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Privatization in the Land of Believers: The political economy of privatization in Pakistan*

Published online by Cambridge University Press:  12 January 2018

KAMAL MUNIR  and
NATALYA NAQVI
KAMAL MUNIR
Affiliation:
Mushtaq Gurmani School of Humanities and Social Sciences, Lahore, Pakistan University of Management Sciences, Lahore, Pakistan Judge Business School, University of Cambridge, Cambridge, UK Email: k.munir@jbs.cam.ac.uk
NATALYA NAQVI
Affiliation:
Centre of Development Studies, University of Cambridge, Cambridge, UK Email: nn257@cam.ac.uk
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Abstract

Despite theoretical justifications and empirical evidence that state-owned enterprises have played an important role in late development, as well as over three decades of evidence that privatization programmes since the 1980s have had mixed results at best, international financial institutions continue prescribing privatization as a panacea for developing countries. Pakistan is an interesting case to understand why privatization is still considered desirable, because it is one of a set of developing countries that have whole-heartedly implemented Washington Consensus policies. In this context, we analyse privatization in two key economic sectors in Pakistan: energy and banking. Using qualitative and quantitative data, we describe the motivations behind these privatizations, the process by which they were carried out, and analyse the post-privatization performance of these organizations and sectors. We find that in both cases (a) the privatizations failed not only with respect to their stated aims, leading to a decline in national productive capabilities, but also had adverse distributional consequences, shifting the rewards to the buyers while the risks and costs remained with the public sector, and (b) the suboptimal outcomes of the privatizations went largely unchallenged aided by a prevalent neoliberal view amongst the country's economic policy makers and intelligentsia. Our analysis sheds new light on the process by which privatization in the absence of a state with the capacity to discipline business interests has enabled these interests to obtain state-sponsored rents without bringing any of the associated benefits for economic development.

Type
Research Article
Information
Modern Asian Studies , Volume 51 , Special Issue 6: Institutions and Economic Development in South Asia , November 2017 , pp. 1695 - 1726
Copyright
Copyright © Cambridge University Press 2018 

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Footnotes

∗

The authors would like to thank Salman Khalid for his input on energy privatizations and Umair Mesiya for valuable research assistance.

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123 Ibid.

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