© mcgraw-hill companies, inc., 2000 national differences in political economy chapter 2
TRANSCRIPT
© McGraw-Hill Companies, Inc., 2000
National Differences in Political Economy Chapter 2
© McGraw-Hill Companies, Inc., 2000
1994: Sales = $253m Loss = $310m
1994: Sales = $253m Loss = $310m
1998(3Q): Sales = $934m Profits = $260.2m
1998(3Q): Sales = $934m Profits = $260.2m
The Impact of Privatization
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Democratic
Totalitarian
Political Systems“The System of Government in a Nation”
Individualism
Collectivism
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Collectivism and Individualism
Collectivism Socialism
• Communists
• Social Democrats
Individualism Guarantee individual freedom and expression People can pursue own economic self-interest
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Democracy and Totalitarianism
Democracy Government by people exercised directly or
through elected representatives.
Totalitarianism One person or party exercises control over all
spheres of human life.• Opposing political parties are prohibited.
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Democracy
Representative Democracy Freedoms:
• expression, opinion, organization
• media
• regular elections with universal suffrage
• limited terms for elected representatives
• fair and independent court system
• non political bureaucracy, police force and armed service
• relatively free access to state information
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Totalitarianism
Constitutional guarantees are denied. Four major forms:
Communist Theocratic Tribal Right Wing
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Economic Systems
Market Economy Command Economy Mixed Economy State Direct Economy
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Economic Systems
Market
State-Directed
Mixed Command
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Legal Systems
Rules or laws that regulate behavior. Property rights Private action Public action
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International Property Issues
Protection of Intellectual Property Lax enforcement
Product Safety and Product Liability Competitiveness Ethics
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PPP Index and GNP Data(Selected Countries)
Country GNP percapita,
1997 (US$)
GNP percapita
measured atPPP, 1997
(US$)
AnnualAverage
Growth inGDP, 1990-
97 (%)Mozambique 90 520 6.9
India 390 1650 5.9China 860 3570 11.9
Indonesia 1110 3450 7.5Romania 1420 4290 0
Russia 2740 4190 -9Mexico 3680 8120 1.8Brazil 4720 6240 3.1
S.Korea 10550 13500 7.2United
Kingdom20710 20520 1.9
Australia 20540 20170 3.7Canada 19290 21860 2.1
Singapore 32940 29000 8.5United States 28740 28740 2.5
Japan 37850 23400 1.4Switzerland 44320 26320 -0.1
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Table 2.1
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The Global Politics ofCivilizations
J apan Orthodox(Russia)
I slam
Af rican
West
Sinic(China)
Hindu(I ndia)
LatinAmerican
More Conflictual
Less Confl ictual
Figure 2.1
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Other Determinants of Development: Geography and Education
“Throughout history, coastal states, with their long engagements in international trade, have been more supportive of market institutions than landlocked states, which have tended to organize themselves as hierarchical (and often military) societies. Mountainous states, as a result of physical isolation, have often neglected market-based trade. Temperate climes have generally supported higher densities of population and thus a more extensive division of labor than tropical regions.”
-Jeffrey Sachs-
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Geography and Education
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Singapore Population: 2.8 million Literacy rate: 91.1% GDP ($B): 83 Per Capita GDP: $26,294 Strategic location: Malacca Straits World’s second busiest port: cargo tonnage Average GDP growth over 25 years: 8%
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Spread of Democracy
Totalitarian regimes failed to deliver economic progress.
New information technologies (internet) restricted a state’s ability to control information.
Emergence of prosperous middle class demanding democratic reforms.
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Universal Civilization
“we may be witnessing…the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.”
- Francis Fukuyama -
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Clash of Civilizations
There is no “universal” civilization based on widespread acceptance of Western liberal democratic ideals.
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1990 1991 1992 1993 1994
Real Percentage GDP Growth, 1990-94, for Five Post-Communist States
5
0
-5
-10
-15
-20
-25
Czech Republic
Hungary
Poland
Russia
Ukraine2-24
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© McGraw-Hill Companies, Inc., 2000 Map 2.6 2-25
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The Changing Political Economy of India
Population: 936 million GDP: $1.254 trillion GDP growth: 5-6% per year 10% of population produces 40% of
national income Agriculture is 70% of employment, but only
35% of GDP
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India’s GDP
0
2
4
6
8
50-60 60-70 70-80 80-90 90-92 92-95 96 97 98
% GDP
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The Falling Rupee
2
2.2
2.4
2.6
2.8
3
3.2
3.4
1995 1996 1997 1998
US Dollar Value of 100 Indian Rupees$
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Percentage of India’s Exports and Imports
(By Region)
0
10
20
30
40
Asia Europe US Africa
ExportsImports
Exports
Imports
$31.6B
$36.0B
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Foreign Investment in India
0
1
2
3
4
1992 1993 1994 1995 1996 1997 1998
$ BILLIONS
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The Nature of Economic Transformation
Deregulation Removal of legal restrictions to free markets.
Privatization Transfer of state ownership of property into
private hands.
Creation of legal systems to protect property rights.
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The Nature of Risk Political Risk
Likelihood that political forces will cause drastic changes that adversely affect profits and other goals.
Economic Risk Likelihood that economic mismanagement will cause
drastic changes that adversely affect profits and other goals.
Legal Risk Likelihood that a trading partner will opportunistically
break a contract or expropriate property rights.
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