Self-Evaluation"
BY: JANOS KORNAI
Harvard University
Department of Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=235875
Contact: JANOS KORNAI
Email: Mailto:jkornai at harvard.edu
Postal: Harvard University
Department of Economics
Littauer 222
Littauer Center
Cambridge, MA 02138-3001 USA
Phone: 617-495-1236
Fax: 617-495-7730
ABSTRACT:
The book discussed several topics; the paper presents an
evaluation of two issues only. As for ownership reform, there
were alternative strategies suggested at that time. Strategy A
recommended organic development: creating favorable conditions
for bottom-up development of new entries; sale of state-owned
firms, avoiding give-away schemes; and hardening the budget
constraint. Strategy B proposed accelerated privatization,
putting the emphasis on quick elimination of state-ownership.
The main instrument was to give away state property (e.g. via a
voucher-scheme), and shifting ownership into the hands of
managers. "Road" suggested Strategy A, but the majority of the
Western economics profession supported Strategy B. Experience
seems to show the superiority of Strategy A. The author is less
satisfied with the suggestions presented in the book for a
stabilization program. The main weakness was the one-sided
attention paid to short-term adjustment measures without
sufficient elaboration of the profound institutional changes
needed for sustainable stability.
JEL Classification: G34, L33