The political economy of privatization in eastern Europe: Transformative politics and competing imperatives of privatization in Hungary, Poland and the Czech Republic

This study tries to explain privatization policies in different East European countries from a neo-institutionalist perspective. Privatization policies in different East European countries are seen as results of multi-level bargaining games by various institutional actors who fight over the spoils of privatization. The outcome of the scramble for ownership depends on resource distribution among factors. A comparison of the privatization processes of Hungary, Poland and the Czech Republic shows that the Czech state was relatively autonomous from social forces and could pursue a more coherent privatization strategy which granted little benefits to enterprise insiders. In Poland, influence from workers' bodies and the self-management forces led to the fragmentation of decision-making power and more redistributive privatization strategies. The managers, as the most influential social actor in Hungary, were the biggest beneficiaries of the privatization process in Hungary.; More detailed analysis of the Hungarian privatization experience shows that the imperatives of transformative politics were important factors behind policy decisions in Hungary. The Hungarian government was caught in a complex web of competing imperatives of redistribution, minimizing social costs, maximizing revenue and efficiency, etc., when it formulated its privatization strategy. The conservative government, which ruled from 1990 to 1994, tried to reduce transformative costs of reform by selective privatization, and tried to enhance its popularity by switching to more redistributive strategies after 1992.; Fieldwork studies showed that the managers of Hungary were able to transfer their rents into new institutionalized forms during the ownership transformation process. The managers, because of their information advantage and connections, had a lot of influence on the privatization of their own firms, and in deciding the winner(s) of the open tenders. They maintained managerial control on their companies, and they also enjoyed a lot of advantages if they wanted to buy out their own firms.