Privatization: Its Essence And Forms

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Privatization: Its Essence And Forms
Privatization: Its Essence And Forms

Video: Privatization: Its Essence And Forms

Video: Privatization: Its Essence And Forms
Video: Y2 29) Privatisation 2023, March

Privatization is a set of economic relations arising in connection with the reformatory transfer of ownership of the means of production: from the “state” form of ownership to the “private” one.

Privatization: its essence and forms
Privatization: its essence and forms


The essence of privatization is often interpreted as the transfer of state property to the private sector of the economy. Thus, privatization is, in fact, a basic process that triggers profound changes in the socio-economic structure. Obviously, how effectively such a process is implemented depends on both civil consent in society and how market incentives will work. At the same time, it should be especially noted the importance of a comprehensive preliminary assessment of the feasibility of each privatization measure in relation to possible socio-cultural consequences.

In the theses of numerous discussions on this topic, it is noted that the economic results of privatization often turn out to be negative, namely, in connection with the conflict and protests from the point of view of social justice. That is, privatization leads to an unjustified enrichment in the eyes of the majority of the minority of the population and the impoverishment of the majority itself. At the same time, the fact that privatization should be viewed as a long, regular and long-term process in order to ultimately create an economically more efficient social system often does not receive sufficient argumentation in the dispute.

Forms of privatization

The forms of privatization are divided into four main categories: denationalization, free distribution, sale, creation of national holdings.

It should be noted that, often, privatization is carried out according to different - several - formats in relation to the same industry object at the same time, which is due to an integrated approach to achieving the goals of economic efficiency.


Denationalization is the return of previously nationalized property to its former owners or their heirs. Acts of denationalization, as a rule, demonstrate the state's commitment to protecting private property rights.


The most frequently implemented form that attracts modern management technologies is investment by private owners, which gives the state free resources. The sale can be carried out both in the open and in the closed way. The open method provides the possibility of corporatisation of the enterprise by any interested parties, while the closed one - only by a narrow circle of employees.

Formation of holdings

In cases where the sale of enterprises is impossible for any state-political reasons, public-private holdings are established, the management companies of which can manage a whole set of industry enterprises.

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