chapter 2 Flashcards
what is the political reason?
The system of governement in a nation
what is political economy?
The political, economic, and legal systems of a country.
what are the two dimensions of political reason?
Emphasis on collectivism or individualism.
*Degree to which they are democratic or totalitarian.
what is collectivism?
Emphasizes collective goals over individual goals → try to look at big picture, whatever is good for the group has priority over what is good for the individual
needs for society are more important that individual freedom
“good of society”
what is socialism?
Modern version of collectivism
Public ownership of the means of production for the common good.
Karl Marx: the few benefit at the expense of the many in a capitalist society where individual freedoms are not restricted.
everyone shares everything
what was socialism split into
communism and social democrats
what is communism?
use of dictatorship (people dont make decisions)
cvfwhat are social democrats?
using democratic means to achieve socialism
what is privatization?
selling state-owned companies to private investors
Privatization is a sign of commitment towards free market economic→ individualistic economy
what is invidiualism ?
an individual should have freedom in economic and political pursuits→ better chance of benefiting the society
The interest of the individual should take precedence over the interests of the state
say that yes they are certain things that are good for the whole society but we have to let people decide for themselves
what are the two underlying tenets of individualism?
- Guarantee of individual freedom and self-expression (legal guarantee - if you invent something you can get a patent on it)
- Welfare of society best served by letting people pursue their own economic self-interest (motivation pushes you forward, you create more than what you can consume)
what is democracy?
government is by the people, exercised either directly or through elected representatives → people decide for themselves, people have a voice over their future
Real democracy is theoretical
what is totalitarianism
one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties → political party controls everything, nobody has a say
which two political systems go hand and hand together
Democracy and individualism go hand in hand, as do the communist version of collectivism and totalitarianism
Doesnt mean that a collectivist society is necessarily a totalirism society
china as a grey zone?
A lot of buts, no absolute sense of totalitarianism or communism
Young generations moved toward more individualism in China → changing jobs, choosing jobs, move towards company that pays more, don’t care about organization but you care about your own salary and lifestyle
More of a convergence towards individualism
why is Iran an interesting case?
They have all of the mechanism of democracy on the surface but very individualistic society, not collectivist with totalitarianism regime
what is representative demoracy>
citizens periodically elect individuals to represent them.
Includes a multitude of safeguards that are typically based in constitutional law
what are the different safeguards of democracy?
Freedom of expression.
Free media
Universal adult suffrage: the right to vote for as many people who are bound by a government’s laws as possible, as supported by the “one person, one vote” principle.
Fair court system.
what is communist totalitarianism
socialism can be achieved only through a totalitarian dictatorship
what is theocratic totalitarianism
monopolized by a party, group, or individual that governs according to religious principles (ex: Saudi arabia)
what is tribal totaliranism
a party, group, or individual that represents the interests of a particular tribe monopolizes political power. → in african countries, one tribe dominates others, other tribes dont have a say in how the country is done
what is right wing totalitarianism
generally permits individual economic freedom but restricts individual political freedom, including free speech, on the ground that it would lead to the rise of communism
what are pseudo democracies
Lie between pure democracies and complete totalitarianism systems
Looks like a democracy but not a democracy
Authoritarian elements have captured some or much of the machinery of state and use this to deny basic political and civil liberties.
ex: russia,
what is economic freedom?
Based on the concept of self ownership
Individuals have a right to choose
when there is economic freedom, what increases and what happens?
income per capita increases, people have more money in their pockets, lifestyle is better
what is market economy?
All productive activities are privately owned.
Production is determined by supply and demand → you produce as many cars as people have demand for, nobody tells you how many cars to produce - demand and supply set equilibrium when they intersect, price is determined by the market
To work, supply must not be restricted.
supply and demand control the economy and the gvt does not intervene
what is the role of the gvt in a market economy if there’s a chance of monopoly
to encourage vigorous free and fair competition. (encouragement in economic sense has to do with money)
allow private ownership
what Is a command economy (economic systems)
Government plans the goods and services, quantity and price, then allocates them for “the good of society.”
All businesses are state owned.
Historically found in communist countries.
No incentive for individuals to look for better ways to serve needs.
similar to collectivism –> allocate resources for the good of society
why are all businesses state owned in a. command economy
because the goevrennt believes that they can direct these businesses to make investments that are better for the nation
what are social inclined governments under command economy?
they love the command economy that they cnetrally plan the economy, not bad but free market economt
what are sone negatives of a command economy
state owned enterprises have little incentive to control costs and be efficient because they cant go out of business. furthermore, the abolition of private ownership means there is no incentive for individuals to look for better ways to serve consumer needs
what is a mixed economy?
Some sectors are privately owned, some are government owned.
Once common in developed world, less so now.
Government may aid troubled firms whose operations are vital to national interests.
china is an example–> promotes public and private sectors
what is the legal system?
Rules or laws that regulate behavior.
Process through which laws are enforced.
Process through which redress for grievances is obtained.
how is the legal system influenced
by the prevailing political system
what is common law (legal systems)
Evolved in England over hundreds of years.
Based on tradition (country ;legal history), precedent (cases in the courts that have happened, custom (how laws are applied in specific situations)
More flexible than other systems.
judges in common law can interpret the law so that it applies to the curcumstsnces of an individual case
what is civil law (legal sysystems)
Based on detailed laws organized into codes.
Less adversarial than a common law system because judges rely on detailed legal codes rather than looking at tradition, precent and custom
More black and white
less flexible
what is theocratic law (legal systems )
Based on religious teachings.
Most common is Islamic law.
what is a contract
specifies conditions under which an exchange is to occur, and details rights of parties involved.
what is contract law?
body of law that governs contract enforcement.when contracts exist, when they’re enforceable, and what the wronged party can do if the other signatory ignores the terms of the agreement
what is the United Nations convention on contracts for the international sale of goods
A set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of businesses in different nations.
what does the CISG apply to
Applies automatically to all contracts for the sale of goods between different firms based in countries that have ratified the convention, unless the parties opt out.
when firms don’t want to accept the CISG, what happens
they will opt for aberration by a recognized arbitration court to settle contract disputes
what is property
a resource that an individual or business owns.
- Land, buildings, equipment, capital, mineral rights, businesses, intellectual property.
what are property rights
legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.
what are the two ways that property rights can be violated
through private action and public action
what is private action?
theft, piracy, blackmail by private individuals or groups
what is public action and corruption
Public officials extort income, resources, or property.
Can be done legally by levying excessive taxation, requiring licenses or permits from property holders, taking assets into state ownership without compensating owners, redistributing assets without compensating prior owners.
Can be done illegally through corruption, demanding bribes.
how can high levels of corruption affect an economy
lowering FDI, international trade, less growth
what is the foreign corrupt practices act (FCPA)
Illegal to bribe a foreign government official to obtain or maintain business over which that foreign official has authority.
what does the FCPA require all public traded companies to do?
keep detailed records that would reveal whether a violation of the act has occurred.
what was the OECDS convention on combating bribery
Makes bribery of a foreign public official a criminal offense.
Allows for facilitating or expediting payments
what is intellectual property
property that is the product of intellectual activity, such as computer software, a screenplay, a music score
what is the philosophy behind intellectual property laws
is to reward the originator of a new invention
what is a patent
inventor’s exclusive rights for a defined period. **an exclusive right granted for an invention. **
when you invent something, nobody else can still that
what are copy rights
exclusive legal rights of authors, composers, playwrights, artists, and publishers. the exclusive legal right, given to an originator or an assignee to print, publish, perform, film, or record literary, artistic, or musical material, and to authorize others to do the same
what are trade marks
officially registered designs and names used to differentiate products.
World Intellectual Property Organization: international organization whose members sign treaties to protect intellectual property
what are product safety laws
set certain safety standards to which a product must adhere.
what is product liability
involves holding a firm and its officers responsible when a product causes injury, death, or damage.
- Can be much greater if a product does not conform to safety standards.
- Criminal and civil laws apply.
- Raises ethical issues when doing business abroad
civil vs criminal product laws
civils–> dealing with money
cirminal–> could be sent to jail
what are the two broad implications for international business
Political, economic, and legal systems of a country raise important ethical issues that have implications for international business.
Political, economic, and legal environments of a country clearly influence the attractiveness of that country as a market or investment site
what is the World Intellectual Property Organization:
international organization whose members sign treaties to protect intellectual property
what was the Paris convention for intellectual property
International agreement to protect intellectual property.
