Political Economy
political, economic, and legal systems
Political System
the system of government in a nation
Political systems can be assessed in terms of the degree to which they... (2 things)
1. emphasize collectivism as opposed to individualism
2. are democratic or totalitarian
Democracy
Political system in which government is by the people
(exercised either directly or through elected representatives)
Totalitarianism
Political system in which one person or political party exercises absolute control
(opposing political parties are prohibited)
How are decisions made in most democratic regimes?
Elected representatives make decision (laws) through direct decision mechanisms
How are decisions made in totalitarian regimes?
There is widespread political repression and challenges to the regime are prohibited
Communist Totalitarianism
advocates achieving socialism through totalitarian dictatorship
Theocratic Totalitarianism
political power is monopolized by a party, group or individual that governs according to religious principles
Tribal totalitarianism
A political party, that represents the interest of a particular tribe, monopolizes power
Right-wing totalitarianism
individual economic freedom is allowed but individual political freedom is restricted in the belief that it could lead to communism
Market Economy (2 things)
1. Interaction of supply and demand determines productions
2. The role of government is to encourage free and fair competition between private producers
Command Economy (2 things)
1. All businesses are state-owned, and so have little incentive to control costs and be efficient
2. Because there is no private ownership, there is little incentive to better serve consumer needs
Mixed Economy
Governments tend to take over troubled firms that are considered to be be vital national interests
Legal System
Rules or laws that regulate behavior along with the process by which the laws of a country are enforced
3 types of legal systems
1. Common Law
2. Civil Law
3. Theocratic Law
Common Law
Based on tradition, precedent, and custom
(found in most of Great Britain's former colonies, including the U.S)
Civil Law
Based on a very detailed set of law organized into codes
(found in over 80 countries, including Germany, France, Japan and Russia)
Theocratic Law
Based on religious teachings
(Islamic law is the most widely practiced)
Common Law State
Very detailed contracts with all contingencies spelled out
Civil Law State
Shorter contracts and much less specific
Property Rights
legal rights over the use of a resource and over the use of any income that may be derived from that resource
Private Action
theft, piracy, blackmail, and the like by private individuals or groups
Public Action (corruption)
public officials extort income or resources from property holders
(e.g. excessive taxation)
3 things corruption causes
1. Foreign direct investment falls
2. International trade falls
3. Economic growth falls
The Foreign Corrupt Practices Act (FCPA)
limits corruption in the U.S
3 regulations of the FCPA
1. It is illegal to bribe a foreign government official in order to obtain or maintain business over which the foreign official has authority
2. All publicly traded companies must keep detailed records so that is clear whether a violation of the act has o
3 examples of intellectual property rights
1. patents
2. copyrights
3. trademarks
Patents
gives the inventor exclusive rights to the manufacture, use, or sale of that invention
Copyrights
exclusive legal rights of authors, composers, play-writes, artists, and publisher to publish and dispose of their work as they see fit
Trademarks
Designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products
3 ways companies can respond to violations of intellectual property
1. Lobbying government for better laws and enforcement of those laws
2. Filing lawsuits
3. Avoiding countries with poor intellectual property laws
Where are intellectual property right protected?
Under WIPO