Privatization and Deregulation: A Veritable Tool for Economic Develiopment

INTRODUCTION

Privatization as major fallout of globalization has become a key aspect of the restructuring and adjustment programs advocated by the World Bank and the IMF as a consideration for lending to develop countries. The attention given this subject took it’s on set in  the privatization  efforts undertaken  by the British conservative government in the early 1980s and accelerated with the political transformations that took place in Eastern  Europe after the  fall of the Berlin wall.

Mary countries of the word embarked on privatization program in 1974. The United Kingdom implement a rigorous privatization program during the regime of Margaret Thatcher in the 1980s. one of the reason why British decided to embark on privatization program was largely informed by the need to cut back on public spending rather than the need to promote efficiency and competition.

The 1990s also witnessed the implementation of former Eastern block like Russia, Romania, and Czechoslovakia etc. Russia, Poland and other nations that were under  the repressive influence of  soviet union are now enthusiastically pursuing  fundamental economic reforms top on the  agenda of which is privatization. It has been documented that more than 8, 500 state owned enterprises in over 801 countries have been privatized in the past 12 years according to world to World Bank in 2003.

In the case of African countries and other  third  world countries, privatization came as a Greek gift  embedded in the structural adjustment programs [SAP] designed by the international monetary fund [IMF] as the elixir for the economics of the perpetually heavily indebted nations.

CONCEPT OF PRIVAZATION AND DEREGULATION

The Longman dictionary of contemporary English defines privatization as an act to sell an organization, industry, or service that was previously contributed and owned by the economy being totally private sector-led with the government offering complimentary and legal support.

Its essence is deregulation and de-bureaucration that is substitution of government control with market competitive forces of demand and supply, which ensures better economic efficiency and growth.

Deregulation on the other hand refers to changes in the overall function of the economy, which among other include ownership changes, organization changes and operational changes.

Deregulation of the economy sets up the basic condition under which privatization is carried out through measures such as new investment laws, abolishment of price subsidies, etc. This aims at creating an enabling environment for privatization to be implemented, deregulation normally constitutes first necessary but not sufficient step in the privatization process.