Cambridge International as and a level Economics Ebook

1
Explain the likely benefi ts of rail privatisation for 
Myanmar.
2
Comment on why some countries have continued to 
rely on the state to operate their national rail networks.
SELF-ASSESSMENT TASK 
3.5
For your own country, consider each of these 
activities:
■
water supply
■
rail transport
■
telephone services.
a
Establish whether these activities are operated by 
the government or private sector businesses.
b
If government-owned, how might the private 
sector help to improve the economic effi
ciency of 
these activities?
c
Why in your country might the government not 
wish to pursue a policy of privatisation?
Rail train in Yangon
Regulation and equality: 
Privatisation can include 
the deregulation of markets; experience has shown that 
the benefits of privatisation may not always be equally 
distributed. A valid reason for nationalisation is to 
promote greater social equality by operating services for 
the benefit of all.
KEY CONCEPT LINK
77
Chapter 3: Government microeconomic intervention 

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SELF-ASSESSMENT TASK 
3.6
Water privatisation in sub-Saharan Africa
Water privatisation, either by direct sale or through 
public–private partnerships, is now the favoured way 
forward for tackling Africa’s serious problems of water 
provision. This may seem a little odd, given that the 
supply of water is best provided by a monopoly to avoid 
any problems of wasteful duplication.
Most countries in sub-Saharan Africa have a lack of 
clean water and adequate sanitation. As a consequence, 
water-borne diseases such as cholera and dysentery are 
rife and result in high infant and child mortality rates. 
The problems are acute in rural areas and in the teeming 
shanty towns in most of the large cities.
The push for privatisation is now required by the 
International Monetary Fund as a condition for countries 
receiving loans. It is a further requirement that a market 
price for water supplies must be established. The UK’s 
Department for International Development took a similar 
line before giving funding for water privatisation in 
Ghana, West Africa.
The eff ects on local populations have been particularly 
controversial. The problem is that water tariff s have to 
be set by private companies at a market price that is 
oft en far beyond the means of most poor families. As a 
consequence, many cases of water-borne disease occur, 
not because of a lack of infrastructure, but because those 
in most need lack the meagre finances to be able to pay 
for this life-saving facility.