Rapid and multifaceted privatization: Experience of the Czech and Slovak Republics

Like the other formerly communist countries, Czechoslovakia commenced its transformation process from a position of extreme state ownership of the economy. Czechoslovakia was in fact exceptional in that the extent of etatization was greater than in most other socialist economies - only 1.2% of the labor force, 2% of all registered assets and a negligible fraction of the nation's GDP belonged to the private sector in 1989. This low share did not change very much in 1990, when official statistics still attributed only 4% of GDP to the private sector. As can be seen from Table 1, in 1992 the private sector started to grow rapidly in retail trade and construction, mostly as a result of restitutions and small scale privatization. In contrast, industry remained predominantly in state hands throughout the first half of 1993 and it was not until the second half of 1993 that the share of private ownership in industry increased as a result of the massive transfer of shares of enterprises in the large scale privatization program