The harsh truth about privatisation

Privatisation is in vogue. Political leaders, commercial and investment bankers, and international financial institutions such as the International Monetary Fund (IMF) deem it a magical panacea, especially for ailing, less developed economies. But is it really a panacea? Does it make sense for poor, developing countries to divest vital and sometimes strategic national assets? In examining these questions, a distinction needs to be made between nationalised industries, which are manufacturing companies, and other government assets such as public utilities and transportation companies. Nationalised industries now owned by the government were appropriated from their owners in the early 1970s. This was a catastrophic mistake. Some would argue that it caused irreparable damage to Pakistan's economy, from which it has still not recovered.