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Nationalised
industries
- part
2
Yvonne
Harvey, Contributor
Hi
friends. This week's lesson will complete
our study of nationalised industries.
I will begin by giving an overview
of the organisational structure of
nationalised industries. I will also
look at the advantages and disadvantages
of such industries.
Finally,
there will be the presentation of
your homework assignment.
The
organisational structure of nationalised
industries
Government
ministry
Nationalised
industries are run by boards, which
are appointed by a member of parliament,
who is, in turn, appointed by government.
Each
board has a chief executive officer
(CEO) who oversees administrative
affairs. The CEO reports to a government
ministry.
Advantages
of nationalisation
1.
When nationalisation takes place,
profits are transferred from private
hands, where only a few benefit, to
the country as a whole, where many
more persons benefit.
2.
Nationalisation often leads to regional
economic development, not just development
of the country where the nationalisation
takes place.
3.
Through nationalisation, private monopolies
are prevented if they do not yet exist,
or they are broken up if they exist.
This protects consumers from restricted
quantities and high prices.
4.
The aim of nationalised industries
is social welfare rather than the
maximisation of profits. A wider cross-section
of persons benefit when the aim is
social welfare.
5.
Economies of scale (that is benefits
or advantages of large-scale production)
result from nationalisation. These
advantages lead to lower average costs
of production for the industry. Lower
costs can be and often are transferred
to consumers in the form of lower
prices.
6.
If it was not for nationalisation,
some essential goods and services
would not be provided, since it would
not be profitable for private sectors
to provide them.
7.
Nationalisation may result in improved
quality and greater efficiency.
8.
Increased employment and greater job
security are often the results of
nationalisation. It sometimes even
results in improved working conditions.
9.
Nationalisation standardises production
and therefore, encourages the use
of up-to-date technology which increases
output.
10.
Industries that are failing are revived
through nationalisation. Thus, unemployment
that would result from the closure
of these industries is prevented.
Disadvantages
of nationalisation
1.
The taxpayer is often burdened with
paying more tax to cover losses in
these industries when the management
is weak.
2.
The monopoly nature of nationalised
industries may lead to a 'take it
or leave it' attitude to the consumer.
3.
In some instances, the quality and
variety of output may actually decline.
4.
Many consumers resent the standardised
production of nationalised industries.
5.
Some ministers and MPs do not exercise
effective control over very specialised
and complicated operations in some
nationalised industries.
6.
Governments may have difficulty in
maintaining the industry after the
initial investment. This may result
in their passing it back to private
hands.
7.
Workers in nationalised industries
receive relatively lower wages than
workers in private sector businesses.
Okay,
now it's assignment time. Use the
TWO lessons on nationalisation to
answer the following question:
(a)
(i) Define 'nationalisation'
(ii)
Give TWO examples from your own country
of industries that are nationalised
or have been nationalised in the past.
(4 marks)
(b)
Explain THREE major objectives governments
attempt to achieve through nationalisation.
(6 marks)
(c)
Outline the organisational structure
of a nationalised industry. (4
marks)
(d)
Give THREE advantages and THREE disadvantages
of nationalisation.
(6 marks)
Total
marks: 20
The
other side of the coin is privatisation.
You are being encouraged to research
this area under the following headings:
- Definition
of privatisation
- Reasons
for privatisation
- Advantages
of privatisation
- Disadvantages
of privatisation
As
you research this area, it would be
wise to make some brief notes on your
findings. Take care until next time
when we will consider the concepts
of the private and the public sectors.
Bye for now.
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Sharna-Kaye
Whyte prepares to take out a
printed page while her classmate
Keneisha Bryan (left) looks
on during an information technology
class at the Greater Portmore
High School, recently. - Anthony
Minott/Freelance Photographer
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Yvonne
Harvey teaches at Glenmuir High School.
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