Blackwell Reference Online

Extract

The term “privatization” refers to the transfer of property and/or operations from state or public ownership and control into private hands. Among the principal reasons given to justify privatization is that private ownership and operation make a company perform more efficiently because its managers will be financially obligated to make the company accountable to shareholders. By contrast, government operations are often criticized for being inefficient, corrupt, and insufficiently responsive to the interests of the taxpayers who fund them. Advocates of privatization argue that the competitive environment of private industry fosters greater technological innovation, and that it pressures companies to introduce more stringent cost-cutting measures. Privatizations of vital public services have become a lightning-rod topic in recent decades, most notably in countries where economic and political institutions have undergone radical structural transformations, for example in central and eastern Europe and in Latin America. Following the collapse of the Soviet Union, gas and oil industries were privatized and then became the focus of corruption scandals and civic unrest as former government officials and communist party leaders became wealthy “oligarchs” through massive stock acquisitions. Elsewhere, recent attempts to privatize water services have led to public outrage and riots, most ... log in or subscribe to read full text