What are the implications for management practice of national difference in political economy?

What are the implications for management practice of national difference in political economy?

Deciding whether to invest into a country is decided by the balance between benefits, costs and risks of that country; the country attractiveness. Generally, developed countries have lower benefits and risks, while developing countries have higher benefits and higher risks.

Benefits

Such as size of the market, the present and prospective future wealth of the consumers.

Costs

Such as politically powerful entities that require payments to allow international business, lack of infrastructure and supporting businesses, local regulations and strict product safety standards and environmental pollution, high liability insurances.

Risks

Political risks(social unrest and disorder), economic risks(inflation, debts, varying exchange rates) and legal risks(failing to provide adequate protection of property)

How are transition economies moving toward market-based economic systems?

How are transition economies moving toward market-based economic systems?

There are three steps which are transition economies moving toward market-based economic systems. These three steps are:

1. Deregulation: Removing legal restrictions that prevents individuals from conducting business.
2. Privatization: Ownership is being transferred from government to individuals.
3. Legal systems: To protect property rights and with strong enforcement mechanisms.

What are the macropolitical and macroeconomic changes occurring worldwide?

What are the macropolitical and macroeconomic changes occurring worldwide?

Right now there are multiple changes occurring in the world that are related to macropolitics and macroeconomics.

- Democracy is spreading
- Market based systems are becoming more popular
- Many countries are still difficult to conduct business in due to violent conflicts, unfavorable systems and terrorism.

What determines the level of economic development of a nation?

What determines the level of economic development of a nation?

The strong drivers of economic development are innovation and entrepreneurship, as these increase economic activity and the productivity of labor and capital. These drivers require;

- Market economy
- Strong property rights
- Stable political system, normally democracy or in transition towards democracy
- Favorable geographic location
- Educated population