chapter  4
24 Pages

The Hungarian case

ByMIHALY LAKI

Privatization in a narrow sense is the transformation of state-owned assets (even whole companies) into privately owned ones. Privatization in a broader sense is measured by the growing share of the private sector in the national economy. The share of the private sector is increasing not only through the privatization in the narrow sense defined above, but also through the establishment and expansion of newly established, or de novo, firms (Kornai, 1992b). How important is the interaction between the two processes in the creation of a dominant private sector? Are the new private businesses the main source of economic dynamism and structural change in post-communist Hungary or are the privatized (previously state-owned) companies the engine of the economic recovery of the last years? This chapter is an attempt at an answer.