Nationalization or nationalisation is the act of taking assets into public ownership/state ownership. Usually it refers to private assets being nationalized, but sometimes it may be assets owned by other levels of government, such as municipalities. Similarly, the opposite of nationalization is usually privatization, but sometimes it may be municipalization. Nationalization that happens after a previous privatization is often called renationalization.
A key issue in nationalization is whether the private owner is properly compensated for the value of the institution. The most controversial nationalizations are those where no compensation is paid or an amount unreasonably below the likely market rate as expropriations. Many nationalizations through expropriation have come after revolutions, especially socialist ones.
The traditional Western view as to the question of compensation has been that declared by former US Secretary of State Cordell Hull , in the event of the 1938 Mexican nationalisations, that compensation should be made "prompt, effective and adequate", meaning that the nationalising state had an obligation under international law to pay the deprived party the full value of the property taken. Opposing views as regards to this has been taken mainly by developing countries, claiming that the question of compensation was a question solely up to the sovereign state to decide upon, in line with the Calvo doctrine. Communist states have held that no compensation is due, based on communist notions of private property. In 1962, the UN General Assembly adopted resolution 1803 on Permanent Sovereignty over National Resources, which states that in the event of nationalisation, the owner "shall be paid appropriate compensation in accordance with international law". This clearly establishes that at least some compensation is due, and further that the question is a matter of international law, thus denouncing both the traditional Calvo-doctrinist view, and the communist view. The amount to be paid is "appropriate" compensation, the wording representing a compromise between the traditional views, taking into account both developing countries' interests in being able to undertake reforms without being prevented from this due to lack of money for compensation, and the classical Western interests in protection of private property. The solution, then, as to the amount of compensation due, is that this will have to be assessed on a case-to-case basis in order to establish what is appropriate.
In some instances, nationalization occurs as the government seizes the corporate property of a criminal. An example is Renault, which was seized by the French government from its owners because they had collaborated with Nazi Germany.
The cost of legally buying a large business is such that many legal nationalizations have happened when firms of national importance run into trouble (close to bankruptcy), and could be acquired by the government for little or no money. A classic example is the UK nationalization in the 1970s of the car-maker British Leyland. At other times governments have felt it important to gain control of institutions and industries of strategic economic importance, such as banks or railways, or of important industries struggling economically. The case of Rolls-Royce, nationalised in 1971, is an interesting blend of these two arguments. This policy was sometimes known as ensuring government control of the "commanding heights" of the economy, to enable it to manage the economy better in terms of long-term development and medium-term stability. The extent of this policy declined in the 1980s and 1990s as governments increasingly privatized industries that had been nationalized, replacing their strategic economic influence with use of the tax system and of interest rates.
Nonetheless, national and local government has seen the advantage of keeping key strategic assets in institutions that are not strongly profit driven, can raise funds outside the public-sector constraints, but retain some public accountability. Examples from the last five years in the United Kingdom include the vesting of the British railway infastructure firm Railtrack in the not-for profit company Network Rail, and the divestment of much council housing stock to 'arms-length management companies', often with mutual status.
Most of the nationalizations took place under Labour governments and many of the major nationalised industries were privatized in whole or part from 1979 to 1997 under Conservative governments.
Philippines - During the administration of Ferdinand Marcos, important companies such as PLDT, Philippine Airlines, Meralco and the Manila Hotel were nationalized. Other companies were sometimes absorbed into these government-owned corporations, as well as other companies, such as Napocor and the Philippine National Railways, which in their own right are monopolies (exceptions are Meralco and the Manila Hotel). Today, these companies have been reprivitized and some, such as PLDT and Philippine Airlines, have been de-monopolized. Others, like government-formed and owned Napocor, are in the process of privitization.
Companies in Cuba after the 1959 revolution bringing Fidel Castro to power in which the assets of foreign (largely U.S.) companies were expropriated without compensation (the USA has long complained about these nationalizations).
Zimbabwe's nationalization of its food distribution infrastructure.
1948. With the Decree 119 of june 1948 the new Romanian communist regime nationalised all the existing private companies and their assets in Romania leading to the transformation of the Romanian economy from a free market economy to a centralised one.
1948. The Australian government attempted to nationalise the banks, but the act was declared unconstitutional by the High Court of Australia.
Chile 1972. Nationalisation of copper minning industry by the government of Salvador Allende. A very important step for a small country which happens to be the biggest copper producer in the world.
1982. The Paris business of M&A advisory firm Rothschild was nationalized and renamed.
2003. The Labour Government of New Zealand took an 80% stake in national air carrier Air New Zealand in exchange for a large financial infusion.
2006. On May 1, newly elected Bolivian leader Evo Morales announces plans to nationalize the country's natural gas industry; foreign-based companies are given six months to renegotiate their existing contracts.
"Nationalization".
