Liberalization or liberalisation (

British English British English is the set of Variety (linguistics), varieties of the English language native to the United Kingdom, especially Great Britain. More narrowly, it can refer specifically to the English language in England, or, more broadly, to ...

) 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 Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

, where it refers to economic liberalization, 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

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 market (economics), 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 ...

s and

free trade Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...

, whose ideology is also called

economic liberalism Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic liberalism ...

. Economic liberalization also often involves reductions of taxes, social security, and unemployment benefits. Economic liberalization is often associated with

privatization Privatization (rendered privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation w ...

, which is the process of transferring ownership or outsourcing of a business, enterprise, agency,

public In public relations and communication science, publics are groups of individual people, and the public (a.k.a. the general public) is the totality of such groupings. This is a different concept to the sociology, sociological concept of the ''Öf ...

service or public property from the public sector to the

private sector The private sector is the part of the economy which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The private sector employs most of the workfo ...

. For example, the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

has liberalized gas and electricity markets, instituting a competitive system. Some leading European energy companies such as France's EDF and Sweden's

Vattenfall Vattenfall is a Swedish multinational corporation, multinational electrical power industry, power company owned by the List of government enterprises of Sweden, Swedish state. Beyond Sweden, the company generates power in Denmark, Finland, Germa ...

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 in the 1980s and 1990s to constitute the "standard" reform package promoted for Economic crisis, crisis-wracked developing country, developing countries by the Was ...

's trinity strategy for economies in transition. The Bretton Woods Conference of 1944, which recommended the establishment of International Monetary Fund (IMF) ''and the

World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...

'', 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 International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (See: World economy.) In most countries, such trade represents a significan ...

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 The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...

in 1995. The original GATT text (GATT 1947) is still in effect under the WTO framework. Thus liberalization was born. There is also a concept of hybrid liberalization. For instance, in

Ghana Ghana, officially the Republic of Ghana, is a country in West Africa. It is situated along the Gulf of Guinea and the Atlantic Ocean to the south, and shares borders with Côte d’Ivoire to the west, Burkina Faso to the north, and Togo to t ...

, cocoa crops can be sold to competing private companies, 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 Global (formerly 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 Liberalism is a Political philosophy, political and moral philosophy based on the Individual rights, rights of the individual, liberty, consent of the governed, political equality, the right to private property, and equality before the law. ...

, 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 Divorce (also known as dissolution of marriage) is the process of terminating a marriage or marital union. Divorce usually entails the canceling or reorganising of the legal duties and responsibilities of marriage, thus dissolving the M ...

abortion Abortion is the early termination of a pregnancy by removal or expulsion of an embryo or fetus. Abortions that occur without intervention are known as miscarriages or "spontaneous abortions", and occur in roughly 30–40% of all pregnan ...

, or psychoactive drugs. Regarding

civil rights Civil and political rights are a class of rights that protect individuals' political freedom, freedom from infringement by governments, social organizations, and private individuals. They ensure one's entitlement to participate in the civil and ...

, it may refer to the elimination of laws prohibiting homosexuality, private ownership of firearms or other items,

same-sex marriage Same-sex marriage, also known as gay marriage, is the marriage of two people of the same legal Legal sex and gender, sex. marriage between same-sex couples is legally performed and recognized in 38 countries, with a total population of 1.5 ...

, inter-racial marriage, 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

{{Authority control Market structure Economics of regulation Law reform

In economy and trade

In social policy and government

See also

References