Market

Globalism
An Overview of the
World Economy
• The World Economy has changed
profoundly since WWII (Ducker, 1986).
• Perhaps the most fundamental change is
the emergence of global markets;
responding to new opportunities, global
competitors have steadily displaced or
absorbed local ones.
• Economic integration stood at 10% at the
beginning of the 20th century; today, it is
approximately 50%.
• Within the past decade, there have been
several remarkable changes in the world
economy.
An Overview of the
World Economy
- The first change is the increased volume of
capital movements. The dollar value of the world
trade is greater than even before.
- The second change concerns the relationship
between productivity and employment.
Productivity continues to grow even if
employment in manufacturing remains steady or
had declined.
- The third major change is the emergence of the
world economy as the dominant economic unit.
Organizations that recognize this change have
the greatest success. Those who do not likely to
experience decline and bankruptcy or
overthrow.
- The last change is the end of the Cold War. The
demise of communism as an economic and
political system can be explained in a specific
manner: Communism is not an effective
economic system.
Economic Systems
There are three types of economic
systems: capitalist, socialist, and mixed. This
classification is based on the dominant
method of resource allocation: market
allocation, command allocation, and mixed
allocation respectively.
Market Allocation
• Market allocation system relies on
households and firms to allocate resources.
• Consumers decide what goods they desire,
and firms determine how much is made.
• The market system is an economic
democracy where people have their option
to buy according to their choice and
budget.
• The role of the state in a market economy is
to promote competition and ensure
consumer protection.
Command Allocation
• The country or nation has broad powers to
serve the public interest on what is
appropriate based on their judgement.
• Consumers are free to spend their money
on what is available but government
planners make decisions about what is
produced, and therefore, what is available.
• Three most populous countries in the world:
China, the former Soviet Union, and India–
relied on command allocation systems for
decades and are now engaged in
economic reforms directed in varying
degrees shifting to market allocation
systems.
Mixed Allocation
• Mixed allocations stems on the principle
that there is no pure market or command
allocation systems among the world’s
economies.
• It means all market systems have a
command sector and all command systems
have a market sector which means they are
mixed.
• There is a high correlation between the
degree of economic freedom and this
extent to which a nation’s mixed economy
is heavily market oriented.
World Bank
Four-Category System
The World Bank has developed a
four-category system of classification that uses
GNP as base. Although the income definition
for each stages is arbitrary, countries within a
given category generally have a number of
characteristics in common.
Low-Income Countries
• Low-income countries have a GNP per
capita of less that $766. the characteristics
shared by countries at this income level are:
1. Limited industrialization and a high
percentage of the population engaged
in agriculture and subsistence farming
2. High birth rates
3. Low literacy rates
4. Heavy reliance on foreign aid
5. Political instability and unrest
6. Concentration in Africa south of the
Sahara
Low-Middle-Income
Countries
• Sometimes, countries that can be assigned
to the lower income and lower-middle
income categories as less-develop countries
(LDCs). This is to indicate contract with
developing (UMI) countries and develop
(HI) countries.
• These countries are typically at relatively
early stages of industrialization.
• Consumer markets in theses countries are
expanding.
Upper-Middle-Income
Countries
• Theses countries are also known as
industrialization or developing countries.
• The percentage of population engaged in
agriculture drops sharply as people move to
the industrial sector and the degree of
urbanization.
• They have rising wages and high rates if
literacy and advanced education but
significantly lower wage costs than the
advanced countries.
• The influx of technology, particularly the
computer revolution, creates starting
balanced positions of the old and the new
in these countries.
High-Income Countries
• High-income countries are also known as
advanced, developed, industrialized, or
post-industrial countries.
• The countries in this category reached their
present income levels through a process of
sustained economic growth.
• Product and market opportunities in a
post-industrial society are more heavily
dependent on a new products and
innovations that in industrial societies.
The Six Core Claims of
Market Globalism
1. Globalization: Liberalization and
Global Integration of Markets
• The perspective of this first claim dwells on the
vital functions of the free market, on its rationality
and efficiency likewise on its alleged ability to
bring about greater social integration and
material progress.
• There are two established ideologies that play
important role in market:
- Neo-liberalism, they are more inclined on the
latter because the attitude toward big business
has a big impact on the intrusive government
action as to policies and regulations.
- Free-market capitalism, the more you let market
forces rule and the more you open your
economy to free trade and competition, the
more efficient your economy will be.
The Six Core Claims of
Market Globalism
2. Globalization: Inevitable and
Irreversible
• The perspective of this claim is that
globalization reflects the spread of
irreversible market forces drive by
technological innovations that make the
global integration of national economies
inevitable.
• The fact that market globalism is almost
always intertwined with the deep belief in
the ability of markets to use new
technologies to solve social problems far
better than any alternative course.
The Six Core Claims of
Market Globalism
3. Nobody is in Charge of Globalization
• This perspective focuses on the classical liberal
concept of the ‘self-regulating market’.
• The semantic link between ‘globalization
–market’ and the adjacent idea of ‘no leader’
is simple.
• Robert Hormats (1998) emphasized that the
great beauty of globalization is that no one is
in control. It is not controlled by any individual,
any government, and any institution.
• Thomas Friedman’s (1999) statement that the
most basic truth about globalization is no one
is in charge and that the global market today
is an Electric Herd of often anonymous stock,
bond and currency traders and multinational
investors.
The Six Core Claims of
Market Globalism
4. Globalization Benefits Everyone
• The adjacent idea of ‘benefits for everyone’
is usually unpacked in material terms such
as ‘economic growth’ and ‘prosperity’.
• Globalization provides great opportunities
for the future, not only for our countries, but
for all others too.
• Its many positive aspects include an
unprecedented expansion of investment
and trade; the opening up to international
trade and opportunities to improve their
standards of living.
The Six Core Claims of
Market Globalism
5. Globalization Furthers the Spread of
Democracy in the World
• This claim links ‘globalization’ and ‘market’,
which also plays a significant role in
liberalism, conservatism, and socialism.
• Largely based on a narrow, formal
procedural understanding of ‘democracy’.
In short, Neo-liberal economic globalization
and the strategic promotions of polyarchic
regimes in the Third World are two sides of
the same ideological coin.
The Six Core Claims of
Market Globalism
6. Globalization Required War on Terror
• The neo-conservative commitment to
‘American values’ of freedom, security, and
free markets.
• Robert Kaplan 92003) in his statement that
“you also have to have military and
economic power behind it, or else your
ideas cannot spread”
• If global terror were no longer a major issue,
it would disappear without causing market
globalism to collapse.
• This final claim is a contingent one and less
important than the five previous claims.
The International
Economic Environment
• Economic experts predict that sometime
early in the next century, Asia will eclipse
North America as the world’s most powerful
region.
• A conservative assumption is that fully 1
billion Asians – not much less than the entire
population of NA, Sam and Europe – will be
living in households with some
consumer-spending power which means
they can buy at least basic goods.
• The assessment of foreign-based market
environment should start with the evaluation
of economic variables relating to the size
and nature of the markets.
Governments and Citizens in
a Globally Interconnected
World of State
Introduction
The formation of a state is the highest expression of a political act of men conforming to
promote their common interest, advance their common welfare, secure their collective
rights, optimize their available common resources, promote their common heritage, and
harness their common potentials for the general wellbeing of the citizens (De Leon and De
Leon Jr. 2014, p. 6).
WHAT IS A STATE?
• A state is a community of persons, more or less numerous, occupying a definite territory,
possessing an organized government, and enjoying independence from external control.
• It is dwelled by people permanently occupying a fixed territory and bound by
common-law habits and customs into one body politics, exercising through the medium of
an organized government, independent sovereignty and control over all persons and
things within its boundaries, capable of making war and peace and entering into
international relations with other communities of the globe (De Leon and De Leon Jr., 2014).
Nation and State
• Under international law, state is not equivalent to nation. Nation is defined as people, or
aggregation of men, existing in the form of an organized society, usually inhabiting a
distinct portion of the earth, speaking the same language, using the same customs,
possessing historic continuity, and disguised from other like groups by their racial origin and
characteristics, and generally, but not necessarily, living under the same government and
sovereignty (Dannug and Campanilla, 2004).
Nation and State
• State is more of a political concept while nation is racial or ethical. However, state and
nation are often used interchangeably. For example, the nations referred to in the United
Nations are actually states.
Nation and State
• To illustrate, the Arab Nation is not a state but a nation which consists of several states, such
as Kingdom of Saudi Arabia, Yemen, Qatar, Bahrain, Kuwait, Syria, Jordan, Iraq, Iran
(although their language is not Arabic but Farsi, but their geographical location is within
the Arab nations) Oman, Lebanon, and United Arab Emirates. On the other hand, the
United States of America is a state and not a nation but it consists of several nationalities
such as Caucasians, Africans, Chinese, Filipinos, Latin Americans, Koreans, etc.,
 Elements of the State:
1. People 2. Territory 3. Government 4. Sovereignty
• This is the entire body of those citizens of a state who are invested with political power for
political purposes (Black's Law Dictionary, 6th edition). It is necessary to the existence of the
state. There can be no functionaries to govern and no subjects to be governed without the
people. The number should be neither too small nor too large. It should be large enough to
be self-sufficient and small enough to be well governed (Martin, 1984). It must be sufficient
and number to maintain and perpetuate itself. A casual gathering of individuals by
chance, a group of bandits or a society of pirates does not constitute people as an
element of state (Aruego, 1975; De Leon and De Leon Jr., 2014).
 Elements of the State:
1. People 2. Territory 3. Government 4. Sovereignty
• It is a geographical area under the jurisdiction of another country or sovereign power or state
(Black's Law Dictionary, 6th edition). It must be a fixed territory which the inhabitants occupy,
Nomadic tribes, who travel from place to place, may not establish a state since they are not
occupying a fixed territory. A state must have a territory sufficient in extent to provide for its
maintenance and growth (Aruego, 1975; De Leon and De Leon Jr., 2014).

• There are four modes by which a state can acquire territory. These are by discovery and
occupation, prescription, cession, and subjugation and annexation, addition is accretion.
 Discovery and Occupation Prescription
Cession Subjugation and Annexation Accretion
• A state may acquire a territory by discovering a continent, an island or land with no
inhabitants or occupied by uncivilized inhabitants, and thereafter, occupying it by placing
it under its political administration. Discovery without subsequent occupation is not
sufficient to acquire a territory. There is effective occupation when the following are met:
✔ That the parties occupying the territory must have been authorized by the state for which they are
acting;
✔ That the state must by formal act evidence its intention to acquire sovereignty over the new
territory; and
✔ That there must be established within a reasonable time after discovery some government
authority (Public International Law).
• The following lands can be the subjects of discovery and occupation: (1) uninhabited
lands, (2) lands inhabited by uncivilized persons, and (3) lands discovered by a state but
which it failed to occupy for unreasonable length of time.
 Discovery and Occupation Prescription
Cession Subjugation and Annexation Accretion
• It is the mode of acquiring a territory through continuous and undisputed exercise of
sovereignty over it during such period as is necessary to create under the influence of
historical development the general conviction that the present condition of things is in
conformity with international order (Public International Law). Note that the length of time
required for the acquisition of territory by prescription is not definite, although some
authorities consider a period of fifty years as sufficient.
 Discovery and Occupation Prescription
Cession Subjugation and Annexation Accretion
• It is the assignment, transfer, or yielding up of territory by one state or government to
another. Cession may be in the form of sale or donation. For example, for 20 million dollars,
the Spanish government on December 10, 1898 ceded the Philippine archipelago to the
United States of America through the Treaty of Paris.
 Discovery and Occupation Prescription
Cession Subjugation and Annexation Accretion
• It is a mode of acquiring a territory belonging to a state by occupation and conquest
made by another state in the course of war and by annexation at the end of the war.
Conquest gives the conqueror inchoate title that may be converted into a full title after
annexation of the territory. Conquest and annexation are also called involuntary cession.
 Discovery and Occupation Prescription
Cession Subjugation and Annexation Accretion
• It is another mode of acquiring territory by addition of portions of soil, either artificial such as
the reclamation area in Manila Bay, or natural by gradual deposition through the
operation of natural causes such as the waves of the ocean. 
 Elements of the State:
1. People 2. Territory 3. Government 4. Sovereignty
• Government is the totality of authorities which rule a society by prescribing and carrying
out fundamental rules which regulate the freedom of its members. It is composed of the
executive, legislative, judiciary, and administrators with corresponding roles in administering
the affairs of the state (De Leon and De Leon Jr., 2014,
 Elements of the State:
1. People 2. Territory 3. Government 4. Sovereignty
Kinds of Government
• De jure or legitimate government.
This is established according to the constitution, and lawfully entitled to recognition
and supremacy and administration of the nation, but which is actually cut off from
power or control. It is a government deemed lawful or deemed rightful or just, but
which, nevertheless, has been supplanted or displaced (Black's Legal Dictionary, 6th
edition).
• De facto or illegitimate government.
A government that maintains itself by a display of force against the will of the rightful
legal government and is successful, at least temporarily, in overturning the institutions of
the rightful government by setting its own in lieu thereof.
 Elements of the State:
1. People 2. Territory 3. Government 4. Sovereignty
There are three kinds of de facto government:
• Government by Revolutions is a government established by the inhabitants who rise in
revolt against and depose the legitimate regime.
• Government by Secession is a government established by the inhabitants of a state who
secede therefrom without overthrowing its government.
• Government by Occupation is a government. established in the course of war by the
invading forces of one belligerent country in the territory of another belligerent country, the
government of which is also displaced.
 Elements of the State:
1. People 2. Territory 3. Government 4. Sovereignty
• It is the supreme, absolute and uncontrollable power by which an independent state is
governed. It is the paramount control of the constitution and the frame of government and
its administration (De Leon and De Leon Jr., 2014, 9).
 Elements of the State:
1. People 2. Territory 3. Government 4. Sovereignty
There are two kinds of sovereignty: internal and external.
• Internal sovereignty is the power to control and direct the internal affairs of a country such
as the authority to enact, execute, and apply laws. Under international laws, internal
sovereignty is not a factor in determining whether an entity is a state.
• External sovereignty is the power of an independent state to control and direct its external
affairs such as the authority to enter into treaties with other states, to wage warm, and to
receive and send diplomatic missions.
THE POLITICAL, LEGAL, AND REGULATORY
ENVIRONMENTS AMONG STATES
• In May 1998, India stunned the world by conducting nuclear weapon tests. Two weeks
later, Pakistan responded by conducting several tests of its own. Amidst widespread
condemnation of the tests, several major trading partners moved swiftly to impose
economic sanctions on India and Pakistan. Japan, the largest donor nation to both India
and Pakistan, froze development grants and new loans. The U.S. government weighed
several options, including cutting off aid from the Agency for International Development
(AID), withholding credits from, the Export-Import Bank and preventing the Overseas Private
Investment Corporation (OPIC) from extending insurance and loans to U.S. firms doing
business in India. Such actions were permitted under the Nuclear Proliferation Prevention
Act, a law passed in 1994 that had never been used. Boeing, Enron, and Hughes Network
Systems were a few of the U.S. companies that could be affected if sanctions were
imposed.
THE POLITICAL, LEGAL, AND REGULATORY
ENVIRONMENTS AMONG STATES
• The world's response to the nuclear tests in India and Pakistan illustrates that the political,
legal, and regulatory environments can have on international trade and global marketing
activities. Each of the world's national governments regulates trade and commerce with
other countries and attempts to control the access of outside enterprises to national
resources. Every country has its own legal and regulatory system that affects the operations
and activities of the global enterprise, including the global marketer's ability to address
market opportunities. Laws and regulations constrain the cross-. border movement of
products, services, people, money, and technical know-how. Every government should
know that laws and regulations are frequently ambiguous and continually changing.
The Political Environment
• Globalization in the context of governance takes place within the political environment of
governmental institutions, political parties, and organizations through which a country's
people and rulers exercise power. Each nation as we know has a political culture, which
reflects the relative importance of the government and legal system and provides a
context within which individuals and corporations understand their relationship to the
political system. Hence, every corporations’ doing business outside its home country should
carefully study the political culture in the target country and analyze salient issues arising
from the political environment. These include the governing party's attitude toward
sovereignty, political risk, taxes, and seizure of assets.
Nation-States and Sovereignty
• Sovereignty, as defined, earlier is supreme and independent political authority.
Government actions taken in the name of sovereignty occur in the context of two
important criteria: a country's stage of development and the political and economic
system in place of the country. Many governments in developing countries exercise control
over their nations' economic development by passing protectionist laws and regulations.
Their objective is to encourage economic development by protecting emerging or
strategic industries. Government leaders can also engage in cronyism and provide favors
for family members or "political friends."
POLITICAL RISK
• Political risk is the risk of a change in political environment or government policy that would
adversely affect a company's ability to operate effectively and profitably. It can deter a
company from investing abroad. When the perceived level of political risk is high, a country
will have greater difficulty in attracting foreign investment. Political forces can drastically
change the business environment with little advance notice. Valuable sources of
information include The Economist, Financial Times, and other business periodicals. A
number of organizations such as the Economic Intelligence Unit (EIU), the Geneva-based
Business Environment Risk Intelligence (BERI) and the World Political Risk Group (PRS)
specialize in providing up-to-date political risk reports on individual country markets. The
BERI system examines six internal causes of political risk, two external causes, and two
symptoms as illustrated in table.
 Categories of Political Risk
Economic Intelligence Unit Business Environment Risk Intelligence (BERI) PRS Group World Political Risk Forecasts

War Fractionalization of political spectrum Political turmoil probability

Social Unrest Fractionalization by language, ethnic, or religious group Equity restrictions

Orderly political transfer Restrictive or coercive measures required to retain power Local operations restrictions

Politically motivated violence Mentality (xenophobia, nationalism, corruption, nepotism) Taxation discrimination

International disputes Social conditions (including population density and wealth distribution) Repatriation restrictions

Change in government or
Organization and strength of forces for a radical government Exchange controls
pro-business orientation

Institutional effectiveness Dependence on or importance to a major hostile power Tariff barriers

Bureaucracy Negative influences of regional political forces Other barriers

Transparency and fairness Societal conflict involving demonstrations, strikes, and street violence Payment delays

Corruption Instability as perceived by assassinations and guerrilla was Fiscal or monetary expansion

Crime Labor costs, foreign debt

Source: Adapted from Llewellyn D. Howell. The Handbook of Country and Political Risk Analysis, 3 rd ed. (Syracuse, NY, 2008)
Causes of Political Risk
• Tension is the fundamental cause of political risk between the residents aspirations and
goals and the real conditions at a given time. Whenever the public perceives a wide gap
between its aspirations and reality, there is political risk. In high-income countries, the gap
between aspirations and reality in high-income countries is seldom great enough to
generate a significant level of political risk. When political risk is present in a high-income
country, it can be traced to identifiable, long-standing issues in the country, such as the
conflict between the Protestants and Roman Catholics in Northern Ireland.
• In lower-and lower-middle-income countries, an economic crisis can trigger political risk.
• Diligent attention to risk assessment throughout the region should be ongoing to determine
when the risk has decreased to levels acceptable to management (Yergin & Gustafon,
1995).
Taxes
• Tax is the lifeblood of every government (with the exception of some oil rich countries that
do not impose taxes on their citizens). Governments rely on tax revenue to generate funds
necessary for social services, the military, and other expenditure. Unfortunately,
government taxation policies on the sale of goods and services frequently motivate
companies and individuals to profit by not paying taxes. In China, for example, most
imports are subject to high duties, plus a 17 percent value-added tax (VAT). As a result,
significant quantities of oil, cigarettes, photographic films, personal computers, and other
products are smuggled into China.
• Corporate taxation is another issue. The high level of political risk currently evident in Russia
can be attributed in part to excessively high taxes on business operations. High taxes
encourage many enterprises to engage in cash or barter transactions that are off the
books and sheltered from the eyes of tax authorities. This has created a liquidity squeeze
that prevents companies from paying wages to employees. In other words, the impact of
this will disappoint employees that can lead to political instability if there are labor strikes.
Seizure of Assets
• The ultimate threat a government can pose toward a company is seizing assets.
Expropriation refers to government action to dispossess a foreign company or investor.
Compensation is generally provided, although not often in the "prompt, effective, and
adequate" manner provided for by international standard. If no compensation is provided,
the action is referred to as confiscation (Root, 1994, 154). International law is generally
interpreted as prohibiting any act by a government to take foreign property without
compensation. Nationalization is generally broader in scope than expropriation. It occurs
when the government takes control of some or all of the enterprises in a particular industry.
International law recognizes nationalization as a legitimate exercise of government power,
as long as the act "satisfies” a "public purpose" and is accompanied by adequate
payment which means it reflect the fair market value of the said property. South Korea
nationalized Kia, the nation's number three automaker, in the wake of the; Asian currency
crisis. In 1998, the Japanese government was debating whether to nationalize the country's
banking system.
International Law
• International law may be defined as the rules and principles that nation-states consider
binding upon themselves. International law pertains to property, trade, immigration, and
other areas that have traditionally been under the jurisdiction of individual nations.
International law applies only to the extent that countries are willing to assume all rights
and obligations in these area
• Although elaborate international rules gradually emerged—such as the status of neutral
countries the creation of laws governing commerce proceeded on a state-by-state basis in
the 19th century. International law still has the function of upholding order, although in a
broader sense than dealing with problems arising from wars. 
International Law
The court, whose function is to decide in accordance with international law, such disputes as
are submitted to it, shall apply:
a. international conventions, whether general or particular, establishing rules expressly
recognized by the contesting states;
b. international custom, as evidence of a general practice accepted as law;
c. the general principles of law recognized by civilized nations; and 
d. subject to the provisions of Article 59, judicial decisions, and the teaching of the most
highly qualified publicists of the various nations, as subsidiary means for the determination
of rules of law.
Common Law and Civil Law
• Private international law is the body of law that applies to disputes arising from commercial
transactions between companies of different nations. Laws governing commerce
emerged gradually, leading to a major split in legal systems between various countries
(Kelso & Kelso, 1984). The story of law in the Western world can be traced to two sources:
Rome, from which the continental European civil law tradition originated, and English
common law, from which the U.S. legal system originated.
• A civil-law country is one in which the legal system reflects the structural concepts and
principles of the Roman Empire in the sixth century.
• In common-law countries, companies are legally incorporated by state authority. In
civil-law countries, companies are formed by contract between two or more parties, who
are fully liable for the actions of the company.
Common Law and Civil Law
• The United States, nine of Canada's 10 provinces, and other former colonies with an
Anglo-Saxon history found their systems on common law. Historically, much of continental
Europe was influenced by Roman law and later, the Napoleonic Code. Asian countries are
split: India, Pakistan, Malaysia, Singapore, and Hong Kong are common-law jurisdictions;
Japan, South Korea, Thailand, Vietnam, Taiwan, Indonesia, and China are civil-law
jurisdictions. The legal systems in Scandinavia are mixed, displaying some civil-law attributes
and some common-law attributes. Today, the majority of countries have legal systems
based on civil-law traditions. 
Islamic Law
• The legal system in many Middle Eastern countries is identified with the laws of Islam, which
are associated with "the one and only one God, the Almighty" (Luqmani, Yavas, &
Quraeshi, 1989, pp. 61-63). In Islamic law, the Sharia is a comprehensive code governing
Muslim conduct in all areas of life, including business. The code is derived from two sources.
First is the Koran, the Holy Book written in Arabic that is a record of revelation made to the
Prophet Muhammad by Allah. The second source is the Hadith, which is based on the life,
sayings, and practices of Muhammad. In particular, the Hadith spells out the products and
practices that are haram (forbidden). The orders and instructions found in the Koran are
analogous to code laws; the guidelines of the Hadith correspond to common law. Any
Westerner doing business in Malaysia or the Middle East should have at least a minimum
rudimentary understanding of Islamic law and its implications for commercia activities.
Brewers, for example, must refrain from advertising beer on billboards or in local-language
newspapers. 
Bribery and Corruption: Legal and Ethical
Issues
• At the beginning of the 20th century Charles M. Schwab, head of Bethlehem Steel
presented a $200,000 diamond and pearl necklace to the mistress of Czar Alexander Ill's
nephew. In return for that consideration, Bethlehem Steel won the contract to supply the
rails for the Trans Siberian railroad (Daniel Pines, 1994, 185).
• Today, in the post-Soviet era, Western companies are again being lured by emerging
opportunities in Eastern Europe. Here, as in the Middle East and other parts of the world,
they are finding that bribery is a way of life and that corruption is widespread, and U.S.
companies in particular are constrained in their responses to such a situation by U.S.
government policies of the post-Watergate age. Transparency International annually ranks
countries in terms of corruption.
Most Corrupt Countries, 2017 Least Corrupt Countries in the World, 2017

Best Countries Countries Rank Score / 100 Countries Rank Score / 100
Countries Rank
Overall Rank
New Zealand 1 89 United Kingdom 5 82
Nigeria 1 76
Denmark 2 88 Germany 6 81
Colombia 2 55
Finland 3 85 Australia 7 77
Pakistan 3 74
Norway 3 85 Hong Kong 7 77
Iran 4 77
Switzerland 3 85 Iceland 7 77
Mexico 5 31
Singapore 4 84 Austria 8 75
Ghana 6 71
Sweden 4 84 Belgium 8 75
Angola 7 79
Canada 5 82 United States 8 75
Russia 8 26
Luxembourg 5 82 Ireland 9 74
Kenya 9 57
Netherlands 5 82 Japan 10 73
Guatemala 10 66

Source: Transparency International, 2018

Bribery and Corruption: Legal and Ethical
Issues
• The ranking is based on the level of public sector corruption vin 2017, according to business
people, journalists, and civic organizations. Higher-ranked countries tend to have more
press freedom, access to information about public spending, and independent judicial
systems.
• The existence of bribery as a fact of life in world markets will not change because it is
condemned by the U.S. Congress. In fact, bribery payments are considered a deductible
business expense in many European countries. According to one estimate, the annual
price tag for illegal payments by German firms alone is more than $5 billion. Most global
companies are still adopting codes of conduct designed to reduce illegal activities.
• When companies operate abroad in the absence of home-country legal constraints, they
face a continuum of choices concerning company ethics. At one extreme, they can
maintain home-country ethics worldwide with absolutely no adjustment or adaptation to
local practice. At the other extreme, they can abandon any attempt to maintain
company ethics and adapt entirely to local conditions and circumstances as they are
perceived by company managers in each local environment. Between these extremes,
one approach that companies may select is to utilize varying degrees of extension of
home-country ethics. Alternatively, they may adapt in varying degrees to local customs
and practices (Mason & Jonquierres, 1997 p.13).
Bribery and Corruption: Legal and Ethical
Issues
• In the case of the Philippines, Article Il, Section 20 of the State Policies states that "The State
recognizes the indispensable role of the private sector, encourages private enterprise, and
provides incentives to needed investments (Dannug & Campanilla, 2004, p. 496). The
presence of multinational corporations such as Nestle, Coca-Cola, Unilever, McDonald,
KFC, and many other foreign firms 'operating in the Philippines is a testimony that the
above state policies works efficiently to investors. Regardless of the corruption ranking of
the Philippines as revealed by Transparency International (2018), (111 out of 180 countries)
the Philippine government is still inviting and attracting investors to do business here in the
country.
Balances in Globalization
1. Traditional balance between nation-states
Respect to sovereignty of each country is the rule here. Although the United States is still the
dominant superpower, the mandate of the United Nations is still adhered to protect each
country. Disputes; disagreements, and the like are discussed diplomatically by countries in
order to maintain and sustain peace, harmony an stability with one another. 
Balances in Globalization
2. Balance between nation-states and global markets
In reality, there is always imbalance and inequality (ag discussed in the chapter between
global divides) between and among nations in terms of economies. That is why the concept
of electronic herd emerged that gathers in key global financial centers, such as Wall Street,
Hong Kong, London, Frankfurt, and Tokyo which can be described as the "supermarkets."
Emerging supermarkets are Singapore and Seoul. The attitudes and actions of these
Electronic Herd and Supermarkets can have a huge impact on nation-states today, even to
the point of triggering the downfall of governments (cited by Dannug & Campanilla, 2004, p.
88).
Balances in Globalization
3. Balance between individuals and nation-states.
This means that globalization had given every individual the freedom to move, to choose, to
decide what is beneficial to them with no intimidation or restriction. from any authority
provided laws and policies are not violated. The individuals in the age of globalization are
actors in a world stage, empowered by their will to create something rewarding for them and
for the society.