Wave of Privatisation: A Theoretical Review

This theoretical paper illuminates the wave of privatisation of public enterprises (PEs) adopted by developed countries and less developed countries (LDCs) and how it affected them. It also high lightened the factors responsible for privatisation of PEs. Today, advanced, developing and under-developed countries are moving towards privatisation to grow rapidly, achieve economic growth and development, enhance financial as well as productive and allocative efficiency of PEs. It is an important component of the transition of the countries from socialism to market economies. Privatisation is proved helpful for developed countries i.e. increased the volume of production, enhanced productivity and quality, reduced in the cost of production per unit, etc; but hampered MDC and LDC i.e. increased inequalities in income. Thus study concluded that, efficiency cannot be improved through the privatisation of PEs rather it can be improved through developing competition among the industries. Competition is needed for economic growth and development. Privatisation is not yet proved panacea to all economic problems of any country.