Emerging and Transitional Economies (BS2261) 2013Group No.:

Did competition help achieve positive effects of privatisation?

Emerging and Transitional Economies (BS2261) – Group Presentations

Semester One - 2013

Group Members:Ryan Gill

Sang ByunGim Ooi

Group Number: 27

Introduction

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

In this presentation we will outline the following things:

What is privatisation and competition? When was privatisation implemented in the UK? Example of positive effects of UK privatisation? Example of positive effects of Korea privatisation? Example of positive effects of Malaysia privatisation?

Did it help to achieve positive effects of privatisation?

It is the transfer of assets from the public sector (government) to the private sector.

Worldwide examples include:•British Airways•Korail•Malaysian Universities

What is privatisation?

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

Increased income to government leads to a cut in taxes

Improves political opportunities Increases employment rateCreates incentive for profit maximizationIntroduces competition amongst firms

Why do governments opt for it?

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

Competition within privatisation occurs when there are one or more private firms within a certain industry.

Positive effects of competition are:

More competition equals lower pricesAllows for increased efficiency and profit maximisation

Spreads countries wealth to its citizens

What do privatisation and competition have in common?

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

British Telecom privatised in 1988Industry carefully selected as plenty of demand

Competition implemented through Mercury a electric firm installed by government.

Done so no monopolist affair createdBritish Telecom charged higher line rentals so call charges could be cheaper

UK Example Of Positive Effects

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

Malaysia Example Of Positive Effects

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

•Privatized Universities- gives opportunity for students to gain education- no race discrimination

•Privatized Hospitals- provides better service and facility- increases the number of medical centers- less waiting time

South Korea’s Example Of Positive Effects

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

•Public Transport (Bus, KORAIL)- Increased service quality-Efficiency has improved significantly-Decreases the liabilities on taxpayers

•Healthcare (Not applied yet)- Improved medical quality - Less waiting time

Negative Effects

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

•Pollution•Creation of black markets•Encourages monopolistic firms•Higher prices•Causes political debate

Conclusion – Did competition help to achieve positive effects of privatisation?

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

YESWhy?

• Economic growth improved • Further job opportunities (addresses

unemployment)• Wider availability of goods and services for

consumers

References

Emerging and Transitional Economies (BS2261) 2013Group No.: 27

• Matsumura , T. (2012). Airport Privatisation And International Competition. The Journal Of Japanese Economic Review. 63 (4), 431-448.

• Johnson, C (1988). Lloyds Bank Annual Review Privatisation And Ownership. London: Pinter Publishers Limited . p1-7.

• Simon Commander, Jan Svejnar (2007). Do Institutions, Ownership, Exporting and Competition Explain Firm Performance? Evidence from 26 Transition Countries.  1-57

• Lee, Molly N.N. 1998. “Corporatization and Privatization of Malaysian Higher Education”, International Higher Education, Winter: 1-2.

• Government of Malaysia. 1980. Fourth Malaysia Plan, 1980-1985. Kuala Lumpur: Government Printer.