In 2019, the government of Argentina nationalised a large oil company that had been privatised in the 1990s. Which economic concept best explains why the government might reverse its earlier decision?

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Question

In 2019, the government of Argentina nationalised a large oil company that had been privatised in the 1990s. Which economic concept best explains why the government might reverse its earlier decision?

Accepted Answer

Strategic industries may need to be under government control — Award 1 mark for identifying that governments may nationalise strategic industries (such as oil) to maintain control over essential resources and ensure they serve national interests. A is incorrect — making losses could be a reason, but the question asks for the 'best' explanation. C is incorrect — this would be an argument against nationalisation. D is incorrect — increased foreign investment would typically be seen as positive for privatisation.

Answer

Private firms always operate more efficiently

Answer

Foreign investment in oil increased after privatisation

Answer

Strategic industries may need to be under government control

Answer

The oil company was making excessive losses

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