1. The International Business Environment
The Changing Political Environment: National, Regional and International Forces
Dr(Prof) M Ambashankar

2. How political factors affect business
Monetary and fiscal policies, e.g. taxation
Environmental policies
Regional development schemes
Welfare state measures, including health, social security, pensions, education
Agricultural support
Immigration policies
Employment protection and regulation of working conditions
Dr(Prof) M Ambashankar

3. The nation state
Defining characteristics: geographical territory, sovereignty, monopoly of coercive power; continuity despite changes of government
Government – the institutions through which the state is run. These may change over time.
What do we expect of the state?
- national security, system of laws, protection from invasion, effective policing to maintain order
Dr(Prof) M Ambashankar

4. Political risks for international business
Unstable country environment, where government forces struggle to maintain law and order
Disaffected groups in society
External threats, such as from terrorists
Armed groups in society, who have a political or regional base
Countries run by military governments
Dr(Prof) M Ambashankar

5. Sources of authority in states
Traditional sources such as monarchy or theocracy (religious rule)
Constitution – set of basic rules which underpin institutions of government (may be written or unwritten)
Democracy – legitimacy rests on accountability to the people through elections, contrasted with -
Authoritarian rule – rule by a single leader or small group
Dr(Prof) M Ambashankar

6. Functional framework of government: Checks and balances between executive, legislative and judiciary
Dr(Prof) M Ambashankar

7. Democracy: basic principles
Rule of law
Free and fair elections – includes choice of candidates and right to stand for office
Universal right to vote for all adults
Freedoms of expression, speech and association
Dr(Prof) M Ambashankar

8. Elections and political parties
Proportional representation systems (PR) vs first-past-the-post systems – PR systems are more advantageous for small parties
Political parties – may be leftist (closer to socialist principles); rightist (closer to conservative principles); or centrist (hoping to appeal to the widest possible range of voters)
Political parties may also be based on religion, economic interests (such as agriculture) or environmental concerns (‘green’ parties)
Dr(Prof) M Ambashankar

9. Women in national legislatures in selected EU countries
(lower or single house)
Dr(Prof) M Ambashankar

10. Transitional democracies
The consolidated democracy has settled institutions and values, contributing to political stability
Democratization - introducing democratic reforms
- introduction of elections, but often with limited political rights (limited right to form political parties and restrictions on free speech)
- legislative assembly in place, but weak in relation to strong executive
Democratization often goes hand in hand with economic liberalization, offering opportunities to international business, but with risks stemming from weak institutions
Dr(Prof) M Ambashankar

11. Global politics Interdependence of nation states
Most independent states are members of the United Nations (UN)
Through the UN, numerous treaties and other conventions promote inter-governmental co-operation
Role of non-governmental organizations (NGOs) – work with both UN agencies and businesses, e.g. in environmental and human rights areas
Dr(Prof) M Ambashankar

12. The European Union
Major institutions – Council, Commission, European Parliament, European Court of Justice
A new Constitution for Europe? Are existing institutions in need of reform following enlargement in 2004, with further enlargement to come?
Euro-sceptic parties and weak voter turnout in EU parliamentary elections suggest doubt over future political reforms
Dr(Prof) M Ambashankar

13. Concluding summary and questions
Nation states have become more interdependent: to what extent has sovereignty been eroded through globalization?
A stable political environment is conducive to international business, but many industries are concentrated in unstable areas, posing risks for businesses.
The EU seems to be at a turning point in terms of institutional structure, but what sort of structural reforms are likely to occur?
Dr(Prof) M Ambashankar