External controls are the constraints of the company’s labor market such as governing laws of firing or hiring an employee, minimum wage requirements, and fixed working hours of an employee (Clift, 2014). Therefore, the degree of the labor market flexibility of a company is inversely correlated with the flexibility of external labor controls. For example, business organizations located in the countries with strict external labor laws can have decreased labor market flexibility. Labor deregulation proponents recommend that if the labor market, flexibility is high then levels of unemployment will decrease, and the company experiences long-term productivity.
A developmental state concerns in guiding economic growth and development and proper use of country’s resources to meet the citizens’ needs. It tries to stabilize social development and economic growth. A developmental state exploits all county’s resources and uses national influence to eradicate poverty and create economic opportunities. A developmental state is effective to all countries because it shapes the economic structures and outputs of the countries (Clift, 2014).
Different nations use various policies and instruments in states including the regulations of commerce and trade, the use of monetary and fiscal policies, the redistribution of possessions and incomes and direct ownership of key companies’ state (Low, 2004). For example, in South Africa, they have committed to build a developmental state that will guide the economic development efficiently through mobilizing society’s resources and directing them in attaining their common goals. The country provides health care, education, social safety and housing to the needy poor people. The developmental state also builds a strong community service, supports the development of small businesses, creates a friendly