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The early debates about the transition of the enterprise sector in eastern Europe centred on the thesis that the transfer of property rights to private agents was both necessary and sufficient to achieve efficient restructuring. Several years into the transition, it seems that the relationship between privatization and restructuring is not simple. Three features of the transition stand out: first, forms of privatization that did produce rapid increases in efficiency were very slow; second, fast privatization has only been possible when it left — or was expected to leave — control in the hands of insiders (employers and managers). Such insider privatization produces only limited restructuring activity (labour-shedding, closure of unprofitable activities, and shedding of non-production-related activities). Third, managers of enterprises which have not been privatized have engaged in some restructuring, as documented, for …