Facts about Privatization <ul><li>Privatization started in 1989 </li></ul><ul><li>It is not a region specific phenomenon. ...
Facts about Chile <ul><li>Pioneered the privatization movement. </li></ul><ul><li>A strong market based economy in which g...
Facts about Chile contd.. <ul><li>In 1974 & 1975, some 360 firms that had been nationalized in the early 1970s were return...
Facts about Poland <ul><li>Early 1990 – the Polish government launched a five-part radical stabilization plan composed of ...
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Chile & Poland

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Chile & Poland

  1. 1. Facts about Privatization <ul><li>Privatization started in 1989 </li></ul><ul><li>It is not a region specific phenomenon. It was pioneered in Asia & Latin America before the recent wide spread adoption in transition economies. </li></ul><ul><li>Enterprises in the developing countries following trends of firms in the developed countries in involving employee in stock ownership, decision making and gain sharing. </li></ul><ul><li>In developing economies, privatization has an important role to play but cannot succeed by simply banishing government from the economic scene </li></ul>
  2. 2. Facts about Chile <ul><li>Pioneered the privatization movement. </li></ul><ul><li>A strong market based economy in which government competently plays an active but targeted role in the areas in which it is most needed. </li></ul><ul><li>In the early 1970s it was an economy with the pervasive government intervention and later became one of the most open and most market oriented economies of Latin-America. </li></ul><ul><li>Every market (except the labor market) was freed from the government control. </li></ul><ul><li>Under Pinochet also there were some hidden subsidies and inducements including a massive government rescue of financial sector, amounting to 4.6% of GDP from 1982 to 1986. </li></ul><ul><li>In Privatization itself, subsidies were offered to the private sector through the sale of assets at little more than half their real value. </li></ul>
  3. 3. Facts about Chile contd.. <ul><li>In 1974 & 1975, some 360 firms that had been nationalized in the early 1970s were returned to their previous owners; most of the rest of these were reprivatized by 1978. </li></ul><ul><li>From 1978 to 1981, privatization of social services took place; the government officially continued to provide social services only for the poorest groups and focused on subsidizing demand rather than supply. </li></ul><ul><li>1982 – stocks crashed, there was a huge wave of bankruptcies, including one-fifth of all manufacturing companies employing 50 workers or more: & unemployment reached 24% </li></ul><ul><li>1983-1986 – many enterprises “rescued” (nationalized) by Pinochet. </li></ul><ul><li>Since 1986 – 30 large industrial enterprises that had been in state hands for a longer term were privatized. 2 recent e.g.s – electricity-generating company and a railway company. </li></ul><ul><li>To become eligible for generous discounts, participants had to be taxpayers with no back taxes owed. </li></ul><ul><li>First in Latin America to be able to tame inflation. </li></ul>
  4. 4. Facts about Poland <ul><li>Early 1990 – the Polish government launched a five-part radical stabilization plan composed of price deregulation, introduction of a convertible currency, wage controls, increased interest rates and budget-balancing measures. </li></ul><ul><li>GDP in Poland fell drastically in the early transition to a market economy, 11.6% in 1990; and unemployment reached high levels. </li></ul><ul><li>Polish privatization plan was adopted in the summer of 1990. </li></ul><ul><li>For smaller firms, “privatization through liquidation” was adopted. </li></ul><ul><li>Out of 250 companies about 10% were fully privatized and only about 175 firms had self privatized by mid 1992. </li></ul>

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