Liberalization or liberalisation (

British English British English (BrE, en-GB, or BE) is, according to Oxford Dictionaries, "English as used in Great Britain, as distinct from that used elsewhere". More narrowly, it can refer specifically to the English language in England, or, more broadly ...

) is a broad term that refers to the practice of making laws, systems, or opinions less severe, usually in the sense of eliminating certain government regulations or restrictions. The term is used most often in relation to economics, where it refers to

economic liberalization Economic liberalization (or economic liberalisation) is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. In politics, the doctrine is associated with classical libe ...

, the removal or reduction of restrictions placed upon (a particular sphere of) economic activity. However, liberalization can also be used as a synonym for decriminalization or legalization (the act of making something legal after it used to be illegal), for example when describing drug liberalization.

In economy and trade

The Great Depression of 1929 made nations throughout the world realize that the wide gap between the economic theory and practice in determination of internal trade policy was the major cause of worldwide economic disaster. Therefore, a need for reviving the classical theory of trade by adhering to free trade policy was felt. The

Bretton Woods Conference The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United ...

of 1944, which recommended the establishment of International Monetary Fund (IMF) ''and the World Bank'', had also recommended the establishment of an International Trade Organization (ITO). Although, the IMF and the World Bank were established in 1946, the proposal for ITO did not materialize. Instead, the General Agreement on Tariff and Trade ''(GATT)'', a less ambitious institution, was formed in 1948. The primary objective of GATT is to expand international trade by liberalizing trade so as to bring about all round economic prosperity. GATT was signed in 1947, came into effect in 1948 and lasted until 1994. It was replaced by the World Trade Organization in 1995. The original GATT text (GATT 1947) is still in effect under the WTO framework. Thus liberalization was born. Economic liberalization refers to the reduction or elimination of government regulations or restrictions on private business and trade. It is usually promoted by advocates of

free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ...

s and

free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold eco ...

, whose ideology is also called economic liberalism. Economic liberalization also often involves reductions of taxes, social security, and unemployment benefits. Economic liberalization is often associated with privatization, which is the process of transferring ownership or outsourcing of a business, enterprise, agency, public service or public property from the public sector to the private sector. For example, the European Union has liberalized gas and electricity markets, instituting a competitive system. Some leading European energy companies such as France's

EDF EDF may refer to: Organisations * Eclaireurs de France, a French Scouting association * Education for Development Foundation, a Thai charity * Électricité de France, a French energy company ** EDF Energy, their British subsidiary ** EDF Luminus ...

and Sweden's Vattenfall remain partially or completely in government ownership. Liberalized and privatized public services may be dominated by big companies, particularly in sectors with high capital, water, gas, or electricity costs. In some cases they may remain legal monopolies, at least for some segments of the market like consumers. Liberalization, privatization and stabilization are the

Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monet ...

's trinity strategy for economies in transition. There is also a concept of hybrid liberalization. For instance, in Ghana, cocoa crops can be sold to competing

private companies A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...

, but there is a minimum price for which it can be sold and all exports are controlled by the state.Marcella Vigneri and Paulo Santos (2007)
Ghana and the cocoa marketing dilemma: What has liberalization without price competition achieved?
,

Overseas Development Institute ODI (formerly the 'Overseas Development Institute') is a global affairs think tank, founded in 1960. Its mission is "to inspire people to act on injustice and inequality through collaborative research and ideas that matter for people and the ...

The term liberalization has its origin in the political ideology liberalism, which took form by the early 19th century.

In social policy and government

In social policy, liberalization may refer to a relaxation of laws restricting certain practices or activities, such as divorce,

abortion Abortion is the termination of a pregnancy by removal or expulsion of an embryo or fetus. An abortion that occurs without intervention is known as a miscarriage or "spontaneous abortion"; these occur in approximately 30% to 40% of pregnan ...

, or psychoactive drugs. Regarding civil rights, it may refer to the elimination of laws prohibiting homosexuality, private ownership of firearms or other items, same-sex marriage,

inter-racial marriage Interracial marriage is a marriage involving spouses who belong to different races or racialized ethnicities. In the past, such marriages were outlawed in the United States, Nazi Germany and apartheid-era South Africa as miscegenation. In 19 ...

, or inter-faith marriage. There is a distinct difference between liberalization and democratization. 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. Democratization is politically highly specialized; it can arise from a liberalization but works on a broader level of governmental liberalization.

References

Market structure Economics of regulation Law reform {{Gov-stub

In economy and trade

In social policy and government

See also

Specific

References