Privatization impacts in transition economies

This article addresses the large-scale privatization processes in central and eastern Europe. It explains why reformers placed such emphasis on privatization and the practical problems posed by the scale of state ownership under communism, leading to the widespread use of mass privatization. As a result ownership changes were huge and extremely rapid but the improvement in corporate governance was more questionable. The empirical findings about the impact on enterprise performance are patchy, though on balance the effect has been positive, especially in countries with stronger institutions or where the new owners have been foreigners.