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So firms were kept alive at any cost, including cheap credit, subsidies, tax breaks and the like; they operated under "soft budget constraints", in the phrase of Janos Kornai, the path-breaking Hungarian economist who predicted and explained this pathological condition.Knowing the government would always bail them out, state enterprises acted accordingly.
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Mr Klaus's bold sale of state enterprises and his refusal to bail out unsound financial institutions with taxpayers' money are both highly laudable.
Hundreds of state enterprises were privatised.
President Lukashenko has steadfastly opposed the privatisation of state enterprises.
Another source of concern is the number of contracts being handed out to Chinese state enterprises.
In response, the government banned management buy-outs of large state enterprises.
In the 1970s and '80s, he also portioned out control over state enterprises to shifting networks of associates whose loyalty he needed.
Since then, the pendulum has swung back to strong state involvement, with quasi-monopolistic state enterprises crowding out private enterprise.
In those years, shares in state enterprises were handed out democratically to 98% of the Soviet population, from children to grandparents.
Strong private companies are also the quickest solution to the rising unemployment that will come as failing state enterprises throw droves of people out of work.
State enterprises have been given just three years to sort themselves out, even though it means sacking millions of workers.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com