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Denationalization is the process of making assets owned by a country available to private companies, often occurring during a transition from communism to free enterprise. Dispersing assets can be complex, and denationalization can take years or never be complete. Albania gave truck drivers their own trucks to allow for economic development during denationalization. Denationalization can also occur in free-market countries, such as the proposed privatization of social security in the US.
Denationalization occurs when assets owned or operated by a country are made available to non-nationalized or private companies. In some cases, this could be entire business operations. In other cases, it may be equipment or real estate formerly under the jurisdiction of a national government.
Denationalization is likely to happen when a government is moving from a communist system to one based primarily on free enterprise. For example, when Eastern Bloc countries, formerly allied with the Soviet Union, began changing forms of government in the early 1990s, denationalization was a primary issue. After almost all operations in these countries were nationalized by communist governments, it became a very difficult task to denationalize everything that was in store for the process.
When a country starts the task of denationalization, the main task is to determine how to disperse the assets. For example, distributing assets through bidding might be a good way for the government to raise money during the transition period, but most of those who can afford to pay for these things would likely be foreigners. This would eventually lead to a large outsourcing of the country’s wealth to others. Due to this situation, denationalization has the potential to be very disruptive for a country and can cause moments of civil unrest.
Therefore, it is likely that many countries will look for other ways to distribute their assets, or at least look for a policy that includes buyers and foreign nationals. Albania, for example, when it converted in the early 1990s, gave almost every truck driver in the country their own truck. This allowed the equipment to remain in the country and gave these drivers a chance to earn a living. This also allowed for some economic development and personal wealth creation within the country during the critical period of denationalization.
The issues and demands of a country undergoing a massive denationalization process can be complex and time consuming. Denationalization can often take years to complete, and in some cases, it may never be complete. As a country evolves, it may find itself denationalizing assets and operations from time to time. Therefore, declaring that a country is done with denationalization can be problematic.
Denationalization can also occur in countries that are also primarily based on free market principles. For example, some in the United States believe that the social security system should be privatized. Although it is commonly called privatization in the United States, it is the same as denationalization.
Asset Smart.
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