The Privatization Challenge: A Strategic, Legal, and Institutional Analysis of International Experience

By Pierre Guislain | Go to book overview

3
Privatization in a Market Economy

A legal environment that fosters private-sector development is essential to the success of a privatization program.1 For example, rules defining and protecting ownership and ensuring fair competition among economic operators, commercial law provisions affecting the privatization process itself (directly or indirectly), or legislation governing the functioning of the privatized enterprises will all have a substantial impact on the implementation of the privatization program.

Because of their importance, some of the legal provisions examined in this chapter may need to be amended, suspended, or repealed to permit or facilitate privatization. For example, measures that discriminate against the private sector will have to be abolished. Many countries have radically redefined the role of the state in the economy to create and maintain a level playing field that allows private entrepreneurs to engage in economic activity free from unfair competition or interference from government agencies. In doing so, they have shifted the focus of state intervention: the public sector is no longer directly involved in productive activities; it now plays regulatory and promotional roles.2 As mentioned in the introduction to this book, such a change is equivalent more to privatizing the entire economy than to privatizing an enterprise or a specific economic sector. It calls for major adjustments at all levels; hence, a strong political commitment is

1. Some countries have attempted to privatize in the absence of minimum rules governing the functioning of a market economy. That happened, for example, in Guinea immediately following the Sékou Touré era. A fairly large privatization program was implemented in 1986–87. In view of the uncertainties of the legislation in force, the privatization agreements had to be ratified by presidential ordinance, giving them force of law. Despite this legal protection, the success of the program was less than complete: many privatized enterprises ran into difficulties in restarting production and achieving financial viability. The country’s generally unfavorable business climate played a considerable role in this outcome.

2. Even in core public services, the traditional role of the state has been radically revisited in many countries, with increasingly strong participation by private operators in the provision of such services. On this subject, see chapters 1 and 7.

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The Privatization Challenge: A Strategic, Legal, and Institutional Analysis of International Experience
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Preface xi
  • Introduction 1
  • 1 - Defining a Privatization Strategy 15
  • 2 - Privatization and Basic Legal Norms 33
  • 3 - Privatization in a Market Economy 45
  • 4 - Privatization and Public-Sector Management 89
  • 5 - The Privatization Law 111
  • 6 - Institutional Framework for Privatization 149
  • 7 - Privatization of Infrastructure 203
  • 8 - Meeting the Privatization Challenge 287
  • Glossary 335
  • Bibliography 343
  • Geographic Classification of References 369
  • Specialized Journals 379
  • Internet Resources 381
  • Subject Index 385
  • Geographic Index 393
  • Index of Enterprises, Agencies and Other Organizations 397
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