Theory question 105
Government and BusinessCommerce 2 (essay, answer five questions only)
(a) What is the difference between Privatization and Nationalization?
(b) Explain four reasons why a country may choose to privatize state-owned enterprises
Show the model answer
Model answer
(a) Privatisation transfers ownership of government enterprises to private individuals or firms; nationalisation transfers private businesses to government ownership.
(b) Any four, explained: to improve efficiency; to reduce the burden of subsidies on government; to raise revenue from the sale; to reduce political interference and corruption; to attract private and foreign investment; to widen share ownership; to improve service quality.
Explanation
The two are opposite movements of ownership.