The Development of Private Enterprises in China Essay

The Development of Private Enterprises in China - Essay Example By 1980, economic zones were created that was followed by more in the succeeding years by the clear establishment of Special Economic Zones. In terms of trade, it has implemented decentralized trade system, tax refunds and systematic foreign trade (Galbraith, p.9). The shift from the strict implementation of socialist policies to capitalistic ones was achieved primarily through the loosening of the constraints imposed by the government of the People’s Republic of China which allowed for the growth of the enterprises. This stimulated the businesses that enabled them to seek and work for returns enabled by the economic atmosphere that permitted such. The International Finance Corporation found that the main restrictions that obstruct business growth include access to finance, prejudicial competition, unreliable policy implementation and availability of information. To address these issues, the government introduced various ways to alleviate the problem and continue to do so consistently (Asian Development Bank, p.vii). The realization of these policies serves as an anchor that empowers enterprises to pursue continued growth in the region from the vantage point that was the Open Door Policy. The recognition of the involvement of the private sector in the country’s development was pivotal in clearing the path for acceptable growth. The fear of capitalism overtaking the ideology of Marxism has posed a constant battle to the region. The promotion of market-oriented reform came into being with the slackening toward a new ownership structure from firmly public ownership. â€Å"Since the late 1980’s, private enterprises in China had grown continuously an average rate of more than 30 percent every year since 1992. By the end of 2005, the number of private enterprises was 4.30 million, while total registered capital was 6,133.11 billion RMB, hiring a total of 58.24 million employees. Non-public

BU1010 Final Assessment Essay Example | Topics and Well Written Essays - 2000 words

BU1010 Final Assessment - Essay Example And as result today the Central and Eastern European block and the Baltic States are knocking at the doors of European Union (IMF, 2000). The centrally planned economies existed in Soviet Union. The problem in the central economies was its inability to generate wealth and raise the living standard. The production and distribution would come from central government, deciding for the states, what to produce and how to distribute in what quantities. The workforce was assumed to be fully employed and salary was predetermined, regardless of the potential of the worker (Greenspan, 1997). In these economies there was no effective market clearing mechanism, the result was huge surplus of unwanted goods by population on one side and shortage of goods, which were in needed. This imbalance in demand and supply led to rationing the quota, as the quantity of the goods was limited. As production and planning was followed through state orders rather than by market demand, the finance had no control over the actions that were remotely planned by the center without following the market rules (Greenspan, 1997). In such economies, there was nothing like credit, interest or market values, as every thing belonged to the state. Due to the lack of a developed financial system, these economies as a consequence wasted their resources as much as much five to seven times more than Western European economies, yet without any productive result, which led to the dismemberment of Soviet Union and the rest of Eastern Bloc in early 1990s (Greenspan, 1997). The macroeconomic stabilization process after initial burst of high inflation stabilizes the inflation and allows the liberalization to take place, which keeps a tight control over the state budget and growth of money allowing the growth of progressive fiscal system to develop. These economies had no financial