BUS 200 Lecture 5: Lecture 5 Tuesday Feb 7
Chapter 3
What are the ipliatios of a outry’s politial eooy o its level of economic development and its
environment for doing business?
• A outry’s politial eooy ifluees its level of eooi developet
• Higher levels of economic development create a more favorable environment for international
business
Differences in Economic Development
A outry’s level of eooi developet affets its attrativeess as a possile arket or produtio
location for firms
Oe oo easure is a outry’s gross national income (GNI) per head of population
A purchasing power parity (PPP) adjustment allows for a more direct comparison of living standards in
different countries
• The base for the adjustment is the cost of living in the United States.
• The PPP for different countries is then adjusted (up or down) depending upon whether the cost
of living is lower or higher than in the United States
• Large amounts of economic activity may be in the form of unrecorded cash transactions, or
barter agreements.
• The GNI and PPP data give a static picture of development ->
o They tell us, for example, that China is much poorer than the United States, but they do
not tell us if China is closing the gap.
Amartya Sen - development should be assessed less by material output and more by the capabilities and
opportunities that people enjoy
The United Nations created the Human Development Index based on life expectancy, education
attainment, and whether average incomes are sufficient to meet the basic needs of life in a country
• An attempt by the UN to assess the impact of a number of factors on the quality of human life in
a country.
find more resources at oneclass.com
find more resources at oneclass.com
