Two to Three methods used to encourage economic growth for the typical firms in hongkong and singapore
One of the methods that has been used to encourage economic growth in singapore and hongkong is the market economy. This method is dominant in Hongkong. In this type of economy, the government has no say on goods to be produced and their quantity. The market is the sole determinant of goods and services prices. This method allows businesses to decide on which goods to produce and the quantity needed. it involves negotiations between firms and households to determine what will be purchased and at what price. Since all governments have some sort of control over the economy, it is justified to say that in market economies, the government tries to employ the least intervention in trade afffairs. Basically, the price of commodities in this type of market is affected by the supply and demand chain. An increase in demand and shortage in supply leads to rise in market prices. The reverse is true. This system brought about the end of the communist era and established firm employee- employer relationships . Citizens were thus able to own property which encouraged the growth of free market economy. Also as a result, the policy attracted direct foreign investment, leading to expansion of both economies even further.
The second method that has helped in expanding economic growth is introduction of high saving culture. In Singapore, the Central Provident Fund is a savings scheme in which all working citizens are required to contribute. This method has been used to accumulate physical capital by the government since the early 1960’s. This has been the governments main source of finance in establishing infrastructure and provision of public goods. Though this method has been highly critisized worldwide, it has enabled singapore to acquire neccessary capital, technology and other resources to expand its market economy. Apart frome these, the use of human capital and infrastructure can also be considered success factors in building of Hongkongs and Singapores economy.
In my opinion, focusing largely on human capital and expansion in infrastructure will go along way in making the growth rate of the economy increase. The reason being, that for one, expanding sectors such as the internet infrastructure will open up their markets and also bring in new ideas that provide a faster, and cheaper means of acquiring capital and increasing productivity. Also, educating and training of most of the population will help citizens acquire technical knowledge of various industry activities and thus expand employment and output levels of nationals; thereby reducing foreign takeovers in the job market. This also enables a country to maintain its wealth as most of the employees being natives, will choose to invest within their country.
REFERENCES:
Ministry Of Economic Development
Ludwig Von Mises Institute, “The charasteristics of Market Economy”
http://mises.org/humanaction
