A Business-Friendly Environment Benefits the Nation

Companies are the most efficient institutions for qualitatively improving our lives. They create jobs and increase income while generating added value. They make possible things that once seemed impossible. By investing capital, they raise productivity and build highly sophisticated systems of cooperation, mysteriously delivering high-quality goods at low prices. Especially good companies possess “innovative know-how” that creates new methods of production within the firm. In that sense, companies are valuable assets in themselves and, indeed, a remarkable legacy.

Modern capitalism is a system that develops the economy through such “companies.” That is why countries with vibrant business sectors are more dynamic. And societies with outstanding companies enjoy greater prosperity than those without them. The United States, Japan, Europe, and the newly industrialized economies have achieved their current economic growth and affluence because they had long-established firms, companies armed with new technologies, and businesses that succeeded in emerging markets.

If that is so, then countries seeking higher growth rates should be able to achieve that goal more easily by fostering excellent companies. But why is it that most countries fail to put this simple answer into practice? The problem is that creating highly profitable companies is not easy. In fact, there are not many countries that have succeeded in producing good companies. Fewer still have managed to sustain that condition over time.

As exchange expanded and barriers were removed, the global economic environment gradually became more globalized. All economic actors—companies, organizations, governments, and others—are exposed to competition in the global market. This is therefore an era in which everyone must secure a competitive edge.

In this global age, where survival depends on competitive advantage, each economic actor must now cultivate its own name as a brand. Fortunately, our society is seeing a growing number of companies recognized around the world. The task of our time is to create a competitive environment in which brands of even greater value can emerge and be recognized.

To make that possible, the key task is to create a “business-friendly environment.” Governments that put this into practice succeed in achieving economic growth. Conversely, when the business environment deteriorates, the economy cannot help but decline. History has long taught us that without business vitality, the economy contracts and the harm of political turmoil follows.

When hostility toward or attacks on business gain force in society, the business environment inevitably worsens. If the government stands by and allows this to happen—or worse, embeds negative perceptions of business into laws and institutions—then long-term economic decline becomes all the more inevitable.

If a business-unfriendly atmosphere takes root as a long-standing social sentiment, companies cannot help but lose their motivation. Even the firms that had sustained that society begin to disappear one by one. As the classical liberal thinker Ayn Rand said in her representative novel Atlas, a bleak society in which entrepreneurs gradually disappear becomes a reality.

Political freedom is a core element of a democratic society. Likewise, economic freedom is a core element of a prosperous society. Allowing companies the freedom to engage in economic activity is the fundamental prescription for enabling economic growth. We must not fall into the temptation to regulate and interfere with business. A government that provides a business-friendly environment is a good government.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

---

Original title: 기업하기 좋은 환경, 국가에得

Author: Sung-no Choi

Date: 2018-03-11

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=26&idx=10849