Nationalization of Bolvia's Oil and Gas Sector

Topics: Nationalization, Public ownership, Evo Morales Pages: 5 (1333 words) Published: January 7, 2013
Bolivia Nationalizes the Oil and Gas Sector

a.What are the benefits and drawbacks of nationalization?

Benefits and drawbacks of nationalization

1. Public welfare: Nationalization abolishes the economic powers to form a few monopolists and enables the govt. to take steps for the welfare of the public.

2. Economic Prosperity: Government got the power to modernize the industry, communications and transport for the best interest of the nation. So rapid growth of industries causes economic prosperity in the country.

3. Maximum utilization of resources: All the oil, gases, minerals and other national resources can be utilized maximum in order to achieve economic development.
4. Development of Backward Area: All the regions of the country developed equally under nationalization. Regional and social factors are considered preferential while Government decides regarding the location of new plant.

5. Improvement of Working Conditions: Government improves the working conditions of the workers in nationalized industries. The state interested in providing just rates of pay, security of services and other fringe benefits. So peaceful atmosphere can be maintained in the industrial field.

6. Protection of Public Interest: Unhealthy competition among the industrialist’s injuries the interest of the public which can be measures and mitigated by state ownership.

7. Economy: It enables the Govt. to achieve the economy in different fields due to the coordination in numerous departments.

8. Promotion of Defense service: Nationalization is desired to strength then the specific industries for defense of the country.

9. Centralized Management: Centralized management is possible due to co-ordination in nationalized industry. It thus enables the state to solve the problems of organization, capital, labor operation and marketing.

10. High Standard of Living: It tends to increase the economic activities of the country which greatly influence the standard of living of the people.

11. Use of Surplus Profit: Under the state ownership the profit of the enterprises would go to the public treasury which can be employed for the welfare of the country.

12. Employment: Industries are nationalized with a view to creating new posts for jobless persons under a programmed.

13. Uniformity in Services: As all the public utility services i.e. water, railway, post office, communications, electricity are connected by the state, so uniformity in quality of services can be maintained.

14. Skilled Services: Government may hire the services of talented and skilled persons due to its largest resources. So services can utilize all the unused resources of nationalized industries for productive purpose.

15. Other Advantages:-
(a) Cost per unit may be reduced due to large scale of production. (b) Prices of the goods may be lower.
(c) The role of middleman can be eliminated.
(d) Research facility can be scientific lines and up to date modern technique and scientific invention can be enjoyed.

The followings are the drawbacks of nationalization

1. Complex Management: The management is complex, difficult to deal and large size. Various departments/offices nationwide persons with diverse knowledge conduct its management.

2. Slow decision-channel: All essential decisions are carried out by various officials, head offices and committees which delays the operation of urgent matter or any conflicting views.

3. Inefficient functioning: Management consists of salaried persons who are generally inefficient, rigid and inflexible as compared with privately owned concerns.

4. Rules first work next: The extensive and rigid rules of the nationalized industry have made the process of work every complicated which results in delay and loss of initiative and sincerity.

5. Noncommittal towards profit: The salaried persons are not concerned with profit and the...
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