What are the disadvantages associated with public enterprises?

What are the disadvantages associated with public enterprises?

  • They are associated with high rate of corruption due to employment of some dishonest officials.
  • Decision making is slow because a lot of bureaucracy is practiced in these enterprises.

  • There is too much inefficiency in these enterprises due lack of profit motive and personal initiative.
  • Public enterprises are very large hence they are subjected to diseconomies of scale.
  • Most of these enterprises depend mainly on foreign expatriates hence leaving the local population unemployed.
  • It is too costly to run these enterprises hence these costs are passed onto the public in form of high taxes.
  • Some of these enterprises operate as statutory monopolies which lack competition hence they end up producing inferior products.
  • Some of these enterprises are mismanaged by politicians who may have limited skills on how to run the enterprise.

Some of these enterprises compete with the private sector which may discourage the private sector from providing certain services


Published by


IAM experienced geography teacher with more than three years of teaching and creating content related to geography and other subjects for both high school and college students. hope you will find the content of this website useful to your studies and daily life

%d bloggers like this: