What is the Case for State Investment Companies?
State investment companies are established by governments to use public funds to acquire equity or bond holdings in companies formerly financed through private sources. The outcome of their operations has often been described as ‘back-door nationalisation’ — a description that has obvious force, particularly when the state investment company buys all the voting shares in a company. But this does not always happen. Indeed, the state investment company may buy no voting shares at all, merely acquiring bonds or non-voting shares. Moreover, the official reasons for establishing a state investment company typically differ from those given for nationalisation. Nevertheless, the existence of a state investment company is likely to tilt the balance of decision-making power between the public and private sectors in much the same way as nationalisation.
KeywordsEurope Petroleum Income Stake Monopoly
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