Question

In: Economics

Let's assume I’m the financial vice-president of WW Corp and I’m thinking about doing business in...

Let's assume I’m the financial vice-president of WW Corp and I’m thinking about doing business in either A country or B country.

Please explain your decision.

Both countries have the same current GDP

Country A

Democratic country, free speech
Enforcing property rights
Low investing in education and physical capital
High public spending and federal deficit
Sample income mean (n:100) is $894.96
Probability that a household’s income is below the poverty line is 6%

Country B

Run by peaceful one-party gov
Budget has been balanced
Gov. spending is focused on education
Legal system is well developed, supporting property rights
Low corruption
No democracy, no elections, has political prisoners
Sample income mean (n:100) is $1000
Probability that a household’s income is below the poverty line is 20%
Larger gap between the rich and the poor

Expert Solution

Ans.

Both the countries has some favourable and unfaourable aspects .

For country A favourable factors are such as

- Democratic country, free speech

- Enforcing property rights

- Income equality , Probability that a household’s income is below the poverty line is 6%

And unfavorable factors are

- Low investing in education and physical capital

- High public spending and federal deficit

For country B. For country B favourable factors are such as

- Run by peaceful one-party gov

- Budget has been balanced

- Gov. spending is focused on education

- Legal system is well developed, supporting property rights

- Low corruption

And unfavorable factors are

- No democracy, no elections, has political prisoners

- Income Inequality , Probability that a household’s income is below the poverty line is 20%

- Larger gap between the rich and the poor

We will suggest to do business in country A , because of the fact that it is democratic country, free speech and Enforcing property rights. In country B , with no democracy, no elections, has political prisoners it may be challenging for the CEO to get the support in case of any disputes and also he may not get much support from the legal system in case of dispute with the government.

Rahul Sunny answered 1 year ago

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