Module 2
intergovernmental cooperation and facilitates economic, political,
Political System - defines the process for making official government
decisions. It is usually compared to the legal system, economic
system, cultural system, and other social systems
Two political systems in general that are popular among nations:
democracy and totalitarianism
Democracy - political system where the people elect the leaders of
the government as a representative of the people in managing the
affairs of the government.
Totalitarian- (also known as a dictatorship) form of government,
the absolute control of managing the affairs of the state is on a
single person or political party The control of the totalitarian
government extends beyond political and economic affairs of the
state; it includes the attitudes, beliefs and values of the citizen. Most
countries under this form of government the constitutional
guarantees like freedom of expression, free and fair election, etc.
are absent.
FOUR MAJOR TYPES OF TOTALITARIANISM:
- communist - right-wing
- theocratic - tribal
Economic System - system of production, resource allocation and
distribution of goods and services within a society or a given
geographic area
- Philippines has Mix Economic System
1. Mix Economic System – Private Freedom, firms has a say..
protects private property and allows a level of economic
freedom in the use of capital, but also allows for
governments to interfere in economic activities in order to
achieve social aims.
2. Traditional Economies – Decisions are guided by customs.
Often based on one or a few of agriculture, hunting,
fishing, and gathering. Barter and trade is often used in
place of money. There is rarely a surplus produced. In
other words, most of the goods and services are fully used.
3. Command Economy – Related to dictatorship.
Government controls mostly. Connected to Political
System. The government, rather than the free market,
determines what goods should be produced, how much
should be produced, and the price at which the goods are
offered for sale. It also determines investments and
incomes.
4. Market Economy – an economic system in which
production and prices are determined by unrestricted
competition between privately owned businesses.. Most
countries that are rich implements this like US, UK, and
Japan
APEC – Asia – Pacific Economic Cooperation is an inter-
governmental forum for 21 member economies in the Pacific Rim
that promotes free trade throughout the Asia – Pacific region.
ASEAN – Association of Southeast Asian Nations, promotes
security, military, educational, and sociocultural integration among
its members and other countries in Asia. ASEAN also regularly
engages other countries in the Asia-Pacific region and beyond.
Surplus – excess of supply over demand
Shortage – demand > supply
Legal System - responsible for the regulation of the behavior of
people and other entities
Common law - is based on tradition, precedent, and customs.
Traditions refer to a country's legal history, precedent to cases that
have come before the courts in the past, and customs to the ways in
which laws are applied in a specific situation
Civil law - system is based on a detailed set of laws organized into
codes
Theocratic law - system is one in which the law is based on religious
teachings. Islamic law is the most widely practiced theocratic law" in
modern times
Anti – Red Tape Authority – R.A. 11032 “Ease of doing business
service delivery act of 2018” Eliminates unnecessary procedures and
corruption
World Price – Price of a good that prevails in the world market for
that good
*If the world price of a product is lower than the domestic price then
a country should import (Vice versa)
Comparative Advantage – the ability to produce a good at lower
opportunity cost than another producer
Property Rights - refer to the legal rights over the use to which a
resource is put and over the use made of any income that may be
derived from that resource. Ability of an individual to own control
over resources
Property - a resource over which an individual or business holds a
legal title
Property Actions - refers to theft, piracy, blackmail, and the like by
private individuals or groups
Public Action - violates property rights. It is done when public
officials like politicians and government bureaucrats, extort income,
resources, or the property itself from property holders
Productivity – outcome of an economy
PROTECTION OF INTELLECTUAL PROPERTY
Intellectual Property - Public Action violates property rights. It is  It is one of the structural transformations that occurred in
done when public officials like politicians and government global trade. The production become more fragmented
bureaucrats, extort income, resources, or the property itself from and an increase in the share of trade in parts were
property holders observed. This term was coined by Baldwin and Lopez-
Gonzalez.
Patents - it grants the inventor of a new product or process Expansion of supply-chain trade
exclusive rights for a defined period to the manufacture, use, or sale  Which of the following describes the findings on the
of that invention dominant assumptions of international business?
Globalization of business is driven by
Copyrights - the exclusive legal rights of authors, composers, comparative advantage of host countries and
playwrights, artists and publishers to publish and disperse their work domestic market conditions
as they see fit  This term was coined by Buckley in international business
literature. It is described as the integration of production
Trademarks - are designs and names, often officially registered, by activities in Asia into the global strategies of multinational
which merchants or manufacturers designate and differentiate their firms.
product Global Factory
 The integration of the national market into a global market
Product Safety - Laws that set certain safety standards to which a place is described as what?
product must adhere Globalization of markets
 The ability of the business to locate facilities in multiple
Product Liability - involves holding a firm and its officers responsible locations/countries is an example of impact on what?
when a product causes injury, death, or damage Production globalization
 Which of the following best describes a global business?
The specific measure of the 12 areas of doing business activities are
A company which expands business operations
listed below.
in multiple countries
 Which of the following are the benefits of distributing
Opening a Business
- starting a business operations of business in multiple locations?
- employing workers Reduction in production and distribution cost
 What is the convergence in the principles of GVC, strategy,
Getting a location networks, and international business with respect to
- dealing with construction permits dominant assumption?
- getting electricity The environment is complex which created
- registering property
interdependence of people/organization hence
Accessing finance cooperation is needed.
- getting credit  It is described as an approach in production which
- protecting minority investors concerns with fragmentation across borders.
Offshoring
Dealing with day to day operations
 Which of the following primarily facilitated the
- paying taxes
opportunities for business to market internationally?
- trading across borders
- contracting with the government Reduction in trade barriers
 It is described as the sourcing of goods and services by
Operating in a secure business environment firms globally to take advantage of cost and quality of
- enforcing contracts factors of production
- resolving insolvency Globalization of production
 Land, labor and capital are examples of what?
The ease of doing business ranking compares economies with one
Factors of production
another; the ease of doing business scores benchmark economies
 What is the dominant theory which explains the
with respect to regulatory best practice, showing the proximity to
motivation of multinational enterprises to globalize their
the best regulatory performance on each Doing Business Indicator
business?
Multinational enterprise wishes to maximize
the performance of the business
Quiz 1  When goods can travel freely between countries with no
tariffs charged when it crosses borders is called what?
 What method was used by the author to investigate the Free trade
questions for their research?
Searching for the terms in the published  It is described as an approach in production which
literature of Scopus platform concerns with fragmentation across business.
Outsourcing
  What is the convergence in the principles of GVC, strategy,
networks, and international business with respect to the
dominant theory?
Organizations are resource dependent:
networks and exchange are considered
resources
 The impact of globalization which is described as the
decline in the barriers of selling products internationally
and with few border restrictions.
Market globalization
 Which of the following concepts and literature strands
were studied by the authors Humprey et.al (2019) in order
to determine restrictions?
GVC, Business networks, strategy, and
international business
 Which statement DOES NOT reflect the influence of
globalization?
The way of life of people remains primitive and
traditional, free from outside influence.
Quiz 2
Countries imposed higher tariff restriction on imported products and
it caused the decline of trade barriers globally False
Internet and World Wide Web are inventions which help improve
transportation of technologies False
The interactions of people through technologies have created
networks and communities that facilitated globalization True
The efficiency gains associated with containerization has driven the
globalization of markets and production True
The paradigm shift in managing global economy is a driver of
globalization True
Internalization trade are typically conducted through horizontal and
vertical trade True
FDI is an operations of business conducted in the domestic market
of the firm False
Cross border business and international business are identical terms
True
URL provided in the internet is free True
Satellites are machines sent to outer space and serve as brain of the
computer False
Quiz 3
Countries imposed higher tariff restriction on imported products and
it caused the decline of trade barriers globally False
Internet and World Wide Web are inventions which help improve
transportation of technologies False
The interactions of people through technologies have created
networks and communities that facilitated globalization True
The efficiency gains associated with containerization has driven the
globalization of markets and production True
The paradigm shift in managing global economy is a driver of
globalization True
Internalization trade are typically conducted through horizontal and
vertical trade True
FDI is an operations of business conducted in the domestic market
of the firm False
Cross border business and international business are identical terms
True
URL provided in the internet is free True
Satellites are machines sent to outer space and serve as brain of the
computer False
Quiz 4
The unauthorized use or reproduction of someone else’s work
Piracy
Property that is an output of intellectual activity Intellectual
property
An official registered design and name to differentiate products
Trademarks
Laws that are set to maintain safety standards which the product
must adhere Product Safety
The firm and its officers are responsible when a product causes
injury Product Liability
Violation of property rights made by public officials Public Action
Violation of property rights made by private person Private Action
The grant of exclusive rights to an inventor of a new product for a
defined period to manufacture the invention Patent
The exclusive legal rights given to artist to publish their work
Copyrights
An act of stealing the work of another person Theft