Discussion: Effects of Political, Economic and Legal Systems on Economic Growth

Discussion: Effects of Political, Economic and Legal Systems on Economic Growth

Several factors influence economic development in a given nation as well as in the world. For growth in the economy to be achieved, all these factors must interact together within the society.  It is worth noting that every element has an impact on the rate and level of economic growth. This discussion will thus restrict itself in three major factors that affect development in a society which include political, legal and financial system itself.

First, business is only possible in a peaceful environment. Politics existing within a given state or among trading nation affect how commercial activities are done (Autio & Fu, 2015). A peaceful society attracts investors while chaos sends away them. This is because of the apparent reasons for safety.

The legal system is another major issue affecting how business and hence economic development. It affects economic growth in the following ways; corruption protection, property rights policies, setting obligations to be met, as well as control of the government on investors (Autio & Fu, 2015). These legal policies determine the association of the investors with the rule of law of given state or controlling the world business. It differs from one country to the next, which may discourage investments or promote it. Considering that rules must be followed, individual investors will feel certain policies are not favourable for their dealings while other legal systems will lure them even more.

The third issue is the economic system of a given state. Each country follows a different approach in their performance and policies of commercial activities. The set rules controlling the market of a given state may offer a friendly environment to the investors or discourage their activities. These all factors affect the development of a given place, country or even the entire world. Therefore, security, policies, and economic factors determine the growth of a state.

Response

Monica Jaramillo

Investors should indeed be informed about the current affairs concerning the global economy, contemporary politics and legal institutions that interact with economic activities at the international level. This reveals the opportunities available and threats that may occur one’s investment which help the investor reduce risks by taking the necessary measures. The impact of these factors on the commercial activities by the investors determines inflow of capital and hence growth. It is evident that peace, favourable policies and terms will attract more entrepreneurs in the market place. These factors, while critically observed and control is taken, ensure a favourable environment for investors which leads to economic development.

Julius Noi

Economic growth, as you said, is determined by the immediate resources that affect how business activities are carried out. Some of the essential things to consider are the infrastructures and public amenities accessibility within a given locality which discourages or lure investors in a given place. The other thing is politics existing in a particular state. Investors will flock in peaceful countries. Trade activities cannot be quickly done in regions with political chaos. It is a fact that in the case of wars, everyone will run away for their safety. Likewise, the legal system or policies set by a given government affect the entry of investors within a particular economy. This is equally the same, even in international markets. Certain policies limit the way economic activities are conducted and hence hinder the development.

Marie Bradshaw

Peace is a significant factor that affects the way people relate with each other as you have stated. The political system of a given nation may encourage investors or send them away depending on the set rules and nature of leadership within the country. For instance, political violence or divided politics may discourage investments from avoiding the risk of loss. Therefore, as a business person, it is worth considering the environment that best protects your properties and your business activities from damage. Security and commercial activities thus go hand in hand, and thus controls the way growth is attained in a given region as well as in the international market.

Joyce Montague

The video was indeed very educative in matters of economic development. The fact that business is performed in the society brings forth the necessity of considering the nature of a given place economically, politically and legally to ensure growth. Coexistence of a good interaction and communication system between the three structure of the society controls the way business activities are done. The political system determines security which is the influencing factor of consideration in economic activities. The legal system determines policies that control trade within a given region and are necessary consideration by the investors while entering in trade ties.

Reference

Autio, E., & Fu, K. (2015). Economic and political institutions and entry into formal and

informal entrepreneurship. Asia Pacific Journal of Management, 32(1), 67-94.