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Difficulty: Very hardPrivatization, Commercialization, and Deregulation of Public Enterprises

Following a comprehensive structural reform, a state-owned telecommunications agency retained 100% government ownership but was mandated to operate as a self-sustaining profit-making entity without state financial grants. Simultaneously, the ministry abolished statutory entry barriers to permit private investors to build competing networks under a newly created independent supervisory body. Which combination of public economic reforms correctly identifies the internal restructuring of the state enterprise and the external modification of the industry framework, respectively?

  1. A
    Outright privatization and partial commercialization
  2. Full commercialization and deregulationAnswer
  3. C
    Partial commercialization and outright privatization
  4. D
    Deregulation and outright privatization

Answer

The reform policy applied internally to the state enterprise is full commercialization, and the market-wide policy removing entry barriers is deregulation.
Full commercialization describes restructuring a public enterprise to operate strictly for profit as a going concern without state subsidies while maintaining 100% government shareholding. Deregulation describes removing statutory monopolies, price controls, and legal barriers to allow private enterprise participation within an industry.

Step-by-Step Solution

1
Analyze internal enterprise restructuring
The enterprise maintains 100% government ownership, loses state financial grants/subsidies, and is expected to generate profit independently.
When a public corporation retains state equity but is restructured to operate strictly on commercial principles to earn profit without government subvention, it constitutes full commercialization.
2
Analyze external industry environment changes
Statutory monopolies and legal entry barriers are removed, permitting private sector participation under an independent regulatory body.
Eliminating legal restrictions and price controls to allow private firms to enter and compete in a previously state-monopolized sector is the core definition of economic deregulation.
3
Synthesize the two policy dimensions in correct sequence
Internal restructuring = Full Commercialization; Industry framework modification = Deregulation.
Matching the respective dimensions yields full commercialization for the firm level and deregulation for the market structure level.

Key Concept

Distinction between Full Commercialization, Privatization, and Deregulation
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Topics

Privatization, Commercialization, and Deregulation of Public Enterprises

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