Privatization Cure Often Worse Than Malady Jomo Kwame Sundaram and Anis Chowdhury

Privatization of SOEs has been a cornerstone of the neo-liberal counterrevolution that swept the world from the 1980s following the economic crisis brought about by US Fed's sharp hike in interest rates. Developing countries, seeking aid from the International Monetary Fund (IMF) and the World Bank, often had to commit to privatization as a condition for credit support. The World Bank and the IMF then attributed developing countries' inability to adjust to the external shocks of that time, inter alia, to their import-substituting industrial policy initiatives and the inefficiency of the state-owned enterprises (SOEs). Hence, their support came with conditions…

Privatization the Problem, Rarely the Solution Jomo Kwame Sundaram

Privatization has been one of the pillars of the counter-revolution against development economics and government activism from the 1980s. Many developing countries were forced to accept privatization as a condition for support from the World Bank while many other countries have embraced privatization, often on the pretext of fiscal and debt constraints. Privatization generally refers to changing the status of a business, service or industry from state, government or public ownership to private control. It sometimes also refers to the use of private contractors to provide services previously delivered by the public sector. Privatization can be strictly defined to include…

The Neoliberal Counter-revolution in Retreat? Jomo Kwame Sundaram

The US Wall Street crash of 1929 was followed by the Great Depression, which in turn engendered two important policy responses in 1933 with lasting consequences for generations to come: President Franklin Roosevelt's New Deal and the Glass-Steagall Act. While massive spending following American entry into the Second World War was clearly decisive in ending the Depression and for the wartime boom, the New Deal clearly showed the way forward and would have succeeded if more public money had been deployed consistently to revive economic growth. Although Michal Kalecki and others had anticipated some of his work, it took a…

Public Enterprises in Mixed Economies: Their Impact on Social Equity Andong Zhu

[Working Paper No. 04/2007] The underlying theoretical argument of Privatization, as a crucial component of the neoliberal policies, is that state-owned enterprises (SOEs) are inherently inefficient, and therefore bad for social equity, besides hindering economic growth. However, the existing literature falls short of providing a solid theoretical basis for this argument. This study improves upon the existing literature through utilization of a panel data set of more than 40 mixed economies for the period 1960s to the 1990s. By applying the fixed effects techniques, this study empirically explores the impact of SOEs on income equality. The conclusion arrived at, is…

Privatizing the World Bank?

In a recent article entitled Reforming the World Bank: Creative Destruction (Foreign Affairs, January/February 2006), Jessica Einhorn, dean of the Paul H. Nitze School of Advanced International Studies (SAIS, Johns Hopkins University), called for the disbandment of the International Bank for Reconstruction and Development (IBRD). Addressing her remarks to the World Bank's new president, Paul Wolfowitz [1] and its major funders, she called for an end to the bank's lending to middle-income countries, and for a focus instead on the poorer countries which have little or no access to private capital markets as credit sources for development financing. Einhorn, who retired in…

Bolivia on the Boil Jayati Ghosh

The current political turmoil in Bolivia is part of a wider movement in Latin America, of people rejecting not only corrupt politicians, but also –  and more importantly – the neoliberal economic policy paradigm that enriched a few at the expense of the vast majority. Bolivia is the poorest country in Latin America, with more than 70 per cent of its population estimated to be living below the official poverty line. In rural Bolivia the incidence of poverty is reckoned to be as much as 90 per cent of the population, and there is almost no access to basic amenities…

A Brief Outline of a Critique of the Common Minimum Programme in respect of Public Sector and Public Services K. Ashok Rao

1.0 Preamble It can and would be argued that the United Progressive Government is a secular alternative to the National Democratic Alliance. The emphasis being on the struggle against communal forces, it is not possible to disturb the equilibrium by raising questions relating to economic policies. Compromise is the essence of political stability and therefore the best that one can hope is some concessions in the neo-liberalism enforced by the gang of four – the Multinationals – Indian big business – the Indian State and the consortium of World Bank-IMF and WTO. In one sentence, using Marxist terminology – why…

The World Bank and the IMF in Africa: Strategy and routine in the generation of a failed agenda Howard Stein

This paper argues that more than any other region, Africa has been forced to feel the full effect of neo-liberalism due to its increasing dependence on bilateral and multilateral aid and paucity of alternative sources of capital. Meanwhile, the vision of development choreographed by the World Bank and the Fund continues to be captured by the same core principles and policies which have failed Africa in the last two decades. imf_africa (Download the full text in PDF format)

International Financial Architecture: A view from the kitchen Diane Elson

This paper discusses the issues of better integration of social and economic policy; greater transparency and accountability in the governance of finance; and the construction of a new reformed international financial architecture from a gender perspective, with a particular concern for the implications for poor women living in the South. architecture (Download the full text in PDF format)

Review of the 2004 World Development Report “Making Services Work for Poor People” Tim Kessler

On September 21, 2003, the World Bank unveiled its annual flagship publication, the 2004 World Development Report, entitled "Making Services Work for Poor People." The WDR's main premise is that basic services - primary education, basic health care, water and electricity services -fail to reach the poor because too many governments lack sound and representative institutions of governance. Ironically, the report expresses strong confidence in the ability of these same unaccountable governments to regulate private service provision. In addition to deficient institutions, the WDR attributes failing public services to regressive budgets (that benefit mostly the middle class), petty corruption, and…

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