Question

In the space provided, analyze the relationship between democracy and the free enterprise system. Give an example of how the two work together to support economic growth.

Answer 1

The free enterprise system simply gives people the freedom to establish their own business with little or no government involvement. Democracy is what grants the freedom for free enterprise.

Answer 2

The system of free initiative consists in the existence of an environment conducive to competition and the development of new companies, in a market system where the state acts as an ally that aims to promote the adequate environment for the growth of firms. This type of environment is usually observed in democracies, where there is a civilizational standard in which companies, state and citizens coexist under a set of norms and laws that are respected by all. In a situation where democracy and the system of free enterprise coexist, companies develop and consequently increase economic development.

For example, in a democratic nation like the US, it was possible for Silicon Valley tech companies to develop to the point where they would become leading giants in their industries. These companies promote employment, social and economic development, since their sales are computed in the US GDP.