Whither State Ownership? The Persistence of State-Owned Industry in Postsocialist Central and Eastern Europe

Abstract

ABSTRACTAfter widespread privatization in the 1990s, the early 2000s witnessed the reemergence and consolidation of state owned industries in the postsocialist states of Central and Eastern Europe (CEE). To counter views that state owned industries have largely disappeared from postsocialist CEE due to extensive privatization, the paper demonstrates the continued economic significance of state owned industries across the region. The paper then offers a typology of state-firm relations and highlights differences in empirical cases of large state-owned firms that have emerged in the region, distinguishing between market-oriented and politicized firms. Finally, the paper develops a comparative, macro-level processual analysis accounting for the institutional and political factors that explain why some postsocialist states have developed state-owned industries that operate successfully in competitive markets while others have developed highly politicized state-controlled firm. It finds that political factors are what chiefly account for the emergence of successful state sectors in the region.