Enterprise Behavior and Privatization of the Large Enterprises in the Russian Federation

IIASA Economic Transition and Integration Project (1993). Enterprise Behavior and Privatization of the Large Enterprises in the Russian Federation. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-93-070

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Abstract

The Economic Transition and Integration (ETI) Project at IIASA has built on the institute's tradition of promoting collaborative research between East and West. The ETI Project's proven ability in dealing with issues pertaining to the transformation from central planning to market economics has been valuable for policy-makers and scientists alike. As a result, the government of the Russian Federation turned in 1992 to the ETI Project to organize a series of seminars and provide reports on topics of concern to the government. The Ford Foundation and the Pew Charitable Trusts have generously provided financial support for the seminar series.

This report summarizes the contributions of participants at two related seminars held at the request of the Russian government at IIASA in the summer of 1993: Enterprise Behavior under Conditions of Economic Reform and Privatization of Large State Enterprises, both in the Russian Federation.

Enterprise behavior, particularly of the large state enterprises that continue to dominate the Russian industrial and service sectors, is a crucial factor determining the success of economic reform. Somewhat surprisingly, the changing economic conditions have as yet to be accompanied by similarly sweeping alterations in firm behavior. The first of the two summer seminars focussed on why and how managerial attitudes and objectives, enterprise relationships, financial issues and taxation, foreign trade, and social welfare were significant in explaining present trends in enterprise behavior. Seminar participants searched out alternatives that would make these factors more conducive to promoting economic recovery and growth, and also compared the behavior of Russian enterprises with experiences in Poland and the Czech Republic.

Privatization of large state enterprises is an integral part of the Russian economic transition. Vice Premier Anatoly Chubais opened the second workshop by reviewing the economic and political history of Russian privatization efforts, summarizing recent developments, and outlining future plans. Potential and actual privatization influence managers' and firms' behavior before and after the process is undertaken. Further discussions were devoted to the legal and institutional environment, the restructuring and privatization interface, and a review of privatization techniques and experiences from Central and Eastern Europe.

Once again, the seminar revealed an intense willingness of experts from Russia, Central and Eastern Europe, and the West to share their valuable experiences in an effort to find approaches to more optimally encourage the successful transition to a market economy.

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