Chapter

part 2 Country Differences

LEARNING OBJECTIVES

After you have read this chapter you should be able to:

1 2 3 4 5 6 7

. Understand how the political systems of countries differ.

. Recognize how the economic systems of countries differ.

. Understand how the legal systems of countries differ.

. Explain what determines the level of economic development of a nation.

. Identify the macro-political and economic changes taking place worldwide.

. Describe how transition economies are moving toward market-based systems.

. Explain the implications for management practice of national differences in political economy.

chapter

2

opening case

National Differences in Political Economy

The Polish Surprise

s the financial crisis of 2008 and 2009 unfolded, countries across Europe were hit hard. A notable exception was Poland, whose economy grew by 1.5 percent during 2009, while every other economy in the European Union contracted. How did Poland achieve this? It turns out that the country benefited from sound economic policy, a stable political system, and some luck. In 1989, Poland elected its first democratic government after more than four decades of Communist rule. Since then, like many other Eastern European countries, Poland has embraced free market economic policies and free trade, and has privatized many of its state-owned businesses. In 2004 the country joined the European Union, giving it easy access to the large consumer markets of Western Europe. All this helped transform Poland into a major exporter. Exports account for about 40 percent of GDP (in contrast, they account for around 12 percent in the United States). As a consequence, between 1989 and 2009 the country recorded the highest sustained growth in the region—real GDP doubled over this period, compared to a 70 percent increase in neighboring Slovakia and 45 percent in the Czech Republic. The government of the country has also been fiscally conservative, keeping public debt in...