Parastatal

Parastatal

[par-uh-steyt-l]

A parastatal or para-statal (from para- meaning mean something close or near, a prefix, and state) is a fully or partially state-owned corporation or government agency. In centrally planned economies such entities are dominant. They play a major role in many LDCs, even if free-market economy is declared. Often the influence of these entities is very large, matching that of the government itself. They are created to give certain social welfare services as well as commercial services. Para-statals comprise a large part of the national bureaucracy of certain nations.

These state-owned enterprises fall in between true public services and the private sector in terms of government involvement. Para-statals have their own board of directors, similar to private corporations. The government, however, has authority to control the board of directors.

Para-statals are formed where a political body would not operate as efficiently as civilian ownership can. The government in this situation willingly gives up power to private business - but not fully. Examples of para-statals are waterworks, hydroelectric power, ports, and some petroleum sectors.

The role of para-statals is explicit in countries like Nigeria and Tanzania.

Even in developed countries, large utility companies have characteristics of para-statals, such as EDF and GDF and other national utilities in France. The term used in the United Kingdom was Quango or QUasi-Autonomous National Government Organisation.

In New Zealand, such companies are called SOEs or State-Owned Enterprises, or Crown Research Institutes. The Crown is assisted in the running of SOEs and other Crown-owned companies by the Crown Company Monitoring Advisory Unit or CCMAU (pronounced "see-see-maow") in the Treasury.

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