Content area
Full Text
Introduction
Privatization is a single, but significant, element of policies aimed at reducing the role of the State in modern mixed economies. The objective of reducing government intervention has political/ideological and economic motives, and policies directed towards their achievement have been pursued with varying degrees of vigour in most western European economies since the late 1970s.
Ireland still lags behind the pioneers of privatization like the UK and France in terms of divestiture of public-sector companies. However, another form of privatization -- that of local authority refuse collection services -- has emerged to a considerable extent without record or analysis. This article reviews some of the economic theories that provide a theoretical rationale for privatization. It also provides a preliminary insight into the extent of privatization of refuse collection services in Ireland, assesses the procedures adhered to and offers some tentative results. The findings draw attention to the experience of a small open economy where public-service reform has been piecemeal and unco-ordinated, and provides lessons for other countries at a similar stage of development in this area.
Scope and reasons for privatization
In general, "privatization" means "reducing the role of Government and increasing the role of the private sector in an activity or ownership of assets"
1
. The term "privatization" is most commonly used to describe the process of denationalization, i.e. the sale of all or part of a State company to private investors by means such as a stock market or private placement. However, the term extends to a host of arrangements whereby governments withdraw from the production and finance of goods and services. This article focuses on where local authorities transfer their provision (specifically refuse collection) to the private sector.
The late 1970s and early 1980s heralded a reappraisal of the traditional rationale for government intervention and public enterprise. Critics of State-owned enterprises generally viewed them as inefficient. This was attributed to factors such as the absence of a profit motive, the pursuit of non-commercial objectives, unnecessary political interference and bureaucratic controls. These constraints were frequently cited as causes of poor financial performance and the resultant burden on the exchequer. In policy terms this resulted in attempts to improve public-sector efficiency through the introduction of competition (deregulation) and privatization. Privatization, in particular...