Recent Developments in the Short-term Employment in Kazakhstani Firms
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Recent Developments in the Short-term Employment in Kazakhstani Firms YELENA KALYUZHNOVA1, MARIA VAGLIASINDI2 & MARK CASSON1 1 The centre for Euro-Asian Studies, The University of Reading, Whiteknights, PO Box 218, Reading, UK. E-mail: [email protected]; 2 European Bank for Reconstruction and Development, London, UK
The paper analyses data from the survey of 701 Kazakhstani firms over a nearly 2-year period from the second quarter of 1998 through the fourth quarter 1999, making it possible to examine employment changes for period prior to, during and following the Russian financial crisis of August 1998. The survey reports the major constraints on productivity growth and market penetration facing enterprises in transition. In addition, the predictions of the theoretical propositions of the employment behaviour of firms in transitional economies are tested by cross-section regressions. The results indicate that changes in ownership per se did not cause a significant difference in the behaviour of newly privatised enterprises in Kazakhstan. However, there is some evidence of a differential effect of privatisation on export-oriented enterprises. This is reflected in differential responses among the enterprises that were most exposed, through their trade linkages, to the recent Asian and Russian financial crises. Comparative Economic Studies (2003) 45, 466–492. doi:10.1057/palgrave.ces.8100033
Keywords: ownership, employment adjustment, enterprise behaviour JEL Classifications: D3, H3, P2
INTRODUCTION Up to the first half of the 1990s, it was widely claimed that the privatisation of enterprises in a transitional economy should improve productivity and enhance national economic performance. This claim reflected an underlying assumption that state-owned enterprises are inefficient. This inefficiency is usually attributed to the distortion of management incentives under state
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ownership. The economic literature comparing public and private ownership to assess the desirability of (alternative types of) privatisation suggests that public ownership can be preferred to private ownership only under a restricted set of conditions.1 Particularly for transition economies, this might not be the case, since budget and regulation can be arbitrarily manipulated, corruption is widespread and (capital and financial) markets work imperfectly with the risk of tunnelling. Moreover, transition economies present other challenges, as privatisation methods have not followed a unitary path but varied extensively, so that an additional issue to address is which type of privatised firms will behave in the most similar way to private firms. The role that the State and policy makers can play in designing appropriate privatisation methods can be crucial and depends on the specific institutional settings. Privatisation methods and design play a primary role in a successful privatisation policy, because, determining private ownership structures, crucial
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