Chapter 14: Structures of public enterprise
Jiirgen G. Backhaus One of the most fascinating developments in law and economics analysis is the possibility of subjecting public institutions to a scrutiny that allows an assessment of their performance. This entry first gives an introduction to the basic approach and then details a law and economics-based performance analytic approach of public institutions such as public enterprises. Introduction As a consequence of the collapse of state socialism in Central and Eastern Europe, many countries found themselves with a large set of pubicly owned entities which often imposed a considerable burden on the public budget. Hence governments designed different programmes to privatize these entities (which often could hardly be referred to as enterprises as they tended to display traits of bureaucracies) or at least to make them independent of public support. However, this task proved to be very difficult. For instance, the performance of the authority charged in Germany with the privatization of the state socialist industry inherited from the defunct German Democratic Republic gives a mixed picture of what could be accomplished under the most favourable of circumstances. As Table 14.1 indicates, out of a total of almost 14 000 enterprises in East Germany, a mere 354 remained to be privatized in the autumn of 1994. But all the assets had been sold for a trifling 41 million dollars, many had been Table 14.1 The Treuhand legacy 13 781 354 3701 $133.2 billion 1.4 million $41 million 2697 855 East German enterprises taken over Number still to be privatized...
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