Is privatization by itself enough to guarantee economic growth? Why? Explain using an example.

What will be an ideal response?

Ans: Privatization has evolved and it has become clear that selling state-owned assets to private investors will not guarantee enough economic growth. It has been shown in studies that privatization the process often fails to deliver predicted benefits if the newly privatized firms continue to receive subsides from the state. If they are protected from foreign competition by barriers to international trade and foreign direct investment. An example would be a peach farmer who gets paid subsides because their product is made more cheaply in another country. These subsides create little incentive for the farmer to find another way to make money and therefore do not result in growth in the economy.