Scribd
Upload
15 views3 pages

Reviewer Itb

Globalization refers to the integration of economies and societies worldwide, driven by technological, economic, political, and cultural exchanges. It presents both benefits, such as increased trade and foreign direct investment, and risks, including structural unemployment and threats to sovereignty. The political economy of a nation, influenced by its legal systems and political ideologies, affects its economic development and attractiveness for international business.

Uploaded by

aldrin ladano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
15 views3 pages

Reviewer Itb

Globalization refers to the integration of economies and societies worldwide, driven by technological, economic, political, and cultural exchanges. It presents both benefits, such as increased trade and foreign direct investment, and risks, including structural unemployment and threats to sovereignty. The political economy of a nation, influenced by its legal systems and political ideologies, affects its economic development and attractiveness for international business.

Uploaded by

aldrin ladano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Globalization is the spread of financial products, goods, Political System

technology, information, and jobs across national borders  The system of government of a nation
and cultures. Assessed according to:
 The degree to which the country emphasizes
Globalization is the system of interaction among the collectivism as opposed to individualism
countries of the world in order to develop the global  The degree to which the country is democratic
economy.
1. It refers to the integration of economies and societies Political ideology linked to economic systems
all over the world. 1) Market economies - All productive activities are
2. It involves technological, economic, political and privately owned and production is determined by
cultural exchanges made possible largely by advances in interaction of supply and demand"
communication, transportation, and infrastructure.
2) Command economies - Government plans the goods
Globalization and its Impact on Economic Growth and services that a country produces, the quantity that is
Benefits produced and the prices at which they are sold at "- All
Foreign Direct Investment businesses are state owned, and the government
Technological Innovation allocated them the resources.
Economies of Scale
Legal Systems
Risks The rules, or laws, that regulate behaviour
Interdependence Common law (UK) – based on tradition, precedent, and
Inequitable Distribution custom
Threat to Sovereignty Civil law (Europe)– based on a very detailed set of laws
organized into codes
Impact of Globalization Theocratic law (Saudi) – based on religious teachings
Increased trade - greater choice of goods
Greater competition - lower prices United Nations Convention on Contracts for the
Economies of Scale - more efficient production International Sale of Goods (CIGS)
Increased capital and labour mobility  Establishes a uniform set of rules governing
everyday commercial contracts between sellers and
Monopoly power of multinationals buyers in different nations
Structural unemployment (from shifting sectors)
Tax avoidance (easier) Collectivism
Primacy of collectivist over individual goals
NATIONAL DIFFERENCES IN POLITICAL ECONOMY Emphasis: “good of society”, “common good”
The Poorest Continent: Sub-Saharan Africa
 Corrupt government, bad economic policies. Individualism
 Property rights are either not established or not Individual freedom over economic and political action
respected
 It is difficult for property owners to raise capital little Democracy:
incentive to make the investments necessary to  Government is by the people, exercised either
make the properties more efficient and productive. directly or through elected representatives
 Safeguards hold elected representatives accountable
Political System varies by country on the basis of values
and beliefs about Totalitarianism:
 Collectivism and Individualism  One person/party exercises absolute control over all
 Democracy and Totalitarianism spheres of human life

Political Economy  Communist totalitarianism (PRC, Vietnam, Laos, N.


 A term that stresses that the political, economic, and Korea,Cuba)
legal systems of a country are interdependent; they  Theocratic totalitarianism (Iran, S. Arabia)
interact and influence each other, and in doing so  Tribal totalitarianism (Zimbabwe, Tanzania)
they affect they level of economic well-being.  Right wing totalitarianism
Economic Systems Public Action can violate property rights
Market economy: what is produced in what quantity  Legal mechanisms
determined by supply/demand and through a price  Illegal means: corruption
system
Command economy: planned by government Corruption across countries is tracked by
Mixed economy: a balance of both of the above Transparency International
State-Directed economy: state directly influences
investment activities of private enterprise through High corruption levels reduce
“industrial policy.”  Foreign Direct Investment
 economic growth
Businesses must observe
 Home country laws US foreign corrupt practices act:
 Host country laws illegal for US managers to bribe government officials
 International Laws and Treaties OECD Convention on Bribery of Foreign Public
Officials in International Business transactions
Contract Law
A contract specifies Product safety and product liability
 conditions under which an exchange will happen  Product safety laws
 rights/obligations of parties  Criminal / civil liability
 It is based on a country’s legal system.
Differences of Economic Development
Systems differ based on legal tradition GDP per capita: does not factor cost of living differences
 common law system
 civil law system Purchasing Power Parity (PPP) index: adjusts per capita
GDP by cost-of-living
Disputes
UN Convention on Contracts for the International Sale Human Development Index: life expectancy, literacy, PPP
of Goods (CIGS) based average incomes
International Court of Arbitration of the International
Chamber of Commerce in Paris, France ICAoICC Broader Conceptions of Development
Amartya Sen: development
Property rights  Should be assessed by material output measures
 use of a resource  Is an economic AND a political process that requires
 use made of income from resource “democratization”
 enforcement issues
 Public vs private action violations Human Development Index (HDI) =
f{life expectancy, educational attainment, PPP based
Protection of Intellectual Property annual incomes sufficient to meet basic needs}
patent: inventors’ exclusive rights to manufacture,
use, sell an invention Political Economy and Economic Progress
copyright: same for authors, composers, artists, Innovation >> Engine for Growth
publishers (products, processes, strategies, organizations,
trademark: unique design and name, often management practices)
officially registered
Innovation requires:
Paris Convention for the Protection of Industrial Property  market economy
(96 countries)  strong property rights
WTO/GATT  the “right” political system
TRIPS (WTO)Trade Related Aspects of
Intellectual Property Economic progress is related to Democracy
States in Transition: Spread of Market-Based Systems
Nature of economic transformation
 Deregulation: legal changes
 Privatization: transfer of state property/industries to
private individuals
 Auctions
 IPOs
 Evolution of legal systems
 The road of transformation is rocky

Implications for International Business


Country’s political, economic, and legal environment
 influence attractiveness
 raise ethical Issues

Country attractiveness
 balance long-term risks with short-term benefits for
business
 benefits depend on: size, wealth, future economic
growth
 first mover advantages
 identify “star” future economies
 costs are affected by:
 economic sophistication (may be more costly to
operate in LDCs, no infrastructure)
 legal framework impact on costs
 political payoffs

You might also like