2. National Differences in Political Economy2
chapter
National Differences in Political Economy
McGraw-Hill/Irwin
Global Business Today, 5e
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

3. Chapter 2: National Differences in Political Economy
INTRODUCTION
This chapter explores how the political, economic, and legal systems of countries differ.
Together these systems are known as the political economy of a country.

4. Chapter 2: National Differences in Political Economy
POLITICAL SYSTEMS
A political system is the system of government in a nation
Political systems can be assessed according to:
the degree to which they emphasize collectivism as opposed to individualism
the degree to which they are democratic or totalitarian

5. Chapter 2: National Differences in Political Economy
Collectivism and Individualism
Democracy and Totalitarianism

6. Chapter 2: National Differences in Political Economy
ECONOMIC SYSTEMS
A free market system is likely in countries where individual goals are given primacy over collective goals
State-owned enterprises and restricted markets are common in countries where collective goals are dominant

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Market Economy
Command Economy
Mixed Economy

8. Chapter 2: National Differences in Political Economy
LEGAL SYSTEMS
The legal system of a country is the rules, or laws, that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained.

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Different Legal Systems
Differences in Contract Law
Property Rights and Corruption
The Protection of Intellectual Property
Product Safety and Product Liability

10. Chapter 2: National Differences in Political Economy
THE DETERMINANTS OF ECONOMIC DEVELOPMENT
Differing political, economic, and legal systems can have a profound impact on the level of a country's economic development, and hence on the attractiveness of a country as a possible market and/or production location for a firm.

11. Chapter 2: National Differences in Political Economy
Differences in Economic Development
Broader Conceptions of Development: Amartya Sen
Political Economy and Economic Progress
Geography, Education, and Economic Development

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STATES IN TRANSITION
Since the late 1980s, a wave of democratic revolutions has swept the world, and many of the previous totalitarian regimes collapsed
There has been a move away from centrally planned and mixed economies towards free markets

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STATES IN TRANSITION
The Spread of Democracy
The New World Order and Global Terrorism
The Spread of Market-Based Systems
The Nature of Economic Transformation
Deregulation
Privatization
Legal Systems
Implications of Changing Political Economy

14. Chapter 2: National Differences in Political Economy
IMPLICATIONS FOR MANAGERS
Political, economic, and legal systems of a country raise important ethical issues that have implications for the practice of international business
The political, economic, and legal environment of a country clearly influences the attractiveness of that country as a market and/or investment site

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Benefits
Costs
Risks
Overall Attractiveness