Group 2 - Political Economy Economic Development

INBUST
POLITICAL ECONOMY AND

ECONOMIC DEVELOPMENT
PRESENTATION - GROUP 2
Definition of Political Economy
Political Economy
It focuses on the interrelationships of individuals,
governments, and public policy.
Example:
U.S. - China Trade
Tariffs
Definition of Economic Development
Economic Development
Programs, policies or activities that seek to improve
the economic well-being and quality of life for a
community
Example:
Government spending
on railways etc.
1
WHAT DETERMINES THE

LEVEL OF ECONOMIC
DEVELOPMENT OF A
NATION?
7 Key Factors that determines the Level of Economic
Development of a Nation:
Income Infrastructure Education

Levels and and and
GDP Human Technological Political Human
Developmen Advancements Stability and Capital
t Index (HDI) Governance
Natural Global
Resources Integration
1. Income Levels and Gross Domestic Product
The most common measure is Gross Domestic Product per capita,
which represents the average income of a country’s citizen.
Gross Domestic Product per capita Gross Domestic Product (GDP)
A country’s economic output A global measurement used by

per person. economists to gauge the
prosperity of nations based on
economic growth.
2. Human Development Index (HDI)
HDI is a summary composite measure of a country’s

average achievements in three basic aspects of human
development:
Life Expectancy
Education
Standard of Living
3. Infrastructure and Technological Advancements
Availability of quality infrastructure and technology

roads
telecommunications
electricity
access to modern technology
4. POLITICAL STABILITY AND GOVERNANCE
Effective management of political institutions and

processes that promote economic growth and social
welfare by ensuring the rule of law, accountability,
and public trust.
5. EDUCATION AND HUMAN CAPITAL
Education level of workforce is critical for economic

development
Investing in education and training produces more

skilled workforce
Skilled workforce contributes to higher productivity

6. NATURAL RESOURCES
Availability and management of natural resources

impact economic development
Reliance on natural resources alone can lead to

‘resource curse’ and economic volatility
7. GLOBAL INTEGRATION
Greater integration into global economy through

trade, investment, and finance leads to faster
development
Openness to international trade allows access to

larger markets and foreign investments.
2
MACRO-POLITICAL AND
ECONOMIC CHANGES
OCCURING WORLDWIDE
1. GLOBALIZATION
It refers to the movement of people (labor)

and knowledge (technology) across
international borders.
2. SHIFT TOWARD MARKET ECONOMIES
A transition economy is an economy that

is in the process of transitioning from a
centralized system to a market-based
system.
3.RISE OF POPULISM AND NATIONALISM
The rise of nationalism and populism in

recent years has caused a rift in economics,
environmental factors, issues regarding
income, and governments globally.
4. TECHNOLOGICAL REVOLUTION
Advances in technology, particularly in artificial

intelligence, automation, and digital
communication, are transforming industries and
altering the global economic landscape.
This has significant implications for employment,
productivity, and economic growth.
PROS AND CONS
PROS CONS
-Improve Efficiency -Expensive
-saves Time -Shortage of Jobs
-Better Communication -Malfunctions
-Reduces Cybercrime Risks
5. ENVIRONMENTAL CONCERNS AND SUSTAINABILITY
Growing awareness of climate change and

environmental degradation drives a global shift
towards sustainable development.
6. DEMOGRAPHIC CHANGES
Aging populations in developed countries and

rapid population growth in developing regions are
creating different sets of economic challenges
and opportunities.
3
TRANSITION ECONOMIES
MOVING TOWARD
MARKET-BASED SYSTEMS
Transition Economies Moving Toward
Market-Based Systems
A transition economy undergoes a series of

structural reforms and transformation aimed
at developing market-based institutions.
1. Privatization
Privatization occurs when a government-owned
business, operation, or property becomes owned
by a private, non-government party.
Two types of privatization: government and

corporate.
2 TYPES OF PRIVATIZATION:
Government-to-Private: Corporate Privatization:

The government transfers This refers to a public
ownership of specific company becoming
facilities or business privately held once again.
processes to private, for-
profit companies.
3. LEGAL AND INSTITUTIONAL
2. MARKET LIBERALIZATION
REFORMS
Market liberalization is the Legal reforms focus on

process of reducing or updating or creating laws
removing government to better protect individual
regulations and rights, promote social
justice, and support
restrictions in an
economic growth.
economy to encourage
Institutional reforms in
more competition and business refer to changes
efficiency. in the rules, regulations,
and policies that govern
how businesses operate.
5. INTEGRATION INTO THE
4. CURRENCY STABILIZATION
GLOBAL ECONOMY
Currency stabilization in Integrating into the

transition economies is Global Economy offers
crucial as it helps to access to capital,
reduce economic technology, new markets,
problems, build investor and competitive
confidence, and support pressure, all of which
growth with the help of contribute to sustainable
international economic development
organizations like the IMF. and stability.
6. Challenges in Transition
Transition economies face challenges such as:
Social Dislocation
High Unemployment, and
Increasing Inequality
4
IMPLICATIONS FOR
MANAGEMENT PRACTICE
OF NATIONAL
DIFFERENCES IN POLITICAL
ECONOMY
National Differences
One is to learn from others, particularly from more
successful foreign competitors.
Political Economy
refers to a branch of social sciences that focuses on
relationship between individuals, governments, and
public policy.
It is also used to describe the policies set by

governments that affect their nations’ economies.
National Differences in political economy
can have significant implications for management

practices. Understandig these differences is
crucial for managers operating in the global
market.
1. Legal and Regulatory Environment
Different legal systems, which might differ greatly

between nations, must be negotiated by managers.
This entails being aware of corporate governance

guidelines, labor rules, and environmental requirements.
Examples:
Minimum Wage, Paid Leaves
2. Cultural Differences
Political economies are often shaped by cultural factors,

which influence business practices.
Examples:
1. Enhanced Innovation and Creativity
2. Improved Decision Making
3. Increased Employee Engagement and Satisfaction
When Apple unveiled the new iPhone 15 earlier in September,
they touted the shift to a USB-C port as an advancement
that allows users to use a single cord to charge all their
devices. While this sounds great, it isn’t anything new — most
iPhone competitors switched to USB-C around 2016. Why did
it take Apple so long to switch to the “universally accepted
standard?”
3. Risk Management
Political risk management (PRM) is how organizations

anticipate, identify, and respond to political changes that
affect their day-to-day operations. It is often associated
with international relations, but the same strategies can be
applied to domestic affairs.
4. Market Entry Strategies
Market entry strategies are methods companies use
to plan, distribute and deliver goods to international
markets. The cost and level of a company's control
over distribution can vary depending on the strategy
it chooses.
3 PRIMARY FACTORS THAT AFFECT A COMPANY’S CHOICE OF
INTERNATIONAL MARKET ENTRY STRATEGY ARE:
MARKETING SOURCING CONTROL

5. HUMAN RESOURCE
6. ETHICAL CONSIDERATIONS
MANAGEMENT
Labor Unions and Labor Corruption

Laws
Human Rights and
Flexible Labor Markets Environmental
Flexible work Sustainability
arrangements
THANK YOU
FOR YOUR ATTENTION AND COOPERATION
SY, HONEY JEREMAE

PERUCHO, JANNA MANUELA
MAGLANTAY, MARIANNE
SORALLO,DAPHNE
LUMBANG, FRANCINE
ARUTA,LARA
JACINTO, HONEY GRACE
MATEO, JAYCIL
BAYON-ON, MELVIC JAN
OPILDA, AIRA

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INBUST

POLITICAL ECONOMY AND

WHAT DETERMINES THE

Income Infrastructure Education

Gross Domestic Product per capita Gross Domestic Product (GDP)

A country’s economic output A global measurement used by

HDI is a summary composite measure of a country’s

Availability of quality infrastructure and technology

Effective management of political institutions and

Education level of workforce is critical for economic

Investing in education and training produces more

Skilled workforce contributes to higher productivity

Availability and management of natural resources

Reliance on natural resources alone can lead to

Greater integration into global economy through

Openness to international trade allows access to

It refers to the movement of people (labor)

A transition economy is an economy that

The rise of nationalism and populism in

Advances in technology, particularly in artificial

Growing awareness of climate change and

Aging populations in developed countries and

A transition economy undergoes a series of

Two types of privatization: government and

Government-to-Private: Corporate Privatization:

Market liberalization is the Legal reforms focus on

Currency stabilization in Integrating into the

Transition economies face challenges such as:

High Unemployment, and

It is also used to describe the policies set by

can have significant implications for management

Different legal systems, which might differ greatly

This entails being aware of corporate governance

Political economies are often shaped by cultural factors,

Political risk management (PRM) is how organizations

MARKETING SOURCING CONTROL

Labor Unions and Labor Corruption

SY, HONEY JEREMAE

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