4. Using examples, summarize the core features of a country’s political economy and discuss how they can impact the attractiveness of a country as a potential foreign capital destination. Flashcards
Intro
Hill and Hult (2017) explain that the core features of a country’s political economy encompass how politic, economic and legal systems are independent in that country.
Concerned with how these factors interact with each other and how it contributes to the country’s economic well being
Intro for the political system
The political system refers to how collective or individual a country is and also the degree to which they are either democratic or totalitarian
Define collectivism
Emphasises more on collective goals rather than the individual.
Associated with socialist Karl Marx who believed in the good for the people rather than merely thinking about each individual
An example is Labour Party. They are known for being socialist and for the people eg making education accessible for everyone
Define Individualism
Opposite. Refers to how individuals should have freedom in their own economic and political pursuits
Associated with Aristotle who believed in individual diversity
Eg tori = reduce tax
Define Democracy
People essentially vote on things. Ran by the people
EG brexit
Impact: What they vote for affects businesses
What are the 4 forms of totalitarianism
Communist totalitarianism
Tribal
Theocratic
Right -wing
Define 4 forms of totalitarianism + Impact
Communist= communist party running country
Impact: Eg Tencent + regulation
Tribal= Party which represents the interest of tribes eg Kenya
Theocratic: Laws based on religion
Impact: Eg Afganistan (Sharia Law) impact = violence
Right-wing: Extreme conservative
= Eg hitler
Conclusion for Political
Individualism = VV Attractive because free market + Free to do as much as they can + innovate
Democratic = Attractive higher economic rates compared to totalitarian
Define Legal Systems
Rules business must follow
Businesses must know the ins and outs
What are the legal systems
Common Law
Civic Law
Theocratic Law
Define legal systems + EG
Common Law
Based on precedenct Eg Murder(UK & USA use this)
Civic Law:
Based on a set of rules formed into codes
Eg Newzealand = must have an employment contractbut
Theocratic Law:
Based on Religious Teachings
Conclusion for Legal Systems
Business must consider. Attractiveness = saeguards in contracts
What are the economic systems
Market Economy
Command Economy
Mixed economy
Define + impact on economic systems
Market economy: Will supply for the amount fo demand
Impact: government encourages free and fair competition between businesses
Command economy
Government plans the goods and services for the country
Impact: Businesses are usually state owned. They produce so it benefits society
Mixed economy:
Mix of both private and stateowned
