Privatization In Russia Essay -- essays research papers

For some, the privatization of Russian industry has been one of the great success stories of Russias painful economic transition quick, firm and radical action was taken to shift the great bulk of Russian industry out of state hands, thereby laying the stem for a radical restructuring of enterprises and improvements in their performance. Others see privatization as a best a failure, at worst a catastrophe. Not surprisingly those opposed to the merchandise and economic reform as a whole sh be this view. But many commentators who see themselves as supporters of reform find plenty in Russian privatization to criticize the process led to the transfer of ownership to inappropriate people and as a consequence no beneficial restructuring of enterprises or the economy stop be expected. While this paper will attempt to cover the three key facets of privatization that enterprises be transferred to private ownership that the new owners be able de jure and de facto to mold ownership rights and, finally and ultimately most importantly, that the new owners exercise their ownership rights in such a way as to bring about improvements in enterprise performance. The key issues to be surveyed, therefore, are who as a result of privatization obtained ownership of Russian industrial assets, and are they appropriate owners try new owners, especially if they are appropriate owners, exercise their ownership rights and has privatization led to improvements in enterprise performance? The paper will deal with privatization only within the industrial field thereby ignoring the highly controversial privatizations of the last twelve months or so in the energy and utility sectors. Who are the new owners?Global selective information showing about 70% of GNP being produced in the private sector reflects the high levels of privatization of industrial enterprises, with the great bulk of enterprises having been privatized by mid-1994. However privatization does non necessarily mean the complete removal of the state from an equity involvement in enterprises. State ownership. The state retains shareholdings in a significant number of privatized enterprises on the basis of government decrees declaring the strategic significance for national security of the enterprise. Shareholdings range from 20 to 51 per cent or a Golden Share (a item-by-item share giving veto rights over certain strategic iss... ...nagers does not stand up. The indications are that they knew what they were doing and judged that outside owners would eventually assert themselves. Gradually they are doing so, and in stages they are improving their ability to exercise and enforce their ownership rights. Sometimes they are doing so in ways that are no less criminal than the methods of the manager-owners. There are also reasons to be concerned about the long-term consequences of the sort of bank-dominated and highly integrated ownership that many of the outsiders have brought. The best that can be sa id at this stage is that all modern economies have at their peak a corporate sector dominated by hulky integrated institutions. Clearly the private sector, and thereby privatization, has to bear some responsibility for an economy in which it has a 70% share but which is unable to provide in anything like adequate proportions growth or welfare. But in this there are other factors also at work. Indeed there are some small indications, at both macro- and micro-levels, of a positive correlation between private ownership and good performance. With time that correlation could well pay back stronger and more evident.