Privatization in Practice

Abstract

Once put into practice, the policy of privatization reveals itself as increasingly complex as it is applied to a vast range of circumstances, with an equally diverse set of outcomes that defy simple analytical prognostications. The content and emphasis of theory itself has been moulded in response to emerging empirical evidence. Empirical research typically examines the effect of ownership on enterprise performance by comparing results before and after privatization or comparing private with public entities. A balanced assessment is extremely difficult to make because one can never tell what would have happened otherwise and because there is scope for different interpretations of findings, with the same case studies used by supporters and critics of privatization alike. Privatization can be a cup half full or half empty depending on many factors such as underlying assumptions, time frame and distributional considerations. Even where privatization has failed it is readily asserted that it was not the policy but the context that was to blame. So the logical conclusion drawn is that the context needs to be made more conducive to successful privatization rather than that privatization should be rejected.