...A Case Study of a Currency Crisis: The Russian Default of 1998 Abbigail J. Chiodo and Michael T. Owyang currency crisis can be defined as a speculative attack on a country’s currency that can result in a forced devaluation and possible debt default. One example of a currency crisis occurred in Russia in 1998 and led to the devaluation of the ruble and the default on public and private debt.1 Currency crises such as Russia’s are often thought to emerge from a variety of economic conditions, such as large deficits and low foreign reserves. They sometimes appear to be triggered by similar crises nearby, although the spillover from these contagious crises does not infect all neighboring economies—only those vulnerable to a crisis themselves. In this paper, we examine the conditions under which an economy can become vulnerable to a currency crisis. We review three models of currency crises, paying particular attention to the events leading up to a speculative attack, including expectations of possible fiscal and monetary responses to impending crises. Specifically, we discuss the symptoms exhibited by Russia prior to the devaluation of the ruble. In addition, we review the measures that were undertaken to avoid the crisis and explain why those steps may have, in fact, hastened the devaluation. The following section reviews the three generations of currency crisis models and summarizes the conditions under which a country becomes vulnerable to speculative attack. The third section...
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...Problems of the Russian agriculture Difficulties in the development of domestic agriculture have been and remain a consequence of underestimating the state's role in the formation of a national agricultural policy, the lack of the necessary logistical and financial support for the industry. This led to a skewed when domestic food in relation to the subsidized import was uncompetitive. It has become more expensive imported and widely displaced from the Russian market. Production of high-quality and productive agricultural machinery is also not well developed in Russia. Farmers choose the best and buy the imported tractors and seeders. Russia has also developed the production of high quality and productive agricultural machinery; farmers choose the best and buy the imported tractors and seeders. Is it possible to change the situation? It is already changed. Prospects for the development of agriculture in Russia A powerful impetus for renewing the country's economy, its improvement and promotion of economic development have become the priority national projects, including "Development of agriculture (agriculture)", which in a short time had to solve the most pressing problems of the village. In recognition of this country's agro-industrial complex national priority should be seen as a turning point for farmers to labor, agriculture, as a confirmation that it is one of the main sectors of the economy, ensuring the stability of the lives of citizens and the country's food security...
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...Table of Content Introduction…………………………………………………………………….3 Goals and Objectives of the Accession to the WTO……………………4 Advantages and Disadvantages of the Accession to the WTO………5 Conditions of Accession to the WTO……………………………………...6 * Terms and Conditions of Russia’s Accession to the WTO * Unfavorable Institutional Environment * Russia Does Not Have Effective Mechanism to Support Domestic Business * Phytosanitary Standards: Good Conditions and Poor Implementation * Sources of Growth of Exports to Russia Are Limited Overall Assessment of Impact of Accession to the WTO…………….10 * Missed Opportunities for Growth * The Overall Picture Conclusion ……………………………………………………………………13 References.……………………………………………………………………15 Introduction Russian economy can effectively develop only in close cooperation with international market of goods and services, in spite of huge potential and resources. It also required by the state reforms inside the country. However, World Trade Organization (WTO) states the rules of game on the international market, on time of international globalization. WTO unify about 160 countries and covers more than 95% of turnover of international trade. Russia should enter to WTO considering strategic perspective. This is only way for both Russia government and business. However, rules and norms of WTO create new organizational and legal environment of functioning...
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...The year 2011 will go down in global corporate history as the year when one of the world’s largest energy companies, BP, and the Russian state company, Rosneft, unsuccessfully attempted to form a strategic partnership on Arctic development. This failure was caused by the contractual and legal objections of the AAR consortium - BP’s partners in the Russian oil company TNK-BP. In 2003-5, BP and the AAR consortium led by three billionaires with Russian connections - Mikhail Fridman, Len Blavatnik, and Viktor Vekselberg - merged their Russian oil corporate assets - TNK, Sidanko, and Onako and their subsidiaries - under the umbrella of TNK-BP.2 This joint venture was established on a 50/50 basis, the operation of which required mutual joint decision making. The partners also signed a shareholding agreement on TNK- BP’s right of first refusal in relation to potential future oil and gas projects offered to BP or AAR in Russia and Ukraine. This agreement was subsequently used by AAR to stop the BP-Rosneft deal in international courts. Unfortunately, this was not the first time that BP had been unable to change the way it conducted its business in Russia. The first example occurred in 2007-8 when BP was reported to be keen on having Gazprom as a partner instead of AAR. This move would have transformed the TNK-BP joint venture into Gazprom-BP. This did not transpire. Second, in the spring-summer 2008, there was a turbulent ‘misunderstanding’...
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...Name: Course: Tutor: Date: DIFFERENT CAUSES OF POPULATION DECLINE IN RUSSIA Russia is experiencing unprecedented decline in its population, a decline never witnessed in modern human history. This drastic decline is not a result of war or a single epidemic, but rather an amalgamation of demographic factors which cannot be reversed in the near future: extremely high death rates, birth rates well below replacement levels, lower life expectancies. These demographic challenges have been worsened by the rising rate of HIV/AIDS infection that Russia is experiencing. In the Foreign Affairs Magazine January 2009 edition, the U.S Secretary of Defence Robert M. Gates talks of “...adverse demographic trends in Russia...” as he talked about military threats in his defence strategy. Population decline could affect the status of Russia as a great power in the long run, particularly its economy, internal social stability and military. Professor Graeme Herd (2003), in his book “Russian Regions and Regionalism” notes the decline in Russia`s population has adverse effect on the following sectors: health reform, pensions, internal migration and the expected ethnic, religious and societal security challenges. Geographically, the Russian federation covers roughly 6.6 million square miles with a population of 142 million in 2010 and a population density of 21.5 per square mile (as of 2010). Russia has 160 different nationalities within its borders. As the ethnic Russians decline in population...
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...Karachi school for business and leadership | Financial Institutions (Banks) & Industrial Development in Germany, Russia & India | Global and South Asian Business Development | Dr. Imran Ali | | 3/24/2014 | Salik Chaturbhai M2130024 Taimour Abdullah M2130017 Zeeshan Jessani M2130034 Salik Chaturbhai M2130024 Taimour Abdullah M2130017 Zeeshan Jessani M2130034 Contents Introduction 2 Review of Literature 3 Looking at the Past: Industrialization and Financial Institutions 8 Germany 8 Deutsche Bank, Germany 10 Russia 13 Sberbank, Russia 16 India 17 The State Bank of India 18 Major Themes: Comparison & Contrast 24 The debate between Capitalist and Communist Industrialization 25 Fiscal and Industrialization policy 27 Mission Statement and goals 30 The Banking Sector 31 Target Markets 32 Colonized Industrialization or De-industrialization 34 Conclusion 37 Appendix 1 39 Appendix 2 40 Work Cited 42 Introduction Mankind as a whole and the world as has been observed in the past has undergone much change in all aspects of human life. The concept of economic development in light of increasing industrial growth, free labour, the growth of private property as an institution and the development of the international trade as a concept have changed the way humans and hence nations interact and intervene in the world economic system. These gradual yet drastic changes in the structure of human interactions led to a wave...
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...economies vary widely. Some sources suggest that they might overtake the G7 economies by 2027. • According to a paper published in 2005, Mexico and South Korea were the only other countries comparable to the BRICs, but their economies were excluded initially because they were considered already more developed, as they were already members of the OECD. Current leader Brazil - Dilma Rousseff, President China - Xi Jinping, President India - Manmohan Singh, Prime Minister `Russia - Vladimir Putin, President BRAZIL Brazil has the sixth largest economy by nominal GDP in the world, and seventh largest by purchasing power parity. The Brazilian economy is characterized by moderately free markets and an inward-oriented economy. Brazil’s economy is the largest of the Latin American nations and the second...
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...BP in Russia Executive Summary This case study “BP in Russia: Settling the Joint Venture Dispute” goes into the major world energy companies and the formation of joint ventures. This case delves into the 50/50 international joint venture (IJV) formed between British Petroleum (BP) and a group of Russian investors, Alfa Group, Access Industries, and Renova known as AAR. This IJV was formed in September 2003 and was known as TNK-BP.1 TNK-BP’s CEO was Robert Dudley in May 2008. This is when the dispute between the British and Russian shareholders started to escalate. AAR thought that BP was treating TNK-BP as a subsidiary and not a JV. The escalation of the conflict got to the point where BP was seriously considering whether they should walk away from the IJV by selling its stake, acquire AAR’s stake or continue the IJV. This case analysis will explore BP and whether it was a good strategy to enter Russia and pursue an international joint venture with consortium AAR. Next the analysis will look at the evolution of the joint venture and examine the unique challenges faced by the international joint venture. Next the study will detail our recommendations regarding the AAR partnership, their implications and steps to implement this. Lastly the case will be updated to the present time. 1. Did BP pursue the right strategy to enter Russia? There are arguments both for and against BP’s decision to enter Russia. Perhaps the biggest disadvantage to BP’s strategy was...
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... Starting from dissolution of Soviet Union, these countries went through political and economic movements which cause changes in international business, trade and investment. The Breakup of Yugoslavia and The Dissolution of Czechoslovakia in the early 1990s had shown two different types of political upheavals and conflicts: the situation in Yugoslavia led to the civil war and to the foreign intervention, while a non-violent transition of power in Czechoslovakia, usually called ‘Velvet revolution’, caused the formation of two new states - The Czech Republic and Slovakia. As a result of these changes, the economy of countries was also affected: some people were sure that dissolution would quickly start an era of high economic growth of a new country; some of them faced a problem of economic collapse. Furthermore, there are always the same problems after political movements such as, chronic lack of productivity, fuelled by the country's leaderships' decision to enforce a policy of full employment, long-term fiscal irresponsibility, a failure to take steps to improve the low domestic labor productivity. Consequently, it had a negative impact on economic development, establishment of international relations, creating favorable conditions for business and investment. It is a commonplace now that the economies were at various levels, some such as Poland and Hungary...
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...Income inequality damages growth, OECD warns Chris Giles in London Rising income inequality over the past 30 years has damaged growth rates in rich countries by limiting educational opportunities for poor children, according to research by the OECD, the group of mainly rich nations. The finding that higher inequality harms economic performance mirrors the results of a similar study by the International Monetary Fund earlier this year. But the OECD’s analysis goes further because it concentrates on rich countries and attempts to establish the exact cause of inequality’s harmful effects on growth. The OECD said the research showed governments should focus policy on ensuring poorer children gain better education and the supporting people into employment. As inequality has moved higher up the political agenda in rich countries, there has been a flurry of research papers looking into the link between inequality and growth. Clear conclusions have been difficult to achieve because economic theory is ambiguous and the subject has been plagued by research finding spurious associations in the data rather than meaningful causal relationships. Higher inequality can hinder growth by destroying trust in society, hitting investment in skills and reducing demand growth for goods and services from poorer families who tend to spend more of their incomes. But it also provides greater incentives for people to strive to climb the ladder of opportunity and can provide necessary savings to...
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...Entrepreneurship TERM PAPER Research paper on the subject of whether it’s better, as a career choice, to be an entrepreneur or work for others Is it better to be an entrepreneur or an employee? Most of the academic research focuses on finding external factors or personal qualities that create entrepreneurs. In early academic papers emphasis has been on psychology and sociology, while more recent research is focusing more on economic perspective. Overall, entrepreneurs are a minority if compared to paid employees. There are most certainly more people who choose to work for someone else rather than attempt to be an entrepreneur. Reasons behind this career choice are very different. Most obvious reason for a rational person might be financial benefits. Research done by Hamilton (2000) shows that initial earnings as well as earning growth is much larger for paid employees in the first 10 years if compared to entrepreneurs, not even including fringe benefits. However, money is definitely not the only factor that affects the career choice when it comes to a decision, whether to become an entrepreneur or to go work for someone else. If entrepreneurs are perceived as utility-maximizing individuals, then independence, risk bearing, work effort, and perquisites associated with self-employment plays a very vital role in their career choice (Douglas and Shepher, 2000). In the following parts of this research paper, various benefits and shortcoming of being an entrepreneur will be discusses...
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...effecting monetary policy and intervening body in exchange rate trades, Central Bank as a Last Lender Resort (LLR), and Central Bank as a regulatory body of the financial sector. Prior to further discussion, it is important to stress that the role of Central Bank and the scope of its involvement may vary due to the effect of different legislations and the presence of various stakeholders. Thus, US Central Bank does not act as a regulatory body of the financial sector (Driffill et al., 2005), whereas the intervention activity of Japan Central Bank requires the approval of other governmental bodies (Fujiwara, 2005). This paper discusses the importance of Central Bank's publications of economic forecasts and other information related to Central Bank's views of the further state of macroeconomic trends. The discussion shows that this information is highly important for other market players and forecasting agencies as it reduces the information asymmetry. The role of Central bank in macroeconomic stabilization Chandavarkar (1996 cited in Geraats, 2002) claims that macroeconomic stabilization is the pivotal role of the Central Bank. The stabilization duties include such aspects as the stabilization of the domestic price level and exchange rate as well as domestic payment systems. The entry and operations of MNEs on the domestic market as well is the growing interdependence of the domestic...
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...and political assassinations. The Cold War was one of the longest conflicts in human history, over seventy years in duration, with periodic lulls in the level of hostility. It was also the widest in scope of all the world's wars; it was fought on every continent on the globe and, considering the space race, over every conti- nent as well. The Cold War was also one of the costliest of the world's conflicts, not only in numbers of lives lost but also in resources expended. In the end, the Soviet Union collapsed, and communism, at least in the form that existed in the Soviet Union, expired. But, as Mikhail Gorbachev pointed out, both sides lost much in the Cold War. The United States lost many lives and consumed huge financial resources as well, and the demo- cratic principles on which it was founded were endangered. For decades, historians have argued about the origins of the Cold War. Who, or what, was primarily responsible? Was it inevitable? One school of thought, the orthodox interpretation, places the major blame for the Cold War on the Soviet Union. Its proponents argue that the United States had no choice but to contain and, where possible, reverse the expansion of an aggressive communist state whose main ambi- tion was the overthrow of capitalism, democracy, and other aspects of Western culture. In contrast, the...
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...TURKISH FOREIGN POLICY DURING THE COLD WAR Turkey followed a “belligerence” policy from the start of II. World War in 1939 until the start of war in 1945. The purpose of that time managers of Turkey, protect it from the damage of the war. The end of the war with the options in front of us, pushing us to act together with the Western bloc. The formation of these preferences is not a decision for an instant multi-dimensional factors, factors were created by a process. Turkey’s prefer of Western side, did not lead to acceptance by the West sincerely. European members of NATO did not want to risk of war again because of Turkey who was under the Soviet threat at that time. At the same time, they were not willing to impart that the U.S. Marshall Aid to Turkey. Britain lost its efficiency in the Middle East as in all the world and for that reason Britain was put forward a project that "Commander of the Middle East" which Turkey will play a key role for gain efficiency again. Due to U.S. opposition to this prediction, this project got shelved.In the "Containment Policy" process which started with Truman Doctrine by U.S. against the Soviet Bloc, military and geo-strategic location of Turkey opened the door to NATO membership.With North Korea's attack on South Korea, the Korean War started in 1950-53 and the Turkey participating in United States’s side, this was resulting against all suspicies and prejudice, Turkey took place between NATO member countries.Russians wishes to change of...
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...In the current economic market, a company does not necessarily follow that the best chance possible instead to develop the ability to create competitive advantage by understanding the level of fit between their strengths and upcoming opportunities. In some cases, companies can overcome their weaknesses and to achieve attractive opportunities. In the context of current globalization, the opening up, economic exchange - the water cultures is inevitable and risks in the market for small businesses do not. So SWOT analysis will help the enterprises' balance - close - measure - count "correctly before you decide to enter international markets before penetrating international markets. Since SWOT analysis model is a subjective assessment of the data is sorted by the SWOT format as a logical order and easy to understand, easy to present, to discuss and make decisions, which can be used used in any decision-making process is a useful tool for understanding and decision making in any situation for any organization or business. Distribution SWOT process will provide useful information for connecting the resources and capabilities of the company with a competitive environment where companies operate. SWOT model provides a tool for strategic analysis, review and evaluate the position and orientation of a company or of a business plan. SWOT fit and analysis work in groups, are used in business planning, strategy development, competitor evaluation, marketing, product development and...
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