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The effects of privatization on foreign owners, domestic owners and non-state owners are examined, based on experiences during the last fifteen to twenty years in the post-communist economies and China. Its impact on efficiency, profitability, revenues and other indicators are distinguished separately, and studies are differentiated based on their econometric methodology to arrive to more credible results.

The effect of the trends of corporate governance in Central and Eastern Europe on the returns on investments in these regions between 1999 and 2003 is described.

The performance of financial institutions in Eastern Europe following effective economic policies is examined.

The effect of speed of reforms relating to transition from planned economy to market economy on the returns to education is assessed based on data from China, Russia, and Central and Eastern Europe.

The impact of trade liberalization on the internal geography of a domestic country is analyzed in a model where both the dispersion and agglomeration of economic activity are driven by endogenous elements. The economic integration was found to foster the location of economic activity in regions having pronounced advantage in terms of access to international markets impact.

This paper analyses the importance of developing market-enhancing institutions for restoring economic growth in transition economies during 1991-98. The papers main finding is that the development of an institutional framework has indeed a significant positive impact on growth, but that progress in achieving macroeconomic stabilisation and implementing broad-based economic reforms remain the key determinants of growth in transition economies. Comparative Economic Studies (2003) 45, 2-24. doi:10.1057/palgrave.ces.8100005 Keywords: growth, institutions, transition countries, public policy JEL Classifications: P2, P21, P47, O21, `When I was growing up in Peru, I was told that the farms I visited belonged to farming communities and not to the individual farmers. Yet as I walked from [...]

Transition from a centrally planned economy to a market economy has proved to be an enormous challenge. Differences exist between individual countries regarding the scale and efficiency of the reform [...]

Between 1990 and 1996, competition laws have been adopted in 22 of the 26 transition economies of eastern Europe and the former Soviet Union. Yet there is very little systematic evidence about implementation experience, and none regarding its impact on intensity of economy-wide competition. The novelty of this paper is twofold. First, it defines a range of competition policy implementation criteria relevant for transition and developing economies along the three main dimensions of enforcement, competition advocacy and institutional effectiveness. These classification criteria go significantly beyond the traditional emphasis on abuse of dominance, agreement and merger cases. Second, it provides an assessment of the effectiveness of competition policy implementation across 18 countries along these criteria, based on data from each country's competition authorities and supplemented with assessments by legal practitioners. The relationship between competition policy and intensity of competition is explored, with the latter captured by a measure of economy-wide enterprise mobility that reflects selection effects. We find a robust positive relationship between effective competition policy implementation and expansion of more efficient private firms.

The privatization process in Eastern Europe is not irreversible. Future governments may want to (partially) expropriate successful private firms in order to subsidize unsuccessful ones. We use a simple median voter model to predict the policy of future governments. It is shown that there will be less expropriation the more shares were distributed for free to the population. Diversified mass privatization is better than insider privatization. Furthermore, people should be discouraged to sell their shares for cash. Finally, we show that some free distribution of shares may induce more investment and increase expected profits and privatization revenues for the government. Keywords: Mass privatization; Transition; Expropriation; Political economy

The discrepancy between China and Central and Eastern European countries' (CEECs) economic development can be attributed to the two region's varying economic goals and objectives. While CEECs pursue market-oriented trading policy and structural reforms, China's trading programs are aimed at promoting over-all growth and sectoral improvement. Further, European countries favor the adoption of open-market economy, while China seeks to capitalize on fostering decentralization and exemption from controls.

The paper analyses the major challenges for macro-economic policies and institutions of Central and East European countries raised by accession. The analysis starts by proposing an interpretation of the economic conditions that the CECs would need to satisfy in order to become members of the European Union. The paper then proceeds to discuss the acquis communautaire in the area of EMU which the new members will have to implement, at least as non-participating countries. It is argued that EMU should not be an immediate target for the majority of the Associated Countries (ACs). The successful conclusion of the transformation calls for a certain degree of flexibility in the conduct of economic policy which the adoption of too strict criteria could actually prevent. This does not mean that the effort to follow sound economic policies should be discontinued. The paper simply concludes that a too short policy horizon should not constrain the ACs' ability to converge or to undertake macro-economic stability-oriented policies in the future. Keywords: European Union; Eastern Europe; Enlargement; Macroeconomic policy; EMU

Government-led gradualism and wholesale application of bankruptcy are ineffective in dealing with loss-making state-owned enterprises (SOEs) in Eastern Europe. A more efficacious solution would be to create an incentive framework and legal environment to encourage major nongovernment creditors to initiate restructuring. Poland's successful enterprise reform program indicates that a decentralized, nongovernment approach to dealing with loss-making SOEs is a viable method.

This paper presents an analysis of reforms using a simple general equilibrium model with production. The model illustrates some of the distortions remaining in the eastern European countries as they adopt market-oriented policies, and it shows that price reforms should take priority if simultaneous reform is not possible. Specifically, we examine reforms of relative prices of output goods and liberalization of the capital market. The model is solved numerically, showing that restrictions on capital mobility should be retained until after price distortions have been removed.

The economic restructuring in Eastern European countries and the former Soviet Union requires monetary policies to stabilize the currency and decrease inflation. Currency management techniques must include the maintenance of a flexible exchange rate supported by strong local monetary institutions and goals. The International Monetary Fund plays an important role in helping countries manage their currency regime.

Privatization is proceeding slowly in many Eastern European countries. This is largely because the insiders, who currently have control but not property rights to the firms, oppose outsider privatization. Privatization would proceed faster if governments decided to go the insider privatization route. There would seem to be two strong efficiency arguments for doing so. First, insider privatization aligns control and property rights. This gives the right incentives to insiders. Second, if for some reason, insiders cannot do the job themselves, they will have the right incentives to sell the firms to those outsiders who can. Our paper focuses on this second argument. We conclude that it is not as obvious as it seems. There is a wedge between the value of the firm to insiders and the value of the firm to outsiders. Depending on the details of insider privatization, and on the details of the resale process, this wedge may prevent resale, and thus prevent desirable restructuring. Keywords: Privatization; Transition; Restructuring; Ownership; Eastern Europe

The liberalization and privatization policies improve the performance of the telecommunication sector in Central/Eastern Europe and the Soviet Union. The success is mainly due to tariff restructuring, market size and expected growth rate, investor risk perception, policymakers' uncertaintyand wider external benefits' perceived importance. The strategy of reforms for the short to medium term shows the current conditions and political realities along with the needs of customers.

The economic reform programs proposed by the IMF and World Bank for Eastern Europe should have considered the nature and characteristics of Soviet-type economies before the stabilization and reform programs were applied. The characteristics include excess inventories, enterprise behavior and structural deformations. Cognizance of these characteristics would have minimized the costs of transition and the public could have been prepared for the consequences of the reform programs.

Coal mining and consumption pollutes the environment and should thus be minimized by imposing taxes on coal production and consumption. However, governments in several Western European countries subsidize coal production while most Eastern European countries subsidize coal consumption. Neoclassical political economic theory can explain how governments could adopt such inappropriate behavior. Political pressures have caused the dismantling of some coal subsidies. Such pressures combined with commercial diplomatic pressures can help bring about the end of coal subsidies.

The economies of Central and East European nations may not be suited to the 'shock' approach developed by orthodox Western economic policymakers due to various economic and political concerns. A study on the Scandinavian 'negotiated economy' as a model for development is discussed. The economy is an alternative to the type of economic growth espoused by free market economists.

A model for examining privatization in Central and Eastern Europe is proposed. It specifically focuses on two important features of the region's privatization program, namely, the concept of the necessity of critical mass to the program and the serious problems encountered in the actual privatization process. The model is used to investigate the effects of free and equal distribution to the population of share in the privatized enterprises. The results of the study are discussed.

The effects of cash social transfers and direct taxation on income distribution in the hitherto communist countries of Czechoslovakia, Hungary, Poland, Bulgaria and Yugoslavia are discussed. Social transfers have been found to decrease income inequality but to a much lesser degree than transfers effected in free market economies. The impact of direct taxation, on the other hand, is proportional to wages earned.

The former communist countries of Eastern Europe are undergoing a four-year transition period from planned to market economies and their experiences provide lessons in economic transformation. The controversy on their transition policies has been centered on the debate between the approaches described as shock therapy and gradualism. It was argued that shock therapy can be a tool for economic stabilization because it announces the end of the previous economic regime. The need to promote intraregional trade and good economic administration by the state were also discussed.

Russia can learn from the mistakes of Eastern Europe when establishing its privatization plan. The collapse of communism in Eastern Europe has led to corruption and a lack of direction, and the public has begun to take a negative attitude toward privatization. East European countries have implemented privatization one enterprise at a time and have allowed enterprises to privatize on a voluntary basis. Russia can make privatization more effective by taking a rapid and more comprehensive approach.

Privatization will proceed at differing rates in socialist economies, depending on prior experience with competition and with private businesses. To be successful, inefficient businesses must be allowed to fail. Owners [...]

Recent developments in Central and Eastern Europe will have a significant impact on world economic and political relationships. The basic elements of the new world order include the following: growth [...]

After sudden political liberalization, Eastern Europe and the Soviet Union seem poised to abandon administrative-command planning and embrace market socialism (which stops somewhere short of American-style capitalism). However, using the Soviet Union as a case in point, careful analysis of all plausible transition paths from the current system to Western-style markets suggests that prospects for success are dim. The revolution of rising expectations in the Soviet Union and Eastern Europe sparked by Gorbachev's program of political liberalization is on a collision course with the immediate possibilities for fundamental economic change. The East is likely to be politically unstable for a long period, nor can the West alter this situation with massive foreign assistance because the Eastern nations cannot utilize the credits effectively. The Western business community therefore must be very constrained in its expectations about progress in the East and should approach the issues of private investment and government aid accordingly. (Reprinted by permission of the publisher.)

Since the collapse of the Communist bloc, and despite four decades in which entrepreneurship was rigorously suppressed, private enterprise has flourished rapidly in Hungary, Poland and the Czech and Slovak [...]