Examkin

Question

Difficulty: MediumPrivatization, Commercialization, and Deregulation of Public Enterprises

The federal government transferred 70% of its ownership equity in a state-owned telecommunications company to private corporate investors and the public through a stock exchange floatation. Which economic reform policy does this transfer of ownership illustrate?

  1. PrivatizationAnswer
  2. B
    Commercialization
  3. C
    Deregulation
  4. D
    Nationalization

Answer

Privatization is the economic policy illustrated by the transfer of government equity and ownership in a public enterprise to private investors.
Privatization refers to the policy of selling state-owned assets or equity in public enterprises to private investors, transferring ownership and managerial control to the private sector.

Step-by-Step Solution

1
Analyze the core reform action described in the scenario.
The government sold 70% of its shareholding/ownership equity in the state-owned firm to private investors.
Identifying whether ownership is transferred or retained is the critical distinction between public enterprise reform policies.
2
Differentiate between ownership transfer (Privatization) and operational restructuring without ownership transfer (Commercialization).
Selling equity to private investors shifts capital ownership away from the government, which defines privatization.
Under commercialization, 100% government ownership is preserved while forcing profit-oriented management.

Key Concept

Distinction between Privatization, Commercialization, and Deregulation
Rate this question

Topics

Privatization, Commercialization, and Deregulation of Public Enterprises

More questions from this topic