Discuss the following:
Political economy, property rights, corruption and economic development and transformation
1) One of the components of the political economy is the economic system of a country. Discuss the differences between a market-based economy and a command economy. Include in your description of each type of economy an indication of: Who determines production? What is the role of the government? How does each type of economy sustain itself (i.e. continue to develop)?
2) What types of conditions in the political economy encourage economic growth? What is the role of strong property rights in economic growth?
3) There are two types of violation of property rights: public actions and private actions. What do private action violations involve? What do public action violations involve?
4) Describe (name and explain) the four (4) changes or developments which usually occur when a country undergoes economic transformation and moves toward a market-based economy. (hint: pay attention to the Power points)
5) Read the Country Focus on “India’s Economic Transformation.” Applying the facts of the case, answer the following questions:
a) What kind of economic system did India operate under during the period 1947-1990. What kind of economic system is India moving toward today?
b) What impact did widespread public (government) ownership of businesses and extensive government regulations have on new business formation and investment and the rate and level of economic growth in India during the 1947-1990 timeframe?
c) What impact did privatization and deregulation (and hence the further development of a legal system) have on the efficiency of business, new business formation, and the rate of economic growth during the post-1990 period?
d) India is still facing challenges to achieve the maximum benefits of economic progress and be competitive in the global marketplace. Discuss the obstacles which India must still overcome to achieve economic progress (name at least three areas in which India must improve).
6) Review the Case “Siemens Bribery Scandal” and answer the following questions
a) What explains the high level of corruption at Siemens? How did managers engaged in corruption rationalize it?
b) What is the impact of corrupt behavior by Siemens on the business environment in countries where it does business? How does the kind of corruption Siemens engaged in distort competition?
7) Mini-Research on Corruption
The level of corruption varies from country to country. Explore this topic further by doing research online. Go to the Transparency International website at www.transparency.org. At the top of the home page, click on “What We Do” and look at the drop down menu. Select “Corruption by Country.” Choose a country to investigate by either using the drop down menu on the top right hand side or by clicking on the map. The drop down menus in each country section can lead to more information. Research the level of corruption in the country you have chosen, the type of corruption that is present in the country, etc. and write at least one paragraph (minimum five to six sentences) analyzing the state of corruption in the country and describing the types and level of corruption in the country you have chosen.