(a) What is the difference between Privatization and Nationalization?
(b) Explain four reasons why a country may choose to privatize state-owned enterprises.
Explanation
(a) Difference between privatization and nationalization:
Privatization is the transfer of ownership and control of businesses from the state to the individual whereas nationalization is the acquisition by the state of privately own, businesses
(b) A country may choose to privatize a state-owned enterprise for the following reasons:
(i) To make the company more efficient by cutting out red-tapism and the reduction of wastage.
(ii) Conscious effort to – their profit-orientation.
(iii) To prevent the government from influencing the business operation.
(iv) To liberate the market and allow private investors to compete.
(v) To ensure that business is run by businessmen ar servants/efficient management.
(vi) To ensure that consumers have a choice as government ownership often result in a monopoly
(vii) To relieve the government of the burden of finance.