In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy.

In the arena of social policy it may refer to a relaxation of laws restricting for example divorce, abortion, homosexuality or drugs.

Most often, the term is used to refer to economic liberalization, especially trade liberalization or capital market liberalization, policies often referred to as neoliberalism.

Liberalization and privatization

Although economic liberalization is often associated with privatization, the two can be quite separate processes. For example, the European Union has liberalized gas and electricity markets, instituting a system of competition; but some of the leading European energy companies (such as EDF and Vattenfall) remain partially or completely in government ownership.

Liberalised and privatised public services may be dominated by just a few big companies, particularly in sectors with high capital costs. In some cases they may remain legal monopolies, at least for some part of the market (eg small consumers).

See also

• Electricity liberalization
• Oligopoly

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