Essays on enterprises in transition: How policy-makers in the reforming socialist economies can affect enterprise behavior

April Lynn Harding, University of Pennsylvania


In this dissertation, I have examined the issue of how post-socialist governments can positively influence the course of economic adjustment in transition, in particular, with regard to their ability to affect the behavior of enterprises. A fundamental component of reforming enterprise behavior is privatization. Given the large absolute size of the state sector, a critical step on the road to a market economy must be the transfer of the bulk of these enterprises to private hands. The first essay, "Small-scale Privatization in Central Europe: Lessons for Russia", and the second, "Reform in the Russian Enterprise Sector in 1992", are focused on this issue. A particular effort is made to explore the conditions under which these privatization programs must be implemented and the resulting constraints on their implementation. In the final essay, "Barter and Non-monetary Wage Payments in the Russian Economy" the implications of the incidence of barter and other non-monetary forms of payment are explored. The transactions costs borne in trade of goods are apparent. Less obvious are the costs in terms of enterprise responses to a regime where trade in non-monetized. If barterable goods are needed to conduct operations (pay workers) and trade, then enterprises will adjust production accordingly. The implications for enterprise adjustment in transition are particularly damning. Since barter became even more widespread after liberalization, the incentives to shift production into more barterable goods increased as well. Thus, just when reformers are trying to move towards a rationalization of production, forces are created to push the other way. This result strongly underlines the significance of quickly locating and empowering new owners for the enterprises who will restrain wages and other costs, so that the government won't need to do so, with all the associated costs.

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Recommended Citation

Harding, April Lynn, "Essays on enterprises in transition: How policy-makers in the reforming socialist economies can affect enterprise behavior" (1995). Dissertations available from ProQuest. AAI9532192.