1. Mohammad Sabuz Class: Managing in a Global Economy
Nationalizations
Nationalization is the process of taking private industry or private assets into public
ownership in interest of the good of the public rather than individuals1. Nationalization is very
common for developing nations due to rapid leadership and regime changes and it’s a way for
government to expand its economic resources and power2.
When nationalization occurs, private industries are brought under government’s control
and it is run as a government organization. It tends to reduce competition and scare away
industries. It reduces revenue, businesses are under-invested and results in a lower growth
rate3. Nationalization occurs when private companies are in trouble but it is very crucial for the
nation that the business continues to prevent the economy from collapsing. Businesses such as
banks, transport, communication, energy and natural resources4 are industries which
absolutely cannot fail. If one of these sectors was near collapsing, Government will take over
and will manage it in favor of the good of the public and the nation’s economy.
1 http://www.investopedia.com/terms/n/nationalization.asp
2 http://www.investopedia.com/terms/n/nationalization.asp
3 http://www.youngzine.org/article/nationalization-what-it
4 http://en.wikipedia.org/wiki/Nationalization

2. Mohammad Sabuz Class: Managing in a Global Economy
To answer the question, are nationalization justified? Yes, it is justified. It’s great when
the economy is growing, competitions among businesses rises, more opportunities are created,
GDP expands and so forth but what happens when things fall apart and no one is there to
support/break the fall. The 2007-2008 Global Financial Crisis5 is considered to be one of the
worst financial crises since the 1930s Great Depression. The national government of US bailed
out banks and other large financial institutions6 in the US. Central banks around the world have
taken similar steps to expand their monetary supplies. US alone has executed two stimulus
package totaling $787 billion7. If the government wasn’t there to help these private institutions,
we all would be back into another Great Depression.
Bottom line is privatization is great as it helps to expand an economy rapidly. It creates
jobs, encourages competition, attracts investors but it’s better to know that if all fails,
government is there to save us.
5 http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308
6 http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308
7 http://news.bbc.co.uk/2/hi/business/7889897.stm