Economic Instabilities Lead To Privatization In Any State, An Exposition Of Pakistan’s Privatization Policy

Abstract

Privatization is the process of transferring an estate's ownership of an enterprise to private owners, whereas nationalization is the state's acquisition of a private company. They can both be used in place of the other. Privatization is now a common practice throughout the world, particularly in emerging nations. In this study privatization policy has been described and its connection with economic instabilities by unfolding literature and trends of privatization parallel to economic instabilities in facts and figures during sample year 1990-2021. Descriptive statistics and Augmented Dicky Fuller test is applied to check trend of data. Johansen Co-Integration test is applied to check long run association between the variables. Granger Causality test is implied by literature to check causality behind Privatization policy. Based on statistical criteria, variables are categorized into significant and insignificant. The study found that the two main drivers of economic instability in Pakistan are fiscal imbalances and public debt, although this study only considers the effects of public debt and fiscal deficits.