Journal Article

An Assessment of Privatization

Sunita Kikeri and John Nellis

in The World Bank Research Observer

Published on behalf of World Bank

Volume 19, issue 1, pages 87-118
Published in print March 2004 | ISSN: 0257-3032
Published online March 2004 | e-ISSN: 1564-6971 | DOI: http://dx.doi.org/10.1093/wbro/lkh014
An Assessment of Privatization

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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.

Journal Article.  0 words. 

Subjects: Development Planning and Policy

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