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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. 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 or dissolution of marriage is a legal process in which a judge or other authority dissolves the bonds of matrimony existing between two persons, thus restoring them to the marital status of being single....
, abortion
Abortion

An abortion is the termination of a pregnancy by the removal or expulsion of an embryo or fetus from the uterus, resulting in or caused by its death....
, homosexuality
Homosexuality

Homosexuality refers to human sexual behavior or same-sex attraction between people of the same sex or to homosexual orientation. As a sexual orientation, homosexuality refers to "having sexual and romantic attraction primarily or exclusively to members of one?s own sex"; "it also refers to an individual?s sense of personal and social identi...
 or drugs
Psychoactive drug

A psychoactive drug or psychotropic substance is a chemical substance that acts primarily upon the central nervous system where it alters brain function, resulting in temporary changes in perception, mood , consciousness and behaviour....
.

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 neoliberalism....
, especially trade liberalization
Free trade

Free trade is a type of trade policy that allows traders to act and transact without coercive interference from government. Thus, the policy permits trading partners mutual gains from trade, with goods and services produced according to the law of comparative advantage....
 or capital market liberalization.

ough economic liberalization is often associated with privatization
Privatization

Privatization is the incidence or process of transferring ownership of business from the public sector to the private sector . In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement....
, the two can be quite separate processes.






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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. 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 or dissolution of marriage is a legal process in which a judge or other authority dissolves the bonds of matrimony existing between two persons, thus restoring them to the marital status of being single....
, abortion
Abortion

An abortion is the termination of a pregnancy by the removal or expulsion of an embryo or fetus from the uterus, resulting in or caused by its death....
, homosexuality
Homosexuality

Homosexuality refers to human sexual behavior or same-sex attraction between people of the same sex or to homosexual orientation. As a sexual orientation, homosexuality refers to "having sexual and romantic attraction primarily or exclusively to members of one?s own sex"; "it also refers to an individual?s sense of personal and social identi...
 or drugs
Psychoactive drug

A psychoactive drug or psychotropic substance is a chemical substance that acts primarily upon the central nervous system where it alters brain function, resulting in temporary changes in perception, mood , consciousness and behaviour....
.

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 neoliberalism....
, especially trade liberalization
Free trade

Free trade is a type of trade policy that allows traders to act and transact without coercive interference from government. Thus, the policy permits trading partners mutual gains from trade, with goods and services produced according to the law of comparative advantage....
 or capital market liberalization.

Liberalization and privatization

Although economic liberalization is often associated with privatization
Privatization

Privatization is the incidence or process of transferring ownership of business from the public sector to the private sector . In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement....
, 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 European Union member state, located primarily in Europe. It was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the pre-existing European Economic Community....
 has liberalized gas
Gas

In physics, a gas is a state of matter, consisting of a collection of particles without a definite shape or volume that are in more or less random motion....
 and electricity
Electricity

Electricity is a general term that encompasses a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena such as lightning and static electricity, but in addition, less familiar concepts such as the electromagnetic field and electromagnetic induction....
 markets, instituting a system of competition
Competition

Competition is a rivalry between individuals, groups, nations, or animals, for territory, a niche, or allocation of resources. It arises whenever two or more parties strive for a goal which cannot be shared....
; but some of the leading European energy companies (such as EDF
Électricité de France

?lectricit? de France is the main electricity generation and distribution company in France. It was founded on April 8, 1946, as a result of the nationalisation of a number of electricity producers, transporters and distributors by the minister of industrial production Marcel Paul....
 and Vattenfall
Vattenfall

Vattenfall is a Sweden electric company and one of the leading energy producers in Northern Europe. 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 Service s provided by government to its citizens, either directly or by financing private provision of services....
 may be dominated by just a few big companies
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 from the Greek language for few sell....
, particularly in sectors with high capital costs, or high sunk cost
Sunk cost

In economics and business decision-making, sunk costs are costs that cannot be recovered once they have been incurred. Sunk costs are sometimes contrasted with variable costs, which are the costs that will change due to the proposed course of action, and prospective costs which are costs that will be incurred if an action is taken....
, such as water, gas and electricity. In some cases they may remain legal monopolies
Monopoly

In economics, a monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it....
, 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 initially coined in 1989 by John Williamson to describe a set of ten specific economic policy prescriptions that he considered to constitute a "standard" reform package promoted for Economic crisis developing country by Washington D.C based institutions such as the International Monetary Fund , World Bank an...
'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

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

  • 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....
  • 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....
  • 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 from the Greek language for few sell....
  • 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 privatization....