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Privatization is one of the ways governments consider to dispense with the consequences of governmental economy in the economic reforms. One of the complex matters that governments face is decision-making in privatization and choosing policies and methods that move the country’s economy toward more efficiency. Considering the importance and complexity of this issue, taking a comprehensive strategic perspective by the policy makers seems necessary for establishing successful privatization.

Article 44 of the Islamic Republic of Iran’s constitution is the foundation of its privatization program and this study specifies the strategic requirements in implementation of privatization based on the mentioned article and other legal documents. Iran Privatization Organization (IPO) is the single executor of the program and we surveyed all members of the statistical population of this study, including all experts, supervisors, managers, deputies, and senior advisers of IPO to collect the required information by a questionnaire with some questions including strategic thinking, requirements, and results.

To analyze the data, at first, validity and reliability of the collected data, then the correlation between strategic thinking and requirements were tested and all strategic requirements of privatization were prioritized. We used tests such as Cronbach’s Alpha, Pearson Correlation Coefficient, Linear Regression, and Friedman to perform the study.

The first step in the reform of the Romanian enterprise sector after the collapse of communism was the commercialization of state enterprises. This was completed by 1991. Two types of enterprises were established: regies autonomes and commercial companies. The regies autonomes were legal entities with the social capital owned by the state. This legal status was restricted to enterprises that were “natural monopolies or of public interest or essential for national defense and security.” The governance of regies autonomes of national importance was the responsibility of the ministries, while the governance of regional regies autonomes was devolved to local authorities. The commercial companies were mainly joint stock corporations and about 6,300 of them were incorporated between 1990 and 1991. Their social capital was split between the state-ownership fund (SOF) and five private-ownership funds (POFs, latter called PIFs). Table 1 presents the structure of state holdings at the beginning of privatization in 1992.

In 1993, the author labeled “Privatization: The Theme of the 1990s.”¹ This may or may not be true in the developing world but it was certainly accurate for the CEE and the CIS. Privatization was central to the structural reform that has taken place in the region and it is central to the creation of a market economy.

In theory, the method employed to transfer ownership from public to private hands is a secondary concern. But when the legal-institutional environment is weak, the method of sale matters greatly. The experiences of the transition economies have taught us that different forms of sales methods produce very different types of owners, who vary greatly in their commitment to, and ability to carry out restructuring (meaning the changes required to allow the firm to survive in a competitive market setting). The method of privatization is thus an important factor in determining¹ an efficient allocation of ownership rights.

The distribution of state property to the private sector has always been and will continue to be intensely political. Relinquishing hiring, production, investment, and other enterprise decisions constitute a significant loss of potential rents to those who exercise control rights in state-owned enterprises. Additionally, the large transfer of wealth that privatization on a large-scale entails, combined with the potential for unemployment, loss of access to enterprise-based social services (which were substantial in state-socialist economies) threatens to undermine public support for privatization and reform in general.

Russia's size – both in terms of population and geography, spanning 11 time zones, 89 oblasts (states or regions) and autonomous republics and its privatization program, encompassing some 100,000 small-scale enterprises, 25,000 medium to large firms, and 300 or so of its largest firms, made its privatization program the largest sale/transfer of assets conducted among the transition economies, with the possible exception of China. Comparisons by many of the program's critics, and there are many, to Poland, Hungary, or the Czech republic are invidious, especially the latter two countries whose populations are similar to just that of greater Moscow.

This chapter analyzes the early post-transition privatization and enterprise reform efforts of three major countries: Poland, Czechoslovakia (subsequently the Czech Republic), and the Soviet Union (subsequently Russia). For each, it discusses the prevailing ideologies of key decision makers and their external advisors prior to and during the transition process, the initial conditions faced by reformers and advisors, the policy frameworks that evolved, the results achieved, the mistakes made, and the opportunities missed. The ultimate conclusion is that while privatization could have and probably should have been done better, it nonetheless had to be done. The Czech Republic and Russia, and others in the region, are better off after the flawed privatizations they carried out than they would have been had they avoided or delayed divestiture. Poland, which did quite well at first in the absence of mass and rapid privatization, now finds itself burdened with a number of expensive and unproductive state firms. This chapter shows how and why these outcomes came about, and discusses the role of external advisors in the process.

This chapter is intended to provide the reader with information and insights on the transition or transformation from socialism to a market economy in what are generally termed the transition economies. This includes countries in Central and Eastern Europe (CEE), the Commonwealth of Independent States (CIS), sometimes referred to as the Former Soviet Union (FSU), the South East European (SEE) countries, sometimes referred to as the Balkans and the major socialist economy of Asia, China. The chapter covers the critical years of reform for most of these countries, from 1990 to 2000. Some transition economies started reforming earlier, such as China which has continued state-owned enterprise (SOE) reforms to the present time. Other transition countries, primarily the SEE economies, lagged due to the conflict which raged throughout most of the region and the period of isolation which followed, particularly for Serbia. China and Serbia are sui generis for a number of reasons. They will be referenced as examples in this chapter, but they will not form part of the core statistical and data analysis.

The paper examines the overall results achieved in the area of privatization in Serbia, as the largest part of the Serbian-Montenegrin economy. The privatization process in Serbia during the 1990s is described in some detail, including the various pieces of privatization legislation (adopted in 1989–1990, 1991, 1994, 1996, 1997), and the overall results achieved, which have been extremely poor: by late 2000, less than 40% of the country’s Gross Material Product was produced by the private sector. The main problems of corporate governance are also discussed in some detail, having in mind the specific situation in Serbia characterized by the maintenance of the ambiguous system of “social property.” The most recent privatization phase started after the political changes in late 2000, and marked a fundamental change in the approach, away from sales at privileged terms to insiders implemented throughout the 1990s, towards commercial sales to strategic owners, at tenders and auctions. The main achievements and shortcomings of the new strategy are discussed.