04_International Economic Environment Flashcards
Indicators measuring economic standing and development of a country
5 items
- GDP
- GDP Growth
- GDP/C or GNI/C [Gross National Income per Capita]
- Gini Coefficient
- Human Development Index (HDI)
GDP
= sum of gross value added by all resident producers in economy
- gives value of all produced products and services in one country and within one year
- but: doesn’t say anything about how rich a country is, nor about country’s economic development
GDP Growth
- annual change in GDP
- information about the economic development (as opposed to GDP alone)
GDP/Capita
and
GNI/Capita
GDP/Capita
= sum of gross value added by all resident producers in economy divided by population
GNI/Capita
- total annual income received by residents of a country divided by population (GNI = GDP + net recepits of income from abroad)
- can measure richness and living standard of a country/economy
- can be used to compare different countries and different years
- but: doesn’t say anuything about how equal or unequal the wealth is distributed
Gini Coefficient
- measures economic inequality
- measure of inequality of any quantity such as income or wealth, varying from value of 0 (no inequality) to 1 (if a single receives all of it
- if everyone has same income, Gini coefficient takes value of 0
g = half the relative mean difference in income among all paris of individuals in the population
Human development index (HDI)
UN Development Programme
- composite index measuring average achievement in 3 basic dimensions of human development:
- a long and healthy life
- knowledge
- a decent standard of living
HDI
Dimensions
Indicators
Dimension Index
Dimensions
- Long and healthy life
- knowledge
- a decent standard of living
Indicators
- life expectancy at birth
- expected years of schooling, mean years of schooling
- GNI per capita (PPP $)
Dimension Index
- Life expectancy index
- Education index
- GNI index
Studies on Culture and Economic Development I
-
North (1991, 1994)
- sees institutions as the “underlying determinants of economic performance”
- differentiates between formal institutions: political, economic, juridical system and
- informal institutions: customs, traditions, code of conducts which he calls culture -
Other studies
- confirm that these institutions are crucial for economic development
- Acemoglu et al 2001, 2005
- Hall Jones 1999 -
Legal System
- La Porta et al. 1999 analyze effect of different legal systems (civil vs. common)
- countries with common law derive more efficient institutions which are more important for economic growth
Studies on Culture and Economic Development II
-
Hall and Jones (1999)
- effect of language on formation of “social infrastructure” and on productivity
- positive correlation of population speaking English and a european language -
Religion
- body of several studies
- early studies see protestantism closely linked to economic prosperity
- catholic countries delayed in economic development compared to protestant
- muslim countries come to different conclusions
Ethics and Responsibility in international business context
Ethics
Business Ethics
Ethical strategy
Ethics
- refercs to accepted principles of right or wrong governing conduct of a person, members of a profession or actions of an organization
Business Ethics
- accepted principles of right or wrong governing conduct of business people
Ethical strategy
- strategy or course of action, that does not violate these accepted principles
CSR [Coporate Social Responsibility]
Reflects the awareness of corporate responsibility towards society, including social environmental and economic issues
Code of Conduct
- guidelines how to behave to ensure that business ethics and corporate social responsibility is being lived within organization
- OECD published the so called Guidelines for multinational enterprises: include a set of voluntary principles and standards for responsible business conduct, including employment practices, human rights and environmental pollution
Common issues of concern
Employment Practices
Ethical Issues
- working hours
- salary
- work safety
- child wokr
- forced or compulsory labor
- missing worker representation bodies, trade union, …
e.g. 12-hour workdays, extremely low pay and exposure to chemicals
OECD Guidelines for multinational enterprises
most important issues for Employment practices
Ethical Issues
- trade unions
- abolition of child labour
- elimination of forced labour
- equal opportunity and treatment
- promote comparable standards to those in host country
Determinants of
Un-/Ethical Behaviour
Ethical Issues
1. Decision making process [forgetting ethical impact of business decision]
2. Leadership: [leaders establish culture of organization and set example that others follow]
3. Unrealistic performance expectations [e.g. Enron pressure from parent company to meet unrealistic perforamcne goals]
4. Organization culture [e.g Enron emphasizing greed and deception]
5. Personal ethics [personal ethical codex exerts influence on the way we behave as business people]
