Privatization:
In general Privatization, means leaving the economy
from government control to market. In the broad sense, privatization implies
the policy meant to give the greater role to the market mechanism and lessen
the government intervention in the economy. It means the production of goods and
services by NGOs or private limited. It covers various ideas and policies and
evokes political reactions.
In the current scenario, privatization is an
international phenomenon, and it is on the progress in every countries of the
world. The prime purpose of privatization is to make industries competitive by
transforming public sector ownership and control to the private sector.
Privatization in fact, envisages the shifting of control or ownership of the
means of production from the state to common people, so that these enterprises
are not more under the domain of political system. Due to effectiveness and
efficiency, the governments rely on private sector for commercial activities.
Political
economist have interpreted, defined privatization differently,
World Bank(1988):-is
broadly defined as increased private sector participation in the management and
ownership of activities and assets controlled and owned by the government.
Mary Shirley:-not only the state of state assets but also
privatization the management of state activities through contras and leases and
contracting out activities that were previously done by the state.
Kikeri et.al.:-privatization is the transfer of responsibilities from the state to private sector of economy.
Rondinelli and nellis (1986):-it is the transfer of responsibility for certain
government functions to nongovernmental organizations voluntary organizations
community associations and private enterprises.
Types of privatization:-
There
are five types of privations
1. Mega: -advocates the concept of minimalist state and the
reduction of stases power in all sectors, dimensions and spheres and activating
private sector in this direction.
2. Macro
privatization:-refers to the greater
use of market forces and ensures maximum degree of compition reducing the
active role of the state or state as regulator, facilator welfare provider and
producer.
3. Micro
privatization:-refers to the transfer
of ownership of public assets/enterprises to private sector /individuals.
4. Liberal
democratic privatization:-refers to
the process of privatization adopted in the liberal democratic system.
5. Socialistic
privation:-refers to the deregulation
to enhance the competition among the various economic actors, reducing the role
of all powerful or active state and converting it into a minimalistic state or
state acting as simply facilitator than acting as initiator of development.
Importance of privatization in Nepal for rural
development:
Our country Nepal has the experience of
privatization since the period of Panchayat. The Panchayat government in order
to meet the growing challenges of increasing the quality and quantity of basis
services, facilities, basic needs of the people, particularly the rural poor,
made a number of efforts and undertook several policies to invest public money
in a number of governments owned, controlled and regulated enterprises. During
the Panchayat period, some attempts were made to encourage the process of
privatization. During the sixth five year plan period two public enterprises
i.e. “Nepal Cehuri Ghee Plant” and “Chandeshwori Textile Factory” were
privatized. In the year 1985, HMG attempted to privatize twelve PEs, which could not be materialized in
practice.
With the formation of the first elected government in
1991 under the prime minister ship of G.P. Koirala in 1991, privatization
policy got encouraged in different forms. Immediately after assuming power, the
NC government in 1991 issued a policy paper on privatization as the integral
part of its economic reform policy and consequently adopted certain policies,
programs administrative mechanism and modalities for it. Three PEs i.e.
“Bhrikuti Paper Mills”, “Harisiddhi Brick and Tile Factory” and “Bansbari
Leather and Shoe Factory” were sold to private individuals from India at cheap
rate. The objectives of the phase wise program of privatization were reducing
financial and administrative burden of government, improving operational
efficiency and involving the participation of general public and the private
sector in the management of public enterprises.
As privatization encourages industrialization, it also
provides/ generates employment opportunities in private sectors. Privatizations
helps the capable and competent persons/ firms to involve in economic
activities and thus contributes in most calls, for the just distribution of
wealth and income in society but the state has to check the trend of over
contraction of capital in the hands of few economic elites and market actors.
It may be process of converting black money into white money because it
encourages private investment.
Liberalization:
Economic liberalization is taken as the reform
processes directed at freeing economic agents and activities from state
control. It may be associated with an enhanced role of the private sector as
opposed to the state sector. Liberalization is simply to relieve the economy
from governmental control and directives and to promote the private sectors.
Liberalization is analyzed in terms of internal economic reform which can be
discussed in terms of reforms in the fiscal and the financial sectors.
Liberalization according to John
Black is a program of changes in the direction of moving towards a free market
economy. This normally includes the reduction of direct controls on both
internal and international transactions and a shift towards relying on the
price mechanism to co ordinate economic activities. In such a program, less use
is made of licenses, permits and price controls, and there is more reliance on
prices to clear markets. It also involves a shift away form exchange controls
and multiple exchange rated\s towards the convertible currency. The extent to
which an economy is controlled can vary greatly, liberalization is a matter of
degree and does not imply a shift to total laissez faire. Liberalization is an
act of freeing somebody from political or moral restrictions. According to
“World Development Report 1996”, liberalization means ‘freeing prices trade and
entry of markets form state controls while establishing the economy’.
Importance of liberalization in Nepal for rural
development:
The need and importance of
liberalization in Nepal
in post 1990 period was felt due to various reasons. The supporters of economic
liberalization advocated that the existing government investment in most cases
had proved unproductive and unfruitful to the people and the nation,
consequently creating deficit budget every year. As the economic policies
including market prices, production, consumption and distribution were
government controlled, the private sector, and individual investors remained
passive in economic activities often directly encouraging their capital to
invest in foreign banks or invest outside the country in different forms. The
supporters of liberalization advocate that it can reduce the growing government
deficit every year.
The liberalized economic reform
measures in post 1990 periods have played very significant roles in the
economic life of Nepal .
Its role in Nepal ’s
particular context can be outlined as:
1. Since the economic liberalization measures in post
1990, Nepal
have contributed to the all round development and rapid economic growth inside
the country, though economic development in Nepal in post days remained
negatively affected by the political factor.
2. Like in other liberalized economics, liberalization in
Nepal
has also benefited people in different ways and has reduced the role of command
economy.
3. Liberalization contributed much for the development of
Nepal
in different ways including improving the quality of Nepalese people and their
living standard by generating income in different ways.
4. As liberalized economic reforms have encouraged the
establishment of new industries or enterprises of new industries or
enterprises, it would encourage the increase the volume of export items and
contents, contributing to earn foreign currency and making economy self
sustaining.
5. Liberalization process has also contributed much to
the utilization of country’s existing resources and the development of raw
materials based industries, new enterprises and business/ commercial
activities.
6. The liberalization in Nepal has contributed to generate
employment opportunities to Nepalese in new established enterprises, firms,
industries and business houses.
7. The state owned enterprises, after liberalization
process was encouraged and have also made several attempts to improve their
working styles in course of competing with the private sector banks.
8. A number of financial institutions, aid services, film
industries, media houses, insurance companies and joint venture companies in
different sectors, travel agencies and man power companies were established
which have brought positive impacts in Nepalese economy in different form
including the increment in revenues and taxes.
9. It has promoted private sector, prices have been freed
from government control and economy has been more or less stabilized.
Globalization:
Globalization is a worldwide
phenomenon and has become quite a fashionable term among political economist,
planners, development practitioners, media persons, which generally means the
free flow of ideas, information, goods and services. It is generally referred
as the international flow of trade and capital, growing integration of
economics and societies around the world through free movements of goods,
services, people, and information across boundaries. It has both descriptive
and prescriptive interpretation. It refers to widening and deepening of
international flow of trade capital and technology, ideology, culture and
information within a single and integrated market and also involves the
liberalization of national and global markets in the belief that free flow of
trade, capital and technology, and information would produce box outcome of
growth and human welfare.
Globalization is the process by
which an activity becomes worldwide in scope. It is a process of integration of
the world as one market. The free movements of the elements like information,
economy, technology and ideas are well knitted production network help to
create bigger market which in turn is expected to generate opportunities for
product specialization. Globalization according to Todaro is the increasing
integration of national economics into global markets.
Speaking from political point of
view, globalization refers to the integration of national economy with the
powerful global economy through a number of processes and measures including
privatization, liberalization, marketization and liberal economic reforms,
removing existing trade barriers consequently leading the world towards “one
huge market” and increasing the process of “interdependence” among sovereign
nation states on the ground of mutual interest and benefit. Globalization in
most cases leads to an integrated global economy. The process of globalization
ultimately converts the huge globe into a small global village. Structurally
speaking, structural globalization refers to the activation of global economic
actors including Britton woods institution, multinational corporations and
enterprises virtually establishing their organization networks though out the
world powerfully controlling the economy in the independent nation states.
Importance of globalization Nepal for rural
development:
Increasing globalization has direct/
indirect impact and consequences on individual, business groups, nation
economy, political system, socio cultural and other sectors which may be both
negative and positive. The major effects of globalization are on liberalized
international trade, import penetration, foreign direct investment,
multinational companies and competitive environment. In this connection, it
would be appropriate to study the regional reaction to the increasing
globalization. Late his majesty king Birendra addressing in the inaugural
session of form for Asia in the capacity of chief guest, stated that this
phenomenon of opportunities for economic and social development yet are facing
a number of challenges on the same occasion. Chinese president Jiang Zemin
viewed that the forum reflected the aspirations of the Asian countries for
common development through enhanced dialogue and co operation against the
backdrop of economic globalization.
Malaysian Prime minister Mohammad
Mahathir stated when the weak countries are forced to open their borders to
globalization; giant banks and corporation would come in and destroy the small
local counterparts. In such a terrible situation can the states ignore the
growing wave of globalization and the answer would be strictly not because in
today’s globalize world, these nation states which are mostly the members of
international community and have to depend on them on a number of sectors
cannot get international support and thus cannot remain in complete isolation.
Moreover, these states cannot explore and exploit the opportunities for
economic growth and efficiency to the maximum possible extent provided by the
increasing wave of globalization. They also need to protect their national
interest, adjust with the changing world, redefine their foreign policy, goals,
objectives, strategies, interests, re-orient their diplomatic practices in the
light or context of globalization.
The only thing the small countries
like Nepal
in this context can do is that it can make attempts to minimize the negative
impacts of globalization, increase its capability to cope with the changing
regional and international environment. The factors responsible for global economic
boom during the 1990’s include growing economic interdependence, technological
revolution and low transport costs, globalization, increasing gross national
product, changing structure of world economy, increasing global trade,
increasing foreign direct investment, foreign aid, increasing subsidies and
current transfers.
Globalization
has impacts on Nepalese economy in a number of areas both positive and negative
ones. It attempts to widen or broaden individual attitudes, encourages tough
competition and consumer satisfaction encourages access to global markets,
increase in investment and improvement in quality of products influence on
performances. However globalization in today’s world is relevant to the Nepali
context and has contributed much positive impact on rural development of Nepal . The
Nepalese rural areas have taken better advantage of the process of
globalization in a number of ways. Rural population have become conscious about
their human rights including their right to development and right to protect
their own clean and beautiful environment and protect rural natural resources.
Conclusion:
From the above discussion, it can be concluded that
the process of liberalization, privatization, and globalization has done a lot
and can do a lot for the development of the rural area of Nepal . For the
development of the country, we should go from the rural area and should apply
the weapon of liberalization, privatization and globalization properly. As most
of the places of our country are rural, the development step should be started
from the rural place and the media of liberalization, privatization and
globalization can play a very important role in this step.
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