A study of the voucher privatization in Armenia. Privatization: neither panacea nor poison

Abstract

In any transition from a centralized economic system to a market economy one of the most important steps for governments is the privatization of large and medium-size enterprises, with the goals of improving enterprise management, efficiency and competitiveness. This essay examines the privatization process in the Republic of Armenia. In particular, it focuses on voucher privatization in Armenia from 1995-1998. The essay begins with explanations of what mass privatization is and what voucher privatization is. It then discusses the transition from a command economy to market economy in Armenia. Finally, the essay identifies advantages and drawbacks of voucher privatization. Privatization is neither panacea nor poison. The essay stresses that case-by-case privatization strategy that was adopted by the government in the end of 1998 in Armenia was more preferable approach than was voucher privatization. It also points out, that when public enterprises are privatized, these companies, the private providers of public services, must be continually monitored and held accountable by the government to make sure that they serve in the public interest.