Privatization, Competition, and Budget Constraints: Disciplining Enterprises in Russia |
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Authors: | John S Earle and Saul Estrin |
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Institution: | (1) Upjohn Institute for Employment Research, 300 S. Westnedge Ave., Kalamazoo, MI 49007, USA;(2) Department of Economics and Labor Project, Central European University, H-1051 Budapest, Hungary |
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Abstract: | We investigate whether privatization, competitive forces, and the hardening of budget constraints played efficiency-enhancing
roles in Russia in the immediate post-privatization period. We find evidence of a positive impact of privatization on labor
productivity: a 10% point increase in private share ownership raises real sales per employee by 3–5%. The evidence on product
market competition is weaker, depending on model specification. Soft budget constraints are usually found to reduce restructuring
but the effect is small and insignificant. We find that in terms of their impacts on productivity, privatization and subsidy
reduction are substitutes; privatization and competition (measured as the geographic scope of markets) are complements; and
that competition and subsidy reduction are independent.
This revised version was published online in August 2006 with corrections to the Cover Date. |
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Keywords: | competition enterprise performance import discipline market structure privatization Russia soft budget constraints subsidies transition |
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