TAILIEUCHUNG - Lecture Global business today (6e): Chapter 2 - Charles W.L. Hill

In this chapter, the learning objectives are: Understand how the political systems of countries differ, understand how the economic systems of countries differ, understand how the legal systems of countries differ, explain the implications for management practice of national differences in political economy. | Global Business Today 6e by Charles . Hill McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 National Differences in Political Economy Introduction Question: What is the political economy of a country? A country’s political economy refers to its political, economic, and legal systems These systems are interdependent, and interact and influence each other A country’s political system has major implications for the practice of international business Political Systems A political system is the system of government in a nation Political systems can be assessed in terms of the degree to which they emphasize collectivism as opposed to individualism in terms of the degree to which they are democratic or totalitarian Political Systems Collectivism refers to a system that stresses the primacy of collective goals over individual goals Individualism is a political philosophy that suggests individuals should have freedom over their economic and political pursuits Political Systems Democracy is a political system in which government is by the people, exercised either directly or through elected representatives Totalitarianism is a 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 Economic Systems There are three types of economic systems the market economy the command economy the mixed economy 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 Economic Systems In a pure market economy the goods and services that a country produces, and the quantity in which they are produced is determined by supply and demand In a pure command economy the goods and services that a country produces, the quantity in which they are produced, and the price at which they are

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