The Unspoken Truth about Privatization

The Unspoken Truth about Privatization covers the length and breadth of this interesting topic in nine short essays. The author defines privatization as 'the policy or process of converting, wholly or partially, public enterprises to private enterprises'The main characteristics of the public sector and of the private sector are then discussed in turn, as a prelude to an examination of the rationale behind privatization. Once the case for privatization is established, the author proceeds methodically to study the process itself, and concludes that a decision to privatize should be based not on political ideology alone, but on a sober empirical analysis of its expected costs and benefits.One of the book’s highlights is the emphasis placed on the importance of the 'indirect' costs of privatization, particularly those associated with the use of foreign resources. The presence of foreigners holding key positions in a newly independent state is often resented by the nationals, and may even lead to political instability.Another highlight is a myth exploded: the author denies any automatic link between privatization and democratization. He deplores donors who insist on progress in privatization as a condition for disbursing aid, based on their false belief that more privatization means better democracy.