Models of Government-Business Relations in Great Britain and Hong Kong - Case Study Example

Essay (Business) 5 May 2008 Compare the models of government-business relations in two different countries. Discuss which model delivers better outcomes for the respective citizens and why The 21st century has definitely brought a marked shift into the way governments associate with businesses and the nature of conflicts and expectations that both these bulwarks of society have to face. Not only have the national economies become open to outside influences, but the governments have to deal with many dilemmas pertaining to the issues of national interests and their correlation with the cause of free trade and business. In such and environment, directing the course of MNCs becomes a big challenge. Especially, when individuals and trade groups have an enhanced predilection for the path of minimal intervention by the state. In the contemporary Western Europe, the government intervention in business demands more of a tight rope walking, so far as striking a balance between many conflicting issues is concerned (Gross, 2005). The governments desire to endorse economic growth without inviting disproportionate foreign ownership in the national economy. They seek development of technology and skills without resorting to complete reliance on foreign provisions. The need for environmental and cultural conservation has to be balanced with a yearning for economic growth. The flavour of local values has to be retained while savouring products and services from around the world. The national sovereignty has to be upheld in the face of supra-national goals. In the given context, it will be truly informative to analyse the government- business relations in the Great Britain and in Hong Kong. These two political entities tend to follow entirely different models of government-business relations that are in tune with their ideological aspirations, political moorings and developmental goals. The businesses and trade groups in a country evolve within the ambit of the political ideals endorsed by it and the power systems operating within the country. The UK has a long standing commitment to democracy and free trade. Thus the businesses there operate amidst a politically open environment, without any coercive or forced influence from the government or other instruments of political power. The companies and business houses enjoy ample participation and representation in the decision making forums. Since ages, governments in the UK have been avid supporters of free trade and non intervention or minimal intervention by the state. At present Hong Kong is a part of China which is a boon and a bane at the same time (Warren, 1997). The economic integration with China can solve a lot of problems which Hong Kong has failed to solve till now. Still, the real bone of contention is the political integration between the two land masses. China has a long standing Communist system of government which is vehemently totalitarian and interventionist to its core. This makes it difficult for Hong Kong to continue with its policy of liberalization and laissez faire that it inherited from its British colonizers. The companies in the Hong Kong have to face a tough competition from much smaller Chinese government backed businesses. This severely undermines its business potential despite being capable of acting as a gateway to Asia. In the UK, the government tends to follow the principle of qualified intervention in the field of trade and business. The underlying motive behind this intervention is to attain the goals of social efficiency and equity. Since the judgements pertaining to the issues of social efficiency and equity are prone to be influenced by subjective evaluations, thus businesses do enjoy ample representation in the administrative and political organs of decision making. The main aim of the government is to discourage monopolistic tendencies and to ensure a level playing field for all the participants and consumers. Taxes and subsidies are used as a means of correcting market distortions. Regulatory bodies are appointed by the government to monitor trade activities which are primarily advisory in their perspective. The objective of the state is to aid a free market which automatically, efficiently and justly responds to the changes in economic conditions. In the UK, the government has no doubt pertaining to the fact that restrictive tendencies can prove to be outright damaging for the consumer’s interests. That is why the state has designed appropriate legislations to control and prohibit unfair trade practices without exercising any restrictive influence on the firms and business organisations. The main thrust of such legalisations is to prohibit anti competitive practices without discouraging free trade. This ensures long term economic success and social justice. Crucial technology policies are formulated on a regular basis to enable the national economy to remain competitive in an international scenario. The ownership and patent rights over new technologies are regulated stringently to avoid losses to businesses. Wide range of measures are adopted to encourage R&D without giving in to coercively regulatory tactics. As is expected in a continuously evolving democratic setup, the government-businesses relationships are facing many challenges in the UK. One of the primary issues were the state intends to play a dominant role is the area of pollution and environmental degradation. Due to the ambiguity of property rights over environment, it tends to be susceptible to abuse. Hence the state tries to ensure that the guilty parties pay full costs of the damage done. However, the objective is to achieve this goal by involving and sensitizing the businesses to this crucial issue, rather then by simply resorting to restrictive legislations. The other major are of confusion is the state’s extent of control over the digital media and information systems (Bastow, Dunleavy, Margetts and Tinkler, 2000). This issue is managed with the aid of highly flexible regulatory bodies including the representatives of both the government and businesses, which update their policies on a regular basis. Most of the challenges facing the government-business relations in the UK are typically evolutionary and developmental in their preview. Till now the British model of capitalism has successfully relied on a coordination and cooperation between political groups, trade unions and business associations. Due to a deep desire for integration with the European Union and the ensuing challenges, recently many dynamic changes have occurred in the UK. Thus, there is an increased pressure on the government to play a more proactive role. The latest corporate model emphasizes on collective success. In tune with the developments in the Western Europe, the neo-corporatists in the UK yearn for an active government intervention in the national and world economy to tap into the newly emerging markets. The government also to a great extent has succeeded in fulfilling such aspirations of the business community. The new changes infact aspire for more liberal reforms. The underlying tenants of social capital and democracy in the British political system and economy will definitely lead to the benefit of all the citizens. On the contrary, the political compulsions in Hong Kong have pushed it towards a quite different genre of Capitalism. Hong Kong served as a portal to China since the emergence of the People’s Republic of China in 1949. Though Hong Kong at present is a part of one of the most illiberal economies in the world, still at an ideological level it professes allegiance to the doctrines of a laissez faire economy. The surrender of the sovereignty of Hong Kong to China initially made the capitalist ideological groups in this island look optimistically towards east. However, in the coming times, things were to undergo massive changes, threatening the very composition of the capitalism in Hong Kong. The rule of the law and the fair market competition was soon threatened by the influx of state owned firms with a strong political backing from the mainland China. This exerted a very pressurizing influence on the existing capitalistic system. The regulating authorities in Hong Kong also saw an increased influx of Chinese officials and directives. This communist control in the strategic sectors has drastically altered the nature of existing Western oriented modes of Capitalism. The higher education system in Hong Kong has evolved to adapt to the existing political and business realities and the need for responding as a mature society to the changes unleashed by the communist hierarchy. The University Grants Commission (UGC) has chalked out an education policy aimed at adapting and adjusting to the recent reforms and to meet the enhanced competition from the mainland China and the International arena (HK Government, 2004). The UGC has directed the institutes for higher education to work closely with the community and to focus on augmenting its roles and strengths in the new scenario. The students should be able to embark on collaborative relationships with people from conflicting ideologies, without loosing their initiative and potential. Due to the influx of population form the mainland China, the health services in Hong Kong are facing an increased pressure and have deteriorated to a relatively haphazard mode of functioning. This is a fry cry from the highly efficient health facilities enjoyed by its inhabitants, before the transfer of sovereignty from Britain to China in July 1997 (Gauld, 1998). As an emergency response, Hong Kong established the statuary Hospital Authority in 1999 to stabilize the administration and maintenance of the deteriorating health care facilities in the existing circumstances. In the times to come, the policy makers will have to face an assortment of issues pertaining to the organization and financing of the dwindling health sector. The irony is that the health and education sector in Hong Kong still relies on notions of classical economic theory and salubrious liberal democracy. As expected, China has chosen to compromise on the ideal of regulatory neutrality. The Chinese authorities have followed the earlier existing British policy of awarding the lucrative contracts to the firms owing allegiance to their nation, though with a more then usual vehemence and impropriety. Chances are that Hong Kong will eventually be tamed to practice political loyalty at the cost of free market policy. The regulatory prerogative of the Chinese regime is increasingly interfering with the right of the commercial firms to tow an independent strategy. The other great disadvantage that the local firms have to face is that the state owned Chinese firms are not required to function with the objective of profit making and have massive funds at their disposal. This skews the playing field overwhelmingly in favour of state owned businesses. This trend poses a great impediment, so far as achieving the ideal of an equitable distribution of the wealth and services is concerned. The distribution is meticulously designed to deliver benefits to the state supported elite groups in the system, backed by an unbalanced distribution of power. The interventionist policy being practised by China in Hong Kong is expected to have an excruciating impact on the social and economic fundamentals. The unfair competition unleashed by the communist regime is expected to have a devastating influence on the overall business environment that can damage the very ethos of this previously business heaven. The health and education system in Hong Kong is already under stress. The more than normal investment by the Chinese firms in the housing sector has destabilized it and has rendered the real estate environment more volatile. The firms lacking in political connections and regulation favours find themselves helpless and may have to file for bankruptcy. The government policies do have a strong influence on the Stock Exchange and have compromised its credibility. The current scenario seems to be a fine recipe for the conception of a corrupt set up. The business environment and the political set up in a nation are always intrinsically wedged together. The entrepreneurs in Hong Kong are realistically left with no other option, but to harmonize their aspirations with the Chinese brand of capitalism, which is pathetically inflexible and totalitarian in its approach. In contrast, the English system is not only in tandem with the existing world view, but is designed to yield better outcome for its citizens. It is a well balanced arrangement which makes way for social and capital ideals along with the necessity to respond timely and appropriately to the challenges and changes in the government-business relations. It does not compromise on ethics, human aspirations, noble ideals and human rights. Such a model is certainly a truly modern and continually evolving system for holistic growth. References Choices and Responsibilities: Higher Education in the Knowledge Society (2004), Retrieved May 5, 2008, from , Gould,R.D. (1998), International Bibliographic Information on Dietary Supplements, Retrieved. May 5 2008, from, < http: /grande,nal,usda.gov/ibids/indexphp?mode2=detail&origin= Ibids references&theories=361393> Government-Business-Civil Society Relations: Globalization And Competing Models of Contemporary Capitalism (2008) , Retrieved May 5 2008, from, Read More