Privatization and Economic Reform in Central Europe: The Changing Business Climate

Privatization and Economic Reform in Central Europe: The Changing Business Climate

Privatization and Economic Reform in Central Europe: The Changing Business Climate

Privatization and Economic Reform in Central Europe: The Changing Business Climate

Synopsis

The process of economic restructuring is especially important and particularly complex in Central Europe, where Poland, Hungary, the Czech and Slovak Republics, Slovenia, and other independent states of former Yugoslavia are struggling to transform themselves from socialist to market economies. Each country faces equally complex challenges, however, in creating a new business climate that will nourish domestic enterprise and attract investments by multinational corporations. These challenges include: (1) privatizing state-owned enterprises that have dominated the economies of socialist countries; (2) developing public policies and programs that support the private sector, especially small- and medium-scale enterprises; (3) decentralizing the state administrative structure to allow regional and local governments to play a more active role in providing public services and supporting private enterprise; and (4) restructuring industry, agriculture, and services in order to diversify and reinvigorate the economic base (including infrastructure) of regions surrounding cities that are still dominated by heavy (and now largely obsolescent) manufacturing industries. This book surveys the situation in Central Europe during the early period of transition in the early 1990s when governments in all four countries were experimenting with privatization and economic reform. The authors assess how privatization and economic reform policies have changed the business climate in this important region of the world. The editor provides an overview of economic reforms in Central European countries, offers a framework by which to compare them, describes the approaches to privatization their governmentsadopted, and identifies the problems and challenges that each country faces in attempting to create a market-oriented economy.

Excerpt

A fundamental characteristic of the global economy during the 1990s is the reinvigoration of the private sector as the driving force for economic growth and social progress. The limits of the state's ability to plan, direct, and control national economies have been clearly exposed. Yet private enterprise cannot flourish where public policies do not provide an environment conducive to the efficient operation of markets. The 1990s is a period during which an appropriate division of decision making must be sought between the state and the market, and new cooperative arrangements must emerge between government and private enterprise.

The process of economic restructuring is especially important and particularly complex in Central Europe, where Poland, Hungary, the Czech and Slovak republics, Slovenia, and other independent states of former Yugoslavia are struggling to transform themselves from socialist to market economies. These countries differ in their experiences with market competition and in the degree to which their private sectors have been allowed to function over the past 40 years. Each country faces equally complex challenges, however, in creating a new business climate that will nourish domestic enterprise and attract investments by multinational corporations. These challenges include (1) privatizing state- owned enterprises that have dominated the economies of socialist countries; (2) developing public policies and programs that support the private sector, especially small- and medium-scale enterprises; (3) decentralizing the state administrative structure to allow regional and local governments to play a more active role in providing public services and supporting private enterprise; and (4) restructuring industry, agriculture, and services in order to diversify and reinvigorate the economic base (including infrastructure) of regions surrounding cities that are still dominated by heavy- (and now largely obsolescent) manufacturing industries.

With financial support from the Johnson & Johnson Corporation, the Kenan Institute of Private Enterprise at the University of North Carolina at Chapel Hill . . .

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