Privatization is the first priority of transition economies because it is the most critical process of shifting from a planned economy to a market economy. Even state enterprises can gain competitiveness by attracting foreign capital and adopting foreign technologies. Meanwhile, the most important element of privatization is confirming ownership. For this, it is necessary to go though complex negotiation and mediation between conflicting parties. Otherwise, privatization cannot be completed and the expected effects will not be realized. Based on this understanding, chapter 2 examines the economic plight and challenges faced by the planned economies before the transition process.
   Chapter 3 reviews the major features of Russia’s privatization by period and of Russian businessmen. In addition, success factors and failure factors are presented through an analysis of privatized companies. Against this backdrop, implications for North Korea are drawn, centered on potential issues that could arise during its transition process.
   In chapter 4, Vietnam’s case is analyzed. Vietnam had a different social and economic structure from Russia when it began privatization. Russia was a large autarkic economy with a highly industrialized structure, whereas Vietnam was a small autarkic economy with a low level of industrial development. Thus, privatization in Vietnam proceeded differently as the collective leadership system by the labor party remains intact.
   The first lesson we learn from Russia’s and Vietnam’s experiences is that institutionalization is the prerequisite of privatization. Structural changes of a society and economy can be accomplished only through legislation and institutionalization. Without these crucial developments, investors or capitalists in the market can be discouraged from participating. Another lesson is the importance of forming ardent reformist groups. Such groups can prevent any attempts to reverse progress and return to the past. As seen in Russia’s and Vietnam’s cases, North Korea can implement reforms and transition successfully by quickly developing the private sector and nurturing capitalist businessmen. Establishing a business-friendly climate is a significant factor of success in privatization.