Jump to content

Privatisation of services

Public vs. private sector : an examination of neo-liberal ideology

Public and private sector ideologies compared

Authors: I. Khan
Publisher: Eldis Document Store, 2006

Full text of document

This paper reviews the theoretical underpinnings of the debate on the superiority of the public or private sector, and supports theoretical perspectives with help from empirical literature on the subject.

The theoretical part covers issues relating to public choice, property rights and principal-agents relationship, while the empirical evidence includes review of literature on macroeconomic, microeconomic and welfare impacts of privatisation.

The paper finds that despite numerous studies and unending discussions, the debate on the superiority of the public or private sector has remained inconclusive and is likely to remain so in the future. The paper also finds that:

  • it is not possible to determine the superiority of one over the other through case studies, which can only be selective in nature
  • the impact of privatisation are subject to the economic, social and political factors prevalent in the country
  • however, the private sector is superior in terms of efficiency and cost effectiveness only where the regulators have ensured a competitive market.