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many governments to renegotiate their contracts with private providers, which
made many people question the integrity of the process.
4. Today, many developing country governments are fiscally weak and cannot issue
debts to finance future infrastructure. As a result, it is extremely unlikely that any
of these nations will ever return to state provisioning of resources. Instead, most
developing country governments seek to improve the framework for private
provisioning. Yet, due to consumer dissatisfaction, investors and governments
are withdrawing their support, for privatization.
5. Although the financial assessments of privatization are generally positive,
negative social assessments give rise to political opposition and popular
discontent. Though privatized utilities tend to be better managed; more
productive, more profitable, enjoy increased operating efficiency and improved
output, many groups lose their jobs as a result of increased efficiency.
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Furthermore, the poorest sectors of the population benefit only marginally from
the changes in ownership.
Linked to growing poverty and rising inequality,
privatization gets a bad reputation. Anecdotal evidence supports these negative
assertions, yet macroeconomic analysis shows that unemployment increases only
marginally and that poverty levels are rarely impacted after privatization.
6. The failure to provide proper infrastructure can lead to divisiveness, tension,
instability and eventually violence. The danger of such an outcome diminishes
the appeal of the country as an investment destination. Instituting better efforts to
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This seems to be especially true in Latin America where privatization started earlier and spread further. In
India, after the introduction of privatization programs in early 1990’s, the rate of growth of employment on
current daily status basis declined from 2.7% per annum during 1983-94 to 1.07% per annum in 1994-
2000.(Economic survey 02-03, Ministry of Finance, GOI)
Convention