ABSTRACT
This chapter discusses the relevant issues and theories associated with privatisation. These include the economic and political background to privatisation, the objectives and methods of privatisation, incentive structures under public and private ownership, and performance comparison under the two different forms of ownership in order to find out which factors are pivotal to the implementation of a successful privatisation policy. Privatisation is also a direct and immediate way of reducing government intervention in the decision making of a company. Privatisation can also be considered as a way of promoting government objectives regarding the labour market: vis a vis the lessening union power. Privatisation presents an excellent vehicle for encouraging the wider ownership of economic assets. The effect of privatisation is to substitute shareholder for governmental monitoring and control of the firm's management and operation. There are methodological difficulties in distinguishing the effects of privatisation from other factors influencing the variables.
