ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Privatisation Strategies in Developing Countries-External Debt and Domestic Economic Perspectives

Privatisation Strategies in Developing Countries External Debt and Domestic Economic Perspectives Narayanan Edadan A comparison of privatisation strategies followed in the developing world suggests that the 'big-bang' approach of the Latin American and Caribbean countries, the "go-slow and institutional approach'' of the Asian and east Asian countries, and the 'marketisation" political approach of the east European countries have yielded different levels of impacts. Decisions to choose various options of privatisation strategies are influenced by the economic and political imperatives of these countries. This study attempts to examine the relationship between the privatisation, external debt factors and domestic economic factors, using a cross-sectional analysis of 28 major privatisors in the developing world. The analysis suggests that while privatisation proceeds and external debt are positively related, there is no such relationship between privatisation and indebtedness. This reflects the institutional dimension of external debt stock which seems to be more politically sensitive than the actual indebtedness. The study does not find any evidence to suggest that neither has privatisation of state-owned enterprises impacted any change in the government consumption nor has an increase in FDIs resulted in an increase in domestic investments.

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