Question

The country of Brazil

Explained how differences in economic systems, economic institutions, how the economy is organized, the rate of economic growth, or other economic factors (refer to the economic section in the “environments of international business” document) such as GDP, inflation rate, interest rates, etc. that are different in the target country when compared to economic factors in the USA that can affect how business is done, the types of products you can sell, or, how differences in the economy can affect business decisions. ?

Answer 1

Economic systems like closed economy, open economy, mixed economy plays a very important role in determining trade, a closed economy is said to be self sustainable because all the goods produced in the country are said to be absorbed in the country itself for eg:- chinese civilization centuries ago. In an open economy various private sector individuals are allowed to enter for trade with a country and the economic balance is left free as per the trade, with the rise of liberalization, globalisation and privatisation in the 21'st century bring the emerging concept of mixed economy, where both the private as well a government sectors are allowed to hold on trade, thus in terms of modern trade FDI through various routes like automatic approval or government approval directly affect the trade with nations worldwide.

When we talk about economic institutions, the first institution that come to our mind is the Central Bank or the Federal Reserve, it plays a very important role in making the economy of a country stable, it continuously monitors the inflation rate and based on the current stats it adopts expansionary and contractionary monitory policies which makes the economy robust, stable and less volatile. In terms of trade stability is the key, enterpreneurs around the world want to invest in countries that are stable, progressive and less volatile, from the infrastructure sector to the defence sector.

GDP or the Gross domestic product is the net value of all the goods and services produced in an economy in its territorial boundaries, thus when the GDP and GDP growth rate is increasing it shows the effectiveness of the government policies, thus attracting trade and investors from worldwide, high GDP results in high employement rate which ultimately results in high income levels in the society, thus lead to rise in standard of living and poverty free nation. Low interest rates allow people to avail easy loans thus help general people to live more prosperously by purchasing there own homes.

Factors like, ease of doing business, SWIFT i.e Single Window interface for facilitating trade, sustainable development help the nation to attract more business and rise the confidence level of the industrialist to take business decisions more effectively.