Publication: Privatization in Competitive Sectors: The Record to Date
Date
2002-06
ISSN
Published
2002-06
Author(s)
Kikeri, Sunita
Nellis, John
Abstract
The paper reviews recent evidence on the
impact of privatization. It focuses on traditional
privatization efforts involving firms in competitive
markets. It shows that privatization improves firms'
financial and operating performance, yields positive fiscal
and macroeconomic benefits (proceeds are saved rather than
spent, transfers decline, and governments start collecting
taxes from privatized firms), and improves overall welfare.
The popular view that privatization always leads to layoffs
is unfounded. While highly protected firms have seen
significant declines in net employment, competitive firms
generally experienced slight declines if any.
Privatization's effects on wealth and income
distribution have only recently been receiving the attention
of analysts, and research is just getting underway. The
paper highlights the conditions for successful
privatization: strong political commitment combined with
wider public understanding of and support for the process;
creation of competitive markets through removal of entry and
exit barriers, financial sector reforms that create
commercially oriented banking systems, effective regulatory
frameworks that reinforce the benefits of private ownership;
transparency in the privatization process; and measures to
mitigate adverse social and environmental effects.
Citation
“Kikeri, Sunita; Nellis, John. 2002. Privatization in Competitive Sectors: The Record to Date. Policy, Research working paper;no. WPS 2860; Policy Research Working Paper;No.2860. © World Bank, Washington, D.C.. http://openknowledge.worldbank.org/handle/10986/14257 License: CC BY 3.0 IGO.”
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