Burlington High School
Burlington, Kansas
Teacher: Mrs. Parker
The Different Sorts of Economies
By Daniel Swendson
Let me tell you a tale of a poor sod named Pete; he was not a very bright man, but he did have a dream. He wanted to start his own business. But, what poor Pete didn’t know was that he lived in Soviet Russia (He really wasn’t very bright), where the economy was completely controlled by the government. So, you can just imagine the look on poor Pete’s face when he was carried of by the KGB for treason and never seen again. The moral of this story is that different countries have different styles of economies. There’s free economy, mostly free economy, mostly unfree, and, finally, repressed. My goal is to show a wide variety of countries, each with a different sort of economy.
The first country is an example of a free economy, and it is Middle Earth, also known as New Zealand. New Zealand is quite modern and developed with a high standard of living. Within the last decade or so, it has gone under intense macroeconomic restructuring and has switched from a regulated and controlled economy to a free-trade economy. It seems to be better for it. Despite a stock market burst that caused poor growth until the mid-90’s, it it’s doing very well. It’s interesting that a country actually does better when the government has less control over the economy.
Japan goes under the category of a mostly-free economy; for three decades the Land of the Rising Sun has experienced incredible economic growth over a 30-year period. There had been a marked slowdown in the market in the 90’s due to over investment in the 80’s, but there has been fairly strong recovery recently. This efficiency is thanks in part to a close relationship between the business district and the government. This is an example of how a country can be economically successful, but yet be not quite as free as some other nations are.
Morocco is an example of a developing country facing economic typical problems, restraining government spending, reducing constraints on private activities and foreign trade, and achieving sustainable economic growth. The country has been at this since the early 80’s and is making good strides, though there was a slowdown in 1999 due to a drought. But, there was an estimated 6% of growth for 2000 because of favorable rainfall. This nation is an example of a mostly un-free economy, where the government controls a large portion of the economy, and it seems to experience hard times when it is like that. This would indicate that heavily controlled countries do not do that well economically. It is also interesting to note that Morocco seems to be reforming its economy, making it freer instead of so tightly controlled.
Uzbekistan, like many other authoritarian governments, seems to be in a bad way economically. Restrictive trade regimes have basically crippled the economy; the government needs to rescind its draconian trade measures and achieve full current account convertibility if it wants to get back on its feet. It also needs to substantially reform it economic structure. Basically, this country’s government keeps passing measures to tighten its control over the economy and this is causing severe constraints on economic growth. In turn, this has led to international lending to suspend or scale back credits, kind of like what the U.S. is doing now with China. This country is what is called a repressed economy, the government controls just about everything
I will compare and contrast each country. First, it seems that Japan and New Zealand compare rather nicely to each other; they both have great economies. But, Japan is only mostly free, whilst New Zealand is completely free, yet they still have great economies. The other two countries, Morocco and Uzbekistan, compare to each as in they have bad economies and tightly control the economy (Though, Morocco is reforming.). Again, it seems the tighter the government control, the worse the economy; likewise, the less the government controls the economy, so the better it does.
In conclusion, world economy can be best measured by studying and comparing individual nation’s economic freedoms. New Zealand is a completely free country that has a great economy. Japan is doing pretty good but has slightly more control over the economy. Morocco isn’t doing all that great, most likely because it has more control over the economy, but it is reforming itself. Finally, Uzbekistan is doing quite poorly because the government keeps tightening its control, proving that the more control a government has the worse the economy.
Answers To Questions Prompted By The Required Reading
The Benefits of Free Trade
Q1- Be the Devil's Advocate and counter Benjamin Franklin's statement that "No nation was ever ruined by trade."
International trade can be like an injection of window cleaner in the arm for an unsuspecting country. One of the problems with free trade is that often times forces a state to become too dependent on foreign nations. For example; our own country, the United States, is becoming more and more dependent on China as we burrow more and more money from them and as businesses outsource more and more. Soon, something’s going to give, and it won’t be pretty.
Index of Economic Freedom and Annual Report (Chapter 3 for links to countries)
Q2- Name five countries whose ranking surprised you.
Hong Kong
Morocco
Romania
Colombia
Saudi Arabia
Q3- Write one sentence each to explain why you chose the countries you did in Q2.
I never thought that Hong Kong was considered “free”, since it’s in China I always figured it’d be under the same doctrine.
Morocco was a bit of a surprise because I would have figured it’d be completely repressed like many other countries in Africa.
Romania is quite a bit surprising, since they are no longer part of the Soviet Union one would think they’d free up a little bit more. But no, they’re still labeled as mostly unfree.
I find Colombia a little a surprising because it’s mostly unfree, that whole area in South America is like in total anarchy; I would figure Colombia would basically be a totalitarian dictatorship.
Saudi Arabia surprises me with it’s freedom, the royalty controls just about everything in the country and I would have thought economic freedom would be tighter.
Q4- The USA was not ranked first in any of the years exhibited online in the Annual Report nor in the 2005 Index. List the twelve countries that ranked higher on the Index and the countries that out ranked the USA in the eight Annual Reports.
Hong Kong
Singapore
Luxembourg
Estonia
Ireland
New Zealand
United Kingdom
Denmark
Iceland
Australia
Chile
Switzerland
Q5- The Index uses 50 variables in 10 categories. The Report shows 21 variables in 5 categories and lists 24 sub-variables in its online charts.
Take the 10 categories of the Index and place all 45 variables found in the Annual Report charts under one of the Index categories. The Trade Policy category is already done as an example. Many variables might well go under more than one category. Do the best you can using each variable only once until all are categorized. We will be able to tell if thought is put into this exercise.
We looked over this problem in class and could not find a way to suitably answer this question.