Telfer School of Management

International Business
ADM 3318, All Sections
Pran Manga, Ph.D., M.Phil

WEEK 2

1
 Chapter 2 of textbook
A synopsis of the changing « political economy » of India (p.
38-40) Nehru and Gandhi made serious policy mistakes; self-
reliance; quick industrialization behind high tariff; infant-
industry argument. The « licence raj », highly bureaucratic;
corrupt excessively prolabour policies; militant unions.
Gender & ethnic inequalities, also income, wealth inequalities.
China & India; compare and contrast.

The meaning of political economy (p. 41)

Countries obviously differ in terms of:

 Political system
 Economic system
 Legal system (eg. Intellectual property, rights)
 Other systems (eg. Human rights, the extent of the
« Welfare » state, etc.)

But every country is in a state of flux, so, impact on costs,

benefits, risks of doing business is inescapable and must be
seriously considered.

2
Political Systems (p. 42)
Collectivism
Socialism
Communism
Individualism
Democracy (*)
Totalitarianism

Economic Systems
Market economy
Command economy
Mixed economy

Legal Systems
Common law
Civil law
Theocratic law
Contract law

(*) with safeguards: free press; regular elections, universal

suffrage, independent legal and court system(s), nonpolitical
state bureaucracy, police, army; relatively free access to
information (other: separation of state form religion, citizen’s
basic rights, etc).

3
Private action (p. 50) theft, privacy, generally criminal activity
transferring property.

Public action and corruption (p. 51); extortion.

Protection of intellectual property (p. 54)

Product safety and liability (p. 57)

Property rights (p. 60)

There are many other legal issues that are involved in trade and
investment.

Eg. transfer pricing

taxation of profits – currently crucially important.

4
Economic Development

Determinants of Economic Development

- a complex, broad issue
- remains highly controversial

Measuring Economic Development

GNP
GNI
PPP
broader concepts (p. 59)
HDI, more recent concepts – quality of life indicators.

Political Economy and Economic Development

Innovation
Entrepreneurship
Property rights

5
Economic Development and Democracy (p. 65) 2 views.

Countries in transition (p. 66)

A new world order? already here!

Deregulation (p. 70) truly controversial almost everywhere

Re-regulation

Privatization (p. 72)

Remember: all of these issues are highly complex and any would
take up innumerable hours of reading and analysis, our task is
mainly to recognize them as issues that are important in the
globalization of the world’s economies, and the continuing debate
about free trade and the role and scope of government’s effort to
control their own economies.