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Sovereign State
Independent and free from all external control
-governs its own territory
-selects its own political, economic, & social systems
-has the power to enter into agreements with other nations
-enjoys full legal equality with other states
Sovereignty
refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members
A sovereignty state
-Sets requirements for citizenship
-defines geographical boundaries
-controls trade and the movement of people and goods across its borders
Stability of Government Policies
The ideal political climate for a multinational firm is a stable, friendly government. Unfortunately, governments are not always stable and friendly, nor do stable, friendly governments always remain so.
Issues concerning foreign businesses
-Stability or instability of prevailing government policies
Other issues include:
-An opposing political party ascends to power
-Pressure from nationalist and self-interest groups
-Weakened economic conditions
-Bias against foreign investment
-conflicts between governments
Five main Political Issues
1)Some forms of governments seem to be inherently unstable
2)Changes in political parties during elections
3)Nationalism
4)Animosity targeted toward specific countries
5)Trade disputes
Monarchy or Dictatorship
Rule by one
Aristocracy (Oligarchy)
rule by few
Democracy
rule by many
Throcratic Republic
-Islamic Law countries where political parties can exist but have little power
-the religious leader controls government and all governmental decisions
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