Politicians and Firms in Seven Central and Eastern European Countries [book]

Stijn Claessens, Simeon Djankov
1999 Policy Research Working Papers  
We test several propositions derived by Vishny (1994, 1996) about the effects of privatization and stabilization (hard budget constraints) on enterprise behavior. We document the changes in financing, employment, and operating efficiency that occur in over 6,300 manufacturing enterprises in seven Central and Eastern European countries (). We then compare the relative performance of privatized and still state-owned enterprises. Controlling for institutional differences and endogeneity of
more » ... ogeneity of privatization choices we find that privatization is associated with significant improvements in total factor productivity and reductions in excess employment. Reductions in soft financing are associated with further productivity gains. The results provide significant support to the Shleifer-Vishny model.
doi:10.1596/1813-9450-1954 fatcat:3sp56bemkfarjie5liwd3ggppa