Renationalization

Definition of 'Renationalization'


Bringing assets and/or industries back into national-government ownership after they had previously been privatized. The motives for renationalization can be widely varied, but are always based in either economics or politics.

Renationalization often occurs in sectors that are required for the country to operate smoothly, or where monopolies must occur. Examples of sectors that are commonly renationalized are utilities and transportation.

If no compensation is given to the previous owners, this process is called expropriation, and it is commonly seen in times of war.

Investopedia explains 'Renationalization'


Renationalization can be a risk investors see when investing in a foreign industry of a developing country. Developing countries might begin to privatize industries and assets previously under national control and allow foreign investment for the first time. Should the privatization not work, or should political instability prevail, renationalization could occur. In such a case, the largest risk would be that no compensation is given to the previous owners (i.e., shareholders).



comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific benchmark, such as a SPDR. Unlike actively managed ETFs, passive ETFs are not managed by a fund manager on a daily basis.
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another market so that it balances out. So when examining a specific market, if all other markets are in equilibrium, Walras' Law asserts that the examined market is also in equilibrium.
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another.
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following:
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option is purchased and the lower premium option is sold - both at the same time. The higher the debit spread, the greater the initial cash outflow the investor will incur on the transaction.
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
Trading Center