Privatisation in Eastern Europe: A comparative study of Poland and Hungary

Abstract

FOR HISTORICAL REASONS privatisation became an issue in Eastern Europe first in Hungary and in Poland. In these two countries orthodox communism was forced to make major concessions in the field of ownership earlier than in any other country in the region. In Poland an organic privatisation started as early as the late 1970s, when the small private sector started to boom while the state-owned enterprises continuously lost their potential to expand.1 In Hungary the early 1980s experienced an explosion of small private business.2 These countries were also the first in which the last communist governments consciously announced a privatisation programme. We are still at the beginning of this major historical transformation, although some empirical evidence of privatisation is already available. The purpose of this study is to take the risk of an early comparative assessment of the privatisation process in the two pioneering countries in this respect. At the outset the definition of privatisation adopted must be made clear. I am using the notion here in the broader, more 'economic', as against 'juridical', sense. That means that I will regard all forms of expansion of the private sector in the national economy (conventionally measured by its share in GDP) as part of the 'privatisation process', whereas for a legal analyst formation of the legal frameworks for this expansion is part of the story, while practical implementation is not. The distinction is a question of definition but it has a real importance when we look at the problem of informal obstacles to privatisation, like bureaucratic resistance. We are interested in analysing the real conditions for expansion of the private sector in the post-communist countries.