Political, Economic, and Legal Systems PDF

Chapter 4: Political, Economic, Legal Systems. Political Systems Totalitarianism - individuals govern regardless of the people’s support, tightly control people’s lives, and do not tolerate opposing viewpoints. Theocratic Totalitarianism - under the control of totalitarian relig...

Chapter 4: Political, Economic, Legal Systems. Political Systems Totalitarianism - individuals govern regardless of the people’s support, tightly control people’s lives, and do not tolerate opposing viewpoints. Theocratic Totalitarianism - under the control of totalitarian religious leaders Secular Totalitarianism - control through military and bureaucratic power. Doing Business in Totalitarian Countries - It can be risky because the law is vague or nonexistent, and people in powerful government positions can interpret laws at will. Democracy Representative Democracy. Representative democracies strive to provide freedom of expression, periodic elections, full civil and property rights, minority rights, and nonpolitical bureaucracies. Doing Business in Democracies - Democracies tend to maintain stable business environments through laws protecting individual property rights. Participative democracy, property rights, and free markets tend to encourage economic growth. Economic Systems - An economic system is the structure and processes that a country uses to allocate its resources and conduct its commercial activities. Centrally Planned Economy - Land, capital, factories, and other economic resources are owned by the government, which plans nearly all economic activity. Decline of Central Planning - Failure to create economic value. Failure to provide incentives. Failure to achieve rapid growth. Failure to satisfy consumer needs. Mixed Economy Origins and progress of the Mixed Economy Market Economy An economic system in which most land, factories, and other economic resources are privately owned, either by individuals or businesses. Price mechanism determines Supply & Demand.  Supply: Quantity of a good or service that producers are willing and able to provide at a specific selling price. Demand: Quantity of a good or service that buyers are willing and able to purchase at a specific selling price of a Market Economy Government’s Role in a Market Economy: anti-trust, preserve property rights, macroeconomic policy. Economic Freedom - economic freedom tends to coincide with higher living standards. Legal Systems Common Law – tradition, precedent. Detailed contracts. Civil Law - detailed set of written rules and statutes. Contracts can be less detailed. Theocratic Law – religious law. Global Legal Issues Intellectual Property Industrial Property – patents, trademarks. Copyrights Product Safety and Liability Antitrust Regulations – encourage competition, try to correct economic inefficiency. Taxation – Different legal systems tax businesses differently. Taxation policy affects business development.