Lessons from the Czech Transition: An Inspiration for Iraq?
|Author(s):|| doc. Ing. Ondřej Schneider MPhil., Ph.D., |
|Type:||IES Occassional Papers|
|ISSN / ISBN:|
|Published in:||IES Occassional Paper 1/2004|
|Abstract:||This paper was written on invitation from the U.S. Department of State to prepare a paper describing the Czech experience during the transition process and addressing issues that might be applicable to the rebuilding of Iraq. The aim of this paper, thus, is not to provide an extensive and complete overview of the Czech transition experience. Rather, we focus on several issues that may be relevant in the Iraqi context.
We first discuss the privatization methods used in the Czech Republic and their merits. Then we study the financial sector developments, namely dominance of large banks and absence of significant equity market. We show how the Czech transition was tarnished by rampant corruption and how the interplay between the weak financial institutional basis and widespread corruption led to escalation of privatization costs. These costs influenced public budgets, but we show that budgets are threatened more by too generous social benefits that destroy working incentives. Lastly, we discuss the Czech experience with the environmental damage left by the previous regime and policies employed to deal with it.
OP 2004_1 Schneider