Chap002 - Chapter 02 - National Differences in Political...

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National Differences in Political Economy INTRODUCTION A) Different countries have different political systems, economic systems, and legal systems. Cultural practices can vary dramatically from country to country, as can the education and skill level of the population. All of these differences have major implications for the practice of international business. B) This chapter explores how the political, economic, and legal systems of countries differ. Together these systems are known as the political economy of a country. POLITICAL SYSTEMS A) By political system we mean the system of government in a nation. Political systems can be assessed according to two related dimensions. The first is the degree to which they emphasize collectivism as opposed to individualism. The second dimension is the degree to which they are democratic or totalitarian. Collectivism and Individualism B) Collectivism refers to a system that stresses the primacy of collective goals over individual goals. When collectivism is emphasized, the needs of the society as whole are generally viewed as being more important than individual freedoms. Advocacy of collectivism can be traced to Plato, in modern times the collectivist mantle has been picked up by socialists , and their champion, Karl Marx. Socialism C) Communists generally believed that this could only be achieved though revolution and totalitarian dictatorship, while s ocial democrats worked to achieve the same goals by democratic means. D) While state owned firms might have been intended to promote the public interest, experience suggests that this isn't always the case. In many countries the performance of state owned companies has been poor. Protected from significant competition by their monopoly position, and guaranteed governmental financial assistance, many state owned enterprises became increasingly inefficient. Consequently, a number of Western democracies voted social democratic parties out of office and moved toward free market economies by selling state-owned enterprises to private investors, a process known as privatization . Individualism E) Individualism refers to a political philosophy that an individual should have freedom over his or her economic and political pursuits. In contrast to collectivism, individualism stresses that the interests of the individual should take precedence over the interests of the state. F) Individualism, while advocated by Aristotle, in modern days was encouraged by David Hume, Adam Smith, John Stuart Mill, and most recently, Hayek and Milton Friedman. Individualism focuses on i) guaranteeing individual freedom and self-expression, and ii) letting people pursue their own self-interest in order to achieve the best overall good for society. The U.S. Declaration of Independence and the Bill of Rights embody the spirit of individualism. 2-1
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This note was uploaded on 04/24/2010 for the course MARK 3336 taught by Professor Cox during the Spring '10 term at University of Houston - Downtown.

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Chap002 - Chapter 02 - National Differences in Political...

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