BUS 203: BUSINESS ENVIRONMENT

Section: 03

Fall 2013
September 29, 2013

L5

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Topics
Property Rights (Cont. from last lecture)
World Development Report 2005 - Ch 4 pp. 79-84

Globalization
Defining characteristics
Potentials and
Dangers

Property Rights
Secure property rights link efforts with reward
Assure firms that they will be able to reap the fruits of their
investment

Entrepreneurs who believe that their property rights are

secure reinvest 14 to 40% of their profit more
In contrast, firms in low income countries require returns
much higher to compensate the risks resulting from insecure
property rights
More secure the rights, the faster the growth efficiency factor

Property Rights
Land titling is a form of land reform in which private individuals and
families are given formal property rights for land which they have
previously occupied informally or used on the basis of customary land
tenure
Titling increased the value of rural lands anywhere from 43 to 81% in
Brazil, Indonesia, Thailand and Philippines
In case of urban lands, it increased the value by 14% in Manila
Secure property rights and environmental stewardship (Box 4.3)

Property Rights
Rights to land
Improved access to credit, titled land as ready collateral, land ownership as
indicator of creditworthiness
Maintain an effective titling program
Initial cost, multiple claims, inertia to reform

Considering alternative to full-blown titling

Foster competition among service providers

Title to other property

Titling movable assets can provide similar benefits
Easier it is for financial institutions to recover the property for defaulting,
the more willing they are to lend

Globalization
Globalization and you
Everything you consume in a day and their country of origin

What is globalization?

Supranational focus on business activity

Emphasizes inter-linkage across the spatial levels from local

through global
Global company example? Stakeholders?

Globalization
Main aspects of globalization
International trade and the creation of the global market
place
Globally organized products and investment flows

Migration as a side effect

Communication flows
Cultural flows
Rapid technological change and its effects

Globalization
Mini case: The world in your coffee cup
2.5b cups of coffee consumed in a day
Produced far from where it is consumed
Ethiopia where coffee was believed to be discovered
Choche, Ethopia was studied
Individual farmers sell to the local trader
Shipped to Addis Ababa 250 miles away

Workers earn less that 1 a day

Then sold in international auction
London street coffee price per cup 2.19 to 2.70

Other examples? Different market power at different levels?