Privatization in Czechoslovalia and Its Role in Economic Reform
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For the past two years the Czech and Slovak Federal Republic has been a country faced with great challenges and changes. The objective is to erase all marks of communism within their society. In the political arena, changes have come rather quickly, establishing a democratic government for the people. In the economic arena however, the challenges have been much more complex. For Czechoslovakia, economic reform has meant a two fold challenge; establishing framework for a free market economy, while at the same time having to deal with the existing economic disrepair left by the command economy. To get a better understanding of present day economic conditions, this paper briefly expands upon the events which have lead up to and caused such conditions. Once one of the most industrialized nations in Europe, Czechoslovakia's weak political structure gave way to communist domination and eventually Soviet occupation. Under this communist state, Czechoslovak enterprise and financial structure became obsolete and inefficient. Years of disintegrating economic conditions and growing dissent resulted in a successful revolution, establishing the present day state. The newly established government has shown its commitment to reform through legislation, guidelines and the creation of task ministries to oversee reforms. As presented in this paper, reform has been divided into four major tenants: 1) Price liberalization 2) trade liberalization J)Financial sector and 4) privatization. While all points are crucial to reform, privatization is a central means of bringing about a successful market economy. Privatization in Czechoslovakia means distributing nearly all enterprises to the private sector in order to give the economy back to the people. Plans for privatizing enterprises have been created, but the difficulty now lies in the limitations of the economy and the uncertainty which lies ahead. While this paper presents the importance of privatization, it also discusses how other factors in reform come into play. Taking all of this into consideration, this paper gives a broad view of the challenges facing the implementation of reform and how these changes are affecting the society.