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Privatization In Developing Countires.

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Introduction

PRIVATIZATION IN DEVELOPING COUNTIRES DIMPLE PATEL DECEMBER 2002 Privatization in Developing Countries Privatization has different definitions; some scholars define privatization as " the concept, which covers the transfer from the public to the private sector of the ownership and/or control of productive assets, their allocation and pricing, and the entitlement to the residual profit flows generated by them." (Abu Shair). Researchers identify five definitions of privatization; "the partial sale of state assets, which does not imply attenuation of state control; change in ownership and control; private ownership without any constraints on entry into the industry; changes only in patterns of control rather than ownership, and finally both ownership and key decision-making remain with the state while production." (Abu Shair). Basically privatization is to transfer public enterprises to private enterprises and less governmental interference. There can be many different definitions of privatization. It can be said that privatization should aid in the task of resolving problems of poverty and sustainable development. It should decrease the poverty rate and benefit the poor. There are about 240 public enterprises in India, and this makes up for almost 15 percent of India's GDP. It has been argued that the privatization of public enterprises can lead to an increase in product efficiency. With having private ownership it can encourage competition and can be profit maximizing As the productivity for newly privatized firms grow, and selling these public enterprises increases the Government revenue, which then helps the national debt. ...read more.

Middle

Because of the international perception of Africa of systematic-instability, potential investors have not even noticed the macro-legal and regulatory reforms that have been made in recent years. The future role of privatization in Africa will eventually create new business opportunities and jump-start the economy. Private economic power means that the political power will change eventually from the central government to the citizenry. This can be a huge step toward political maturity and democracy. "However, the political cost of a corrupt privatization program could be overwhelming." (Tanyi). Military coups in Africa generally thrive widespread dissatisfaction with politicians. "Also, investors seeking to achieve long term capital appreciation may not participate in a blatantly corrupt privatization program for that fear that a new regime might undo previous divestitures." (Tanyi). Privatization of Africa's economies would take apart power that certain ethnic groups and political groups have taken over in certain countries. A nation must privatize in order to survive as a competitive economy. Thus, privatization may be the solution to economic weakness and inefficiencies, poverty, mismanagement and deficits. Privatization has played a vital role in many other south Asian countries as well. Pakistan's objectives of privatization at different points in time have varied. "During the period 1988-90, privatization was pursued to divest 14 loss making manufacturing units and raise funds by selling shares of profit making units for retiring public debt and thus reducing debt servicing." ...read more.

Conclusion

Hence, the authorities may consider selling shares of public enterprises to workers at a discount. Therefore, privatization in India, Africa, and Pakistan eventually shall increase the competition and growth of the economy. There will be less governmental interference. Many of these developing countries are controlled by a corrupted political system. Transferring these public enterprises to private enterprises gives the government a smaller role on the enterprises. Hence, raising funds to pay off national debts. Privatization should no be used as a scapegoat the state to solve its economic and social problems. Privatization can create more jobs, increase incomes and improve standard of living. For these developing countries privatization would be the process that promotes economic development and democracy. Also, improving the performance of the former public enterprises. Bureaucratic control that once existed in the public sector would be reduced, the number of unproductive employees would be cut and the efficiency and performance would be greatly improved. Privatization can decrease poverty, which has been a main concern for developing countries such as India, Africa and Pakistan. The pace of privatization in developing countries appears to be slow. Hence, India, Pakistan and Africa will eventually gain a lot by privatization in the present and future. REFRENCE Abu Shair, Osama J. Privatization and Development. St. Martin's Press. New York, 1997 Cook, Paul. Privatization, Enterprise Development and Economic Reforms. Edward Elger. Massachusetts, 1998. Dinavo, Jacques V. Privatization in Developing Westport, CT, 1995. Tanyi, Gerlald. Designing Privatization Strategies in Africa. Prager. Westport, CT, 1997. ...read more.

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