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Political Systems


Democracy, with its European roots and strong presence in Northern and Western Europe, refers to the system in which the government is controlled by the citizens either directly or through elections. Essentially, every citizen should be involved in deci- sion-making processes. The representative government ensures individual freedom since anyone who is eligible may have a voice in the choices made.

A democratic society cannot exist without at least a two-party system. Once elected, the representative is held accountable to the electorate for his or her actions, and this ultimately limits governmental power. Individual freedoms, such as freedom of expres- sion and assembly, are secured. Further protections of citizens include impartial public service, such as a police force and court systems which also serve the government and, in turn, the electorate, though they are not directly affiliated with any political party. Finally, while representatives may be re-elected, the number of terms is often limited, and the elected representative may be voted out during the next election if he or she does not sufficiently adhere to the goals of the majority ruling. As mentioned above, a social democracy combines a socialist ideology with a democratic political system, a situation that has characterized many modern European states as well as some in Latin America and other regions.


Totalitarianism refers to a political system in which there is only one representative party which exhibits control over every facet of political and human life. Power is often maintained by suppression of opposition, which can be violent. Media cen- sorship, political repression, and denial of rights and civil liberties are dominant ideals. If there is opposition to government, the response is imprisonment or even worse tactics, of- ten torture. This may be used as a form of rehabilitation or simply a warning to others who may question the government.

Since only one party within each entity exists, there are many forms of totalitarian government. The most common is communist totalitarianism. Most dictatorships under the communist party disintegrated by 1989, but as noted above, aspects and degrees of this form of government are still found in Cuba, North Korea, Laos, Vietnam, and China. The evolution of modern global business has substantially altered the political systems in Vietnam, Laos, and China, each of which has moved toward a more market-based and pluralistic environment. However, each still exhibits some oppression of citizens

through denial of civil liberties. The political environment in China is very complex because of the government’s desire to balance national, immediate needs with the chal- lenge of a free-market economy and globalization. Since joining the WTO in 2001, China has made trade liberalization a top priority. However, MNCs still face a host of major obstacles when doing business with and in China. For example, government regulations severely hamper multinational activity and favor domestic companies, which results in questionable treatment such as longer document processing times for foreign firms.12 This makes it increasingly difficult for MNCs to gain the proper legal footing. The big- gest problem may well be that the government does not know what it wants from mul- tinational investors, and this is what accounts for the mixed signals and changes in direction that it continually sends. All this obviously increases the importance of knowl- edgeable international managers.

China may be moving further away from its communist tendencies as it begins supporting a more open, democratic society, at least in the economic sphere. China con- tinues to monitor what it considers antigovernment actions and practices, but there is a discernible shift toward greater tolerance of individual freedoms.13 For now, China con- tinues to challenge the capabilities of current international business theory as it transitions through a unique system favoring high governmental control yet striving to unleash a more dynamic market economy.14

Though the most common, the totalitarian form of government exhibited in China is not the only one. Other forms of totalitarianism exhibit other forms of oppression as well. Parties or governments that govern an entity based on religious principles will ultimately oppress religious and political expression of its citizens. Examples are Iran or Saudi Arabia, where the laws and government are based on Islamic principles. Conduct- ing business in the Middle East is, in many ways, similar to operating a business in the Western world. The Arab countries have been a generally positive place to do business, as many of these nations are seeking modern technology and most have the financial ability to pay for quality services. Worldwide fallout from the war on terrorism, the Afghanistan and Iraq wars, and the ongoing Israel–Arab conflicts, however, have raised tensions in the Middle East considerably, making the business environment there risky and potentially dangerous. One final form of totalitarianism, sometimes referred to as “right-wing,” allows for some economic (but not political) freedoms. While it directly opposes socialist and communist ideas, this form may gain power and support from the military, often in the form of a military leader imposing a government “for the good of the people.” This results in military officers filling most government positions. Such military regimes ruled in Germany and Italy from the 1930s to 1940s and persisted in Latin America and Asia until the 1980s when the latter moved toward democratic forms. Recent examples include Myanmar, where the military has ruled since the suspension of democracy in 1962.

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