The economy of a country can be labeled as a rough portrayal of how a country allocates resources. Details about how much money is received by the country and sent abroad are also counted. Many world governments try their best at controlling the economy of their country to suit them. Yet if there is one thing that economics has taught us, it is that the best scenario is a free market. A free market is essentially an economy with little to no government intervention policies.
To the average person, an economy without any government intervention may seem absurd. The truth cannot be farther than this and in reality, many market forces are at their optimum. The benefits of a free-market economy are highly advantageous to any country. Government intervention is taking place to reduce the debt or inflation level of a country. Below are some of the significant advantages that a free market brings to the country.
1: Overthrow Monopolies
A monopoly is essentially a business that owns the majority of the market share in the country. Think of a local cellphone manufacturer having more market share than all of the competitors. This will mean that that local manufacturer will have power over the entire market. In a worst case scenario, this can mean very high prices for a substandard product. Monopolies are common in markets where international companies are barred. Getting rid of a monopoly can take years and much effort from the government. A free market on the other hand absolves monopolies and rules against it.
In a free market, there are little to no regulations barring multinationals from setting up shop. In this case, large scale multinationals can easily breach the market economy and overthrow monopolies. This can be done by pricing better products at a cheaper price. This effectively reduces the demand for monopolies and helps the market. Multinationals can do this because of their large capital and business expertise. Monopolies are limited in number and quickly eradicated in free market economies.
2: Better Standard Of Living
When international laws and regulations permit multinationals, the average standard of living increases. Previously, local companies and businesses may suffer from limited resources and hardships. Multinationals on the other hand will set up factories and buildings with ease. Their products are well defined and strong in the market. The prices also adjust to the local rates and may even be cheaper than local products. The result is that the product of the companies is far superior for consumers.
The product is superior mainly due to the better technology and equipment at hand. Factories built by multinationals may be more efficient and even safer for labor. They may be equipped with state-of-the-art robotics that increase production. Safety precatuions and more stable machinery such as a globe valve with actuator may be present too. New production methods such as plastic molding can also raise the standard of living. Imagine medical device injection molding companies providing support to local facilities.
3: Support For Local Industries
Local industries that suffer from low capital and market help will be better off too. With the large influx of international business, there will be a market for businesses too. This can mean access to new suppliers and affordable raw materials too. Outsourcing is common in free market economies and benefits the entire market. A snack company or canned food company can outsource their packing to a reliable supplier such as https://www.levapack.com.
The market in its entirety will be better off and have more resources to spare. The prices and demand will equal out eventually too. Industries that struggle will benefit from a new pool of resources to tap in to. Multinationals that manufacturer goods and services locally will provide better prices to local businesses.
Another benefit of a free market is the push for competition. The business world is harsh and a quick moving one. Local businesses that do not compete will take their time evolving. This slow growth period means subpar products for consumers and a lack of effort. When multinationals step into the market, local businesses will be forced to compete.
This competetion is very healthy for the market as whoever makes the better product will win.
From a consumers stand point, this means more quality products and at better prices too. Competition is always necessary for a market to reach its optimum level.
Product supply and consumer demand always reaches an equal level in a free market. Government intervention have the potential to create a shortage or surplus of products. The average resident should buy and sell in a free market. Of course, the effectiveness of a free market is going to be dependant on how the country is. Well established countries may not benefit as much from a free market. Developing countries may benefit more than developed ones.