National Differences in Political Economy

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LETTER OF TRANSMITTAL

1st

June, 2011

Sir Prof. Dr. M.M.H. Siddiqi

Course Instructor, Global Business

Dadabhoy Institute of Higher Education

Karachi.

Sir

I here with present our Chapter Report authorized by you as a requirement for this

course.

In this report, I have tried to given the explanation of each topic in some detail.

I hope I have covered all that was required for the report.

If there be any clarification demanded, I would appreciate a call from you.

Sincerely,

Notan Khatri (BBA-8)

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Political System

A political system is a system ofpolitics and government. It is usually compared to the

legal system, economic system, cultural system, and other social systems. It is different

from them, and can be generally defined on a spectrum from left, e.g. communism, to theright, e.g. fascism. However, this is a very simplified view of a much more complex

system of categories involving the views: who should have authority, how religious

questions should be handled, and what the government's influence on its people and

economy should be.

"INDIVIDUALISM: The term 'individualism' has a great variety of meanings in social

and political philosophy. There are at least three types that can be distinguished: (1)

ontological individualism, (2) methodological individualism, and (3) moral or political

individualism. Ontological individualism is the doctrine that social reality consists,

ultimately, only of persons who choose and act. Collectives, such as a social class, state,

or a group, cannot act so they are not considered to have a reality independent of the

actions of persons. Methodological individualists hold that the only genuinely scientific

propositions in social science are those that can be reduced to the actions, dispositions,

and decisions of individuals. Political or moral individualism is the theory that

individuals should be left, as far as possible, to determine their own futures in economic

and moral matters.

COLLECTIVISM: Collectivism is defined as the theory and practice that makes some

sort of group rather than the individual the fundamental unit of political, social, and

economic concern. In theory, collectivists insist that the claims of groups, associations, or

the state must normally supersede the claims of individuals."

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SOCIALISM: is an economic system in which the means of production are publicly or

commonly owned and controlled co-operatively, or a political philosophy advocating

such a system. As a form of social organization, socialism is based on co-operative social

relations and self-management; relatively equal power-relations and the reduction or

elimination of hierarchy in the management of economic and political affairs.

Socialism is an economic system based upon production for use and the direct allocation

of economic inputs to satisfy economic demands and human needs (Use-value);

accounting is based on physical quantities of resources, some physical magnitude, or a

direct measure oflabor-time. Goods and services for consumption are distributed through

markets, and distribution of income is based on the principle of individual

merit/individual contribution.

As a political movement, socialism includes a diverse array of political philosophies,

ranging from reformism to revolutionary socialism.State socialistcurrents of socialism

advocate for the nationalization of the means of production, distribution and exchange as

a strategy for implementing socialism; while social democrats advocate public control of

capital within the framework of a market economy.Libertarian socialists and anarchists

reject using the state to build socialism, arguing that socialism will, and must, arise

spontaneously. They promote direct worker-ownership of the means of production

alternatively through independent syndicates, workplace democracies, or worker

cooperatives.

Modern socialism originated from an 18th-century intellectual and working class political

movement that criticized the effects ofindustrialization and private property on society.

Utopian socialists such as Robert Owen (17711858), tried to found self-sustaining

communes by secession from a capitalist society. Henri de Saint Simon (17601825),

who coined the term socialism, advocated technocracy and industrial planning. Saint-

Simon, Friedrich Engels and Karl Marx advocated the creation of a society that allows

for the widespread application of modern technology to rationalize economic activity by

eliminating the anarchy of capitalist production that results in instability and cyclical

crises ofoverproduction.

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Socialists inspired by the Soviet model of economic development, such as Marxist-

Leninists, have advocated the creation of centrally planned economies directed by a

single-party state that owns the means of production. Others, including Yugoslavian,

Hungarian, East German and Chinese communist governments in the 1970s and 1980s,

instituted various forms ofmarket socialism, combining co-operative and state ownership

models with the free market exchange and free price system (but not free prices for the

means of production).

COMMUNISM: is a sociopolitical movement that aims for a classless and stateless

society structured upon common ownership of the means of production, free access to

articles of consumption, and the end of wage labor and private property in the means of

production and real estate.

In Marxist theory, communism is a specific stage of historical development that

inevitably emerges from the development of the productive forces that leads to a

superabundance of material wealth, allowing for distribution based on need and social

relations based on freely-associated individuals. The exact definition of communism

varies, and it is often mistakenly, in general political discourse, used interchangeably

with socialism; however, Marxist theory contends that socialism is just a transitional

stage on the road to communism. Leninists revised this theory by introducing the notion

of a vanguard party to lead the proletarian revolution and to hold all political power after

the revolution, 'in the name of the workers' and supposedly with worker participation, in a

transitional stage between capitalism and socialism.

Communists such as council communists and non-Marxist libertarian communists and

anarcho-communists, as well as some Marxist-Leninists who have progressively

abandoned many of the basic assumptions of Leninism, oppose the idea of a vanguard

party and a transition stage, and advocate for the construction of full communism to

begin immediately upon the abolition of capitalism. There is a very wide range of

theories amongst those particular communists in regards to how to build the types of

institutions that would replace the various economic engines (such as food distribution,

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education, and hospitals) as they exist under capitalist systems or even whether to do

so at all.

SOCIAL DEMOCRACY: is a political ideology of the center-left on the political

spectrum. The contemporary social democratic movement seeks to reform capitalism to

align it with the ethical ideals of social justice while maintaining the capitalist mode of

production, as opposed to creating an alternative socialist economic system. Practical

modern social democratic policies include the promotion of a welfare state, and the

creation ofeconomic democracy as a means to secure workers' rights.

Historically, social democracy was a form ofevolutionary reformist socialism.[2]During

the early 20th century, major European social democratic parties began to reject elements

ofMarxism, Revolutionary socialism and class struggle, taking a moderate position that

socialism could be established through political reforms.

PRIVATIZATION: is the incidence or process of transferring ownership of a business,

enterprise, agency or public service from the public sector (the state or government) to

the private sector (businesses that operate for a private profit) or to private non-profit

organizations. In a broader sense, privatization refers to transfer of any government

function to the private sector - including governmental functions like revenue collection

and law enforcement.

The term "privatization" also has been used to describe two unrelated transactions. The

first is a buyout, by the majority owner, of all shares of a public corporation or holding

company's stock, privatizing a publicly traded stock, and often described as private

equity. The second is a demutualization of a mutual organization or cooperative to form a

joint stock company.

DEMOCRACY: is a form of government in which all citizens have an equal say in the

decisions that affect their lives. Ideally, this includes equal (and more or less direct)

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participation in the proposal, development and passage of legislation into law. It can also

encompass social, economic and cultural conditions that enable the free and equal

practice ofpolitical self-determination. The term comes from the Greek:

(dmokrata) "rule of the people", which was coined from (dmos) "people" and

(Kratos) "power", in the middle of the 5th-4th century BC to denote the political

systems then existing in some Greek city-states, notably Athens following a popular

uprising in 508 BC.

TOTALITARIANISM: (or totalitarian rule) is a political system where the state, usually

under the power of a single political person, faction, or class, recognizes no limits to its

authority and strives to regulate every aspect of public and private life wherever feasible.

Totalitarianism is usually characterized by the coincidence of authoritarianism (where

ordinary citizens have less significant share in state decision-making) and ideology (a

pervasive scheme of values promulgated by institutional means to direct most if not all

aspects of public and private life).

Totalitarian regimes or movements stay in political power through an all-encompassing

propaganda disseminated through the state-controlled mass media, a single party that is

often marked by personality cultism, control over the economy, regulation and restrictionofspeech, mass surveillance, and widespread use ofstate terrorism

REPRESENTATIVE DEMOCRACY: is a form of government founded on the principle

of elected individuals representing the people, as opposed to autocracy and direct

democracy. Two countries which use representative democracy are the United Kingdom

(a constitutional monarchy) and Germany (a federal republic).

It is an element of both the parliamentary system and presidential system ofgovernment

and is typically used in a lower chamber such as the House of Commons (UK) or

Bundestag (Germany), and is generally curtailed by constitutional constraints such as an

independent judiciary or an upper chamber.

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THEOCRACY: is a form of government in which a state is understood as governed by

immediate divine guidance especially a state ruled by clergy, or by officials who are

regarded as divinely guided.

From the perspective of the theocratic government, "God himself is recognized as the

head" of the state, hence the termtheocracy, from the Greek "rule of God", a

term used by Josephus of the kingdoms of Israel and Judah. Theocratic governments

enact theonomic laws (rules).

A theocracy may be monist in form, where the administrative hierarchy of the

government is identical with the administrative hierarchy of the religion, or it may have

two 'arms,' but with the state administrative hierarchy subordinate to the religious

hierarchy.

Theocracy should be distinguished from other secular forms of government that have a

state religion, or are merely influenced by theological or moral concepts, and monarchies

held "By the Grace of God".

Tribal Totalitarianism

A third form of totalitarianism is the tribal totalitarianism This exists principally in African countries, such as Zimbabwe, Tanzania,

Uganda, & Kenya Tribal totalitarianism occurs when a political party that represents the interests of

a particular tribe monopolizes power.

Right-Wing Totalitarianism

Here, private ownership of property is endorsed by government, market forces arealso allowed free play, but political freedom are rarely granted

Argentina, Brazil, Chile, & Paraguay were under right-wing totalitariangovernments in the 1980s

China is classic example of polity which though communist by definition, ispursuing right-wing policies

The country is privatizing state-owned enterprises, attracting FDI, pursuing pro-business policies & is registering a hefty growth rate

The country appears to be an open & free society, but is essentially totalitarian

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As between democracy & totalitarianism, which political system is ideal forbusiness growth is a relevant question?

It may be stated that democracy does not guarantee high rates of economicgrowth, nor does totalitarianism drive a country to slow economic growth

Rate of growth the increase in the amount of goods & services produced by anationis influenced by many variables other than political & civil liberties

ECONOMIC SYSTEM

An economic system is the structure of production, allocation of economic inputs,

distribution of economic outputs, and consumption ofgoods and services in an economy.

It is a set ofinstitutions and their social relations. Alternatively, it is the set of principles

by which problems ofeconomics are addressed, such as the economic problem ofscarcity

through allocation of finite productive resources.

An economic system is composed ofpeople and institutions, including their relationships

to productive resources, such as through the convention of property. Examples of

contemporary economic systems include capitalist systems, socialist systems, and mixed

economies. "Economic systems" is the economics category that includes the study of

respective systems.

Market Economy

In a market economy, national and state governments play a minor role. Instead,

consumers and their buying decisions drive the economy. In this type of economic

system, the assumptions of the market play a major role in deciding the right path for acountrys economic development.

Market economies aim to reduce or eliminate entirely subsidies for a particular industry,

the pre-determination of prices for different commodities, and the amount of regulation

controlling different industrial sectors.

The absence of central planning is one of the major features of this economic system.

Market decisions are mainly dominated by supply and demand. The role of the

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government in a market economy is to simply make sure that the market is stable enough

to carry out its economic activities properly.

Planned Economy

A planned economy is also sometimes called a command economy. The most important

aspect of this type of economy is that all major decisions related to the production,

distribution, commodity and service prices, are all made by the government.

The planned economy is government directed, and market forces have very little say in

such an economy. This type of economy lacks the kind of flexibility that is present a

market economy, and because of this, the planned economy reacts slower to changes in

consumer needs and fluctuating patterns of supply and demand.

On the other hand, a planned economy aims at using all available resources for

developing production instead of allotting the resources for advertising or marketing.

Mixed Economy

A mixed economy combines elements of both the planned and the market economies in

one cohesive system. This means that certain features from both market and planned

economic systems are taken to form this type of economy. This system prevails in many

countries where neither the government nor the business entities control the economicactivities of that country - both sectors play an important role in the economic decision-

making of the country. In a mixed economy there is flexibility in some areas and

government control in others. Mixed economies include both capitalist and socialist

economic policies and often arise in societies that seek to balance a wide range of

political and economic views.

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LEGAL SYSTEM

The legal system of a country refers to the rules or laws, that regulate behavior along with

the processes by which the laws are enforced and through which redress for grievances is

obtained. The legal system of a country is of immense importance to internationalbusiness. A countrys laws regulate business practice, define the manner in which

business transactions are to be executed, and set down the rights and obligations of those

involved in business transactions. The legal environments of countries differ in

significant ways. As we shall see, differences in legal systems can affect the

attractiveness of a country as an investment site or market.

Different Legal Systems

COMMON LAW: This system developed from a set of traditional laws first brought

together in England around the 12th Century. The name derives from the fact that it was

one set of laws "common" to the whole kingdom, rather than different sets of laws used

by individual communities or tribes.

One of the distinguishing features of common law is that it developed through usage

rather than being imposed by codified legislation as with the civil code system.

(Legislation means laws - sometimes also called statutes - that are made by a

representative body such as a parliament. Codification is when individual laws of a

similar nature are bundled together under one new, overarching law.)

Common law developed based on the outcomes of individual court cases. Each court case

provided a basis for judging the next case of a similar nature. Over the centuries and

many thousands of court cases, this process led to a body of laws covering most aspects

of society and based on principles shared by the society in general.

There are several core principles which guide common law, though they are not

necessarily unique to it. These include:1. The rights of the individual exist alongside those of the state;2. It is adversarial;3. It has a presumption of innocence;4. It develops case law through judgments and precedents;5. Case law co-exists with statute law and - in most cases - a constitution;6. Crimes are punished and civil wrongs are rectified by compensation.

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CIVIL LAW: (or civilian law) is a legal system inspired by Roman law, the primary

feature of which is that laws are written into a collection, codified, and not (as in common

law) interpreted by judges.

Conceptually, it is the group of legal ideas and systems ultimately derived from the Code

of Justinian, but heavily overlaid by Germanic, ecclesiastical, feudal, and local

practices,[2]as well as doctrinal strains such as natural law, codification, and legislative

positivism.

Materially, civil law proceeds from abstractions, formulates general principles, and

distinguishes substantive rules from procedural rules.[3]

It holds legislation as the primary

source of law, and the court system is usually inquisitorial, unbound by precedent, and

composed of specially trained judicial officers with a limited authority to interpret law.

Juries separate from the judges are not used, although in some cases, volunteer lay judges

participate along with legally trained career judges.

THEOCRATIC LAW OR RELIGIOUS LAW: Here we are not talking of laws governing

the religious practices of believers but of a country's legal system being based on

religious laws which apply to people as citizens in both their private and public lives.

Although throughout history many countries have had legal systems based wholly or

partly on religious laws and teachings, today by far the most common are those aligned to

Islam.

Islamic law (Sharia) is based on the Koran and Sunnah holy books, supplemented by

interpretations over the centuries by Muslim scholars and jurists. It provides rules on how

practicing Muslim should live their lives. Like common law and civil code law, Islamic

law is still evolving and there are still disagreements about exactly what makes up Sharia

and its scholarly interpretations (Fiqh).

Islamic law shares some similarities with common law, principally the fact that it has

evolved through application, with current judgments based on precedents and the analysis

of previous cases of a similar nature. There are, however, some fundamental differences

in areas such as individual rights and equality before the law, especially in the treatment

of women.

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CONTRACT: is a legally enforceable agreement between two or more parties with

mutual obligations. The remedy at law for breach of contract is "damages" or monetary

compensation. In equity, the remedy can be specific performance of the contract or an

injunction. Both remedies award the damaged party the "benefit of the bargain" or

expectation damages, which are greater than mere reliance damages, as in promissory

estoppels.

A contractual relationship is evidenced by (1) an offer, (2) acceptance of the offer, and a

(3) valid (legal and valuable) consideration. Each party to a contract acquires rights and

duties relative to the rights and duties of the other parties. However, while all parties may

expect a fair benefit from the contract (otherwise courts may set it aside as inequitable) it

does not follow that each party will benefit to an equal extent. Existence of contractual-

relationship does not necessarily mean the contract is enforceable, or that it is not void

(see void contract) or voidable (see voidable Contract). Contracts are normally

enforceable whether or not in a written form, although a written contract protects all

parties to it. Some contracts, (such as for sale of real property, installment plans, or

insurance policies) must be in writing to be legally binding and enforceable. Other

contracts (see implied in fact contract and implied in law contract) are assumed in, and

enforced by, law whether or not the involved parties desired to enter into a contract.

CONTRACT LAW: Blacks Law Dictionary defines a contract as [a]n agreement

between two or more parties creating obligations that are enforceable or otherwise

recognizable at law. Forpurposes of this chapter, we are concerned with agreements to

buy and sell some type of agricultural product.

Contract law lies at the heart of our system of laws and serves as the foundation of our

entire society. This is not an exaggeration. It is a simple observation - one that too often

goes unobserved.

Our society depends upon free exchange in the marketplace at every level. Contract law

makes this possible. Exchanges in the marketplace always depend upon voluntary

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agreements between individuals or other "legal persons". Such voluntary agreements

could never work without contract law.

Contract law serves to make these agreements "enforceable", which usually means that it

allows one party to a contract to obtain money damages from the other party upon

showing that the latter stands in breach.

Without contract law, these voluntary agreements would instantly become impractical

and unworkable. Since such agreements lie at the very heart of our society and economy,

and since they depend upon contract law, it is no exaggeration to say, as I have just done,

that "contract law lies at the heart of our system of laws and serves as the foundation of

our entire society." Those were the very words that I used to begin this essay.

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL

SALE OF GOODS (CIGS): The United Nations Convention on Contracts for the

International Sale of Goods (CISG) has been recognized as the most successful attempt to

unify a broad area of commercial law at the international level. The self-executing treaty

aims to reduce obstacles to international trade, particularly those associated with choice

of law issues, by creating even-handed and modern substantive rules governing the rights

and obligations of parties to international sales contracts. At the time this is written

(February 2009), the CISG has attracted more than 70 Contracting States that account for

well over two thirds of international trade in goods, and that represent extraordinary

economic, geographic and cultural diversity.

CIGS addressing the following matters

Interpretation of the parties agreement; The role of practices established between the parties, and of international usages; The features, duration and revocability of offers; The manner, timing and effectiveness of acceptances of offers; The effect of attempts to add or change terms in an acceptance; Modifications to international sales contracts; The sellers obligations with respect to the quality of the goods as well as the time

and place for delivery;

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The place and date for payment; The buyers obligations to take delivery, to examine delivered goods, and to give

notice of any claimed lack of conformity;

The buyers remedies for breach of contract by the seller, including rights todemand delivery, to require repair or replacement of non-conforming goods, to

avoid the contract, to recover damages, and to reduce the price for non-

conforming goods;

The sellers remedies for breach of contract by the buyer, including rights torequire the buyer to take delivery and/or pay the price, to avoid the contract, and

to recover damages;

Passing of risk in the goods sold; Anticipatory breach of contract; Recovery of interest on sums in arrears; Exemption from liability for failure to perform, including force majeure; Obligations to preserve goods that are to be sent or returned to the other party.

PROPERTY RIGHTS AND CORRUPTION: Laws created by governments in regards

to how individuals can control, benefit from and transfer property. Economic theory

contends that government enforcement of strong property rights is a determinant

regarding the level of economic success seen in the area. Individuals will create new

forms of property to generate wealth, only when they are assured that their rights to

their property will protect them against unjust and/or unlawful actions by other parties.

CORRUPTION:affects all regions of the world and all levels of society, but the impact is

greatest in developing countries. Every year, developing countries lose USD 50 million to

100 million through corrupt acts (World Bank estimate, 2004).

Corruption undermines political, social and economic stability and damages trust in

institutions and authorities. It also fuels transnational crime. Terrorists and organized

criminals are aided in their illegal activities by the complicity of corrupt public officials.

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Corruption is of particular concern for the worlds police and judicial systems, as

corruption in one country can compromise an entire international investigation.

There is clear recognition by the international community that further work to enhance

co-operation between law enforcement authorities is needed in order to co-ordinate

global action against corruption.

Figure 2.1: Rankings of Corruption by Country

2004

0 2 4 6 8 10

Bangladesh

Nigeria

Indonesia

Zimbabwe

Russia

India

China

Brazil

Italy

Malaysia

France

United States

United Kingdom

New Zeland

Finland

Corruption Index (10=clean; 0=totally corrupt)

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The protection of intellectual property

INTELLECTUAL PROPERTY: is the Creations of the mind, such as inventions, literary

and artistic works, and symbols, names, images, and designs.

PATENT: is a document that grants the holder exclusive rights to an invention for a fixed

number of years.

COPYRIGHT: is an exclusive grant from the government that allows the owner to

reproduce a work, in whole or in part, and to distribute, perform, or display it to the

public in any form or manner, including over Internet

Literary works Musical works Dramatic works Artistic works Sound recordings, films, broadcasts, cable programs

TRADEMARK: is a symbol used by businesses to identify their goods and services;

government registration of the trademark confers exclusive legal right to its use.

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Piracy of Intellectual Property

THE DETERMINANTS OF ECONOMIC DEVELOPMENT

GROSS NATIONAL INCOME (GNI): comprises the value within a country (i.e. its

gross domestic product), together with its income received from other countries (notably

interest and dividends), less similar payments made to other countries.[1]

The GNI consists of: the personal consumption expenditures, the gross private

investment, the government consumption expenditures, the net income from assets

abroad (net income receipts), and the gross exports of goods and services, after deducting

two components: the gross imports of goods and services, and the indirect business taxes.

The GNI is similar to the gross national product (GNP), except that in measuring the

GNP one does not deduct the indirect business taxes.

PURCHASING POWER PARITY (PPP): is a theory which states that exchange rates

between currencies are in equilibrium when their purchasing power is the same in each of

the two countries. This means that the exchange rate between two countries should equal

Figure 2.2: Regional Piracy Rates for Software

0 20 40 60 80

North America

Western Europe

Middle East and Africa

Latin America

Asia Pacific

Eastern Europe

Percentage of Software that is Pirated

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the ration of the two countries price level of a fixed basket of goods and services. When

a countrys domestic price level is increasing (i.e., a country experiences inflation), that

countrys exchange rate must depreciated in order to return to PPP.

HUMAN DEVELOPMENT INDEX (HDI): is a composite statistic used to rank

countries by level of "human development" and separate "very high human

development", "high human development", "medium human development", and "low

human development" countries. The Human Development Index (HDI) is a comparative

measure of life expectancy, literacy, education and standards of living for countries

worldwide. It is a standard means of measuring well-being, especially child welfare. It is

used to distinguish whether the country is a developed, a developing or an under-

developed country, and also to measure the impact of economic policies on quality of

life. There are also HDI for states, cities, villages, etc. by local organizations or

companies.

Countries fall into four broad human development categories, each of which comprises

42 countries (except for the second category, comprising 43 countries).[4]

The divisions

are:

Division comprising:

Very high 42 countries

High 43 countries

Medium 42 countries

Low 42 countries

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STATES IN TRANSITION

The spread of Democracy:

The spread of democracy. During the 1800's, democracy developed steadily. Many

countries followed the American and British examples. Such democratic institutions aselections and legislatures became common. Where kings still ruled, they lost much of

their power and performed mainly ceremonial duties.

The Industrial Revolution brought political changes of great importance. During the

second half of the 1800's, the working classes demanded and received greater political

rights. New laws gave more citizens the right to vote. The freedoms of speech, the press,

assembly, and religion were extended and enlarged.

Democracy did not take root everywhere. Some countries that adopted constitutions

modeled after that of the United States later became dictatorships. These nations found

that a constitution alone did not guarantee democracy. In Russia, a group of revolutionists

set up a Communist dictatorship in 1917 and halted Russia's progress toward democracy.

Germany adopted a democratic government in 1919, but Adolf Hitler's rise to power

brought a fascist dictatorship in 1933.

Democracy today. Most governments today claim to be democratic, but many lack some

essential freedoms usually associated with democracy. In some countries, for example,

the people are not allowed certain basic freedoms, such as those of speech and of the

press, or competitive elections.

The New World Order And Global Terrorism

International terrorism, particularly after the Sept. 11 attacks, the West finally attractedthe attention of the world, especially to combat international terrorism and the fight

began. Terrorist activities in the United States is the center of the world to take an easy

target to attack even if the share of the arrangement behind the crisis brought by

globalization undoubtedly enormous.

The name of the last century with an incredible evolution of technology and objectives of

terrorist organizations who want to announce, that they provide the means of mass

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communication facilities due to high blood anywhere in the world are performing their

activities.

Terrorism is a fact that todays conditions have been replaced by hot wars.

it is obvious that external sources sustain the existence of terrorism . In this case, the

states need to stop use of terrorist organizations for political purposes. That one or two

states

possibly can and that is not a war that one or two states can struggle with that issue.

International agreements and cooperations should act together rather than signing useless

agreements. In contrast when we consider the aims and methods of terrorist organizations

it is not far away unpreventable atrocities and high-effected attacks.

The Nature of Economic Transformation

DEREGULATION: is the removal or simplification of government rules and regulations

that constrain the operation of market forces.[1]

Deregulation does not mean elimination

of laws against fraud or property rights but eliminating or reducing government control of

how business is done, thereby moving toward a more laissez-faire, free market. It is

different from liberalization, where more players enter in the market, but continues the

regulation and guarantee of consumer rights and maximum and minimum prices. Anexample of Deregulation would be Financial Deregulation.

PRIVATIZATION: is the incidence or process of transferring ownership of a business,

enterprise, agency or public service from the public sector (the state or government) to

the private sector (businesses that operate for a private profit) or to private non-profit

organizations. In a broader sense, privatization refers to transfer of any government

function to the private sector - including governmental functions like revenue collection

and law enforcement.

The term "privatization" also has been used to describe two unrelated transactions. The

first is a buyout, by the majority owner, of all shares of a public corporation or holding

company's stock, privatizing a publicly traded stock, and often described as private

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equity. The second is a demutualization of a mutual organization or cooperative to form a

joint stock company.

LEGAL SYSTEM:of the world today are generally based on one of three basic systems:

civil law, common law, and religious lawor combinations of these. However, the legal

system of each country is shaped by its unique history (see State law), and so

incorporates individual variations.