Privatization and Restructuring in Central and Eastern Europe
One of the most important policy questions in the transition economies is what governments can do to speed the restructuring of firms and thus hasten the transition to a mature market economy. The authors report on a study that provides some answer...
| Main Authors: | , , , |
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/1997/07/441497/privatization-restructuring-central-eastern-europe http://hdl.handle.net/10986/11576 |
| Summary: | One of the most important policy
questions in the transition economies is what governments
can do to speed the restructuring of firms and thus hasten
the transition to a mature market economy. The authors
report on a study that provides some answers. Privatization
encourages restructuring if it is rapid and comprehensive
and leads to concentrated ownership. Privatization also
promotes restructuring because privatized firms are more
likely than state-owned enterprises to exercise wage
restraint--and wage restraint is vital to free up the
necessary internal finance. But policies that increase bank
lending to firms, such as debt forgiveness and
recapitalization, may do more harm than good. The safest
course is to recapitalize banks only as part of
privatization and to encourage negotiations for financial
restructuring only after the banks are privatized. |
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