Advantages of Privatization
1. It helps to reduce the monopoly of states and to encourage healthy competition within the industry.
2. Competition is encouraged which brings about efficiency and therefore ensuring production, and provision of standardized quality commodities.
3. It encourages better management of public enterprises.
4. It encourages better use of human and material resources at a greater level.
5. The provision of essential commodities and the creation of job opportunities helps to increase the level of standard of living of the people.
6. The rate of corruption, embezzlement, and misappropriation of funds and administration is reduced.
7. Due to a greater increase in economic activities and national income, there is the development of the economy.
Disadvantages of Privatization
1. A greater number of private enterprises that pushes their prices upward in order to maximize profit are produced.
2. It encourages the inequitable distribution of resources, wealth, incomes, and goods.
3. Excessive privatization of public enterprises may breed an increase in the inflationary gap in the economy.
4. It may lead to uneven distribution of wealth in the country.
5. Privatization cannot be implemented in some sensitive areas or sectors of the economy in order to avoid sabotage and other abuse of private ownership by private individuals.
6. The private sectors may decide to lay-off workers so as to maintain a reasonable number of workers in a bid to allow profit maximization.
Responses