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The reasons for the establishment of Public Corporations

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Definition of Public corporation
A Public Corporation can be defined as an organization, set up by an Act of Parliament and its sole purpose is to provide services to the public at an affordable price. Services provided by a typical Public Corporation includes, but is not limited to, water, electricity, postal and telecommunication, and public broadcasting.

To create employment
One of the reasons for the establishment of a Public corporation is to give employment to the people who, otherwise would have been idle. A Public Corporation needs human resource in order to function. These human resources have to be recruited and appointed. This act of getting people to work for the Public Corporation creates employment to the citizens of a nation.

To create an essential industry
The creation of a Public Corporation is to establish industries in areas of the economy which the government deems necessary or very crucial but which investors may not be willing to invest in because of the huge capital that is required. Apart from that, it is well documented that investment in such areas of the economy takes a long time to materialize. It is for these reasons that Public Corporations are established to provide such essential industries for the economy.

Ensures that prices are controlled
Another reason for establishment of Public Corporation is to lower the prices of the goods and services they provide. Water, electricity and other essential services are very important to the people, but when the provision this dominated by private business men, the prices may be beyond the pockets of the people. However, when these services are provided by the government through the establishment of Public Corporations the prices become bearable for the populace.

Established for political reasons
Sometimes, governments set up Public Corporations just achieve a political aim. Such Public Corporations are therefore sited as a reward to the people who voted for a winning party. Sometimes also it is used to entice them to vote in a desired direction in a coming general election.

To provide capital
If Public Corporations are not established, certain areas of the country’s economy may be starved of the capital they so need to function though such areas of the economy are very import to the country. So one reason why Public Corporations are established is to inject capital into areas of the economy which the ordinary invest may shy away from. The establishment an Agriculture Development Bank, for example, is to ensure that capital is provided for investors in the agricultural sector.

To control an industry
Another reason for the establishment of Public Corporations is to control an industry. In many African and Asian countries, it is the intention of governments that the retail industry is controlled by their citizens. Since this is not the case under many circumstances, many governments use the establishment of Public Corporations to urge out those who compete with the citizens. In Ghana, the government established Ghana National Trading Corporation with the purpose of controlling the retailing industry.

1. a. What is a Public Corporation? [3 marks]

    b. Advance five reasons for the establishment of Public Corporations. [12 marks]

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