The Pros and Cons of Privatization

Seminar paper from the year 2013 in the subject Business economics - Economic Policy, grade: A, School of Oriental and African Studies, University of London, course: Public Policy, language: English, abstract: This paper critically discuses the benefits and costs of privatization as well as its success factors and future prospects. Following a snap conceptual review of privatization, including its various forms and reasoning underlying its promulgation as the most effective mechanism for organizing the delivery of public services, it examines in-depth the arguments for and against privatization, and ascertain these claims from actual examples of implemented privatization programs. Evaluating the determinants of successful (and unsuccessful) privatization, it demonstrates the importance of context in shaping the decision, form and likely outcomes of any privatization policy. It is argued that privatization has and will remain an important item on the reform agenda of many governments as a pragmatic solution to deepening domestic challenges, including depleting state revenues and bloating public expenditure, as well as external opportunities and constraints such as foreign direct investments and pressures from international organizations, rather than pure ideological reasons. At the same time, however, given the limitations of privatization, it is asserted that more mixed ownership arrangements or Public-Private-Partnerships (PPP) will assume the face of future privatization.