...1. How could a higher level of inflation in Thailand affect Blades (assume U.S inflation remains constant)? Although the Blades have already a decreasing demand for “Speedos” and the rate of inflation is high relative to U.S inflation rate. It will affect the current account of Thailand which would be expected to decrease and due to this scenario the exports of demand for other countries will also decline. 2. How would Blades be affected relative to competition both from firms in Thailand and from U.S firms conducting business in Thailand? As with a view of point of local firms they will be affected by the tax rates on interest and dividends because the local investor or firms in Thailand would normally invest with in the country due to the interest on taxes and dividends income are relatively low. They will access their earnings from investing in foreign securities. Competitors in U.S firms the investors and other firms may decide to purchase securities from other countries, rather purchasing Thailand securities the reason is that due to the currency of Thailand (Thai Baht) is continuously depreciating. 3. How could a decreasing level of national income in Thailand affect Blades? As Thai economy was being affected due to the Asian crises, thus the national income of Thai declined, and causing the decline demand for imported goods which was manufactured by firms based in Thailand were affected by Asian crises. Due to the decrease in national income the...
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... December 1, 2012 International Crisis in Lending Lessons to be learned Group V Samantha Jeffrey Gabriella Stankovic Na-taisha Williams The debt crisis played a huge role in international lending. This report will discuss how economic crisis can result from many different factors such as changes in government policies which result in failure, and the cost of bank bailouts. Least developing countries also learned a lesson about how interest rates and low exports and imports played a major role in the financial crisis. These countries also tried to stabile their country's currency by fixing its exchange rate to that of the United States, which also resulted in failure. European countries also integrated their currency to Euro that caused a major crisis in lending. All are major factors that contributed to a crisis in international lending. Countries need to know what they are doing wrong before they can solve their problems. The historical events discuss will help serve as answer of how it can be resolved. Sovereign risk is the risk of lending money to the government with the risk of not being able to repay the obligation. There is always a risk in lending but the previous debt crisis and the crisis that is occurring in Europe plays a role in whether financial institutes want to lend to governments. The sovereign risk is important in international lending because many countries borrow money and are unable...
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...The Global Financial Crisis and Its Impacts on Developing Countries Student’s Name Professor’s Name Institution Dates Page no. 1.0 Origin of financial crisis………………………………………………………………… 3 2.0 causes of the financial crisis …………………………………………………………. 3-4 3.0 Channels of Transmitting Financial crisis ……………………………………………… 4 3.1 Transmission through financial flows ……………………………………….. 4-6 3.2 transmission through trade ……………………………………………………… 6 4.0 responses to the crisis by developing countries ………………………………………. 6 4.1 fiscal stimulation measures ………………………………………………….. 6-7 4.2 money policies ………………………………………………………………….. 7 5.0 reference ………………………………………………………………………………… 8 The Global Financial Crisis and Its Impacts on Developing Countries Origin of Financial Crisis The financial crisis originated form the United States’ economy. In the year 2007 during summer after two Bear Stearns Hedge Funds collapsed resulting to subprime mortgage crisis. This financial crisis reintroduced private defaults, bank failures, massive layoffs and credit crunch to the world. The financial crisis was as a result of too much foreign money from Asian countries like China flowing into the economy of US (Savona, Kirton, & Oldani, 2011). Causes of the Financial Crisis Creation of too much money by the banks had led to the crisis. New money is created when the banks give loans to the public. By giving loans, the banks created a large sums of money during the run up to the financial crisis. Many people had...
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...version (1970-2000) Nayyar demonstrates the similarities and differences that occurred in both epochs and further examines the implications of this process both in the past and in the present as it includes three main characteristics, increases in international trade, investment and finance. Nayyar defines globalisation as a “deepening economic integration in the world economy” and is cautious to advise that this process is neither symmetrical nor new. Paradoxically he points out that whilst globalisation in the new era advocates free trade, this freedom is limited to the flow of goods and services whilst restricting the movement in labour. The period 1870-1914 was a true era of free trade, where the dominant ideology was economic liberalism. This was an era of rapid growth in international trade, finance and investment where statistics showed that Western Europe was the engine of this growth. In theory it was believed that trade liberalization was the sole variable responsible for the expansion in international trade. Nayyar points out that the increase in international trade was more the result of a strategy to increase trade between the developing world and the developed world than trade liberalization. Likewise international investment expanded rapidly between 1870 and 1914. This investment formed a significant part of the output for the developing and industrializing world and was a source of income for the net...
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...declaration of development banking and trade prospects by setting up Brics Bank. Leaders of Brazil, Russia, India, China and South Africa inked a deal, on 15 July in Fortaleza, Brazil, to launch a development bank with an initial $50 billion paid-up capital and a $100 billion monetary reserve. It is seen as a fruition of a multilateral financial diplomacy with the help of the multilateral mechanism and platform, without being cramped by Western pressure and dollar power. 2. In terms of economic function, this bank will provide long-term development aid to developing countries like Bangladesh. The monetary reserve will provide an economic stability fund to help BRICS countries respond to financial emergencies. BRICS Development Bank will help us to borrow cash for development projects, and to better cope with the risks created by international monetary system. 3. This paper will AIM 4. The aim of this paper is to.... BRICS AT A GLANCE 5. BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China, and South Africa. The grouping was originally known as "BRIC" before the inclusion of South Africa in 2010. The BRICS members are all developing or newly industrialised countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs; all five are G-20...
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...would use capital budgeting analysis to determine the desirability of global projects. There are three different types of capital budgeting processes: centralized, decentralized and integrated. In centralized capital budgeting, top management make all important strategic capital budgeting decisions. Operating managers bid on implementing projects selected by top management. In decentralized capital budgeting operating managers identify and initiate projects that are approved by top management based upon projected financial performance. Integrated capital budgeting has elements of both decentralized and centralized capital budgeting. Capital budgeting process defines the set and size of a firm’s real assets, which in turn generate the cash flows that ultimately determine its profitability, value, and viability. In principle, a firm’s decision to invest in a new project should be made according to whether the project increases the wealth of the firm’s shareholders. The two things to consider when you would use capital budgeting in global projects are the following; What will the Project Cost? This is the first and most basic question a company must answer before pursuing a project. Identifying the cost, which includes the actual purchase price of the assets along with any future investments costs, determines whether or not the business can afford to take on such a project. How Long Will It Take to Re-coup the Investment? Once the costs have been identified, management must...
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...stolen by officials. Determine other main factors that account for the misuse of these funds. corrupt government officials. Money, of course, is a fungible commodity, and once aid money from the International Monetary Fund or the World Bank enters a government’s budgetary stream, it become difficult to trace. Even to the extent loans and grants are tied to specific projects, for example, construction of infrastructure, it can be difficult to track. The larger problem of government corruption, however, is well-known. The principal nongovernmental source on corruption around the world is Transparency International, a link to whose website is provided below. Transparency International conducts annual assessments of corruption in every country in the world and ranks each country according to its level of corruption. For example, Denmark and New Zealand are rated as the least corrupt countries in the world, with Afghanistan, North Korea and Somalia ranked as the most corrupt. Unsurprisingly, the correlation between a country’s level of development and its position on the corruption ladder clearly indicates that a relationship between level of development and corruption exists. As the least developed countries are also the more corrupt countries, in most instances, and as the least developed countries are the main recipients of World Bank assistance, it can be deduced that international aid disappears into the coffers of corrupt leaders and officials in those countries. Similarly...
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...International Lending and Financial Crisis By Alicia Jones ECON610, Spring 2012, Session 8 Dr. Fereidoon Shahrokh May 25, 2012 Abstract In this paper we will be discussing the pros and cons of international lending practices and how it affects borrowing countries capital flows and their trading. While some countries go through financial crisis, international lending may be hard to secure due to the fact that there are associated risks. Because of these risks, lenders do not want to lose their money on a country who is struggling and/or in debt. We will also take a look at how the international financial crisis affects industrial countries and developing nations in which they will not be able to obtain financing for future or current projects. There are many reasons why international financing causes crises which one reason is caused by over lending and over borrowing. We will discuss exogenous shocks and exchange rates and how these can affect the entire world and what happens when countries with huge debts negatively affect short term debt financing for foreigners. Keywords: Financial crises, debt, lending practices. Exogenous, risks INTRODUCTION The goal of this paper is to show a broad picture of the differences between how international capital moves through the investing and lending process, through both lenders and borrowers. This depends on whether countries are in a financial crisis or not...
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...up the phone and call a toll free customer support line. They are greeted by friendly voices that identify themselves with iconic American names such as Ashley and Brian and sound like our neighbors. Only Ashley are Brian are on the other side of the world where our day is their night. Outsourcing and globalization has made it possible for work and labor to flow across international borders to wherever it is cheapest to do. Many people feel threatened by the trends of outsourcing and globalization. After all, how can any American be expected to compete with someone who is willing to work for penny’s? Yet it is in America’s best interest to fight the impulse reaction to enact protectionist policies. Outsourcing is inevitable in a globalized world. Governments that attempt to prevent outsourcing/globalization often do more harm to their economies than good, and governments that embrace it are creating a healthier, more ethical global economy filled with more consumers. According to Webster’s definition, globalization is “the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor.” [Webster]. According to Fiona Torrance, “Outsourcing occurs when a business purchases services or products from a foreign supplier or manufacturer, or when a business pays another company to provide services that a business might otherwise have employed its own staff to perform.” [Torrance]. Prior to the...
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...Latin America, out of IMF’s control World Economy and Latin America 20 December, 2011 Contents Introduction Past relationship between Latin America and IMF How LAC could get out of IMF’s control Conclusion Introduction Latin America was a volatile region with a history of exceptionally high inflation rates, substantial macroeconomic instability, and a record of unsuccessful monetary and fiscal stabilizations. However, during the past decade, Latin America’s economy has strengthened their body and benefited from high exports, strong economic growth in its trading partners and good global financial conditions and domestic policies. All of this is related with international financial institutions and one of IFIs, International Monetary Fund had affected in currency perspective in the region. In this paper, I will search the changing relationship between Latin America and one of IFIs, IMF whose role is so involved with Latin America’s economy. The first session will explain the relevance between the region and IMF and in the following part, there will be the reasons that Latin America could escape from IMF’s control. Past relationship between Latin America and IMF The IMF was set up to assist countries that had temporary current account deficits and lacked a sufficient quantity of official reserve assets to support a fixed exchange rate. However, the slow motion collapse of the fixed exchange rate system in the 1970s created an odd situation for the IMF. At about the...
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...service organization considering expansion to Thailand or Ghana A nonprofit organization considering expansion to China or Hungary Obtain faculty approval of your scenario prior to beginning the assignment. Prepare a 1,750- to 2,450-word paper in which you relate the international flow of goods, services, and capital to the balance of payments and domestic economic behavior. Address the following: Analyzetrends of balance of payments accounts, including the current and capital accounts, and the overall balance of payments over a 3-5 year period on a quarterly basis for the countries in your scenario. Relatevarious balance of payments accounts to fluctuations of the exchange rates of the proposed countries over the time period. Describecurrent economic conditions of the countries. Use the Internet to research balance of payments data. Use the following resources to research data related to the international flow of goods, services, and capital, and international economic and political conditions: U.S. Department of Commerce Bureau of Economic Analysis Economic Research Federal Reserve Bank of St. Louis International Trade Administration World Bank Group U.S. Census Bureau International Monetary Fund U.S. Commercial Service Format your paper consistent with APA guidelines. Include a minimum of five cited references in the body of the paper For more Assignments visit:...
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...Politics and Economics of the Third World viz a viz Theories of Development Student’s Name: Course: Tutor’s Name: 17/05/2013 Outline i. Abstract ii. Introduction iii. Literature Review iv. Method of Analysis v. Analysis vi. Conclusion vii. Works Cited Abstract This paper analyzes the politics and economics of the third world. It seeks to provide information about development and the steps that countries in the developing world ought to follow in order to attain economic development and growth. The rationale is that the countries in the developing world have continued to experience challenges that hinder growth. This study will use theoretical models of development and discuss various aspects of development and politics in the third world. Keys Words: Third World Development; Modernization; Globalization; Global South Introduction Various theories propose ways through which a developing country can achieve economic growth while at the same time attaining development. This has precipitated politics in the global south. This paper seeks to explore various development theories proposed by various authors. Besides, the paper will explore elements of economics that are pertinent to the third world countries. This is in recognition of the fact that many countries in the third world still grapple with poverty and slow economic development. From Immanuel Wallerstein to Rostow, the paper will...
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...The Role and Influence of International Financial Institutions Danny Leipziger Abstract Development thinking has evolved from the early works of W. Arthur Lewis and Paul Rosenstein-Rodan and has been influenced by new and varied schools of thought. Emphases have shifted from capital accumulation and technical progress to human capital investment and social inclusion. Institutions have come into the equation, as has a prominent role for markets and for the state as drivers of development. Underlying these views were practicalities that shaped the way countries dealt with their need for foreign capital, the management of the macroeconomy, and their responses to economic and financial crises. There was a prominent role for the so-called Bretton Woods institutions, namely, the World Bank and the International Monetary Fund, in shaping prevailing views of development and putting them into practice. This Danny Leipziger The Role and Influence of IFIs has been important, both directly and indirectly, in affecting policy choices made by developing country governments over past decades. Keywords: Bretton Woods Institutions; World Bank ideology toward development; IMF ideology and development; changing development paradigms; international financial institutions; Bank-Fund Collaboration; Bank-Fund Concordat. Chapter 49 Page 2 Danny Leipziger The Role and Influence of IFIs Introduction International financial institutions (IFIs) have strongly influenced development...
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...refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production like land, labor, and capital Companies compete more effectively by lowering their overall cost structure or improving the quality or functionality of their product offering. The Emergence Of Global Institutions : Institutions are needed to: * help manage, regulate, and police the global marketplace * promote the establishment of multinational treaties to govern the global business system Institutions created over the past half century include: * the General Agreement on Tariffs and Trade (GATT) * the World Trade Organization (WTO) * the International Monetary Fund (IMF) * the World Bank (WB) * the United Nations (UN) a)The World Trade Organization (like its predecessor GATT) is...
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...2012 Journal of Undergraduate Research at Minnesota State University, Mankato The Role of the International Monetary Funds (IMF) in the East Asian Debt Crisis of 1997 By Yaro Sadek Tahirou Minnesota State University, Mankato 2 ABSTRACT During the East Asian Financial crisis in particular, the IMF has been criticized of promoting international cooperation because of the supervised enforcement of its rules. The purpose of this research is to find out how the IMF responded to the East Asian debt crisis and whether or not its responses were the best possible responses to this crisis. Through my research, I talked about the causes of the East Asian financial crisis, the role of the IMF in the international monetary system, and if the IMF responses to Thailand, South Korea and Indonesia were the best responses or not. After analyzing the IMF responses in this crisis, I found that the IMF policies need to be reformed in order to monitor and prevent future financial crises spill-over effects at the global and regional levels. I will analyzed 5 scholarly journals on the financial crisis in East Asia, 3 scholarly articles on the role of IMF in the East Asia financial crisis, and 1 novel called POLITICS IN SOUTHEAST ASIA DEMOCRACY OR LESS by William Case. INTRODUCTION Several financial crises have occurred in the world economy through the last decades. Some examples include the East Asian financial Crisis of 1997, the Latin American debt crisis of 1994-95, the Russian crisis...
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