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Privatization: Aims, Methods, Advantages, Disadvantages

Privatization: Aims, Methods, Advantages, Disadvantages

ESSAY IN MICROECONOMICS

PRIVATIZATION: AIMS, METHODS, ADVANTAGES, DISADVANTAGES

Moscow 2009

Introduction

Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector (government) to the private sector (business). In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement.
The term "Privatization" also has been used to describe two unrelated transactions. The first is a buyout, by the majority owner, of all shares of a public corporation or holding company's stock, privatizing a publicly traded stock. The second is a demutualization of a mutual organization or cooperative to form a joint stock company.
Privatization is sometimes called the quiet revolution that is sweeping the world. In fact, in one way or another in the process now involves more than 50 countries: sold off state enterprises, agriculture and industry are derived from government control, are leased to government service. The speed and magnitude of these changes is particularly intensified in 1981, and now they are held in countries all ideological directions, and with any level of development. The idea of privatization proved to be relevant and attractive to many states, strikingly different from each other.
The main reason for privatization, especially in least developed countries, served as the fiscal crisis caused by the realization that state-owned enterprises, as a rule, the embezzlers of national wealth. There was quite the feeling that instead of accumulating profits or the effective provision of services, they only devastate treasury. Hence, naturally, and concludes on the need to strengthen the role of the private sector.
Over time, most public enterprises are monopolies, have become nothing more than as an employment agency, providing work for political...

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