The impact of privatisation on port efficiency - Coursework Example

For instance, at a macroeconomic level, port efficiency has been discovered to be an integral element in determining a country’s global competitiveness and trade prospects because it make exportation cheaper and thus, making the country’s products competitive in international markets (Culline, 2010; Park and De 2004). For this reason, governments are recognising the imperativeness of port efficiency both at the macro and micro economic levels and have started taking radical measures such as privatisation to improve their performance.

This literature review examines the impact of privatisation on the efficiency of ports by examining empirical evidence and theoretical framework. In academic studies, the concept of efficiency has been used to evaluate the performance. In port literature, Wang and Knox (2011); Talley (2009) discusses three types of port efficiency, which include technical, overall and allocative efficiency. Technical efficiency is achieving the greatest productivity at the least cost possible while allocative efficiency is the production of goods and services that are demanded by customers.

On the other hand, overall efficiency is the efficiency achieved when both allocative and technical efficiency are maximised and exist. For the purpose of this literature, all types of efficiency will be considered to determine the impact privatisation has on the efficiency of ports. According to Baird (2002), public ports are perceived to be inefficient because they are managed by government hierarchies and thus, suffer from disincentivisation, lack of clarity in operational responsibility and corporate objectives, goals displacement and excessive ministerial intervention (Demirel, Cullinane and Haralambides, 2011).

Thus, as much as the role of the public in management of port facilities is inevitable and remains significant, it is imperative to recognise that privatisation of port facilities helps overcome the limitations of traditional,