Effective environmental policies and institutional frameworks are needed at the local, regional, national and international levels. The impact of trade liberalization on a country`s well-being depends on the country`s adequate environmental policies (e.g. proper pricing of depleted environmental resources). Strict environmental policies are compatible with an open trade regime because they create markets for environmental goods that can then be exported to countries that follow the example of environmental objectives – the so-called first-mover advantage. This is especially true for complex technologies such as renewables. The Chinese Communist Party outlines its goals in five-year plans. The latter highlights the government`s goal of making China a technological powerhouse by 2020, with a focus on key areas such as green technologies, hence the expansion of the solar industry. Proponents of free trade perceive this state-led intervention as an unfair bias against the global private sector. Nevertheless, global companies continue to seek out the Chinese market, which offers much-needed growth and opportunities. Jason Dean, Andrew Browne and Shai Oster, “China`s `State Capitalism` Sparks Global Backlash,” Wall Street Journal, November 16, 2010, accessed December 22, 2010, online.wsj.com/article/SB10001424052748703514904575602731006315198.html. Hymer`s second phase is his 1968 neoclassical paper, which contains a theory of internationalization and explains the growth direction of international business expansion. In a later phase, Hymer moved to a more Marxist approach, explaining that multinationals, as agents of an international capitalist system, cause conflicts and contradictions, causing inequality and poverty in the world, among other things. Hymer is the “father of multinational enterprise theory” and explains the motivations of companies doing direct business abroad.
Terrorism is a deliberate act of violence against a group of people. In most cases, acts of terrorism stem from hatred of religious, political and cultural beliefs. One example was the infamous 9/11 attacks, dubbed terrorism because of the massive damage inflicted on American society and the global economy due to the hostility of some radical Islamic groups to Western culture. Terrorism not only affects civilians, but also harms businesses and other businesses. These impacts may include: physical vandalism or destruction of property, declining sales due to fear from consumers and governments adopting public safety restrictions. Companies that operate internationally will find it difficult to operate in a country whose security against these attacks is uncertain.  International trade standards emphasize the following: In democracies, businesses understand that most rules survive changes in government. All changes generally reflect a changing economic environment, such as the Great Depression of 2008, not a change in state actors. In order to maintain and carry out successful business operations in foreign countries, individuals must understand how differences in culture and traditions between nations affect business practices.
This idea is known as cultural education. Without knowledge of the culture of a host country, the business strategy to penetrate foreign markets is more difficult and prone to mistakes than the market and culture of the home country. This can create a “blind spot” during the decision-making process and lead to ethnocentrism. International business education introduces the student to new concepts that can be applicable in international strategy in subjects such as marketing and operations. Not surprisingly, established democracies, such as those found in the United States, Canada, Western Europe, Japan and Australia, offer a high degree of political stability. Although many countries in Asia and Latin America are also functioning democracies, their level of development affects the stability of their economic and trade policies, which can fluctuate with changes in government. Chapter 4 “World Economies” provides more information on industrialized, developing and emerging countries. The study of political systems is vast and complex. A political systemThe system of politics and government in a country; It governs a comprehensive set of rules, regulations, institutions and attitudes. is basically the system of politics and government in a country. It governs a comprehensive set of rules, regulations, institutions and attitudes.
A key distinguishing feature of political systems is the philosophy of each system regarding the rights of the individual and group, as well as the role of government. The philosophy of any political system affects the policies that govern the local economy and business environment. It may seem obvious that companies would prefer to operate in open and democratic countries; However, it can be difficult to determine which countries meet the democratic criteria. As a result, there are a variety of institutions, including The Economist, that analyze and evaluate countries based on their openness and adherence to democratic principles. Although almost half of the world`s countries can be considered democracies, the number of “full-fledged democracies” is relatively small (only 30); 50 are classified as “imperfect democracies”. Of the remaining 87 states, 51 are authoritarian and 36 are considered “hybrid regimes”. Not surprisingly, developed OECD countries dominate among full-fledged democracies, although there are two Latin American, two Central European and one African countries, suggesting that the level of development is not a constraint. Only two Asian countries are represented: Japan and South Korea. This is in contrast to more authoritarian governments, where democracy is not in force or is only a symbolic process.
China is one of the most visible examples with its strong government and limited individual rights. Over the past two decades, however, China has sought a new balance between state planning and management of the economy. While the government remains the dominant force, controlling more than a third of the economy, more private companies have emerged. China has managed to combine government intervention with private investment to develop a robust, market-oriented economy – all in a communist form of government. This system is commonly referred to as a “socialist market economy with Chinese characteristics”. The Chinese are eager to present their version of combining authoritarian government with a market economy as a better alternative model for emerging economies like those in Africa. This new combination has also raised more questions for companies facing new issues – such as privacy, individual rights and the protection of intellectual property rights – as they try to do business with China, which is now the world`s second-largest economy behind the United States. China`s model of authoritarian government and market economy has sometimes tilted in favor of companies, usually Chinese, that understand how to handle the nuances of this new system. The Chinese government`s control over the internet, for example, has helped boost Chinese search engine Baidu, which generates more than 73 percent of Chinese search engine revenue. Baidu self-censors and, as a result, has seen its revenue increase after Google scaled back its business in the country. Rolfe Winkler, “Internet Plus China Equals Screaming Baidu,” Wall Street Journal, p. 9.
November 2010, accessed December 21, 2010, online.wsj.com/article/SB10001424052748703514904575602781130437538.html. All companies that want to operate internationally have a common goal; the desire to increase their respective economic value in international trade.