Critical Thinking and Discussion Questions

Discussion Ch. 2

Critical Thinking and Discussion Questions:

1. In a free market economy individuals are allowed to own private property and assets; which this helps the companies to introduce new products, update existing products and develop new marketing strategies, creating competition and the will to satisfy customers. This helps for the economy to be fluent and creating economic growth. Whereas in a state-directed economy individuals and/or corporations are not allowed to own property or any type of assets. The reason is for everyone to work for the good of society and not for the personal wealth. Which it does not allows for competition to grow and the economy to flow, generating less innovation and efficiency.

2. Democratic systems allow for the stable transfer of power through elections, providing political stability; which is essential for economic growth.

3. When the government is involved in corruption, business interaction is not clear anymore. Many research demonstrate a relationship between bribery and economy development; the higher the level of corruption the more economically underdeveloped. Even though there are many countries such as Japan or Germany that see corruption as an important role in their economy, that sometimes briberies need to be reported as an expense.

4. According to Sen development is not only economic but also political, in order for it to occur is required that political communities give their citizens a voice. Governments influenced by Sen’s view would value their citizens freedom, exchanging economic development for greater individual freedom. I think Sen is correct, because a government cannot be economically prosperous for a long term by limiting its citizens freedom and can be at the risk of stifle.

5. Russia is politically unstable but has a high potential while