Essay on HK and PRC Business Environment
Number of words: 820
A free market economy (an economic market governed by supply and demand) with some government oversight. In a completely free market, market participants conduct their transactions without the intervention of the government. A free market is one in which individuals in an economy are permitted to engross in economic activity and exchanges without intrusion from the government. In other sense, there are no supports, no rules, and little or no taxation. The government’s engagement is strictly partial to protection, law enforcement, and police (Huynh & Hoang, 2021). Those who advocate for less regulation claim that removing government limits will force firms to protect customers, produce improved products or services, and generate fair prices for all. Those who believe that regulatory requirements are important to protect consumers, the environment, and the public contend that firms are not working out for the people’s best interests and that laws are necessary specifically because of this (Ismail, 2016). Therefore, the free market policy is blessing for economy growth the free market is not without flaws, but it has numerous merits finished other fiscal systems such as mixed or socialist economies. The major difficulty is that some individuals appreciate the benefits of a free market more than the drawbacks. At the same time, others believe that the drawbacks of a free market strategy are too large to accept.
In a free market, there are no laws or regulations, which means that businesses from all over the world compete with one other. When trade barriers such as tariffs, prohibitions, and other trade barriers are erected, the rest of the world is prevented from engaging. In a free market, there are no trade barriers, therefore there are more options and competition from around the world (Lim, 2018). Conversely, fewer laws make it easier for new enterprises to enter the market while simultaneously putting pressure on existing companies. In turn, this makes firms to be more competitive, and more creative hence improved productivity and customer satisfaction. In a free market, the profit incentive drives people and firms to generate goods that purchasers want. If they do not, they will go out of business. This forces businesses to constantly innovate and increase efficiency in order to produce a high-quality product at a low cost. In a free market, only enterprises that invent and produce things that buyers want remain (Huynh & Hoang, 2021). Profit-driven incentives urge them to enhance manufacturing efficiency at the same time. Reduced production costs free up resources that can be put to better use elsewhere in the economy, leading in increased growth.
Monopolies, such as electricity, sewer services, and railway lines, pose a serious danger to free market competition. In such marketplaces, the entry hurdle is exceptionally high. To reach customers’ houses, a power provider, for example, may need to develop an entirely new supply network, which is costly. As a result, one company may be able to exert market domination and charge prices that are higher than the market rate. In a free market, essential services such as free health and schooling do not apply; private firms own them (Ismail, 2016). Finally, many people may be unable to use such services because they are unable to pay for them. There is not a single modern country that runs with entirely unrestricted free markets. However, countries that respect private property, capitalism, and personal freedoms tend to have the freest markets. However, Hong Kong market policy relates with that of Heritage Foundation in the sense that, they both operate in deregulation setting (Lim, 2018). Resources are completely owned by private businesses in a free market. Hong Kong has no business control, and its resources are limited to basic duties like defense, enforcement, and the legal system.
The government should continue to follow the HF model because it is good to both consumers and small businesses. Hong Kong’s economy has become more open to trade over the last two decades. As a percentage of GDP, trade has risen considerably over this time. That is, the percentage of imports and exports as a fraction of Hong Kong’s goods and services has increased. Economists have universally regarded this as a positive move for the economy as a whole. On the other side, public opinion has been more divided. The pricing impacts of trade, like labor market implications, are not evenly distributed among households since households with income levels buy somewhat diverse bundles of products and services.
Huynh, C. M., & Hoang, H. H. (2021). Does a free-market economy make Mother Nature angry? Evidence from Asian economies. Environmental Science and Pollution Research, 1-12.
Ismail, A. G. (2016). Between Free Market and State Capitalism: How Islamic Economics System Shape the Future Global Economy? Current Politics and Economics of the Middle East, 7(3), 383-383.
Lim, L. Y. (2018). 5. Free Market Fancies: Hong Kong, Singapore, and the Asian Financial Crisis. In The politics of the Asian economic crisis (pp. 101-115). Cornell University Press.