Privatizaion
By: Mary Anne Winslow
Privatization is the transfer of the services that used to belong to the state to the enterprises of the private sector. It is done free of any charge and also on a voluntary and free will basis. It can be realized in relation to the private residence as well as to big manufacturing plants and enterprises.
A public enterprise is defined by CARICAD studies as “an institution either wholly owned by Government or in which Government owns a majority share, that sells goods and services in the market and has its own management entrusted with the task of running the organization.”
There are many strong arguments for the privatisation of public corporations which can be studied in four categories of Economic, Ideological and Political and Organizational. Before these arguments are discussed it is critical to give a brief overview of the emergence of privatisation in the world. In developed and developing countries, privatisation is one of the most revolutionary innovations in the recent history of economic policy. The policy of privatisation of public enterprises has been adopted and implemented variably at the global level since the 1980s. The British Prime Minister, Margaret Thatcher and U.S President, Ronald Reagan were the two political leaders behind this global policy movement. According to A. Farazmund, “they both came to power with an agenda to reverse the growth of their governments and their administrative welfare states which were begun in the 1930s”. By the 1970s most capitalist nations and all socialist governments had experienced a major failure in their corporate and government leadership with a growing rate of national debt and budget deficits. Both groups of nations were unable to continue the trend and were forced to adopt major changes which included reorganization, reform, structural adjustment and the privatisation of public enterprises.
Public enterprises are established for many reasons such as provision of social goods and services which the private sector fails to provide; control of key resources such as water and oil and also to enable economic stabilization with the provision of employment. However, many of these Public Enterprises are privatised for many reasons. Privatisation is seen as a means to increase output, improve quality and reduce unit costs. It is believed that privatisation will curb the growth of public spending and raise cash to reduce government debt.
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