Deregulation

Deregulation refers to the removal of restrictions that hinder competition among businesses. There are several approaches to implement deregulation:

1. Eliminating Government Controls: This involves reducing or completely abolishing government regulations in specific industries, paving the way for the emergence of new firms within the market.
2. Combating Monopolies: Taking action against monopolistic practices within an industry fosters a more competitive environment among businesses.
3. Encouraging Private Sector Competition: Permitting private companies to compete with state-owned enterprises enhances the quality of services and products offered to consumers.

This video, titled "Supply Side Policy Themes - Paper 2 Hot Topic!", delves into various themes surrounding supply side policies and their implications on economic competitiveness.

Government Initiatives Supporting Deregulation

Policies aimed at enhancing industrial competitiveness focus on improving the overall supply efficiency of the nation. When successfully implemented, these deregulation efforts can significantly boost the country's competitive stance in the global market.

Here are six illustrative examples of supply side policies that can enhance competitiveness:

• Lowering Individual Income Tax: Reduced taxes encourage workers to strive for higher earnings and promotions, as a smaller portion of their income is deducted, leading to increased net income.
• Reducing Corporate Tax: Lower corporate taxes incentivize entrepreneurship, as reduced tax burdens on profits allow for greater potential rewards, fostering investment and new business initiatives.
• Enhancing Labor Flexibility: A flexible labor market facilitates worker mobility across various sectors, encouraging individuals to seek better opportunities, ultimately improving the workforce's skills and efficiency.
• Opening Bidding for Government Projects: Following deregulation, companies from both the private and public sectors can now bid for government contracts, ensuring a level playing field and broadening the supply of goods and services.
• Restricting Welfare Benefits: Welfare should primarily support those truly in need. Healthy, capable workers should not be incentivized to remain idle; thus, welfare benefits should be limited to those who genuinely cannot work.
• Promoting Immigration: By welcoming skilled workers from abroad, the government can fill job vacancies, boosting industrial output and contributing to economic growth.

The second video, "Y1 38) Supply Side Policies (Interventionist and Market Based) - With Evaluation," evaluates different types of supply side policies, focusing on their interventionist and market-based approaches.

Conclusion

Deregulation empowers businesses to operate independently, fostering healthy competition and attracting foreign direct investments due to a more business-friendly environment. Moreover, it helps mitigate political corruption, which poses a significant threat to businesses, as there exists a strong link between corruption, poverty, and international competitiveness.