Czech Approach to Transformation Gradualism X Shock Therapy

Czech Approach to Transformation Gradualism x Shock Therapy  Accepted Transformation Strategy

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Shock Therapy

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Voucher (Coupon) Privatization

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A Specifically Czechoslovak Approach

Critical Remarks  Theoretical Concepts Linked with Critical remarks

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Gradualism x Shock Therapy Gradualism – restructuring first, thereafter gradual privatization by standard methods  Shock Therapy – mass scale privatization before restructuring, unstandard privatization methods necessary because of the lack of financial capital

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Accepted Transformation Strategy

Shock Therapy  Prepared by a team organized by Vaclav Klaus (current President)  Backed by Washington Consensus (International Monetary Fund´s (IMF) medicine)

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Fiscal Austerity  Privatization  Market Liberalization

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Accepted Transformation Strategy

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Transformation Rules: (Vaclav Klaus 1994)

Transformation is neither modernization, nor restructuring, nor the financial stabilization of individual firms, because all these are posttransformation tasks

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Accepted Transformation Strategy

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Systemic change is primarily and mainly about privatization. Systemic change has its

macroeconomic, liberalization and deregulation dimensions

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Privatization during transformation is different from privatization in the West  Mixture of standard and non-standard methods  A different role of the price of privatized firms (and privatization revenues) and different ways of evaluating privatized firms

Accepted Transformation Strategy

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The key task is looking for an owner who will perform post-privatization restructuring, not for a state bureaucrat who will restructure the firm before privatization Minimizing the period of pre-privatization agony, because no method exists to rationalize behavior of firms waiting for privatization

Accepted Transformation Strategy

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Macroeconomic, liberalization and deregulation dimensions

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Basic macroeconomic...