The privatization process in Eastern Europe has not been a success everywhere. The opinion of experts about the optimal privatization strategy has changed over the last decade. This article first presents the theoretical foundation for privatizing state-owned enterprises. It then discusses the pros and cons of different privatization strategies. As the examples of the Czech Republic and Russia show, privatization does not lead to enterprise restructuring if it is not accompanied by institutional reforms. Empirical studies confirm that the effects of privatization are very different in different regions, mostly positive in MOE countries, but not always so in CIS countries.
Among economic journals, this publication has a “bridging” function, as it features content written by economists for researchers in the field and for non-specialists, including professionals with a background in economics who want to keep up to date with the latest research.