Privatization

Privatization is the transfer of ownership, property rights, or management control of a public sector enterprise or service to the private sector. It can involve the sale of state-owned assets, the transfer of management or shares, outsourcing of services, or private finance initiatives and public-private partnerships. The term is often used to describe a broad set of reforms intended to introduce private sector participation into previously government-controlled activities.

Common mechanisms include the sale of state-owned enterprises to private owners, public-private partnerships for new investment or operation, outsourcing of services to private contractors, concessions or licenses for private firms to operate utilities or infrastructure, and vouchers or employee stock sales to broaden private ownership. Governments pursue privatization to raise revenue, reduce fiscal burdens, foster competition, improve efficiency, and attract private capital for investment and innovation.

Impacts are mixed and highly context-specific. Proponents cite efficiency gains, cost reductions, improved service delivery, and stronger capital investment. Critics point to job losses, higher prices for consumers, unequal access to essential services, governance problems, and the emergence of private monopolies in natural monopoly sectors. Robust regulatory frameworks and independent oversight are generally deemed essential to protect public interests, ensure universal service where appropriate, and monitor quality and pricing.

Globally, privatization peaked in the 1980s and 1990s in many developed and some developing countries, with varied outcomes. In some cases, privatization has been tempered or revisited through regulation, re-nationalization, or changes in policy emphasis. Related concepts include liberalization, privatization of regulatory regimes, and public-private partnerships as ongoing forms of private sector involvement in public services.