BA 390 Chapter 3 – Flashcards
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In the context of cost, which of the following can be considered as the most attractive market or investment site?
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A country that has a well-developed body of business contract law
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Do all totalitarian regimes oppose market economy and strong property rights protection? Elaborate.
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Some totalitarian regimes have fostered a market economy and strong property right protection. such as China, South Korea, and Taiwan have had major economic growth. But this only happens when the totalitarian regime is committed to a market system and strong protection of property rights. This type of commitment is rare in a totalitarian regime, because dictators are rarely benevolent.
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Entrepreneurial individuals have fewer economic incentives to develop valuable new innovations in market economies than in planned economies.
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FALSE
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In the context of political economy, the past three decades have seen a general move toward:
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adoption of legal systems that better enforce property rights.
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Five of the fastest growing economies of the past 30 years—China, South Korea, Taiwan, Singapore, and Hong Kong—had one thing in common at the start of their economic growth: democratic governments.
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FALSE
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The cost of doing business is most likely to be the lowest in:
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open democratic societies.
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One common measure of economic development is a country's:
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gross national income.
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Economists who argue that innovation and entrepreneurial activity are the engines of long-run economic growth, define innovation broadly to include not just new products but also new processes, new organizations, new management practices, and new strategies.
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TRUE
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Discuss Jeffrey Sachs's conception of geography, education, and economic development.
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Landlocked states have not been as supporting of market institutions and coastal states which have their long engagements in international trade. Landlocked states are normally hierarchical and usually militarized. Market-based trade has been neglected often by mountainous states. Temperate climes usually are higher supporters of higher densities of populations, which makes them more extensive division of labor than tropical regions.
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Generally, the costs and risks associated with doing business in a foreign country are typically lower in:
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economically advanced countries.
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Why are market economies more conducive to innovation and entrepreneurship than planned or mixed economies?
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In a market economy anyone who has an innovative idea is able to try to make money out of it by starting a business. In planned economy, the state owns all means of production, making individuals have few economic incentives to develop valuable new innovations, because the state has all the revenue. Mixed economies have the same problem as planned economies. the state has the monopoly in the mixed economies.
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A company has business interests in a country where the President-elect wants the country to adopt socialism and protectionism. Consequently, the company will be concerned about the _____ risks of continuing to do business in that country.
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political
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_____ is regarded as a yardstick for the economic activity of a country; it measures the total annual income received by residents of a country.
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Gross national income
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When social unrest and disorder in a country causes drastic changes in its business environment that adversely affect the profit and other goals of a business enterprise, the business enterprise is said to be facing a(n) _____ risk.
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political
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Which of the following is most likely to be true about the overall attractiveness of a country as a potential market or investment site for an international business?
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The costs and risks associated with doing business in a foreign country tend to be greater in politically unstable nations.
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In Amartya Sen's view, development is solely an economic process, and not a political process.
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FALSE
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Totalitarian states that limit human freedom are highly conducive to progress in terms of innovation, entrepreneurship, and economic growth.
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FALSE
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If a company from a highly developed nation hesitates to enter into a joint venture with a company from a developing nation due to inadequate protection of intellectual property rights, it is trying to avoid a(n) ____ risk.
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legal
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Both China and India have achieved high growth rates despite relatively weak property rights regimes and high levels of corruption, because of:
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the shift toward a market-based economic system.
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Which of the following statements is most likely to be true about the risks of doing business in a country?
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One visible indicator of economic risk is the level of business and government debt in the country.
