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International Handbook on Privatization

Edited by David Parker and David Saal

Privatization has dominated industrial restructuring programs since the 1980s and continues to do so. This authoritative and accessible Handbook considers all aspects of this key issue, including: the theory of privatization; privatization in transition, developed and developing economies; as well the economic regulation of privatized industries.
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Chapter 17: Privatization in Russia

Paul Hare and Alexander Muravyev


Paul Hare and Alexander Muravyev Introduction1 In all countries privatization programmes are pursued to fulfil a range of state and/or social objectives. The methods adopted are commonly influenced by the priority ranking of these objectives, and this can change over time for either political or economic reasons. In any case, the outcome of a privatization programme is a set of privatized firms whose subsequent economic behaviour and performance will depend not only upon their new private sector status, but upon many other features of the economic environment that have little or nothing to do with privatization per se. This, of course, is why privatization in the transition economies, where much of the institutional environment for a market-type economy is still under construction (see Hare, 2001), sometimes turns out to be disappointing in its impact on the economy, as compared to privatization in a long-established market-type economy such as the UK. Russia is a case in point. Overall economic performance, even in an economy like Russia’s that was predominantly state-owned for decades under the communist system, depends both on the way the former state-owned firms function postprivatization and on the activities of wholly new firms. At the start of transition, the importance of the latter factor was seriously underestimated, with the result that external advice as well as official policies paid rather more attention to organizing privatization and implementing it speedily than now appears justified. Later, attention shifted to new firm formation and the policies and institutions...

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