Advantages and Disadvantages of Privatisation 2 - 4553 Words

ADVANTAGES AND DISADVANTAGES OF PRIVATISATION Contents 1.0 INTRODUCTION 1 2.0 ADVANTAGES OF PUBLIC SECTOR PRIVATISATION 2 2.1 Improving Efficiencies 2 2.2 Reduction in Government Cost and Spending 3 2.3 Focusing on Core Competences 3 2.4 Streamlining Businesses to Allow Productive Job Creations 4 2.5 Obtaining Goal Congruences 4 2.6 Effective Utilization of Taxpayers’ Money 5 2.7 Generate Income Tax Revenue 5 2.8 Improving Government Financing 6 2.9 Reorganisation or Restructuring Government Systems and Performance Measures 7 3.0 DISADVANTAGES OF PUBLIC SECTOR PRIVATISATION 7 3.1 Possible Control of Foreign Entity on National Interests 7 3.2 Monopoly Risks 8 3.3 Management Incompetencies 8 3.4†¦show more content†¦We find that the privatized firms improve productive efficiency by increasing their capital and decreasing their labor endowment. At a first examination, privatization also seems to improve allocative efficiency, as prices fall after privatization. But this effect disappears when we control for changes in market structure using a measure for market concentration– the Herfindahl Index. Hence, while private ownership has a robust positive effect on productive efficiency, whether gains in productivity will be passed on to consumers in the form of lower prices will depend on the market structure ensuing from privatization. Since we have pre and post privatization data for all the cement plants which were once public, we are able to avoid the endogeneity problem associated with sample selection which has been a problem for earlier research. Our results withstand various robustness checks addressing other possible problems associated with sample selection and unobserved heterogeneity. 2.2 Reduction in Government Cost and Spending Certain public sector, government agencies or entities may not perform effectively hence contribute adverse financially towards government revenue. Thus, through privatization government debt could be transfer towards able management further helping government in reducing its cost and unnecessary spending. Various governments -- from small towns all the way up to federal agencies -- have been sendingShow MoreRelatedDiscuss the advantages and disadvantages of moving the NHS from public sector to private sector1345 Words   |  4 Pagesgovernment. Though in recent years this money has been moving to the private sector and many have speculated that this is privatisation by stealth. In this essay I will attempt to understand this process by giving some historical context to the events of the last few decades while pointing out some of the advantages and disadvantages, and the forms it could take, of privatisation. In conclusion I hope to point to a future where the NHS can exist with public money and private management. It cameRead MoreObjectives of Privatization2131 Words   |  9 Pagesmain objectives and methods of privatisation? 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