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What is Nationalization?

Welcome to the Investors Trading Academy talking glossary of financial terms and events. Our word of the day is “Nationalization”. Nationalization occurs when a country's government seizes the assets of corporations or resources without paying for those assets. 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. 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 was some selective nationalization 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. By Barry Norman, Investors Trading Academy