3-2 Assignment Economic and Political Environments Comparison (1)

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Southern New Hampshire University *

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INT-220

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Economics

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Apr 3, 2024

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INT 220 Module Three Assignment Template Economic and Political Environments Comparison Section One By researching and obtaining the required data on the countries below, we will be able to utilize this information to evaluate the pros and cons before a business decision is made of whether to expand our products of digital video conferencing cameras into a new market. To be effective in a country, a business needs to know its recent political, economic, and social history. This helps to evaluate not only the current business opportunity but also the risk of political, economic, and social changes that can impact the business (Dunung, S.P. 2020). When it comes to the data that has been collected below, all areas are important to look at and analyze before planning. The country’s economy and how it sustains itself is extremely important; however, a few data points that weigh a bit more heavily than others are that of the countries political systems, economic classification, and economic blocs. Each political system’s philosophy impacts the policies that govern the local economy and business environment (Dunung, S.P. 2020). A country’s political system can affect a business by the number of tariffs, or possible trade barriers that can make it difficult or expensive for a company to do business. In addition, if there is political instability or conflict in a country this can cause interruptions to trade, shipping, and supply chains, which can have a negative impact on the economy (Whitten, G., Dai, X., Fan, S., Pang, Y. 2020). A country’s economic classification can impact business decisions as well, based on the data that countries with higher levels of economic development tend to have better terms of trade than countries that have lower levels of economic development (Ortiz-Ospina, E., Beltekian, D., Roser, M. 2018). Finally, knowing and understanding what economic blocs a country belongs to also provides input as to what other connections, support, and allies a country may have. Section Two Political and Economic Data Collection Below is the political and economic data collection for Mexico, Germany, and China; as well as an explanation for each selected statistic on order to provide insight to the business owner. Category Mexico Germany China Political System Democratic Democratic Federal Parliamentary Republic Communist Party of China (CCP) Economic Classification Mixed Economy Mixed Economy Socialist Market Economy 1

Category Mexico Germany China Economic Blocs Impacting Trade World Trade Organization (WTO), Asia-Pacific Economic Cooperation (APEC), G- 20, Organization for Economic Cooperation and Development (OECD), 13 Free Trade Agreements (FTAs) with 50 countries, USMCA and FTAs with European Union, European Free Trade Area, Japan, Israel, 10 countries in Latin America, 11 countries Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and Pacific Alliance a trade bloc formed by Mexico, Chile, Colombia, and Peru. World Trade Organization (WTO), General Agreements on Tariffs and Trade (GATT), the European Union (EU), the North Atlantic Treaty Organization (NATO), and the Organization for Economic Cooperation and Development (OECD). World Trade Organization (WTO), International Monetary Fund (IMF), The World Bank, Paris Climate Agreement, World International Property Organization, Asian Development Bank, Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Gross Domestic Product $2.492 Trillion as of 2022 $4.503 Trillion as of 2022 $25.604 Trillion as of 2022 Purchasing Power Parity GDP (Purchasing Power Parity, int$ Billions): $3,377.27 as of 2022 GDP (Purchasing Power Parity, int$ Billions): $5,009.46 as of 2022 GDP (Purchasing Power Parity, int$ Billions): $31,555.11 as of 2022 Gross Domestic Product Per Capita $25,670 as of 2022 $59,719 as of 2022 $21,785 as of 2022  Political System – This can affect a business by the number of tariffs, or possible trade barriers that can make it difficult or expensive for a company to do business, in addition, if there is political instability or conflict in a country this can cause interruptions to trade, shipping, and supply chains, which can have a negative impact on the economy (Whitten, G., Dai, X., Fan, S., Pang, Y. 2020).  Economic Classification - Countries with higher levels of economic development tend to have better terms of trade than countries that have lower levels of economic development (Ortiz- Ospina, E., Beltekian, D., Roser, M. 2018).  Economic Blocs Impacting Trade - Knowing and understanding what economic blocs a country belongs to also provides input as to what other connections, support, and allies a country may have. 2

 Gross Domestic Product (GDP) – Pertains to the value of all the goods and services produced by a country in a single year. It can indicate the strength of the local economy and the market opportunity for a new consumer product (Dunung, S.P. 2020).  Purchasing Power Parity – This pertains to the value of currencies. This can be utilized for estimating a more accurate comparison between different countries’ gross domestic product (GDP), and cost of living other than using the market exchange rates (Eldrige, S. 2023).  Gross Domestic Product Per Capita - The total for this statistic pertains to the measurement of a country’s economic output that accounts for its number of people. This is done by dividing the country’s gross domestic product (GDP) by its total population. This will provide a reasonable measurement of a country’s standard of living (Amadeo, K. 2022). Section Three Based on the information and data collected, below you will find a ranking of the appropriateness for introducing this new product into these countries. The ranking is categorized from “most appropriate” to “least appropriate” including the reasoning for their ranking. Most Appropriate – Mexico  Mexico would be chosen as the most appropriate in order to expand the new product for the following reasons: Although it is the 15 th largest economy in the world based on its political system of democracy and mixed economy, there are more opportunities for business. In addition, Mexico has free trade agreements with other countries such as the U.S., Canada, and 44 other countries which makes it an easy country to conduct business in. Furthermore, this country belongs to many economic blocs. This provides a look into the connections, support, and allies Mexico has. The corporate tax rate is a bit high at 30%; however, labor costs and manufacturing costs are low, therefore this low cost can offset the tax rate (Global PEO Services, 2022). Appropriate – China  China would be chosen as an appropriate location in order to expand. It is the 2 nd largest economy in the world which is stable and growing. China also offers low prices for manufacturing and a corporate tax at 25% (Global PEO Services, 2022). It also belongs to many economic blocs demonstrating what types of connections China may have. However, due to China’s political system this causes a complexity in their laws and regulations which can be extremely overwhelming without the knowledge or expertise. In addition, based on its economical classification of having a socialist market economy, this could entail pros and cons. Pros of this could be that ensures that all citizens have the means to achieve a minimum living standard, it minimizes unemployment, and provides comprehensive social security to all its members. However, some cons that could affect business due to their economic classification could be that it is highly perceptible for corruption and favoritism, it restricts the freedom of its citizens’, administered pricing is not efficient, and The State and Central Planning Authority hold to much power, which can be abused for personal gain (Toppr, n.d.). Least Appropriate – Germany  Germany has remarkable economic growth, political and social stability. It has a mixed economy which provides for many opportunities, as well as connections pertaining to the various economic blocs it belongs to. However, Germany has extremely excessive costs for 3

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