Privatisation as a vehicle for economic development: an appraisal

Abstract

The ‘Neoclassical Counter Revolution’ school of thought emphasised privatisation as a vehicle for economic development. This school owes its existence to the political ascendancy to state power by conservative governments in the United Kingdom and the United States of America amongst others, around 1980. The ‘Washington Consensus’ was not to be outdone as it included privatisation amongst its ten policy prescriptions. The ‘Washington Consensus’ policies were a product of intellectual convergence by the three Bretton Woods institutions. It seems that privatisation has endeared itself to policy makers and is universally perceived as a vehicle towards economic development, save for a few exceptional cases for which China stands out. This paper interrogates this view and highlight that it deserves contextualisation for the realisation of maximum returns. Privatisation should consider other factors, far and above the ‘overemphasised’ productive efficiency. We conclude that such a policy might be counterproductive in a developing country with high unemployment and poverty rates such as Botswana. We also agree without question that ‘it is what the doctor ordered for a healthy American economy’ and others comparable to it, with the unemployment rate hovering around the natural rate.