Nationalization occurs when the government of a country confiscates the assets of a corporation or organization without paying for the assets. Nationalization usually refers to private property or resources owned by lower levels of government, such as municipalities being transferred to states. It is a historically recent development and differs from the purpose and degree, confiscation, or prominent domain, which is the right of the government to take property for certain public purposes (such as the construction of roads, reservoirs, sometimes without compensation, or hospitals). The move could result in efforts to strengthen the country, dissatisfaction with foreign ownership of industries representing significant importance to the local economy, or encouraging failed industries.
Nationalization can occur with or without compensation from former owners. Nationalized property is different from the redistribution of property in that the government maintains control of the nationalized property. Nationalization is accompanied by the implementation of communist or socialist theories of government, such as the transfer of industrial, banking, and insurance enterprises to Russia after 1918, the nationalization of the oil industry in Mexico, and Iran in 1938. For example, in 1945 the French government arrested Renault because car owners collaborated with the Nazi occupiers in France. The coal industry was nationalized in 1947 when more than 800 coal mines were taken over by the people and a National Coal Board (NCB) was established to manage the industry on a commercial basis. However, for industries such as mining, energy, water, healthcare, education, transportation, policing, and military defense, within a democracy, national or municipal administrations allow taxpayers to take certain measures through elected officials to control the services required by a large majority of citizens.
Nationalization must be distinguished from socialization, which refers to the process of reorganizing the economic structure, organizational structure, and organization of an economy on a socialist basis. The aim was to make these industries more efficient by returning to the free market and to be able to modernize by gaining more access to capital markets and utilizing more modern and dynamic management. In some developing countries, temporary state control over the operation of various industries can be applied to reduce the lack of capital markets or the inadequate supply of entrepreneurs in the domestic private sector, thus providing ample competitive market opportunities. However, nationalization is mostly opposed by economic liberals because it can be seen as additional government intervention in government and control over the economic affairs of individual citizens.