Essay by raotownHigh School, 11th gradeA+, August 2005

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The term Privatisation can be defined as the transfer of activities from the public sector to the private sector.

2.0 GBE

The term "GBE" is an abbreviation for Government Business Enterprises, which means businesses owned solely by the government, thus not privately owned.


3.1 Reasons For

There are many positive reasons for privation, these include:

- Privatisation many help reduce the inefficiency that previously existed in large government organizations.

- Privatisation also reduces the number of situations in which the government is both the umpire and player. Government run business may also have unfair advantage over private enterprises. They have prestige of official backing with guaranteed payment bills. This would allow government businesses to have a greater security financially, allowing them to build a stronger position in their market.

- Firms operate more efficiently in the private sector because they are trying to maximize profits.

- Profit provides an incentive in the private firm to operate with less waste and focus towards the needs of the consumers.

- Money can be raised to increase government services or to pay for tax cuts for private enterprises, making taxpaying companies an asset to the community.

- Privatised GBEs may operate in a more innovative and less bureaucratic manner and thus being more responsive to the needs of consumers.

- Ordinary people become shareholders and take a greater interest in economic matters (people's capitalism).

- A higher opportunity cost may occur when placing taxpayers' money to fund the government businesses, bearing too high a risk. Privatisation would then place the risk into the hands of the owners, rather than the hands of the economy as a whole.

3.2 Reasons Against

There may be many positive reasons for privation; on the other hand there are also...