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2-1
Contracts
Common Law
Evolved in England
Based on:
Tradition
Precedent
Custom
United States
Contracts tend to be
long
Civil Law
‘Code Napoleon’
Detailed set of laws
organized into ‘Codes’.
Europe
Russia
Japan
80 countries
Short contracts
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2-2
Differences in Economic Development
Gross National Product (GNP)
Common yardstick for measuring economic
activity.
Measures total value of goods and services
produced annually.
Doesn’t consider the differences in costs
of living.
Purchasing Power Parity.
Uses U.S,cost of living for basis of
adjustment among countries.
Both give
a static
picture of
development
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2-3
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2-4
PPP Index and GNP Data for Selected
Countries 2000
Co unt r y G NP/Capi t a PPP /Cap it a GN P G row t h
Rat e (%) 9 0 - 99
B razil $3,5 70 $7,3 20 3,0
Ch in a 840 3,9 40 1 0,7
Ge rm an y 2 5,050 2 5,101 1,3
In dia 460 2,3 90 6,0
Japan 3 4,210 2 6,460 1,3
Nig eria 260 790 2,4
Polan d 4,2 00 9,0 30 4,5
Russi a 1,6 60 8,0 30 - 6,1
Sw it ze rl an d 3 8,120 2 4,970 0,6
U n it ed K in gd o m 2 4,500 2 3,550 2,5
U n it ed St at e s 3 4,260 3 4,260 3,3
Table 2.1
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2-5
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2-6
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2-7
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2-8
Geography,Education and Economic
Development
,..that throughout history,coastal states,with their long
engagements in international trade,have been more
supportive of market institutions than landlocked states,
which have tended to organize themselves as hierarchical
(and often military) societies,Mountainous states,as a
result of physical isolation,have often neglected market-
based trade,Temperate climes have generally supported
higher densities of population and thus more extensive
division of labor than tropical regions.”
Jeffrey Sachs
Harvard University
The general assertion is that
nations that invest more in
education will have higher
growth rates because an
educated population is a more
productive population.
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2-9
The spread of Market-Based
Systems
Shift
Centrally
Planned
Economies
Mixed
Economies
Market –
Based
Economies
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2-10
The Nature of Economic Transformation
The shift to market-based economies entails:
Deregulation
Removal of legal restrictions to free
markets.
Privatization
Transfer of state ownership of property into
private hands.
Legal Systems
Creation of systems to protect property
rights.
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2-11
Implications for Business
Attractiveness
Benefits
First-mover advantages
Late-mover disadvantages
Costs
Risks
Political
Economic
Legal
Ethics
Human rights
Regulations
Corruption
Foreign Corrupt
Practices Act