Mass Privatization, State Capacity, and Economic Growth in Post-Communist Countries

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Mass Privatization, State Capacity, and Economic Growth in Post-Communist Countries

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Title: Mass Privatization, State Capacity, and Economic Growth in Post-Communist Countries
Author: Hamm, Patrick; King, Lawrence; Stuckler, David

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Citation: Hamm, Patrick, Lawrence P. King, and David Stuckler. 2012. Mass privatization, state capacity, and economic growth in post-communist countries. American Sociological Review 77(2): 295-324.
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Abstract: Why did the transition from socialism to capitalism result in improved growth in some countries and significant economic decline in others? Scholars have advanced three main arguments: (1) successful countries rapidly implemented neoliberal policies; (2) failures were not due to policies but to poor institutional environments; and (3) policies were counterproductive because they damaged the state. We present a state-centered theory and empirically demonstrate for the first time one of several possible mechanisms linking neoliberal policies to poor economic performance: mass privatization programs, where implemented, created a massive fiscal shock for post-communist governments, thereby undermining the development of private-sector governance institutions and severely exacerbating the transformational recession. We performed cross-national panel regressions for a sample of 25 post-communist countries between 1990 and 2000 and found that mass privatization programs negatively affected economic growth, state capacity, and property rights protection. We further tested these findings with firm-level data from a representative survey of managers in 3,550 companies operating in 24 post-communist countries. Within countries that implemented mass-privatized programs, newly privatized firms were substantially less likely to engage in industrial restructuring but considerably more likely to use barter and accumulate tax arrears than their state-owned counterparts.
Published Version: doi:10.1177/0003122412441354
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:9637880
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