Nationalization

AAA

DEFINITION of 'Nationalization'

Refers to the process of a government taking control of a company or industry, which can occur for a variety of reasons. When nationalization occurs, the former owners of the companies may or may not be compensated for their loss in net worth and potential income.

Nationalization is most common in developing countries subject to frequent leadership and regime changes. In these instances, nationalization is often a way for a government to expand its economic resources and power.

The opposite of nationalization is privatization, when government-owned companies are spun off into the private business sector.

INVESTOPEDIA EXPLAINS 'Nationalization'

In the United States, true nationalization is a rare occurrence. The last true nationalization of an industry was the government takeover of airport security after the September 11th tragedies in 2001. Prior to that, there were some selective nationalizations of savings and loan institutions in the early 1980s, as well as much of the railroad industry in the 1970s.

Many have argued that the government takeover of a number of failing companies, such as GM and AIG, has also amounted to nationalization, even though the U.S. government exerts very little control over these companies.

RELATED TERMS
  1. Denationalization

    The act of changing a government-run firm into a private-sector ...
  2. Condemnation

    The seizure of a property by a public authority for a public ...
  3. Renationalization

    Bringing assets and/or industries back into national-government ...
  4. Privatization

    1. The transfer of ownership of property or businesses from a ...
  5. Thrift Bank

    A financial institution focusing on taking deposits and originating ...
  6. Deprivatization

    The act of transferring ownership from the private sector to ...
RELATED FAQS
  1. How did moral hazard impact the financial crisis of 2007-08?

    Many economists, financial analysts and policy pundits believe that the U.S. Federal Reserve System and the U.S. Treasury ... Read Full Answer >>
  2. How risky is it to invest in metals and mining companies with operations in politically ...

    There are substantial risks involved with investments in mining operations in countries that are politically unstable. In ... Read Full Answer >>
  3. What other sectors are most similar to oil & gas drilling?

    Companies involved in locating and extracting natural resource deposits are similar to oil and gas drilling companies. Sectors ... Read Full Answer >>
  4. How does an economic downturn affect a cyclical stock?

    An economic downturn negatively affects a cyclical stock. Its stock price declines as earnings and revenues tumble. Cyclical ... Read Full Answer >>
  5. How do government bailouts increase moral hazard?

    Government bailouts increase moral hazard by engendering a business climate in which companies feel they will be protected ... Read Full Answer >>
  6. What are the primary sources of market risk?

    Market risk is the risk of loss due to the factors that affect an entire market or asset class. Market risk is also known ... Read Full Answer >>
Related Articles
  1. Personal Finance

    State-Run Economies: From Public To Private

    Find out how former Iron Curtain countries used private enterprise to join the world financial markets.
  2. Options & Futures

    Why Public Companies Go Private

    Privatization can give management more time to make money for investors, but at what cost?
  3. Insurance

    The Globalization Of Financial Services

    The key to survival for many financial institutions will be to efficiently serve a global customer base.
  4. Professionals

    Understanding Operations Management

    Operations management is concerned with converting materials and labor into goods and services as efficiently as possible to maximize profits.
  5. Personal Finance

    Protect Your Teen When They Work Over The Summer

    If your child is working a summer job, here are some rules you should know about what he or she is allowed to do.
  6. Personal Finance

    Weak Oil, Sanctions' Bite, Mean Misery for Russia

    Low oil prices, coupled with crippling sanctions, will mean Russia will suffer declining growth and vicious inflation for at least the next two years.
  7. Investing

    The Labor Market Recovery’s Missing Ingredient

    Job creation is running at the fastest pace since the 90s, and there is some evidence that wage growth is finally starting to accelerate, albeit modestly.
  8. Mutual Funds & ETFs

    6 ETFs to Fight Your Recession Jitters

    Are you worried about a recession? If so, consider these 6 ETFs.
  9. Investing

    When Will The Bull Market End?

    A few weeks ago, the current bull market celebrated its sixth anniversary, making it one of the longest in history.
  10. Economics

    Worried About a Recession? Then Buy These 5 Stocks

    What makes these stocks so resilient? And how did they perform during the last crisis?

You May Also Like

Hot Definitions
  1. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  2. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  3. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  4. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  5. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
Trading Center