CHAPTER 5 - Public Corporations

Question 1

FEATURES OF PUBLIC CORPORATIONS

Answer 1

• state owned: government owns public corporations
• created by law: by an act of parliament
• incorporation: incorporated businesses, they gave a separate legal identity
• provide public services

Question 2

Reasons for the public ownership of businesses:

Answer 2

• avoid wasteful duplication
• maintain control of strategic industries
• save jobs
• the gaps left by the private sector
• serve unprofitable regions

Question 3

Reasons against the public ownership of businesses

Answer 3

• cost to government: subsidise
• inefficiency
• political interference
• difficult to control

Question 4

PRIVATISATION

Answer 4

the process of transferring public sector resources to the private sector is called privatisation. 
It can take a number of forms:
- sale of public corporations 
- deregulation
- contracting out
- the sale of land and property

Question 5

Why does privatisation take place?

Answer 5

• to generate income: scale of state assets generates income for the government
• to reduce inefficiency in the public sector
• as a result of deregulation
• to reduce