Concept explainers
To evaluate: The given statement
Introduction:
Explanation of Solution
Discuss the given statement:
The given statement states that free market economies stimulate economic growth and state-directed economies stifle economic growth.
In a free market economy, the individual or private corporations have the right to own the property. In such an economy, those individuals or private corporations would work hard to improve their wealth, as they have the right of ownership. They would create new advertisement campaigns, develop new products, and innovate things. They will give their best to develop their wealth, which would stimulate the economic growth.
In state-directed economies, the individual or private corporations have no right to own the property. In such economy, individuals and the private corporations should work hard for the good of society and it will improve their personal wealth. They will not work hard for something that does not benefit them personally. Hence, this kind of economy will stifle the economic growth of the country or society.
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Chapter 2 Solutions
International Business: Competing in the Global Marketplace
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