Political ForcesPolitical Forces

Chapter 9Chapter 9

Ideological ForcesIdeological Forces

CommunismCommunism Who controls factors of production?Who controls factors of production?

ExpropriationExpropriation ConfiscationConfiscation

Why did it fail?Why did it fail? CapitalismCapitalism

Are any organizations government-owned?Are any organizations government-owned? SocialismSocialism

European socialismEuropean socialism Developing countriesDeveloping countries

Conservative v. LiberalConservative v. Liberal

ConservativeConservative Right wingRight wing

LiberalLiberal Left wingLeft wing

Political advocacy groupsPolitical advocacy groups

Government OwnershipGovernment Ownership

Why?Why? Five reasonsFive reasons

Unfair Competition?Unfair Competition? Can lower pricesCan lower prices Cheaper financingCheaper financing Government contractsGovernment contracts Export assistanceExport assistance Can hold wages downCan hold wages down

PrivatizationPrivatization

““Transfer of public-sector assets to private Transfer of public-sector assets to private sector, the transfer of management of sector, the transfer of management of state activities through contracts and state activities through contracts and leases and the contracting out of activities leases and the contracting out of activities previously conducted by the state.”previously conducted by the state.”

ExamplesExamples 1985-2002: $525 billion assets privatized1985-2002: $525 billion assets privatized US privatizing?US privatizing? Example: Water in the UKExample: Water in the UK

Government ProtectionGovernment Protection

Gulf WarGulf War TerrorismTerrorism

ItalyItaly September 11September 11

Department of Homeland SecurityDepartment of Homeland Security Other changesOther changes

Other groupsOther groups

Government ProtectionGovernment Protection

Terrorism (cont’d)Terrorism (cont’d) KidnappingKidnapping

Columbia & PeruColumbia & Peru Pay the ransom?Pay the ransom? CountermeasuresCountermeasures

Cassidy & DavisCassidy & Davis International Training, Inc.International Training, Inc.

Other terrorismOther terrorism EthnocentrismEthnocentrism Nuclear terrorismNuclear terrorism Chemical and biological terrorismChemical and biological terrorism Islamic fundamentalismIslamic fundamentalism

Government StabilityGovernment Stability

Government is stable ifGovernment is stable if Maintains itself in power, orMaintains itself in power, or Its fiscal, monetary, and political policies Its fiscal, monetary, and political policies

are predictable and not subject to are predictable and not subject to sudden, radical changessudden, radical changes

UnstableUnstable LebanonLebanon ZimbabweZimbabwe

Traditional HostilitiesTraditional Hostilities

Arab Countries – IsraelArab Countries – Israel Hutus & TutsisHutus & Tutsis

MassacreMassacre RetributionRetribution ZaireZaire

Tamils – SinhaleseTamils – Sinhalese Sri LankaSri Lanka

Albanians, Bosnians, Croats, and SerbsAlbanians, Bosnians, Croats, and Serbs Ethnic cleansingEthnic cleansing United Nations & NATOUnited Nations & NATO

South AfricaSouth Africa

International OrganizationsInternational Organizations

United NationsUnited Nations Main functionsMain functions Transnational Corporation DivisionTransnational Corporation Division UN Conference on Trade & DevelopmentUN Conference on Trade & Development

IMFIMF GATT/WTOGATT/WTO OPECOPEC EUEU OECDOECD

Country Risk AssessmentCountry Risk Assessment

““Bank or business having an asset in Bank or business having an asset in or payable from a foreign country or or payable from a foreign country or considering a loan or an investment considering a loan or an investment there, evaluates that country’s there, evaluates that country’s economic situation and policies and economic situation and policies and its politics to determine how much its politics to determine how much risk exists of losing the asset or not risk exists of losing the asset or not being paid.”being paid.”

Country Risk AnalysisCountry Risk Analysis

Five Types of RiskFive Types of Risk Information ContentInformation Content

Nature of BusinessNature of Business Length of Tome RequiredLength of Tome Required

Who does a CRA?Who does a CRA? Lessons of International Debt CrisesLessons of International Debt Crises

External shocks occur to developing countriesExternal shocks occur to developing countries Economic policies impact defaultEconomic policies impact default Need substantial growthNeed substantial growth Social and potential political costs of developmentSocial and potential political costs of development Ripple effectsRipple effects