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LESSON 12:
LIBRELIZATION

Learning Objectives

• To understand the concepts of Liberalization

• To analyze the reasons of State involvement in a country

• To understand the Economic Motives of Liberalization
• To understand the various other motives involved in
Liberalization

• To understand the results of Liberalization
• To understand the cautions the country needs to go for while promoting Liberalization

Interaction
Liberalisation has been the dominant force in international business in the developed world over the past two decades. It is likely to remain importan⁴湡⁤敤敶潬楰杮挠畯瑮楲獥眠汩湩牣慥楳杮祬映敥瑩⁳晥敦瑣⹳䄠瑬潨杵⁨桴⁥敭档湡獩獭愠摮洠瑯癩瑡潩獮椠癮汯敶⁤慣敢挠浯汰硥‬桴⁥潣獮煥敵据獥愠敲猠牴楡桧晴牯慷摲ⴠ洠牯⁥潣灭瑥瑩潩Ɱ洠牯⁥灯潰瑲湵瑩敩⁳潦⁲瑳潲杮映物獭愠摮映睥牥瀠慬散⁳潴栠摩⁥潦⁲敷歡漠敮⹳഍灓敲摡漠⁦楌敢慲楬慳楴湯伍慍⁹ⰱㄠ㜹‵单映湩湡楣污洠牡敫獴眠牥⁥畳橢捥整⁤潴愠戠t and developing countries will increasingly feel its effects. Although the mechanisms and motivations involved can be complex, the consequences are straightforward - more competition, more opportunities for strong firms and fewer places to hide for weak ones.

Spread of Liberalisation
On May 1, 1975 US financial markets were subjected to a burst of deregulation which triggered a price war in the market for financial services. In the two decades since then, liberalisation has spread to many other sectors of the economy, while the theme crossed the Atlantic into Western Europe and has since traveled, with increasing speed, across the globe.
In the second half of the 1990s, there are very few states which impose a higher degree of regulation on economic activity than was the case two decades previously. Some have travelled further down the path than others, but in terms of direction it has
been one-way traffic.

Some Definitions
First to define the key terms:

Liberalization
The act of reducing government-imposed constraints on the behaviour of actors in the economy. The two ways that this is achieved are by privatisation and deregulation.

Privatisation...