Book on economic role of state in privatisation, markets launched

AMMAN — There are major ideological differences regarding the economic role of the state in privatisation, said Arab Thought Forum (ATF) Secretary General Mohammad Abu Hammour at the launch of Taher Kanaan and Hazem Rahahleh’s book “The State and the Market Economy” on Tuesday. 

Some believe that the role the state should be limited to the role of a “watchdog”, merely regulating the process, while others believe that the government should be responsible for providing for citizens’ basic needs, Abu Hammour explained. 

This is one of the debates this book looks into, focusing on Arab and international experiences of privatisation policies. 

The privatisation experience in Jordan was discussed at the ATF by the book’s co-author and former minister Taher Kanaan and Minister of Education Omar Razzaz. 

Razzaz, an economist by training, headed the Privatisation Evaluation Committee in 2014, which reviewed the privatisation process in Jordan, and studied its economic and social effects. 

The importance of the book lies in clarifying the limits of the private and public sectors, and how their actions are interconnected.

The book includes comparisons between various international experiences of privatization, including China, India and the Arab world, with a special focus on Egypt and Jordan, to explore the effects of privatisation on development. 

A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregated interaction of a country’s citizens and businesses. There is little government intervention or central planning in this type of economy, according to Investopedia. 

For Razzaz, the global economy can today be described as a market economy, except for North Korea, with variations in application. 

In regards to the Jordanian experience, Razzaz explained that a “full divestiture model” had been adapted. 

Full divestiture implies that all the interests of a government in a utility asset or a sector have been transferred to the private sector.

Privatisation in Jordan was not a choice but a “must” to revive the economy after the economic crisis of 1988, Razzaz explained, noting that some companies succeeded while others failed, due to the lack of effective enforcement of the privatisation standards.

Kanaan presented privatisation of universities as a model of the privatisation experience in Jordan, explaining that the campus is a place that provides public products such as providing teachers and students the chance to work jointly on scientific research. In the 1990s, Jordan allowed the construction of private universities as a result of the inflation of secondary school certificate holders, which had not been accompanied with an increase of governmental support, Kanaan highlighted. 

In a review of budgets, costs and revenues of public and private universities during the academic year 2006-2007, public universities were shown to have suffered deficits of JD 55.5 million, while private universities had JD 21.8 million surpluses. 

Razzaz noted that one of his main challenges faced by his ministry today is the privatisation of fundamental education and the correlation between the quality of services provided by universities and their fees.