Hong Kong and Singapore are similar in many ways. Their economies have been growing at a high rate where an average growth of six percent per year has been recorded. The state of poverty that has been characteristic of these two regions has been replaced by industrialized economies.
As an administrative region of China, Hong Kong is similar to Singapore in that both are highly populated leading to scarcity of land in the regions. This has caused an increase in the price of land and property market investments. Hong Kong and Singapore are famous for practicing free trade since there are few limitations on trade and capital flow. The entire land in Hong Kong is owned by the State (Trading Economics, 2011).
Economic growth for the typical firm in Hong Kong and Singapore has been increasing but there is a debate about the methods being used to encourage the growth. Discussions about the reasons behind the increased economic growth have raised tough questions regarding regional growth and attempts by other countries to achieve the growth recorded in Hong Kong and Singapore. These methods have largely increased the economic growth which has been recorded in Hong Kong and Singapore (Wilson, 2002).
Methods used to Encourage Economic Growth
Growth Accounting
This method is made up of three elements that increase economic growth through improved production of services and goods. The three elements are technology, labor and capital. Capital and labor are referred to as the factors of production. Labor is the workforce used in production while capital refers to equipment such as machines and vehicles that assist the workforce to produce goods or services. Technology is the method used by the factors of production in providing goods.
For effective use of technology, it is important for workers to develop the required technological skills in order for the work to be done fast and appropriately. The above elements are crucial in the economic growth of any country. However, the level of economic growth arising from factors of production depends on the technology applied. Some people argue that high economic growth is achieved when capital and labor are used at a higher rate while others believe that efficient use of technology leads to increased economic growth.
Through growth accounting system, typical firms in Hong Kong and Singapore are able to conduct mathematical descriptions by using simple equations to show how factors of production and technology increase economic growth. The total workforce is used to describe how individual output increases economic growth within a short period of time.
Growth accounting system describes how increased labor participation and technology increase economic growth. Growth accounting gives clear information on how increased labor increases economic growth as well as the rate at which use of technology increases economic growth (Sarel, 1997).
Growth accounting suggests that advancement in technology is a good way of achieving permanent economic growth. Labor increase encourages economic growth but its increase is indefinite. Increase in capital may lead to a decline in returns which eventually slows down economic growth.
The realization that economic growth is highly dependent on improved technology is one of the methods being used in Hong Kong and Singapore to increase economic growth in typical firms. The growth is made possible by application of growth accounting which involves analyzing the factors of production and use of technology in the firms.
Support for Investment and Exports
Support for investment and exports are other methods being used to increase economic growth for typical firms in Hong Kong and Singapore. Hong Kong and Singapore are located in strategic positions which make them important economic players in Asia (US Department of State, 2011). Investment and exports are important factors in developing the economy of any country.
There are also effects associated with investment and exports that are beneficial to the economy. Hong Kong and Singapore fully support investment and exports as well as offering full support for sectors that contribute towards economic growth for typical firms while paying little attention to sectors that do not contribute towards economic growth for typical firms. In Hong Kong and Singapore, policies such as direct subsidies are used to promote exports and investment which eventually increase economic growth of typical firms.
Support for investment and exports has been a successful method in Hong Kong and Singapore because the remarkable economic growth for typical firms promotes export trade and increase in investment rates. Increase in the rates of investment has a positive impact of increasing the capital stock that consequently increases economic growth for typical firms.
Improvements in exports lead to open economy that is capable of increasing the technological developments. As a result, support for investment and exports is one of the most successful methods that have been used to encourage economic growth for typical firms in Hong Kong and Singapore (Kwong, n.d).
The Method I suggest to Increase Economic Growth
My suggested method of encouraging economic growth for the typical firm in Hong Kong and Singapore is support for exports and investment. This is because involvement in export trade exposes typical firms to foreign technology. Regular exportation is associated with advancements in technology and as mentioned earlier, improved technology is one of the methods of encouraging economic growth for typical firms.
Advancements in technology give typical firms the ability to gain international competitiveness thus increasing their exports. Increase in exports consequently encourages economic growth for the typical firms. Support for investment also increases economic growth for typical firms. Supporting investment and exports is therefore an important method of encouraging economic growth for typical firms in Hong Kong and Singapore.
Ethical Issues Posed by Polarization of Income and Wealth
Polarization of income and wealth is associated with various ethical issues. At the domestic level, polarization of income and wealth is associated with a decline in social cohesion leading to social unrest. Increased income and wealth polarization restricts distribution of employment opportunities.
The second ethical issue associated with polarization of income and wealth is that it causes corruption. In most democracies, there might be exchange of political influence and wealth as a result of polarization of wealth and income (Kwong, n.d).
Polarization of wealth and income is also likely to cause inequalities among citizens. This happens when the rich build up wealth and create policies that enable them to get wealthier. At the international level, polarization of wealth and income reduces the level of trade among countries. This leads to adverse effects on developing economies.
References
Kwong, S. (n.d). Productivity and What It Means to Hong Kong. Web.
Sarel, M. (1997). Growth in East Asia:What We Can and What We Cannot Infer. Web.
Trading Economics. (2011). Singapore GDP Growth Rate. Web.
US Department of State. (2011). Background Note: Singapore. Web.
Wilson, P. (2002). Economic growth and development in Singapore: past and future. London: Edward Elgar Publishing.