Privatization

Task Force Chairs

• Jan Svejnar

• Roland Gerard

Privatization of large state-owned enterprises was a radical and new policy implemented late last century. Right wing governments engaged in privatization to minimize the size of government. Left wing governments, which were disappointed with the inefficiencies of large state-owned firms, implemented privatization policies in order to generate greater revenues and competition. These policies generated huge controversies. In economic terms, the efficiency improvements expected from privatization have often been argued to be absent or hard to detect. In many countries where state ownership had been used to provide cheap water, energy or transport to poorer segments of the population, privatization policies were criticized for their regressive redistribution effects. Privatization led to cutbacks in redistribution and stirred popular discontent in many countries. Privatization programs were also criticized for the rents they generated among the acquirers of state assets. Accusations of corruption and cronyism have stained the reputation of privatization programs in many countries.

Policymakers involved with privatization continue to face a large dilemma: be cautious with privatization and face the continued inefficiencies of state owned enterprises or be bold and risk major political backlash because of the redistributive effects of privatization, especially if rent-seeking and regulatory capture are involved. This is a steep trade-off that much of Africa, as well as other countries must negotiate.

The Privatization Task Force convenes some of the best experts in the world to to debate and write on the privatization programs of Eastern Europe, Africa, Latin America, and Asia. The Task Force analyzes successes and failures, reasons for each, and presents alternative ideas and frameworks for many countries in Africa and other regions that are formulating privatization policy and programs.