Business Environment

- Phasing out of collectivized agriculture

- Gradual liberalization of prices

- Increased autonomy for state enterprises

- Creation of a private sector

- Foundation of a diversified banking system and the development of a stock market

- Opening to foreign trade investment

Leader: Jiang Zemin

Massive economic growth since the 1990s. China is one of the main winners of globalization.

Since 2000 the third ranking industry worldwide in factory output.

By 2002 china has become the worlds work bench.

Sky-rocketing

Leader: Hu Jintao

Even more export driven growth

China heads the list of countries that are satisfied with the wy things are going at home. More than 70% of citizens express satisfaction with their national condition.

Middle class households typically have enough imcome to satisfy their primary needs (food, clothing, shelter), with some income left over for additional desired consumption and savings (2002: 4%, 2012: 31% -> 420 million people)

Positive: 

- Outstanding economic development. GDP increased more than 10 times 1978 to 2005

- Decline of poverty rate from 53% of population (1981) to 3% (2008)

- Rise as a major player in the global economy

Negative:

- Large disparities in per capita income between regions and social classes and the risk of social strife

- Rise of corruption and other economic crimes

- Environmental damage

Global player

Leaders: Xi JIngping (representing entrepeneurs & emerging middle class) & Li Keqiang (representing poorer inland provinces) in a delicate power sharing arangement.

1. Core technologies are imported
2. Imported technologies are absorbed during an initial phase of operation in the domestic market
3. The firms push up to the global technological frontier during a period of increased export discipline – first to the markets of developing countries and then to the global market. Master current technologies and the originate new ones (especially in the field of incremental innovation)
4. Consolidate domestic and global market position by pushing foreign competition aside.

Traditionally supporting large-scale high quality domestic infrastructure projects.

NEW: financing major public infrastructure deals in Sotheast Asia, Africa, Latin America, Russia a.o.

At the end of 2010 the CDB gave USD 687.8 billion in loans (more than twice as much as the World Bank)

General aim: Turn the country into a "manufacturing superpower" over the coming decadses.

Specific aim: Increase productivity rate and make China self-sufficient in targeted industries (automoitve, aviation, machinery, robotics, high-tech maritime and railway equipment, energy-saving vehicles, medical devices and information technology)

- Creation of publicly and privately funded innovation centers

- More private and public research subsidies

- Large and low-interest loans from state-owned investment funds and development banks

- Assistance in buying foreign competitiors

Short-term: Enonrmous demand increase for smart manufacturing products (industrial robots, smart sensors, wireless sensor networks and radio frequency indentification chips) = Great business opportunities for foreign firms. 

Long-term: Challenge for the economic primacy of the current leading economies and international corporations.

Oil exporters / high per capita income / small population 
Countries -> Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE

Oil exporters / lower per capita income / large populations

Countries -> Algeria, Iran, Iraq, Libya, Syria, Yemen, Egypt

Non-oil exporters / strongly integrated with the GCC economic area or dependent on foreign development assistance

Countries -> Djibouti, Jordan, Lebanon

Non-oil exporters / diversified economies strongly integrated with the Euro area

Countries -> Morocco, Tunisia, Israel

Argument 1: The price of primary products are more volatile (schwankend) than of manufactured goods. A huge natural resource sector increases the countries dependence on global market development and causes economic distress and social instability in case of a declining market price. "Growing with oil, slowing with oil".

Argument 2: The secure money flow can prevent the economy from investing in other sectors, thus not creating business and job opportunities outside the natural resource business.

Argument 3: The secure money flow can free governments from financial pressures and constraints, which, in other countries, would have induced governments to “good government” in order to receive the cooperation of the masses. (investment in our education à very expensive!)

Argument 4: Increased danger of foreign intervention due to the strategic importance of the country as a major oil supplier. Foreign intervantion often increases rather than decreases poor governance performance and thus political instability

to what extend a countrys citizens are able to participate in selecting their government, as well as freedom of expression and free media (Election in chiapas was manipulated by systematic vote-buying, theft of ballot boxes, simulated computer crashes, as well as physical violence by PVEM supporters)

- Citizens should be involved in the political decision making process - either directly or through elected representatives
- Most modern democratic states practice representative democracy
- Its attraction lies in the principle of political participation, accountability and freedom (of expression, gathering..)

Form of government in which one person or one political party exercises sole political, economic, and social (often also cultural) control and prohibits opposing political parties = Monopolization of power
4 Major Forms of authoritarianism:
- Communist authoritarianism
- Theocratic authoritarianism (Tiran)
- Tribal authoritarianism (African Countries)
- Right-wing authoritarianism
 

- Form of government that goes beyond the monopolization of power 
- Controls all aspects of social life by even controlling the citizens life and morals = monopolization of power + citizens total submission to the state
 

Four major example:
Nazi Germany
Fascist Italy
Stalinist Soviet Russia

--> Control of everything (who you marry)

Capturing perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means.

Capturing perceptions of the quality of public services and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the governments commitment to such policies.

capturing perceptions of the ability of the government to formulate and imlpement sound policies and regulations that permit and promote private sector development.

cpturing perceptions of the extent to which agents have confidence in and abide by the rules of society (in particular the quality of contract enforcement, property rights, the police, and the courts, as well as holding down crime and violence).

capturing perceptions of the extent to which public power is not exercised for private gain, but fot the long-term interest of the whole nation.

- federal presidental representative democratic republic

- was a one-party state until 2000, then again from 2012

- worlds 11th largest oil producer (1/3 of government revenue)

- upper-middle-income country (GNI = 4126.- to 12735.-)

- fight against the 4 Is: impunity, illegality, injustice and inequality

- public transport

- water

- education

- waste disposal

- electricity

- hospital / health system

1. Shrinking rich and old

         VS

2. Growing poor and young

3. Growing poor and encreasingly old

1. Since 2008 and for the first time in human history, the majority of the worlds population lives in cities. 2050  estimate: 70% of the worlds population lives in cities

2. Most of urban growth will happen in the developing world

The HDI measures the average social economic development in a country.