Reflect on this weeks lecture notes and consider the following statement: Free-market economies stimulate greater economic growth, whereas state-directed economies stifle growth. Evaluate the statement and post your analysis and reasoning as to your stand in a 250-words post.

Consider Google's twisted experience in China as an example. The giant Asian nation has adopted capitalistic market principles but has not revised its political system; it is still a brutal communist-police state with limited freedom of speech and expression. Given its market size, and being still a global engine of growth, China attracts massive foreign investments and cannot be ignored by international firms. Google sought a slice of the giant nation's market but soon realized that the tension between China's political policies and economic opportunities can be costly and inhibitive. At the heart of the "googling" experience is the liberty that the end-user has when searching for a desired term, idea, or a concept. Thus, any limitations or exclusions that are built into, or imposed on the search engine limit the end-user experience and deem the service counterproductive and contrary to Google's vision and mission. Google's experience in China, given the limitations on any search that has been dictated by the Chinese government, aside from being controversial, also stands contrary to the very existence of Google, and threatened the firm's reputation and image; Google's entry to China was risky, and its quick exit and re-entry turned out costly and carried diminished benefits to the Chinese customer and end-user. Now, reflect on the company's history in China. Has Google failed in its due-diligence? Have the political, legal, and cultural differences, within the Chinese context, been factored in as Google crafted its entry strategy to that country? Should we assume that the process was flawed given Google's hasty exit and re-entry to the Chinese marketplace? This week's reading provides an overview of key concepts that highlight country differences among several key dimensions. Chief among them are the notions of collectivism versus individualism; democracy versus totalitarianism; free market economy versus command, and mix economies; prevalence of contract law, property rights, and corruption; the existence of safeguards such as product safety and liability; government's deregulation and privatization tendencies. Our reading further examines the implications that the changing political economy has for managers, and concludes with benefits, costs, and risks considerations that must be accounted for by firms' managers. Objectives By the end of this week, you should be able to: - Discuss how the political, economic, and legal systems of countries differ - Evaluate and summarize what determines the level of economic development of a nation - Analyze the main arguments in the debate over the political and economic trends and changes taking place worldwide - Apply a conceptual framework that explains how transition economies are moving towards market-based systems - Explain the implications for management practice of national difference in political economy In his seminal work, sociologist Malcolm Waters reviews the unifying tendencies inherent in globalization despite world differences. Waters proposes a multi-dimensional theory of globalization, and offers an explanatory Theorem with the economy, polity, and culture at its core. Waters combines three independent dimensions to explain several evolving dynamics: Marx's logic of the economy and material production; Parson's view of culture; and Held's political argument for the emergence of global governance that severely curtails the powers of the nation-state. A synthesis of these thinkers' key arguments enabled Waters to identify the following eight intertwined and evolving dynamics: The emergence of capitalism signifies a prime globalizing dynamic as it confers significant power on a party in control of it. Capitalism offers a liberation from the constraints of tradition as individuals and communities experience an increase in level of material welfare. Such modernization tendencies release economic and political activities from local contexts enabling them to re-converge on national and transnational levels. Seeking to sustain national goals compelled states to also pursue relations with other states; during the 19th century, the main processes were wars, alliances and colonialism. In the 20th century, they include trade, capital, and cultural relations. International relations, in today's world, are but one among other linkages driving integration of societies. The emergences of "transnational practices" extend beyond economic exchanges to include ideas, tastes, and culture. Last but not least, electronic communications and rapid transit systems are drivers of the emergence of transnational practices. A careful assessment of these dynamics led Waters to conclude as to their multi-causal nature, with subjectivity and culture as central factors. Furthermore, the study of said dynamics allows Waters to propose a new paradigm of globalization as a unifying force that transcends national differences, topples walls and erects bridges across societies and territories. The paradigm's theoretical elements include: - Globalization involves accelerated economic systematization, international relations, and an emerging global culture. - Globalization is reflexive; individuals orient themselves to the world as a whole; firms explore global markets; and governments commit resources to the maintenance of world order. - Globalization brings about the demise of particularism; distinctions between public and private, home and work, life-chances and lifestyles - can no longer apply. - Finally, globalization involves a mix of risk and trust; individuals extend trust to unknown persons, to impersonal forces and norms (e.g. the "market"). Hence, the fiduciary commitment of all participants is a precondition for the well-being of each individual. Otherwise, a fiduciary panic (e.g. recent financial markets collapse) increases the global risk of systemic collapse. - Expanding on the proposed paradigm, Waters offers a theorem that he traces to three structurally autonomous "regions of social life:" the economy, polity, and culture. - The economy is governed by social arrangements for production, exchange, distribution and consumption of capital, labor, and goods. The polity is governed by social arrangements for the concentration and application of power to control populations, territories, and other assets with regard to regulation, redistribution, civil rights, and taxation. Culture is governed by social arrangements for the production, exchange, and expression of symbols that represent facts, affects, beliefs, preferences, and tastes What follows, according to Waters' logic, is that material exchanges tend to tie social arrangements to localized spaces, ruling out long-distance trade unless cost advantages are involved. Power exchanges tend to tie social arrangements to extended territories harnessing resources toward territorial integrity and sovereignty. Symbolic exchanges release social arrangements from spatial referents. Waters' theorem suggests that material exchanges Iocalize; political exchanges internationalize; and symbolic exchanges globalize. Ultimately, in a highly integrated marketplace, the cultural arena is far more developed than the other two Tying it All Together How do we tie in Waters' theorem to this week's readings? As a starting point, consider Waters' argument that economies trend toward marketization - seeking freedom from constraints, command, and monopolization; politics trend towards liberalization and democratization; and culture trends toward universalization - both high level of generality and extreme levels of cultural differentiation. This week's readings focus primarily on countries' political and economic systems and their impact on the economic progress of nations, but they also address current trends concerning the spread of democracy and market-based economic principles. Despite the bridges that globalization erects, and the falling walls, national differences still remain and must be further considered by firms' managers. The trends so thoroughly assessed, and eloquently worded by Waters are widely accepted, and so is the notion that the position of a country on the economic and political curve determines its overall attractiveness both as a potential market or an investment target. One concluding general observation to be made is that the costs and risks associated with doing business in a foreign country are typically lower in economically advanced and politically stable democratic nations. This view deserves to be given a serious consideration by managers as they assess entry strategies as well as Waters' theorem and logic. Foreign Direct Investment | International Business. [14:16 ] In 2020, Starbucks opened 1,404 new stores, and 1,117 of them were located outside the U.S. In the same year, Tesla built and expanded its Gigafactories in China and Germany. In early 2021, Samsung announced a plan to invest as much as $17 billion to build a chip plant in the U.S. Why do these industry giants invest so heavily in foreign countries even during a global pandemic? What are the impacts of those investments? To better understand the answers to these questions, we need to learn about an important term in the international business field: foreign direct investment