This dissertation, "Evaluation of the Privatization of Government Agencies in the 21st Century" by Ka-lun, Wong, 黃嘉麟, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: Evaluation of the privatisation of government agencies in the 2P* century Chapter 1 Chapter 1 Introduction 1.1 Introduction In the past two decades, the notion of privatisation to national utilities and agencies has been gaining more and more political momentum. In fact in some countries, it has become "politically correct" to embrace the privatisation policy. The government agencies that we discussed in this paper are those organisations that provide services to the public and are funded by the government budget directly or by government subvention. 1.2 Brief Historical Background After the World War II in 1940s, many countries faced the problem of unemployment, damaged economies and infrastructure which required the state to start the resurrection process. These political and economical problems needed to be dealt with immediately. State provision of services and goods seems to be an inevitable solution. Nationalisation provision to services of goods was the prevailing economic vogue for decades. To depict the situation, there were over 20 percent working force employed by national industries in the United Kingdom during the 1940s. The continuous expansion of the state sector since 1940s can be the result of many reasons. Many infrastructure and social facilities were destroyed after the War, jobless rate increased. There was an urgent need for the state to rebuild the infrastructure and invest on social welfare to maintain national stability. Other reasons for the continuous expansion of state sector included embracement of Socialist ideology after the War, the persistent increase of demand for more and better public services for the community from the state, the "empire-building" consequences of the bureaucratic system and politicians. -1-Evaluation of the privatisation of government agencies in the 21" century Chapter 1 With the state sector continued to expand, the inadequacies, and ultimately the failures, surfaced. In the 1980s, besides explaining the increase of state involvement in economic activities, many economists started to focus their attention on explaining the inefficiency of resource allocation by the state, especially when comparing it with the market efficiency of resource allocation. Moreover, with the economical condition improved, the inefficiency of many state-owned companies is criticized openly and people demanded them to reforms. The lack of a profit-motivated management structure resulted in expanding financial losses that could be curtailed through the process of privatisation. The need for improved economic efficiency was further intensified by accelerating globalisation and rapid advanced in technology of communications, transportation, logistics and information management. As the advantages of reduced statism became more and more recognised, the concept of privatisation gained more and more momentum and spread rapidly through the countries of many parts of the world (Europe, Latin America and Ask). Amongst the above places, United Kingdom was pioneer in privatising the national utilities. The 1984 privatisation of British Telecom (BT) by Margaret Thatcher's government could be considered as the origin and primary catalyst for subsequent privatisation efforts around the world. The BT privatisation experience provided a blue print for the denationalisation of large-scale state-owned enterprise. However, people criticised her government for "selling the family si