In a freemarket economy, the economy is run by individuals on their own using the forcesof demand and supply. How much is produced is driven by the demand and supply.
For instance, if someone is demanding more than what has been supplied, thenprices go up whereas if the supplier priced more than what customers are buyingfor that specific product or service, then prices fall. Individuals are allowedto own property and other assets. The opportunity for individuals to have this ownershipserves as a powerful incentive for people to work hard, to develop new productideas and to do business that would help the economy to increase. Most humanbeings have goals they dream to accomplish. In fact, we as students, have beenstudying most of our lives because we want to make a living out of it.
We all havedreams that we acknowledge can be accomplish through studying and getting adegree. All of these hope of accumulating personal wealth enriches the economy asa whole and allows the economic growth. State-directed economies, on the otherhand, are directed and controlled by the government. The main goal for thestate-directed economies is to create social welfare rather than profitmaximization. Although it sounds like a very selfless act, where everyoneshould be happy and share the same economy welfare, it does not provide a greatincentive for individuals to work as hard and to create new product ideas thatboost the economy up.
In fact, it stifles the economic growth. For example, Cuba,which is a state-directed economy, had a 0.9% GDP in 2016, whereas the UnitedStates, a free market economy, had a 1.6% increased GDP in 2016. Therefore, Iagree with the statement “Free market economies stimulate greater economicgrowth, whereas state-directed economies stifle growth.”