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Economical Growth

Essay by   •  February 12, 2012  •  Essay  •  440 Words (2 Pages)  •  1,578 Views

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The World Bank was established in 1944. The World Bank is a vital source of financial and technical assistance to developing countries (World Bank, 2012). They provide low interest loans, interest free credit, and grants to developing countries. By doing this, they support investments in areas like education, health, public administration, infrastructure, financial and private sectors in developing agriculture and environmental and natural resources (World Bank, 2012).

In 2010, the government of Hong Kong took several measures to forestall the risk of a housing market bubble arising from low interest rates and ample liquidity in the global financial system. Hong Kong has multiple economic strengths which are sound banking system, virtually no public debt, strong legal system, foreign exchange reserves, and able and regulatory enforced anti-corruption regime. They interact with the Pearl River Delta to maintain its position as a gateway to China. They use free trade agreement with China known as "Closer Economic Partnership Arrangement" (Dept of State, 2011), which apples zero tariffs to all Hong Kong origins goods. The US has favored Hong Kong's business environment including its legal system and free flow of information, low taxation, and infrastructure.

Singapore had a lack of physical resources and small domestic market. In 1965, the government adopted a pro-business, pro-foreign investment, exported oriented economic policy framework, combined with state-directed investments in strategic government owned corporations which rose the growth 8% from 1965 to 2010 (Dept of State, 2011). Manufacturing and services were the twin engines for Singapore and accounted for 26.7% and 67.5% of their GDP in 2010. To maintain their competitive position the government seeks to promote higher value added activities in the manufacturing and services sectors. They recently opened the financial services, telecommunications, and power generations and retailing sectors to foreign service providers and greater competition. They also applied tax cuts and wages and rent deductions to lower the cost of doing business.

I feel that they are doing a great job trying to keep their GDP up. By cutting taxes and wages will provide more money to the government which will help with opening more businesses. Continuing their trade and trying to get more countries involved in trade with them will help bring in more money as well which will boost the economy. A nice thing that is going good for Hong Kong and Singapore is that they have support from a few big countries that are trying to help them out.

References

Department of State, (2011). Background Note: Singapore. Retrieved from https://www.state.gov/r/pa/ei/bgn/2798.htm

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