Author: Nodar Pkhaladze
The World Bank and the International Monetary Fund are the two strongest institutions in the sphere of global trade and finance. Together, those two organs represent the Bretton Wood system. Bretton Woods was founded in 1944, with the mission to help rebuild the damaged economy of European countries after the WWII and to promote international economic cooperation. Since the creation they have been supporting developing countries in the world by providing aid. In exchange for their aid, the developing countries are usually required to complete a concrete set of criteria. These criteria are called "SAP", which stands for Structural Adjustment Programs. One of the components of this vast package is the privatisation of state-owned enterprises.
The process of privatization can be one of those many steps that should help the developing country to successfully transform into a successful economy. The problem is, that those processes not always result in success. One of the main criticisms of the Bretton Wood Institutions is the belief that they are, in reality, destabilizing the economies of states that are undergoing the transitional period. The purpose of this paper will be to look into those problems by arguing whether or not the process of privatization harms those countries. For this reason the paper will look into two separate cases, where the process of privatization was a failure (case of Guinea) and where it was a success (case of Czech Republic). As for the theory, the events will be analysed by the perspective of Friedrich List.