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WorldEconomy,Introductionaboutthecourse,Content1.NationalDifferencesinPoliticalEconomy2.Globalization3.Historicalbackgroundofglobalization4.Internationaltradetheories5.Trade&investmentpolicies6.Foreigndirectinvestment7.Economicintegration8.Internationalmonetarysystem9.U.S.inglobaleconomy10.Globalperspectivesinglobalization,WorldEconomy,MethodSeminar,countryfocus,casesGroupdiscussion,teamwork,presentation,classroomquiz,WorldEconomy,RequirementClass-attendingQuestion-answeringPaper-handingActiveindiscussion&presentation,WorldEconomy,ExaminationAllinEnglish30%classroomperformance&quiz70%finalexam,Chapter2,NationalDifferencesinPoliticalEconomy,2-7,WhatIsAPoliticalEconomy?,Thepoliticaleconomyofanationreferstohowthepolitical,economic,andlegalsystemsofacountryareinterdependenttheyinteractandinfluenceeachothertheyaffectthelevelofeconomicwell-beinginthenation,2-8,WhatIsAPoliticalSystem?,PoliticalsystemreferstothesystemofgovernmentinanationAssessedaccordingtothedegreetowhichthecountryemphasizescollectivismasopposedtoindividualismthedegreetowhichthecountryisdemocraticortotalitarian,2-9,WhatIsCollectivism?,CollectivismstressestheprimacyofcollectivegoalsoverindividualgoalscanbetracedtotheGreekphilosopher,Plato(427-347BC)Today,collectivismisequatedwithsocialists(KarlMarx1818-1883)advocatestateownershipofthebasicmeansofproduction,distribution,andexchangemanagetobenefitsocietyasawhole,ratherthanindividualcapitalists,2-10,HowDoesModern-DaySocialismLook?,Intheearly20thcentury,socialismsplitintoCommunismsocialismcanonlybeachievedthroughviolentrevolutionandtotalitariandictatorshipinretreatworldwidebymid-1990sSocialdemocratssocialismisachievedthroughdemocraticmeansretreatingasmanycountriesmovetowardfreemarketeconomiesstate-ownedenterpriseshavebeenprivatized,2-11,WhatIsIndividualism?,IndividualismreferstophilosophythatanindividualshouldhavefreedominhisowneconomicandpoliticalpursuitscanbetracedtoGreekphilosopher,Aristotle(384-322BC),whoarguedthatindividualdiversityandprivateownershiparedesirableindividualeconomicandpoliticalfreedomsarethegroundrulesonwhichasocietyshouldbebasedimpliesdemocraticpoliticalsystemsandfreemarketeconomies,2-12,WhatIsDemocracy?,Democracyreferstoapoliticalsysteminwhichgovernmentisbythepeople,exercisedeitherdirectlyorthroughelectedrepresentativesusuallyassociatedwithindividualismpuredemocracyisbasedonthebeliefthatcitizensshouldbedirectlyinvolvedindecisionmakingmostmoderndemocraticstatespracticerepresentativedemocracywherecitizensperiodicallyelectindividualstorepresentthem,2-13,WhatIsTotalitarianism?,TotalitarianismisaformofgovernmentinwhichonepersonorpoliticalpartyexercisesabsolutecontroloverallspheresofhumanlifeandprohibitsopposingpoliticalpartiesCommunisttotalitarianismfoundinstateswherethecommunistpartymonopolizespowerTheocratictotalitarianism-foundinstateswherepoliticalpowerismonopolizedbyaparty,group,orindividualthatgovernsaccordingtoreligiousprinciplesTribaltotalitarianism-foundinstateswhereapoliticalpartythatrepresentstheinterestsofaparticulartribemonopolizespowerRight-wingtotalitarianism-permitssomeindividualeconomicfreedom,butrestrictsindividualpoliticalfreedom,2-14,WhatIsAnEconomicSystem?,TherearethreetypesofeconomicsystemsMarketeconomies-allproductiveactivitiesareprivatelyownedandproductionisdeterminedbytheinteractionofsupplyanddemandgovernmentencouragesfreeandfaircompetitionbetweenprivateproducersCommandeconomies-governmentplansthegoodsandservicesthatacountryproduces,thequantitythatisproduced,andthepricesaswhichtheyaresoldallbusinessesarestate-owned,andgovernmentsallocateresourcesfor“thegoodofsociety”becausethereislittleincentivetocontrolcostsandbeefficient,commandeconomiestendtostagnateMixedeconomies-certainsectorsoftheeconomyarelefttoprivateownershipandfreemarketmechanismswhileothersectorshavesignificantstateownershipandgovernmentplanninggovernmentstendtoownfirmsthatareconsideredimportanttonationalsecurity,2-15,WhatIsALegalSystem?,ThelegalsystemofacountryreferstotherulesthatregulatebehavioralongwiththeprocessesbywhichthelawsareenforcedandthroughwhichredressforgrievancesisobtainedTherearethreetypesoflegalsystemsCommonlaw-basedontradition,precedent,andcustomCiviclaw-basedondetailedsetoflawsorganizedintocodesTheocraticlaw-lawisbasedonreligiousteachings,2-16,HowAreContractsEnforcedInDifferentLegalSystems?,AcontractisadocumentthatspecifiestheconditionsunderwhichanexchangeistooccuranddetailstherightsandobligationsofthepartiesinvolvedContractlawisthebodyoflawthatgovernscontractenforcementUnderacommonlawsystem,contractstendtobeverydetailedwithallcontingenciesspelledoutUnderacivillawsystem,contractstendtobemuchshorterandlessspecificbecausemanyissuesarealreadycoveredinthecivilcodeManycountrieshaveratifiedtheUnitedNationsConventiononContractsfortheInternationalSaleofGoods(CIGS)whichestablishesauniformsetofrulesgoverningcertainaspectsofthemakingandperformanceofeverydaycommercialcontractsbetweenbuyersandsellerswhohavetheirplacesofbusinessindifferentnations,2-17,HowArePropertyRightsAndCorruptionRelated?,PropertyrightsrefertothelegalrightsovertheusetowhicharesourceisputandovertheusemadeofanyincomethatmaybederivedfromthatresourceCanbeviolatedthroughPrivateactiontheft,piracy,blackmailPublicaction-legally-ex.excessivetaxationorillegally-ex.bribesorblackmailinghighlevelsofcorruptionreduceforeigndirectinvestment,thelevelofinternationaltrade,andtheeconomicgrowthrateinacountryTheForeignCorruptPracticesActmakesitillegalforU.S.companiestobribeforeigngovernmentofficialstoobtainormaintainbusinessoverwhichthatforeignofficialhasauthority,2-18,WhichCountriesAreMostCorrupt?,RankingsofCorruptionbyCountry2008,2-19,HowCanIntellectualPropertyBeProtected?,Intellectualproperty-propertythatistheproductofintellectualactivityCanbeprotectedusingPatentsexclusiverightsforadefinedperiodtothemanufacture,use,orsaleofthatinventionCopyrightstheexclusivelegalrightsofauthors,composers,playwrights,artists,andpublisherstopublishanddispersetheirworkastheyseefitTrademarksdesignandnamesbywhichmerchantsormanufacturersdesignateanddifferentiatetheirproducts,2-20,HowCanIntellectualPropertyBeProtected?,ProtectionofintellectualpropertyrightsdiffersfromcountrytocountryWorldIntellectualPropertyOrganizationParisConventionfortheProtectionofIndustrialPropertyToavoidpiracy,firmscanstayawayfromcountrieswhereintellectualpropertylawsarelaxfilelawsuitslobbygovernmentsforinternationalpropertyrightsagreementsandenforcement,2-21,WhatIsProductSafetyAndLiability?,ProductsafetylawssetcertainstandardstowhichaproductmustadhereProductliabilityinvolvesholdingafirmanditsofficersresponsiblewhenaproductcausesinjury,death,ordamageWhenproductsafetylawsarestricterinafirmshomecountrythaninaforeigncountry,orwhenliabilitylawsaremorelax,thefirmhastodecidewhethertoadheretohomecountryorhostcountrystandards,2-22,WhatDeterminesACountrysLevelOfEconomicDevelopment?,TwowaystomeasurelevelsofeconomicdevelopmentareGrossnationalincome(GNI)perpersonPurchasingpowerparity(PPP)involvesadjustingGNIbypurchasingpowerNobel-prizewinnerAmartyaSenargueseconomicdevelopmentshouldbeseenasaprocessofexpandingtherealfreedomsthatpeopleexperiencetheremovalofmajorimpedimentstofreedomlikepoverty,tyranny,andneglectofpublicfacilitiesthepresenceofbasichealthcareandbasiceducation,2-23,WhatDeterminesACountrysLevelOfEconomicDevelopment?,TheUnitedNationsusedSensideastodeveloptheHumanDevelopmentIndex(HDI)whichisbasedonlifeexpectancyatbirtheducationalattainmentwhetheraverageincomesaresufficienttomeetthebasicneedsoflifeinacountry,2-24,HowDoCountriesCompareonEconomicDevelopment?,EconomicDataforSelectCountries,2-25,HowDoesPoliticalEconomyInfluenceEconomicProgress?,Innovationandentrepreneurshiparetheenginesoflong-runeconomicgrowthInnovationandentrepreneurshiprequireamarketeconomyandstrongpropertyrightsDemocraticregimesareprobablymoreconducivetolong-termeconomicgrowththandictatorships,eventhebenevolentkindSubsequenteconomicgrowthleadstotheestablishmentofdemocraticregimes,2-26,HowDoGeographyAndEducationInfluenceEconomicDevelopment?,Countrieswithfavorablegeographyaremorelikelytoengageintrade,andso,bemoreopentomarket-basedeconomicsystems,andtheeconomicgrowththeypromoteCountriesthatinvestineducationhavehighergrowthratesbecausetheworkforceismoreproductive,2-27,HowIsThePoliticalEconomyChanging?,Sincethelate1980s,twotrendshaveemergedDemocraticrevolution(late1980sandearly1990s)manytotalitarianregimesfailedtodelivereconomicprogresstothevastbulkoftheirpopulationsnewinformationandcommunicationtechnologieshavebrokendowntheabilityofthestatetocontrolaccesstouncensoredinformationeconomicadvancesofthelast25yearshaveledtoincreasinglyprosperousmiddleandworkingclasseswhohavepushedfordemocraticreformsAmoveawayfromcentrallyplannedandmixedeconomiesmorecountrieshaveshiftedtowardthemarket-basedmodel,2-28,HowFreeAreCountriesPolitically?,PoliticalFreedomin2008,2-29,HowFreeAreCountriesEconomically?,DistributionofEconomicFreedomin2008,2-30,WhatIsTheNatureOfEconomicTransformation?,Theshifttowardamarket-basedsysteminvolvesderegulationremovinglegalrestrictionstothefreeplayofmarkets,theestablishmentofprivateenterprises,andthemannerinwhichprivateenterprisesoperateprivatization-transferstheownershipofstatepropertyintothehandsofprivateinvestorsthecreationofalegalsystemtosafeguardpropertyrights,2-31,WhatDoesTheChangingEconomyMeanForManagers?,Marketsthatwereformerlyoff-limitstoWesternbusinessarenowopenByidentifyingandinvestingearlyinapotentialfutureeconomicstars,firmsmaybeabletogainfirstmoveradvantages(advantagesthataccruetoearlyentrantsintoamarket)andestablishloyaltyandexperienceinacountryex.China-1.2billionpeopleandIndia1.1billionpeopleHowever,thepotentialrisksarelargeItcanbemorecostlytodobusinessincountries
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