Disadvantages Of Privatization Essay

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Ever since its introduction by the British government, under Margaret Thatcher, privatization has been widely used by governments all over the world. In fact, it is arguable that public officials have become increasingly supportive of privatization as some sort of panacea for the financial troubles of government. Additionally, “under the ideological banner of globalization, America has made neo-liberalism and its policy of liberalization, deregulation and privatization a must developmental capsule on a global scale” (Odukoya 2007). Although a vast amount of research has not been conducted on privatization, there are a number of theoretical perspectives on the subject matter. This essay will therefore seek to provide a critical assessment of the theoretical and empirical justifications for privatization.
Privatization, broadly speaking, has been defined as “the deliberate sale by a government of state-owned enterprises (SOEs) or assets to private economic agents” (Megginson and Netter 2001). Other academics characterize privatization as “a key component of structural reform programs in both developed and developing economies. The aim of such programs is to achieve higher microeconomic efficiency and foster economic growth, as well as reduce public sector borrowing requirements through the
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This is due to the fact that privatization includes sweeping changes, often to “institutional archetypes which structure the governmental, societal, and economic arrangements and behaviours, it can be both challenging and problematic” (Carter 2013). Economies have been known to go into decline due to privatization and we cannot forget the social jitters, if not outright unrest, that can be caused by layoffs of large numbers of workers. Also, an increase in the unequal distribution of wealth can cause its own social and political
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