Privatisation in Lithuania: Expectations, Process, and Consequences.” Heriot-Watt University CERT Discussion Paper No

The primary emphasis of Lithuania’s economic transition policy has been placed on the restructuring of ownership relations. Lithuania chose one of the most ambitious methods of privatisation compared to other countries in Central and Eastern Europe, privatising two-thirds of state property. The process of privatisation, is the backbone of the Lithuanian transformation process and has a significant impact on the general economic development of the country, the creation of a competitive business environment, and the development of a system of corporate governance and securities market. The paper aims to shed light on the nature and efficiency of the privatisation process, on the emerging problems, obstacles, and results of the privatisation process. The arguments supporting the distributional model of privatisation and the socio-political preconditions and consequences are also analysed. It is argued, that the transfer from public to private ownership brings efficiency related changes in the way a company is run. Private companies are less subject to political interference, and should be more subject to the discipline of commercial and financial markets. After privatisation, problems of enterprise capitalisation and restructuring still remain. The aims of social equity and justice, promoted at the start of privatisation, were not achieved. As a new stage of privatisation (for cash) begins in Lithuania, an analysis of the first stage of privatisation should prove useful in the preparation and implementation of a new model of privatisation. JEL Classification: D 40, K 21, L33