The Necessity of a Market Economy

The failure of the economies in which all aspects were planned by the government and the success of those adopting the market system show the virtue of an economically free system. Even the communist countries had to turn to the market system to attain their full potential. Those LDCs which previously had been under heavy government controls are now adopting economic liberalization in one way or another. The well-known Economic Freedom of the World (EFW) index constructed by Gwartney and Lawson [17] shows that increased economic freedom spurs economic growth; not only does it not lead to greater income inequality, but it actually reduces poverty. As defined in the index, economic freedom involves personal choice, voluntary exchange, freedom to compete, and protection of person and property. Institutions and policies are consistent with economic freedom when they provide an environment for voluntary exchange and protection of individuals and their property. This environment includes not only legal and monetary aspects, but also limited interference by government into the private sector, except in the case of market failures and the need for protection and nurturing of infant and strategic industries. To be more specific, economic freedom is reflected in five areas: (1) the size of government in terms of expenditures, taxes, and government enterprises; (2) legal structure and security of property rights; (3) access to sound money; (4) freedom to exchange with foreigners; and (5) regulation of credit, labor, and business. For instance, the 2001 EFW index shows that among the four newly industrializing countries (NICs), Hong Kong and Singapore rank first and second respectively in the123 countries ranked, while the other two, South Korea and Taiwan, both rank 26th.

Negotiating Essentials

Negotiating Essentials

Always wanted to get a better deal but didn't have the needed negotiation skills? Here are some of the best negotiation theories. The ability to negotiate is a skill which everyone should have. With the ability to negotiate you can take charge of your life, your finances and your destiny. If you feel that others are simply born with the skill to negotiate, you should know that everyone can learn this wonderful skill.

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