National Differences in

Political Economy

Gonzales & Liwag

Political
Political economy of a nation -
how the political, economic, and

Economy
legal systems of a country are
interdependent.

Collectivism
Individualism
Democracy
Totalitarianism


Political Systems
A political system is a component of the state system. The political process
developing includes any actions to implement the ruling of people,
community and public affairs in governance.

While many different political structures have existed

throughout history, three major forms exist in modern
nation‐states: totalitarianism, authoritarianism, and
democracy.
 Economic Systems
Market Command Mixed
Economies Economies Economies
all productive government plans certain sectors of the
activities are the economy are left to
privately owned goods and services private ownership and
and that a country free
market mechanisms
production is produces, while other sectors have
determined by the the quantity that is significant state
interaction of produced, and the ownership and
supply and prices as government
which they are sold planning
demand
 Legal Systems
The legal system includes rules, procedures, and institutions by which public initiatives and
private endeavors can be carried out through legitimate means. In other words, is a system for
interpreting and enforcing the laws.
Among the main groups that you might encounter are: 1) common law; 2) civil law; 3)
religious law; and 4) customary law. Many countries employ more than one of these
systems at the same time to create a hybrid system.
 Implication for
Management Practice
Political Risk Economic Risk

Legal Risk
Level of Economic
Development

What determines it?

Social conditions like literacy rate, life
expectancy, infant mortality, and
healthcare are some of the indicators
of level of economic development.
 Human Geoss
Development National
Jndex Income
The HDI uses the
logarithm of
income, to reflect
The Human Development the diminishing Gross National Income (GNI)
Index is a statistic importance of is the total amount of money
income with earned by a nation's people
composite index of life increasing GNI.
expectancy, education, The scores for the and businesses. It is used to
and per capita income three HDI measure and track a nation's
dimension indices wealth from year to year.
indicators, which is used to are then
rank countries into four aggregated into a The number includes the
composite index nation's gross domestic
tiers of human using geometric product (GDP) plus the
development. mean. income it receives from
overseas sources.
 Political Economy Influence on
Economic Progress

How are they connected?

A good political economy promotes the growth of
the economy, whereas imbalance in political
economy hinders the growth of an economy.
Trade, investment, and taxation need to be
structured in a way that promotes growth.
Geography and Economic
Development
Geographic location is important because it determines the
market size of firms in that location. That is, it determines
the surrounding distribution of economic activity and the
transport and trade costs associated with accessing that
purchasing power.
Education and Economic
Development

Educated citizens earn more, pay higher

taxes over a lifetime, and cost less for
their governments in terms of social
entitlements and welfare.
Changing Each country has

Political
varying economy
depending on their

Economy
system.

For example, in
communism and
socialism, resources
are owned by the
government
How free are countries
politically?
All Filipinos, celebrities and everyday folks alike,
have the right to express their beliefs and
convictions and to participate in activities in line
with these beliefs. The Constitution guarantees our
freedom of thought, expression, and participation.
 Nature of Economic
Transformation

Economic transformation is about changing the

nature of jobs, of changing what people do,
where they do it and how they do it. Just having
a job is not enough: What makes a difference is
having a more productive job, with good
working conditions, and social protection.
Implications of Political
Economy Difference for
Managers
The political situation of a country affects its
economic setting. The economic environment
affects the business performance.

 How can managers

determine a Market's
overall Attractiveness?
There are many variables that influence market
attractiveness. Market size, growth rates, pricing trends,
competition, and overall risk in the industry all factor into it,
among many others, depending on the individual
organization and its target markets.
Thank you
for listening!