AFM333 Lecture Notes - Lecture 7: Country Risk, Totalitarianism, Limited Government

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM333
• Professor: clarkhampton

Document Summary

Chapter 7: political and legal systems in national environments. Political system: a set of formal institutions that constitute a government. Well-known totalitarianism states: nazi germany, spain, china, and the. Soviet union state attempts to regulate most aspects of public and private behavior seek to control economic and political matters, as well as the attitudes, values, and beliefs of citizens. Over time, many of the world"s totalitarian states have either disappeared or shifted towards democracy and capitalism. Government frequently intervenes in the private sector and in business activities. Democracy"s link to to economic freedom and openness: compared to totalitarianism and socialism, democracy is associated with greater economic freedom and usually higher living standards. Economic freedom flourishes when governments support the institutions necessary for that freedom, such as freely operating markets and rule of law. Democracy is closely related with openness (lack of regulation/barriers to the entry of firms in foreign markets)