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The most important thing that must be understood by anyone thinking about Eastern European privatization is that the word "privatization," although correct, is somewhat misleading. It is misleading because it brings to mind the operations performed in many other countries where state-owned companies have been sold to private individuals. It is very important to understand that the significance of privatization and the practicality of privatization in Eastern Europe are quite different. The most important thing is that the main task of privatization is not to transfer ownership from one party to another-like that successfully done in England-but rather to create a market economy. This is something very new, whereas privatization in England relied on the existence of market institutions.

State companies that the British government privatized operated within a system of free prices. One could easily trace past income from their books. They operated under a scheme that required their books to reflect real costs and revenues. There was a proper accounting system, which allowed analysts to get an idea of the health of the companies.


Business Organizations Law | European Law | Law