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Working paper

Privatization and Survival – Evidence from a Russian Firm Survey

Sprenger C.
This study investigates an important aspect of the long-run evolution of firms that have been founded in Russia under the Soviet planning system, namely their survival under rapidly changing conditions. In our analysis, we focus on the questions whether initial conditions, in particular privatization and the choice among various privatization options, have affected the likelihood of survival. We use a sample of 497 privatized and non-privatized firms that have been surveyed in 1999-2000 and for which we updated the information about the survival status, reasons for exit including bankruptcy procedures and their ownership structure (state-owned vs. private). We find that privatization and the choice of privatization option have no effect on the long-term survival of firms in Russia. This is in line with earlier results by Brown et al. (2011) that any positive productivity effects of privatization in Russia take much time to realize. But it is neither the case that privatization has considerably accelerated the process of creative destruction, which often takes the form of liquidation of existing firms.