This paper critically reviews the theoretical and empirical literature concerning two major economic aspects of privatisation, It finds that the crucial question as to whether or not private firms are inherently superior to public enterprises in terms of economIc efficiency is yet to be conclusively answered. If, in time, it is found that they are, it is likely that the difference between their levels of efficiency will be less than traditionally assumed. It concludes further that privatisation will increase the net worth of the public sector and the economy generally only if post-privatisation profits are greater than they would have been under continued public ownership, and if the increased profitability is a result of improved productive efficiency.