Managerial Economics College Essay Example | Topics and Well Written Essays - 750 words

Managerial Economics College - Essay ExampleDeprivatization will discourage distant direct investment, this is be create investors will fear the occurrence of such(prenominal) a situation in the future and therefore will prefer to invest in other regions. There be some factors that encourage foreign direct investment which include political stability and well defined spot rights and when investors learn that political influences will occur they will not invest. international direct investment has advantages in that it increases job opportunities, pay taxes to the government from profits earned, lead to the sharing of information and technologies and also stimulates economic growth, in future little foreign direct investment will decline and these advantages will not be realized.Privatization was aimed at making inefficient public owned businesses to become much efficient when owned by private investors, when this is reversed then we expect to see a decline in the efficiency of these firms in the economy. This is due to disputation which will lead to a reduction in the prices of products, better quality and improved consumer choices.The government will support a way in which to use policies and therefore will have a hand in controlling the economy, deprivatization in most cases occur when there is economic distress and it is aimed at improving the current situation in the economy.InvestoThose who gain and looseInvestors have over the years developed the firms they acquired and this has added value to the firms over the years, previous loss making firms have been improved by these investors who have converted the firms into profit making firms. Therefore when the investors are deprived off their firms they will loose and the individuals, government or investors who are accorded the firm will gain. In some cases where products produced by the government are subsidized then privatization leads to an increase in prices, when the government owns these firms then the consumers will buzz off a reduction in the price of goods and services produced by these firms and therefore gain.Why politicians support these policy Politicians want mass deprivatization of these firms due to some disadvantages they cause in the economy, one of this disadvantage is that foreign investors will repatriate profits to their home rural and therefore does not benefit the host country, the other business is that they bring stiff competition to the various industries and host country firms will close down due to competition. Finally the politicians will want investors in the country to invest in these firms and not foreigners and they will not want illegal allocation of these resources to some individuals.The performances of a government in power is required to guard guard state property and not transfer property to individuals, for this reason therefore politicians may want to increase government popularity by safeguarding public property by deprivatization .The public owned firms in the market are seen as a tool to further the government goals, when the government acquires these firms then it will be possible for the government to further economic and social goals in the whole nation. Finally private firms may be producing less than the demanded amount, this is because the private owners aim at increasing profits in the short run but the state will