IPD AI Insights

Privatization in Central-East Europe and the CIS

04/01/2005
Working Paper
The State

The wisdom and economic effects of privatization in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) are currently the subject of intense re-examination. While today privatization is under debate, in the early 1990s privatization was widely considered one of the keystones of the entire transition process. From the start it was clear, however, that privatization in and of itself would not be sufficient to insure an effective functioning of the newly created market economies.

Since the impact of privatization was often viewed as dependent on the presence of specific accompanying policies and systemic changes, we include in this paper a brief evaluation of such policies and changes that presumably influenced the effects of privatization. We also discuss the key systemic changes and policies that, along with privatization, were carried out, in full or in part, during the transition in CEE and CIS. We examine the macro- and microeconomic evidence about the determinants, extent and effect of privatization. We conclude our study with a number of policy-oriented observations.