ECONOMIC ENVIRONMENT


INTRODUCTION

An economic system refers to the manner in which a culture produces and distributes its goods and services. It refers to the conditions under which a cultural group makes use of the capabilities of its individuals and the environment to derive some benefits.


THE ECONOMIC SYSTEMS

In order to make an informed judgment about global construction markets, it is necessary to perform an analysis of the prevailing economic systems. The economic systems are broadly classified into three categories: (1) Capitalist, (2) Socialist, and (3) Mixed. A better classification, however, may be made using the criteria of property ownership type and mode of resource allocation and governmental control. Using these two criteria, a taxonomy of economic systems may be created as shown in Figure 1.

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Figure 1. The Economic Systems

Control

Ownership


KEY ECONOMIC ISSUES INFLUENCING INTERNATIONAL CONSTRUCTION

The global construction companies must be able to identify the issues they may confront while working abroad. The impact of these factors may vary considerably from country to country. Therefore, strategies for handling those issues may be different for different regions.

The factors that are most likely to influence international construction include:

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Figure 2. The Inflation Cycle

 

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Figure 3. Effect of Fixed Exchange Rates on Monetary Policy

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Figure 4. Effect of Flexible Exchange Rate on Monetary Policy


References:

Baker, S. A. (1990). An introduction to international economics. New York: HBJ.

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