DB week 8-10

Hello everyone,
I would like to discuss on question 1:
DB 1- Impact of Political System on Economic Growth
Looking back at history, most East Asian countries were under some form of authoritarian
government during the period of take-off; for example, General Chiang Kai-shek was head of
Taiwan, General Park Chung He was head of South Korea, the British government ruled in
Hong Kong, and the military ruled Thailand.
Does the political system have anything to do with the miracle?
Answer:
Political system influences the economic growth of a country.
Types of political systems:

 Democracy
 Monarchy
 Authoritarianism and Totalitarianism
Factors that influence the economic growth of a country:

 Natural resources
 Infrastructure
 Population
 Human capital
 Technology
 Law
Politics affect an economy in several ways: -
Political system
The political system is the shape of the presidency within a country. This consists of whether
a government is democratic, authoritarian, communist, or other. The political system type
impacts the guidelines that influence non-public and public economic development. For
example, in a democratic nation, people can gain small business loans and start their own
companies. The business can expand exponentially and pay employees different salary rates
depending on the job scope. In a communist nation, strict rules include paying all workforce
equally, which could affect how organizations function and save you boom that might
increase financial development.
Political stability or instability
Political stability, or instability, refers back to the reliability and sturdiness of a government's
structures. The greater the strength of a political system is, the lesser the hazard a business
operating in that country will face. Nations wherein there's an excessive hazard of terrorism
or internal conflicts are less stable. This makes starting and working a business high-risked
and unstable withinside the region. When a country is going to war, these decreases, and it
could damage the currency trading rate compared to that of different nations. Thus, much
fewer solid structures are less likely to see growth in monetary improvement because
they're unstable to function.

Policy management
Policy management refers to how nicely the government monitors and enforces national
and international policies or legal guidelines. The government did not implement countries
wherein copyright and legal piracy guidelines are less suitable for companies. Failure to
implement copyright or piracy laws means that an organization might not make a profit,
and, in turn, this will increase the threat of operating in the region. For example, an
organization that wants to sell music may change its thoughts because this may not
generate profit. Everyone will illegally start downloading the music for free.

Corruption
The level of corruption identifies the extent of dishonest, unethical, and unlawful practices
imposed on people and companies operating in a region. Corruption can consist of bribing
politicians, bribing local businesses for materials, or paying to prevent business competition
from getting into the market. Imagine that a corporation can pay the government to hold a
competitor out. This prevents further economic development and may cause a monopoly
that makes services overly expensive.

Freedom Around the World (Based on Extent of Political Rights and Civil Liberties)
The political system does have an impact on economic growth. Authoritarian capitalism is a
financial system where a capitalist market economy exists with an authoritarian
government. Related to and overlapping with nation capitalism, a system wherein the
country undertakes business activity; authoritarian capitalism combines private assets and
the functioning of marketplace forces with suppressing dissent, restrictions on speech
freedom, and biased elections with a single dominant political party in the country.
Countries commonly known as authoritarian capitalist states are China ever since the
financial reforms, Hungary, Russia, Chile, Singapore, and Turkey, in addition to fascist
regimes and military dictatorships throughout the Cold War. Political scientists disagree with
the long-run sustainability of authoritarian capitalism, with arguments each for and in
opposition to the long-time period viability of political repression along with a capitalist
free-marketplace economic system.

Reference:
Source: Adapted from Freedom House. (2010). Map of freedom in the world. Retrieved
from http://www.freedomhouse.org/template.cfm?page=363&year=2010.
Political Regimes and Economic Growth, Journal of Economic Perspectives—Volume 7,
Number 3—Summer 1993—Pages 51–69
Pettinger, T., Wang, S., & Sreyneath. (2021, May 25). The relationship between
economics and politics. Economics Help. Retrieved November 22, 2021, from
https://www.economicshelp.org/blog/11298/concepts/the-relationship-between-
economics-and-politics/.
Authoritarian capitalism. owlapps. (n.d.). Retrieved November 23, 2021, from
http://www.owlapps.net/owlapps_apps/articles?id=58301943&lang=en.
Hello everyone,
I would like to discuss on question 2:
DB 2- Effect of FDI Inflow

Discuss the positive and negative contributions of FDI inflow to the competitive advantage
of host countries with regard to the following issues:
• Entrepreneurship • Efficiency • Political Social, and cultural issues

Answer:
Positive and negative impact of Foreign Direct Investment
Liberalization policy is growing globally because the 90s have revolutionized the economic
system and provided a fillip to their domestic productions. Developed nations invested cash
in foreign direct investment into South American and East Asian countries to transform them
from an agrestic outpost into industrial economies. Foreign Deposit Investment, the
acronym of foreign direct investment, has proved to be a boon for the nations, but it has its
disadvantage.

Advantages of Foreign Direct Investment

1. Stimulate Economic Development
Foreign direct investment can stimulate the country's monetary goal, developing greater
conducive surroundings for the investors and benefiting local industries.

2. Facile International Trade

A nation has its import tariff, which is one reason why trading with it is difficult. Some
industries usually require a presence in the international markets to ensure their sales and
goal target will be met. With Foreign Direct Investment, all these are achievable.

3. Economic and employment boom

Foreign direct investment creates employment opportunities, as investors construct new
businesses in the targeted countries and create new opportunities. This increased income
and increased buying power to the people, resulting in a financial boom.
4. Human Capital Resources Development
One massive advantage introduced by FDI is the improvement of human capital sources,
which is also frequently understated because it is not immediately apparent. Human capital
is the competence and expertise of these capabilities carried out labor, known as the
workforce. The attributes gained through training and sharing experience could increase
education and overall human capital. Its resource isn't always a tangible asset that is owned
through companies but on loan. A country with Foreign Direct Investment can significantly
advantage by growing its human resources and maintaining ownership.

5. Tax Incentive
Parent businesses could also provide foreign direct investment to get extra expertise,
technology, and products. As a foreign investor, you could obtain tax incentives to be highly
beneficial in your chosen area of business.

6. Transfer of Resource
Foreign direct investment will permit resource transfer and other knowledge exchanges,
wherein various countries are given access to new technology and skills.

7. Less Disparity Between Revenues and Costs.

Foreign direct investment can lessen the disparity between revenues and costs. With such,
countries can ensure that production costs can be equal and may be bought easily.

8. Increase in Productivity
The facilities and equipment supplied through foreign investors can increase a workforce's
productiveness in the targeted country.

9. Income Increment
Another massive benefit of foreign direct investment is the growth of the target country's
profits. With more jobs and higher wages, national income usually increases. As a result, the
economic boom is spurred. Take note that large businesses could generally provide better
salary tiers than what you will discover in the targeted country, leading to an increment in
profits.
Disadvantages of Foreign Direct Investment
1. Domestic Investment Hindrance
As it focuses its resources somewhere apart from the investor's home country, foreign
direct investment can sometimes hinder domestic investment.

2. Risk from Political Changes

Political issues in different countries can immediately change, foreign direct investment is
hazardous. Plus, most of the risk elements that you're going to see are extraordinarily high.

3. Negative Influence on Exchange Rates

Foreign direct investments can often affect exchange rates to the advantage of one country
and the detriment of another.

4. Higher Costs
Investment in a foreign country is more expensive than exported goods. So, it is very vital to
put together sufficient cash to set up operations.

5. Economic Non-Viability
Considering that foreign direct investments can be capital-in-depth from the factor of view
of the investor, it could often be precarious.

6. Expropriation
Remember that political modifications can also result in expropriation, which is a scenario
where the government could control your property and assets.

7. Country's Investment Negative Impact

The guidelines that govern foreign exchange rates and direct investments may negatively
affect investing in a country. Investment can be banned in some foreign markets; this means
that that it is not possible to pursue an inviting opportunity.

8. Modern-Day Economic Colonialism

Many third-world nations, or countries with colonialism history, fear that foreign direct
investment could bring about some forms of modern-day economic colonialism, exposing
host nations and leaving them vulnerable to foreign companies' exploitations.

Conclusion
Investment in another country's economy, buying into a foreign corporation, or in any other
case expanding your business overseas may be financially profitable. It can offer you the
boost needed to leap to a brand-new level of success. However, foreign direct investment
also contains risks, and it is rather critical to evaluate the economic climate before doing it.
Also, it's far crucial to hire a financial expert who's conversant in working internationally, as
they may provide a clear view of the prevailing economic landscape for your target country.
They may even assist you in monitoring marketplace stability and predicting future growth.

Reference:
Chief, E. in. (2018, August 3). 17 Big Advantages and disadvantages of foreign direct
investment. ConnectUS. Retrieved November 23, 2021, from https://connectusfund.org/17-
big-advantages-and-disadvantages-of-foreign-direct-investment.
Positive and negative impact of FDI: My essay point. My Essay Point |. (2021, August 5).
Retrieved November 23, 2021, from https://myessaypoint.com/positive-negative-impact-
fdi.
Foreign direct investment statistics - how countries measure FDI 2001. International
Monetary Fund. (n.d.). Retrieved November 23, 2021, from
https://www.imf.org/external/pubs/ft/fdis/2003/.

Hello everyone,
Question 3:
DB 3- Reflective Summary Posting Weeks 8-10
For your reflective summary posting of week 8-10, post the following to the discussion
board:
A summary of the discussion that took place during weeks 8-10
Identify and highlight the key discussion board contributions YOU made during those 3
weeks
Nominate two other postings (from other students) that you felt were particularly helpful
or insightful and tell us why.

On this post, I would like to summarize the discussion on DB during week 8 to 10:
We had discussed on the impact of political system on economic growth, learned that
leaders were visionary enough to believe and embody the concept that economic prosperity
can mollify their political aspiration and political survival without economic growth and
development with good social policies is precarious with potential disastrous political
consequences. Also, we had discussed the positive and negatives effects of Foreign Direct
Investments.

The highlights that I would like to identify in this key discussion board is:
I had shared types of political systems and factors that influence the economic growth of a
country.
Effects of politics towards the economy:

 Political system
 Political stability and instability
 Policy management
 Corruption

Positive and negative impact of Foreign Direct Investment

Advantages

 Stimulate Economic Development

 Facile International Trade
 Economic and employment boom
 Human Capital Resources Development
  Tax Incentive
 Transfer of Resource
 Less Disparity Between Revenues and Costs
 Increase in Productivity
 Income Increment

Disadvantages

 Domestic Investment Hindrance

 Risk from Political Changes
 Negative Influence on Exchange Rates
 Higher Costs
 Economic Non-Viability
 Expropriation
 Country's Investment Negative Impact
 Modern-Day Economic Colonialism

I would like to nominate Elroon and Syed Hussain as they discussed very informatively and
aided in understanding the subject comprehensively.

Elroon - Malaysia FDI Inflow

Syed Hussain - Stated the FDI example in India for Byju’s and Jio.

Best regards,
Rita Maran