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Does Sequencing of Privatization Matter in Reforming Planned Economies?

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  • Mr. Aasim M. Husain
  • Ms. Ratna Sahay

Abstract

Although a centerpiece of the reform process in Central and Eastern Europe, large-scale privatization cannot be undertaken all at once and policymakers inevitably face the choice of privatizing some sectors before others. This paper analyzes the allocative efficiency implications of alternate sequences of privatization in a reforming planned economy with two sectors—an input-producing upstream sector and a final goods-producing downstream sector. The model focuses on the link, through a market for intermediate inputs, between the two sectors. The impact of exogenous shocks to the two sectors are highlighted to show how the inflexibility of public firms in responding to shocks constrains the production response of private firms operating in perfectly as well as imperfectly competitive markets.

Suggested Citation

  • Mr. Aasim M. Husain & Ms. Ratna Sahay, 1992. "Does Sequencing of Privatization Matter in Reforming Planned Economies?," IMF Working Papers 1992/013, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1992/013
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    Citations

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    Cited by:

    1. Kar, Saibal & Majumdar, Devleena, 2015. "The wage response in exporting firms: evidence from machinery and chemical industries in India," MPRA Paper 103483, University Library of Munich, Germany.
    2. Gianni De Fraja & Barbara M. Roberts, 2009. "Privatization in Poland What was the government trying to achieve?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(3), pages 531-557, July.
    3. Mr. S. Nuri Erbas, 2002. "Primeron Reforms in a Second-Best Ambiguous Environment: A Case for Gradualism," IMF Working Papers 2002/050, International Monetary Fund.
    4. Funke, Norbert, 1993. "Timing and sequencing of reforms: Competing views," Kiel Working Papers 552, Kiel Institute for the World Economy (IfW Kiel).
    5. Singh, Nirvikar, 2010. "The Dynamics and Status of India’s Economic Reforms," MPRA Paper 24479, University Library of Munich, Germany.
    6. Jacek Cukrowski, 2002. "Privatizing a service sector: where to start?," Prague Economic Papers, Prague University of Economics and Business, vol. 2002(3), pages 269-279.
    7. Csaba, László, 1995. "A nemzetközi pénzügyi szervezetek és a keleteurópai rendszerátalakító politika [International financial organizations and the East European policies aimed at systemic transformation]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 117-138.
    8. Yongfu Liang & Leonard F. S. Wang & Yapo Yang, 2023. "What role should public firms play in the upstream market?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 101-117, March.

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