Privatization in Romania: Present State and Perspectives
In this chapter, the privatization experience in Romania is presented according to three premises. The first premise is that the main difference between the privatization process in Eastern Europe and in the West is that in Eastern Europe the mission is to create a new property rights structure to re-create private property as a legal, institutional, and functional national system--a much more difficult process than is the transfer of several or even a dozen enterprises, as in Great Britain, from the state to private owners. The second premise is that in Eastern Europe privatization should be a combination of macroeconomic and comprehensive microeconomic actions. At the national level, it is necessary to have a detailed strategy for privatization to create an institutional framework and functional mechanism for privatizing thousands of enterprises. Because of the numerous enterprises to be privatized in only a few years, the decentralized approach, based on the actions of each enterprise involved, is mandatory.
The third premise is that because of the cultural differences among the Eastern European countries, the solutions and methods of privatization could not be the same for each country. Thus, the privatization approach must take into consideration the following factors related to each country: traditions; economic level; institutional structure; geographic location; the social behavior, attitudes, and educational levels of the people; strategies of political parties; personalities of political leaders; and presence of foreign capital.
On the basis of these premises, this chapter describes and analyzes the evolution of privatization in Romania from 1989 to June 1995. The first section discusses the three main components of privatization: privatization of the land, real estate, and state enterprises.