Privatization in Eastern Europe

Executive summary

Concept of privatization in global economies is not a new phenomenon. Across the world many of the developed nations have privatize enterprises under their control to private entities or have shared a similar pattern to share their authorities with private entrepreneurs or firms. In United States and United Kingdom, the concept was developed and implementation took place, which helped in limiting the control of state over major state owned businesses. Initially the concept was majorly applied in developed economies as states wanted to limit self-control and authorize private ownership for better results from some of the firms under their control. However, in the recent past many of the developing economies have also started applying the concept to firms under their control. The premier reason behind that is to provide a lift to the securities market. Valuable enterprises like transportation, posts, healthcare institutions, telephone network, etc. are being privatized so as to extract the maximum performance level for the sustainable growth of the economies. The following paper discusses the implementation of privatization process in majority of the Eastern European Countries and the progress, which economies of the mentioned countries are having due to the process of privatization. Furthermore, concept of privatization in general has also been discussed keeping in mind the effects that privatization can cause on the emerging economies. In order to support the following discussion various secondary sources have been used to validate the point of discussion.

Table of Contents

Privatization in Eastern Europe1

Executive summary2

Introduction1

Privatizing Process1

Discussion3

Types of Privatization4

The Opening of the Monopoly to Competition4

The Deregulation4

Vouchering5

The Incremental Privatization5

The Privatization Cold6

The Formal Privatization6

The Privatization Functional6

The Public Offering7

Direct Sales8

Joint Venture9

Issues in Privatization9

Effectiveness of Privatization10

Literature Review12

Success of Privatization in CEE Countries13

Application of Privatization14

Large Scale Privatization17

Privatization and Its Impact on Different Economies19

Conclusion21

References22

Appendix25

Introduction

Privatization is the process of transfer of state assets to private entities, transforming the state of the economy in the private economy, limiting the role of the state in the economy. It can be defined as a process that leads to a change of control of the economy and social change in private ownership. In any case, the process of privatization, and corporate welfare is, at the beginning of the 80s accentuates a path implementation in a manner and shapes. It should be remembered, then, that the concept of privatization could be understood in different ways. On the one hand, there is the substantial privatization in the case in which the management of the company is taken totally by the private sector, which can produce a real transfer of ownership by the public to the private sector (Bjornskov & Potrafke, 2011). In this case, privatization, implemented through cooperation between public and private, allow the State to provide a service, limiting its role to mere control of the services offered by the private operator. The main difference between the substantial privatization and other forms of privatization can be seen in the fact that in this case the private becomes in effect the owner of the property. There are many reasons that can ...