Privatization in Europe: West and East Experiences.

• Author: Gronberg, Timothy J.

The political and economic reform movement in Eastern Europe has provided economists with a remarkable opportunity for major social experimentation. The "what ifs" which have intrigued comparative systems researchers are now potential realties, and academic arguments have become hot applied policy debates. In this volume, Targetti has compiled a series of essays on theoretical and applied issues concerning the process of privatization. Most of the papers were presented at the Conference of the European Association for Comparative Economic Systems held at Trento University in 1991. Others were commissioned post-conference.

The authors, who are almost all based in Europe (both Western and Eastern), bring a variety of perspectives to the exercise. Both academic economists and government economists are included among the writers.

The book is divided into four sections. Parts I and II both deal with broad issues concerning the relative roles of the State and the private sector in Eastern Europe. Part III provides analysis of the privatization experiences in France and England. Part IV includes more narrow, case-specific discussions of privatization in Czechoslovakia and Hungary.

The three papers in the opening section discuss some generic issues in both the positive and the normative analysis of economic systems. Robin Marris identifies five stereotype economic systems and provides a listing of potentially relevant and distinguishing characteristics of each system type. The chapter reads like the outline of a set of lecture notes, with little in the way of clarifying discussion. Roberto Tamborini brings a Simon/Hayek perspective on the impact of restricted rationality, imperfect information and knowledge, and residual uncertainty on the establishment of market relationships as well as upon the functioning of established markets. An elementary and somewhat dated discussion of private market sector failure and public sector failure is provided by Alastair McAuley. The suggested lessons for privatization in this article, i.e., create contestable markets, beware of potential private market failure, beware of potential public sector failure, are too broad and too trite to be of much value in the privatization debate.

The second set of four papers presents a variety of proposals for privatization in Eastern Europe. The best of these papers, written by Frydman and Rapaczyhski, discusses the relative merits of privatization via asset sales and...