Markets, Privatization, and Corruption

Abstract

In recent decades, market provision has replaced or partially substituted for government provision in many arenas. During the 1970s and 1980s in the US and in some European countries, many publicly owned enterprises involved in telecommunications, electricity, transportation, and water were contracted out or sold to private parties. The governments of these countries, especially the US, also outsourced some of their core functions: welfare provision, prisons, and military services have been increasingly passed to private hands and today involve some degree of market competition. The rationale for this outsourcing has usually rested on claims about efficiency, although sometimes it has been rooted in the desires of governments to take costs off the public budget or to weaken and/or circumvent the power of public sector unions. Individual corruption is best addressed through accountability and transparency mechanisms. While individual corruption is an important factor to consider in the privatization issue, it is likely to be a more limited problem -- composed of isolated acts of malfeasance whose effects can be contained