Enterprise Reform in Eastern Europe

Sweder van Wijnbergen

No 738, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Eastern Europe is not well served with straightforward textbook advice. The common wisdom on privatization fails to address the problems created by diffuse ownership and control prior to privatization. Cash auctions may not efficiently match managers and capital stock because of wealth constraints. Standard advice on enterprise restructuring fails to incorporate the effect of the sheer scale of the problem, and the reasons why current profits are a poor guide to future profit opportunities. Finally, introducing Western style unemployment insurance, while lowering the social costs of unemployment, would almost certainly also contribute to its indefinite extension. This paper shows how such problems can be addressed by incorporating incentive problems specific to Eastern Europe into policy design. Sometimes the resulting advice is novel and as yet untried; in some cases successful examples exist. Thus some experimentation is unavoidable. The alternative, however, is declining incomes and increasing social unrest as the consensus underlying the reforms erodes.

Keywords: Bank Reform; Eastern Europe; Enterprise Restructuring (search for similar items in EconPapers)
JEL-codes: L2 (search for similar items in EconPapers)
Date: 1992-11
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=738 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Enterprise reform in Eastern Europe (1993)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:738

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=738

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().