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A Successful Transformation?Effects of Domestic Privatization in the Auto Components Industry

A Successful Transformation?: Effects of Domestic Privatization in the Auto Components Industry 5 Effects of Domestic Privatization in the Auto Components Industry Privatization of formerly state-owned enterprises (SOEs) has been consid- ered one of the most important issues of post-socialist economic transfor- mations into market based economic systems in CEE. Privatization of all economic sectors (i.e. industry, agriculture, services) and the development of the private sector in the economy was the central element of all eco- nomic “transition” plans. According to the liberal view, the “transition to capitalism” would fail without successful privatization and development of the private sector because a market economy cannot function properly without private ownership (e.g. Claudon and Gutner 1992; The Economist 1991). In the early 1990s CEE governments prepared conditions for the development of private capital by establishing private property rights and legalizing private ownership. New laws were put in place to equalize tax treatment with state-owned firms, remove restrictions on private firms’ size and activities, free private procurement and distribution, and reduce bureaucratic requirements for establishing new firms (Gelb and Gray 1991). While these governmental policies supported the development of new small-scale private enterprises, they did not solve the problem of pri- vatization of the SOEs. A major discussion emerged around the techniques, speed and http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Successful Transformation?Effects of Domestic Privatization in the Auto Components Industry

Part of the Contributions to Economics Book Series
Springer Journals — Mar 4, 2008

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Publisher
Physica-Verlag HD
Copyright
© Physica-Verlag Heidelberg 2008
ISBN
978-3-7908-2039-3
Pages
157 –184
DOI
10.1007/978-3-7908-2040-9_5
Publisher site
See Chapter on Publisher Site

Abstract

5 Effects of Domestic Privatization in the Auto Components Industry Privatization of formerly state-owned enterprises (SOEs) has been consid- ered one of the most important issues of post-socialist economic transfor- mations into market based economic systems in CEE. Privatization of all economic sectors (i.e. industry, agriculture, services) and the development of the private sector in the economy was the central element of all eco- nomic “transition” plans. According to the liberal view, the “transition to capitalism” would fail without successful privatization and development of the private sector because a market economy cannot function properly without private ownership (e.g. Claudon and Gutner 1992; The Economist 1991). In the early 1990s CEE governments prepared conditions for the development of private capital by establishing private property rights and legalizing private ownership. New laws were put in place to equalize tax treatment with state-owned firms, remove restrictions on private firms’ size and activities, free private procurement and distribution, and reduce bureaucratic requirements for establishing new firms (Gelb and Gray 1991). While these governmental policies supported the development of new small-scale private enterprises, they did not solve the problem of pri- vatization of the SOEs. A major discussion emerged around the techniques, speed and

Published: Mar 4, 2008

Keywords: Corporate Governance; Privatize Company; Chief Executive Officer; Ownership Structure; Foreign Capital

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