Demystifying Privatization in Developing Countries

State intervention is needed to dismantle the protective regime of “government failure” and expose the developing economies to the new rigour of global competition and technological advancement. In addition to standing the test of welfare consequences, a developing country′s agenda for privatization includes restructuring, reform, commercialization, management‐cum‐technology contracts for public enterprises and their leasing – prior to divestiture, joint venture, hire purchase and disinvestment of minority, majority or full shareholding through public offer or private sale. The backward and forward linkages, the institutional framework, the pace and sequence, planning and preparation and financing of privatization, with transparency of procedure, are equally important preconditions for avoiding corruption and ensuring efficiency. Divestiture without reform can be counter‐productive. Divestiture without private sector development can remain “stillborn”.