chapter  6
34 Pages

Enterprise reform and restructuring

We now turn our attention to microeconomic reform, aimed at improving enterprise efficiency and performance. Here we examine reform at the enterprise level, and, in particular, issues relating to restructuring and privatisation.1 The main elements of enterprise reform and restructuring are ownership change and privatisation, corporate governance, hardening the budget constraint, competition and demonopolisation, and SME development and entrepreneurship, and each of these will be discussed separately. The empirical literature on the determinants of enterprise performance is then presented. We begin, however, with the legacy of central planning for enterprise reform and, in particular, we examine the basic production unit of the traditional centrally planned system, namely the state-owned enterprise (SOE).