What is Privatization?
Privatization occurs when a government-owned business, operation, or property becomes owned by a private, non-government party. Note that privatization also describes the transition of a company from being publicly traded to becoming privately held. This is referred to as corporate privatization.
How Privatization Works
Privatization of specific government operations happens in a number of ways, though generally, the government transfers ownership of specific facilities or business processes to a private, for-profit company. Privatization generally helps governments save money and increase efficiency. In general, two main sectors compose an economy—the public sector and the private sector.
Government agencies generally run operations and industries within the public sector. In the U.S., the public sector includes the U.S. Postal Service, public schools and universities, the police and firefighter departments, the national park service, and the national security and defense services.
Enterprises not run by the government comprise the private sector. Private companies include the majority of firms in the consumer discretionary, consumer staples, finance, information technology, industrial, real estate, materials, and health care sectors.
- Privatization describes the process by which a piece of property or business goes from being owned by the government to being privately owned.
- It generally helps governments save money and increase efficiency, where private companies can move goods quicker and more efficiently.
- Opposers suggest basic services, such as education, shouldn’t be subject to market forces.
Denationalization, also known as privatization, occurs when a national government sells an asset such as a large firm to private investors
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