Exporting and Economic/Political Systems

Goal: Describe the differing political, economic, and cultural systems around the world that affect global business. Describe the differing political, economic, and cultural systems around the world that affect global business. Attached is the readings from the textbook. Select ONE COUNTRY from EACH of the columns on the attached sheet. (Free Market, Socialist, Communist). These are the countries where you have identified a potential market for your amazing and highly effective new toothpaste “Forever Bright.”RESEARCH the countries you have selected using the CIA Factbook, globalEDGE, and Vision of Humanity as a starting point to determine the economic and political climate for our business venture. You MUST use and reference these before you use any other recourses For EACH country: https://youtu.be/d8ivuSUfTg4 http://visionofhumanity.org/ https://globaledge.msu.edu/ https://www.cia.gov/library/publications/the-world-factbook/ Identify the OPPORTUNITIES and THREATS to your global business venture posed by the economic/political environmentIf you decide to pursue your business venture in these countries, what are the specific risks that you face as an international business entrepreneur? What, if anything, can you do to mitigate the risks as an exporter into these countries? Minimum of 2 pages in length with a 3-page maximum. Title pages, pages of references, citations or graphs DO NOT count towards the length of the paper. One page, double-spaced at a 12-point Times New Roman Font is approximately 250 â?? 300 words. This means that your assignments should be a minimum of 6300 words, and a maximum of 900. The assignment must be double-spaced, using no more than a 12-point font and standard margins of no greater than 1â? on all sides. Must cite resources and NO PLAGIARISM
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READING: FREE-ENTERPRISE
A FREE-ENTERPRISE SYSTEM IS BASED ON PRIVATE OWNERSHIP AS THE MEANS OF PRODUCTION.
KEY POINTS
Free-market systems operate in capitalist economies.
There are multiple variants of capitalism depending on interpretation and practice.
Economists emphasize the degree to which markets are free of government control (laissez faire) in
capitalism.
Political economists focus on the presence of private property, as well as power,wage, and class
relations.
Mixed economies and state capitalism are systems that incorporate different amounts of planned and
market-driven elements in the stateâ??s economic system.
TERMS
Laissez-faire: A policy of governmental non-interference in economic affairs.
Mixed economy: Mixed economy is an economic system in which both the state and private sector
direct the economy, reflecting characteristics of both market economies and planned economies. Most
mixed economies can be described as market economies with strong regulatory oversight, in addition to
having a variety of government-sponsored aspects.
State capitalism: The term state capitalism has various meanings, but is usually described as commercial
(profit-seeking) economic activity undertaken by the state with management of the productive forces in
a capitalist manner, even if the state is nominally socialist. State capitalism is usually characterized by
the dominance or existence of a significant number of state-owned business enterprises.
EXAMPLES
China is seen as the primary example of a successful state capitalist system. Political scientist Ian
Bremmer describes China as the primary driver for the rise of state capitalism as a challenge to the free
market economies of the developed world, particularly in the aftermath of the 2008 financial crisis.
Bremmer states, â??In this system, governments use various kinds of state-owned companies to manage
the exploitation of resources that they consider the stateâ??s crown jewels and to create and maintain
large numbers of jobs. They use select privately owned companies to dominate certain economic
sectors. They use so-called sovereign wealth funds to invest their extra cash in ways that maximize the
stateâ??s profits. In all three cases, the state is using markets to create wealth that can be directed as
political officials see fit. And in all three cases, the ultimate motive is not economic (maximizing growth)
but political (maximizing the stateâ??s power and the leadershipâ??s chances of survival). This is a form of
capitalism but one in which the state acts as the dominant economic player and uses markets primarily
for political gain. â??
FREE-ENTERPRISE DEFINED
The definition of free enterprise is a business governed by the laws of supply and demand, where the
government has no involvement in its decisions or actions. This economic system is based solely on
private ownership as the means of production.
It is a private system in which all means of production are privately owned and operated.
LINK TO CAPITALISM
This is an example of capitalism in which government policies generally target the regulation and not the
money.
Capitalism is generally considered to be an economic system that is based on private ownership of the
means of production and the creation of goods or services for profit by privately-owned business
enterprises.
Some have also used the term as a synonym for competitive markets, wage labor, capital accumulation,
voluntary exchange, and personal finance. The designation is applied to a variety of historical cases,
varying in time, geography, politics, and culture.
VARIATIONS OF CAPITALISM
There are multiple variants of capitalism, including laissez faire, mixed economy, and state capitalism.
There is, however, a general agreement that capitalism became dominant in the Western world
following the demise of feudalism.
Economists, political economists, and historians have taken different perspectives on the analysis of
capitalism. Economists usually emphasize the degree to which government does not have control over
markets (laissez faire), as well as the importance of property rights.
Most political economists emphasize private property as well, in addition to power relations, wage
labor, class, and the uniqueness of capitalism as a historical formation.
The extent to which different markets are free, as well as the rules defining private property, is a matter
of politics and policy. Many states have what are termed mixed economies, referring to the varying
degree of planned and market-driven elements in a stateâ??s economic system.
A number of political ideologies have emerged in support of various types of capitalism, the most
prominent being economic liberalism.
Capitalism gradually spread throughout the Western world in the 19th and 20th centuries.
READING: CAPITALISM IN THE US
DEMOCRATIC CAPITALISM IS A POLITICAL, ECONOMIC, AND SOCIAL SYSTEM WITH A MARKET-BASED
ECONOMY THAT IS LARGELY BASED ON A DEMOCRATIC POLITICAL SYSTEM.
KEY POINTS
The United States is often seen as having a democratic capitalist political-economic system.
The three pillars of democratic capitalism include economic incentives throughfree markets, fiscal
responsibility, and a liberal moral-cultural system that encourages pluralism.
Some commentators argue that, although economic growth under capitalism has led to democratization
in the past, it may not do so in the future; for example, authoritarian regimes have been able to manage
economic growth without making concessions to greater political freedom.
Proponents of capitalism have argued that indices of economic freedom correlate strongly with higher
income, life expectancy, and standards of living.
Democratic Peace Theory states that capitalist democracies rarely make war with each other, and have
little internal conflict. However, critics argue that this may have nothing to do with the capitalist nature
of the states, and more to do with the democratic nature instead.
TERMS
Capitalism: A socio-economic system based on the abstraction of resources into the form of privatelyowned money, wealth, and goods, with economic decisions made largely through the operation of a
market unregulated by the state
Tripartite: In three parts.
Polity: An organizational structure of the government of a state, church, etc.
Pluralism: A social system based on mutual respect for each otherâ??s cultures among various groups that
make up a society, wherein subordinate groups do not have to forsake their lifestyle and traditions, but,
rather, can express their culture and participate in the larger society free of prejudice.
EXAMPLES
Singaporeâ??s de facto one-party system has been described as an example of an authoritarian capitalist
system that other authoritarian governments may follow. However, polls have recently suggested that
the ruling PAP party is suffering declines in popularity, suggesting that increasing material gains may not
make up for a lack of political freedoms. The Singaporean government has introduced limited political
concessions, suggesting that authoritarian capitalist systems may transition to democracy in time.
DEMOCRATIC CAPITALISM AND THE US
The United States is often seen as having a democratic capitalist political-economic system. Democratic
capitalism, also known as capitalist democracy, is a political, economic, and social system and ideology
based on a tripartite arrangement of a market-based economy that is based predominantly on a
democratic polity. The three pillars include economic incentives through free markets, fiscal
responsibility, and a liberal moral-cultural system, which encourages pluralism.
In the United States, both the Democratic and Republican Parties subscribe to this (little â??dâ? and â??râ?)
democratic-republican philosophy. Most liberals and conservatives generally support some form of
democratic capitalism in their economic practices. The ideology of â??democratic capitalismâ? has been in
existence since medieval times. It is based firmly on the principles of liberalism, which include liberty
and equality. Some of its earliest promoters include many of the American founding fathers and
subsequent Jeffersonians.
This economic system supports a capitalist, free-market economy subject to control by a democratic
political system that is supported by the majority. It stands in contrast to authoritarian capitalism by
limiting the influence of special interest groups, including corporate lobbyists, on politics. Some argue
that the United States has become more authoritarian in recent decades.
THE RELATIONSHIP BETWEEN DEMOCRACY AND CAPITALISM
The relationship between democracy and capitalism is a contentious area in theory and among popular
political movements. The extension of universal adult male suffrage in 19th century Britain occurred
alongside the development of industrial capitalism. Since democracy became widespread at the same
time as capitalism, many theorists have been led to posit a causal relationship between them. In the
20th century, however, according to some authors, capitalism also accompanied a variety of political
formations quite distinct from liberal democracies, including fascist regimes, absolute monarchies, and
single-party states.
While some argue that capitalist development leads to the emergence of democracy, others dispute this
claim. Some commentators argue that, although economic growth under capitalism has led to
democratization in the past, it may not do so in the future. For example, authoritarian regimes have
been able to manage economic growth without making concessions to greater political freedom. States
that have highly capitalistic economic systems have thrived under authoritarian or oppressive political
systems. Examples include:
Singapore, which maintains a highly open market economy and attracts lots of foreign investment, does
not protect civil liberties such as freedom of speech and expression.
The private (capitalist) sector in the Peopleâ??s Republic of China has grown exponentially and thrived
since its inception, despite having an authoritarian government.
Augusto Pinochetâ??s rule in Chile led to economic growth by using authoritarian means to create a safe
environment for investment and capitalism.
Peoplesâ?? Republic of Chinaâ??s Nominal Gross Domestic Product (GDP) Between 1952 to 2005
Scatter graph of the Peopleâ??s Republic of Chinaâ??s GDP between years 1952 to 2005, based on publicly
available nominal GDP data published by the Peopleâ??s Republic of China and compiled by Hitotsubashi
University (Japan) and confirmed by economic indicator statistics from the World Bank.
READING: SOCIALISM AND PLANNED ECONOMIES
SOCIALISM IS CHARACTERIZED BY SOCIAL OWNERSHIP OF THE MEANS OF PRODUCTION.
KEY POINTS
A planned economy is a type of economy consisting of a mixture of public ownership of the means of
production and the coordination of production anddistribution through state planning.
Socialism has many variations, depending on the level of planning versus market power, the
organization of management, and the role of the state.
In a socialist system, production is geared towards satisfying economicdemands and human needs.
Distribution of this output is based on individual contribution.
Socialists distinguish between a planned economy, such as that of the fomer Soviet Union, and socialist
economies. They often compare the former to a top-down bureaucratic capitalist firm.
TERMS
Socialism: Any of various economic and political philosophies that support social equality, collective
decision-making, distribution of income based on contribution and public ownership of productive
capital and natural resources, as advocated by socialists.
Planned economy: An economic system in which government directly manages supply and demand for
goods and services by controlling production, prices, and distribution in accordance with a long-term
design and schedule of objectives.
EXAMPLES
There are few clear examples of purely socialist economies; nonetheless, many of the industrialized
countries of Western Europe experimented with one form of social democratic mixed economies or
another during the twentieth century, including Britain, France, Sweden, and Norway. They can be
regarded as social democratic experiments, because they universally retained a wage-based economy
and private ownership and control of the decisive means of production. Variations range from social
democratic welfare states, such as in Sweden, to mixed economies where a major percentage of GDP
comes from the state sector, such as in Norway, which ranks among the highest countries in quality of
life and equality of opportunity for its citizens.
PLANNED ECONOMY
A planned economy is a type of economy consisting of a mixture of public ownership of the means of
production and the coordination of production and distribution through state planning.
PLANNED SOCIALIST ECONOMY
Economic planning in socialism takes a different form than economic planning in capitalist mixed
economies. In socialism, planning refers to production of use-value directly (planning of production),
while in capitalist mixed economies,planning refers to the design of capital accumulation in order to
stabilize or increase the efficiency of its process. While many socialists advocate for economic planning
as an eventual substitute for the market for factors of production, others define economic planning as
being based on worker-self management, with production being carried out to directly satisfy human
needs. Enrico Barone provided a comprehensive theoretical framework for a planned socialist economy.
In his model, assuming perfect computation techniques, simultaneous equations relating inputs and
outputs to ratios of equivalence would provide appropriate valuations in order to balance supply and
demand.
Hierarchy of Needs
Worker self-management and production to satisfy human needs are key.
The command economy is distinguished from economic planning. Most notably, a command economy is
associated with bureaucratic collectivism, state capitalism, or state socialism.
SOCIALISM
Socialism is an economic system characterized by social ownership, control of the means of production,
and cooperative management of the economy. A socialist economic system would consist of an
organization of production to directly satisfy economic demands and human needs, so that goods and
services would be produced directly for use instead of for private profit driven by the accumulation of
capital. Accounting would be based on physical quantities, a common physical magnitude, or a direct
measure of labor-time. Distribution of output would be based on the principle of individual contribution.
There are many variations of socialism and as such there is no single definition encapsulating all of
socialism. They differ in:
The type of social ownership they advocate;
The degree to which they rely on markets versus planning;
How management is to be organised within economic enterprises; and
The role of the state in constructing socialism.
READING: THE BENEFITS OF SOCIALISM
SOCIALISM HAS A NUMBER OF THEORETICAL BENEFITS, BASED ON THE IDEA OF SOCIAL EQUALITY AND
JUSTICE.
KEY POINTS
Advantages of socialism relating to social equality include a focus on reducing wealth disparities,
unemployment and inflation (through price controls).
Advantages of socialism related to economic planning include an ability to makegood use of land, labor
and resources, as well as avoiding excess or insufficient production.
Additional benefits of Socialism: Nationalization of key industries, redistribution of wealth, social
security schemes, minimum wages, employmentprotection and trade union recognition rights.
TERMS
Public Benefit: A payment made in accordance with an insurance policy or a public assistance scheme.
Redistribution: The act of changing the distribution of resources
EXAMPLES
Socialist systems have a number of policy tools to help them achieve these goals. Nationalization of key
industries such as mining, oil, and energy allows the state to invest directly, set prices and production
levels, publicly fund research, and avoid exploitation. Wealth redistribution can occur through targeted,
progressive taxation and welfare policies such as free/subsidized education and access to housing. Social
security schemes also provide security in old age, while minimum wages, employment protection, and
other labor rights ensure a fair wage and safety at work.
HOW ECONOMIES CAN BENEFIT FROM SOCIALISM
Socialist economics entails the following:
Socialism
A graphical illustration of socialism.
Nationalization of key industries, such as mining, oil, steel, energy and transportation. A common model
includes a sector being taken over by the state, followed by one or more publicly owned corporations
arranging its day-to-day running. Advantages of nationalization include: the ability of the state to direct
investment in key industries, distribute state profits from nationalized industries for the overall national
good, direct producers to social rather than market goals, and better control the industries both by and
for the workers. Additionally, nationalization enables the benefits and burdens of publicly funded
research and development to be extended to the wider populace.
Redistribution of wealth, through tax and spending policies that aim to reduce economic inequalities.
Social democracies typically employ various forms of progressive taxation regarding wage and business
income, wealth, inheritance, capital gains and property. On the spending side, a set of social policies
typically provides free access to public services such as education, health care and child care.
Additionally, subsidized access to housing, food, pharmaceutical goods, water supply, waste
management and electricity is common.
Social security schemes in which workers contribute to a mandatory public insurance program. The
insurance typically includes monetary provisions for retirement pensions and survivor benefits,
permanent and temporarydisabilities, unemployment and parental leave. Unlike private insurance,
governmental schemes are based on public statutes rather than contracts; therefore, contributions and
benefits may change in time, and are based on solidarity among participants. Its funding is done on an
ongoing basis, without direct relationship to future liabilities.
Minimum wages, employment protection and trade union recognition rights for the benefit of workers.
These policies aim to guarantee living wages and help produce full employment. While a number of
different models of trade union protection have evolved throughout the world over time, they all
guarantee the right of workers to form unions, negotiate benefits and participate in strikes. Germany,
for instance, appointed union representatives at high levels in all corporations, and as a result, endured
much less industrial strife than the UK, whose laws encouraged strikes rather than negotiation.
The benefits of socialism also include the following:
In theory, based on public benefits, socialism has the greatest goal of common wealth;
Since the government controls almost all of societyâ??s functions, it can make better use of resources,
labors and lands;
Socialism reduces disparity in wealth, not only in different areas, but also in all societal ranks and
classes. Those who suffer from illnesses or are too old to work are still provided for and valued in by the
government, assuming that the government is more compassionate that the individualâ??s family;
Excess or insufficient production can be avoided;
Prices can be controlled in a proper extent;
Socialism can tackle unemployment to a great extent.
READING: THE DISADVANTAGES OF SOCIALISM
DESPITE THE THEORETICAL BENEFITS OF SOCIALIST ECONOMIC SYSTEMS, THERE ARE ALSO
DISADVANTAGES THAT MAY ARISE IN APPLICATION.
KEY POINTS
Disadvantages of socialism include slow economic growth, less entrepreneurial op …
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