Privatization of State Owned Enterprises and Economic Efficiency

The book investigate the process of privatization of state owned companies. Privatization of state owned companies and institutions is well known within the frame of the economic theory. Many explanations and reasons were given in numerous papers and books. In cost/benefit analyses it can be justified by economic reasoning. However, when other factors as sovereignty, national institutional framework, equities, operational functioning, and justice, there can be many objections. Corruption also surface in the process of privatization as an eminent threat to the economic viability of a nation. Bad examples were shown by the privatization process in many countries, e.g., former Soviet Union. Sudan Airways was privatized seven years ago. It was bought by unknown Gulf Company named Arif for announced reasons of improving its efficiency, infusing more capital to expand her operations and buy more new planes. After three years, Sudan Airways performance horrendously deteriorated, operationally and financially. The new management sold her old landing rights in strategic international airports and it was deprived of such rights in all European countries. It became more or less like domestically secluded to fly inside the country. Even that was limited due to lack of available operational airplanes. The deterioration was ultimate and the government asked the holding company to return it back for unnamed price though rumors were that it was five times higher than what it bought it with.