Question

4.2. Currently there are indicators that the government wants to nationalise mines in South Africa. Discuss whether you think this is a good idea or not. Motivate your answer using sound economic arguments

Answer 1

Ans. Nationalizing the mines would have both it's advantages and disadvantages , but according to my opinion , the disadvantages outweigh the advantages. Let's discuss how :

1) South Africa is a developing economy and many economists fear that it would not be able to generate much funds in order to efficiently run the mining sector.

2) Because of the above reason , There can be reluctance in the minds of Foreign Investors to invest in country.

3) After Nationalization , Mining Sector would take a long time to generate appropriate profits for the government.

4) Government would have to incur huge costs if they nationalise the mining sector and it would provide to be a huge burden on its financial resources.

5) Deficit and Debt of the government could increase tremendously because of this decision.

6) There is no need of snatching the industry from private sector , because they already have necessary capital and human resource.

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