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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 6: Privatization in the European Union

David Parker


David Parker Introduction1 Europe has a history of state ownership with a major expansion of state ownership of industry occurring in the inter-war years and more especially after 1945 (Monsen and Walters, 1983:1; Anastassopolou et al., 1987). Until the 1980s, state intervention was generally accepted in Europe, particularly where there was a suggestion of market failure, such as in the network industries (telecommunications, gas, electricity, water and the railways) with their natural monopoly characteristics. Although major privatization activity in Europe is associated with the UK since 1979, there are examples of earlier sales of state assets, such as in West Germany after 1959, in the UK in the early 1950s and early 1970s, Ireland in the 1960s and 1970s and Italy in the 1950s and 1960s. These sales were not, however, part of a systematic programme aimed at slimming down the state sector (with the partial exception of the UK in the early 1950s). This is what marks out the current privatizations in Europe compared to earlier programmes. This chapter considers the development of privatization in the European Union. It provides an overview of privatization activity in each of the EU states before turning to consider why privatization is fashionable at the present time. The consequences of privatization are then assessed. There are four main reasons for the privatization activity with expected efficiency gains seemingly not the main driving force in a number of EU states. Even where economic efficiency gains are the main goal, they are...

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