Strategic Behavior

Privatization is a prevalent strategy made popular by the advent of free-market thinking. It is done in the name of efficiency, fiscal reward, wealth distribution, and competitiveness. Arab countries followed the trend. Household Arab corporate names, as Saudi Arabia’s Saudi Telecommunication Co (STC) and Egypt’s Omar Effendi, the nation’s prime department store, moved into private hands. So did several other entities in a variety of Arab countries. Arab countries were, however, mild in their endorsement of this privatization strategy. The privatization efforts that began in Egypt in the late eighties, in Tunisia in the early nineties, and in Algeria in the late nineties, were, in reality, hesitant and, at times, shy. The scale was limited and the result was modest. The Egyptian program, which, by far, was the largest in the region, experienced constraints ranging from an immature capital market, especially in the early stages of the program, to innate resistance by both the bureaucracy and the unions (Jayid, 1995). These constraints did admittedly vary over time but they were there. Much of what has materialized was externally induced with the World Bank, IMF as the main levers of induction (Shirley, 1998). And the anticipated productivity, efficiency, and competitiveness outcome of the exercise are yet to be seen.