Privatization is a process by which the government sells off the public property/government’s stake in a company with the expectation of generating more efficiency and market opportunities. Privatization is a buzz word in current world where it is a very attractive concept for capitalist economies and sounds very bitter for economies preferring socialism governed by the central government.

Government sells off their stake in government corporations and department may be in full or may decide to retain a certain percentage of ownership to still exercise control over operations. Privatization may be done with the expectation of generating new business opportunities, flexibility and efficiency in government organization which are highly bureaucratic and inefficient. Privatization may attract foreign direct investments to the country as it implies the operations are liberal from the government with open market policies.

Privatization has may advantages such as:

  • Increased efficiency due to motive of profit.
  • Attract new investments into the country.
  • Utilization new technology in business operations.
  • Exposure to high capital with less restrictions.
  • Less bureaucracy.

Privatization has may disadvantages such as:

  • Ignored social welfare.
  • Creation of monopolies.
  • Exploitation of buyers with high prices.
  • Government losing control over important infrastructures.
  • Clashes between government and businesses.
  • Employee lay offs.
  • Trade union resistance and strikes

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