Property Right Security in Russian Deprivatization Essay

The impact that the prospects of deprivatization have on investment by managers of privatized firms is that these managers will come to a realization that additional investments are prone to more risks in respect to the potential payback. In this situation, the time frame for returns on investments is shortened immensely. The uncertainty stems from the longer time frame, which results in managers hesitating from entering as a private firm. If this notion of deprivatization is upholded upon organizations, the owners will potentially lose any gains they may possess. The effect that deprivatization will have on foreign investments in Russia is that foreign financiers will comprehend the political risks of deprivatization in Russia is vital to the success of many organizations. They will be tentative to make capital investments in Russian businesses because there will be no security that there will be any return, regardless of how prosperous the prospect may seem to be. Deprivatization would primarily be for foreign private business owners considering they can take their profits and send them back to their home countries. For the most part, the Russian economy would behoove having some deprivatization influenced businesses and industries. From an overall standpoint and point of view, Russia has benefited with the movement of a free market but consequently would hinder the underprivileged population if the amount of supply were not readily available. â€Å"Free market economy under centralized political control is the most effective way for these countries† (EconomyWatch, 2010). When one is questioning the beneficiaries of political and economic decisions, the first ones to benefit from this would be the family and friends of these politicians. Also many workers will become at an advantage because since deprivatization creates openings in positions once held by other owners, these positions, once deprivatized, become readily available to be occupied. People they know and people they surround themselves with such as family, friends and such often fill these positions. The ones that would lose in a deprivatization firm are normally the foreign investors that are affiliated. Immediate losers in deprivatization efforts are usually foreign investors. If more people are hurt by deprivatization than helped, the local politicians would support such a policy because they would want to portray an image that shows they know what they are doing and what they are doing is in the best interest of the people. More often than not, when a political figure makes a mistake or does something that is not in the best interest of the people admitting to their mistake is by far the last thing they will do. This would make them seem weak and unknowledgeable. Adversely, they will embrace their mistake and make it part of what they intended to do from the beginning. â€Å"Economic decisions in a market system are decentralized to individuals who are likely to have the relevant specific knowledge† (Brickley, Smith, Zimmerman, 2009). References Brickley, J.A., Smith, C.W., & Zimmerman, J.L. (2009). Managerial economics and Organizational architecture (5th ed.). New York: McGraw Hill/Irwin. EconomyWatch (2010). Advantages of Market Economy. Retrieved from http://www.economywatch.com/market-economy/advantages-market- economy.html