Globalization and Economic Systems Quiz

Global Business & Country Differences

• Globalization is the shift towards a more integrated and interdependent world economy.
• Drivers of globalization include lower barriers to trade, lower transport costs, and lower communication costs. These factors allow companies to operate on a global scale, producing goods and services in optimal locations and targeting markets worldwide, instead of just within one country.
• China, the USA, and Germany are leading exporters and importers in the world. China and the USA are prominently represented in the global 500 firms.

Institutions

• Institutions are the rules of the game in a society, which shape human interaction.
• Political institutions encompass elections and political systems.
• Economic institutions involve production, allocation, and distribution processes in markets for goods and services.
• Legal institutions include legal systems and property rights.
• Social institutions include access to health, education, and social security.

Political Systems

• Totalitarianism is a political system where the government controls society and the economy (e.g., communism, theocracy, tribalism).
• Democracy is a political system where the people rule.

Economic Systems

• Market economies, often associated with democratic countries, are characterized by privately owned productive activities determined by supply and demand.
• Command economies, mostly associated with totalitarianism, are characterized by the government controlling and directing all business plans. Mixed economies are also possible.

Culture

• Culture is the shared system of values and norms within a society.
• Values are abstract ideas of what is considered good or bad.
• Norms are the social rules or guidelines for particular situations (e.g., folkways and mores).
• Culture encompasses religion, political/economic philosophies, education, language, and social structure.
• Relationships and nation-states can contain several cultures and one culture can encompass several nations. Culture can manifest on different levels, including national, business, occupational, and organizational levels.

Hofstede's Cultural Dimensions

• Cultures are programmed minds distinguishing human groups from one another.
• Key dimensions include power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity (quality of life/care for others), long-term/short-term orientation, and indulgence/restraint (individual happiness and leisure).

Economic and Human Development

• Human Development Index (HDI) is a measure of living, education, and life expectancy.

Methods of International Comparisons

• Comparing business systems and countries helps with contextual descriptions and classifications. It also aids hypothesis testing by reducing complexity. Hypothesis testing helps with predictions.
• Methods of comparing include individual country studies and multiple country studies. The number of countries helps with reliability and generalization.

Statistical Basics for Measurement

• Nominal scales involve rankings.
• Numerical scales include characteristics like relationships between numbers (nationality or language).
• Ordinal scales rank items that are organized into an order, and measure relative differences (e.g., development status).
• Cardinal scales measure the same type of differences as ordinal scales, but also quantify the amount of difference (e.g., GDP, years of schooling).

Hypothesis Testing

• Hypothesis testing evaluates whether observed differences are significant.
• Methods include simple linear regression analysis, and identifying significance levels. Results can lead to rejecting or not rejecting a hypothesis.

Application 1: Becker's Concept of Human Capital

• Human capital is the economic value of skills, experience, and abilities.
• Education and training often improve productivity and economic growth.
• Fischbein's formula is used to calculate the net benefit of additional education.

Application 2: UN Sustainable Development Goals

• UN Sustainable Development Goals address global challenges to create a sustainable and prosperous world.
• The higher a country's level of democracy (PD), the higher the SDG index score.

Application 3: Management Practices

• Management practices are structured methods used to improve organizational productivity, profitability, and performance.
• These practices optimize resources, drive innovation, and ensure adaptability in market conditions.