AP® Comparative Government and Politics review sheet from Aim for Five (aimforfive.com/comp-gov/units/5/5-2)
Unit 5 · Topic 5.2
5.2 Political Responses to Global Market Forces
Governments respond to global markets in different ways: opening up, holding on to state control or mixing the two. China built special economic zones, Mexico opened its oil sector in 2013 and then put state companies back at the center in 2024–25, Nigeria works through joint ventures, Russia brought energy back under state control and the UK relies on private ownership.
Key terms
- special economic zone
- privatization
- nationalization
- joint venture
- state-owned enterprise
Recent change to know (as of October 2026)
Mexico's 2024 constitutional reform and 2025 energy laws turned the national oil company Pemex and the electricity company CFE into “state public companies” (a new legal label replacing the 2013 term “productive state enterprises”) and gave them priority over private firms in oil and electricity. Private companies can still take part, but in a smaller role. This rolled back part of the 2013 opening. Older study materials describe the 2013 rules.
Key terms
- Privatization: selling state-owned companies to private owners.
- Nationalization: the state taking ownership of private companies or resources.
- State-owned enterprise (SOE): a company owned and run by the state.
- Joint venture: a business owned by two or more partners, such as a state company and a foreign firm.
- Special economic zone (SEZ): an area with lower taxes and looser rules to attract foreign investment.
The six countries
| Country | Response | Details |
|---|---|---|
| China | Gradual opening with state control | Reforms from 1978; first SEZs in 1980, including Shenzhen; big SOEs remain in banking, energy and telecoms |
| Mexico | Opening, then partial reversal | Oil nationalized in 1938; 2013 reform let private and foreign firms in; 2024–25 reforms restored the state companies' priority |
| Nigeria | Joint ventures | The state oil company partners with foreign firms; a 2021 law turned it into a commercial company, NNPC Limited |
| Russia | Privatization, then state control | 1990s sell-offs created powerful owners called oligarchs; from 2003 the state took back key oil assets and controls Gazprom and Rosneft; a 2008 law limits foreign investment in “strategic” sectors |
| Iran | State dominance | Oil nationalized in 1951; foreign companies' operating role ended after 1979; a 2006 policy launched partial privatization, but state bodies and religious foundations still dominate |
| UK | Private ownership | Privatized many state firms in the 1980s, including telecoms and gas; North Sea oil run by private companies under state licenses |
Why governments choose differently
Governments respond to global markets to improve the economy at home, answer public demands, keep control of political debate and stay in power, and extend their influence abroad. China's Belt and Road Initiative, launched in 2013, uses overseas investment to widen its reach. Of the six, the UK allows the most private control of natural resources and China the least. Openness tends to bring investment and growth. State control tends to keep resource revenue and strategic industries in national hands and can be used to reward supporters. Nationalism matters too: in Mexico, the 1938 oil expropriation is a symbol of national sovereignty, which helps explain support for state-led energy policy. Supporters of the 2024–25 reforms say they protect energy sovereignty; critics say they discourage investment and strain public finances.
Worked examples
Try each one yourself first, then open the solution.
- Example 1
Comparing two responses
Compare China's and Russia's responses to global market forces.
Show the solutionHide the solution
- Step 1: China: opened gradually, starting with SEZs in 1980, attracting foreign investment and exports while keeping the state in charge of key sectors.
- Step 2: Russia: privatized rapidly in the 1990s, then reasserted state control over energy after 2003, using oil and gas revenue to fund the state.
- Step 3: Compare: both keep state control of strategic sectors, but China's opening was gradual and export-led, while Russia's was rapid and then partly reversed, leaving it dependent on energy exports.
Answer: Both combine markets with state control of key sectors, but China opened step by step through SEZs while Russia privatized quickly and later reclaimed energy firms, leaving it more resource-dependent.
Common mistakes
- Describing Mexico's oil sector using only the 2013 reform. The 2024–25 reforms gave Pemex and CFE priority again.
- Calling China's economy fully privatized. Large SOEs remain in key sectors.
- Mixing up privatization and liberalization. Privatization is one form of liberalization (see 5.4).
On the exam
- Questions often ask why a state might nationalize or privatize. Give a political reason (sovereignty, control of revenue, legitimacy) as well as an economic one.
- Use dates: 1938 and 2013 for Mexico, 1980 for China's SEZs, 2003 for Russia's Yukos case.
Connected topics
Videos
Check yourself
4 questions on 5.2 Political Responses to Global Market Forces. Pick an answer to see if you got it, and why.
In the 2000s, Russia's government prosecuted the head of the private oil company Yukos, and most of the company's assets ended up with the state-controlled firm Rosneft. This case best illustrates
Nigeria's national oil company produces much of the country's oil through partnerships with foreign oil firms in which each side owns a share. These arrangements are best described as
Which statement best compares the UK with other course countries on ownership of natural resource industries?
Even after decades of market reform, China's largest banks and energy companies remain state-owned. This shows that China's economy is best described as
0 of 4 answered