The Liberalization, Privatization,

Globalization and Deregulation

PRESENTATION OF: KHEMBERLY RANDING LADIO

BSA-1
The difference between the LPG and
Deregulation

LPG stands for:

L- iberalization
P-rivatization
G-lobalization
 What is the difference between Deregulation
and Liberalization ?

Deregulation
 Is the process of removing or
reducing state regulations.
Liberalization
- Means that the economy is
FREE from direct or physical
controls imposed by the
government.
Deregulation and Liberalization

 The two terms are synonymous. They are both refer to removal and
reducing regulations made by the government and allows more free
economy, resulting globalization.
What is LPG?
Now let’s define each term...
DEREGULATION
Deregulation

 Deregulation removes government oversight of business.

Deregulation is the reduction or elimination of government power in a
particular industry, usually enacted to create more competition within
the industry. Over the years, the struggle between proponents of
regulation and proponents of no government intervention has shifted
market conditions. Deregulation, removal or reduction of laws or
other demands of governmental control. Deregulation often takes the
form of eliminating a regulation entirely or altering an existing
regulation to reduce its impact.
Prominent examples include deregulation of the airline,
long-distance telecommunications, and trucking industries.
This form of deregulation may attract support across the
political spectrum. For instance, consumer advocacy groups
and free market organizations supported many of the
deregulatory efforts in the 1970s.
LIBERALIZATION
Liberalization

Liberalization generally refers to the removal of restrictions;

usually government rules and regulations imposed on social,
economic, or political matters. In particular, it refers to
reductions in restrictions on international trade and capital.
Additionally, it refers to a country "opening up" to the rest of
the world with regards to trade, regulations, taxation, and
other areas that generally affect business in the country.
Objectives of Liberalization

 To increase competition amongst domestic industries.

 To encourage foreign trade with other countries with regulated
imports and exports.
 Enhancement of foreign capital and technology.
 To expand global market frontiers of the country.
 To diminish the debt burden of the country.
Concept of Liberalization

The concept of liberalization is introduced in the early 1990s

in India. At that time powerful changes happen in Indian
economic structure. In addition, most of the international
companies that work in India are from that time. With the
start of liberalization, many companies face serious
competition for the first time. Also, companies that
monopolize the market at that time start getting competition.
Characteristics of Liberalization

The characteristics of liberalization contain some strong

benefits that help in the growth of companies. Firstly, it encourages
economic growth of private sector companies. Also, it simplifies the
regulation, policy, and tax structure. Liberalization facilitates Foreign
Direct Investment, which also forces public sector companies to
restructure themselves for efficiency. In addition, it provides
motivation for export and allows more imports of capital goods and
technology. Besides, it moves away from the protection of small scale
industries.
Implementation of Liberalization

Removing barriers of trade reduces the rate of goods

purchased. Also, it removes barriers and quotas between
countries. It benefits the stronger economies. Besides, the
implementation of liberalization can cost jobs.
 For example, the European Union has liberalized gas and
electricity markets, instituting a competitive system.
PRIVATIZATION
What is Privatization?

Privatization means the increase of the controlling role of

private sector companies and lessens the role of public sector
companies. In other words, privatization is the reduction of
government-owned companies’ ownership of management.
Also, it converts government companies into private
companies.
Privatization

This is the second of the three policies of LPG. It is the increment of the
dominating role of private sector companies and the reduced role of public
sector companies. In other words, it is the reduction of ownership of the
management of a government-owned enterprise. Government companies
can be converted into private companies in two ways:
 By disinvestment
 By withdrawal of governmental ownership and management of public
sector companies.
Concept of Privatization

The concept of privatization divides into four parts namely

delegation, divestment, displacement, and disinvestment.
Delegation means giving the companies on lease or grant.
Divestment means selling the majority of the stake to one or
many private companies. Displacement means to displace
the public company in the market. And finally, disinvestment
means selling a portion or whole public company to private
companies.
 Forms of Privatization

 Denationalization or Strategic Sale: When 100% government ownership of

productive assets is transferred to the private sector players, the act is called
denationalization.
 Partial Privatization or Partial Sale: When private sector owns more than 50% but
less than 100% ownership in a previously construed public sector company by
transfer of shares, it is called partial privatization. Here the private sector owns
the majority of shares. Consequently, the private sector possesses substantial
control in the functioning and autonomy of the company.
 Deficit Privatization or Token Privatization: When the government disinvests its
share capital to an extent of 5-10% to meet the deficit in the budget is termed as
deficit privatization.
Objectives of Privatization

 Improve the financial situation of the government.

 Reduce the workload of public sector companies.
 Raise funds from disinvestment.
 Increase the efficiency of government organizations.
 Provide better and improved goods and services to the consumer.
 Create healthy competition in the society.
 Encouraging foreign direct investments (FDI)
Characteristic of Privatization

Privatization improves efficiency because private companies

have a profit motive to cut cost and be more resourceful.
Also, there is less political interference, they fight the
competition, they set short term goals, and there are
shareholders in the companies.
Implications of Privatization

It sees the growth of companies also the employees take

their work seriously. In addition, they help in the
development of the economy.
GLOBALIZATION
What is Globalization?

It means to link the economy of a country with the global

market or economy. Most noteworthy, the main aim of this is
to focus on foreign trade and investment. In other words, in
globalization, we remove the barriers to international trade to
facilitate foreign investment and trade in the country.
Concept of Globalization

In globalization, the entire world economy acts as a single

unit. In other words, in globalization the entire world trade
with each other with mutual cooperation. Also, it notices the
growth and output of world trade. The measuring of
globalization is not an easy task. Besides, it helps developing
countries in their growth and development.
Characteristic of Globalization

The characteristics of globalization include several features

that not only help countries in trade. But, also facilitate many
other things. In addition, these features help in the
globalization of economic activities, facilitate free trade
between countries, connect the local and international,
market and many more.
Characteristics of Globalization

Breaking time and space constraints

Increasing Mobility
Increasing interaction and exchange
Interconnecting networks across the world
Establishment of transnational rules
Implementation of Globalization

Globalization makes possible The Foreign Direct Income

(FDI). Moreover, this direct income grows more rapidly than
world trade. Most noteworthy, this help in boosting the
technology, industrial restructuring, and growth of
companies.
That’s all, THANK YOU...