COMO LA DIFERENCIA SALARIAL AFECTA A LA PRODUCTIVIDAD

Sheyla Jaslin Vera Aguilera1, Raquel Arévalo Lara2, Solange Lissette Salazar Yagual3

AQUÍ VA EL ABSTRACT Y LAS PALABRAS KEY JEJE

1. Introducción

2. Political System

A country’s political system refers to the structural dimensions and power dynamics of its
government that specify institutions, organizations, and interest groups, and define the norms that
govern political activities. The goal of a country’s political system is to integrate the diverse
elements of a society. A successful political system unites a society in the face of differing
viewpoints.

So for example, the peace and prosperity that exists in countries like Sweden and Australia
illustrate the success of the political systems in those countries, while the instability and
insurrection of Libya’s political system shows its failings.

 Sweden is a democratic constitutional monarchy where the Prime Minister takes the
government decisions. Sweden is the 2nd economy by its GDP. The average real growth of
the Swedish economy from 2014 to 2017 was 3.15%, 55% higher than average recorded
in a similar period of time by the most advanced countries in the world grouped In the
OECD (Organization for Economic Co-operation and Development). And the principal
activity for this economy is the international business; its exportations are about 50% of
GDP.

1
Sheyla Vera Aguilera, Escuela Superior Politecnica del Litoral, Guayaquil, Ecuador, shejvera@espol.edu.ec
2
Raquel Arevalo Lara, Escuela Superior Politecnica del Litoral, Guayaquil, Ecuador, raqfarev@espol.edu.ec
3
Solange Salazar Yagual, Escuela Superior Politecnica del Litoral, Guayaquil, Ecuador, solisala@espol.edu.ec
 The example of Sweden is useful for politicians, businessmen, workers and world citizens
in general to understand that it is possible to build a competitive society without sacrificing
the well-being of people (Menkos, 2017).

Table 1: Evolution of the economy in Sweden

Economy (Sweden) 1990 2000 2010 2016
GDP (current US$) (billions) 258.15 259.8 488.38 514.46
GDP growth (annual %) 0.8 4.7 6 3.2
Inflation, GDP deflator (annual %) 9.5 1.6 1 1.6
Agriculture, value added (% of GDP) 4 2 2 1
Industry, value added (% of GDP) 32 30 29 25
Services, etc., value added (% of GDP) 65 68 69 74
Exports of goods and services (% of GDP) 29 44 46 44
Imports of goods and services (% of GDP) 28 38 41 39
Gross capital formation (% of GDP) 29 23 23 25
Revenue, excluding grants (% of GDP) 39.3 38 33 32.3
Net lending (+) / net borrowing (-) (% of GDP) 3.1 3.2 -0.2 1.7
Source: World Bank Data

 Australia's system of government is based on the liberal democratic tradition, which

includes religious tolerance and freedom of speech and association. Australia is the 13rd
economy by its GDP. The Gross Domestic Product of Australia in 2017 has grown by 2.3%
with respect to 2016. It is a 3-tenths higher rate than in 2016, which was 2%.
Australia is a country very rich in natural resources, especially mining products such as
iron (of which it is the world's leading exporter), coal, crude, gold or aluminum, which
makes the metal industry one of the pillars of the economy Australian
The other is agricultural production (wheat, wine, sugarcane) and livestock (breeding of
cattle and cattle). Traditionally, Australia has been a great exporter of meat (the heads of
cattle in the country are counted by millions) and it is also the first wool producer in the
world.
However, to the primary products we must add today the increase of other exports, as is
the case of tourism (Australia attracts about 5 million tourists a year), a sector on the rise.
Table 2: Evolution of the economy in Australia
Economy (Australia) 1990 2000 2010 2016
GDP (current US$) (billions) 311.43 415.45 1,142.88 1,204.62
GDP growth (annual %) 3.5 3.9 2 2.8
Inflation, GDP deflator (annual %) 6.1 2.6 1 -0.4
Agriculture, value added (% of GDP) 5 3 2 3
Industry, value added (% of GDP) 31 27 27 24
Services, etc., value added (% of GDP) 64 70 71 73
Exports of goods and services (% of GDP) 15 19 19 19
Imports of goods and services (% of GDP) 17 21 20 21
Gross capital formation (% of GDP) 29 26 28 26
Revenue, excluding grants (% of GDP) 24.4 25.9 23.4 24.9
Net lending (+) / net borrowing (-) (% of GDP) 1.7 2 -4 -2.4
Source: World Bank Data

 Libya since 1977 is proclaimed Jamahiriya (State of the Masses), Libyan Popular and
Socialist. It is the 113th economy by the GDP. The gross domestic product of Libya in 2016
fell by 7.4% compared to the previous year. This rate is 56 tenths higher than that published
in 2015, which was -13%. Its economy is especially given by food imports by 75% and
only petroleum exports.
Libya no longer exists ... there is no central authority, there is no government, there is
nothing that looks like Libya is a State. Libya in these five years ceased to exist as a State
(Peckel, 2016).

Table 3: Evolution of the economy in Lybia

Economy 1990 2000 2010 2016
GDP (current US$) (billions) 28.9 38.27 74.77 ..
GDP growth (annual %) .. 3.7 5 ..
Inflation, GDP deflator (annual %) .. 13.3 14.2 ..
Agriculture, value added (% of GDP) .. 5 2 ..
Industry, value added (% of GDP) .. 66 78 ..
Services, etc., value added (% of GDP) .. 29 20 ..
Exports of goods and services (% of GDP) 40 32 66 ..
Imports of goods and services (% of GDP) 31 14 42 ..
Gross capital formation (% of GDP) 19 12 30 ..
Revenue, excluding grants (% of GDP) .. .. .. ..
Net lending (+) / net borrowing (-) (% of GDP) .. .. .. ..
Source: World Bank Data
There are some political systems that help with the economy of their countries because of their
international trade. And the World Bank shows the ranking 2017 how is the progress of those
countries compared with others.

Figure 1: World GDP 2017 Ranking

Source: World Bank

3. Spectrum Analysis

For a political spectrum to exist, a range of values and beliefs must exist. Political systems in which
the majority of the population is inside one group or another, as in most nationalist conflicts, can
not be described well by means of a political spectrum.

A political spectrum outlines the various forms of political ideology including anarchism,
conservatism, secularism, environmentalism, liberalism, feminism, nationalism, socialism, and
theocracy.
Managers are concerned with the degree of political freedom in a country and its effect on
investment choices and operations decisions.

In the Figure 2 shows a political spectrum of the various forms of political ideologies. By
configuring ideologies along the central axis we can model different political ideologies in relation
to each other. The goal of relativity depends on specifying credible ideas to anchor the endpoints
of the axis; reasonably set, one can then position alternative ideas.

There is a political spectrum with democracy with its call to preserve, protect, and defend freedom
and totalitarianism with its call to control, constrain, and, suppress freedom. In practice, purely
democratic and totalitarian systems are exceptions.

Figure 2: The Political Spectrum

Source: International Business (Daniel; Radebaugh; Sullivan)

3.1. Democracy

The word democracy comes from the Greek words "demos", that is, people, and "kratos" which
means power; so that democracy can be defined as "the power of the people": a form of
government that depends on the will of the people. Democratic systems almost always tend to be
more inclusive, reflect more desires of the population and respond better to their influence.
What democracy is? We can think of democracy as a system of government with four key
elements:

 A political system for choosing and replacing the government through free and fair
elections.
 The active participation of the people, as citizens, in politics and civic life.
 Protection of the human rights of all citizens.
 A rule of law, in which the laws and procedures apply equally to all citizens.

Democracy supports individualism attitudes that permit MNEs (Multinational enterprises) to

invest and operate based on economic, not political, standards. It creates business environment
that promote commerce, expand trade, and streamline exchange, both within the country as well
as across countries. Managers and consumers are free to do as they see fit.

Looking around the world, one see many variations, for example, democratic systems range from
radical one side (advocates of extreme political reform) to reactionary (advocates of a return to
past conditions)

3.1.1. Types of Democracies

Although the concept of democracy is one and unequivocal, there are different varieties and types
of State organization, whose differences are especially marked by the exceptionality of each
society, such as religion, territorial character or the ethnicity of different communities.

3.1.1.1. Radical

A radical democracy could be defined as that which brings democracy closer to the citizens, that
is, a completely direct democracy, to such an extent that citizens literally have to decide absolutely
everything about the issues of interest.

Radicalism in a broad sense is all set of ideas and doctrines of those who, at certain moments of
social life, seek to profoundly (root) reform the political, scientific, moral and even religious order.

 France: the radical movements were taken over by the nostalgic Jacobinism 3 of the postulates
of 1789.
 Spain: The Radical Republican Party founded by Alejandro Lerroux in Santander in 1908.

3
They were the members of the political group of the French Revolution called Club of the Jacobins, whose
headquarters were in Paris.
 Argentina: the radical political current was initiated by the Radical Civic Union, a party
founded in 1891.
Figure 3: Radical Politic

Source: Wikipedia data

3.1.1.2. Liberal

Liberal democracy is common in the Western world, whose system is defined by the election of
the rulers by vote (suffrage), those representatives where they are subject to a rule of law, laws and
the Constitution that have emanated from the same people.

In this type of democracy, citizens enjoy rights and freedoms, both individually and collectively,
democratic pluralism, political, social and religious tolerance.

 Uruguay
 Costa Rica
 Sweden

3.1.1.3. Conservative

It makes reference to an ideology and position in the political spectrum that unites two components
that in their origin and historical evolution were opposed: democracy and conservatism4.

3.1.1.4. Reactionary

4
Conservatism is called the set of doctrines, currents, opinions and positions, usually center-right and right, which
favor traditions and which are adverse to radical political, social or economic changes, opposing progressivism.
Reactionary is a term referring to ideologies or people who aspire to establish a state of affairs
prior to the present.

3.1.1.5. Representative

People’s elective representatives hold ultimate sovereignty and enjoy sufficient authority to deal
directly and as they see fit with changing circumstances.

 United States
 Japan

3.1.1.6. Multiparty

Three or more political parties control the government.

 Canada
 Germany
 Italy
 Israel

3.1.1.7. Parliamentary

Citizens elect representatives to a legislative branch of government called parliament. The

executive branch typically consists of a cabinet headed by the prime minister. There is no formal
separation of powers between legislative and executive branch.

 India
 Australia

3.1.1.8. Social

Use of democratic means to achieve a gradual transition from capitalism to socialism.

 Norway
 Sweden

The Economist Intelligence Unit’s Democracy Index provides a snapshot of the state of democracy
worldwide for 165 independent states. This covers almost the entire population of the world and
the vast majority of the world’s states (microstates are excluded). The Democracy Index is based
on five categories: electoral process and pluralism; civil liberties; the functioning of government;
political participation; and political culture. Based on its scores on a range of indicators within
these categories, each country is then itself classified as one of four types of regime: “full
democracy”; “flawed democracy”; “hybrid regime”; and “authoritarian regime”.5

Table 4: Democracy Index 2017, by regime type

No. of countries % of countries % of world population
Full democracies 19 11.4 4.5
Flawed democracies 57 34.1 44.8
Hybrid regimes 39 23.4 16.7
Authoritarian regimes 52 31.1 34.0
Note: “World” population refers to the total population of the 167 countries covered by the Index.
Since this excludes only micro states, this is nearly equal to the entire estimated world population.
Source: The Economist Intelligence Unit

3.2. Totalitarianism

Totalitarian systems emphasize different degrees of state control. Fascism aims to control people’s
minds, souls, and daily existence, whereas authoritarianism confines itself to political control of
the state.

A totalitarian system champions the power of a few over the many. Under a totalitarian system,
the government maintains control over many aspects of life, the individual is subordinated to the
state, and all opposing political and cultural expression is suppressed. Managers operating in a
totalitarian state must make decisions based on political rather than economic standards.
Typically, local companies are favored over foreign firms forcing multinational companies to
make business deals that would not occur in a democratic environment.

3.2.1. Types of Totalitarianism

5
Democracy Index 2017 Free speech under attack, The Economist Intelligence Unit.
Although it may seem incredible in the 21st century, dictatorial governments and regimes or, in
other exceptional cases, democratic governance systems with a dictatorship character still exist in
the contemporary world.

However, this is not so strange if we consider that the dictatorship was a habitual form of
government since the existence of the first civilizations, in which "one lord" held all the powers
concerning the administration of resources, concerns and life of your fellow citizens. He offered
protection in exchange for power.

3.2.1.1. Dictatorship

The concept of dictatorship corresponds to a type or system of government (commonly known as

a regime) whose legislative, judicial and executive state powers fall directly and exclusively on an
individual or, in many cases, a political group such as a hegemonic party.

The origin of the term dictatorship comes from the Latin word "dictator" and goes back to the time
of Antiquity where that "dictator" was invoked to put order and stability in times of institutional
turmoil.

 North Korea
 China
 Turkmenistan

3.2.1.2. Communist

Communism is an ideology, a political doctrine and a form of social organization. Its central axis
is the elimination of social classes as well as the suppression of private ownership of the means of
production.

Communism goes against the private property of the means of production, because they must
belong to the proletariat because they are its source of wealth and production.

 China since 1949

 Cuba since 1961

3.2.1.3. Fascism
Fascism is based on an all-powerful State that claims to embody the spirit of the people. The
population should not, therefore, look for anything outside the State, which is in the hands of a
single party. The fascist state exercises its authority through violence and repression.

Organizes a nation based on corporatist perspectives, values, and systems.

 North Korea
 Germany (racial base, since 1933 to 1945)

3.2.1.4. Authoritarianism

Tolerates no deviation from state ideology. Day-to-day life reflects obedience to state authority;
resistance incurs punishment. Officials regulate the political environment but pay less attention to
the economic and social structure of society.

In these types of governments, civil and even social freedoms of thought and assembly are
restricted. Any confrontation with the State is usually considered as an act of conspiracy and
treason.

 Kazakhstan
 Chad
 Turkmenistan

3.2.1.5. Secular

Single-party government controls elections, tolerates dissent as long as it does not challenge the
state, and suppresses other ideologies.

 China
 Vietnam
 Venezuela

3.2.1.6. Theocratic

Government is an expression of the preferred deity. Leaders claim to represent its interests on
earth.
Whether consent or by imposition, theocratic regimes are governed by the deity, by a specific
religion, and legislate in function of it. The relevant constitution usually recognizes religion as a
way of administering the State, both politically and civilly.

 Iran
 Afghanistan
 Saudi Arabia.

4. Democratic vs. Totalitarianism

Democracy and totalitarianism are at opposite poles within political systems. In a democracy the
government is of the people, and is exercised directly or through elected representatives.
Totalitarianism, on the other hand, is exercised by a person or political party that is in charge of
making absolute control over all spheres of human life and prohibits opposition.

The political, legal and economic systems of a country profoundly affect the level of economic
development, and therefore, its attractiveness as a possible market or place of production for a
company.

Frequently the economic development of a country is related to its political and economic systems.
Innovation and business activity act as engines of long-term economic growth, therefore, it can be
concluded that for an economy to maintain constant growth, the business environment must be
conducive to the lasting generation of product innovations and processes and business activity.

Another important point of discussion is that innovation and entrepreneurship require a market
economy since it promotes incentives for those who undertake them. In a planned economy,
individuals have very little incentive to develop valuable innovations, because it is the State, and
not the individual, that takes the profits.

Likewise, innovation and entrepreneurial spirit require well-established property rights; and a
political system that works and offers full protection of these rights. As a consequence, it can be
said that economic progress generates democracy, although democracy does not always generate
economic progress.
The correlation suggests that established democracies could serve their own economic interests by
encouraging democratic institutions abroad and thereby improving the business environment over
the long term.

Figure 4: The top performers on the World Bank’s Doing Business survey are mostly Free
countries

Source: World Bank and Freedom House

Figure 5: The Distance to Frontier

Note: The Distance to Frontier score is on a scale of 0 to 100, with 100 representing the ideal
regulatory environment for business.
Source: World Bank and Freedom House

Strong growth in certain repressive systems, especially China, has given the misleading impression
that authoritarianism is good for business. The casual observer might see ruthlessly implemented
development projects and pro-business legal window dressing as more important to the operating
environment than things like parliamentary oversight and freedom of assembly.

However, only a handful of Not Free countries score highly on the Doing Business “distance to
frontier” measurement, which compares economies as they are with regulatory best practice. Most
Not Free states breed corruption due to their opacity and concentration of power, are prone to
sudden and arbitrary decisions due to the lack of checks and balances, and are more susceptible to
political unrest than democracies because they do not allow peaceful changes of government
through elections. None of these traits are helpful to businesses.

A number of developing countries that are often praised for macroeconomic expansion, such as
Angola, Ethiopia, and Uganda, actually receive rather low scores on Doing Business, and are rated
Not Free by Freedom House for their repression of political opposition and other democratic
shortcomings.

5. Conclusions

Democracy and totalitarianism are two opposite poles in which human rights are affected, which
does not generate social or economic progress.

Stable, transparent governments built on respect for human rights and the rule of law tends to foster
environments that are conducive to the establishment and unfettered operation of private
enterprises.

Conversely, regimes that oppress their populations are more likely to limit business opportunities.
Governments in countries identified as not free generally impose more red tape, build up barriers
to trade, and fail to enforce contracts.

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