment until the 1980s, when economic slowdown and popular pressure for higher consumption forced the authorities to reduce the rate of investment and allow wages to rise (EBRD, 1995, 1996). As both the Soviet bloc and former Yugoslavia disintegrated, analysts and policy-makers started worrying about the fact that the rate of investment declined further, principally as a result of declining enterprise saving (EBRD, 1995).2 At the same time, investment has been identified as a principal indicator of strategic or deep restructuring in the microeconomic models of transition (for example, Blanchard, 1997; Grosfeld and Roland, 1997) and a number of theoretical papers have examined conditions, such as managerial ownership stake, under which managers would restructure firms prior to privatization (for example, Aghion et al., 1994a; Blanchard, 1997).

Keywords: Corporate Governance; Instrumental Variable; Internal Fund; Investment Equation; Soft Budget Constraint (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:pal:stuchp:978-0-230-59032-8_8

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DOI: 10.1057/9780230590328_8

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