Firm internationalization in transition economies: A Romanian case study through the lens of public choice theory

Soon after entering the transition from communism to capitalism, Eastern European governments realized that access to cheap, flexible and varied communications facilities could make the difference in the new information-based global economy. In other words, to become competitive in the information economy, a country needs a functional communication system (Neelameghan and Akhtar, 1996; Rischard, 1996). The post-communist economies were transitioning towards a type of capitalism heavily dependent on a solid, extensive and reliable information infrastructure. The demonopolization, liberalization, privatization and internationalization of the telecommunication networks in Eastern Europe have thus become one of the key elements in the process of economic transformation (Aghion and Blanchard, 1998; Borensztein and Kumar, 1991; Frydman et al., 1999; Lipton and Sachs, 1990; Tirole, 1991). Given their pivotal position in the structural transition and systemic reorganization of the economic order, the various cases of privatization and internationalization of former state-owned companies and networks are of great interest for their analytic and diagnostic potential. They become a special type of 'critical' case study, a special window on the economic system of interest with its structure, dynamics, pathologies and promise. Unsurprisingly, as Central and Eastern European countries faced the pressure of internationalization, advancing privatization and liberalization efforts in the telecommunications sector continued to increase. In this respect each country had a unique set of political, economic and cultural forces driving these changes, and structural reform in the telecommunications sector exhibited markedly different paces and styles in each country.