The Determinants of Enterprise Restructuring in Transition

Over the last decade, more than one hundred fifty thousand large enterprises in twenty seven transition countries have encountered revolutionary changes in every aspect of their political and economic environments. Some enterprises have responded to the challenge, entering world markets with great dynamism and becoming indistinguishable from their competitors in mature market economies. Others remain mired in their past, undergoing protracted deaths, delayed at times by their slippage into a netherworld of barter and ersatz money. Thus the revolutionary changes in transition countries have been matched by great variation in the degree to which enterprises have responded successfully to events. To assess the effectiveness of the different reform and privatization strategies, empirical research on transition countries has examined enterprise level data to ascertain whether enterprises have responded productively to changes in ownership and to other reform measures. This volume provides a general assessment of the evidence generated by these studies. In providing the assessment, it: discusses the general context of the studies; assesses the evidence on whether state-owned or privatized firms undertake more economic restructuring; studies the effects of restructuring on different types of owners; focuses on the role of managers; analyzes the effect of greater discipline in the government's reaction to enterprises in distress; examines how variations in product market competition affect enterprise restructuring; and examines the role of the institutional and legal framework. This publication will be of interest to policy makers and readers interested in gaining an overview of the current state of the evidence.