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Privatization: Successes and Failures resources

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F O R E W O R D Joseph E. Stiglitz This book brings together a set of essays on recent experiences and current thinking in the debate over privatization, the conversion of state- owned assets into privately managed assets. Especially after Ronald Reagan and Margaret Thatcher assumed offi ce in the United States and the United Kingdom, a conventional wisdom developed that private management and own ership was better, in some sense, than public own ership and management: enterprises would be run more effi ciently and there would be less opportunity for corruption. The World Bank and the International Monetary Fund (IMF) pushed countries to privatize as much as they could and as fast as they could. Privatization became not only one of the pillars of the “Washington Consensus” but also a condition imposed on countries seeking assistance. The experiences of the last 15 years have cast a pallor over this unbri- dled enthusiasm for privatization. As these essays illustrate, a new, more pragmatic consensus is developing—more consistent with economists’ normal two- handed stance, “it depends.” Privatization has had some suc- cesses, but it has also been marked by dramatic failures and disappoint- ments. There are dramatic successes, and failures, in state ownership. The questions being posed today are: When will privatization be successful? And how can the privatization pro cess be managed to maximize the like- lihood of success? Perhaps no subject in development arouses more passions—on both sides—than privatization. The privatization pro cess has been marked by enormous abuses: in many countries a few individuals managed to grab hold of previously state- owned resources for a pittance and become millionaires—or billionaires. In a few years, Rus sia became a country marked by great in e qual ity, with a Gini coeffi cient as bad as many in Latin

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