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Service and Asset Privatization Essay example

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The rapid interest in privatization stroked when all the levels of government economies were persistently challenging in running their operations during last two to three decades of twentieth century (Shirley, 1992). Since then, privatization of public sectors has been a key factor of structural reform programs in both developed and developing countries (Sheshinski & Lopez-Calva, 2003). The process of transferring ownership of public services from the public sector (the part which is controlled by government) to private sectors (the part which is owned and controlled by private party) is called privatization (Investopia, 2013). According to Sarah E. Gollust and Peter D. Jacobson, “privatization is the transfer of decision-making authority,…show more content…
Primarily, privatization is “to achieve higher allocation and productive efficiency and to strengthen the role of private sector in the economy” (Sheshinski & Lopez-Calva, 2003). They describe that these two objectives are the main reasons behind government contracting its sectors to private parties and are associated with microeconomic efficiency. Secondarily, it is “to improve the public sector’s financial health and “to free resources for allocation in other important areas of government activity-usually related to social policy” (Sheshinski & Lopez-Calva, 2003). For the next ones, they explain that these reduce the level of borrowing and reallocate the possible expenditure towards social policy areas, and these are connected to public sector finance.
Literature Review: In this research, I have conducted studies on three important aspect of public sector where privatization has taken place and from which I could draw a conclusive end. The first among them is the privatization of state prison. The first privatization of prison in United States was done in 1986 and soon after, the numbers continue to increase rapidly (Burkhardt, 2009). From theory-driven historical analysis, he finds out that the rising population, “interventionist federal courts,” and the link between the private contractors and members of state governments are the causing factors of state prison privatization. In
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