| Privatization has been widely regarded as a “panacea” for the prevailing economic crisis in previously centrally planned economies (PCPE’S). Based on the alleged superiority of private ownership, the literature on privatization has largely ignored the definition of property rights and their formation. The question raised in this article is, why it is that the existing set of property rights cannot easily be replaced with one that is more conductive to economic recovery. The answer lies in the institutional changes that are necessary and which, in turn, lead to complex processes of contracting for property rights. These institutional requirements are discussed in the context of Azerbaijan and it is argued that the deficiencies of the institutional framework in this and other PCPE’S have not been adequately taken into account either in the privatization literature or in the privatization process itself. As a result, the process of contracting for property rights has not led to the establishment of appropriate enterprise control mechanism or the initiation of major industrial restructuring. |
|
