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Privatization Task Force Meeting, New York City 2004

June 26, 2004

Columbia University   New York City, New York, United States

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The Privatization Task Force convened its second meeting at Columbia University. Members used this forum to present and critique one another's Task Force papers. Five articles, each covering a different region, including Western Europe, Eastern Europe, Africa, Latin America, and Asia, and one piece on privatization theory were reviewed. The meeting concluded with a discussion on how to best structure and frame the papers in an IPD publication due out in spring 2005.

  • Bernardo Bortolotti
    Task Force Member
    Professor
    Fondazione Eni Enrico Mattei
  • Nandini Gupta
    Task Force Member
    Assistant Professor of Finance
    Kelley School of Business, Indiana University
  • Jan Hanousek
    Task Force Member
    Director
    CERGE, Charles University and the Economics Institute
  • Valentina Milella
    Task Force Member
    Head of Communication and External Relations
    Fondazione Eni Enrico Mattei
  • Gerard Roland
    Task Force Chair
    Professor in Economics and Political Science
    University of California, Berkeley
  • Jan Svejnar
    Task Force Chair
    James T. Shotwell Professor of Global Political Economy; Director, Center on Global Economic Governance
    School of International and Public Affairs, Columbia University
Growth, Initial Conditions, Law and Speed of Privatization in Transition Countries

874kb pdf
Joseph Stiglitz,
Sergio Godoy

This paper examines alternative hypotheses concerning the determinants of success in the transition from Communism to the market. In particular, we look at whether speed of privatization, legal institutions or initial conditions are more important in explaining the growth of the transition countries in the years since the end of the Cold War. In the mid 90s a large empirical literature attempted to relate growth to policy measures. A standard conclusion of this literature was the faster countries privatized and liberalized, the better. We now have more data, so we can check whether these conclusions are still valid six years later. Furthermore, much of the earlier work was flawed since it did not adequately treat problems of endogeneity, confused issues of speed and level of privatization, and did not face up to the problems of multicollinearity. Our results suggest that, contrary to the earlier literature, the speed of privatization is negatively associated with growth, but it confirms the result of the few earlier studies that have found that legal institutions are very important. Other variables, which seemed to play a large role in the earlier literature, appear to have at most a marginal positive effect.