Power lies in the Economy!
Economists all over the world agree that the strength of any country does not derive solely from their military nor from having a large land mass, but its power rather lies in a prosperous economy. It is possible to compare the area of economy in all countries by looking at their economic growth which comprises of three factors:
- GDP – Gross Domestic Product, the monetary value of all final goods and services that were produced over the last year (a high GDP = rich society)
- Gross National Product – goods and services produced exclusively by the country’s residents during the year, including the income of companies abroad
- GDP per capita
In the early 20th Century, Austrian scholar Joseph Alois Schumpeter was the first to address the impact of the economy on the development of a country and the consequences that arise from experiencing instability in this sector. He also lay down types of barriers that can be encountered when a country is experiencing intense economic growth. These barriers are dependent on the country’s history, land mass, population, traditions, service orientation and its natural resources.
Two basic barriers that can arise in both developed and least developed countries are:
- Economic and political barriers (the country’s political system, apportionment of influence on the world, international relations and organization)
- Socio-economic barriers (population, social problems, wages, food supply, level of consumption, infrastructure)
Both the country and its economy can be compared to a large company that is managed by the right people with physical capital (consisting of modern machinery, factories and modernized roads), human and financial capital that is able to grow at a fast pace and provide wealth to the society. Examples of countries that operate well across all these three capitals are Germany, Japan and China.
Their large economies are also a great place for Western investors and engineers that are working on new technologies. The stable economy of the People’s Republic of China ensured growth even during the 2008 economic crisis. The strength of this world power can be perfectly described by using the example of rice farming. Deng Xiaoping, a politician who “opened up China to the world”, over the past 10 years has, to a large degree, eliminated hunger and has begun exporting rice abroad which has consequently strengthened and enriched China.
The company: from scratch
Each company is made up of “cells”. For these cells to function, rapid communication is required so that they can form their own kind of community. Nowadays, an intriguing phenomenon is occurring – the replacement or renting of entire teams of employees to particular departments in a company. This is called Team Leasing.
Below is an example of an industrial organization structure: