Nationalization is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to private assets or assets owned by lower levels of government, such as municipalities, being transferred to the state. The opposites of nationalization are privatization and demutualization. When previously nationalized assets are privatized and subsequently returned to public ownership by a later government, they are said to have undergone renationalization. Industries that are usually subject to nationalization include transport, communications, energy, banking and natural resources.
What is ‘Nationalization’
Nationalization refers to the process of a government taking control of a company or industry, which generally occurs without compensation for the loss of the net worth of seized assets and potential income. The action may be the result of a nation’s attempt to consolidate power, resentment of foreign ownership of industries representing significant importance to local economies or to prop up failing industries.
Nationalization is more common in developing countries. Privatization, which is the transfer of government-run operations into the private business sector, occurs more frequently in developed countries.
Nationalization and Oil
The oil industry has experienced nationalization actions for decades, dating back to Mexico’s nationalization of the assets of foreign producers such as Royal Dutch and Standard Oil in 1938 and Iran’s nationalization of the assets of Anglo-Iranian 1951. The result of Mexico’s nationalization of foreigners’ oil assets was the creation of PEMEX, which is one of the largest oil producers in the world. After the nationalization of Anglo-Iranian, Iran’s economy fell into disarray and Britain was allowed back in as a 50% partner a few years later. In 1954, Anglo-Iranian was renamed the British Petroleum Company.
Nationalization in the United States
The United States has technically nationalized several companies, usually in the form of a bailout in which the government owns a controlling interest. The bailouts of AIG in 2008 and General Motors Company in 2009 amounted to nationalization, but the U.S. government exerted very little control over these companies. The government also nationalized the failing Continental Illinois Bank and Trust in 1982, finally selling it to Bank of America in 1994.
What does it mean to nationalize something?
Why is nationalization bad?
What is the difference between Privatisation and Nationalisation?
What is an example of nationalization?
What does nationalization business mean?
What is Nationalisation and Privatisation?
Why is Nationalisation important?
- Bank nationalization, financial savings, and economic development: a case study of India – www.jstor.org [PDF]
- Explaining hydrocarbon nationalization in Latin America: Economics and political ideology – www.tandfonline.com [PDF]
- Nationalization, privatization, and the allocation of financial property rights – link.springer.com [PDF]
- Bank Nationalization, Restructuring and Reprivatization: The Case of Korea since the Asian Financial Crisis – papers.ssrn.com [PDF]
- From privatization to re-nationalization: what went wrong with privatizations in Argentina? – www.tandfonline.com [PDF]
- Finance and politics: special interest group influence during the nationalization and privatization of Conrail – papers.ssrn.com [PDF]
- Is Hollywood America? The trans‐nationalization of the American film industry – nca.tandfonline.com [PDF]
- The political economy of corporate finance: evidence from 're-nationalization'in China – papers.ssrn.com [PDF]
- The International Political Economy of Bank Nationalization: Mexico in Comparative Perspective – www.jstor.org [PDF]