Theory question 107
Government and Business(a) Differentiate between deregulation and commercialization.
(b) The government of country Z wishes to sell its transport company. (i) Name the policy that the government wishes to adopt; (ii) Explain five reasons which could have necessitated the government's course of action.
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(a) Deregulation is removing or relaxing government rules and controls in a sector so that market forces and private firms operate freely; commercialization keeps the enterprise in government ownership but makes it run on business lines to cover its costs and make profit.
(b)(i) Privatization.
(ii) Any five, explained: to improve efficiency and service; to reduce the financial burden of subsidies on government; to raise revenue from the sale; to stop losses and mismanagement; to reduce political interference and corruption; to encourage private investment and competition; to bring in new capital and technology; to widen share ownership among citizens.
Selling a government company = privatization.