The Big Sell: Privatizing East Germany's Economy

Privatizations Spark Socialist Backlash: Evidence from East Germany's Transformation

“…Both samples assume that firms not in our survey are missing at random to rule out selection bias in the former and imputation bias in the later. As mentioned above, Mergele et al (2020) provide some supportive evidence of this assumption.…”

“…Analyses on the immediate repercussions of the transformation and, in particular, privatization are relatively scarce, however. While the economic repercussions of privatization have received some scrutiny (Barberis et al, 1996;Collier and Siebert, 1991;Mergele et al, 2020), we are the first to show that privatization efforts led to an immediate resurgence of the former Socialist Unity Party as early as 1994. As such, we fill an important gap that explains the (semi-)successful transformation of Eastern Europe into democratic and capitalist societies.…”

“…Second, the Treuhand was criticized for prioritizing West German investors, even when East Germans put in a competitive bid. 51 percent of companies were sold to West German investors, especially the largest and most productive ones (Mergele et al, 2020). In some instances, the sales price amounted to a symbolic 1 Deutsch Mark.…”

“…We match this list with another registry and biannual surveys conducted since April 1991, both by the SOESTRA institute. Using these data sources,Mergele et al (2020) demonstrate that the surveys are representative for the whole universe of firms in terms of privatization status and federal state.…”

Committing to Grow: Privatizations and Firm Dynamics in East Germany

“…The data contains a total of 13,552 legal firm entities, out of which 93.3% are observed for the first time in 1990. 30 We complement the data with additional industry information from the SOESTRA survey (see Mergele, Hennicke, and Lubczyk 2020). The final data set is used in the analysis to study random assignment of firms to privatizers in Table 2, to calculate labor productivity growth between 1990 and the final commitment year in Table 4, market exit effects in Table 5, and to construct Figure A.3.…”