A feature of the global economy through the 1980s and 1990s, which appears set to continue into the next century, is the sweep of privatization. From the UK to Latin America, from the previously centrally planned economies to the emerging post-apartheid South Africa, industries previously in state ownership have been and continue to be sold off in one form or another to the private sector.

The trend toward privatization has found its reflection inevitably in economic theory. The previous era, which witnessed significant degrees of nationalization and state ownership through most of the Organization for Economic Cooperation and Development (OECD) economies, was generally interpreted in mainstream economics in terms of various forms of 'market failure' requiring state intervention. The mainstream response to privatization has therefore been to interpret the changing industrial ownership structure in terms of 'government failure' or 'public failure', which in turn must have come to outweigh the original market failure. (The balance can also be interpreted as having shifted through reductions in the degree of market failure with, for example, technological developments reducing the degree to which certain industries displayed natural monopoly characteristics.)

The economic and political factors behind the various types of privatization which have been pursued, and continue to be pursued, vary hugely between the very different country settings. Furthermore, developments such as the globalization of financial and capital markets, the growing activities of multinational corporations and the switch to a more free market orientation by international institutions, including the World Bank, all need to be analysed not only as the economic, political and institutional backdrop to the swing to private ownership but also as being fuelled by the very process of privatization itself across the globe.

In the case of the World Bank, it report The East Asian Miracle interprets the economic success of the high-performing south-east Asian economies as being primarily due to market-friendly economic policies. This is in marked contrast to the success of South Korea, where an interventionist inductrial policy, including the use of natioalization, is shown to have played a key role. Of course, the World Bank acknowledges that such policies were pursued, but makes a distinction between these, on the one hand, and market firendly policies on the other, and chooses to recomend only the latter. However, to the extent that 'market-friendly' policies now embrace privatization, these themselves become 'institutionally demanding' policies as a new regulatory structures become required.

Jonathon Michie