chapter 2

• Political systems of countries differ in terms of their political, economic, and legal systems.
• A country with democratic political institutions, market-based economic system, and strong legal system is more attractive to do business in.
• Political, economic, and legal systems are interdependent and influence each other.
• The system of government in a nation is referred to as the political system.
• Political systems are assessed according to two dimensions: emphasis on collectivism or individualism and degree to which they are democratic or totalitarian.
• Collectivism: the needs of society as a whole are generally viewed as being more important than individual freedoms.
• Socialism: public ownership of the means of production for the common good.
• Karl Marx: The few benefit at the expense of the many in a capitalist society where individual freedoms are not restricted.
• Communists versus social democrats.
• Individualism: an individual should have freedom in economic and political pursuits.
• The interests of the individual should take precedence over the interests of the state.
• Two tenets: guarantee of individual freedom and self-expression and welfare of society best served by letting people pursue their own economic self-interest.
• Democracy: government is by the people, exercised either directly or through elected representatives.
• Totalitarianism: one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties.
• Democracy and individualism go hand in hand, as do the communist version of collectivism and totalitarianism.
• Democracy: representative democracy: citizens periodically elect individuals to represent them.
• Private action includes theft, piracy, blackmail by private individuals or groups.
• Public action and corruption can be done legally by levying excessive taxation, requiring licenses or permits from property holders, taking assets into state ownership without compensating owners, redistributing assets without compensating prior owners.
• Copyrights are exclusive legal rights of authors, composers, playwrights, artists, and publishers.
• The World Intellectual Property Organization (WIPO) and the Paris Convention for the Protection of Industrial Property are organizations involved in the protection of intellectual property.
• The attractiveness of a country as a market or investment site is influenced by the political, economic, and legal systems of that country, which raise important ethical issues.
• Public action and corruption involve public officials extorting income, resources, or property.
• Product safety laws set certain safety standards to which a product must adhere.
• Property rights are legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.
• A patent is an inventor’s exclusive rights for a defined period.
• Land, buildings, equipment, capital, mineral rights, businesses, intellectual property are all types of property.
• Totalitarianism: communist totalitarianism: socialism can be achieved only through a totalitarian dictatorship.
• Trademarks are officially registered designs and names used to differentiate products.
• Product liability involves holding a firm and its officers responsible when a product causes injury, death, or damage.
• Intellectual property refers to property that is the product of intellectual activity, such as computer software, a screenplay, a music score.
• Public action and corruption can also be done illegally through corruption, demanding bribes.
• The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997) makes bribery of a foreign public official a criminal offense and allows for facilitating or expediting payments.
• The Foreign Corrupt Practices Act (FCPA) is illegal to bribe a foreign government official to obtain or maintain business over which that foreign official has authority and requires all publicly traded companies to keep detailed records that would reveal whether a violation of the act has occurred.
• Theocratic totalitarianism: monopolized by a party, group, or individual that governs according to religious principles.
• Tribal totalitarianism: a party, group, or individual that represents the interests of a particular tribe monopolizes political power.
• In a mixed economy, some sectors are privately owned, some are government owned.
• Contract specifies conditions under which an exchange is to occur, and details rights of parties involved.
• In a command economy, the government plans the goods and services, quantity and price, then allocates them for “the good of society.”
• Under common law, contracts are very detailed with all contingencies spelled out and are more expensive and can be adversarial.
• The United Nations Convention on Contracts for the International Sale of Goods (CISG) establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations.