Institutional preconditions of privatization in market‐based political economies: Implications for Jordan

Abstract

AbstractConcepts of privatization have been adopted on a global scale. Yet few studies examine issues other than economic and selected political ones. This article argues, however, that a broad spectrum of institutional considerations must be evaluated in order to assess the viability of any proposed privatization strategy. A further distinction must be made between countries with developed markets and those market‐based political economies (MBPEs) whose extant institutional configurations have not reached a level of independence to fully support extensive privatization measures. Jordan, Turkey and Egypt would be examples of such countries.This article contends that the enactment and implementation of privatization policies will achieve its avowed goals only (a) if the state‐controlled enterprises (SCEs) are sufficiently independent of their supervising bureaucracies (presumably a ministry, the treasury or development planning organization) prior to their transfer to a private partner and (b) if the government possesses requisite monitoring capacity to ensure the fulfilment of contractual obligations of the privatized entity. An ancillary thesis suggests that the societal and organizational culture must be succinctly separated to warrant a full‐scale transfer of SCEs to the private sector.In Jordan, privatization has been discussed for a number of years, but no projects have been attempted so far. The article assesses the likelihood of large‐scale privatization occurring soon.