2.1PoliticalSystemDefinition:Political Systemsis the systemof government inacountry.（政治体制）How to assessthe Political system?-Democracy and Totalitarianism-Collectivism and IndividualismThe political risks
2.1 Political System Definition: Political Systems is the system of government in a country. (政治体制） How to assess the Political system？ - Democracy and Totalitarianism - Collectivism and Individualism -The political risks
2.1.1 Democracy and Totalitarianism· Democracy（民主主义）is a political systemin which government is by the people, exercisedeither directly or through elected representativesTotalitarianism（集权主义）is a form ofgovernment in which one person or political partyexercises absolute control over all spheres ofhuman life, and opposing political parties areprohibited
2.1.1 Democracy and Totalitarianism • Democracy (民主主义） is a political system in which government is by the people, exercised either directly or through elected representatives • Totalitarianism (集权主义） is a form of government in which one person or political party exercises absolute control over all spheres of human life, and opposing political parties are prohibited
NORWAYPoliticalFreedomISYA2004MostfreeLeastfreeNANLA901NodataFLLADHongKongAmericanSamoaCayman IslandsMonacoSanMarinoU.K.Virgin IslandsNauruSao Tome and PrincipeU.S.VirginIslandsAndorraComorosIslandsKiribatiAntigua and BarbudaDominicaLiechtensteinNetherlands AntillesSeychellesVanuatuBahamasFijiMacaoNewCaledoniaSingaporeWesternSamoaBahrainFrench PolynesiaMaldivesSolomonIslandsReunionBarbadosGrenadaMaltaSt.Kitts and NevisTongaBermudaGuadeloupeMartiniqueSt.LuciaTrinidad andTobagoCape VerdeIslandsGuamMauritiusSt.VincentTuvalu
Implications:·Doingbusiness in Democracies:- Stable business environment through the lawsthat protect the private property right;-Commerce prospers when private sectors existto make profits. Doing business in Totalitarianism :-More supportive, less political opposition;- May need to pay bribes and kickbacks-Risky- in legal system
Implications: •Doing business in Democracies: -Stable business environment through the laws that protect the private property right; - Commerce prospers when private sectors exist to make profits. •Doing business in Totalitarianism : - More supportive, less political opposition; - May need to pay bribes and kickbacks - Risky- in legal system
2.1.2 political risksPoliticalrisk:The likelihood that a government orsociety willundergo political changes that negatively affectlocalbusinessactivityTypesofPoliticalrisksMacro risk threatens all companiesregardless of industry .Macro risk affectsequally all companies in a country, bothdomestic and international :-Micro risk threatens companies within aparticular industryor even smallergroups
2.1.2 political risks •Political risk： The likelihood that a government or society will undergo political changes that negatively affect local business activity. •Types of Political risks - Macro risk threatens all companies regardless of industry .Macro risk affects equally all companies in a country, both domestic and international . - Micro risk threatens companies within a particular industry or even smaller groups