WHAT IS NATIONALIZATION??
Answers
Answer:
Nationalization is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to private assets or to assets owned by lower levels of government being transferred to the state.
Answer:
===>Nationalization is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to private assets or to assets owned by lower levels of government being transferred to the state.
Explanation:
===>Nationalization is the process of taking privately-controlled companies, industries, or assets and putting them under the control of the government. Nationalization often happens in developing countries and can reflect a nation's desire to control assets or to assert its dominance over foreign-owned industries.
===>What Is Nationalization?
Nationalization refers to the action of a government taking control of a company or industry, which generally occurs without compensation for the loss of the net worth of seized assets and potential income. The action may be the result of a nation's attempt to consolidate power, resentment of foreign ownership of industries representing significant importance to local economies or to prop up failing industries.
KEY TAKEAWAYS
Nationalization is the process of taking privately-controlled companies, industries, or assets and putting them under the control of the government.
Nationalization often happens in developing countries and can reflect a nation's desire to control assets or to assert its dominance over foreign-owned industries.
Often, the companies or assets are taken over and little to no compensation is provided to the previous owners.
Nationalization is different from privatization, in which government-run companies are moved into the private business sector.
Understanding Nationalization
Nationalization is more common in developing countries. Privatization, which is the transfer of government-run operations into the private business sector, occurs more frequently in developed countries.
Nationalization is one of the primary risks for companies doing business in foreign countries due to the potential of having significant assets seized without compensation. This risk is magnified in countries with unstable political leadership and stagnant or contracting economies. The key outcome of nationalization is the redirection of revenues to the country’s government instead of private operators who may export funds with no benefit to the host country.
Nationalization and Oil
The oil industry has experienced nationalization actions for decades, dating back to Mexico’s nationalization of the assets of foreign producers such as Royal Dutch and Standard Oil in 1938 and Iran's nationalization of the assets of Anglo-Iranian 1951. The result of Mexico's nationalization of foreigners’ oil assets was the creation of PEMEX, which is one of the largest oil producers in the world. After the nationalization of Anglo-Iranian, Iran's economy fell into disarray, and Britain was allowed back in as a 50% partner a few years later. In 1954, Anglo-Iranian was renamed the British Petroleum Company.
In 2007, Venezuela nationalized Exxon Mobil’s Cerro Negro Project and other assets. Seeking $16.6 billion in compensation, Exxon Mobil was awarded approximately 10% of that amount by a World Bank arbitration panel in 2014.
Nationalization in the United States
The United States has technically nationalized several companies, usually in the form of a bailout in which the government owns a controlling interest. The bailouts of AIG in 2008 and General Motors Company in 2009 amounted to nationalization, but the U.S. government exerted very little control over these companies. The government also nationalized the failing Continental Illinois Bank and Trust in 1984, finally selling it to Bank of America in 1994.
Despite the temporary nature of most nationalization actions in the United States, there are exceptions. Amtrak was transferred to government ownership after several railroad companies failed in 1971. After the terror attacks of Sept. 11, 2001, the airport security industry was nationalized under the Transportation Security Administration (TSA).
Related Terms
Defense Production Act (DPA)
The Defense Production Act (DPA) gives the president the power to order the production and supply of goods and services to support national defense. more
Denationalization
Denationalization, also known as privatization, occurs when a national government sells an asset such as a large firm to private investors. more
Defining Renationalization
Renationalization is the process of bringing assets and/or industries back into national-government ownership after they had previously been privatized. more
Condemnation Definition
Condemnation is when a government orders a dwelling, building, or other property to be vacated and kept vacant. more
Socialism
Socialism is an economic and political system based on public or collective ownership of the means of production that emphasizes economic equality.