A free-market economy is fuelled by the constant drive for change, improvement and growth, which is facilitated by a liberal innovation policy. This applies particularly to small businesses and start-ups, which are considered to be key drivers of economic growth and as exemplars of economic dynamism their development is crucial for progress and innovation.
Instead, the stifling of competition through a heavy regulatory network and artificial barriers to entry has led to a lack of incentives, poor productivity and, ultimately, the decline in start-ups entering the market manifested itself in the current lagging economic growth.
Despite the persistent global trend of declining entrepreneurship, Britain is consistently lauded as the jurisdiction with the most liberal approach towards growing innovation in the technological sphere, especially in the FinTech industry. One success story that accounts for this is the peer-to-peer money transfer service TransferWise, developed and launched by two Estonians - Kristo Käärmann and Taavet Hinrikus, in 2011 in London. Now a billion dollar company, the platform supports a multitude of currencies and makes money transfer cheaper by matching transfers with those going in the opposite direction. It charges a small fee instead of the traditional broker's commission. Such a revolution in the financial system was facilitated by the government's liberal regulatory approach, which allowed for innovation and promoted competition by introducing new visas for entrepreneurs and tax breaks for early stage investors.
The government has embraced innovation and entrepreneurship and the Financial Conduct Authority (FCA) received the statutory objective of promoting competition in 2013. Its Project Innovate offers advice to budding entrepreneurs on how to navigate the regulatory framework. Another part of Project Innovate is the regulatory "sandbox", which allows companies to test their products under temporary approval. This support for the natural growth of the technological ecosystem has removed barriers to entry, turning UK into the world's leading FinTech hubs. The FCA has promoted competition by encouraging innovation for the benefit of the consumer, and TransferWise founder Taavet Hinrikus hails it as "the most innovative regulator in the world".
Britain’s approach to promoting growth and competition in the technological industry is closely followed by countries like Australia and Singapore. The FinTech-friendly regulatory framework and the fertile investment landscape has turned UK into an innovation powerhouse, a leader in the global financial regulatory services and a representative case of the far-reaching positive effects of innovation without permission on standards of living.
Adelina Fendrina is the winner of the 18-21 category of the ASI's 'Young Writer on Liberty' competition.