Thursday 10 January 2013

Nationalization and Authoritarian Rulers



Whereas democratic regimes are moving away from nationalization by encouraging the privatization of public corporations, authoritarian governments are embracing nationalism. According to Schlumberger (2007), nationalization is processes whereby private companies, enterprises, institutions and other private assert are converted into public entities by a state. The rights of private ownerships of these assets are transformed to allow public ownership. Nationalization do not only factor in private assets, it also implies the assets that may otherwise be owned by a lower carder of government i.e. municipalities or town councils, that are being transferred to be managed by the central government having being transferred to the public sector. Nationalization is one very retrogressive policy associated with authoritarian regime. The same strategy was employed and advocated for by socialist states, famously known as emerging economies. However, unlike socialist who managed the assets as public custodians i.e. for public benefit, authoritarian rulers and their cronies are the only beneficiaries of nationalization.
            Considering that nationalized entities are owned by the state, the central government is vested with the responsibility of meeting the debts the costs accrued or associated with these firms. This is a tricky aspect in authoritarian type of governments. Nationalized industries are meant to operate in the best interest of the public. In the past two decades, third world economies have witnessed a collapse of nationalized corporations. Respective governments are unable to meet the costs associated with their operations. Nationalized industries managed by authoritarian rulers have been marked by mismanagement and looting. This has jeopardized trade and development as they are unable to produce quality goods and services or else products that meet quality standards. It is therefore apparent from the above discussion that through nationalization of industries, authoritarian rulers put their economies in a great mess (Spechler, 2009).

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