...The International Monetary Fund (IMF) was originally established in order to encourage international co-operation to cope with recession and protectionism on a world scale and to discourage individual countries from pursuing policies that would beggar their neighbors and eventually themselves. The desire to improve on the international chaos of the 1930s led to the Bretton Woods Conference in 1944, and an attempt to devise a financial system which would provide a more permanent and acceptable framework for international transactions. It was intended that the emerging Bretton Woods system would generate benefits for international trade in the form of stable (though not necessarily fixed) exchange rates, while at the same time, avoiding the deflationary rigidities of the gold standard mechanism. The system was designed to ensure a world of full employment and economic growth. This paper will examine a few of the negative and positive aspects the IMF has had since its inception, and how it has evolved over time to answer the question, is the IMF a sinner or saint? If the general purpose of the IMF at its inception was to oversee the operation of the infant Bretton Woods system, its more specific purposes were spelled out in Article 1 of its Articles of Agreement as follows: | (i) To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems. | | (ii) To facilitate...
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...Stockholm University, 106 91 Stockholm, Sweden _____________________________________________________________________ Abstract The Swedish economic policy to combine full employment and equity with price stability and economic growth was developed by two trade union economists shortly after World War II. Through the use of extensive employment policy measures, a tight fiscal policy and a wage policy of solidarity, the Rehn-Meidner model represents a unique third way between Keynesianism and monetarism. This essay analyses the application and performance of the Rehn-Meidner model in Sweden. Although never consistently applied, it is possible to distinguish a golden age for the model from the late 1950s to the early 1970s. In the 1970s and the 1980s, governments abandoned the restrictive macroeconomic means of the model and were thus unable to combine low rates of unemployment with low inflation and high economic growth. Since the early 1990s, Sweden has not met the requirement of full employment in the Rehn-Meidner model. Recent declarations by the EU to prioritise full employment once again but without giving up the objectives of price stability and growth legitimise a renewed interest in the model. __________________ JEL classification: E24; E31; E62; J23; J31; J62; O23 Keywords: Swedish model; Rehn-Meidner model; third way; labour market policy; solidarity wage policy; productivity growth, fiscal policy; unemployment; inflation Contact author: Lennart Erixon...
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... The 1980s financial liberalization in the Nordic countries Bank of Finland Research Discussion Papers 36 • 2012 Electronic copy available at: http://ssrn.com/abstract=2190375 The 1980s financial liberalization in the Nordic countries1 Bank of Finland Research Discussion Papers 36/2012 Seppo Honkapohja Monetary Policy and Research Department Abstract The financial liberalization in the four Nordic countries (Denmark, Finland, Norway, and Sweden) that took place mostly in the 1980s led to a major financial crisis in three of those countries. The crises in Finland, Norway, and Sweden are among the deepest financial crises in advanced market economies since World War II. Denmark experienced some banking problems but managed to avoid a systemic crisis. This paper reviews the process of liberalization and discusses the reasons why Finland, Norway, and Sweden drifted into financial and economic crises. Keywords: financial repression, credit rationing, capital account controls, financial deregulation JEL classification numbers: E42, F36, G28 I am grateful to Tapio Korhonen for extensive assistance. Adam Gulan, Hanna Putkuri, and Juhana Hukkinen helped in specific aspects of work. Jarmo Kontulainen and Juha Tarkka provided useful comments. The views expressed are my own and do not necessarily represent those of the Bank of Finland. 1 Electronic copy available at: http://ssrn.com/abstract=2190375 I Introduction The banking and economic crisis that occurred...
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...A Report into the Causes, the Effects and Solutions to the Food Crisis Around the Globe For: Margaret Cairns Communication Lecturer From: Mohamed Nur Class: HNC Business Level 6 27th of February 2013 Table of contents Summary Page 1 Introduction Page 1 Terms of Reference Page 2 Procedure Page 2 Findings Page 3, 5 Conclusions Page 5 Bibliography Page 6 Summary Inexpensive food has been taken for granted for almost 30 years. From their peak in the 1970s crisis, real food prices steadily declined in the 1980s and 1990s and eventually reached an all-time low in the early 2000s. Rich and poor governments alike therefore saw little need to invest in agricultural production, and reliance on food imports appeared to be a relatively safe and efficient means of achieving national food security. However, as the international prices of major food cereals surged upward from 2006 to 2008 these perceptions quickly collapsed. Furthermore, although food prices...
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...and urban sprawl, aided by automobile ownership. Many Western governments funded large infrastructure projects during this period. Here the redevelopment of Norrmalm and theStockholm Metro, Sweden. The post–World War II economic expansion, also known as the postwar economic boom, the long boom, and the Golden Age of Capitalism, was a period of economic prosperity in the mid-20th century which occurred, following the end of World War II in 1945, and lasted until the early 1970s. It ended with the collapse of the Bretton Woods system in 1971, the 1973 oil crisis, and the 1973–1974 stock market crash, which led to the 1970s recession. Narrowly defined, the period spanned from 1945 to 1952, with overall growth lasting well until 1971, though there are some debates on dating the period, and booms in individual countries differed, some starting as early as 1945, and overlapping the rise of the East Asian economies into the 1980s or 1990s. During this time there was high worldwide economic growth; Western European and East Asian countries in particular experienced unusually high and sustained growth, together with full employment. Contrary to early predictions, this high growth also included many countries that had been devastated by the war, such as Greece (Greek economic miracle), West Germany (Wirtschaftswunder), France (Trente Glorieuses), Japan (Japanese post-war economic miracle), and Italy (Italian economic miracle). ------------------------------------------------- Terminology ...
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...Not a single year has gone by in the past two centuries where there was not a financial crisis somewhere in the world (see figure 1). Arguably, the world witnessed its first international financial crisis in 1825. The opening up of Latin America after the overthrow of the Spanish empire led to the opening up of international trade between England and the Latin American republics. The result was massive capital flows from London to finance infrastructure, mining and government spending. But once the capital outflows impinged on the Bank of England’s (BoE) gold reserves, the policy rate was raised, leading to a banking crisis. A sudden stop of capital flow from London resulted in banking panics in the US and currency crashes across Latin America. Figure 1: The history of financial crises Indeed, the crisis in 1825 marked the first of seven clusters of sovereign defaults in the period 1800 to 2010 In the first cluster of defaults, which happened during 1824-1834, 13 Latin American countries defaulted. The following period (1835–1866) was relatively tranquil. But a lending boom developed in this period, which soon resulted in a new series of default episodes. The global crisis of 1873 started with the collapse of a property boom in Germany and Austria, then spread through the continent and affected the US as European investors dumped US railroad stocks . The...
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...Sovereign Debt Crisis Karl Whelan, University College Dublin WP11/09 May 2011 UCD SCHOOL OF ECONOMICS UNIVERSITY COLLEGE DUBLIN BELFIELD DUBLIN 4 Ireland’s Sovereign Debt Crisis Karl Whelan University College Dublin 1 May 2011 1 This paper was presented at a workshop on "Life in the Eurozone With or Without Sovereign Default?" that took place at the European University Institute in Florence on April 14, 2011. 1 1. Introduction Among the countries currently experiencing sovereign debt crises, Ireland’s case is perhaps the most dramatic. As recently as 2007, Ireland was seen by many as top of the European class in its economic achievements. Ireland had combined a long period of high economic growth and low unemployment with budget surpluses. The country appeared to be well placed to cope with any economic slowdown as it had a gross debtGDP ratio in 2007 of 25% and a sovereign wealth fund worth about €5000 a head. Fast forward four years and Ireland is shut out of sovereign debt markets and in an EUIMF adjustment programme. Its debt-GDP ratio has soared over 100% and the sovereign wealth fund is effectively gone. In this short paper, I provide a brief review of how this rapid change came about and discuss potential future developments in relation to Ireland’s sovereign debt situation. 2. The Rise and Fall of the Celtic Tiger It is now well known that Ireland’s famed “Celtic Tiger” ended with the collapse of a housing bubble and a banking crisis. Many have thus...
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...The Changing Geographies of Manufacturing in the UK since the 1970s Since the 1970's, the geographies of manufacturing in the UK has been one of steady decline in relative contribution to GDP and in relative and real terms of employment. This dominant trend can be explained by 4 Theses and this essay will focus on them. The Maturity thesis focuses on the decline in the relative contribution of manufacturing to the employment in the UK. A typical Industry is going through: 1. Growth Phase, in which the industry share in the country's employment rises rapidly. 2. Maturity Phase, when the share stabilises. 3. Declining Phase, marked by decline in this share. Figure 1 Employment change through maturity A sector in growth phase takes the labour needed for its growth from other sectors. The service sector was experiencing growth from the 1970’s onwards and in immature countries the labour was mostly taken from the agricultural sector. But the UK had just 3,6 % of civil employment in agriculture in 1966.(Martin and Rowthorn 1986, 2010) The consequence was that almost all of the labour needed for its growth (20%) from 1971 until 2009 was taken from the industry sector. This explains why the UK was the first developed country to experience de-industrialisation and its strong influence. Figure 2 UK Unemployment by broad sector, 1971-2009 Cambridge Econometrics analysis of ONS (2013) ...
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...addition to Spanish. The predominant religion was Catholicism. The Basque Autonomous Community ranks first in Spain in terms of per capita income, with gross domestic product (GDP) per capita being 40% higher than that of the European Union and 33.8% higher than Spain's average in 2010. Rich iron ore deposits, forests, and ample availability of hydraulic energy from water spurred the region’s industrial development. Basque iron foundries and shipyards dated from the Middle Ages. The industries, together with trade, transport, and later firearms were the bedrock of the economy. In the 15th century, the Basque Country became the leading iron producing region of Spain and one of the most important in Europe. The shipbuilding industry was the largest in Spain and expanded considerably as commerce flourished. A strong legal framework and a broad array of schools and research centers emerged. Industrial activities were traditionally centered on steel and shipbuilding, mainly due to the rich iron ore resources found during the 19th century around Bilbao. The Estuary of Bilbao was the center of the Basque Country's industrial revolution during the 19th and the first half of the 20th century. These activities decayed during the economic crisis of the 1970s and 1980s, giving ground for the development of the services sector and new technologies. The post-war period has been a fruitful period as long as economic progress is concerned. Aggregate...
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...CEMEX go beyond domestic borders? CEMEX needed to go international for various reasons, the first was that when the Mexican economy opened up, it made the cement industry vulnerable to foreign threats. Due to this foreign competitors such as Holderbank and Lafarge, CEMEX needed to diversify geographically to grow and survive. Secondly, by acquiring two big cement companies at the end of 1980s, CEMEX owned already a big market share of the Mexican cement market, which made the growth in its domestic market not appealing anymore. Third, CEMEX wanted to fight against the seasonality of the cement Mexican industry and lower its dependence from the Mexican market. By going in foreign countries they were able to counter this seasonality effect especially in emerging country. This seasonality is explained for the fact that the consumption of cement during the summer is higher than during the winter (especially due to the rain). 2. On what differentiation did CEMEX sustain its competitiveness in the early days of internationalization? The CEMEX began the international business in the early 1970 when it began to export to the U.S. market. At that time, CEMEX, in order to differentiate themselves maintained a low price. CEMEX notice that the prices of cement in different counties were different. Which enabled CEMEX to make profit by diverting low-priced imports away from one’s own market. Since the cement industry is a rather mature industry, with several hundred years, and its characterized...
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...EMS The European Monetary System (EMS) was the forerunner of Economic and Monetary Union (EMU), which led to the establishment of the Euro. It was a way of creating an area of currency stability throughout the European Community by encouraging countries to co-ordinate their monetary policies. It used an Exchange Rate Mechanism (ERM) to create stable exchange rates in order to improve trade between EU member states and thus help the development of the single market. Stable money had been a key part of international economic calculations since World War II. However, by the 1980s, opinion about it was much more divided. As a result, not all countries took part in the EMS straight away, and there were deeper splits in the years to come over the role of the EU in setting monetary policy as the EMS was replaced with the Euro. History The EMS was launched in 1979 to help lead to the ultimate goal of EMU that had been set out in the Werner Report (1970). The EMS came about because of the high global inflation and economic stagnation that characterized much of the 1970s. Contributing greatly to these problems was the sorry financial predicament of the United States during this decade. The dollar, which served as a peg for European currencies, was plagued by a ballooning American deficit, the oil crisis, a rapid rise in the demand for gold in world commodity markets, and unemployment and "stagflation" at home. The currency exchange rates of European Community (EC) members fluctuated...
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...1970s From Wikipedia, the free encyclopedia Jump to: navigation, search "Seventies" redirects here. For decades comprising years 70–79 of other centuries, see List of decades. From left, clockwise: U.S. President Richard Nixon doing the V for Victory sign after his resignation from office after the Watergate scandal in 1974; Refugees aboard a US naval boat after the Fall of Saigon, leading to the end of the Vietnam War in 1975; The 1973 oil crisis put the nation of America in gridlock and caused economic damage throughout the developed world; Both the leaders of Israel and Egypt shake hands after the signing of the Camp David Accords in 1978; The 1970 Bhola cyclone kills an estimated 500,000 people in the densely populated Ganges Delta region of East Pakistan (which would become independent as Bangladesh in 1971) in November 1970; The Iranian Revolution of 1979 ousted Mohammad Reza Shah Pahlavi who was later replaced by an Islamic theocracy led by Ayatollah Khomeini; The popularity of the disco music genre peaked during the middle to late 1970s. Millennium: | 2nd millennium | Centuries: | 19th century – 20th century – 21st century | Decades: | 1940s 1950s 1960s – 1970s – 1980s 1990s 2000s | Years: | 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 | Categories: | Births – Deaths – ArchitectureEstablishments – Disestablishments | The 1970s, pronounced "the Nineteen Seventies", refers to a decade within the Gregorian calendar that began on January 1, 1970, and...
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...codes of ethics and codes of practice that regulate practices in their industrial sector. These are often drawn up in consultation with governments, employees, local communities and other stakeholders. Acting in an ethical way involves distinguishing between “right” and “wrong” and then making the “right” choice. It is relatively easy to identify unethical business practices. Good business ethics should be a part of every business. The term business ethics came into common use in the United States in the early 1970s. By the mid-1980s at least 500 courses in business ethics reached 40,000 students, using some twenty textbooks and at least ten casebooks along supported by professional societies, centers and journals of business ethics. The Society for Business Ethics was started in 1980. European business schools adopted business ethics after 1987 commencing with the European Business Ethics Network (EBEN). Firms started highlighting their ethical stature in the late 1980s and early...
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...sovereign debt crisis – 1982 : This crisis developed when Latin American countries, which had been gorging on cheap foreign debt for years, suddenly realized they could not repay it. The main culprits, Mexico, Brazil and Argentina, borrowed money for development and infrastructure programmes. (causes ) Their economies were booming, and banks were happy to provide loans to the point where Latin American debt quadrupled in seven years. When the world’s economy went into recession in the late 1970s the problem compounded itself. Interest rates on bond payments rose while Latin American currencies plummeted. The crisis officially kicked off in August 1982 when Mexico’s finance minister Jesus Silva-Herzog said the country could not pay its bills. (how they overcome) It took years to sort out the crisis, with Latin American nations eventually turning to the IMF for a bailout in exchange for pro-market reforms and austerity programmes. It also led in 1989 to the novel creation of Brady bonds, which were designed to reduce debt in these countries by converting distressed sovereign debt into a number of different types of bonds. Furthermore, banks could exchange claims on these debts for tradable assets, which enabled them to get the debt off their balance sheets. 2) Savings and loans crisis – 1980s: while the solution to the Latin American crisis was being put together, a domestic one was happening right in front of the US regulators. The so-called savings and loans crisis took place...
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...PESTEL Trends Analysis Political and Legal: Deregulation of airline industry in the late 1970s. In the 1970s there was a general trend to deregulate the airline industry which had previously been mainly controlled by governments. So each government set fares rates, routes, customer service policies, entry and exit, intercarrier agreements, mergers, and consumer issues for its flag carriers as well as private businesses. However, in 1978, the US airline industry became partially deregulated through the Airline Deregulation Act. And even though this movement started in the US airline market it started to spread through European countries when the European commission proposed the deregulation in 19842. This would later result in less involvement of governments in policies of airline businesses. Oil Embargo in 1973–1974 As a result of the Arab-Israeli War in 1973, the US government decided to re-supply the Israeli military in its war against Arab countries. Consequently, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States, which was extended to other European countries that supported the Israeli government. This embargo resulted in the ban of petroleum exports to those countries and introduced cuts in oil production.1 Economic Recession in North Atlantic in the mid-1970s Problems in the North Atlantic corridor in the 1970s led to a recession, which affected the demand on transatlantic routes regardless of promotional...
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