1. INTRODUCTION The issue of state-owned enterprises, or public enterprises, versus privatized enterprises has been a subject of controversy in developing economic development in recent decades. According to Van de Walle (1989, p. 601), privatization can be defined as “a transfer of ownership and control from the public to the private sector, with particular reference to the sale of assets”1. When analyzing whether there has been an increase in the efficiency of the privatization of state-owned enterprises in developing countries, a distinction must be made between the effects of privatization and liberalization; however, economic reforms often go hand in hand. According to Van de Walle (1989, p. 601), liberalization can be defined as “a change in the relative prices operating in the economy”2. One can generalize on board by saying that most of the current developing nations are nations that gained independence from colonial rule in the last 150 years. Nellis and Kikeri (1989) proposed that nations that gained independence from colonial rule tended to inherit a public enterprise sector. This led to the creation of established and, relative to the rest of the nation, technologically advantaged crucial industries that were commonly developed through direct colonial investment and the exploitation of indigenous pollution. An example of this would be the South African Post Office, which would later give rise to the telecommunications giant Telkom, founded during British colonial rule of South Africa. In developed nations, such as those in Europe, the expansion of public enterprises was the result of increased socialization and nationalization after World War II. This was sustained until the 1980s as there was a trend... middle of paper... Investment Case - Telkom SA Ltd. Retrieved May 26, 2014, from http://www.moneyweb.co. za/moneyweb-101-for-beginners/the-investment-case--telkom-sa-ltdCook, P & Uchida, Y. (2003). and economic growth in developing countries. The Journal of Development Studies, 39(6), 121-154Fourie, D. The restructuring of state-owned enterprises: South African initiatives. Asian Journal of Public Administration, 205-216. Nellis, N. & Kikeri, S. (1989). Public enterprise reform: privatization and the World Bank. World Development, 17(5), 659-672. Parker, D. & Kirkpatrick, C. (2005). in developing countries: A review of the evidence and policy lessons. The Journal of Development Studies, 41(4), 513-541.Van de Walle, N. (1989). Privatization in developing countries: A review of the issues. World development, 17(5), 601-615.