Transcript Politcal and Economic Factors Affecting

Political and Economic
Factors Affecting
International Business
Centrally planned
economy
 Currency devaluation
 Currency revaluation
 Democracy
 Economic Imperialism
 Economic system
 Equilibrium
 Exchange controls
 Expropriation
 Floating rate
 Foreign investment
 General instability risk
 Global economy
 Global equity market

Market economy
 Mixed economy
 Operations risk
 Ownership risk
 Political risk
 Privatize
 Repatriation of earnings
 Think tank
 Supply and demand
 Systems
 Totalitarian
 Trade war
 Transfer risk

The Political Process:
Government’s Role in
International Trade
What do governments do?

All governments have some sort of role in
international trade. What does Canada’s
government do?
Establishes import/export policies to
protect Canada and its people.
 Develop policies and regulations to govern
and encourage trade
 Assists Canadian exporters in their quest
to succeed internationally.





Matches potential Canadian exporters with
international clients
Maintains and improves relationships with other
nations for the purpose of trade
Assists Canadian companies in adjusting to
changing international market conditions
Fosters innovation and human resource
development to enable companies to compete
internationally.
Political Risk
Political risk can be business risk, but
business risks are not always political.
 They can be:
-Political decisions
-Conditions
-Events
-Activities
 …that affect the business climate.

Types of Political Systems

Democracy

Vote (free elections)
-rules that govern them.
Own property
-run business
Free press/freedom of speech.
Market-oriented/capitalist economy.
Free Trade (usually)





Totalitarian
Centralize power
-often use military to control
 Single-party rule (usually)
-Dictatorship (sometimes)
 No elected representatives
 Command economy

Usually, there are aspects of both.
 Governments have mixtures of both, like
economies.

Political Interdependence

What do you think these words mean
together?
We know what it means when we talk
about companies. What does it mean for
governments?
 This allows countries to pressure others to
change policies


Sometimes businesses prefer totalitarian
economies (in theory anyway). Why do
you think this is?
Trade Wars

Sometimes, governments can carry out
“trade wars” when there are things going
on that they do not like.
Economic Imperialism

What is imperialism?

How does this apply to economics and
business?

1c and 3b on page 279.