<

Economics FROM 4 ART

CHAPTER 3 :BUSINESS UNIT(ORGANISATION)

NATIONALISATION

It is the taking over of private businesses or companies by the government or the state. Some industries are nationalized because of lack of finance and poormanagement and control in nationalized industries are the same as public cooperation or public enterprises.

ADVANTAGES

  • It help to reduce inequalities of incomes in the society as a result of greed.
  • Nationalisation is important for strategic reasons.
  • State ownership is essential for heavy initial investment in industries such as airlines, shippy lines etc.
  • It makes it possible for the government to manage and control the economy.
  • Ot also helps to reduce natural monopolized
  • This helps to protect and ensure consumer interest.
  • Nationalisation is essential where the industries social cost exceed or is greater than private benefits. That is it reduces social cost and increase benefits.

DISADVANTAGES

  • The management of nationalized industries is poor and inefficient since they are managed by politicians who lack business ecperience.
  • It often leads to inefficiency because it kills the spirit of competition among firms
  • Both nationalized industries often grow began their long run optimum consequently they suffer from economies of scale.
  • It also reduces the level of economic growth in the economy.The profit motive which is an intensive or maximum efficienvy is gradual.
  • Nationalisation industries often experience exesive political interest.
par Claude Foumtum