DP942 On the Speed and Sequencing of Privatization and Restructuring

Author(s): Gérard Roland
Publication Date: April 1994
Keyword(s): Political Economy, Privatization, Restructuring, Sequencing, Transition
JEL(s): H89, P50
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=942

This paper examines aspects of speed and sequencing of restructuring and privatization in economies in transition. It is argued that because of political constraints, restructuring is more likely to be gradual. Because of the political constraints on restructuring, a very fast and non-differentiated approach to privatization may lead to renationalization and general delays in restructuring. A more gradual policy of privatization may allow for the screening of good from bad firms, allow the emergence of a sound financial sector and give credibility to a policy of gradual restructuring and hardening of budget constraints in the state sector.