Global Environment of Business Exam 3

What is politics?

The process by which a social group allocates the exercise of power and authority for the group as a whole.

What are the three elements of politics?

Political community, power relations, and the terrain of politics.

What does “terrain of politics” mean?

It means politics occurs in all organizations, not just governments.

Why should we care about political systems?

Because economic development is directly related to how political power is allocated and exercised.

What do political institutions create?

Incentives for behavior.

What are some key questions about political institutions?

Are they accountable to citizens, do they protect rights, and do they empower people to take advantage of economic opportunities?

What is the political sphere?

The area where society’s agenda is set, including government institutions and political processes.

What is the private sphere?

The area where citizens pursue personal goals, often linked to civil society and pluralism.

What does pluralism mean?

The presence of many different groups and interests in society

What is a nation-state?

The set of authoritative institutions responsible for lawmaking and governance over a defined territory.

What are the three principles of statehood?

Territory, sovereignty, and authorized use of coercive power.

What does “territory” refer to?

The geographically defined area or borders of a state.

Why are many political borders called “artificial states”?

Because they often result from colonization or war rather than cultural groupings.

What is sovereignty?

The supreme legal authority of the state.

What are the two components of sovereignty?

Internal sovereignty and external sovereignty.

What is internal sovereignty?

A state’s ultimate authority to rule within its borders.

What are the two ways internal sovereignty is administered?

Through a unitary system or a federal system.

What is a unitary system? Give examples.

All authority rests with one central government. Examples: China, UK, Japan.

What is a federal system? Give examples.

Authority is shared between central and regional governments. Examples: U.S., Australia, Mexico.

What are two advantages of federal systems?

Flexibility for pluralist societies and accountability between levels of government.

What is external sovereignty?

When states recognize that other states are supreme within their borders.

What is meant by “sovereign equality of states”?

All states are legally equal, although not all are treated equally in practice.

Give an example of unequal sovereignty.

Taiwan is only recognized by 13 UN members.

What are the consequences of a lack of sovereign equality?

Limited access to treaties, lack of representation, and disruptions to business and travel.

What does “authorized use of coercive power” mean?

Only governments have the legal right to use force to uphold laws.

Who said “political power is always coercive power”?

John Rawls

What is a political system?

The system of government in a nation.

What two dimensions can political systems be assessed on?

Collectivism vs individualism and democracy vs authoritarianism.

What is collectivism?

A philosophy emphasizing collective goals over individual goals.

What is individualism?

A philosophy emphasizing individual freedom in political and economic pursuits.

What are the two central tenets of individualism?

Guaranteeing individual freedom and self-expression, and promoting welfare through personal economic freedom.

What is democracy?

A political system where government is by the people, directly or through elected representatives

What does “sovereignty of the people” mean?

Power and authority come from the citizens.

How do democracies ensure accountability?

Through constitutionalism and the rule of law.

What is constitutionalism?

The idea that government power should be legally limited

What is the rule of law?

The principle that law is supreme over both government and citizens.

What are some safeguards of representative democracy?

Freedom of expression, transparency, free media, regular elections, political independence, and fair courts.

What is authoritarianism?

A political system where one person or party has absolute control and limits freedoms.

What are characteristics of authoritarian regimes?

Repression, lack of free elections, censorship, loss of civil liberties, and harsh punishments.

What is communism (in this context)?

A collectivist system where socialism is achieved through totalitarian dictatorship.

Examples: North Korea, Cuba.

What is a theocracy?

A system governed by religious principles.

Examples: Iran, Afghanistan, Vatican City.

What is tribalism?

Political power held by one tribe or ethnic group.

Examples: Zimbabwe, Uganda, Kenya.

What is right-wing authoritarianism?

A system with limited economic freedom and restricted political freedom.

Examples: Germany and Italy in the 1930s–1940s.

What is corruption?

The abuse of entrusted power for private gain.

What are the three types of public corruption?

Petty, grand, and political.

What is petty corruption?

Everyday abuse of power by low-level officials when citizens access services.

Give an example of petty corruption.

Paying a bribe to avoid a police charge or to get utilities connected

What is grand corruption?

High-level corruption that distorts government policies or state functioning.

What is an example of grand corruption?

Brazil’s “Operation Car Wash” involving Petrobras and politicians.

What is political corruption?

Manipulating policies or rules to sustain power, status, or wealth.

What are examples of political corruption?

Vote rigging and imprisoning opposition leaders.

What factors contribute to public corruption?

Monopoly and discretionary power of the state, weak political and economic institutions.

What political factors reduce corruption?

Transparency, free elections, multiple parties, and independent courts.

Which type of economy is more prone to corruption?

Centrally planned economies.

What economic factors increase corruption?

State control over resource allocation and limited economic freedom.

What is the “grease the wheel” theory?

The idea that corruption may speed up processes in inefficient bureaucracies.

What is the “sand in the wheel” theory?

The idea that corruption harms the economy by wasting resources, distorting markets, and destroying trust.

What is law?

Rules that are binding and create obligations for society.

Why is law binding?

Because of the state’s sovereignty.

What does law do for businesses?

Establishes the “rules of the game” for operations and behavior.

What are the three spheres of law?

National legal systems, regional law-making authorities, and international law.

What areas do national legal systems typically cover?

Contract, employment, criminal, environmental, liability, and competition law.

What is the main regional law-making authority?

The European Union (EU).

What are the two parts of EU law?

Primary law (treaties) and secondary law (regulations and directives).

What is international law?

Rules governing relations between sovereign states.

What organization is the main supranational law-maker?

The United Nations (UN).

Why is international law unique?

It’s mostly non-binding and lacks comprehensive enforcement or courts.