The Perils of Privatization
By Walden Bello
March 4, 1999
In 1998, the Pohang Iron & Steel Co.--or Posco--dislodged long-time industry leader Nippon Steel to become the world's No. 1 steel producer for the first time in history. But Posco is not simply another South Korean behemoth. While the country's private-sector business groups, or chaebols, are squeezed by massive debt and plummeting earnings, the state-managed enterprise remains extremely profitable: Posco's net profit of $946 million in 1998 was 54% higher than the 1997 level.
But by far the greatest cheerleader for privatization is the U.S. government. It has long believed that the complex system of activist state intervention, industrial policy and strategic trade policy of most Asian economies handicaps U.S. exporters and investors. As U.S. Trade Representative Charlene Barshefsky bluntly told Congress last year, the Thai government's "commitments to restructure public enterprises and accelerate privatization of certain key sectors will enhance market-driven competition and deregulation [and] create new business opportunities for U.S. firms."
Walden Bello is professor of sociology and public administration at the University of the Philippines and co-director of Focus on the Global South, a programme of the Chula
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