The Generic Private Sector in an Economy of Transition: Developments and Impacts on the Czech Economy

Benacek, V. (2001). The Generic Private Sector in an Economy of Transition: Developments and Impacts on the Czech Economy. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-01-046

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The long-lasting problems of the Czech economy, which have become apparent since 1996, have their roots in the behavior of a significant part of the domestic enterprise sector. These problems were called into being by a very intensive, nevertheless deeply non-standard mass privatization. The authentic (generic) private sector cannot be based on a command coming from the upper hierarchies of the social organization. It can arise only from gradual acts at the level of economic agents making their decisions autonomously at the grass roots of the economy. Soft market environment set by the Czech mass privatization policies was counter-productive for the development of entrepreneurial activities as defined by Schumpeter. The lobbies of pressure groups, defending the privileges of former socialist corporations, became dominant in shaping Czech politics, fiscal and banking economic policies and the build-up of economic institutions. The authentic private sector that evolved mainly from small and medium-sized enterprises was driven from its start to a position of an outsider.

Notwithstanding the lack of government support, market imperfections, bureaucracy and failing judiciary, the sector of newly established businesses has shown a high degree of viability and at the end of the 1990s it became a dominant player on the market side of the Czech economy. The future of the Czech economic development cannot be separated from the situation in both the enterprises under foreign ownership and the small and medium-sized firms under indigenous owners. The economic policy-making should be based on these facts and provide for the requirements of these two progressive segments of the Czech authentic private sector. This also implies that merits of mass privatization should be subject to a fundamental overhauling on both the academic and the economic policy sides.

Item Type: Monograph (IIASA Interim Report)
Research Programs: Economic Transition and Integration (ETI)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 02:13
Last Modified: 27 Aug 2021 17:17

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