Question

To identify the major dimensions of internatinal economic analysis

Answer 1

(1) Economic Environment

Among the various factors of macro environment, the economic environment has a special significance. Economic environment can be divided into three parts. . They are as under:(i) Economic system, (ii) Economic policies, (iii) Economic conditions,

(i) Economic System:

(a) Socialistic Economic System (b) Capitalistic Economic System (c) Mixed Economic System.

(ii) Economic Policies:

(a) Export-Import Policy (b) Employment Policy

(c) Taxation Policy (d) Industrial Policy

(e) Public Expenditure Policy (f) Public Debt Policy

(g) Agriculture Policy (h) Foreign Investment Policy.

(iii) Economic Conditions:

(a) Flow of Foreign Capital (b) Supply of Natural Resources (c) Level of Economic Development (d) Rate of Interest (e) National Income (f) Industrial Development (g) Foreign Trade (h) General Price Level.

(2) Political Environment

Political environment is the outcome of a combination of various ideologies advocated by different political parties.

Factors connected with the activities of the government are included in it, e.g., the type of government (single-party government or multi-party government), the attitude of the government towards different industries, progress in passing different laws.

(3) Social Environment

Business originates and develops in society. Therefore, the effect of various social factors on business is but natural.

Social factors include customs, fashions, traditions, wishes, hopes, level of education, population, standard of living of the people, religious values, distribution of income, corruption, family set-up, consumers’ consciousness, etc.

(4) Legal Regulatory Environment

Many Acts are passed from time to time in order to control and regulate business activities.

The sum total of all these Acts creates legal regulatory environment. Acts are mossy passed to regulate such business activities as sale-purchase, industrial disputes, labour, regulating partnership business, regulating company business, foreign exchange, etc.

In India, the following Acts have been passed in connection with the above business activities:

(i) Sale of Goods Act (ii) Industrial Disputes Act (iii) Minimum Wages Act (iv) Indian Partnership Act (v) Companies Act (vi) Trademark Act (vii) Essential Commodities Act (viii) Consumer Protection Act (ix) Standards of Weights and Measures Act. All these Acts influence business decisions.

(5) Technological Environment

Technological environment includes the discovery of new methods and implements for the production of goods and services. Technological changes make available better methods of production and that makes the optimum use of the raw material possible.

The technological changes offer both the possibilities and threats for business. In case a company understands these things well in time it can achieve its objective, otherwise the very existence of the company is threatened.