international busniss
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lecture slidesTRANSCRIPT
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Lecture II: Country Factors
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Political Systems: Collectivism
Collectivisim: refers to a political system that stresses the primacy of collective goals over individual goals. Socialism: State owns means of production so that it can fully
compensate workers for their labor
Communists vs. Social Democrats Communists: socialism can be achieved only through violent
revolution and totalitarian dictatorship Social democrats: socialism can be achieved by democratic
means
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Political Systems: Individualism
Individualism: Philosophy that an individual should have freedom in his or her economic and political pursuits
Tenets of individualism: Guaranteed individual freedom and self-expression Welfare of society is best served by letting people pursue their
own economic self interest
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Democracy and Totalitarianism
Democracy: a political system in which government is by the people, exercised either directly or through elected representatives
Totalitarianism: form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties
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Elements of Representative Democracy
Representative Democracy’s elements:1. An individual’s right to freedom of expression, opinion
and organization2. A free media3. Regular elections in which all citizens are allowed to
vote4. Universal adult suffrage5. Limited terms for elected representatives6. A fair court system that is independent from the
political system7. A nonpolitical bureaucracy8. A nonpolitical police force and armed service9. Relatively free access to state informatioin
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4 forms of Totalitarianism
1. Communist Totalitarianism2. Theocratic Totalitarianism3. Tribal Totalitarianism4. Right-wing Totalitarianism
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Economic Systems Comparison: Market, Command, Mixed
Market Economy: All productive activities are privately owned, as
opposed to being owned by the state. Goods and services produced by the country are
not planned by anyoneProduction is determined by the interaction of
supply and demand
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Economic Systems Comparison: Market, Command, Mixed
Command Economy: The goods and services, their quantity and prices
are all planned by the governmentObjective of the command economy: to allocate
resources for ‘the good of society’.
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Economic Systems Comparison: Market, Command, Mixed
Mixed Economy: Certain sectors of the economy are left to private
ownership and free market mechanisms while other sectors have significant state ownership
Countries with mixed economies often take up ownership of industries that are troubled. Example: France taking over Renault as it felt social costs of large unemployment undesirable
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Legal Systems: Property Rights
Legal System: refers to the rules, or laws, that regulate behavior along with the processes by which the laws are enforced and through which redress for grievances is obtained
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Different Legal Systems
Common Law: Based on tradition (legal history), precedent (prior cases), and custom (ways in which laws are applied in specific situations)
Civil Law: based on very detailed set of laws organized I
Theocratic Law: Law based on religious teachings
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Country Focus: 40 Years of Corruption in Nigeria
Despite tremendous oil reserves, people are poor. 300 billion in 30 years from oil
$30 billion debt Life expectancy 50 years
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Contract law
Contract law: body of law that governs contract enforcements
Property rights: refer to the bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource
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Lecture II: Determinants of Economic Development
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Differences in Economic Development
GNP vs. PPP (Purchasing power parity) GNP: measures total annual income
received by residents in a country PPP: allows for a more direct comparison
in living standards between countries depending on whether the cost of living is lower or higher as compared to the USA
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Broader Conceptions of Development
Noble Prize winner Amartya Sen argues that development should be assessed less by material output measures like GNP or PPP and more by capabilities and opportunities people enjoy
HDI is used – 1. Life Expectancy (function of health care)2. Educational attainment (adult literacy, levels of
education)3. If average incomes sufficient to meet basic
requirements
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Political Economy and Economic Progress
A. Innovation and Entrepreneurship are engines of growth
B. Innovation and entrepreneurship require a market economy
C. I and E require strong property rights
D. Stable Political system
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States in Transition
Spread of democracy
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Evolution of Commercial Institutions
Evolution of societies – Why are individual groups better at business than others?
The gender gapProperty rightsEvolution of religionsEvolution of economic groups
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The New World Order
Huntington’s thesis vs. Fukayama’s ideas
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Nature of Economic Transformation
Deregulation: involves removing of legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate
Privatization: transfers the ownership of state property into the hands of private individuals frequently by sale of state assets through auctions.
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Article Review
Return of Economic Nationalism:
1.What is economic nationalism?2.How does trade benefit? (see next slide)3.What fear does the article raise?4.Why would raising tariffs result in greater chaos?5.Why does the article say that “Buy American” label
be erased?6.What are the three principles it suggests Obama
should follow?
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Spread of Market-Based Systems
Why is trade a good thing? Trade encourages specialisation, which
brings prosperity; global
capital markets, for all their problems, allocate money moreefficiently than local ones;
economic co-operation encouragesconfidence and enhances security.
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Article Review
Anatomy of an Idea:
1.What does the word ‘liberal’ mean in Europe?2.What does it mean in America?