2 National Differences in Political Economy

Vocabulary flashcards covering the key political, legal, and economic concepts presented in Week 2 of BBA2104/BBA2111.

Political Economy

The interdependent political, legal, and economic systems that shape the rules of the game for international business.

Political System

The rules that determine how a country is governed, including the distribution and exercise of power.

Collectivism

A political ideology that emphasizes group goals over individual goals.

Individualism

A political ideology that stresses individual freedom, self-expression, and free-market economies.

Socialism

Doctrine advocating public ownership of the means of production to achieve collective goals.

Communists

Socialists who seek to achieve socialism through violent revolution and totalitarian dictatorship.

Social Democrats

Socialists who aim to achieve socialism by democratic means.

Totalitarianism

A political system in which one person or party exercises absolute control and denies basic civil liberties.

Democracy

Government by the people, exercised directly or through elected representatives.

Representative Democracy

A democratic system where citizens elect representatives; safeguards include free media, fair courts, and regular elections.

Communist Totalitarianism

Form of totalitarianism claiming that socialism can be achieved only through a totalitarian dictatorship.

Theocratic Totalitarianism

Political power is monopolized by a party or individual governing according to religious principles.

Tribal Totalitarianism

Political power is held by a group representing a particular tribe or ethnic group.

Right-Wing Totalitarianism

Allows economic freedom but restricts political freedom to prevent the rise of communism.

Political Risk

The possibility that political changes will negatively affect firms.

Macro Political Risk

Political changes that impact all firms alike, e.g., revolutions or nationwide strikes.

Micro Political Risk

Political changes targeting specific industries, firms, or projects, such as selective expropriation.

Geopolitics

International political relations and their impact on global business.

Geopolitical Risk

Risks arising from wars, terrorism, or interstate tensions that disrupt international relations.

Legal System

A country’s rules that regulate behavior and outline enforcement and grievance procedures.

Common Law

Legal tradition based on case precedents, customs, and judicial decisions.

Civil Law

Legal tradition founded on comprehensive written codes; case law offers guidance only.

Theocratic Law

Legal system based on religious teachings, e.g., Islamic law.

Contract Law

Body of law that governs the enforcement of contracts.

Legal Risk

Likelihood that a trading partner will opportunistically break a contract or expropriate property rights.

Property Rights

Legal rights to use resources and derive income or benefits from them.

Private Action

Violation of property rights by individuals or groups through theft, piracy, or blackmail.

Public Action

Violation of property rights by public officials via extortion or expropriation.

Corruption

Abuse of public office for private gain, often through bribery.

Foreign Corrupt Practices Act (FCPA)

U.S. law prohibiting bribery of foreign officials and other unethical practices in international business.

Intellectual Property (IP)

Creations of the mind such as software, music, or chemical formulas.

Intellectual Property Right (IPR)

Legal rights associated with the ownership of intellectual property.

Patent

Exclusive right granted to an inventor to manufacture, use, or sell an invention for a set period.

Copyright

Exclusive legal right of authors and artists to publish and distribute their work.

Trademark

Registered designs or names that distinguish products of one firm from another.

Piracy

Unauthorized use or reproduction of intellectual property.

Economic System

The structure governing economic activity, ownership, and resource allocation in a country.

Command Economy

System where government owns resources and sets prices to pursue collective goals.

Market Economy

System where production is decentralized to private owners guided by supply and demand.

Mixed Economy

Combination of market and command elements; key sectors may be state-controlled.

Economic Risk

Likelihood that economic mismanagement will alter a country’s business environment and harm firm performance.