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In general, liberalization (or liberalisation) refers to a relaxation of previous government restrictions, usually in such areas of social, political and economic policy. In some contexts, this process or concept is often, but not always, referred to as deregulation.[1] Liberalization of autocratic regimes may precede democratization (or not, as in the case of the Prague Spring).

In law[edit]

In social policy, liberalization may refer to a relaxation of laws restricting, for example, divorce, abortion, or psychoactive drugs. Regarding civil rights, it may refer to the elimination of laws prohibiting homosexuality, same-sex marriage, inter-racial marriage, or inter-faith marriage.[citation needed]

In economy and trade[edit]

Privatization may have several meanings. Its main meaning is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector to the private sector. It may also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management.[citation needed] Privatization has also been used to describe the buying of all outstanding shares of a publicly traded company by a single entity, making the company privately owned, or the demutualization of a mutual organization or cooperative to form a joint-stock company.[citation needed]

Economic liberalization is often associated with privatisation. The two are distinct concepts. For example, the European Union has liberalised gas and electricity markets, instituting a competitive system. Some leading European energy companies such as France's EDF and Sweden's Vattenfall remain partially or completely in government ownership.[citation needed] Liberalized and privatized public services may be dominated by big companies, particularly in sectors with high capital, water, gas, or electricity costs.[citation needed] In some cases they may remain legal monopolies, at least for some segments of the market like consumers.[citation needed] Liberalization, privatization and stabilization are the Washington Consensus's trinity strategy for economies in transition.[citation needed]

There is also a concept of hybrid liberalization as, for instance, in Ghana, cocoa crops can be sold to competing private companies, but there is a minimum price for which it can be sold and all exports are controlled by the state.[2]

Comparison with democratization[edit]

There is a distinct difference between liberalization and democratization. Liberalization can take place without democratization, and deals with a combination of policy and social change specialized to a certain issue, such as the liberalization of government-held property for private purchase. Democratization is politically specialized; it can arise from a liberalization but works on a broader level of governmental liberalization.[citation needed]

See also[edit]



  1. ^ Sullivan, Arthur; Sheffrin, Steven M. (January 2002). Economics: Principles in Action. New Jersey: Pearson Prentice Hall. ISBN 0-13-063085-3. 
  2. ^ Marcella Vigneri and Paulo Santos (2007) "Ghana and the cocoa marketing dilemma: What has liberalisation without price competition achieved?", Overseas Development Institute