In part, privatization's roots stem from the recent decline of socialism as well as from the growing conviction that free enterprise advances the wealth of nations better than nationalized industries and planned economies. Both mixed-market and socialist (or formerly socialist) economies have engaged in various privatization efforts in recent years.

Privatization represents a reversal of the process of nationalization begun early in this century. In most Communist nations, a wave of nationalizations ensued shortly after Communist governments assumed power in the aftermaths of World War I (WWI) and World War II (WWII). In Western Europe, the nationalization process stretched over several decades but essentially took hold in the 1930's. At the time, European governments of divergent political viewpoints were largely in agreement over the benefits of a strong state role in their domestic economies. "Nationalization represented a cherished post-war European ideal to create large vigorous state-owned businesses that provided pools of public jobs and allowed European politicians to wield influence over their economies. A wide consensus of European politics after held that a strong, government-owned industrial sector was necessary for prosperity and middle-class stability {see Endnote 1}." In the 1930's Spain, the Franco government nationalized the state petroleum resources, which later emerged as Repsol--Spain's state oil company. The Mussolini government in Italy did the same and formed what was to become ENI, Italy's state petroleum company. Energy resources were nationalized at about the same time elsewhere in Europe--although in other nations often by more freely-elected governments.

In other regions, nationalization often involved the expropriation of foreign-owned domestic petroleum properties. Russia was the first to nationalize its petroleum industry following the Bolshevik Revolution in 1918. In 1938, Mexico nationalized what was at the time an industry largely held by U.S., UK, and Dutch interests. Later waves of nationalizations (and expro- priations) followed in the post-war era in Latin America and the Middle East.

However, in the West, by the late 1970's, nationalized industries began to lose favor. Disenchantment with state ownership grew as government enterprises began to be perceived as bloated and inefficient. This view caught on with liberal and conservative parties throughout the world. Recently, the British labor party leader called for the abolishment of the labor party's constitution clause calling for the nationalization of industry--long one of the bedrocks of the British labor movement's constitution {see Endnote2}. Other liberal parties have also embraced privatization. As a result of this historic change in attitude toward state-ownership, such companies as Repsol and ENI--along with a host of other formerly state-owned companies--are now being privatized.

In the East, the collapse of Communism precipitated later efforts to adopt market economies and privately-held industry. Even among still avowedly socialist regimes, such as China, a move to free market-based reforms and privatization has been evident for several years.

Among the developing countries, privatization has also been widespread. With the exception of Cuba, virtually all of Latin America has adopted some form of privatization. Chile--Latin America's pioneer at privatization--and, later, Argentina, Peru, and Colombia have undertaken the most ambitious privatization efforts. Among developing Asian nations, electric power privatization has been most prominent in countries such as Pakistan, the Phillippines, Malaysia, and Indonesia. The two most populous nations of Asia, China and India, have also embarked on various forms of energy privatization.