Nationalization is a process by which government acquires private owned properties and businesses to generate increased social welfare and protect consumers. Nationalization seems be not very attractive in capitalist societies where the private business run businesses based on market forces of demand and supply. Natioanalization is a concept applied by socialist countries where they aim to protect the consumers from exploitations and generate equality among people.

When there is too much of nationalization the country will not attract much of foreign investments into the country as they lack open market policies and discourage private businessmen to make investments. Government can nationalize a private firm by buying its shares or by a law which is passed through parliament. Apart from this nationalization also carried out by jurisdiction as a result of company performing serious offense.

Nationalization has may advantages such as:

  • Social welfare is valued.
  • Creation of public and merit goods.
  • Removal of monopolies.
  • Consumer welfare by providing goods at lower prices.
  • Government experiencing control over important infrastructures.
  • No Employee lay offs and employees welfare
  • Trade union resistance and strikes can be settled by negotiation.

Nationalization has may disadvantages such as:

  • No efficiency due to lack of motive for profit.
  • Distract new investments into the country.
  • Less utilization new technology in business operations.
  • Less exposure to high capital with high restrictions.
  • High bureaucracy.
  • Creation of state monopolies.
  • Politicization of operations.
  • Increased corruption and bribery.

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