National Differences and Political Economy
There are is a big relationship between corruption in a country and economic growth. Corruption will affect a country’s economic growth mostly negatively (Hill, Richardson & McKaig, 2006). Corruption among government officials goes hand in hand with public auction which is the theft, piracy, and blackmail by private individuals or individuals or groups. Public auction and corruption occurs public officials acquire income through excessive taxation. Requiring expensive licenses or permits from property holders, or taking property into ownership by the government without compensating the owners (Hill, Richardson & McKaig, 2006). Corruption can also be in the form of bribing a government official to obtain or maintain business and this is kept a secret because it is wrong.
This corruption has a negative effect on the economic growth. Mostly, the economic growth is determined by calculating the gross national income per head of the population. In cases of corrupt people, their income that is used in calculating the economic growth is not the actual income because of the extra money that they acquire from corruption. Corruption also brings a difference in the purchasing power parity which is also another big determinant of economic growth (Hill, Richardson & McKaig, 2006).
On the other side, corruption is not always bad and it improves the living standards of some of the people who use that money appropriately. They are able to improve their living standards and that of their family, which is also a determinant of economic growth. These people are able to improve their education and that of their children, and are able to meet the basic needs of life in a country and this is likely to contribute in improving economic growth. This in the long run will improve the economic growth because it will not just improve the life one person but will improve other lives indirectly (Hill, Richardson & McKaig, 2006).
Nobel Prize winner Amartya Sen argues that the concept of development should be broadened to include more than just economic development. He gave several factors that should be considered in the evaluation of development. These factors include: human development index, the relationship between political economy and economic progress, geography, education and their relationship with economic development. Political economy also plays a major role in economic progress and it should also be considered in determining economic growth. Innovation and entrepreneurship are said to be the engines of growth. A market economy gives economic freedom and this encourages innovation and entrepreneurship in a planned or mixed economy (Hill & Hernández, 2011) Strong property rights also contribute to economic growth because they provide a good environment for innovation, entrepreneurship and economic growth. The implementation of Sen’s view would have an influence on government policy because the government will have to focus more in thing like geography and education to improve them so as to steer economic development. Sam is correct that development should not only be looked at from the economic development view. Development is more than just economic growth (Hill & Hernández, 2011).
Geographical area of a place can determine how much that area will be developed. The level of education for the majority will also determine the rate at which the growth and development advance. The implementation of his views would ensure that all these opportunities for development are considered (Hill & Hernández, 2011). Putting greater emphasis on providing services that improve some geographical such as watering deserts for farming wound improve the rate of economic growth. Improving the quality of education and making it available to all the country’s population could also steer economic growth.
The risks of investment in Russia and Czech Republic include the following. The increased terror attacks in Russian states, the political ground and lack of available financial support (Hill & Hernández, 2011). In the Czech Republic, it is difficult to start an investment because of the financial support, and the possibility of going bankrupt. It is also difficult to invest in Russia because of the exploitation that is very common. Putting up an investment in the Czech Republic would be safer because the less chances of exploitation that will facilitate the growth of the business. The positive attitude towards entrepreneurs could also steer the growth and development of the investment (Braithwaite & Drahos, 2000). The people would see it as a center for job creation and believe that the creation of new services and goods will benefit the whole society. This will drive labor for the investment and this will also contribute to its growth because it does not run out of labor at any one time. The political environment is also favorable for the growth of an investment (Braithwaite & Drahos, 2000).
The policies of this country are better than those of Russia and this indicates that the rate of growth and development would be more rapid in the Czech Republic than in Russia. People in Russia also like self employment more than the people of the Czech Republic and this gives the latter an added advantage for investment (Hill, 2009). When there is consistent workforce and good management of funds, it is likely that the investment will not be faced with many challenges. Knowing the available risk factors is important in preventing collapse of investments. Exploring them first before putting up the business will help managers to put up appropriate strategies that can be applied in the face of various challenges (Hill, 2009). These strategies will enable the investment to survive within a challenging environment and be able to develop with time.
Braithwaite, J., & Drahos, P. (2000). Global business regulation. Cambridge University Press.
Hill, C. W. (2009). Global business today. McGraw-Hill Irwin.
Hill, C. W., & Hernández-Requejo, W. (2011). Global business today (Vol. 1221). McGraw-Hill/Irwin.
Hill, C. W., Richardson, T., & McKaig, T. (2006). Global business today. New York: McGraw-Hill/Irwin.