Structural transformation was supposed to begin at the same time as the ‘stabilisation-cum-liberalisation’ programmes. Its main building block was privatisation, which meant creating a greenfield private sector, and changing formerly state-owned enterprises into privately owned ones. Privatisation may also mean making existing state enterprises, either earmarked for further privatisation or remaining in state property, work as marketoriented firms, a process called marketisation or commercialisation in Central and East European countries. Reforms of the banking and tax systems, and creation of capital markets, were also among the first priorities of the policy-makers and advisers. Though most of the advisers also advocated the creation of a social safety net, which was meant to replace the former state ‘paternalism’, this is often seen as a ‘luxury’ in the East, as well as the safeguard of the environment. Labour-market reforms have been hard to conceive, as the old system was never confronted with an unemployment problem. Developing an industrial policy so as to organise an orderly dismantling of obsolete branches while providing for the growth of new sectors is still very low on the scale of priorities as it is generally identified with nostalgia for the old system.
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