(a) Distinguish between a public… | Economics

Question 1 Report

(a) Distinguish between a public company and a public corporation
(b) What are the problems of public corporations in your country?

Answer

Answer Details

(a) Public company versus public corporation:

Public company (public limited company)	Public corporation (statutory corporation)
A private-sector business owned by shareholders who buy its shares, which are freely transferable on the stock exchange.	A state-owned enterprise set up by government to provide essential goods or services.
Formed by registration under the Companies Act (memorandum and articles of association).	Established by a special Act of Parliament (statute) which defines its powers.
Its main aim is to make profit for the shareholders.	Its main aim is public service/welfare rather than maximum profit.
Capital is raised through the sale of shares and debentures to the public.	Capital is provided mainly by government from public funds.

(b) Problems of public corporations:

Inefficiency and bureaucracy: Red tape and lack of the profit motive lead to waste and poor service.
Political interference: Government appoints board members and dictates policy, often on political rather than economic grounds.
Inadequate funding and heavy losses: Reliance on government subventions and frequent losses starve them of capital.
Corruption and mismanagement: Embezzlement, over-staffing and poor management reduce productivity, and monopoly status removes the pressure to improve.

(a) Distinguish between a public company and a public corporation (b) What are the problems of public corporations in your country?