ABSTRACT

Since the fall of the Berlin Wall and the opening up of Communist nations, economists have promoted new ownership structures as a solution to the maximization of welfare and a way of introducing market forces into command economies. ey have advocated privatization in particular as the optimal means of achieving an increase in economic growth and li ing per capita income. Privatization is not the only means of reducing state ownership and control of enterprises. Economists have also touted public private partnerships and private fi nance initiatives as means of promoting economic and social development. However, regulators are still intensely debating whether privatization and other ownership structures, which are not totally dependent on state ownership and control, achieve such goals or in fact cause a deterioration in welfare levels from those existing under a command economy. For instance Stiglitz (2002)* claimed that the International Monetary Fund (IMF) advocated such policies without considering factors vital to the suitability of such reform programs to a particular economy and society. Reformists did not understand the particular history, the social capital, the political institutions, and how political forces aff ected political processes (Stiglitz, 1999, p. 4).† Academics and other advisers have refuted Stiglitz’s trenchant criticism of development strategies, which rely largely on changing ownership structures, claiming success for such policies in China and Poland (Dabrowski et al., 2001). Dabrowski et al. (2001) point out that Stiglitz ignores the principal reasons for failure of these policies in Russia and fails to distinguish why these policies succeeded elsewhere.