privatization rahul

8/8/2019 Privatization Rahul

1/20

Privatization

From Wikipedia, the free encyclopedia

Jump to: navigation,searchPart of the series on

Capitalism

Concepts[show]

Central bankCommercial law

Companies law

Comparative advantageCompetition law

Consumer protectionCopyright

CorporationsDeregulation

Economic freedom

Economic liberalismFinancial regulation

Fiscal policy

Free marketFree price system

Free trade agreements

Freedom of contractGlobalization

Inflation

Intellectual property

Invisible handLabour law

Limited government

MarketMonetary policy

Monopoly

Oligopoly

PatentsPrivate property

Privatization

Regulated marketRecession

Spontaneous order

StagflationSupply and demand
http://en.wikipedia.org/wiki/Privatization#mw-head%23mw-headhttp://en.wikipedia.org/wiki/Privatization#mw-head%23mw-headhttp://en.wikipedia.org/wiki/Privatization#p-search%23p-searchhttp://en.wikipedia.org/wiki/Capitalismhttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Commercial_lawhttp://en.wikipedia.org/wiki/Companies_lawhttp://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/Competition_lawhttp://en.wikipedia.org/wiki/Consumer_protectionhttp://en.wikipedia.org/wiki/Copyrighthttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Deregulationhttp://en.wikipedia.org/wiki/Economic_freedomhttp://en.wikipedia.org/wiki/Economic_liberalismhttp://en.wikipedia.org/wiki/Financial_regulationhttp://en.wikipedia.org/wiki/Fiscal_policyhttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Free_price_systemhttp://en.wikipedia.org/wiki/Free_trade_agreementhttp://en.wikipedia.org/wiki/Freedom_of_contracthttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Invisible_handhttp://en.wikipedia.org/wiki/Labour_lawhttp://en.wikipedia.org/wiki/Limited_governmenthttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Monetary_policyhttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/Oligopolyhttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Private_propertyhttp://en.wikipedia.org/wiki/Regulated_markethttp://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/Spontaneous_orderhttp://en.wikipedia.org/wiki/Stagflationhttp://en.wikipedia.org/wiki/Supply_and_demandhttp://en.wikipedia.org/wiki/File:Economic_template.svghttp://en.wikipedia.org/wiki/Privatization#mw-head%23mw-headhttp://en.wikipedia.org/wiki/Privatization#p-search%23p-searchhttp://en.wikipedia.org/wiki/Capitalismhttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Commercial_lawhttp://en.wikipedia.org/wiki/Companies_lawhttp://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/Competition_lawhttp://en.wikipedia.org/wiki/Consumer_protectionhttp://en.wikipedia.org/wiki/Copyrighthttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Deregulationhttp://en.wikipedia.org/wiki/Economic_freedomhttp://en.wikipedia.org/wiki/Economic_liberalismhttp://en.wikipedia.org/wiki/Financial_regulationhttp://en.wikipedia.org/wiki/Fiscal_policyhttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Free_price_systemhttp://en.wikipedia.org/wiki/Free_trade_agreementhttp://en.wikipedia.org/wiki/Freedom_of_contracthttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Invisible_handhttp://en.wikipedia.org/wiki/Labour_lawhttp://en.wikipedia.org/wiki/Limited_governmenthttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Monetary_policyhttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/Oligopolyhttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Private_propertyhttp://en.wikipedia.org/wiki/Regulated_markethttp://en.wikipedia.org/wiki/Recessionhttp://en.wikipedia.org/wiki/Spontaneous_orderhttp://en.wikipedia.org/wiki/Stagflationhttp://en.wikipedia.org/wiki/Supply_and_demand


2/20

Wage labourEconomic theories[show]

Austrian schoolChicago school

Classical economics

Keynesian economicsNew Keynesian economics

Marxian economics

Monetarism

Neoclassical economicsSupply-side economics

Institutional economics

New institutional economicsOrigins[show]

Age of Enlightenment

Feudalism

Industrial RevolutionPhysiocrats

Mercantilism

Islamic capitalismPeople[show]

Ronald Coase

Milton FriedmanFriedrich Hayek

John Maynard Keynes

Alfred Marshall

Karl Marx

John Stuart MillLudwig von Mises

Ayn RandDavid Ricardo

Joseph Schumpeter

Adam SmithThorstein Veblen

Max WeberVariants[show]

Anarcho-capitalism

Consumer capitalism

Corporate capitalismCreative capitalismCrony capitalism

Democratic capitalism

Eco-capitalismFinance capitalism

Global capitalism

Humanistic capitalism
http://en.wikipedia.org/wiki/Wage_labourhttp://en.wikipedia.org/wiki/Austrian_schoolhttp://en.wikipedia.org/wiki/Chicago_school_(economics)http://en.wikipedia.org/wiki/Classical_economicshttp://en.wikipedia.org/wiki/Keynesian_economicshttp://en.wikipedia.org/wiki/New_Keynesian_economicshttp://en.wikipedia.org/wiki/Marxian_economicshttp://en.wikipedia.org/wiki/Monetarismhttp://en.wikipedia.org/wiki/Neoclassical_economicshttp://en.wikipedia.org/wiki/Supply-side_economicshttp://en.wikipedia.org/wiki/Institutional_economicshttp://en.wikipedia.org/wiki/New_institutional_economicshttp://en.wikipedia.org/wiki/Age_of_Enlightenmenthttp://en.wikipedia.org/wiki/Feudalismhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Physiocratshttp://en.wikipedia.org/wiki/Mercantilismhttp://en.wikipedia.org/wiki/Islamic_capitalismhttp://en.wikipedia.org/wiki/Ronald_Coasehttp://en.wikipedia.org/wiki/Milton_Friedmanhttp://en.wikipedia.org/wiki/Friedrich_Hayekhttp://en.wikipedia.org/wiki/John_Maynard_Keyneshttp://en.wikipedia.org/wiki/Alfred_Marshallhttp://en.wikipedia.org/wiki/Karl_Marxhttp://en.wikipedia.org/wiki/John_Stuart_Millhttp://en.wikipedia.org/wiki/Ludwig_von_Miseshttp://en.wikipedia.org/wiki/Ayn_Randhttp://en.wikipedia.org/wiki/David_Ricardohttp://en.wikipedia.org/wiki/Joseph_Schumpeterhttp://en.wikipedia.org/wiki/Adam_Smithhttp://en.wikipedia.org/wiki/Thorstein_Veblenhttp://en.wikipedia.org/wiki/Max_Weberhttp://en.wikipedia.org/wiki/Anarcho-capitalismhttp://en.wikipedia.org/wiki/Consumer_capitalismhttp://en.wikipedia.org/wiki/Corporate_capitalismhttp://en.wikipedia.org/w/index.php?title=Creative_capitalism&action=edit&redlink=1http://en.wikipedia.org/wiki/Crony_capitalismhttp://en.wikipedia.org/wiki/Democratic_capitalismhttp://en.wikipedia.org/wiki/Eco-capitalismhttp://en.wikipedia.org/wiki/Finance_capitalismhttp://en.wikipedia.org/wiki/Global_capitalismhttp://en.wikipedia.org/wiki/Humanistic_capitalismhttp://en.wikipedia.org/wiki/Wage_labourhttp://en.wikipedia.org/wiki/Austrian_schoolhttp://en.wikipedia.org/wiki/Chicago_school_(economics)http://en.wikipedia.org/wiki/Classical_economicshttp://en.wikipedia.org/wiki/Keynesian_economicshttp://en.wikipedia.org/wiki/New_Keynesian_economicshttp://en.wikipedia.org/wiki/Marxian_economicshttp://en.wikipedia.org/wiki/Monetarismhttp://en.wikipedia.org/wiki/Neoclassical_economicshttp://en.wikipedia.org/wiki/Supply-side_economicshttp://en.wikipedia.org/wiki/Institutional_economicshttp://en.wikipedia.org/wiki/New_institutional_economicshttp://en.wikipedia.org/wiki/Age_of_Enlightenmenthttp://en.wikipedia.org/wiki/Feudalismhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Physiocratshttp://en.wikipedia.org/wiki/Mercantilismhttp://en.wikipedia.org/wiki/Islamic_capitalismhttp://en.wikipedia.org/wiki/Ronald_Coasehttp://en.wikipedia.org/wiki/Milton_Friedmanhttp://en.wikipedia.org/wiki/Friedrich_Hayekhttp://en.wikipedia.org/wiki/John_Maynard_Keyneshttp://en.wikipedia.org/wiki/Alfred_Marshallhttp://en.wikipedia.org/wiki/Karl_Marxhttp://en.wikipedia.org/wiki/John_Stuart_Millhttp://en.wikipedia.org/wiki/Ludwig_von_Miseshttp://en.wikipedia.org/wiki/Ayn_Randhttp://en.wikipedia.org/wiki/David_Ricardohttp://en.wikipedia.org/wiki/Joseph_Schumpeterhttp://en.wikipedia.org/wiki/Adam_Smithhttp://en.wikipedia.org/wiki/Thorstein_Veblenhttp://en.wikipedia.org/wiki/Max_Weberhttp://en.wikipedia.org/wiki/Anarcho-capitalismhttp://en.wikipedia.org/wiki/Consumer_capitalismhttp://en.wikipedia.org/wiki/Corporate_capitalismhttp://en.wikipedia.org/w/index.php?title=Creative_capitalism&action=edit&redlink=1http://en.wikipedia.org/wiki/Crony_capitalismhttp://en.wikipedia.org/wiki/Democratic_capitalismhttp://en.wikipedia.org/wiki/Eco-capitalismhttp://en.wikipedia.org/wiki/Finance_capitalismhttp://en.wikipedia.org/wiki/Global_capitalismhttp://en.wikipedia.org/wiki/Humanistic_capitalism


3/20

Inclusive capitalism

Late capitalism

Laissez-faire capitalismLiberal capitalism

Merchant capitalism

Mixed economyMonopoly capitalism

Neo-Capitalism

PhilanthrocapitalismTechnocapitalism

Regulatory capitalism

Rentier capitalismSocial capitalism

Social market economy

State capitalism

State monopoly capitalism

Welfare capitalismRelated topics[show]

Anti-capitalism

Advanced capitalismCriticism

Consumerism

Corporate nationalismCorporatism

Culture of capitalism

HistoryHistory of theory

Perspectives on capitalismPeriodizations of capitalism

Trickle-down economicsMovements[show]

Liberalism

LibertarianismNeoconservatism

Neoliberalism

ObjectivismObjectivist movement

Ordoliberalism

Social democracy

Capitalism Portal

Philosophy Portal

Economics Portal

Politics Portal

vde
http://en.wikipedia.org/wiki/Inclusive_capitalismhttp://en.wikipedia.org/wiki/Late_capitalismhttp://en.wikipedia.org/wiki/Laissez-faire_capitalismhttp://en.wikipedia.org/wiki/Liberal_capitalismhttp://en.wikipedia.org/wiki/Merchant_capitalismhttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Monopoly_capitalismhttp://en.wikipedia.org/wiki/Neo-Capitalismhttp://en.wikipedia.org/wiki/Philanthrocapitalismhttp://en.wikipedia.org/wiki/Technocapitalismhttp://en.wikipedia.org/wiki/Regulatory_capitalismhttp://en.wikipedia.org/wiki/Rentier_capitalismhttp://en.wikipedia.org/wiki/Social_capitalismhttp://en.wikipedia.org/wiki/Social_market_economyhttp://en.wikipedia.org/wiki/State_capitalismhttp://en.wikipedia.org/wiki/State_monopoly_capitalismhttp://en.wikipedia.org/wiki/Welfare_capitalismhttp://en.wikipedia.org/wiki/Anti-capitalismhttp://en.wikipedia.org/wiki/Advanced_capitalismhttp://en.wikipedia.org/wiki/Criticism_of_capitalismhttp://en.wikipedia.org/wiki/Consumerismhttp://en.wikipedia.org/wiki/Corporate_nationalismhttp://en.wikipedia.org/wiki/Corporatismhttp://en.wikipedia.org/wiki/Culture_of_capitalismhttp://en.wikipedia.org/wiki/History_of_capitalismhttp://en.wikipedia.org/wiki/History_of_theory_of_capitalismhttp://en.wikipedia.org/wiki/Perspectives_on_capitalismhttp://en.wikipedia.org/wiki/Periodizations_of_capitalismhttp://en.wikipedia.org/wiki/Trickle-down_economicshttp://en.wikipedia.org/wiki/Liberalismhttp://en.wikipedia.org/wiki/Libertarian_movementhttp://en.wikipedia.org/wiki/Neoconservatismhttp://en.wikipedia.org/wiki/Neoliberalismhttp://en.wikipedia.org/wiki/Objectivism_(Ayn_Rand)http://en.wikipedia.org/wiki/Objectivist_movementhttp://en.wikipedia.org/wiki/Ordoliberalismhttp://en.wikipedia.org/wiki/Social_democracyhttp://en.wikipedia.org/wiki/Portal:Capitalismhttp://en.wikipedia.org/wiki/Portal:Philosophyhttp://en.wikipedia.org/wiki/Portal:Economicshttp://en.wikipedia.org/wiki/Portal:Politicshttp://en.wikipedia.org/wiki/Template:Capitalismhttp://en.wikipedia.org/wiki/Template:Capitalismhttp://en.wikipedia.org/wiki/Template_talk:Capitalismhttp://en.wikipedia.org/wiki/Template_talk:Capitalismhttp://en.wikipedia.org/wiki/Template_talk:Capitalismhttp://en.wikipedia.org/w/index.php?title=Template:Capitalism&action=edithttp://en.wikipedia.org/w/index.php?title=Template:Capitalism&action=edithttp://en.wikipedia.org/w/index.php?title=Template:Capitalism&action=edithttp://en.wikipedia.org/wiki/File:Portal-puzzle.svghttp://en.wikipedia.org/wiki/File:Portal-puzzle.svghttp://en.wikipedia.org/wiki/File:Portal-puzzle.svghttp://en.wikipedia.org/wiki/File:Portal-puzzle.svghttp://en.wikipedia.org/wiki/Inclusive_capitalismhttp://en.wikipedia.org/wiki/Late_capitalismhttp://en.wikipedia.org/wiki/Laissez-faire_capitalismhttp://en.wikipedia.org/wiki/Liberal_capitalismhttp://en.wikipedia.org/wiki/Merchant_capitalismhttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Monopoly_capitalismhttp://en.wikipedia.org/wiki/Neo-Capitalismhttp://en.wikipedia.org/wiki/Philanthrocapitalismhttp://en.wikipedia.org/wiki/Technocapitalismhttp://en.wikipedia.org/wiki/Regulatory_capitalismhttp://en.wikipedia.org/wiki/Rentier_capitalismhttp://en.wikipedia.org/wiki/Social_capitalismhttp://en.wikipedia.org/wiki/Social_market_economyhttp://en.wikipedia.org/wiki/State_capitalismhttp://en.wikipedia.org/wiki/State_monopoly_capitalismhttp://en.wikipedia.org/wiki/Welfare_capitalismhttp://en.wikipedia.org/wiki/Anti-capitalismhttp://en.wikipedia.org/wiki/Advanced_capitalismhttp://en.wikipedia.org/wiki/Criticism_of_capitalismhttp://en.wikipedia.org/wiki/Consumerismhttp://en.wikipedia.org/wiki/Corporate_nationalismhttp://en.wikipedia.org/wiki/Corporatismhttp://en.wikipedia.org/wiki/Culture_of_capitalismhttp://en.wikipedia.org/wiki/History_of_capitalismhttp://en.wikipedia.org/wiki/History_of_theory_of_capitalismhttp://en.wikipedia.org/wiki/Perspectives_on_capitalismhttp://en.wikipedia.org/wiki/Periodizations_of_capitalismhttp://en.wikipedia.org/wiki/Trickle-down_economicshttp://en.wikipedia.org/wiki/Liberalismhttp://en.wikipedia.org/wiki/Libertarian_movementhttp://en.wikipedia.org/wiki/Neoconservatismhttp://en.wikipedia.org/wiki/Neoliberalismhttp://en.wikipedia.org/wiki/Objectivism_(Ayn_Rand)http://en.wikipedia.org/wiki/Objectivist_movementhttp://en.wikipedia.org/wiki/Ordoliberalismhttp://en.wikipedia.org/wiki/Social_democracyhttp://en.wikipedia.org/wiki/Portal:Capitalismhttp://en.wikipedia.org/wiki/Portal:Philosophyhttp://en.wikipedia.org/wiki/Portal:Economicshttp://en.wikipedia.org/wiki/Portal:Politicshttp://en.wikipedia.org/wiki/Template:Capitalismhttp://en.wikipedia.org/wiki/Template_talk:Capitalismhttp://en.wikipedia.org/w/index.php?title=Template:Capitalism&action=edit


4/20

This article needs additional citations for verification.Please help improve this articleby addingreliable references. Unsourced material may be

challengedand removed. (January 2008)

Privatization is the incidence or process of transferring ownership of abusiness,

enterprise, agency or public service from thepublic sector(the state or government) totheprivate sector(businesses that operate for a private profit) or to private non-profit

organizations. In a broader sense, privatization refers to transfer of any governmentfunction to the private sector - including governmental functions like revenue collection

and law enforcement.[1]

The term "privatization" also has been used to describe two unrelated transactions. The

first is a buyout, by the majority owner, of all shares of apublic corporation orholdingcompany's stock, privatizing a publicly traded stock, and often described asprivate

equity. The second is a demutualization of a mutual organizationorcooperativeto form a

joint stock company.[2]

Contents

[hide]

1 Origin

2 History

3 Types

4 Differing views

o 4.1 Supporting

o 4.2 Opposing

5 Intermediate views

o 5.1 Developed or minimally corrupt economies

o 5.2 Underdeveloped or highly corrupt economies

6 Outcomes

7 Alternatives

o 7.1 Public utility

o 7.2 Non-profit

o 7.3 Municipalization

o 7.4 Outsourcing or sub-contracting

o 7.5 Partial ownership

o 7.6 Publicprivate partnership

8 Notable examples

9 Negative responses

10 Reversion

11 See also

12 Notes

13 References
http://en.wikipedia.org/wiki/Wikipedia:Citing_sources#Inline_citationshttp://en.wikipedia.org/wiki/Wikipedia:Verifiabilityhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Wikipedia:Identifying_reliable_sourceshttp://en.wikipedia.org/wiki/Wikipedia:Identifying_reliable_sourceshttp://en.wikipedia.org/wiki/Template:Citation_neededhttp://en.wikipedia.org/wiki/Template:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Verifiability#Burden_of_evidencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Privatization#cite_note-0%23cite_note-0http://en.wikipedia.org/wiki/Privatization#cite_note-0%23cite_note-0http://en.wikipedia.org/wiki/Public_corporationhttp://en.wikipedia.org/wiki/Public_corporationhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Demutualizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Privatization#cite_note-crisis-1%23cite_note-crisis-1http://en.wikipedia.org/wiki/Privatization#%23http://en.wikipedia.org/wiki/Privatization#Origin%23Originhttp://en.wikipedia.org/wiki/Privatization#History%23Historyhttp://en.wikipedia.org/wiki/Privatization#Types%23Typeshttp://en.wikipedia.org/wiki/Privatization#Differing_views%23Differing_viewshttp://en.wikipedia.org/wiki/Privatization#Supporting%23Supportinghttp://en.wikipedia.org/wiki/Privatization#Opposing%23Opposinghttp://en.wikipedia.org/wiki/Privatization#Intermediate_views%23Intermediate_viewshttp://en.wikipedia.org/wiki/Privatization#Developed_or_minimally_corrupt_economies%23Developed_or_minimally_corrupt_economieshttp://en.wikipedia.org/wiki/Privatization#Underdeveloped_or_highly_corrupt_economies%23Underdeveloped_or_highly_corrupt_economieshttp://en.wikipedia.org/wiki/Privatization#Outcomes%23Outcomeshttp://en.wikipedia.org/wiki/Privatization#Alternatives%23Alternativeshttp://en.wikipedia.org/wiki/Privatization#Public_utility%23Public_utilityhttp://en.wikipedia.org/wiki/Privatization#Non-profit%23Non-profithttp://en.wikipedia.org/wiki/Privatization#Municipalization%23Municipalizationhttp://en.wikipedia.org/wiki/Privatization#Outsourcing_or_sub-contracting%23Outsourcing_or_sub-contractinghttp://en.wikipedia.org/wiki/Privatization#Partial_ownership%23Partial_ownershiphttp://en.wikipedia.org/wiki/Privatization#Public.E2.80.93private_partnership%23Public.E2.80.93private_partnershiphttp://en.wikipedia.org/wiki/Privatization#Notable_examples%23Notable_exampleshttp://en.wikipedia.org/wiki/Privatization#Negative_responses%23Negative_responseshttp://en.wikipedia.org/wiki/Privatization#Reversion%23Reversionhttp://en.wikipedia.org/wiki/Privatization#See_also%23See_alsohttp://en.wikipedia.org/wiki/Privatization#Notes%23Noteshttp://en.wikipedia.org/wiki/Privatization#References%23Referenceshttp://en.wikipedia.org/wiki/File:Question_book-new.svghttp://en.wikipedia.org/wiki/Wikipedia:Citing_sources#Inline_citationshttp://en.wikipedia.org/wiki/Wikipedia:Verifiabilityhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Wikipedia:Identifying_reliable_sourceshttp://en.wikipedia.org/wiki/Template:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Verifiability#Burden_of_evidencehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Privatization#cite_note-0%23cite_note-0http://en.wikipedia.org/wiki/Public_corporationhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Demutualizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Privatization#cite_note-crisis-1%23cite_note-crisis-1http://en.wikipedia.org/wiki/Privatization#%23http://en.wikipedia.org/wiki/Privatization#Origin%23Originhttp://en.wikipedia.org/wiki/Privatization#History%23Historyhttp://en.wikipedia.org/wiki/Privatization#Types%23Typeshttp://en.wikipedia.org/wiki/Privatization#Differing_views%23Differing_viewshttp://en.wikipedia.org/wiki/Privatization#Supporting%23Supportinghttp://en.wikipedia.org/wiki/Privatization#Opposing%23Opposinghttp://en.wikipedia.org/wiki/Privatization#Intermediate_views%23Intermediate_viewshttp://en.wikipedia.org/wiki/Privatization#Developed_or_minimally_corrupt_economies%23Developed_or_minimally_corrupt_economieshttp://en.wikipedia.org/wiki/Privatization#Underdeveloped_or_highly_corrupt_economies%23Underdeveloped_or_highly_corrupt_economieshttp://en.wikipedia.org/wiki/Privatization#Outcomes%23Outcomeshttp://en.wikipedia.org/wiki/Privatization#Alternatives%23Alternativeshttp://en.wikipedia.org/wiki/Privatization#Public_utility%23Public_utilityhttp://en.wikipedia.org/wiki/Privatization#Non-profit%23Non-profithttp://en.wikipedia.org/wiki/Privatization#Municipalization%23Municipalizationhttp://en.wikipedia.org/wiki/Privatization#Outsourcing_or_sub-contracting%23Outsourcing_or_sub-contractinghttp://en.wikipedia.org/wiki/Privatization#Partial_ownership%23Partial_ownershiphttp://en.wikipedia.org/wiki/Privatization#Public.E2.80.93private_partnership%23Public.E2.80.93private_partnershiphttp://en.wikipedia.org/wiki/Privatization#Notable_examples%23Notable_exampleshttp://en.wikipedia.org/wiki/Privatization#Negative_responses%23Negative_responseshttp://en.wikipedia.org/wiki/Privatization#Reversion%23Reversionhttp://en.wikipedia.org/wiki/Privatization#See_also%23See_alsohttp://en.wikipedia.org/wiki/Privatization#Notes%23Noteshttp://en.wikipedia.org/wiki/Privatization#References%23References


5/20

14 External links

[edit] Origin

Edwards states that The Economistcoined the term in the 1930s in covering Nazi German

economic policy.[3][4]

The Oxford English Dictionarynotes usage dating from 1942 inEcon. Jrnl, 52, 398.

[edit] History

This section requiresexpansion.

A long history of privatization dates from Ancient Greece, when governments contracted

out almost everything to the private sector[5]. In the Roman Republic private individualsand companies performed the majority of services including tax collection (tax farming),army supplies (military contractors), religious sacrifices and construction. However, the

Roman Empire also created state-owned enterprises for example, much of the grain

was eventually produced on estates owned by the Emperor. Some scholars suggest thatthe cost of bureaucracy was one of the reasons for the fall of the Roman Empire.[5]

In Britain, the privatization of common lands is referred to as enclosure(in Scotland as

the Lowland Clearances and the Highland Clearances). Significant privatizations of this

nature occurred from 1760 to 1820, coincident with the industrial revolution in thatcountry.

In more recent times, Winston Churchill's government privatized the British steel

industry in the 1950s, and West Germany's government embarked on large-scale

privatization, including selling its majority stake in Volkswagen to small investors in apublic share offering in 1961[5]. In the 1970s General Pinochet implemented a significant

privatization program in Chile. However, it was in the 1980s under the leaderships of

Margaret Thatcherin theUKand Ronald Reagan in the USA, that privatization gainedworldwide momentum. In the UK this culminated in the 1993privatization of British Rail

under Thatcher's successor, John Major; British Rail having been formed by prior

nationalization of private rail companies.

Significant privatization of state owned enterprises in Eastern and Central Europe and theformer Soviet Union was undertaken in the 1990s with assistanced from the World Bank,

the U.S. Agency for International Development, the GermanTreuhand , and other

governmental and nongovernmental organizations.

A major ongoing privatization, that of Japan Post, involves the Japanese post service andthe largest bank in the world. This privatization, spearheaded by Junichiro Koizumi,
http://en.wikipedia.org/wiki/Privatization#External_links%23External_linkshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=1http://en.wikipedia.org/wiki/The_Economisthttp://en.wikipedia.org/wiki/The_Economisthttp://en.wikipedia.org/wiki/Privatization#cite_note-2%23cite_note-2http://en.wikipedia.org/wiki/Privatization#cite_note-3%23cite_note-3http://en.wikipedia.org/wiki/Oxford_English_Dictionaryhttp://en.wikipedia.org/wiki/Oxford_English_Dictionaryhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=2http://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4%23cite_note-handbook-4http://en.wikipedia.org/wiki/Roman_Republichttp://en.wikipedia.org/wiki/Tax_farminghttp://en.wikipedia.org/wiki/Military_contractorhttp://en.wikipedia.org/wiki/Roman_Empirehttp://en.wikipedia.org/wiki/State-owned_enterprisehttp://en.wikipedia.org/wiki/Fall_of_the_Roman_Empirehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4%23cite_note-handbook-4http://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4%23cite_note-handbook-4http://en.wikipedia.org/wiki/Enclosurehttp://en.wikipedia.org/wiki/Enclosurehttp://en.wikipedia.org/wiki/Lowland_Clearanceshttp://en.wikipedia.org/wiki/Highland_Clearanceshttp://en.wikipedia.org/wiki/Winston_Churchillhttp://en.wikipedia.org/wiki/West_Germanyhttp://en.wikipedia.org/wiki/West_Germanyhttp://en.wikipedia.org/wiki/Volkswagenhttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4%23cite_note-handbook-4http://en.wikipedia.org/wiki/Augusto_Pinochethttp://en.wikipedia.org/wiki/Chilehttp://en.wikipedia.org/wiki/Margaret_Thatcherhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/Ronald_Reaganhttp://en.wikipedia.org/wiki/USAhttp://en.wikipedia.org/w/index.php?title=Privatization_of_British_Rail&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Privatization_of_British_Rail&action=edit&redlink=1http://en.wikipedia.org/wiki/John_Majorhttp://en.wikipedia.org/wiki/Treuhandhttp://en.wikipedia.org/wiki/Treuhandhttp://en.wikipedia.org/wiki/Japan_Post#Postal_privatizationhttp://en.wikipedia.org/wiki/Junichiro_Koizumihttp://en.wikipedia.org/wiki/File:Wiki_letter_w_cropped.svghttp://en.wikipedia.org/wiki/Privatization#External_links%23External_linkshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=1http://en.wikipedia.org/wiki/The_Economisthttp://en.wikipedia.org/wiki/Privatization#cite_note-2%23cite_note-2http://en.wikipedia.org/wiki/Privatization#cite_note-3%23cite_note-3http://en.wikipedia.org/wiki/Oxford_English_Dictionaryhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=2http://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4%23cite_note-handbook-4http://en.wikipedia.org/wiki/Roman_Republichttp://en.wikipedia.org/wiki/Tax_farminghttp://en.wikipedia.org/wiki/Military_contractorhttp://en.wikipedia.org/wiki/Roman_Empirehttp://en.wikipedia.org/wiki/State-owned_enterprisehttp://en.wikipedia.org/wiki/Fall_of_the_Roman_Empirehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4%23cite_note-handbook-4http://en.wikipedia.org/wiki/Enclosurehttp://en.wikipedia.org/wiki/Lowland_Clearanceshttp://en.wikipedia.org/wiki/Highland_Clearanceshttp://en.wikipedia.org/wiki/Winston_Churchillhttp://en.wikipedia.org/wiki/West_Germanyhttp://en.wikipedia.org/wiki/Volkswagenhttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4%23cite_note-handbook-4http://en.wikipedia.org/wiki/Augusto_Pinochethttp://en.wikipedia.org/wiki/Chilehttp://en.wikipedia.org/wiki/Margaret_Thatcherhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/Ronald_Reaganhttp://en.wikipedia.org/wiki/USAhttp://en.wikipedia.org/w/index.php?title=Privatization_of_British_Rail&action=edit&redlink=1http://en.wikipedia.org/wiki/John_Majorhttp://en.wikipedia.org/wiki/Treuhandhttp://en.wikipedia.org/wiki/Japan_Post#Postal_privatizationhttp://en.wikipedia.org/wiki/Junichiro_Koizumi


6/20

started in 2007 following generations of debate. The privatization process is expected[by

whom?] to last until 2017.

[edit] Types

There are four main methods[citation needed] of privatization:

1. Share issue privatization (SIP) - selling shares on the stock market

2. Asset sale privatization - selling an entire organization (or part of it) to a strategic

investor, usually by auction or by using the Treuhandmodel3. Voucher privatization - distributing shares of ownership to all citizens, usually for

free or at a very low price.

4. Privatization from below - Start-up of new private businesses in formerly socialist

countries.

Choice of sale method is influenced by the capital market, political and firm-specific

factors. SIPs are more likely to be used when capital markets are less developed and thereis lowerincome inequality. Share issues can broaden and deepen domestic capitalmarkets, boosting liquidity and (potentially)economic growth, but if the capital markets

are insufficiently developed it may be difficult to find enough buyers, and transaction

costs (e.g. underpricing required) may be higher. For this reason, many governments elect

for listings in the more developed and liquid markets, for exampleEuronext, and theLondon,New Yorkand Hong Kong stock exchanges.

As a result of higher political and currency risk deterring foreign investors, asset sales

occur more commonly in developing countries.

Voucher privatization has mainly occurred in the transition economies of Central andEastern Europe, such as Russia, Poland, the Czech Republic, and Slovakia. Additionally,

Privatization from below is/has been an important type of economic growth in transition

economies.

A substantial benefit of share or asset-sale privatizations is that bidders compete to offerthe highest price, creating income for the state in addition to tax revenues. Voucher

privatizations, on the other hand, could be a genuine transfer of assets to the general

population, creating a real sense of participation and inclusion. If the transfer of vouchersis permitted, a market in vouchers could be created, with companies offering to pay

money for them.

[edit] Differing views

[edit] Supporting

Proponents[who?] of privatization believe that private market factors can more efficiently

deliver many goods or service than governments due to free marketcompetition. In
http://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=3http://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/w/index.php?title=Share_issue_privatization&action=edit&redlink=1http://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/w/index.php?title=Asset_sale_privatization&action=edit&redlink=1http://en.wikipedia.org/wiki/Auctionhttp://en.wikipedia.org/wiki/Treuhandhttp://en.wikipedia.org/wiki/Treuhandhttp://en.wikipedia.org/wiki/Voucher_privatizationhttp://en.wikipedia.org/w/index.php?title=Privatization_from_below&action=edit&redlink=1http://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Income_inequalityhttp://en.wikipedia.org/wiki/Income_inequalityhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/Transition_economieshttp://en.wikipedia.org/wiki/Privatization_in_Russiahttp://en.wikipedia.org/wiki/Polandhttp://en.wikipedia.org/wiki/Czech_Republichttp://en.wikipedia.org/wiki/Slovakiahttp://en.wikipedia.org/wiki/Slovakiahttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=4http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=5http://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Competitionhttp://en.wikipedia.org/wiki/Competitionhttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=3http://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/w/index.php?title=Share_issue_privatization&action=edit&redlink=1http://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/w/index.php?title=Asset_sale_privatization&action=edit&redlink=1http://en.wikipedia.org/wiki/Auctionhttp://en.wikipedia.org/wiki/Treuhandhttp://en.wikipedia.org/wiki/Voucher_privatizationhttp://en.wikipedia.org/w/index.php?title=Privatization_from_below&action=edit&redlink=1http://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Income_inequalityhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/Transition_economieshttp://en.wikipedia.org/wiki/Privatization_in_Russiahttp://en.wikipedia.org/wiki/Polandhttp://en.wikipedia.org/wiki/Czech_Republichttp://en.wikipedia.org/wiki/Slovakiahttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=4http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=5http://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Competition


7/20

general, it is argued that over time this will lead to lower prices, improved quality, more

choices, less corruption, less red tape, and quicker delivery. Many proponents do not

argue that everything should be privatized. According to them, market failures andnatural monopoliescould be problematic. However, some Austrian school

economists[who?] and anarcho-capitalists[who?] would prefer that every function of the state

be privatized, including defenseand dispute resolution.

The basic economic argument given for privatization states that governments have fewincentives to ensure that the enterprises they own are well run. One problem is the lack of

comparison in state monopolies. It is difficult to know if an enterprise is efficient or not

without competitors to compare against. Another is that the central governmentadministration, and the voters who elect them, have difficulty evaluating the efficiency of

numerous and very different enterprises. A private owner, often specializing and gaining

great knowledge about a certain industrial sector, can evaluate and then reward or punishthe management in much fewer enterprises much more efficiently. Also, governments

can raise money by taxation or simply printing money should revenues be insufficient,

unlike a private owner.

If private and state-owned enterprises compete against each other, then the state ownedmay borrow money more cheaply from the debt markets than private enterprises, since

the state owned enterprises are ultimately backed by the taxation and printing press

power of the state, gaining an unfair advantage.

Privatizing a non-profitable state-owned company may force the company to raise pricesin order to become profitable. However, this would remove the need for the state to

provide tax money in order to cover the losses.

Proponents of privatization

[who?]

make the following arguments:

Performance. State-run industries tend to bebureaucratic. A political governmentmay only be motivated to improve a function when its poor performance becomes

politically sensitive, and such an improvement can be reversed easily by another

regime.[citation needed]

Increased efficiency. Private companies and firms have a greater incentive toproduce more goods and services for the sake of reaching acustomer base and

hence increasing profits. A public organization would not be as productive due to

the lack of financing allocated by the entire government's budget that mustconsider other areas of the economy. (Note: However according to theSamuelson

Condition, public organizations tend to produce more of a public good or service.

Also, since private firms provide goods and services according to the marginalprivate benefit curve, private firms have an incentive to produce less.)

Specialization. A privatebusiness has the ability to focus all relevant human and

financial resources onto specific functions. A state-owned firm does not have the

necessary resources to specialize its goods and services as a result of the generalproducts provided to the greatest number of people in thepopulation.
http://en.wikipedia.org/wiki/Market_failurehttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Austrian_schoolhttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Anarcho-capitalistshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Private_defense_agencyhttp://en.wikipedia.org/wiki/Private_defense_agencyhttp://en.wikipedia.org/wiki/Alternative_dispute_resolutionhttp://en.wikipedia.org/wiki/Alternative_dispute_resolutionhttp://en.wikipedia.org/wiki/Incentiveshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Bureaucratichttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Goods_and_serviceshttp://en.wikipedia.org/wiki/Customer_basehttp://en.wikipedia.org/wiki/Customer_basehttp://en.wikipedia.org/wiki/Samuelson_conditionhttp://en.wikipedia.org/wiki/Samuelson_conditionhttp://en.wikipedia.org/wiki/Samuelson_conditionhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Departmentalizationhttp://en.wikipedia.org/wiki/Populationhttp://en.wikipedia.org/wiki/Populationhttp://en.wikipedia.org/wiki/Market_failurehttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Austrian_schoolhttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Anarcho-capitalistshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Private_defense_agencyhttp://en.wikipedia.org/wiki/Alternative_dispute_resolutionhttp://en.wikipedia.org/wiki/Incentiveshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Bureaucratichttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Goods_and_serviceshttp://en.wikipedia.org/wiki/Customer_basehttp://en.wikipedia.org/wiki/Samuelson_conditionhttp://en.wikipedia.org/wiki/Samuelson_conditionhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Departmentalizationhttp://en.wikipedia.org/wiki/Population


8/20

Improvements. Conversely, the government may put off improvements due to

political sensitivity and special interests even in cases of companies that are

run well and better serve their customers' needs.

Corruption. A state-monopolized function is prone tocorruption; decisions are

made primarily for political reasons, personal gain of the decision-maker (i.e.

"graft"), rather than economic ones. Corruption (orprincipal-agent issues) in astate-run corporation affects the ongoing asset stream and company performance,

whereas any corruption that may occur during the privatization process is a one-

time event and does not affect ongoing cash flow or performance of the company.

Accountability. Managers of privately owned companies are accountable to their

owners/shareholders and to the consumer, and can only exist and thrive where

needs are met. Managers of publicly owned companies are required to be more

accountable to the broader community and to political "stakeholders". This canreduce their ability to directly and specifically serve the needs of their customers,

and can bias investment decisions away from otherwise profitable areas.

Civil-liberty concerns. A company controlled by the state may have access to

information or assets which may be used against dissidents or any individualswho disagree with their policies.

Goals. A political government tends to run an industry or company forpoliticalgoals rather than economic ones.

Capital. Privately held companies can sometimes more easily raise investment

capital in the financial markets when such local markets exist and are suitably

liquid. While interest rates for private companies are often higher than forgovernment debt, this can serve as a useful constraint to promote efficient

investments by private companies, instead of cross-subsidizing them with the

overall credit-risk of the country. Investment decisions are then governed bymarket interest rates. State-owned industries have to compete with demands from

other government departments and special interests. In either case, for smaller

markets,political riskmay add substantially to the cost of capital.

Security. Governments have had the tendency to "bail out" poorly run businesses,

often due to the sensitivity of job losses, when economically, it may be better to

let the business fold.

Lack of market discipline. Poorly managed state companies are insulated from the

same discipline as private companies, which could go bankrupt, have their

management removed, or be taken over by competitors. Private companies are

also able to take greater risks and then seek bankruptcy protection againstcreditors if those risks turn sour.

Natural monopolies. The existence ofnatural monopolies does not mean that

these sectors must be state owned. Governments can enact or are armed with anti-trust legislationand bodies to deal with anti-competitive behavior of all

companies public or private.

Concentration of wealth. Ownership of and profits from successful enterprisestend to be dispersed and diversified -particularly in voucher privatization. The

availability of more investment vehicles stimulates capital markets and promotes

liquidity and job creation.
http://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Principal-agenthttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Economichttp://en.wikipedia.org/wiki/Political_riskhttp://en.wikipedia.org/wiki/Political_riskhttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Principal-agenthttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Economichttp://en.wikipedia.org/wiki/Political_riskhttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Anti-trust_legislation


9/20

Political influence. Nationalized industries are prone to interference from

politicians forpoliticalorpopulist reasons. Examples include making an industry

buy supplies from local producers (when that may be more expensive than buyingfrom abroad), forcing an industry to freeze its prices/fares to satisfy the electorate

or control inflation, increasing its staffing to reduce unemployment, or moving its

operations to marginal constituencies. Profits. Corporations exist to generate profits for their shareholders. Private

companies make a profit by enticing consumersto buy their products in

preference to their competitors' (or by increasingprimary demand for theirproducts, or by reducing costs). Private corporations typically profit more if they

serve the needs of their clients well. Corporations of different sizes may target

different market niches in order to focus on marginal groups and satisfy their

demand. A company with good corporate governance will therefore beincentivized to meet the needs of its customers efficiently.

Job gains. As the economy becomes more efficient, more profits are obtained and

no government subsidies and less taxes are needed, there will be more private

money available for investments and consumption and more profitable and better-paid jobs will be created than in the case of a more regulated economy.[6][unreliablesource?]

[edit] Opposing

Opponents of privatization[who?] dispute the claims concerning the alleged lack ofincentive for governments to ensure that their public services are well run, on the basis of

the idea that governments are proxy owners answerable to the people. It is argued[by whom?]

that a government which runs nationalized enterprises poorly will lose public support and

votes, while a government which runs those enterprises well will gain public support and

votes. Thus, democratic governments do have an incentive to maximize efficiency innationalized companies, due to the pressure of future elections.

Opponents of certain privatizations believe that certainpublic goods and services shouldremain primarily in the hands of government in order to ensure that everyone in society

has access to them (such as law enforcement, basic health care, and basic education).

Likewise,private goods and services should remain in the hands of the private sector.

There is apositive externality when the government provides public goods and servicesto society at large, such as defense and disease control. As fornatural monopoliesthey

are by their nature not subject to fair competition and better administrated by the state.

The controlling ethical issue in the anti-privatization perspective is the need forresponsible stewardship of social-support missions. Market interactions are all guided byself-interest, and successful actors in a healthy market must be committed to charging the

maximum price that the market will bear. Privatization opponents believe that this model

is not compatible with government missions for social support, whose primary aim isdelivering affordability and quality of service to society.
http://en.wikipedia.org/wiki/Politicianshttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Populismhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Constituencyhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/w/index.php?title=Primary_demand&action=edit&redlink=1http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/wiki/Privatization#cite_note-5%23cite_note-5http://en.wikipedia.org/wiki/Privatization#cite_note-5%23cite_note-5http://en.wikipedia.org/wiki/Wikipedia:Identifying_reliable_sourceshttp://en.wikipedia.org/wiki/Wikipedia:Identifying_reliable_sourceshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=6http://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Educationhttp://en.wikipedia.org/wiki/Private_goodhttp://en.wikipedia.org/wiki/Externality#Positivehttp://en.wikipedia.org/wiki/National_securityhttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Politicianshttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Populismhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Constituencyhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/w/index.php?title=Primary_demand&action=edit&redlink=1http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/wiki/Privatization#cite_note-5%23cite_note-5http://en.wikipedia.org/wiki/Wikipedia:Identifying_reliable_sourceshttp://en.wikipedia.org/wiki/Wikipedia:Identifying_reliable_sourceshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=6http://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Educationhttp://en.wikipedia.org/wiki/Private_goodhttp://en.wikipedia.org/wiki/Externality#Positivehttp://en.wikipedia.org/wiki/National_securityhttp://en.wikipedia.org/wiki/Natural_monopolies


10/20

Many privatization opponents[who?] also warn against the practice's inherent tendency

toward corruption. As many areas which the government could provide are essentially

profitless, the only way private companies could, to any degree, operate them would bethrough contracts or block payments. In these cases, the private firm's performance in a

particular project would be removed from their performance, and embezzlement and

dangerous cost-cutting measures might be taken to maximize profits.

Furthermore, large corporations may paypublic-relationsprofessionals to convincedecision-makers that privatization is a sensible idea. Corporations typically have far more

resources for expert testimony, advertisements, conferences and otherpropaganda efforts

than anti-privatization advocates.

Some[who?] would also point out that privatizing certain functions of government mighthamper coordination, and charge firms with specialized and limited capabilities to

perform functions which they are not suited for. In rebuilding a war torn nation's

infrastructure, for example, a private firm would, in order to provide security, either have

to hire security, which would be both necessarily limited and complicate their functions,or coordinate with government, which, due to a lack of command structure shared

between firm and government, might be difficult. A government agency, on the otherhand, would have the entire military of a nation to draw upon for security, whose chain of

command is clearly defined. Opponents would say that this is a false assertion: numerous

books refer to poor organization between government departments (for example theHurricane Katrina incident).

Although private companies will provide a similar good or service alongside the

government, opponents of privatization are careful about completely transferring the

provision of public goods, services and assets into private hands for the following

reasons:

Performance. A democratically elected government is accountable to the people

through a legislature, Congress orParliament, and is motivated to safeguarding

the assets of the nation. The profit motive may be subordinated to socialobjectives.

Increased Market Efficiency forPublic Goods and Services. A public

organization tends to produce more of a public good or service according to theSamuelson condition andMarginal Social Benefit curve. This results in a better

positive externalityfor society. On the other hand, a private firm does not provide

sufficient public goods and services, because it provides them on themarginal

private benefit curve or private demand curve. A private firm provides less inorder to make more profit. Therefore the public goods and services are provided

more efficiently for society as a whole by a public organization. (Any market is

more efficient for society when marginal social benefits equals marginal socialcosts, MSB=MSC.)

Improvements. the government is motivated to performance improvements as

well run businesses contribute to the State's revenues.
http://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Propagandahttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Samuelson_conditionhttp://en.wikipedia.org/wiki/Externality#External_benefitshttp://en.wikipedia.org/wiki/Externality#External_benefitshttp://en.wikipedia.org/wiki/Externalityhttp://en.wikipedia.org/wiki/Externalityhttp://en.wikipedia.org/wiki/Externality#External_benefitshttp://en.wikipedia.org/wiki/Externality#External_benefitshttp://en.wikipedia.org/wiki/Externality#External_benefitshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Propagandahttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Samuelson_conditionhttp://en.wikipedia.org/wiki/Externality#External_benefitshttp://en.wikipedia.org/wiki/Externalityhttp://en.wikipedia.org/wiki/Externality#External_benefitshttp://en.wikipedia.org/wiki/Externality#External_benefits


11/20

Corruption. Government ministers and civil servants are bound to uphold the

highest ethical standards, and standards of probity are guaranteed through codes

of conduct and declarations of interest. However, the selling process could lacktransparency, allowing the purchaser and civil servants controlling the sale to gain

personally.

Accountability. The public does not have any control or oversight of privatecompanies.

Civil-liberty concerns. A democratically elected government is accountable to the

people through aparliament, and can intervene when civil liberties are threatened.

Goals. The government may seek to use state companies as instruments to further

social goals for the benefit of the nation as a whole.

Capital. Governments can raise money in the financial markets most cheaply to

re-lend to state-owned enterprises. Strategic and Sensitive areas. Governments have chosen to keep certain

companies/industries under public control because of their strategic importance or

sensitive nature.

Cuts in essential services. If a government-owned company providing an essentialservice (such as the water supply) to all citizens is privatized, its new owner(s)

could lead to the abandoning of the social obligation to those who are less able topay, or to regions where this service is unprofitable.

Natural monopolies. Privatization will not result in true competition if a natural

monopoly exists.

Concentration of wealth. Profits from successful enterprises end up in private,often foreign, hands instead of being available for the common good.

Political influence. Governments may more easily exert pressure on state-owned

firms to help implementing government policy.

Downsizing. Private companies often face a conflict between profitability and

service levels, and could over-react to short-term events. A state-owned company

might have a longer-term view, and thus be less likely to cut back on maintenanceor staff costs, training etc., to stem short term losses. Many private companies

have downsized while making record profits.

Profit. Private companies do not have any goal other than to maximize profits. Aprivate company will serve the needs of those who are most willing (and able) to

pay, as opposed to the needs of the majority, and are thus anti-democratic. The

more necessary a good is, the lower theprice elasticity of demand, as people will

attempt to buy it no matter the price. In the case of price elasticity of demand iszero (perfectly inelastic good), demand part of supply and demand theories does

not work.

Privatization and Poverty. It is acknowledged by many studies that there arewinners and losers with privatization. The number of losers which may add up

to the size and severity of povertycan be unexpectedly large if the method and

process of privatization and how it is implemented are seriously flawed (e.g. lackof transparency leading to state-owned assets being appropriated at minuscule

amounts by those with political connections, absence of regulatory institutions

leading to transfer of monopoly rents from public to private sector, improper
http://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Necessity_goodhttp://en.wikipedia.org/wiki/Price_elasticity_of_demand#Elasticity_and_revenuehttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Necessity_goodhttp://en.wikipedia.org/wiki/Price_elasticity_of_demand#Elasticity_and_revenue


12/20

design and inadequate control of the privatization process leading toasset

stripping.[7]

Job Loss. Due to the additional financial burden placed on privatized companiesto succeed without any government help, unlike the public companies, jobs could

be lost to keep more money in the company.

[edit] Intermediate views

Others don't dispute that well-run for-profit entities with sound corporate governancemay be considerably more efficient than an inefficient governmentalbureaucracy or

NGO, however many implementations of privatization can - in practice - lead to the fire

sale of public assets, and/or to inefficient or corrupt - for profit management.

[edit] Developed or minimally corrupt economies

A top executive can readily reduce the perceived value of an asset due to information

asymmetry. The executive can accelerate accounting of expected expenses, delayaccounting of expected revenue, engage inoff balance sheet transactions to make the

company's profitability appear temporarily poorer, or simply promote and report severelyconservative (e.g. pessimistic) estimates of future earnings. Such seemingly adverse

earnings news will be likely to (at least temporarily) reduce sale price. (This is again due

to information asymmetries since it is more common for top executives to do everything

they can to window dress their earnings forecasts). There are typically very few legalrisks to being 'too conservative' in one's accounting and earnings estimates.

When the entity gets taken private - at a dramatically lower price - the new private owner

gains a windfall from the former top executive's actions to (surreptitiously) reduce the

sales price. This can represent 10s of billions of dollars (questionably) transferred fromprevious owners (the public) to the takeover artist. The former top executive is then

rewarded with a golden handshake for presiding over the fire sale that can sometimes be

in the 10s or 100s of millions of dollars for one or two years of work. (This isnevertheless an excellent bargain for the takeover artist, who will tend to benefit from

developing a reputationof being very generous to parting top executives).

When a publicly held asset, mutual ornon-profit organizationundergoes privatization,

top executives often reap tremendous monetary benefits. The executives can facilitate theprocess by making the entity appear to be in financial crisis - this reduces the sale price

(to the profit of the purchaser), and makes non-profits and governments more likely to

sell.

Ironically, it can also contribute to a public perception that private entities are more

efficiently run reinforcing the political will to sell of public assets. Again, due to

asymmetric information, policy makers and the general public see a government owned

firm that was a financial 'disaster' - miraculously turned around by the private sector (andtypically resold) within a few years.
http://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Privatization#cite_note-6%23cite_note-6http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=7http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/wiki/Bureaucracyhttp://en.wikipedia.org/wiki/NGOhttp://en.wikipedia.org/wiki/Fire_salehttp://en.wikipedia.org/wiki/Fire_salehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=8http://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Fire_salehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Mutualhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Asymmetric_informationhttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Privatization#cite_note-6%23cite_note-6http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=7http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/wiki/Bureaucracyhttp://en.wikipedia.org/wiki/NGOhttp://en.wikipedia.org/wiki/Fire_salehttp://en.wikipedia.org/wiki/Fire_salehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=8http://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Fire_salehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Mutualhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Asymmetric_information


13/20

[edit] Underdeveloped or highly corrupt economies

In a society with substantial corruption, privatization allows the government currently in

power and its backers to siphon a large portion of the entire net present value of state

assets away from the public and into the accounts of their favored power brokers.

Without privatization, corrupt officials would have to slowly harvest their corruptearnings over time. As such, efficient privatization depends on their being a very low of

current corruption among the current government officials since it allows for far more

'efficient' extraction of corrupt rents.

Of course, corrupt governments can also extract corrupt rents quite efficiently in other

ways - particularly by borrowing extensively to engage in spending on overly favorable

contracts with their backers (or on tax shelters, subsidies or other giveaways).Generations of subsequent taxpayers are then left with paying back the debt incurred for

corrupt transfers made decades previously. Naturally, this may lead to the sale of public

assets....

In the end, the public is left with a government that taxes them heavily, and gives themnothing in return. Debt repayment is enforced by international agreements and agencies

such as the IMF. Infrastructure and upkeep is sacrificed - leading to a further decay in the

economic efficiency of the country over time.

[edit] Outcomes

This article has multiple issues. Please helpimprove it or discuss these issueson the talk page.

Itsneutralityis disputed. Tagged since March 2008.

Its factual accuracy is disputed. Tagged since March 2008.

Literature reviews [8][9] find that in competitive industries with well-informed consumers,

privatization consistently improves efficiency. Such efficiency gains mean a one-offincrease in GDP, but through improved incentives to innovate and reduce costs also tend

to raise the rate ofeconomic growth. The type of industries to which this generally

applies include manufacturingand retailing. Although typically there are social costsassociated with these efficiency gains[10], many economists argue that these can be dealt

with by appropriate government support through redistributionand perhaps retraining.

In sectors that are natural monopoliesorpublic services (such as, say, passenger rail in

the United States), the results of privatization are much more mixed, as a privatemonopoly behaves much the same as a public one in liberal economic theory. The

government is actually seen as a more natural provider of public goods and services.

However, the efficiency of an existing public sector operation can be put into questionrequiring changes to be made. Changes may include,inter alia, the imposition of related
http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=9http://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Tax_sheltershttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=10http://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Talk:Privatizationhttp://en.wikipedia.org/wiki/Talk:Privatizationhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:NPOV_disputehttp://en.wikipedia.org/wiki/Wikipedia:Accuracy_disputehttp://en.wikipedia.org/wiki/Privatization#cite_note-7%23cite_note-7http://en.wikipedia.org/wiki/Privatization#cite_note-8%23cite_note-8http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Privatization#cite_note-9%23cite_note-9http://en.wikipedia.org/wiki/Privatization#cite_note-9%23cite_note-9http://en.wikipedia.org/wiki/Redistribution_(economics)http://en.wikipedia.org/wiki/Redistribution_(economics)http://en.wikipedia.org/wiki/Retraininghttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/Economic_liberalismhttp://en.wikipedia.org/wiki/Inter_aliahttp://en.wikipedia.org/wiki/Inter_aliahttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=9http://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Tax_sheltershttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=10http://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Talk:Privatizationhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:NPOV_disputehttp://en.wikipedia.org/wiki/Wikipedia:Accuracy_disputehttp://en.wikipedia.org/wiki/Privatization#cite_note-7%23cite_note-7http://en.wikipedia.org/wiki/Privatization#cite_note-8%23cite_note-8http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Privatization#cite_note-9%23cite_note-9http://en.wikipedia.org/wiki/Redistribution_(economics)http://en.wikipedia.org/wiki/Retraininghttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/Economic_liberalismhttp://en.wikipedia.org/wiki/Inter_alia


14/20

reforms such as greater transparency and accountability of management, an improved

cost-benefit analysis, improved internal controls,regulatory systems, and better

financing, rather than privatization itself.

Regardingpolitical corruption, it is a controversial issue whether the size of the public

sector per se results in corruption. TheNordic countries have low corruption but largepublic sectors. However, these countries score high on the Ease of Doing Business Index,

due to good and often simple regulations, and forpolitical rights and civil liberties,showing high government accountabilityand transparency. One should also notice the

successful, corruption-free privatizations and restructuring of government enterprises in

the Nordic countries. For example, dismantling telecommunications monopolies hasresulted in several new players entering the market and intense competition with price

and service.

Also regarding corruption, the sales themselves give a large opportunity for grand

corruption. Privatizations in Russia and Latin America were accompanied by large-scale

corruption during the sale of the state-owned companies. Those with political connectionsunfairly gained large wealth, which has discredited privatization in these regions. While

media have reported widely the grand corruption that accompanied the sales, studies haveargued that in addition to increased operating efficiency, daily petty corruption is, or

would be, larger without privatization, and that corruption is more prevalent in non-

privatized sectors. Furthermore, there is evidence to suggest that extralegal and unofficialactivities are more prevalent in countries that privatized less.[11]

[edit] Alternatives

This article may contain original research. Pleaseimprove it by verifyingthe

claims made and adding references. Statements consisting only of originalresearch may be removed. More details may be available on the talk page.(January 2010)

[edit] Public utility

The enterprise can remain as a public utility.

[edit] Non-profit

A private non-profit organization could manage the enterprise.

[edit] Municipalization

Transferring control to municipal government

[edit] Outsourcing or sub-contracting
http://en.wikipedia.org/wiki/Cost-benefit_analysishttp://en.wikipedia.org/wiki/Cost-benefit_analysishttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Nordic_countrieshttp://en.wikipedia.org/wiki/Ease_of_Doing_Business_Indexhttp://en.wikipedia.org/wiki/Freedom_in_the_Worldhttp://en.wikipedia.org/wiki/Freedom_in_the_Worldhttp://en.wikipedia.org/wiki/Accountabilityhttp://en.wikipedia.org/wiki/Accountabilityhttp://en.wikipedia.org/wiki/Privatization#cite_note-10%23cite_note-10http://en.wikipedia.org/wiki/Privatization#cite_note-10%23cite_note-10http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=11http://en.wikipedia.org/wiki/Wikipedia:No_original_researchhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Wikipedia:Verifiabilityhttp://en.wikipedia.org/wiki/Wikipedia:Verifiabilityhttp://en.wikipedia.org/wiki/Wikipedia:Referenceshttp://en.wikipedia.org/wiki/Wikipedia:Referenceshttp://en.wikipedia.org/wiki/Talk:Privatizationhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=12http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=13http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=14http://en.wikipedia.org/wiki/Municipalityhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=15http://en.wikipedia.org/wiki/Cost-benefit_analysishttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Nordic_countrieshttp://en.wikipedia.org/wiki/Ease_of_Doing_Business_Indexhttp://en.wikipedia.org/wiki/Freedom_in_the_Worldhttp://en.wikipedia.org/wiki/Accountabilityhttp://en.wikipedia.org/wiki/Privatization#cite_note-10%23cite_note-10http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=11http://en.wikipedia.org/wiki/Wikipedia:No_original_researchhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Wikipedia:Verifiabilityhttp://en.wikipedia.org/wiki/Wikipedia:Referenceshttp://en.wikipedia.org/wiki/Talk:Privatizationhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=12http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=13http://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=14http://en.wikipedia.org/wiki/Municipalityhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=15


15/20

National services may sub-contract or out-source functions to private enterprises. A

notable example of this is in the United Kingdom, where many municipalitieshave

contracted out their garbage collection or administration of parking fines to privatecompanies. In addition, the British government has involved the private sector more in

the workings of theNational Health Serviceprincipally through outsourcing the

construction and operation of new hospitals to private companies. There are also movesto refer patients to private surgeries to ease the load on existing NHS human resources,

and covering the cost of this.

See also:private finance initiative

[edit] Partial ownership

An enterprise may be privatized, but with the state retaining a number of shares in the

resultant company. This is a particularly notable phenomenon in France, where the stateoften retains a "blocking stake" in private industries. In Germany, the state privatized

Deutsche Telekomin small tranches, and still retains about a third of the company. As of2005, the state ofNorth Rhine-Westphaliais also planning to buy shares in the energycompany E.ON in what is claimed to be an attempt to control spiraling costs.

Whilst partial privatization could be an alternative, it is more often a stepping stone to

full privatization. It can offer the business a smoother transition period during which it

can gradually adjust to market competition. Some state-owned companies are so largethat there is the risk of sucking liquidity from the rest of the market, even in the most

liquid marketplaces: this may favor gradual privatization. The first tranche of a multi-

step privatization would also in the first instance establish a valuation for the enterprise tomitigate complaints of under-pricing.

In some instances of partial privatization of contracted services, some portion(s) of the

state-owned service are provided by private-sector contractors, but the government

retains the capacity to self-operate at contract intervals, if it so chooses. An example ofpartial privatization would be some forms ofschool bus service contracting, such as

arrangements where equipment and other resources purchased with government capital

funds and/o those already owned by a governmental entity are used by the contractor for

a period of time in providing services, but ownership is retained by the governmentalunit. This form of partial privatization eases concerns that once an operation is

contracted, the government may be unable to obtain sufficient competitive bids, and be

subjected to terms less desirable than the prior operation under state-ownership. Under

that scenario, a reverse privatization would be more feasible for the government. (seesection below)

[edit] Publicprivate partnership

Main article: Public-private partnership

[edit] Notable examples
http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Municipalitieshttp://en.wikipedia.org/wiki/Municipalitieshttp://en.wikipedia.org/wiki/National_Health_Servicehttp://en.wikipedia.org/wiki/National_Health_Servicehttp://en.wikipedia.org/wiki/Private_finance_initiativehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=16http://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Deutsche_Telekomhttp://en.wikipedia.org/wiki/Deutsche_Telekomhttp://en.wikipedia.org/wiki/North_Rhine-Westphaliahttp://en.wikipedia.org/wiki/North_Rhine-Westphaliahttp://en.wikipedia.org/wiki/E.ONhttp://en.wikipedia.org/wiki/School_bus_contractorhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=17http://en.wikipedia.org/wiki/Public-private_partnershiphttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=18http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Municipalitieshttp://en.wikipedia.org/wiki/National_Health_Servicehttp://en.wikipedia.org/wiki/Private_finance_initiativehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=16http://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Deutsche_Telekomhttp://en.wikipedia.org/wiki/North_Rhine-Westphaliahttp://en.wikipedia.org/wiki/E.ONhttp://en.wikipedia.org/wiki/School_bus_contractorhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=17http://en.wikipedia.org/wiki/Public-private_partnershiphttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=18


16/20

See also: List of privatizations

The largest privatization in history involved Japan Post. It was the nation's largest

employer and one third of all Japanese government employees worked for Japan Post.Japan Post was often said to be the largest holder of personal savings in the world.

The Prime MinisterJunichiro Koizumi wanted to privatize it because it was thought[by

whom?] to be an inefficient and a source for corruption. In September 2003, Koizumi's

cabinet proposed splitting Japan Post into four separate companies: a bank, an insurancecompany, a postal service company, and a fourth company to handle the post offices as

retail storefronts of the other three.

After the Upper House rejected privatization, Koizumi scheduled nationwide elections

for September 11, 2005. He declared the election to be a referendum on postalprivatization. Koizumi subsequently won this election, gaining the necessary

supermajority and a mandate for reform, and in October 2005, the bill was passed to

privatize Japan Post in 2007.

[12]

Nippon Telegraph and Telephone's privatization in 1987 involved the largest share-offering in financial historyat the time.[13] 15 of the world's 20 largest public share

offerings have been privatizations of telecoms.[13]

The United Kingdom's largest public-share offerings were privatizations ofBritish

Telecom andBritish Gas. The largest public-share offering in France was FranceTelecom.

[edit] Negative responses

Privatization proposals in keypublic service sectors such as waterand electricity in many

cases meet with strong resistance from opposition political parties and from civil societygroups, many of which regard them as natural monopolies. Campaigns typically involve

demonstrations and democratic political activities; sometimes the authorities attempt to

suppress opposition using violence (e.g. Cochabamba protests of 2000 in Bolivia andprotests in Arequipa, Peru, in June 2002). Opposition is often strongly supported by trade

unions. Opposition is usually strongest to water privatization as well as Cochabamba,

recent examples include Haiti, GhanaandUruguay (2004). In the latter case a civil-society-initiated referendum banning water privatization was passed in October 2004.

[edit] Reversion

A reversion from contracted ownership of an enterprise or services to governmental

ownership and/or provision is called reverse privatization ornationalization. Such asituation most often occurs when a privatization contractor fails financially and/or the

governmental unit has failed to purchase satisfactory service at prices it regards as less

than with state-ownership or self-operation of services. Another circumstance may occur
http://en.wikipedia.org/wiki/List_of_privatizationshttp://en.wikipedia.org/wiki/Japan_Posthttp://en.wikipedia.org/wiki/Junichiro_Koizumihttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Japan_general_election,_2005http://en.wikipedia.org/wiki/Supermajorityhttp://en.wikipedia.org/wiki/Privatization#cite_note-11%23cite_note-11http://en.wikipedia.org/wiki/Nippon_Telegraph_and_Telephonehttp://en.wikipedia.org/wiki/Nippon_Telegraph_and_Telephonehttp://en.wikipedia.org/w/index.php?title=Financial_history&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Financial_history&action=edit&redlink=1http://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-12%23cite_note-megginson205-12http://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-12%23cite_note-megginson205-12http://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-12%23cite_note-megginson205-12http://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Gas_plchttp://en.wikipedia.org/wiki/British_Gas_plchttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=19http://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Electricityhttp://en.wikipedia.org/wiki/Civil_societyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Cochabamba_protests_of_2000http://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/Arequipahttp://en.wikipedia.org/wiki/Arequipahttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Water_privatizationhttp://en.wikipedia.org/wiki/Haitihttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Referendumhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=20http://en.wikipedia.org/wiki/Nationalizationhttp://en.wikipedia.org/wiki/List_of_privatizationshttp://en.wikipedia.org/wiki/Japan_Posthttp://en.wikipedia.org/wiki/Junichiro_Koizumihttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_wordshttp://en.wikipedia.org/wiki/Japan_general_election,_2005http://en.wikipedia.org/wiki/Supermajorityhttp://en.wikipedia.org/wiki/Privatization#cite_note-11%23cite_note-11http://en.wikipedia.org/wiki/Nippon_Telegraph_and_Telephonehttp://en.wikipedia.org/w/index.php?title=Financial_history&action=edit&redlink=1http://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-12%23cite_note-megginson205-12http://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-12%23cite_note-megginson205-12http://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Gas_plchttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=19http://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Electricityhttp://en.wikipedia.org/wiki/Civil_societyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Cochabamba_protests_of_2000http://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/Arequipahttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Water_privatizationhttp://en.wikipedia.org/wiki/Haitihttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Referendumhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit&section=20http://en.wikipedia.org/wiki/Nationalization


17/20

when greater control than viable under privatization is determined to be in the

governmental unit's best interest.

National-security concerns may be the source of reverse privatization actions when themost likely providers are non-domestic or international corporations or entities. For

example, in 2001, in response to the September 11th attacks, the then-private airportsecurity industry in the United States was nationalized[citation needed] and put under the

privatization rahul

Documents