The Economy of Czechia
Voucher Privatisation and Transition
Czechia handed out vouchers to citizens to buy shares in state firms, quickly privatising industry but leaving weak governance.
Fast, but flawed.
Vouchers
Citizens bought cheap vouchers and exchanged them for shares.
Funds
Investment funds collected most vouchers and became owners of many firms.
Problems
Weak oversight allowed asset stripping, called tunnelling, and banks remained state-controlled and lent badly.
1997 crisis
A currency crisis exposed the weaknesses and forced reforms.
A voucher book
A citizen exchanged points for shares in a factory.
Believing speed always equals success
Weak institutions cause problems.
Key takeaways
- Vouchers privatised industry quickly.
- Funds held many firms.
- Tunnelling stripped assets.
- A crisis in 1997 forced reform.
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