Corporatization is a form of economic reform which takes services from the direct control of the government, and places them in the control of government-owned corporations. This is often seen as a step towards full-scale privatization.
The move towards economic reform in the 1980s led to privatization of public functions in many countries. Corporatization was seen as a half-way house on the road to privatization. The effect of corporatization has been to convert state departments into public companies and interpose commercial boards of directors between the shareholding ministers and the management of the enterprises. These state-owned enterprises enable efficiencies to be gained without ownership of strategic organizations being transferred, but fall short of the full competitive model in that the company's shares are not traded on the stock market. Corporatization has been the policy of the People's Republic of China and has been used in New Zealand and most states of Australia in the reform of their electricity markets, as well as in many other countries and industries (eg Dutch water supply companies).
Although corporatization is to be distinguished from privatization (the former involves publicly-owned corporations, the latter privately-owned ones), once a service has been corporatised it is often relatively easy to privatise or part-privatise it, for example by selling some or all of the company's shares via the stock market. In some cases (eg the Netherlands in regard to water supply) there are laws to prevent this.
Major Areas
Some major areas of services which have been corporatized in the past include:
National railroads. The initial impetus to corporatization of functions that had belonged to national and local governing bodies began in the sphere of national railroad construction in mid-19th century.
Corporatized water. For example, the Dutch water supply companies are publicly-owned corporations (mostly municipalities, also regional government). For involvement of private corporations in water supply, see water industry and water privatization.
Reference
Maude Barlow and Tony Clarke, Blue Gold: The Fight to Stop the Corporate Theft of the World's Water 2002. Somewhat alarmist and partisan.
Political scientists may also use the term corporatism to describe a practice whereby an authoritarianstate, through the process of licensing and regulating officially-incorporated social, religious, economic, or popular organizations, effectively co-opts their leadership or circumscribes their ability to challenge state authority by establishing the state as the source of their legitimacy.
Corporatism or neo-corporatism is often used popularly as a pejorative term in reference to perceived tendencies in politics for legislators and administrations to be influenced or dominated by the interests of business enterprises, employers' organizations, and industry trade groups.
Historically, corporatism or corporativism (Italian corporativismo) is a political system in which legislative representation is given to industries and workers' societies.
Some elements of corporatism can be found still existing today, for example in the ILO Conference or in the Economic and Social Committee of the European Union.
Today, the word corporatism is most often used to refer to tendencies in politics for legislators and administrations to be influenced or dominated by the interests of corporations rather than citizens.
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