Privatization refers to a broad set of processes coinciding with free-market ideologies, wherein government-controlled resources and services are sold off to be managed by private firms. State control and distribution of goods and services are viewed as impediments to an efficiently functioning market economy, and privatization, in theory, leads to greater efficiency that will ultimately spur increased development of the private sector. In the context of world poverty, privatization and economic liberalization are key aspects of market-oriented policies that international financial institutions implement as poverty reduction strategies in developing countries. Governments sell enterprises for a lump sum payment and private companies are then free to deliver goods or services and collect ongoing revenue.

Privatization has been a central condition of World Bank and International Monetary Fund ...