BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 12/2001:
The role of the new, entrepreneurial private sector in transition and economic performance in light of the successes in Poland, the Czech Republic and Hungary
Jan Winiecki ()
Abstract: The central theme of this paper is the role of the new,
entrepreneurial private sector, established after the fall of communism, in
output recovery, and, more generally, in economic expansion of
post-communist economies. This role is considered specifically in the
context of the successes in Poland, the Czech Republic, and Hungary. The
author notes a substantial difference between the performance of the new
private sector and the privatized sector in the short to medium run (3-7
years) from the start of privatization. New private firms typically enter
the economic game with well-established de jure and de facto property
rights and with industrial relations based on market economy rules. Unlike
the public sector or privatized firms, the labor force of these firms is
not demoralized by the change to market-economy rules. As a result, they
often perform better and are quick to increasing their share of aggregate
output. This also helps the economy as a whole emerge earlier from
transitional recession. The author discusses two hypothetical paths of
recovery and expansion; one with and one without a dynamic new private
sector. The determinants for establishing and growth of new private firms
are considered. In addition to the specific rules and general framework of
transition, the study concludes that broad institutional fundamentals of
political liberty, law and order, and trust contribute to the successful
emergence of this new entrepreneurial sector.
Keywords: new private sector; transition; growth; Poland; (follow links to similar papers)
47 pages, November 26, 2001
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