Politics and Privatization in Central and Eastern Europe: A Panel Data Analysis

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Abstract
This paper examines how government ideology influenced privatization in Central and Eastern Europe after the transition from socialism. We analyze a dataset of privatization indicators covering small- and large-scale industries in 19 transition countries over the 1990-2007 period and introduce an government ideology index. The results suggest that market-oriented governments promoted privatization of small-scale but less of large-scale industries. In the rapid transition process in the early 1990s, leftist governments stuck to public ownership much more strongly than in the following period from the mid 1990s to 2007. The remarkable differences between leftist and rightwing governments concerning the role of government in the economy and basic elements of political order are in line with developments in OECD countries, and may also hold further implications for transition and democratizing countries outside Central and Eastern Europe..

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