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International Handbook on Privatization

Edited by David Parker and David Saal

Privatization has dominated industrial restructuring programs since the 1980s and continues to do so. This authoritative and accessible Handbook considers all aspects of this key issue, including: the theory of privatization; privatization in transition, developed and developing economies; as well the economic regulation of privatized industries.
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Chapter 5: Methods of Privatization

Graham Cosmo


Cosmo Graham Introduction The aim of this chapter is to present an overview of the different methods of privatization, with some observations on the success or failure of certain techniques.1 For the purposes of this chapter, ‘privatization’ is taken to mean the transfer of assets from the public or state sector into the private sector. Issues such as contracting out are thus not examined, although an increasing use of such devices may go along with privatization in the sense of transfer of assets. Assessing the success or otherwise of particular methods of privatization cannot be divorced from the aims and objectives of those behind a privatization programme. This does, however, raise a difficult issue. As a policy, privatization has been used in a wide range of states with dramatically different socioeconomic contexts ranging from developed countries, such as the United Kingdom, France and Germany to the transition economies of Central and Eastern Europe, to the developing nations of Africa and Asia. Moreover, the enterprises to which privatization are applied vary greatly, from one-person retail shops to large network industries such as electricity. Finally, there are different types of privatization programmes. In their research on the dynamics of privatization, Feigenbaum and Henig (1994) distinguish, in ideal–typical terms, between pragmatic, tactical and systemic privatizations. A further problem is that the sponsors, in a broad sense, of a privatization programme may have a number of conflicting objectives. To use Feigenbaum and Henig’s language, some may be interested...

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