InternationalBusiness

7eMcGraw-Hill/IrwinCopyright

?

2009

by

The

McGraw-Hill

Companies,

Inc.

All

rightsreserved.Evaluation

only.ated

with

Aspose.SlidebsyfoCrha.rNlETes3.W5.CLl.iHeintllProfi

Copyright

2004-2011

Aspose

Pty

Ltd.Chapter

2Political

EconomyEvaluation

only.ated

with

AsposNe.aStliiodensaflorDi.NfEfTe3r.e5nCcleiesntinProfiCopyright

2004-2011

Aspose

Pty

Ltd.Political

Systems2-3The

political

economy

of

a

nation

refers

to

how

thepolitical,

economic,

and

legal

systems

of

a

country

areinterdependent;

they

interact

and

influence

each

other,

andin

doing

so

they

affect

Ethvealleuvaeltoifoencoonnolmiyc.well-beingated

with

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for

.NET

3.5

Client

ProfiCopyright

2004-2011

Aspose

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Ltd.Political

Systems2-4Political

system

refers

to

the

system

of

government

in

anationPolitical

systems

can

bEe

vasasleussaetdiaocncoordnilnyg.to

twoateddimweinstihonAsspose.Slides

for

.NET

3.5

Client

Profithe

degrCeeoptoywrhiigchhtth2ey0e0m4p-ha2s0i1ze1cAosllpeocstieviPstmyasLtd.opposed

to

individualismthe

degree

to

which

they

are

democratic

or

totalitarianCollectivism

And

Individualism2-5Collectivism

refers

to

a

political

system

that

stresses

thprimacy

of

collective

goals

over

individual

goalsCollectivism

can

be

traced

back

to

the

Greekphilosopher,

Plato

(427E-v34a7lBuCa)t,

ibuotnionnmoldye.rn

times,atecdolwliectthivAissmpoisseeq.uSatleiddweisthfsoocria.lNiEstTs3.5

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ProfiCopyright

2004-2011

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Pty

Ltd.Collectivism

And

Individualism2-6Socialists

advocate

state

ownership

of

the

basic

meansof

production,

distribution,

and

exchangeState-owned

enterprises

are

managed

to

benefit

societyas

a

whole,

rather

than

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with

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for

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3.5

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the

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spAlistpionsteo:Pty

Ltd.Communism

–

socialism

can

only

be

achieved

throughviolent

revolution

and

totalitarian

dictatorshipSocial

democrats

–

socialism

is

achieved

throughdemocratic

meansClassroom

Performance

System2-7A

political

system

that

stresses

the

primacy

of

collectivegoals

over

individual

goals

is

calleda)

individualismEvaluation

only.atebd)

cwoiltlehctAisvpisomse.Slides

for

.NET

3.5

Client

Profia

democrCacoypyright

2004-2011

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marketeconomyCollectivism

And

Individualism2-8By

the

mid-1990s,

communism

was

in

retreat

worldwideSocial

democracy

is

also

retreating

as

many

countriesmove

toward

free

market

economiesState-owned

enterpriEsvesalhauvaetbieeonnporinvlayti.zedated

with

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for

.NET

3.5

Client

ProfiCopyright

2004-2011

Aspose

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Ltd.Classroom

Performance

System2-9

believe

(s)

that

socialism

can

only

be

achievedthrough

violent

revolution

and

totalitarian

dictatorship.a)

communistsd)

PlatoEvaluation

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for

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social

rCepoupbylirciagnsht

2004-2011

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Ltd.Collectivism

And

Individualism2-10Individualism

refers

to

philosophy

that

an

individualMore

practically,

individualism

means

democraticpolitical

systems

and

free

market

economiesshould

have

freedom

in

his

own

economic

and

politicalpursuitsIndividualism

can

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individualism,

individual

economic

and

politicalfreedoms

are

the

ground

rules

on

which

a

society

shouldbe

basedDemocracy

And

Totalitarianism2-11Democracy

refers

to

a

political

system

in

whichgovernment

is

by

the

people,

exercised

either

directly

orthrough

elected

representativesTotalitarianism

is

aEfvoramloufagtoiveornnmoenntlyin.which

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of

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is

usually

associated

with

individualism

andcommunism

is

usually

associated

with

collectivism

andtotalitarianismDemocracy

And

Totalitarianism2-12Pure

democracy

is

based

on

the

belief

that

citizensshould

be

directly

involved

in

decision

makingMost

modern

democratic

states

practice

representativedemocracy

where

citizenEsvpaelriuoadticiaolnlyoenlelcyt.individuals

toaterdepwriestehntAtshpeose.Slidesm

for

.NET

3.5

Client

ProfiCopyright

2004-2011

Aspose

Pty

Ltd.Classroom

Performance

System2-13A

form

of

government

in

which

one

person

or

political

partyexercises

complete

control

over

all

spheres

of

human

lifeand

prohibits

opposing

political

parties

isEvaluation

only.atead)

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for

.NET

3.5

Client

Profia

represCenotpaytirviegdhetmo2cr0a0c4y

-2011

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Ltd.totalitarianismsocialismDemocracy

And

Totalitarianism2-14Right-wing

totalitarianism

-

permits

some

individualeconomicfreedom,

but

restricts

individual

political

freedomThere

are

four

major

forms

of

totalitarianism:Communist

totalitarianism

–

found

in

states

where

thecommunist

party

monopolizes

powerTheocratic

totalitarEivanailsuma-tfiouonnd

oinnlstya.tes

where

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totalitarianism

-

found

in

states

where

a

politicalparty

that

represents

the

interests

of

a

particular

tribemonopolizes

powerClassroom

Performance

System2-15

is

found

in

states

where

political

power

ismonopolized

by

a

party

according

to

religious

principles.a)

tribal

totalitarianiEsvmaluation

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3.5

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totalitarianismEconomicSystems2-16Political

ideology

and

economic

systems

are

connectedIn

countries

where

individual

goals

are

emphasized

freemarket

economies

are

likelyEvaluation

only.ateTdhewrietahreAtshrpeoestey.peSsloifdeecsonfomoirc

s.yNsEtTem3s:.5

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eCcoonpoymireisght

2004-2011

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economiesmixed

economiesMarket

Economy2-17In

a

market

economy

all

productive

activities

areprivately

ownedandproduction

is

determinedbytheinteraction

of

supply

and

demandThe

role

of

governmenEtviasltuoaetncioounraogenlfrye.e

and

fairatecdomwpiettihtiAosnpboetswee.enSplriidvaetse

fproordu.cNerEsT

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ProfiCopyright

2004-2011

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Ltd.Command

Economy2-18and

be

efficient,

command

economies

tend

to

stagnateIn

a

command

economy,

the

government

plans

thegoods

and

services

that

a

country

produces,

the

quantitythat

is

produced,

andthe

prices

aswhich

they

are

soldAll

businesses

are

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a

mixed

economy,

certain

sectors

of

the

economy

areleft

to

private

ownership

and

free

market

mechanismswhileother

sectors

have

significant

state

ownership

andgovernment

planningEvaluation

only.ate?d

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Performance

System2-20In

which

type

of

economic

system

are

all

productiveactivities

privately

owned?a)

a

mixed

economyEvaluation

only.atebd)

awicotmhmaAnsdpeocosneo.mySlides

for

.NET

3.5

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Profia

represCenotpaytirviegehcton2om0y04-2011

Aspose

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marketeconomyLegal

Systems2-21Civic

law-

basedondetailed

set

of

laws

organized

intocodesTheocraticlaw

-

law

is

based

on

religious

teachingsThe

legal

system

of

a

country

refers

to

the

rules

thatregulate

behavior

along

with

the

processes

by

which

thelaws

are

enforced

and

through

which

redress

forgrievances

is

obtained

Evaluation

only.ated

with

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for

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ProfiThere

are

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2le0g0a4l-sy2s0t1em1s:Aspose

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Ltd.Common

law

-

basedon

tradition,

precedent,

andcustomClassroom

Performance

System2-22Which

type

of

law

is

based

on

tradition,

precedent,

andcustom?a)

civil

lawEvaluation

only.atebd)

cwoimtmohnAlsawpose.Slides

for

.NET

3.5

Client

ProfitheocratCiocplyawright

2004-2011

Aspose

Pty

Ltd.contract

lawDifferences

In

Contract

Law2-23Depending

on

the

legal

system,

contracts

areapproached

in

different

waysA

contract

is

a

document

that

specifies

the

conditionsenforcementunder

which

an

exchangeEivsatlouocactuiroanndodneltayi.ls

the

rightsateadndwoibtlihgaAtsiponossoef.tShleipdaretsiefsoirnv.oNlvEeTd

3.5

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In

Contract

Law2-24Under

a

common

law

system,

contracts

tend

to

be

verydetailed

with

all

contingencies

spelled

outUnder

a

civil

law

system,

contracts

tend

to

be

muchshorter

and

less

specifEicvbaelcuauasteimoannyoinssluye.s

are

alreadyatecdovweiretdhiAsn

thpeocsiev.ilScloiddees

for

.NET

3.5

Client

ProfiCopyright

2004-2011

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Pty

Ltd.Differences

In

Contract

Law2-25Many

countries

have

ratified

the

United

NationsConvention

on

Contracts

for

the

International

Sale

ofGoods

(CIGS)

which

establishes

a

uniform

set

of

rulessellers

who

have

their

places

of

business

in

differentnationsgoverning

certain

aspecEtvsaolf

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b.eNtEweTen3.bu5yeCrlsiaenntd

ProfiCopyright

2004-2011

Aspose

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Ltd.Property

Rights

And

Corruption2-26Property

rights

refer

to

the

legal

rights

over

the

use

towhich

a

resource

is

put

andover

the

use

made

of

anyincome

that

may

be

derivedfrom

that

resourceCountries

differ

in

tEevrmasloufahtoiwotnheoirnlleyg.al

systemsateddefwiinethanAsd

prpootsecet.pSrloipedretsy

rfioghrts.NET

3.5

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ProfiCopyright

2004-2011

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rights

can

be

violated

through:private

actionpublic

actionProperty

Rights

And

Corruption2-27excessive

taxation

or

illegally

through

corrupt

mechanismsPublic

action

and

private

action

to

violate

property

rightoccurs

when

public

officials

extort

income,

resources,

orthe

property

itself

from

property

holdersThis

can

be

done

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3.5

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international

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and

the

economic

growth

rate

in

a

countryProperty

Rights

And

CorruptionFigure

2.1:

Rankings

of

Corruption

by

Country

2006Evaluation

only.ated

with

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for

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3.5

Client

ProfiCopyright

2004-2011

Aspose

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Ltd.2-28Property

Rights

And

Corruption2-29TheForeign

Corrupt

Practices

Act

makes

it

illegal

forU.S.

companies

to

bribe

foreign

government

officials

toobtain

or

maintain

business

over

whichthat

foreign

officialhas

authorityEvaluation

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sales.oSaldiopdteesd

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a

criminal

offenseClassroom

Performance

System2-30Which

country

is

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among

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most

corrupt

countries

inthe

world?a)

HaitiEvaluation

only.atebd)

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for

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3.5

Client

ProfiMalaysiaCopyright

2004-2011

Aspose

Pty

Ltd.NigeriaThe

Protection

OfIntellectual

Property

Rights2-31Trademarks

–

design

and

names

by

which

merchants

ormanufacturers

designate

and

differentiate

their

productsIntellectual

property

refers

to

property

that

is

the

produof

intellectual

activityIntellectual

property

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Pty

Ltd.Copyrights

–

the

exclusive

legal

rights

of

authors,composers,

playwrights,

artists,

and

publishers

to

publishand

disperse

their

work

as

they

see

fitThe

Protection

OfIntellectual

Property

Rights2-32Protection

of

intellectual

property

rights

differs

fromcountry

to

country

–

when

intellectual

property

protection

ilax,

piracy

is

commonMany

countries

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Protection

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PropertyTo

avoid

piracy,

firms

can

stay

away

from

countrieswhereintellectual

property

laws

are

lax,

file

lawsuits,

andlobby

governments

for

international

property

rightsagreements

and

enforcementClassroom

Performance

System2-33Design

and

names

by

which

merchants

or

manufacturersdesignate

and

differentiate

their

products

are

calleda)

trademarksd)

name

brandsEvaluation

only.atebd)

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for

.NET

3.5

Client

Profic)

patents

Copyright

2004-2011

Aspose

Pty

Ltd.Product

Safety

And

Product

Liability2-34Property

safety

laws

set

certain

standards

towhich

aproductmustadhereProduct

liability

involves

holding

a

firm

and

its

officerscountry

than

in

a

foreign

country,

or

when

liability

laws

aremore

lax,

the

firm

has

to

decide

whether

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adhere

to

homecountry

or

host

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for

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ProfiWhen

proCduocptysraifegthytla2w0s0a4re-2st0r1i1ctAersipnoasfeirPmt’ysLhtodme.The

Determinants

OfEconomicDevelopment2-35Countries

have

different

levels

of

economic

developmentGross

national

income

(GNI)

per

person

is

a

commonmeasure

of

economic

developmentPurchasing

power

parEitvya(lPuPPa)tiinovnolovenslayd.justing

GNI

byatepdurwcihatshinAgsppoowesre.Slides

for

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3.5

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ProfiCopyright

2004-2011

Aspose

Pty

Ltd.Differences

InEconomicDevelopmentTable

2.1:

Economic

Data

for

Select

CountriesEvaluation

only.ated

with

Aspose.Slides

for

.NET

3.5

Client

ProfiCopyright

2004-2011

Aspose

Pty

Ltd.2-36Evaluation

only.ated

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2004-2011

Aspose

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Ltd.2-37Evaluation

only.ated

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2004-2011

Aspose

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Ltd.2-38Evaluation

only.ated

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ProfiCopyright

2004-2011

Aspose

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Ltd.2-39Broader

Conceptions

Of

Development:Amartya

Sen2-40impediments

to

freedom

like

poverty,

tyranny,

and

neglectThe

United

Nations

usedSen’s

ideas

to

develop

theHuman

DevelopmentIndex

(HDI)

which

is

based

on

threemeasures:

life

expectancy

at

birth,

educational

attainment,and

whether

average

incomes

are

sufficient

to

meet

thebasic

needs

of

life

in

acountryNobel

Prize

winning

economist

Amartya

Sen

argues

thatdevelopmentshouldbe

seen

as

a

process

ofexpandingthe

real

freedoms

that

people

experienceSo,

development

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2004-2011

Aspose

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Ltd.2-41Evaluation

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2004-2011

Aspose

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Ltd.2-42Evaluation

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for

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ProfiCopyright

2004-2011

Aspose

Pty

Ltd.2-43Political

Economy

AndEconomicProgress2-44What

is

the

relationship

between

political

economy

andeconomic

progress?

Experts

agree

that:Innovation

and

entrepreneurship

are

the

engines

of

long-run

economicgrowthEvaluation

only.ate?d

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seems

likely

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democratic

regimes

are

moreconducive

to

long-term

economic

growth

than

adictatorship,

even

one

of

the

benevolent

kindSubsequent

economic

growth

leads

to

establishment

ofdemocratic

regimesEvaluation

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with

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ProfiCopyright

2004-2011

Aspose

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Ltd.2-45Geography,

Education,

AndEconomicDevelopment2-46engage

in

trade,

and

so,

be

more

open

to

market-basedIn

addition

to

political

and

economic

systems,

geographyand

education

are

also

important

determinants

of

economicdevelopmentCountries

with

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likely

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.rates

because

the

workforce

is

more

productiveEvaluation

only.ated

with

Aspose.Slides

for

.NET

3.5

Client

ProfiCopyright

2004-2011

Aspose

Pty

Ltd.2-47Classroom

Performance

System2-48Which

is

not

a

primary

determinant

of

a

nation’s

rate

ofeconomic

development?a)

its

political

systemEvaluation

only.atebd)

iwtistehcoAnsompiocssey.stSelmides

for

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3.5

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geogCraopphyyright

2004-2011

Aspose

Pty

Ltd.its

currencyStates

In

Transition2-49Since

the

late

1980s,

two

trends

have

emerged

in

thepolitical

economy:A

wave

of

democratic

revolutions

swept

the

world

in

thelate

1980s

and

early199E0vsaluation

only.ate?d

Twhietrhe

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Spread

Of

Democracy2-50There

are

three

main

reasons

for

the

spread

of

democracy:Many

totalitarian

regimes

failed

to

deliver

economicprogress

to

the

vast

bulk

of

their

populationsNew

information

and

cEovmmaulnuicaattiioonntoecnhlnyol.ogies,

haveatebdrowkientdhowAnstphoesaeb.ilSiltiy

dofesthfeostrat.eNtEoTc3on.t5roCllaicceensts

tPorofiuncensoredCionpfoyrrmiatgihotn

2004-2011

Aspose

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Ltd.The

economic

advances

of

the

past

quarter

century

haveled

to

the

emergence

of

increasingly

prosperous

middleand

working

classes

who

have

pushed

for

democraticreformsThe

Spread

Of

DemocracyMap

2.5:

Political

Freedom

in

2006Evaluation

only.ated

with

Aspose.Slides

for

.NET

3.5

Client

ProfiCopyright

2004-2011

Aspose

Pty

Ltd.2-51The

New

World

OrderAnd

Global

Terrorism2-52Many

countries

may

be

increasingly

difficult

places

inwhich

to

do

business,

either

because

of

their

inherentviolent

conflict,

or

because

they

are

part

of

a

civilizationthat

is

in

conflictwithEavnaelnutaertpiroisne’onslhyom.e

countryate?d

TweirtrhorAissmproespree.sSenltisdoense

offotrhe.mNaEjTor3t.hr5eaCtlsiteonwtorPldrofipeace

and

eCcoonpoymircipgrhotgr2es0s0i4n-t2h0e1211stAcsepntousrey

Pty

Ltd.The

Spread

Of

Market-Based

Systems2-53Command

and

mixed-economies

failed

to

deliver

thekind

of

sustained

economic

performance

that

was

achievedby

countries

adopting

market-based

s