|
Nationalisation
Yvonne
Harvey, Contributor
 |
|
Students
at the launch of Go-Local's
BizKidz competition at 7 North
Street on November 4, 2004.
- Andrew Smith
|
THIS
WEEK'S lesson will cover specific objective
7, under Unit X111 Regional and
International Business Enviornment.
The objective states that candidates
should be able to discuss the advantages
and disadvantages of nationalisation.
An
enterprise that has been in private
hands and is now nationalised is now
owned and managed by the state or
government. This has been a recent
trend in the Caribbean. You may be
wondering and rightfully so, why govern-ments
deem it necessary to nationalise certain
industries. There are many reasons
for nationalisation. Some of these
are listed below.
*
A firm or industry may be producing
a good or service which the government
feels is so important to the country
that it would be best if it is managed
and controlled by government rather
than private enterprise, e.g., transport,
water, electricity, postal services,
sugar, cement, etc.
*
Certain businesses export or repatriate
nearly all of their profits to a foreign
or parent company, e.g., multinational
companies. Nationalisation ensures
that profits stay in the country and
are used for development of the country.
*
Nationalisation prevents the formation
of private monopolies whose pricing
policies are against the public interest
and to keep natural monopolies, e.g.,
water, in public ownership.
*
Nationalised industries create more
employment for more people.
*
Sometimes, the initial cost of setting
up an industry may be too high for
private enterprise and the production
of some goods and services requires
huge sums of money which in many cases
cannot be met by private sources.
*
Nationalisation improves the efficiency
of businesses and provides goods and
services at a lower price.
*
Social benefits are provided to consumers,
e.g., transportation services.
*
Where firms are unwilling or unable
to expand for the good of the country,
the state nationalises in order to
benefit most people.
*
Where industries are 'ailing', government
nationalises to save such an industry
and protect jobs.
*
Nationalisation often allows for greater
standardisation and benefits of large-scale
production.
*
Nationalisation prevents duplication
of equipment and wastage of other
resources.
I
could go on, but, it is important
for you to realise that embedded in
the reasons for nationalisation are
the fundamental advantages or benefits
of nationalisation in the Caribbean.
Look at the above points again and
think of them as advantages of nationalisation.
Now,
what are the disadvantages of nationalisation?
Those who oppose or argue against
nationalisation put forth the following
arguments:
*
Nationalisation results in fewer market
options for consumers who will, therefore,
lose some of their freedom of choice.
*
In some cases, government does not
run the businesses as efficiently
as private individuals, resulting
in heavy loss of profits.
*
State monopolies which are not profit
motivated may fail and go out of business.
*
Those state-owned businesses that
are losing money have to be subsidised
by the state or government.
*
Maximum effort is not given by workers
in state-owned enterprises. Workers
tend to idle and relax their capabilities
to do work. This attitude adds to
the government's production costs,
which in turn may be forced to raise
taxes to cover their losses.
*
Nationalised industries are run by
politicians who lack business expertise.
Also, political objectives may overrule
business sense.
*
Where there are state monopolies,
there is lack of healthy competition.
This dampens the free enterprise spirit
and leads to self-satisfaction and
inefficiency.
With
the above overview of nationalisation
in mind, attempt the following question:
"While
some governments in the region prefer
not to nationalise, some see it as
a must."
(a)
What does it mean to nationalise an
industry? (2 marks)
(b)
Name TWO industries in your country
that are nationalised (2 marks)
(c)
(i) For any ONE industry named in
(b) above, discuss THREE benefits
of it being nationalised. (3 marks)
(ii)
Discuss THREE disadvantages of nationalisation.
(3 marks)
Total:
10 marks
Enjoy
the rest of your week. See you next
week.
*
Yvonne Harvey teaches at Glenmuir
High School.
|
