Marketization: A Development Concept

Marketization, as a management / organizational concept is the adoption of market principles to public management. In the context of service delivery, Marketization means letting the service be delivered by competing market players for profit / incentive providing consumers a range of choices on the service they need. This will require the government to let private providers to compete with the traditional government providers or even better, let the private providers compete while the governments take on the role of facilitators enabling the market to function properly.

A major focus of marketization is the concept of competition which is necessary for the market to function well. Moreover, competitive environments provide innovation and continuous improvement, maximizing benefits while preventing price-gouging. With this, many consider marketization of public services as a potential solution for some of the weaknesses and problems in the traditional bureaucracy.

One of the ways of marketizing public services is contracting or more popularly known today as outsourcing. It can be observed that today’s governments are increasingly interested to outsource their services to non-governmental entities. This is not so surprising because outsourcing has had significant positive results to some of the public services. The benefits from such schemes include cost reduction, greater flexibility, access to skills, and innovation.