Hong Kong and Singapore: Exemplifications of How Countries Can Leverage Market Economies
The question of how nations grow is one that I have long contemplated. After watching Milton Friedman’s television special “Free to Choose” I was amazed by the stark differences that he pointed out about the different systems that countries use to try and grow their economies. The example he chose for a capitalist system was Hong Kong, and, even though this film was shot in 1980, it remains a remarkable example of how countries can spur growth and escape poverty. Before the British colonization of Hong Kong, the territory was merely filled with rice paddies and fishing villages. With the introduction of a market economy, Hong Kong has transformed into an international business hub familiar to most in the financial sector.
By utilizing a market economy with little government intervention, Hong Kong has been able to become competitive in the global sphere of economics. This is particularly impressive given the fact that at such a level of economic success, it’s sink or swim for businesses and for governments.
This cut-throat nature of economics is exemplified on the micro-level of small-scale businesses. As a business, if you don’t have a better product than your competitors, you won’t sell. Customers are the judge of how well you do. With no government support and subsidies, companies are forced to innovate. This provides a better product for the customer and spurs innovation. Such a model was adopted in Hong Kong and serves as a great example of a near-perfect market economy. However, it is important to consider forms of economic growth that have been successful elsewhere, too.
If you look at Singapore and Hong Kong, they share many commonalities. Both areas lack natural resources and are relatively small in landmass. Without many of these usual prerequisites for economic success, both Hong Kong and Singapore have had to serve another purpose in order to grow. Currently, both regions play as the middle man for international business. By providing a stable and optimal environment for businesses, these regions have been able to attract foreign investment, thereby enabling both regions to thrive.
Take a look at how Singapore rose to stardom in a world with plenty of resource-rich nations. When one analyses their meteoric economic rise, it becomes clear that they have managed to maintain a similar market economy to Hong Kong but with a difference in implementation. They have managed to leverage several socialist-style policies to exhibit tight control over economic practices. Different from Hong Kong in this sense, Singapore’s economic growth stems from a structured government planning of the economic system.
In these examples there exists one common thread. Both regions prioritize the success of a market system where competition is the main driver of innovation. The way they got to this stage might be different and people may argue on what the better economic method is, but the moral of the story is no matter how you obtain it, nations thrive off a market economy. Tomato Tomato, same difference.