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OECD Says More Focus Needed On Private Enterprise

  • Breffni O'Rourke

Prague, 28 March 1997 (RFE/RL) -- A report from the Organisation for Economic Cooperation and Development (OECD) says countries in transition must relentlessly focus their economic policies on the promotion of private enterprise.

The Paris-based OECD says that unemployment remains "disturbingly high" in Central and East Europe. Since the private sector is the main source of job creation, government's should place the greatest urgency on encouraging the development of a healthy private enterprise sphere. And it says incentives should be offered to people to take jobs, instead of remaining on unemployment benefits.

The OECD's report is entitled "Lessons from Economic Transition", and contains the conclusions of some of the world's top experts in post-communist economic transformation. It says the last six years have seen radical changes in a large part of the world, but that the difficulties the transition countries experienced has exceeded all expectations.

It says economic performance has varied significantly from country to country, with some showing more determination to maintain the momentum of reform. Those that chose the quick path have done better, it says, but there's been progress overall. Experience has been gained in these difficult first years which can help the countries improve their performance in future.

The report says governments should now redouble their efforts to measure and quantify the new economic realities by upgrading their statistical systems. They should also invest more in their national and local infrastructure -- such as communications, transport and utilities -- so as to enable private companies to better exploit market opportunites, and to raise the general potential for economic growth.

But the report sees the process of restructuring of the enterprise sector -- one of the main conditions for sustained growth -- as far from complete. Political considerations have often blocked bolder approaches. The report at this point urges transition countries to give top priority to supporting private enterprise, saying that is the main pathway towards the generation of jobs.

It also urges trade liberalisation, pointing out that foreign trade expansion has provided a key impulse to economic recovery in Central and East Europe.

At the same time, the report refers to the need for governments to strengthen the legal framework within which businesses operate, so as to encourage ethical behaviour and good corporate management, and to make the financial and equity markets transparent.