New Private Enterprises in Three Transitional Contexts: Central Europe, the Former Soviet Union and China

Abstract

This article compares the new private businesses that have been created in three transitional (from communism) contexts: Central Europe (Hungary, Poland and Slovakia), the former Soviet Union (Armenia, Georgia and Ukraine) and Asia (China). There have been major differences among these world regions in the contexts created for the development of new enterprises: in the pace of change, the extent to which state control and the rule of law have been maintained or created, whether there has been economic growth, decline or stagnation, the degrees of political continuity and the length of the communist period. Despite the contrasting contexts, there have been many similarities in the characteristics of new private businesses, but alongside some major differences: in the types of business with which beginners have usually commenced, the match with their specialities, whether self-employment has normally been a full-time or part-time occupation, whether or not the state has been perceived as basically supportive, in uses of the second economies and bribery, and whether sole proprietorship or partnership has been the normal initial business arrangement. It is concluded that there are just two essential conditions for successful transition (as regards the development of small business sectors): economic growth and the rule of law. Thereafter everything seems to depend on creating a favourable configuration of conditions which, our evidence suggests, is most likely when countries have maximum scope to plot their own transitional routes. It is argued that imposing one allegedly correct approach will usually be counter-productive.