SOAS Research Online

Abstract

Privatisation is a central theme in discussions over the transition process of previously centrally planned economies (PCPE). This study examines the developments in privatisation in Azerbaijan, one of the last republics of the FSU to embark upon the road of privatisation. The aim of research was to obtain first hand information on the privatisation process and to construct a qualitative, contextual picture of the power struggle over property rights. Part one establishes a theoretical framework under which privatisation in PCPEs can be evaluated. It establishes that privatisation can be seen as an instrument to build up a sound system of enterprise control and initiate industrial restructuring, and thus enhance static and dynamic efficiency. The success and effectiveness of this tool is dependent on various factors, especially (1) the evolution of institutional preconditions, i.e. the development of the political, legal, and financial framework and other fundamental institutions of a market environment; (2) the question of the power of the state, i.e. is it a strong state, with agenda-setting power, or a weak state, susceptible to counterproductive rent-seeking activities of insiders; (3) the proposed methods of privatisation; (4) the process of contracting for property rights. By applying the theories of privatisation in PCPEs developed in the first part, the second provides an account of the Azeri privatisation process and its likely effect on static and dynamic efficiency placing special emphasis on institutional preconditions. Because of the nature of the proposed research, especially in grasping the institutional dimensions of Azerbaijan's transition, intensive fieldwork was regarded as part of an appropriate research design. The analysis is based on original Azeri documents and archival records, transcripts of almost 127 hours of interviews, and extensive field visits carried out between December 1993 and February 1995.