9. Public corporations and privatisation

Question 1

Define the term public corporation

Answer 1

A business organisation owned and controlled by the state or government

Question 2

What are the characteristics of public corporations?

Answer 2

State owned-owned by the government
Created by law- created by an Act of Parliament
Incorporation- have a separate legal identity
State-funded- government provides the capital needed mainly from tax
Provide public services- do not aim to make a profit
Public accountability- they have to produce an annual report which is submitted to the government minister in charge.

Question 3

Reasons for the public ownership of businesses

Answer 3

Avoiding wasteful duplication
Maintaining control
Saving jobs
Filling gaps left by the private sector
Serve unprofitable regions

Question 4

Reasons against the public ownership of businesses

Answer 4

Cost to government
Inefficiency
Difficult to control

Question 5

Define the term privatisation

Answer 5

The transfer of public sector resources to the private sector

Question 6

what are the forms where privatisation can take place?

Answer 6

Sale of public corporations
Deregulation
Contracting out
The sale of land and property

Question 7

Why does privatisation take place?

Answer 7

To generate income
To reduce inefficiency
As a result of deregulation
To reduce political interference

Question 8

Effect of privatisation

Answer 8

Increase efficiency therefore quality will increase
The price of products will decrease
They will be profit-orientated
Businesses will increase investments
Businesses will diversify into new area
Revenue to the government will increase