open access

https://hdl.handle.net/2115/38929

Radical Structural Reforms and Enterprise Performance in the Kyrgyz Republic : An Institutional Approach

日本語

2000

北海道大学スラブ研究センター

Slavic Studies

47

37-69

During the initial phase of transition towards a market-based economic system after the collapse of the Soviet Union at the end of 1991, the Kyrgyz Republic enjoys a good reputation among several international financial organizations, including the IMF and the World Bank. For instance, this country is recognized to have been at the forefront in implementing stabilization and economic reforms among the FSU countries. However, a comparative analysis of transitional economies conducted by EBRD as of the middle of 1998 clearly shows that the advantageous position of the Kyrgyz Republic in the progress of systemic transformation mostly vanished in comparison with the other former Soviet republics. In particular, the delay in enterprise reform, namely in the sphere of improvement of the corporate governance and restructuring of industrial firms, is one of crucial problems which the Kyrgyz government now faces. It is a fact that the breakup of the centralized socialist economic system of the USSR became an important factor in hindering Kyrgyz industrial firms from overcoming the difficulties in restructuring the management system under the dynamic changes of macroeconomic conditions. But this factor is not sufficient to explain why enterprise reform has been so delayed in this country. Therefore, the article aims to scrutinize the process of structural reform of the Kyrgyz economy from an institutional point of view and to point out essential problems of enterprise behavior which the path of systemic transformation in this country involves. For comprehending a new institutional coordination regulating the performance of Kyrgyz industrial enterprises in the transitional period from 1991 to 1997, the author has paid special attention to next three important issues: The first issue is the decision-making process in forming the Kyrgyz-type radicalism for the implementation of the social-economic reform and its achievements in the sphere of the formal institutionalization of market-oriented enterprise behaviors and of free market transactions between economic entities. The second is an evolutionary process of industrial organization to be guided by privatization policy for the former Soviet firms. The third is a path-depending change in the industrial management system and the relations between the governmental organizations and the industrial firms. Analyzing these problems, the author stresses the importance of institutional complementarity for understanding enterprise performance in the transitional period. Because, even if the freedom of entrepreneurial action and market transactions were institutionally guaranteed by implementing the laws and decrees, we could not expect a "creative destruction" by business firms without a combination of competitive promoting industrial organization and an adequate state-enterprise relationship. Besides examining these three issues, the author conducts a microdata analysis on approximately 290 industrial firms in order to grasp the real situation of Kyrgyz enterprises during the period. The results of the analysis are to be used for verifying the important discussions and conclusions of the article. The main conclusions of the article are as follows: Since 1992, the Kyrgyz government has implemented a radical reform program directed by the strong political leadership of President A. Akaev. To this end, accompanied by many difficulties of structural reform, the government has liberalized prices and domestic trade, and deregulated the external economic regime such that is virtually free of state restrictions. It is agreeable that international financial organizations and some governments of developed countries rate their efforts highly in the liberalization of the economic system. In spite of this, looking at the other aspects of the structural reforms in the industrial sector, the author finds negative consequences of the evolutionary change in industrial organization and the state-enterprise relations. During 1992-97, a privatization policy comprising two phases was implemented. The privatization of state-owned firms has been regulated by the two Privatization Laws enacted in 1991 and 1993 and many government decrees and programs. Notwithstanding careful institutionalization by the government which experienced several failures in the first stage of privatization in 1992-93, the strong tendency to collectivization of privatized industrial firms by insiders could not be restrained effectively. And many stocks of privatizing and state enterprises have remained under the control of the State Property Fund (SPF) during the second phase of privatization. This has been caused mainly due to asymmetrical information between insiders of the firms and external investors and also to the bad management condition of the majority of the privatizing enterprises. Furthermore, examining the privatization process of industrial firms on a property basis, we could notice that, even after the completion of the two-stage privatization program, the state still possesses a lot of industrial property, including so-called strategically important enterprises, and a majority of the largest privatized firms. Consequently, the desirable evolution of industrial organization could not be observed in Kyrgyz industry during the period. In addition to the above, problems arose also from the change of the state-enterprise relationship. The main problem is an inadequate allotment of competence between SPF and other government economic organizations for controlling state-owned enterprises and privatized firms with high proportion of state shares. In the new management system of the government, it is unavoidable that interests of SPF and other organizations would contradict each other. Therefore, this new system may damage consistency in government behavior for industrial enterprise control. Subsequently, regardless of the great effort made by the Kyrgyz government to carry out radical economic policies towards the market-oriented economy, unsuitable institutional coordination has emerged in the process of structural reform. And many industrial enterprises sticking to this trap are not willing to proceed with the improvement of governance structure and management restructuring. Therefore, the Kyrgyz government has to endeavor to promote the privatization of large-scale industrial enterprises and to convert the current state-enterprise relationship to more adequate one.

紀要論文

Version of Record

0562-6579

AN0012574X