Railroad Restructuring in Russia and Central and Eastern Europe: One Solution for All Problems?*

Railways restructuring takes place under very different circumstances and with very different goals in Western Europe, Central and Eastern Europe, and Russia. Observed improvements in productivity associated with vertical access and vertical separation in Western Europe are not certain to be replicated following similar restructuring in transition economies, especially if one takes account of the much higher shadow price on government subsidies in the latter. This paper describes in detail the current and proposed reforms in the railways of Central and Eastern Europe and Russia, analyzes the likely outcomes of reforms in the special economic, regulatory, and legal environments of these countries, and presents an alternative proposal for restructuring in Russia.