9. Public corporations and privatisation Flashcards
Define the term public corporation
A business organisation owned and controlled by the state or government
What are the characteristics of public corporations?
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.
Reasons for the public ownership of businesses
Avoiding wasteful duplication
Maintaining control
Saving jobs
Filling gaps left by the private sector
Serve unprofitable regions
Reasons against the public ownership of businesses
Cost to government
Inefficiency
Difficult to control
Define the term privatisation
The transfer of public sector resources to the private sector
what are the forms where privatisation can take place?
Sale of public corporations
Deregulation
Contracting out
The sale of land and property
Why does privatisation take place?
To generate income
To reduce inefficiency
As a result of deregulation
To reduce political interference
Effect of privatisation
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