economics, political, and legal systems
DESCRIPTION
ECONOMICS, POLITICAL, AND LEGAL SYSTEMS. Secondary international market information /data resources Brief review of International economics Trade policy The political environment Legal systems. Heavily internationally focused Economist Journal of Commerce Forbes - PowerPoint PPT PresentationTRANSCRIPT
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 1
ECONOMICS, POLITICAL, AND LEGAL SYSTEMS
• Secondary international market information /data resources
• Brief review of– International economics– Trade policy
• The political environment
• Legal systems
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 2
Useful Periodicals
• Heavily internationally focused– Economist– Journal of
Commerce– Forbes– Business America
(U.S. Dept. of Commerce)
– World Press Review
• Some international coverage– Wall Street
Journal, New York Times, Washington Post
– Business Week, Fortune
– Time, Newsweek
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 3
Other
• Academic country specialists (e.g., anthropologists, economists)
• Consultants• Expatriates• Own experience
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 4
Data Availability and Reliability
• Availability/ ability to collect data
• Motivations for releasing data– Wishful thinking vs. reality– The Web--accessible to any
fool or group• Comparability of
data/Arbitrary differences in measurements
• Recency--is the data up-to-date?
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 5
Cost of Data
• Much “raw” data is free from– U.S. Gvt.– United Nations– Research
institutions• Commercial
directories• Consulting
services
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 6
Library Databases
• Book– Library catalogs (e.g., SDSU
PAC)– Books in Print– Amazon.com
• Indexing• Collaborative filtering
suggestions• Periodical
– Business & Industry– Lexis-Nexis– ABI/Inform– Factiva (formerly Dow Jones)
• Foreign language– HAPI Online (Hispanic
American Periodicals Index) – Lexis-Nexis
• Government reports– Stat-USA
• Other country info– Countrywatch.com– Specialty
• Latin America Database• HAPI Online (Hispanic
American Periodicals Index)
• Academic research (usually theoretical, hard to read)– Behavioral: PsychInfo– Economics: Econlit
See handouts for details
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 7
University of Texas Library Resource Lists
• International business source list: http://www.lib.utexas.edu/subject/business/internat.html
• Marketing source list: http://www.lib.utexas.edu/subject/business/marketing.html
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 8
VERY BRIEF REVIEW OF ECONOMICS
• Exchange rates– Floating (supply and
demand)– fixed
• Trade balances and their impact on exchange rates
• Measuring country wealth– gross domestic product– “purchase parity” vs.
nominal
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 9
U.S./Euro Exhange RateEuros per Dollar
00.20.40.60.8
11.21.4
1/1/
1999
7/1/
1999
1/1/
2000
7/1/
2000
1/1/
2001
7/1/
2001
1/1/
2002
7/1/
2002
1/1/
2003
7/1/
2003
1/1/
2004
7/1/
2004
1/1/
2005
Rate
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 10
Demand for Currency Depends On
• Trade deficit (demand for foreign currency to fund this) or trade surplus (demand for country’s currency)
• Interest rates: Higher interest rates (real) attract foreign investors (especially for “stable” U.S. bonds and equities)
• Inflation: Reduces the attractiveness of holding the currency
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 11
Nominal vs. Purchase Parity Adjusted GNPs—Examples (2004)
Country Nominal GNP PPA Luxemburg $56,230 $61,220 Norway 52,030 38,550 United States 41,400 41,400 Japan 37,180 30,040
Argentina 3,720 12,460 Czech Republic 9,150 18,400 Mexico 6,770 9,590 China 1,290 5,530
Source: World Bank http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 12
Nominal vs. Purchasing Power Parity GNPs
05,000
10,00015,000
20,00025,00030,00035,00040,000
0 10,000 20,000 30,000 40,000
PPA
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 13
Nominal GNP vs. Ratio
0.001.002.003.004.005.006.007.008.00
0 10,000 20,000 30,000 40,000
Ratio
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 14
Cautions on Interpreting Per Capita Figures
• Averages are not very meaningful!– Regional variations– Socio-economic differences
• Comparison to U.S. dollar and U.S. costs is arbitrary
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 15
Obstacles to Trade: Protectionism
• Differing interests of consumers and manufacturers
• Benefits of trade tend to be more diffused than benefits to specific groups of protectionism
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 16
Approaches to Protectionism
• Tariffs• Quotas• “Voluntary” export
restrictions• Subsidies to
domestic producers/exporters
• Non-tariff barriers– legal obstacles– differential
treatment
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 17
U.S. Protectionism--justified or not...
• Defense industry• Agricultural products--
e.g., beef, sugar• Textiles• Automobiles
(“voluntary” import restrictions)
• Steel
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 18
Justifications for Protectionism
• Protect infant industry• Resist “unfair” or inappropriate
competition• Protect home market (ensure that product
can be produced domestically)--defense• Intervene into temporary imbalance• Maintain domestic living standards• Preserve jobs• Bargaining power/retaliation (Super-301
provision in U.S.)
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 19
Effects of Protectionism
• Reduced competition ---> inflation• More tariffs • Weaken balance of payments
(have to pay more in own currency)
• Reduce choice to consumers • May induce global trade wars
(vicious cycle)
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 20
THE POLITICAL AND LEGAL ENVIRONMENTS
• Political history and stability
• Political relations between countries --impact on business
• Legal differences between countries
• Extra-territorial application of laws
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 21
The Legal Environment
• Which laws apply when doing business between countries?– contractual
specifications– treaties– extra-territorial
applications of laws
– “compulsion” as a defense
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 22
Some Political Risks
• Confiscation, expropriation, and domestication
• Economic risks– Exchange controls– Local content
requirements– Import restrictions– Tax controls– Price controls– Labor problems
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 23
Development of Legal Systems
• Laws on the books vs. laws enforced (transparency)– Japan: “Administrative guidance”
• The ability to sue--a blessing or a curse?– Means of litigation– Implications for contract initiation
and enforcement• Evolving nature of legal systems
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 24
Approaches to Law
• Common law (U.S., Britain, and many English speaking countries)
• Code law (much of Europe and Louisiana)
• Islamic law• Socialist based law• Asian laws
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 25
Common Law
• Gradually evolved in British courts, settling issues as they arose
• Emphasis on precedent• Recognized by U.S. Constitution• Standards
– criminal: “Innocent until proven guilty”
– civil: “Preponderance of evidence”
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 26
Code (Napoleonic) Law
• Law governed by explicit statutory codes--”match” codes to issues as well as possible
• Somewhat different standards in contracts --what constitutes an “act of God” canceling contractual obligations?
• Criminal law: “Guilty until proven innocent” but difficult to bring to trial
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 27
Islamic Law
• Note that different varieties exist• Traditions of Islamic countries are
not all tied to Islamic religion per se
• Purpose of promoting justice– assets are thought to be held in “trust”– interest is frowned upon
• Much wider scope than Western law: Shar’ia: the way
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 28
Socialist Law
• Basis for law in China, former Soviet Republics, and countries influenced by Communist allies
• Based on the view that the government owns productive resources --->– contract and intellectual property laws
are typically not well developed• Legal scholars from the West are
helping to reform
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 29
Asian Law
• Based on compromise and accommodation
• Less emphasis on abstract principles
• Less emphasis on consistent application across circumstances
• Emphasis on informal resolution
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MKTG 376 ECONOMICS, POLITICAL, AND LEGAL SYSTEMS Lars Perner, Instructor 30
U.S. Laws of Interest to firms with U.S. Involvement
• Anti-trust• Foreign Corrupt
Influences• Anti-boycott laws• Trading With the Enemy