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Privatization in Eastern and Central Europe : objectives, constraints, and models of divestiture

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  • Dhanji, Farid
  • Milanovic, Branko

Abstract

This paper is devoted largely to a taxonomic discussion of objectives, constraints, and models of divestiture in privatization programs, but the authors also present some concluding observations. The plethora of divestiture options makes choice difficult. From an individual government perspective, the choice of preferred model will vary depending on the objectives, the weights given to the objectives, and the estimation of practical difficulties in implementation. In this respect, there is no correct answer about how to privatize. Decisions are highly political, mediated through still inchoate political processes, invoking strong interests and lobbies, and with a genuine possibility of popular backlash in societies sensitive to wide discrepancies in wealth. The paper considers various objectives of privatization programs in the region. The environment for divestiture is described and the constraints and barriers to privatization delineated. The authors conclude with an analysis of the more prominent models advanced for privatization, with a discussion of advantages and disadvantages.

Suggested Citation

  • Dhanji, Farid & Milanovic, Branko, 1991. "Privatization in Eastern and Central Europe : objectives, constraints, and models of divestiture," Policy Research Working Paper Series 770, The World Bank.
    • Handle: RePEc:wbk:wbrwps:770
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    References listed on IDEAS

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    1. Kornai, Janos, 1986. "The Hungarian Reform Process: Visions, Hopes, and Reality," Journal of Economic Literature, American Economic Association, vol. 24(4), pages 1687-1737, December.
    2. Nellis, John R., 1988. "Contract plans and public enterprise performance," Policy Research Working Paper Series 118, The World Bank.
    3. Bishop, Matthew R. & Kay, John A., 1989. "Privatization in the United Kingdom: Lessons from experience," World Development, Elsevier, vol. 17(5), pages 643-657, May.
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    1. Feldmann, Horst, 1993. "Die Eigentumstheorien Lockes und Humes und ihre Lehren für den Aufbau privatwirtschaftlicher Eigentumsordnungen in den Transformationsländern," Tübinger Diskussionsbeiträge 30, University of Tübingen, School of Business and Economics.
    2. R. Daviddi, 1994. "Privatisation in the transition to a market economy," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 399-429.
    3. R. Daviddi, 1994. "Privatisation in the transition to a market economy," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 399-429.
    4. Nigel Harris & David Lockwood, 1997. "The war-making state and privatisation," Journal of Development Studies, Taylor & Francis Journals, vol. 33(5), pages 597-634.

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