Differences in the privatization of the Baltic countries and Central Asian countries

In 1991, Estonia, Latvia and Lithuania, as well as Turkmenistan, Uzbekistan and Tajikistan was separated from his future fate of the dying Soviet Union. These two groups of countries have a similar background and at the same time gained independence. Despite the fact that they gained independence in the same time the economic development of different countries.

After the collapse of the Soviet Union, most countries have begun the process of privatization. In Lithuania, Latvia and Estonia, the privatization process was successful. After twenty years, these countries have become successful European countries.

In Uzbekistan, Tajikistan and Turkmenistan, there was the opposite situation. The privatization process was transparent to these countries. The fact that in these countries still authoritative mode. Basically, all the major state-owned enterprises or individuals close to the leader of the country.
The process of disintegration of the Soviet Union received concrete expression in a symbolic date: December 25, 1991. Leave aside the complicated mechanism of the transfer of government functions and note only that on this day the Soviet flag was waved for the last time in the cold wind of the Kremlin before his final descent. The collapse of the empire took a long period of time; it is at this stage of the decline of the USSR entered the transition of Estonia, Latvia and Lithuania on the status of Soviet Socialist Republics to the status of independent states, which remained after the formation of the Commonwealth of Independent States (CIS), which reunited the remaining 11 countries that made up the Soviet Union.
After the collapse of the USSR, One of the main objectives of privatization was the return of nationalized property in Soviet times, its owners or their descendants. Before starting the privatization of the 1993 Act “On the Law of Property” and “On land register” was the reformed system of property rights and the registration of rights to immovable property, a sample was taken Torrens title system with an open registry.
The privatization of small enterprises took place relatively smoothly, most of them were sold at auction. By 1992, almost 50% of enterprises have been privatized, in 1995 about 90%, 100% in 1997.

Privatization of large-scale industry was carried out on the model of «Treuhand-model», ie the company sold through an international tender to the majority investor. In 1992, it was established the Estonian privatization agency, which is engaged in the sale of property, both domestic and foreign buyers. By the end of 1994, the program has sold 192 companies for $ 100 million, about 40% of state-owned companies were sold to foreign companies or joint ventures with foreign investors. European economists usually consider the Estonian model of privatization more effectively than Lithuanian. As a result, enterprises are faced with a choice – either privatization or liquidation, which accelerated the transition to private ownership. In Estonia, it was limited to participate in the privatization of non-citizens, who are often subjected to layoffs in the first place.

By the mid-1990s privatization was almost completed. The state-owned were only the largest enterprises. Since 1999, the private sector was responsible for 75% of production in the country.
Latvia has launched a vast program of privatization and price reform, the creation of new banking and financial system, a revision of economic legislation have been initiated in the autumn of 1991. Spring of 1992, the liberalization of most prices (except for the price of basic food products, and rent) was carried out. To mitigate the consequences of the reforms, the government initially prevented the closure of plants and granted state subsidies. It is allowed to keep an acceptable level of quality of life by indexation of salaries, increase benefits to pensioners and other low-income population. However, as the implementation of the reform agenda and increased the unemployment rate (from 4.5% in 1994 to 12.5% ​​in 2002, a similar situation occurred in neighboring Poland, where unemployment has reached a record 20%).

In Lithuania, the privatization passed two stages.
land privatization
Privatization is a key link in the transformation of the economy, but it is complicated by the problem of restitution of property (especially land), confiscated by the Soviet government. Conflicts of interest of today’s farmers and historical landowners were partially resolved by allocating all interested farmers of small plots of public land in the property. During the reform of state agricultural enterprises (state farms kolkhozy) were dissolved, and the number of private farmers has increased from 7 to. In 1991 to 73 thousand. In 1993. By 1995, almost all the farm belonged to private individuals.

Pervaya- industry Privatization
The privatization of industry proceeded with less difficulty. The state retains control over strategic industries but planned to privatize 71% of state property through the sale of large enterprises open subscription for shares. By 1995, it was privatized 48% of large and 45% of small businesses. Until mid-1992, the privatization allowed only domestic investors, who had special vouchers. Most of the privatized enterprises amounted to service industries and small industrial enterprises.

The second stage of privatization
The second stage of privatization started in 1996 with an exchange of shares for cash on a competitive basis to foreign investors. In 1996-1997, this method was privatized 158 enterprises, and the share of foreign capital was already 79%. By the end of 1998, President Adamkus introduced a new law on privatization, providing a commercial agency for privatization. By 1999, it was put up for sale in 1098 medium and the 14 largest companies, from oil-producing companies and ending with the Center for public radio and television and the Baltic shipyards, which were purchased by Danish investors.

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