Liberalization or liberalisation (

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

) 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 the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...

, 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 liber ...

, 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 Decriminalization or decriminalisation is the reclassification in law relating to certain acts or aspects of such to the effect that they are no longer considered a crime, including the removal of criminal penalties in relation to them. This reform ...

or legalization (the act of making something legal after it used to be illegal), for example when describing

drug liberalization Drug liberalization is a drug policy process of decriminalizing or legalizing the use or sale of prohibited drugs. Variations of drug liberalization include: drug legalization, drug re-legalization and drug decriminalization. Proponents of drug ...

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, Unite ...

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 grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...

'', had also recommended the establishment of an

International Trade Organization The International Trade Organization (ITO) was the proposed name for an international institution for the regulation of trade. Led by the United States in collaboration with allies, the effort to form the organization from 1945 to 1948, with the ...

(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 significant ...

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 that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and ...

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 ot ...

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 econ ...

, 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 liberali ...

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

privatization Privatization (also 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 when ...

, 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 sociological concept of the ''Öffentlichk ...

service or public property from the public sector to the private sector. For example, the

European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...

has liberalized gas and electricity markets, instituting a competitive system. Some leading European energy companies such as France's EDF 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's trinity strategy for economies in transition. There is also a concept of hybrid liberalization. For instance, in

Ghana Ghana (; tw, Gaana, ee, Gana), officially the Republic of Ghana, is a country in West Africa. It abuts the Gulf of Guinea and the Atlantic Ocean to the south, sharing borders with Ivory Coast in the west, Burkina Faso in the north, and To ...

, 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 Liberalism is a political and moral philosophy based on the rights of the individual, liberty, consent of the governed, political equality and equality before the law."political rationalism, hostility to autocracy, cultural distaste for c ...

, 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 reorganizing of the legal duties and responsibilities of marriage, thus dissolving the ...

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 pre ...

, or psychoactive drugs. Regarding

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

, 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 sex or gender. marriage between same-sex couples is legally performed and recognized in 33 countries, with the most recent being Mexico, constituting ...

, 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

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

In economy and trade

In social policy and government

See also

Specific

References