Ownership and Performance in Transition Economies: An Overview

In the early stages of the transformation of the majority of post-Communist countries, various types of privatisation schemes were applied in order to speed up the privatisation of the state sector and ensure social support for the privatisation process. In addition to classic commercial privatisation methods ‘imported’ from the West, these schemes — based on the free or nearly free transfer of assets to certain segments of the population — took the form of mass (voucher) privatisation and management-employee buyouts (MEBOs). Let us denote those schemes, which usually involved the transformation of the ownership of a large number of companies according to some general formula, by the term ‘wholesale privatisation’. The common denominator was the definition by the state (to a greater or lesser degree) of the ownership structures of privatised enterprises, both by identifying future types of owners and, in some cases, by determining the proportions of shares to be held by various types of owners. Additionally, there was often a high degree of state involvement in the creation of various types of investment funds, which became shareholders in privatised companies. As a result, in countries where efforts were made to determine ownership structures from on high, enterprises often found themselves with identical ownership patterns immediately following privatisation, regardless of their size, the markets in which they operated, or other specific characteristics.