Privatization is a mechanism of economía It is used when the state transfers or transfers an industry or an activity to a company or a private organization, thus ceasing to be part of the public sphere.
Privatization is often used to improve the competition of economic activities and favor consumers. On the other hand, privatization allows the State to free itself from a job that can be better managed by companies and control their direction. This makes the State focus on other important aspects for citizens such as health or education.
There are, however, debates about which sectors and areas should be privatized. This depends in part on the safety of the operation, the welfare of citizens, social justice or even different ideological and political points of view.
An advantage of privatization is that citizens will no longer bear the losses that occur in that activity or industry. Proponents of privatization claim that if there is competition In a market, companies improve products and services, thus avoiding any type of risk that the activity could have if it belonged to the State.
The concept of privatization is opposed to that of nationalization, that is, transferring a private activity to a state. Privatization is also often associated with the term liberalization. In this case, liberalizing consists of reducing or eliminating the restrictions and regulations that exist in a mercado.
Some of the methods used to carry out privatization are:
- The sale of companies that have belonged to the state to private entities.
- The transfer of some functions of the management of public goods and services, such as garbage collection, water, electricity, etc. In this case, public tenders are usually held.
- Carry out a partial privatization with the purchase of a certain service by the state from a private company.