This week we focus on the role of government in economic development by supporting international business.
The current political climate in the USA might have you think that government has no business meddling with the market economy, but this is a minority view in one country at one point in time. As in any other country, government has always been involved in supporting and regulating business activities. In a recent NYT article, Eduardo Porter remarked, “for all our love of rugged individualism, government played a large and underappreciated role in reshaping the American economy before —and it could do so again.” (Porter, 2016). Even champions of market economies and capitalism like Adam Smith or David Ricardo recognized the need for government to uphold property rights (over land, equipment, patents, brands, etc), civil and labor rights (discrimination, fair compensation, minimum working age, etc), and leveling the playing field by imposing minimum environmental standards, financial transparency for publicly traded companies, minimum safety standards (e.g. for airplanes, cars, electronics). All this is to set the stage more broadly. But let’s focus on government’s role in economic development by supporting international business.
In addition to Dr Kim’s video, please take a look at these short videos: Governmentpromotion of Foreign Direct Investment in Ireland; video on Chinese counterfeiting(this one is a little goofy but still raises an important issue), then answer the following questions:
Why would a government want to promote international business, and what kind of international business exactly? How can a government support international business?
Second, bribery is a big issue when firms conduct business overseas. The USA have the strictest regulation against corruption by US firms overseas. Do you think that it is fair for the US government to require these high moral standards of US firms while other developed countries continue to let their domestic companies bribe overseas? [scroll down to see list] What can be done to eradicate the practice of bribery overseas, especially given that it is the “normal” way of doing business locally in some countries?