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guarantee the new capital. Those without other capital assets are thus foreclosed from participating in the creation of new capital. Binary economics suggests that in privatizing public assets, governments should consider offering loan guarantees to potential purchasers who have insufficient assets to guarantee those loans directly. Such a process would be a simple extension of the historical practice of offering government loan guarantees to support economic development for everything from football stadiums, to railways, to manufacturing facilities. However, binary economics suggests that these loan guarantees be made available to a much broader group than in the past.

The Course of Privatization

A great deal has been written about the explosion of privatization initiatives around the world in the past two decades (Sanchez & Corona, 1994; Savas, 1987). This author is not likely to expand the base of knowledge or understanding of these initiatives. But, a short review of the process may be helpful in putting into context the opportunity that binary economics offers.

  • The Privatization of Public Assets Has Accelerated Dramatically

It is clear that the privatization of public assets is expanding around the world. Privatization initiatives underway in 1992 through the developing world were estimated in the range of $35 to $45 billion U.S. (Waddell, 1994). Latin America has lead the way with initiatives which began as long ago as 1980 in Chile, which privatized over $1.7 billion (U.S.) of state enterprises between 1985 and 1989. The National Privatization program in Brazil has involved the sale of more than $9 billion (U.S.) of assets in 35

companies and the transfer of $3.2 billion (U.S.) of debt (Landau, governments in Central and Eastern Europe and the former Soviet massive programs for the privatization of government assets.

1996). But recently, Union have initiated In these countries

privatization has been seen as in this part of the world where

a method to quickly convert to a market economy and it is the most diverse experiments in privatization can be seen.

Privatization is also expanding in the East with significant initiatives occurring in Malaysia, Sri Lanka, China, Bangladesh, Taiwan, and The Philippines. Malaysia first implemented privatization in 1983 with the upgrade of a public road into a tolled road and since then privatization has proven to be an important hallmark in the development policy (Malaysia Ministry of Finance, 1992). Even in Africa privatization is staking out a foothold with Morocco and Egypt taking the lead, although the political instability experienced in Sub-Saharan Africa has made the implementation of privatization

programs problematic. The clear evidence is that privatization efforts

pace never opportunity

before experienced. This and a threat for development

new pace for privatization and economic growth.

are occurring at a presents both an

In the midst of all this activity there is no single means of privatization preferred by governments. Privatization vehicles employed include options ranging from outright sale of assets at auction to transfer of assets to employees. In Latin America the most common form of privatization has been the auction or public sale of assets. In the United


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