Privatization in Eastern Europe: Is the State Withering Away? (Central European University Press Book)

In Eastern Europe privatization is now a mass phenomenon. The authors propose a model of it by means of an illustration from the example of Poland, which envisages the free provision of shares in formerly public undertakings to employees and consumers, and the provision of corporate finance from foreign intermediaries. One danger that emerges is that of bureaucratization. On the broader canvas, mass privatization implies the reform of the whole system, the creation of a suitable economic infrastructure for a market economy and the institutions of corporate governance. The authors point out the need for a delicate balance between evolution - which may be too slow - and design - which brings the risk of more government involvement than it is able to manage. A chapter originating as a European Bank working paper explores the banking implications of setting up a totally new financial sector with interlocking classes of assets. The economic effects merge into politics as the role of the state is investigated. Teachers and graduate students of public/private sector economies, East European affairs; advisers to bankers or commercial companies with Eastern European interests.

The creation of new economic and legal mechanisms to replace the fallen communist systems of Eastern Europe must surely count as one of the greatest organizational challenges of this century, and economists and politicians alike are constantly grappling with the enormity of the transformation to be achieved. In this volume, the authors give an in depth explanation of their now widely adopted approach to 'privatizing privatization' and chart the evolution of their thinking, particularly in reaction to real events and prevailing conditions. Expanding on the theme of transferring ownership to the private sector through a system of free vouchers and independent intermediaries, Professors Frydman and Rapaczynski address the dangers of bureaucratization and the delicate balance between the evolutionary elements and imposed regulations that must be achieved to make the transition a success. The perfect companion volume to The Privatization Process in Central Europe, this collection of essays provides a brilliant explanation of the most widely accepted theory of privatization in Eastern Europe today.

CONTENTS Preface and Acknowledgern.ents Foreword Introduction 1 Markets and Institutions in Large-Scale Privatization: An Approach to Economic and Social Transformation in Eastem Europe 2 Privatization and Corporate Govemance: Can a Market Economy Be Designed? 3 Evolution and Design in the East European Transition 4 Corporate Control and Financial Reform 5 Insiders and the State 6 Ambiguity of Privatization and the Paths of Transition to a Private Property Regime Bibliography Index These six papers deal with a variety of aspects of mass privatization. Previously published in less accessible form, they have been brought up to date and a final chapter has been added to provide a coherent account of the problems and opportunities that privatization on such a scale produces. "A Central European University Privatization Project book"--P. opp. t.p. Includes bibliographical references (p. [211]-216) and index