200591 Chapter Notes - Chapter Week 8: Legal Risk, Islamic Banking And Finance, Quran
Week 8-Political and Legal environments
Opening case-fdi in nigeria
Many years the economy-of nigeria held back by political instability,poor gov policies,lack
of infrastructure and corruption
2007-changed -democratic form in nigeria,transfer of civilian power-,market orientated forms
(removal of subsidies,privatisation of state run businesses
Attempt to improve countrys poor transport and infrastructure-
GDP OF nigeria’s purchase power parity tripled from $170 billion to $451 billion in 2012-if back
economy included- $630 million
Economy grew by 7% bw 2010-2012
Nigeria-oil producer
FDI INCREASING-ECONOMIC DEVELOPMENT + promise of large domestic market
Fdi increased by $1.2 billion in 2000 to $9 billion-2012
has a very strong, dynamic and growing population of now over 167 million people, with over 40 per
cent less than 15 years old.
Political systems
Legal systems
Managerial Implications
Political economy-The political, economic and legal systems and forces that govern the economy
Political system-system of gov in nation
GOVERNANCE The process of governing and the basis of judgment on the quality of
government
RULE OF LAW All in society, including government, has confidence in and abides by the
established laws and enforcement procedures
IDEOLOGY A set of values and beliefs that justifies certain behaviours and guides economic
and political actions
3 ideological traditions:CLS
Conservatism - support for tradition, country, authority, duty and hierarchy
Liberalism - belief in the importance of the individual as opposed to any social group, in their
rationality and their freedom to make their own way in life.
Socialism - the priorities of social equality, the common good above the demands of the
self-centred individual and the dependence of the individual on the larger society
Political systems can be compared in terms of degree to which they
-emphasise collectivism (totalarian) as opposed to individualism (democratic)
- being democratic or totalitarian.
Some countries that are democratic-are individualistic and collectivist-
Some totalarian not collectivist (eastern europe,asia-singapore,china,vietnam)
Collectivism-
find more resources at oneclass.com
find more resources at oneclass.com
primacy of collective goals over individual goals. needs of society as a whole more
important than individual rights
society should be stratified into classes (Plato, 427-347BC) adopted by socialists
Socialism -CS
Trace back to MARX (1818-83)
Few benefit (capatlists who own mean of production) and expense of many (worker who
have own labour to sell)
Private property rights + individual freedoms not restricted
state ownership of a country’s means of production, distribution and exchange so that all
can benefit.
Marx logic was that if the state owned the means of production, the state could ensure that
workers were fully compensated for their labour. Thus, the idea is to have state-owned
enterprises that are managed for the benefit
Two broad camps:
Communists socialism could be achieved only through violent revolution and totalitarian
dictatorship.
Soviet Union, its Eastern European client nations (for example, Poland, Czechoslovakia,
Hungary), China, the South-East Asian nations of Cambodia, Laos and Vietnam, various
African nations (for example, Angola and Mozambique), and the Latin American nations of
Cuba and Nicaragua.
Social democrats socialism by democratic means, turning their backs on violent
revolution and dictatorship.
democratic Western nations, including Australia, France, Germany, Great Britain, Norway, Spain
and Sweden, where social democratic parties have often held political power. Other countries where
social democracy has had an important influence include India and Brazil.
PRIVATISATION The process of selling state owned enterprises to private investors
Individualism-
Traced to Aristotle-384
an individual should be free to determine his or her economic and political pursuits.
individual freedom & self-expression.
democratic political systems, free market economies, and ‘level playing fields’
find more resources at oneclass.com
find more resources at oneclass.com
Since the late 1980s, democratic ideals and free market economics have swept away
socialism and communism in many nation- states- Venezuela, Paragray,Bolivia
Shifting ideologies and FDI-RFP
Radical view-An expression of Marxist socialism that opposes private ownership and foreign
investment, and advocates state ownership to prevent exploitation by and dependency on
foreign capital ces
be three reasons for this: (1) the collapse of communism in Eastern Europe; (2) the generally
abysmal economic performance of those countries that embraced the radical position; and
(3) the strong economic performance of those developing countries that more actively
participated in the international capitalist system by opening their economies to FDI.
MNE is a tool for exploiting host countries to the exclusive benefit of their capitalist-
imperialist home countries
FDI keeps less developed countries backward & dependent on advanced capitalist nations
for investment, jobs and technology
No country should permit inward FDI
The New Rulers of the World (2001) by Australian journalist John Pilger, who argued that a
small number of powerful MNEs and global institutions have taken control of global
resources, and that the divide between rich and poor has never been wider. Thus, according
to the extreme version of this view, no country should ever permit foreign corporations to
undertake FDI, since they can never be instruments of economic development, only of
economic domination.
Countries whose political ideology was more nationalistic than socialistic also embraced the
radical position. This was true in Iran and India, both of which adopted tough policies
restricting FDI and nationalised many foreign-owned enterprises. Iran is a particularly
interesting case because its Islamic government, while rejecting Marxist theory, has
essentially embraced the radical view that FDI by MNEs is an instrument of imperialism.
Free market view -FREE MARKET VIEW An expression of liberalism that supports private
ownership and individual enterprise and advocates the free flow of foreign capital in order to
maximise national and global economic wellbeing
Countries should specialise in goods and services they can produce more efficiently
FDI by MNEs increases the overall efficiency of world economy
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Many years the economy-of nigeria held back by political instability,poor gov policies,lack of infrastructure and corruption. 2007-changed -democratic form in nigeria,transfer of civilian power-,market orientated forms (removal of subsidies,privatisation of state run businesses. Attempt to improve countrys poor transport and infrastructure- Gdp of nigeria"s purchase power parity tripled from billion to billion in 2012-if back economy included- million. Fdi increasing-economic development + promise of large domestic market. Fdi increased by . 2 billion in 2000 to billion-2012 has a very strong, dynamic and growing population of now over 167 million people, with over 40 per cent less than 15 years old. Political economy-the political, economic and legal systems and forces that govern the economy. Governance the process of governing and the basis of judgment on the quality of government. Rule of law all in society, including government, has confidence in and abides by the established laws and enforcement procedures.
