World Bank Over the Last Several Years,

World Bank

Over the last several years, the World Bank has played an important part in helping to ensure continuous economic growth throughout East Asia. As, the have worked with a number of different countries to improve their standards of living and in addressing a variety of lingering issues that have been impacting these areas. In the case of Hong Kong and Singapore, they have begun to experience above average growth during the 1980's and the 1990's. As, both countries began to see their GDP rise by 5% or more on yearly basis. (Wen, 2010) This is significant, because it allowed a number of businesses to begin developing their own markets to address the underlying demands of customers. To fully understand what is taking place in both situations requires: examining the two methods that have been utilized, the techniques that should be embraced by businesses and the rationale for these choices. Once this occurs, it will offer the greatest insights as to how this approach is helping to encourage long-term economic growth in these regions.

Two Methods that are used to Encourage Economic Growth in Hong Kong and Singapore

Two basic strategies that have been utilized to encourage economic growth in these regions include: working both countries to begin practicing free trade principals and helping them to establish tax friendly policies. The use of free trade principals is when the World Bank pushed both areas to dramatically reduce their trade barriers and begin joining various trading blocs such as: the Association of Southeast Asian Nations (ASEAN). This gave them access to other partners in the region. At the same time, it encouraged many businesses to build facilities inside both areas.

While, encouraging tax friendly policies, is when the World Bank pushed both governments to reduce their underlying taxes on: capital gains, dividends, property and income. This helped to make locating the region more economically viable by: allowing companies to see how having major operations would help to increase their overall bottom line results. At the same time, many foreign direct investors realized that there were significant advantages that can be gained by: focusing more of their assets in these countries. Over the course of time, this encouraged economic growth by allowing many companies to locate to the region that were seeking to take advantage of the above average growth that was being experienced. This was the point that Hong Kong and Singapore began to see a rapid increase in their economic development. (Corniuk, 2011) (Crook, 2002)

Which of these methods of encouraging growth would you suggest for the typical company in Hong Kong and Singapore? Explain the rationale for your choice.

Reduced tax incentives. The reason why, is because both areas are offering businesses favorable advantages on a host of different taxes. This allows them to locate to some place that has tremendous amounts of economic growth. At the same time, they can be able to not have to worry about the impact that this will have on their profit margins in comparison with other regions of the world. Over the course of time, this will give them a tremendous competitive advantage in comparison with other regions. As, they are close enough to areas such as: India and China to benefit from the above average growth. Yet, they are also able to: reduce their costs, the workforce is highly educated in these regions and they can benefit from the business friendly environment that exists.