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An Assessment of Privatization

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  • Sunita Kikeri

Abstract

Mounting empirical evidence of privatization's benefits coincides with increasing dissatisfaction and opposition among citizens and policymakers. This dissatisfaction reflects the growing questioning of the benefits of privatization, the general downturn of global markets in the past few years and the resulting swing of the pendulum back toward increased governmental supervision, the overselling of privatization as a panacea for all economic problems, and the concern that privatization does not produce macroeconomic and distributional gains equivalent to its microeconomic benefits. This article takes stock of the empirical evidence and shows that in competitive sectors privatization has been a resounding success in improving firm performance. In infrastructure sectors, privatization improves welfare, a broader and crucial objective, when it is accompanied by proper policy and regulatory frameworks. The article argues that despite the growing concerns privatization should be neither abandoned nor reversed. Rather, there should be a strengthening of efforts to privatize correctly: by better tailoring privatization to local conditions, deepening efforts to promote competition and regulatory frameworks, enforcing transparency in sales processes, and introducing mechanisms to ensure that the poor have access to affordable essential services. Copyright 2004, Oxford University Press.

Suggested Citation

  • Sunita Kikeri, 2004. "An Assessment of Privatization," World Bank Research Observer, World Bank Group, vol. 19(1), pages 87-118.
  • Handle: RePEc:oup:wbrobs:v:19:y:2004:i:1:p:87-118
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    References listed on IDEAS

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    1. Friedman, Ernest H., 1993. "Letter to the editor," Social Science & Medicine, Elsevier, pages 383-383.
    2. Levin, Henry M., 1991. "The economics of educational choice," Economics of Education Review, Elsevier, pages 137-158.
    3. Herbert J. Walberg and Joseph L. Bast, 1993. "School Choice: The Essential Reform," Cato Journal, Cato Journal, Cato Institute, pages 101-121.
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    5. Friedman, Ernest H., 1993. "Letter to the editor," Social Science & Medicine, Elsevier, pages 583-583.
    6. Friedman, Ernest H., 1993. "Letter to the editor," Social Science & Medicine, Elsevier, pages 127-127.
    7. Hettich, Walter, 1969. "Mixed Public and Private Financing of Education: Comment," American Economic Review, American Economic Association, pages 210-212.
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    Citations

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    Cited by:

    1. Scheele, Ulrich, 2007. "Privatisierung, Liberalisierung und Deregulierung in netzgebundenen Infrastruktursektoren," Forschungs- und Sitzungsberichte der ARL: Aufsätze,in: Wandel der Stromversorgung und räumliche Politik, pages 35-67 Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften.
    2. Estrin, Saul & Pelletier, Adeline, 2016. "Privatisation in Developing Countries: What Are the Lessons of Recent Experience?," IZA Discussion Papers 10297, Institute for the Study of Labor (IZA).
    3. Sofronis Clerides, 2012. "Competition, Productivity and Competitiveness: Theory, Evidence, and an Agenda for Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 6(2), pages 81-88, December.
    4. Filippo BELLOC & Antonio NICITA, 2011. "Liberalization-privatization paths: policies and politics," Departmental Working Papers 2011-32, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    5. Boubakri, Narjess & Cosset, Jean-Claude & Fischer, Klaus & Guedhami, Omrane, 2005. "Privatization and bank performance in developing countries," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2015-2041, August.
    6. Antonio Rodriguez & Carlyn Ramlogan, 2007. "Corruption, privatisation and the distribution of income in Latin America," Development Research Working Paper Series 09/2007, Institute for Advanced Development Studies.
    7. Anupama Sen and Tooraj Jamasb, 2012. "Diversity in Unity: An Empirical Analysis of Electricity Deregulation in Indian States," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    8. Filippo Belloc & Antonio Nicita, 2011. "Liberalization-Privatization Paths: Policies and Politics," Department of Economics University of Siena 609, Department of Economics, University of Siena.
    9. Kikeri, Sunita & Kolo, Aishetu, 2005. "Privatization : trends and recent developments," Policy Research Working Paper Series 3765, The World Bank.
    10. Asiedu, Kofi Fred & Folmer, Henk, 2007. "Does Privatization Improve Job Satisfaction? The Case of Ghana," World Development, Elsevier, pages 1779-1795.
    11. Schuster, Philipp & Schmitt, Carina & Traub, Stefan, 2013. "The retreat of the state from entrepreneurial activities: A convergence analysis for OECD countries, 1980–2007," European Journal of Political Economy, Elsevier, pages 95-112.
    12. Okten, Cagla & Arin, K. Peren, 2006. "The Effects of Privatization on Efficiency: How Does Privatization Work?," World Development, Elsevier, pages 1537-1556.
    13. Cheng, Minying & Lin, Bingxuan & Wei, Minghai, 2013. "How does the relationship between multiple large shareholders affect corporate valuations? Evidence from China," Journal of Economics and Business, Elsevier, pages 43-70.
    14. Kshetri, Nir & Ajami, Riad, 2008. "Institutional reforms in the Gulf Cooperation Council economies: A conceptual framework," Journal of International Management, Elsevier, pages 300-318.
    15. A. Brandão & S. Castro, 2007. "State-owned enterprises as indirect instruments of entry regulation," Journal of Economics, Springer, pages 263-274.

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