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Liberalization

Liberalization

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In general, liberalization (or liberalisation) refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. In some contexts this process or concept is often, but not always, referred to as deregulation
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...

. Liberalization of autocratic regimes may precede democratization (or not, as in the case of the Prague Spring
Prague Spring
The Prague Spring was a period of political liberalization in Czechoslovakia during the era of its domination by the Soviet Union after World War II...

).

In the arena of social policy it may refer to a relaxation of laws restricting for example divorce
Divorce
Divorce is the final termination of a marital union, canceling the legal duties and responsibilities of marriage and dissolving the bonds of matrimony between the parties...

, abortion
Abortion
Abortion is defined as the termination of pregnancy by the removal or expulsion from the uterus of a fetus or embryo prior to viability. An abortion can occur spontaneously, in which case it is usually called a miscarriage, or it can be purposely induced...

, or drugs
Psychoactive drug
A psychoactive drug, psychopharmaceutical, or psychotropic is a chemical substance that crosses the blood–brain barrier and acts primarily upon the central nervous system where it affects brain function, resulting in changes in perception, mood, consciousness, cognition, and behavior...

 and to the elimination of laws prohibiting same-sex sexual relations
Homosexuality
Homosexuality is romantic or sexual attraction or behavior between members of the same sex or gender. As a sexual orientation, homosexuality refers to "an enduring pattern of or disposition to experience sexual, affectional, or romantic attractions" primarily or exclusively to people of the same...

 or same-sex marriage
Same-sex marriage
Same-sex marriage is marriage between two persons of the same biological sex or social gender. Supporters of legal recognition for same-sex marriage typically refer to such recognition as marriage equality....

.

Most often, the term is used to refer to economic liberalization
Economic liberalization
Economic liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities; the doctrine is associated with classical liberalism...

, especially trade liberalization
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

 or capital market
Capital market
A capital market is a market for securities , where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets...

 liberalization.

Although economic liberalization is often associated with privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...

, the two can be quite separate processes. For example, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 has liberalized gas
Gas
Gas is one of the three classical states of matter . Near absolute zero, a substance exists as a solid. As heat is added to this substance it melts into a liquid at its melting point , boils into a gas at its boiling point, and if heated high enough would enter a plasma state in which the electrons...

 and electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...

 markets, instituting a system of competition
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...

; but some of the leading European energy companies (such as EDF
Électricité de France
Électricité de France S.A. is the second largest French utility company. Headquartered in Paris, France, with €65.2 billion in revenues in 2010, EDF operates a diverse portfolio of 120,000+ megawatts of generation capacity in Europe, Latin America, Asia, the Middle East and Africa.EDF is one of...

 and Vattenfall
Vattenfall
Vattenfall is a Swedish power company. The name Vattenfall is Swedish for waterfall, and is an abbreviation of its original name, Royal Waterfall Board...

) remain partially or completely in government ownership.

Liberalized and privatized public services
Public services
Public services is a term usually used to mean services provided by government to its citizens, either directly or by financing private provision of services. The term is associated with a social consensus that certain services should be available to all, regardless of income...

 may be dominated by just a few big companies particularly in sectors with high capital costs, or high such as water, gas and electricity. In some cases they may remain legal monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

 at least for some part of the market (e.g. small consumers).

Liberalization is one of three focal points (the others being privatization and stabilization) of the Washington Consensus
Washington Consensus
The term Washington Consensus was coined in 1989 by the economist John Williamson to describe a set of ten relatively specific economic policy prescriptions that he considered constituted the "standard" reform package promoted for crisis-wracked developing countries...

's trinity strategy for economies in transition.
An example of Liberalization is the "Washington Consensus" which was a set of policies created and used by Argentina

There is also a concept of hybrid liberalisation as, for instance, in Ghana
Agriculture in Ghana
Agriculture is Ghana's most important economic sector, employing more than half the population on a formal and informal basis and accounting for almost half of GDP and export earnings. The country produces a variety of crops in various climatic zones which range from dry savanna to wet forest and...

 where cocoa crop can be sold to a variety of competing private companies, but there is a minimum price for which it can be sold and all exports are controlled by the state.

Liberalization vs Democratization


There is a distinct difference between liberalization and democratization, which are often thought to be the same concept. 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, whereas democratization is more politically specialized that can arise from a liberalization, but works in a broader level of government.

See also

  • Deregulation
    Deregulation
    Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...

  • Oligopoly
    Oligopoly
    An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...

  • Marketization
    Marketization
    Marketization is the process that enables the state-owned enterprises to act like market-oriented firms. This is achieved through reduction of state subsidies, deregulation, organizational restructuring , decentralization and in some cases privatization...



Specific:
  • Drug liberalization
    Drug liberalization
    Drug liberalization is the process of eliminating or reducing drug prohibition laws. Variations of drug liberalization include drug relegalization, drug legalization, and drug decriminalization -Policies:...

  • Electricity liberalization
    Electricity liberalization
    Electricity liberalization refers to the liberalization of electricity markets. As electricity supply is a natural monopoly, this entails complex and costly systems of regulation to enforce a system of competition....