Privatisation of the Industrial Sector: The Function and Activities of the Treuhandanstalt.

The German Treuhandanstalt responsible for more than 12,000 East German firms has almost finished the world's fastest mass privatization by mid 1993. However, the results are gloomy; more than 60 percent of all workplaces under Treuhand regime were lost, deindustrialization took place, and the fiscal burden of the privatization agency will amount to DM 250bn in 1994, not including social costs. The article provides a critical review of the Treuhand strategy, the results, successes, and shortcomings of three years of intensive Treuhand activities 1990-93. An alternative strategy with a lower speed of privatization, emphasis on pre-sale restructuring and active industrial policy would have led to less unfavorable results. Copyright 1993 by Oxford University Press.