Case – Doing Business in Eritrea

CASE

Case – Doing Business in Eritrea

Eritrea is in Eastern Africa. Its size is slightly bigger than the state of Pennsylvania. Eritrea currently hosts a UN peacekeeping operation that is monitoring a 25 km-wide Temporary Security Zone on the border with Ethiopia. An international commission, organized to resolve the border dispute, posted its findings in 2002 but final demarcation is on hold due to Ethiopian objections. Since gaining its independence from Ethiopia on 24 May 1993, Eritrea has faced the economic problems of a small, desperately poor country. Like the economies of many African nations, the economy is largely based on subsistence agriculture, with 80 percent of the population involved in farming and herding. In 2004, it took 13.788 nakfa (the Eritrean currency) to get one U.S. dollar, and its per capita income was equal to 900 U.S. dollars. It has a total of 306 kilometers of railroad, 874 kilometers of paved roads, and four airports with paved runways. Its people speak a variety of languages including Afar, Arabic, Tigre and Kunama, Tigrinya, and other Cushitic languages. The Eritrean society is generous with whatever resources it has and its people place a high value on helping others.

1. Refer to the scenario above. Eritrea would be classified as a(n):

a. risk aversive nation due to its security zone

b. cultural oasis given the variety of languages spoken there

c. stable country for operation

d. LDC because of low per capita income

e. LDC because its people are altruistic

ANS:

2. Refer to the scenario above. Having such limited roads and railways indicates Eritrea has:

a. a geocentric orientation

b. a high power distance sensibility

c. transportation pluralism

d. an inadequate infrastructure

e. a growth stabilization strategy

ANS:

3. Refer to the scenario above. Within the legal-political environment, Eritrea would:

a. be multicultural

b. be ethnocentric

c. have an inadequate infrastructure

d. offer a political risk

e. have a pluralistic orientation

ANS:

4. Refer to the scenario above. In terms of the dimensions that explain cultural differences, Eritrea appears to have a high degree of:

a. humane orientation

b. individualism

c. ethnocentrism

d. masculinity

e. pluralistic

ANS:

5. Refer to the scenario above. The variety of languages spoken within Eritrea’s sociocultural environment means that the nation:

a. is ethnocentric

b. is geocentric

c. is likely to have high uncertainty avoidance

d. has linguistic pluralism

e. is politically unstable

ANS

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