Ownership as such does not matter relative to the conditions of competition and regulation - Essay Example

From the path that different nations have followed with regards to their individual privatization drives, the most notable point that comes forth is that there should be the creation of a regulatory agency beforehand to oversee the process. It has also been shown that effective introduction of competition within market sectors (that means both within existing state-owned firms and the firms that have been handed to private entities as part of privatization) has ensured rapid acceleration of the economy.

Any such that regulatory agency must be free from any outside influence by the government and must prove as an interface to investors and must also work towards monitoring and managing the concerns of the producers and consumers alike. In other words, a regulatory agency, if it has to be successful, must treat state-owned and private entities alike, which is the reason it has to remain free of any form of influence. It is also deemed appropriate to mention the need of a regulatory agency, which is created out of the fact that any form of transformation of an economy cannot happen in an instant and requires a substantial period of time, during which there needs to be a watchdog that can always be on the lookout of discrepancies and initiate the requisite actions.

Experiences from previous attempts at privatization have suggested that the economy has better progressed when there has been the introduction of effective competition wherever possible. The government would have to consider the pros and cons of introducing such competition, most importantly on the costs. At the micro level, the implications on the purchasing powers of consumers and the costs incurred for procuring raw materials etc. need to be considered thoroughly. PART 2: TREND OF PRIVATIZATION When it comes to the type of ownership and its influence on the competition (with regards to the cost of production), Pollitt has mentioned that there has been no notable difference in the cost of production as part of a study conducted by him on countries such as the UK, USA, Canada, France, Greece and Germany.

This may seem to be what was originally expected among theorists, but this has been the case in almost the entire developed world1. Another point that needs special mention here is that the pattern of privatization has been so varied among countries that there are no specific set of parameters that may be used to judge its effectiveness, thus leading researchers to follow different paths towards studying the phenomena. It is in this regard that privatization is studied in close relationship with various factors and concepts such as ownership, competition and regulation.

In fact, Zhang has pointed to the fact the distortion in the results of studies on privatization were due to the fact that all such studies had been concentrating on the type of ownership alone. Thus, other factors such as the competition within the market and the role played by regulatory agencies were not given any significance. Over the years, the trend and pattern of privatization has heavily relied upon how resources should be regulated and has also been dependent on the manner in which they should be organized and utilized appropriately.

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