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Chapter 2 & 3 Flashcards

1
Q

A country’s political economy refers to its

A

political, economic, and legal systems

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2
Q

These systems ______ and

_______each other

A

interdependent; interact and influence

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3
Q

A political system is

A

the system of government in

a nation

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4
Q

Political systems can be assessed

A

Collectivism vs Individualism

Democratic vs Totalitarian

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5
Q

m is a system that stresses the

primacy of collective goals over individual goals

A

Collectivism

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6
Q

is a political philosophy that

suggests individuals should have freedom over their economic and political pursuits

A

Individualism

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7
Q 
advocates state (government) ownership of the 
basic means of production, distribution, and 
exchange
A

Socialism

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8
Q

In the early 20th century, socialism split into

________

A

Communists and Social Democrats

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9
Q

communists held that collectivism should be achieved though

A

revolution and totalitarian dictatorship

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10
Q

social democrats worked to achieve collectivism by

A

democratic means

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11
Q

Today, many nations are moving toward

___________ whereby state-owned enterprises are sold to private investors

A

privatization

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12
Q

Individualism stresses

A

Individual freedom, self-expression, and personal responsibility; letting people pursue their own self-interests to achieve the best overall good for society; democratic systems and free markets

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13
Q

political system in which
government is by the people, exercised either
directly or through elected representatives

A

Democracy

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14
Q

What is the most common form of democracy today?

A

Representative Democracy

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15
Q

form of government in which
one person or political party exercises absolute control over all spheres of human life, and opposing political parties are prohibited

A

Totalitarianism

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16
Q

In most totalitarian regimes

A 
there is widespread political repression
 there are no free and fair elections
 media is censored
 basic civil liberties are denied
 challenges to the regime are prohibited
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17
Q

There are 4 major forms of totalitarianism today

A

Communist; Theocratic, Tribal, Right Wing

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18
Q

advocates achieving socialism through totalitarian dictatorship (ie. China)

A

communist totalitarianism:

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19
Q

political power is
monopolized by a party, group, or individual
that governs according to religious principles
(ie. Iran)

A

theocratic totalitarianism:

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20
Q 
a political party that 
represents the interests of a particular tribe 
monopolizes power (ie. Syria)
A

tribal totalitarianism

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21
Q

individual economic freedom is allowed but individual political freedom is restricted in the belief that it could lead to communism (ie. fascism)

A

right wing totalitarianism:

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22
Q

There are three types of economic systems

A

the market economy, the command economy,

and the mixed economy

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23
Q

refers to 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

A

Legal system

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24
Q

A country’s legal system is important because

A

laws regulate business practice
laws define the manner in which business
transactions are to be executed
laws set down the rights and obligations of those
involved in business transactions

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25
There are three main types of legal systems:
Common Law, Civil Law, Theocratic Law
26
Common law
based on tradition, precedent, | and custom
27
Civil law
- based on a very detailed set of | laws organized into codes
28
Theocratic law
based on religious teachings
29
In a common law state contracts
contracts are very detailed | where all contingencies are spelled out
30
In a civil law state contracts
contracts are shorter and much | less specific
31
establishes a uniform set of rules governing | commercial contracts who have their places of business in different nations
United Nations Convention in Contracts for | the International Sales of Goods (CIGS)
32
Property rights are
the legal rights over the use to which a resource is put and over the use made of any income derived from that resource
33
Property rights can be violated
by private action (theft, piracy, blackmail, and the like by private individuals or groups) by public action (public officials extort income or resources from property holders) 
34
when a country has a high level of | corruption:
Foreign direct investment falls International trade falls Economic growth falls
35
The Foreign Corrupt Practices Act
limits | corruption for U.S. companies
36
Intellectual property (IP)
is property that is the product of intellectual activity (patents, copyrights, and trademarks)
37
Product safety laws set
certain safety standards | to which a product must adhere
38
Product liability involves
holding a firm and its officers responsible when a product causes injury, death, or damage
39
Political, economic, and legal systems of a | country
• raise important ethical issues for the practice of international business • clearly influences the attractiveness of that country as a market and/or investment site
40
A country’s political economy influences its
level of economic development
41
 Higher levels of economic development create a | more favorable
environment for international | business
42
One common measure is a country’s economic development
gross national income (GNI) per person of population
43
adjustment allows for a more direct comparison of living standards in different countries
Purchasing Power Parity
44
 GNI and PPP data provide a _______ picture of | development
static ( it is also important to consider growth rates)
45
 Amartya Sen held that development should be | assessed less by material output and more by the
capabilities and opportunities that people enjoy
46
The United Nations created the ________ based on life expectancy, education attainment, and whether average incomes are sufficient to meet the basic needs of life in a country
Human | Development Index
47
2 Engines of growth for an economy
Innovation and Entrepeneur
48
new products, new processes, new organizations, new management practices, and new strategies
Innovation
49
first commercialize innovative | new products and processes
Entrepreneurs
50
creates greater incentives | for innovation and entrepreneurship
Market Economy
51
regimes tend to improve long-term | economic growth
Democratic
52
economic growth leads to | more
Democratic Regime
53
the likelihood that political forces will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise
Political Risk
54
the likelihood that economic mismanagement will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise
Economic Risk
55
the likelihood that a trading partner will opportunistically break a contract or expropriate property rights
Legal risk
56
involves removing legal restrictions on the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate
Deregulation
57
transfers the ownership of state property into the hands of private investors
Privatization
58
that protects property rights | and the machinery to enforce that system
Legal system
59
For managers, there are two main implications in international business:
the political, economic, and legal systems of a country raise ethical issues the political, economic, and legal environment of a country clearly influences the attractiveness of country as a market and/or investment site 2
60
In an international market _______ are a function of market size, and current and future consumer purchasing power
benefits
61
Three types of cost in international business
Political, Economic, and Legal
62
include the cost of paying bribes | or lobbying for favorable or fair treatment
Political cost
63
relate primarily to the sophistication of the economic system, including the infrastructure and supporting businesses
Economic Cost
64
can be higher in countries with dramatically different product, workplace, and pollution standards, or where there is poor legal protection for property rights
Legal Costs
65
Advantages accruing to the first to enter a market
first-mover advantage
66
Handicaps experienced by being a late entrant in a market
Late-mover disadvantages
67
Since the 1980s there has been a move away from | ______________ economies and ____________ economies towards ______________
Centrally-planned; mixed | Free market
68
Democracy has spread to new countries | because
 many totalitarian regimes failed to deliver economic progress to the majority of their population  new information and communication technologies have broken down the ability of the state to control access to uncensored information ```  economic advances of the last quarter century have led to the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms ```
69
A document that specifies the conditions under which an exchange is to take place and details the rights and obligations of the partners involved
Contract
70
Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention
Patent
71
The exclusive legal rights f authors, composers, playwrights, artists, and publishers to publish and disperse their work as they wish
Copyright
72
The design and names, oftn oficially registered, to which merchants or manufacturers disiginate and differentiate their products
Trademarks
73
What is GNI?
The total annual income of a nation's residents
74
An international organization whose members sign treaties to agree to protect intellectual property
World Intellectual Property Organization
75
An adjustment to GDP per capita to reflect differences in the cost of living
Purchasing Power PArity

International Business (6 decks)

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