This chapter examines privatization as a means of making developing economies more efficient and profitable. It reviews the implications for changing the role of the State, and the vacillation between nationalization and privatization. Specific case studies of Venezuela, Chile, and the Czech Republic are reviewed from the perspective of understanding the “lessons learned” to be gained from these examples. The chapter discusses strategic and tactical approaches to privatization to give the reader some perspective in the underlying transactions involved in the process of privatization. The host government's objectives in terms of privatizing state-owned enterprises and the underlying theories of development that support such strategies are explored. The need for speed, transparency, accountability, public access to privatization schemes, and political legitimacy are all factors that are carefully examined. Finally, the chapter explores the impact of privatization on capital market development and growth, integration in and access to capital markets, and the role of foreign investment in privatization taking place in the developing world.
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