Who Will Pay for the Social Infrastructure?

Abstract

The transformation of countries in Eastern Europe involves sweeping changes in the scope and roles of national and local governments. The reallocation of economic activities between the public and private sectors and decentralization from national to local governments are complex and difficult processes. This article explores the role of local governments in privatizing the social infrastructure assets of state-owned enterprises, especially housing complexes. Two case studies are used to compare approaches used by local governments to assume responsibility for these facilities. The Polish experience suggests that nations undertaking privatization of social assets should give greater consideration to the role of local governments in the process. The local governments are more flexible in their approach than the central government and can tailor the transformation to local conditions.