State-owned enterprise

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A state-owned enterprise (SOE) is an enterprise, often a corporation, owned by a government. SOE's are usually most frequent in communist based countries with central planning, and central government, as opposed to a Democracy. The state owns all the big companies that produce goods, utilities, etc. and the other government entities place orders with them. For instance, in Iraq, there are over a hundred SOE's (2005) that have a monopoly on certain services and no incentive to improve or make a profit. They are given a certain budget and spend it, then stop work. The government also sets prices, which could be lower than cost, like gasoline in Iraq is 3 cents a liter. The difference between the price and the cost is a subsidy. Citizens become reliant on the subsidized goods and no competition is developed. This is the opposite of a market based economy