For most countries around the world it is particularly important for the marketer to know the philosophies of all major political parties within country since any one of them might become dominant and alter prevailing attitudes and the overall business climate. In countries where two strong political parties typically succeed one another in control of the government it is important to know the direction each party is likely to take. In Great Britain, for example, the Labor Party traditionally has tend to be more restrictive regarding foreign trade the conservative Party. The Labor Party, when in control, has limited imports, whereas the conservative party has tended to liberalize foreign trade when it is in power. A foreign firm in Britain can expect to seesaw between the liberal trade policies of the Conservation and the Liberals.
Even in Mexico, where a dominant party (PRI) maintained absolute control for seven decades knowledge of the philosophies of all political parties is important. Over the years, the doctrines of opposing parties have had an influence on the direction of Mexican policy. With the recent election of the PAN party nominee for president it is eve more essential to know the philosophy and direction of both the PRI and PAN, the two major political parties in Mexico.
The election of Vladimir Putin as President of Russia was originally favorably received. By all accounts Russia’s economy had been stagnant for over 20 years. Corruption, half baked market policies, expansion of the ranks of petty civil servants and a chaotic legal system produced an economy that in many ways is as dysfunctional as the old Soviet system. Putin’s apparent commitment to economic reform and his statement that the only dictatorship Russia will obey is the dictatorship of the rule of law were seen as encouraging notes presaging reform in Russia. However, most agree that it will take time to unseat an entrenched bureaucracy and a country system infested with low paid communist era judges who are susceptible both to bribery and political pressure. And, more recently Putin has been under fire for apparent backsliding in the direction of authoritarian rule with regard to the press and free enterprise, and financial markets have reflected the associated fears.
As astute international marketer must understand all aspects of the political landscape to be properly informed about the political environment. Unpredictable and drastic shifts in government policies deter investments, whatever the cause of the shift. In short, a current assessment of political philosophy and attitudes within a country is important in gauging the stability and attractiveness of a government in terms of market potential.
Economic and cultural nationalism which exists to some degrees within all countries is another factor important in assessing business climate. Nationalism can best be described as an intense feeling of national pride and unity, an awakening of a nation’s people to pride in their country. This pride can take an anti-foreign business bias, where minor harassment and controls of foreign investment are supported, if not applauded. Economic nationalism has as one of its central aims the preservation of national economic autonomy in that residents identify their interests with the preservation of national economic autonomy in that residents identify their interests with the preservation of the sovereignty of the state in which they reside. In other words, national interest and security are more important than international relations.
Feelings of nationalism are manifested in variety of ways, including a call to buy our country’s products only (e.g. Buy American) restrictions in imports, restrictive tariffs, and other barriers to trade. They may also lead to control foreign investment, often regarded with suspicion which then becomes the object of intensive scrutiny and control. Generally speaking the more a country feels threatened by some outside force or as the domestic economy declines, the more nationalistic it becomes in protecting itself against intrusions.
During the period after World War II when many new countries were founded and many others were seeking economic independence, manifestations of militant nationalism were rampant. Expropriation of foreign companies, restrictive investment policies and nationalism of industries were common practices in some parts of the world. This was the period when India imposed such restrictive practices on foreign investments that companies such as Coca-Cola, IBM, and many others chose to leave rather than face the uncertainty of a hostile economic climate. Latin American countries similar attitudes prevailed and led to expropriations an even confiscation of foreign investments.