Para-statals
From Wikipedia, the free encyclopedia
Para-statals or parastatals (from para- meaning mean something close or near, a prefix, and state), are fully or partially state-owned corporations or agencies. In centrally planned economies such entities are dominant. They play a major role in many LDC's, even if free-market economy is declared. Often the influence of these entities is very large, matching that of the government itself. They are created to give certain social welfare services as well as commercial services. Para-statals comprise a large part of the national bureaucracy of certain nations.
These state-owned enterprises fall in between true public services and the private sector in terms of government involvement. Para-statals have their own board of directors, similar to private corporations. The government, however, has authority to control the board of directors.
Para-statals are formed where a political body would not operate as efficiently as civilian ownership can. The government in this situation willingly gives up power to private business - but not fully. Examples of para-statals are waterworks, hydroelectric power, ports, and some petroleum sectors.
Another reason their formation is supported involves the need to increase the economic status. They give citizens low-cost utilities and services that government ownership could not. Also, para-statals decrease dependence on the international services that can be accessed from within the country.
The role of para-statals is explicit in countries like Nigeria, Tanzania. Even in developed countries, large utility companies have characteristics of para-statals, such as EDF and GDF and other national utilities in France.
