INTERNATIONAL BUSINESS
TUTORIAL QUESTIONS
Review question 12
What is the relationship between property rights
and economic development?
Property rights itself is defined as the legal ownership of resources and able to obtain
benefits and income from it and also to prevent violators. The key words are collateral for
credit and incentive to innovate.By having the property rights, more investors will invest
because their trust level increases and increases the rate of economic development.
Second, this can be used as collateral for credit. This allows them to borrow money from
formal banks and to be used as funds to start up new firms. The increase in the number of
businesses helps the increase in the economic growth.
Review question 18
Why is it important to understand formal institutions before entering a country? Explain by
using an example.
Formal institutions include the written constitution, laws, policies, rights and regulations
