Privatization and Economy of the Country

This study investigates importance of privatization, changes in the performance of organizations after meeting the privatization policy and overall effects on the growth of economy of the country. It is described by Farazmand (2001) that privatization has been rationalized by its advocates, policy makers and international agencies on various grounds ranging from economic efficiency to income distribution. It is observed that lot of research has been done on the performance of privatized entities but this research analyzes the growth of macroeconomic factors after privatization, especially in case of large unprofitable state-owned enterprises. Privatization of state-owned enterprises has been investigated in this research with a case study of already privatized banking sector. The theory of privatization has been tested with the performance of private banks as compared to the public banks using the profitability ratios. The statistical result obtained from the profitability ratio show improvement in the performance of banking sector due to privatization in Pakistan and there is evidence of growth of the economic indicators especially FDI in the financial market.