REASONS WHY THE STATE OWN SOME BUSINESS

REASONS WHY THE STATE OWN SOME BUSINESS:

Provision of vital Industries: The state need to establish and control those industries or business which are vital or important for the life of the people.

Protection of consumers against exploitation: companies for vital services such as electricity and water cannot be left to private businessmen because the services will then be very expensive. A businessman, has to make a profit to stay in business. On the other hand, the state can provide affordable services since its Major interest is to a small margin of profit for expansion of business.

Provision of Employment: State owned enterprises provide employment to the general public. E.g. The state transport corporation employs a staff of drivers mates, conductors etc for its fleet of cars.

Control of strategic sectors of the economy: Sometimes state owner Enterprises are set up to enable the government to closely monitor and control strategic industries whose operations may pose some risk to the public. This is why nearly all the atomic energy authorities in the world such as the Ghana Atomic Energy Commission are state owned enterprises.

The need for huge capital to set-up certain businesses: One reason for setting up state owned enterprises is that they are businesses that need huge capital to established but are uprofitable and do not attract private entrepreneurs. Satisfaction of local demands: Some state owned enterprises are set up for political reasons e.g. Some are sited at particular localities if government want the local people to vote for him.

The need for equal or even economic development: State owned enterprises are set up to ensure even or equal economic development throughout the country. This is why the various Regional Development Corporations were setup throughout all the regions in Ghana .

THE ADVANTAGES OF STATE OWNED ENTERPRISES

They protect consumers against possible exploitation or cheating by private enterprises.

They provide essential goods and services to consumers at cheaper rate. They provide employment to the people in the country.

They help to bring even or equal economic development to all part of the country. They help the government to control all the strategic sectors of the economy. They protect the country against foreign domination.

THE DISADVANTAGES OF STATE OWNED ENTERPRISE

Lack of skilled labour alor

The incidence of corruption and mismanagement.

Too much political interference and control.

Inappropriate location because they are sometimes sited for political reasons. Production of low quality goods leading to loss to the state.

Ineffective work ethics of the workers which has led to the collapse of most of the state own enterprise
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