ABSTRACT
The debate over privatization is essentially the debate over the relative efficiency of the state versus markets and private property in the allocation of resources. Privatization is said to improve efficiency by changing the structure of incentives, reducing the possibilities of damaging state interventions, improving monitoring and introducing competition. The mainstream literature has largely focused on the correlation between privatization and performance (by comparing public and private firms) and on establishing the causality between private ownership and performance. However, the results of privatization have been mixed, with the evidence of efficiency gains inconclusive. These approaches are also usually hampered by methodological difficulties and there is a lack of general consensus on the correlation between privatization (private ownership) and economic performance.
