Student name: Rimsha Khan

BA 288-5145 – W24

ESSAY. Write your answer in the space provided or on a separate sheet of paper.

1) What is the philosophy of Amartya Sen?

Renowned economist and Nobel laureate Amartya Sen is well-known for his capabilities-based approach
to philosophy. Sen's paradigm places a strong emphasis on people's substantive liberties and their capacity
to live meaningful lives. He contends that evaluating well-being must take into account factors more than
only conventional economic measures, such as an individual's capacity to carry out a variety of tasks in
their daily lives. Sen emphasizes the value of political liberties, healthcare, and education in her support
of social programs that increase people's chances. His work has had a huge impact on worldwide
conversations about social fairness and wellbeing and has greatly affected development economics, which
emphasizes human development rather than just economic growth.

2) Why does education lead to economic development?

Economic growth is a result of education since it increases productivity, human capital, and creativity. A
workforce with higher levels of education is better able to innovate and keep up with technology
developments, both of which promote economic growth. Education improves a person's knowledge and
abilities, increasing their employability and capacity for higher-value work. It also fosters a culture of
critical thinking, problem-solving, and entrepreneurship—all crucial components of economic
advancement. Furthermore, populations with higher levels of education typically experience better health
outcomes, which lower absenteeism and boost overall productivity. A foundation for sustained economic
growth is laid by the favorable correlations between rising levels of education and increased social well-
being, lower levels of poverty, and higher incomes.

3) Discuss Samuel Huntington’s views on Islamic fundamentalism.

In "The Clash of Civilizations," Samuel Huntington made the argument that Islamic extremism poses a
serious threat to the international system. He highlighted the uniqueness of civilizations by arguing that
the conflict between the Islamic world and the West is based on cultural and theological differences.
According to Huntington, there might be a confrontation between Islamic culture and Western principles
because of their distinct traditions and beliefs. His emphasis on the importance that identity and cultural
elements play in forming international relations and the ideological conflicts that exist between Islamic
fundamentalism and Western cultures drew acclaim and criticism for its significance in comprehending
world affairs.

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4) Since the 1980s, there has been a transformation from centrally planned command economies to
market-based economies. What is the rationale for this transformation?

Since the 1980s, the shift from centrally planned command economies to market-based economies has
been fueled by the realization that centralized planning is inherently inefficient. Nations have seen how
well market-oriented systems foster efficiency, innovation, and economic progress. This change is
justified by the idea that market processes better distribute resources, promote competition, and satisfy
customer needs. Accepting market-based economies also makes it easier to integrate into the world
economy, which in turn draws in foreign capital and promotes commerce. This change is indicative of a
wider recognition of the advantages of free-market ideas in fostering wealth, flexibility, and general
economic well-being.

5) Is privatization by itself enough to guarantee economic growth? Why? Explain using an example.

Economic growth requires more than just privatization; it also requires competitiveness, strong
governance, and supporting policies. For example, Russia had extensive privatization in the 1990s, which
resulted in the transfer of state-owned businesses to private ownership. However, extensive corruption
and oligarchic domination were caused by the absence of appropriate institutional frameworks,
transparency, and regulatory mechanisms, which hampered economic advancement. On the other hand,
successful privatization has led to long-term economic growth in nations like South Korea, where
institutions have been reinforced, market competition has been promoted, and governance has been
enhanced. As a result, even if privatization might increase efficiency, its success depends on a supportive
environment that includes powerful institutions and sensible regulations.

6) What are the factors that determine the long-run monetary benefits of doing business in a
country?

A country's long-term economic gains from business are determined by a number of variables. An
environment that is conducive to long-term profitability is created by stable economic conditions, such as
low inflation and steady growth. Long-term performance is influenced by efficiency and creativity, which
are improved by having access to a trained and productive workforce. Adequate legal and regulatory
environments that facilitate corporate operations are essential. Efficient operations are made possible by
technical preparedness and infrastructure development. Furthermore, a sizable and expanding market and
strong consumer spending power guarantee ongoing demand. Last but not least, a nation's appeal for
long-term financial advantages in business is influenced by political stability and an environment that is
favorable to business, including transparent government and low levels of corruption.

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7) What are the factors that determine the costs of doing business in a country?

A nation's business expenses are influenced by a number of variables. Labor costs have a major impact on
operating expenses and are impacted by productivity and wage levels. The entire cost structure is
influenced by tax rules, such as import/export charges and corporation taxes. Bureaucratic procedures and
regulatory compliance can reduce productivity and increase administrative costs. Transportation and
distribution costs are influenced by logistics and infrastructure quality. International transactions are
impacted by exchange rates and currency stability. Conditions for political stability and security are
essential since unpredictability might result in extra expenses or interruptions. The pricing and availability
of resources, such as energy and raw materials, also affect how cost-competitive a given nation's
economic environment is overall.

8) Why does doing business in a country with a relatively unsophisticated economy result in
increased costs?

Costs might rise while conducting business in a nation with a less developed economy for a number of
reasons. Inadequate infrastructure can cause problems with logistics and transportation, increasing
operating costs. A workforce with lower skill levels could need more training, which would affect labor
expenses and output. Administrative costs can rise in emerging economies due to regulatory inefficiencies
and bureaucratic obstacles. Risks that might influence financial transactions include currency volatility
and undeveloped financial markets. Uncertainty in the market and restricted access to technology might
also impede innovation and competitiveness, which could increase long-term expenses. In general,
organizations operating in such circumstances have greater operational and strategic obstacles due to the
lack of knowledge in numerous economic areas.

9) What are the factors that contribute to the risks of doing business in a country?

There are several elements that go into the dangers of conducting business in a nation. Uncertainties can
arise from political instability, which includes shifts in governmental policy and international tensions.
Financial risks are associated with economic volatility, which is typified by varying inflation rates and
currency values. Operational difficulties may arise as a result of unscrupulous practices and uneven
execution of the law and regulations. Market dynamics may be impacted by social and cultural issues like
consumer behavior or labor strikes. Physical and operational hazards are associated with environmental
and natural disasters. Overall company risks are also influenced by security issues, such as crime and
terrorism. To reduce risks and make wise decisions when entering or operating in a foreign market,
businesses must conduct a thorough evaluation of these aspects.

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