• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Privatization In Developing Countires.

Extracts from this document...

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Retailing In India - A Government Policy Perspective

    their excess funds as well as extend their business lines or brand reach. RPG's tie up with Dairy Farm International was the first Joint Venture in organized retailing in the country. It led to the establishment of specialty retail stores like Foodworld in grocery, Health and Glow in Pharmacy and Musicworld in music.

  2. Causes of the Great Depression

    When the foreign countries became no longer able to buy U.S. goods, U.S. exports fell 30% immediately. That $1.5 billion of foreign sales lost between 1929 to 1933 was fully one eighth of all lost American sales in the early years of the depression.

  1. Free essay

    Do high house prices in Trafford deter key public sector workers from seeking a ...

    ensure houses everywhere are affordable so key public sector workers are not deterred from seeking work. If public sector workers are unable to afford houses then there may be many costs to society, such as a poorly educated population and higher crime.

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    country is the cheapest for a particular product so you can go their and buy it and then leaves Sony with a loss of sales. Possibly Sony could just change markets. The USA could be a possible market because have one currency which is the dollars in all 52 states.

  1. Outline the reasons why the process of industrialization in developing countries might require government ...

    supplies facilitate and help to integrate the economic activities of a society. For example a tractor may help to increase the vegetable output of a farm but with out adequate transport facilities to get the extra output to markets it may not add anything to the national food production.

  2. Competitive Advantage & developing a Competitive Advantage over rivals.

    www.economist.com www.oligopolywatch.com Easy Jets Market Structure All organisations are in a market structure and Easy Jet is no different. Easy Jet is a low cost airline and is in the oligopoly market, but saying that you could argue that they are a duopoly with Ryan air, as these two are the major airlines that offer low cost flights.

  1. Liberalization: where it has lead us and where it is headed

    companies being funded that shouldn't have been funded and deals being done that shouldn't have been done. The result has been bad for the Indian taxpayers, who have shouldered the loss when the deals turned sour, and bad for the entrepreneurs, whose ventures have not been disciplined by competition for capital in the free markets.

  2. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    and international companies and individual supporters" (Hudson). Edmond McGarrell, director of the Institute's Crime Control Policy Center wrote the report Dangerous Drug Proposals. He feels that the costs of legalization far outweigh the current costs of prohibition, stating, "There is evidence both that drug laws work and that legalization would

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work