Category: Economic

Introduction

According to Harcombe (2012), tourism can be defined as travelling for business, pleasure or recreational purposes. Different scholars have advanced many other definitions of tourism to introduce or cover different components of this activity. However, in all these definitions, it is evident that tourism is an activity that individuals engage in to escape the daily routine of life.

In the modern world, we relate tourism to accommodation in five stars hotels, a vacation in exotic islands with sandy beaches, camping and driving in national parks and game reserves, as well as visiting famous places of the world, such as the Taj Mahal, the Pyramids of Egypt, the Grand Canyon and so on.

From this description, people always tend to believe that tourism is an activity of the modern days. This assumption is however wrong. Tourism has been existing since the early days of civilization. There are historic reports of wealthy people travelling around the world for fun and expeditions.

In ancient Rome, for instance, the wealthy people used to visit Baiae, a coastal region with beautiful beaches. However, it is after the Renaissance then the Industrial Revolution that people of the middle class began to be actively involved in tourism (Harcombe, 2012). Given these facts, this paper will focus on the impacts that tourism has on the growth and sustainability of the economy.

A Focus on Tourism

The level of tourism has increased at a tremendous rate after the end of the World War II. This trend has been attributed to the increase in disposable income and the rise of the middle class within the population who had disposable money to spend on luxury.

At the same time, the improvement in the transportation sector, presence of luxurious hotels and other accommodation facilities, improvement in security and hospitality and most importantly, the presence of many tourist destinations capable of meeting the needs and desires of different groups of individuals have also played a critical role in enhancing tourism.

It is because of these factors that governments all around the world have been aiming at enhancing tourism in their countries, through respective tourism ministries, boards and agencies.

Tourism has many effects on the society. For instance, tourism has played a critical role in achieving environmental sustainability. Tourism relies on natural resources mainly. Beaches, wildlife, and geological features are some of the factors which tourism is based on. Therefore, through tourism, these resources are managed in an effective, efficient and sustainable manner to ensure that the present and future generations benefit from them.

Consequently, tourism has social and cultural implications. Through the tourist-host relationships, individuals tend to meet, interact and share their values and morals. Tourists usually interact with the natives. In the process of interaction, they tend to borrow some aspects of their cultures. More than often, tourists return home with souvenirs that they bought in foreign lands.

At the same time, some tourists adopt the dressing, cuisine and to some extent the religious beliefs of the native communities that they have visited during vacations. Natives also experience the same trend since they also acquire some aspects of culture and behaviors of the tourists. Due to this fact therefore, it has always been stressed that individuals should adopt and pass on the values and practices that are moral to enhance the sustainability of tourism.

Most importantly, tourism has great economic benefits. According to Stynes (2011), the number of international tourists recorded in 2011 was approximately 983 million. This is one of the highest figures ever been recorded in the history of international tourism representing a growth of 4.6% as compared to 2010. In the same year, international expenditures in tourism were recorded at over $1 trillion (Harcombe, 2012).

In Canada, for instance, tourism had a revenue of $55 in the year 2000 accounting for approximately 5% of the countrys GDP. At the same time, tourism during that year employed 547,000 individuals within the nation. Therefore, tourism has become one of the major earners of revenue in the economies of many nations. Tourism also provides employment and leads to the development of infrastructure. These are essential components in ensuring the growth and sustainability of the economy of a given nation.

Global Impacts of Tourism

In the year 2010, tourism accounted for 5% of the worlds GDP (Bull, 2010). From this analysis and the facts that have been presented in this paper so far, it is evident that tourism plays a critical role in the growth and development of the global economy. It is as a result of this fact that many nations in the world try to enhance their tourism sector as a move to achieve high economic growth and development.

Tourism supports the economies of nations by acting as a source of foreign exchange. At the same time, tourism provides employment to the native communities of the host nations either directly or indirectly. Furthermore, tourism brings about the growth and development of infrastructure to support the service.

As a result, tourism activities play a critical role in bringing about modernity, especially in developing nations. For tourists to enjoy their stay in a given destination there needs to be effective transportation and communication services, hospitality services, security, a stable banking system and other amenities. On these grounds therefore, governments need to develop these infrastructures and amenities in order for their nations to be regarded as the leading tourist destinations in the world.

However, according to the studies that have been conducted, the impact that tourism has on the economy of a given nation is diversified. For instance, in his book, Bull (2010) asserted that tourism plays a critical role in supporting the national economy of developing countries as compared to the economies of developed nations.

The report presented by the Organization for Economic Co-operation (OECD) stated that although 70% of the global revenue received in the global tourism sector originates from developed countries (OECD, n.d.). Despite this fact however, these nations still do not regard tourism as a profitable venture.

The economies of developed nations are usually based on the industrial sector and the service industries. Given the fact that these nations have a strong internal market and their export markets are viable, their balance of payments is usually high. The scenario is however different in the case of developing nations where the economy is predominantly based on agriculture.

In these nations, the wealth difference between the rich and the poor is always high due to uneven distribution of wealth and national resources. As a result, the domestic industry of developing nation usually lacks the purchasing power required to support local industry, hence increasing the level of international imports to sustain the economy. As a result, these nations usually have a negative balance of payments where the cost of imports exceeds the revenue of exports.

As it has been stated in this paper, developing nations need to transform their economy to be based on industry and the service sector to achieve medium to high economic levels of growth. To achieve this goal, the governments of these nations need to encourage and sustain a lot of investments to sustain industrial growth. At the same time, the government needs to improve on its service industry. This includes developing service industries such as banking and finance, transportation, healthcare and so on.

To achieve all this however, developing nations need to have strong financial backing to support the capital investments that are required to establish and maintain these industries. Seeking for foreign aid and loans has been one of the main avenues that the governments of developing nations have turned to in order to achieve these development needs (Bull, 2010).

At the same time, developing nations have turned to tourism as a source of foreign exchange and revenue to sustain their economic plans (Bull, 2010). Developed nations also have turned to this scheme to enhance economic growth but on a local level, especially in rural economies that have abundant natural resources and scenic views.

The fact that developing nations rely a lot on tourism as a source of foreign exchange has played a considerable role in the development of tourism in the last 30 years (Stynes, 2011). Most nations in Africa, South East Asia and Latin America rely on tourism for economic sustainability a lot.

It is as a result of this fact that tourism countries such as Kenya have become the main foreign exchange earner surpassing traditional exports from agriculture and other industries (Stynes, 2011). Therefore, the governments of developing nations set up and sustain economic investment projects to achieve the short, medium and long-term goals and objectives while using the revenue earned from tourism.

Due to the viability of tourism and its high potential, many developing nations have come up with policies that help enhance the growth and development of the tourism sector. As a result, tourism has become one of the leading industries that support the economies of most developing nations in the world. This is because, tourism not only earn developing countries the much needed foreign exchange but it also acts as a source of employment.

Unemployment is one of the major economic problems which developing nations are facing. In developing nations, unemployment affects mainly the youths that move to urban areas in search for employment opportunities. Rural-urban migration in developing nations reduces the work force that is required to sustain agricultural activities that are mainly based in rural areas.

As a result, this movement not only reduces the level of agricultural exports in the nation, but also reduces food availability. Consequently, a high influx of unemployed individuals in urban areas leads to the development of poverty, and rise of social ills, such as prostitution and insecurity.

Thus, the fact that tourism offers employment either directly or indirectly in developing nations has played a critical role in solving some of the economic problems that developing nations are facing. Through tourism, individuals are employed as tour guides, national park and game reserve managers, and as hotel employees, tours and travel staff.

Tourism also offers indirect employment, especially in supporting industries developed by local communities such as curio shops. Consequently, the money raised from tourism is used to support local projects especially in rural areas through building schools, hospitals, roads and other public amenities. Thus, the level of poverty in developing nations has been reduced considerably with the aid of tourism.

Economic Impacts of Tourism

Apart from providing foreign exchange to the economy of a given nation, other features of tourism play a critical role in sustaining the economy of a given nation. Being a service industry, tourism offers invisible services to its consumers.

The nature of the tourism industry therefore can be compared to that of the transport industry, healthcare industry or the banking sector (Bull, 2010). Therefore, the services offered by the industry occur at the point or the country where they are produced. In the process therefore, consumers enjoy the service at their tourist destination sites at the minimum price possible.

The price associated with tourism is set on the free on board (FOB) basis. However, if tourism could be exported to the home countries of the consumers, then the service would cost much more given the fact that the prices would include the cost, insurance and freight (CIF). Additionally, the service would incur several taxes such as custom duty before reaching the final consumer.

It is as a result of this fact that most imported goods cost more in destination countries as compared to the countries that they are manufactured in. Therefore, given the fact that the cost of tourism is set at FOB, the service is usually offered at the best price in the market. Due to its affordability, the demand for tourism has always been increasing. This phenomenon has made tourism to be one of the most profitable ventures in the world comprising about 5% of the worlds GDP in 2010 (Bull, 2010).

Consequently, tourists need to utilize additional services and amenities to enhance the holiday experience in their destination areas. Therefore, host nations need to ensure that they have adequate facilities that can sustain the wants and needs of the tourists who have visited their nations.

Tourists require effective accommodation services to enhance their stay in a given area. At the same time, for tourism to be sustainable, it needs to be supported with effective and efficient transport facilities, healthcare services, retail services, banking, finance and insurance services and so on.

Therefore, the introduction and development of tourism has not only enhanced the economy of the host nations from the revenue that is earned from the venture, but has also facilitated the growth of other industries as well. Given the rapid expansion of tourism, host nations, especially developing countries, find it difficult to meet the needs, desires and wants of tourists with their available facilities and infrastructure.

In this respect therefore, it was important for these nations to build new infrastructures and develop existing ones to meet the needs and desires of the tourists who were visiting their nations. This move has not only supported tourism in these nations, but it has also played a critical role in the modernization of host nations, as well as enhanced the process of economic growth and development.

With effective infrastructures in place, other processes and industries within the nation are improved. An improved transport system improves the efficiency of transporting goods and services within a given nation. A strong security force protects a nation from internal and external threats.

Consequently, the presence of a strong and reliable banking industry will result in the availability of credits and enhance a saving culture that will assist in the growth of small and medium scale enterprises (SMEs). Thus, facilities that were developed to sustain tourism end up in developing and supporting other industries resulting in the economic growth and sustainability.

Economic Reality of Tourism

In this paper, it has been identified that tourism plays a critical role in growth and development of the economy of a given nation, especially in developing nations. Tourism achieves this by earning foreign exchange, triggering the development of the infrastructures of the host nation, providing employment and supporting the development of trade and other industries.

However, this is just a vague description of how tourism affects the economy of a given nation. Thus, to understand exactly how tourism affects the economy, it is essential to conduct a multiplier analysis (Harcombe, 2012).

The impacts that tourism has on the economy of a given nation cannot be measured by the amount of money they spend or the benefits they receive, but through the impact this revenue has on different realms of the economy. When a tourist spends money in a hotel for example, part of that money is used by the hotel to pay its employees, to purchase goods and services that are required to sustain the operations of the economy and so on.

Consequently, employees will use their salaries to pay rent, basic expenses such as school fees, food, and so on. The landlord on the other hand will invest the money earned in other activities, probably in a welfare association or a local housing scheme. This is just but an example of how the money from tourism penetrates into the economy of a given nation.

According to the multiplier effect, the expenditure by a tourist to enjoy the goods and services of a host nation is regarded as Frontline expenditure (Harcombe, 2012). Here, the tourist is engaged in spending activities such as transport and accommodation, food and entertainment, clothing, gifts and souvenirs, healthcare and other miscellaneous expenses. According to this analysis, this form of expenditure has direct effects on the economy of a given nation.

Therefore, this expenditure as a form of expenditure is referred to as a direct multiplier since it has a direct effect on the economy. For economic growth to be achieved, the value of Frontline spending of tourism should always be higher than the cost required to import the goods and services to sustain the tourists experience (Harcombe, 2012).

On the other hand, hotels, travel agencies, national parks and game reserves receive money directly from tourists. However, these agencies and organizations need to purchase goods and services within the local economy to sustain their operations. For instance, a travel agency will need to employ a workforce in different departments to sustain the needs and requirements of tourists while they are at their discretion.

The firm will also need to purchase tour vans, fuel and service them and most importantly, pay taxes to the government. This level of expenditure is referred to as indirect multiplier effect since the money earned from tourism is spent indirectly within the economy. At this point, it is essential to state that not all the money earned from the Frontline spending is analyzed in the indirect multiplier effect since some of this money might be lost in the form of savings, taxes, import and excise duties.

The induced multiplier effect is the final level of this analysis. Induced spending is used to refer to the money that is spent on paying the wages of employees who work in the firms and agencies that are involved in tourism. Additionally, these firms pay out the profits earned to their shareholders in the form of dividends. Some of this money is put into savings. Thus, the expenditure of the employees, shareholders or any other individual at this level also triggers economic activities within the economy.

From this analysis, tourism plays a critical role in enhancing and maintaining the economy of a given nation either through direct, indirect or induced multiplier effects. On these grounds therefore, it is evident that through tourism, many other economic activities with a given economy are initiated and sustained.

Thus, the assessment of all these realms of expenditure is essential for the true economic impact of tourism on a given economy. Multiplier analysis is an effective tool to ascertain the overall performance of the tourism industry. The data and information gathered from this analysis are essential, especially in the process of decision making to determine the short term and long-term policies and strategies that can be implemented to sustain the tourism industry of a given nation and its economy at large.

Negative Impacts of Tourism from an Economic Perspective

This paper has effectively covered the positive impacts that tourism has on the economy of a given nation. However, this is not always the case as tourism has effects that might be detrimental to the economy of a given nation. One of the main problems that have been associated with tourism is the increased need for importing goods from overseas to meet the needs of the tourists. Tourists always want to have a home experience in their travel destinations.

As such therefore, host nations need to provide perfect conditions to meet the needs and wants of the tourists. For instance, tourists might require luxurious hotel rooms, their home cuisine and additional amenities in the course of their stay at their host hotel. To meet all these demands, host nations have to import all these goods since they might not be locally available as in the case of small tourist islands. Thus, the cost-revenue margin from tourism is highly reduced.

In this paper, it has been identified that tourism plays a critical role in developing and sustaining the global economy. Due to this fact, there are governments that strongly depend on tourism as the main source of revenue in their economies.

This trend is mainly experienced in developing nations that regard tourism as the main source of foreign exchange hence supporting their economic goals and objectives. High risks have always been linked with the dependence on one industry to achieve economic sustainability. The world experienced a high level of inflation between 2008 and 2010.

During this time, the amount of disposable income has been greatly reduced while the price levels including the costs associated with tourism increased. As a result, the revenue earned from tourism has been reduced during this period. At the same time, tourism is a seasonal industry. During the low season, the revenue earned in this industry is usually low leading to firing employees to reduce operating costs.

Consequently, to ensure that tourism become a profitable and sustainable venture in a given economy, the host nation needs to develop its resources and infrastructures. However, a huge proportion of the profits that might be accrued from these investments usually leaks out of the host nation hence reducing the viability of tourism.

Conclusion

Over the years, tourism has grown to become of the leading global economic activities. As a result of its success, tourism plays a critical role in the growth and development of the economy at local, national and international levels.

The venture not only earns host nations revenue, but also plays a critical role in providing employment, developing infrastructures and sustaining the growth and development of other industries. Despite its shortcomings, tourism plays a critical role in modernization and economic development. Therefore, measures need to be put in place to ensure that this venture is profitable and sustainable in the short run and in the long run.

References

Bull, A. (2010). The Economics of Travel and Tourism. Melbourne: Longman.

Harcombe, D. (2012). The Impacts of Tourism. Web.

OECD. Economic Impacts of Tourism. Web.

Stynes, D. (2011). The Economic Impacts of Tourism: A Hand Book for Tourism Professionals. Chicago: Sage.

Article summary

The article by (Li and Chow) develops a detailed account for chinas economic development and growth from 1952. In doing so, the article focuses on areas such as total factor productivity, capital, and labor. Official data on the economic status of the country, the authors develop an estimation of Cobb-Douglas productivity function. The article is an extension of earlier works by Gregory Chow and there are two main aims that the authors pursued.

They include establishing whether the earlier parameters of production function changed and using these parameters to make projection of growth in GDP up to 2010. Data on essential parameters such as national output and labor force were readily available. The only parameter that had changed was the Chinese national accounting income system. It had changed from the old definition of accounting national income accounting system to a new definition that uses the standard measure of GDP.

The article by Wang and Yao, examines the sources of Chinas economic growth from 1952 to 1999. The authors note the remarkable performance of Chinas economy within the period. In addition, the country has also made significant effort in reducing poverty. However, in order to establish the source of this immense growth, the authors examine factor accumulation and productivity.

Most studies focusing on Chinas economy fail to incorporate data on its annual human capital stock (Wang and Yao). This leaves a huge omission and biasness in the studies rendering them inaccurate. The article by Wang and Yao, however, sought to use data of Chinas human capital stock to analyze the economic growth of the country. In addition to the human capital stock data, the authors also identify the significance of using factor productivity in analyzing Chinas economic growth.

Chinas economic growth since 1978

Ever since China implemented economic reforms in 1978, the country has continued to witness impressive economic growth that leaves many economic analysts in the western world wondering the factors that drive this growth. On one end of the spectrum, the situation has increased fears that China will soon become a powerful country and a threat to well established western countries.

On the other end, there are those who choose to become pessimistic about Chinas economy (Holz). However, one thing remains, irrespective of what end of the spectrum one chooses to stand Chinas economy has grown at a rapid rate ever since they began implementing economic reforms. Gross domestic product has been on an average annual rate of 9.6 percent.

In terms of economic size, the country currently is ranked second to the United States after surpassing huge economies such as Japan, Germany and UK. The Share of Chinas economy in the global economic growth has is currently ranked the highest. Basically, it contributes to approximately 25 percent of the global economic growth while the United States is estimated to contribute only 20 percent (Holz 1668).

The interest in Chinas impressive economic growth has drawn many researchers to analyze the factors that drive the economy. Other researchers have focused on Chinas largest industries which contribute a significant share to its overall GDP while others examine the prospective of Chinas firms on the global spectrum. Theories that explain Chinas economic growth tend to emphasize on the economic transition.

As part of the economic reforms, China opened its market to foreign investors (Holz). A cumulative figure of the overall foreign direct investment in China had reached $100 billion by the year 1995. However, this figure was negligible prior the economic reforms of 1978.

Annual inflows of foreign investments increased from 1% in 1978 to 18% in 1995. With the increase inward foreign investment, the government has been using the money to create technological transfer, connect the country to international market, create job opportunities, and to build factories.

With the growing power and global presence of China in the world economy, there is no doubt that it is gaining foothold as the worlds strongest economy (Chow). Critics argue that the economic superpower of China can be attributed to its ability to embrace the market economy using utterly brutal means.

Capitalism and one-party communism are some of the factors that enabled the Chinese economy to address effects of the financial crisis. There is no wonder that the Chinese suffered from the effects of economic ideologies put forward by Friedrich Hayek given the levels of ease in accessing Chinese credits and embarking on overambitious projects. According to Hayek, bad investments lead to hard economic recoveries and this explains the woes that are currently being experienced in China.

Chinas involvement in the global economy subjected it to the effects of the economic downturn. The rate of economic rate declined steadily from 14%, 9%, and 6.1% in 2007, 2009, and at the first quarter of 2009 respectively. The Chinese economy suffered external shocks from the free fall in international demand and the collapse of commodity markets. For the past two decades, foreign direct investment and international trade accounted for US870 billion and US$2.56 trillion respectively.

Equally, $1.95 trillion of Chinese foreign reserves is invested in foreign agency and government bonds. An estimated 25 million employees in the Chinese labor market, work for foreign companies operating in China (Holz). With all these factors, there is no doubt that the Chinese political and economic health is reliant to the global economic markets. These interconnections mean that any undesirable developments in global markets present undesirable effects to the Chinese economy.

During the global financial crisis, assets were devalued, financial markets became turbulent, unemployment levels rose, and access to credit became limited during the crisis. The onset of the financial crisis marked the end of the highest growth cycle experienced from 2003-mid-2008China suffered the pains of the credit crunch in other ways.

The shrinking international trade resulted to a reduction in Chinas involvement in international trade. Small-and mid-sized manufacturing and trading companies collapsed leading to job losses for over 20 million migrant Chinese workers (Holz). Chinese trade relations with the European Union and the US were impacted significantly. Majority of these markets formed the largest consumers of Chinese exports, and the effects of the credit crisis led to slowed purchases of Chinese goods.

Political responses in response to the effects of the credit crisis included a call for rejecting economic reforms in favor of the centrally-controlled economy implemented by Mao. Another possible political response included the adoption of a protectionist/nationalist approach to Chinese growth investments. In efforts aimed at addressing the external shocks associated with the credit effects of the credit crisis, the Chinese government announced a number of macroeconomic policies.

Among these policy response was the 4 trillion Yuan (US$586 billion) stimulus package to be implemented for the duration 2008-2010 (Chow). This stimulus package was aimed at stimulating domestic demand. This translated to the inflation of Chinas fiscal deficit from 0.1% in GDP to 2.9% of GDP in 2010. While this stimulus package targeted three economic pillars (funding mechanism, industrial policy, and investment plan), the stimulus package was criticized for relying heavily on physical infrastructure.

Also included in the stimulus package plan was the innovation and competitiveness plan that targeted 10 additional factors. Contrary to their believe of the Keynesian economy as a general theory aimed at defending capitalism, the Chinese government headed by Wen Jiabao and Hu Jintao embraced Keynesian prescriptions (Chow). The leadership regimes of Li Keqiang and Xi Jinping are expected to suffer the investment effects described by Friedrich Hayek (Chow).

Another policy response has been the implementation of the expansionary fiscal policy by exiting from its tight monetary policy. The new expansionary monetary policy enabled the government to cut interest rates and minimize bank reserve requirement ratio to improve the liquidity volumes on the banking system. The effectiveness of several industrial policies implemented to promote the growth and recovery of particular sectors in the economy is yet to be evaluated.

The stimulus package is likely to increase Chinas reliance on investments that depend on the growth model because inappropriate use of money on key sectors.

The Chinese stimulus program is criticized for relying heavily on imbalanced and unusual investment burst through bank lending, enhancing the role of the state at the expense of the private sector, and exacerbating chinas dependence on exports. The stimulus package is also criticized for neglecting consumption because the package was aimed at expanding investment demand.

Works Cited

Chow, D. Chinas response to the global financial crisis: Implications for US-China Economic relations. Global Business Law Review (2010): 47-81. print.

Holz, Carsten. Chinas Economic Growth 19782025: What We Know Today About Chinas Economic Growth Tomorrow. World Development (2008): 16651691. print.

Li, Kui-Wai and Gregory C Chow. Chinas economic growth: 1952-2010. Economic Development and Cultural Change (2002): 247-256. print.

Wang, Yan and Yudong Yao. Sources of Chinas Economic Growth, 1952-99: Incorporating human capital accumulation. The world bank (2001): 1-17. Print.

Introduction

The economic crisis in Greece has not only affected the country but the whole European Union region and the world. Greece is one of the smallest countries in the European, but this has not made its effect on the European Union any less. The cause of the economic crisis is due to the continuous extensive spending by the government resulting to rise of the nations debt.

This has left it greatly exposed to a financial crisis as a result of reckless borrowing and great expenditure levels. In 2008, Greeces percentage debt to its Gross Domestic Product was 110.7% and this increased to 142.8% by the year 2010. The nations economy is thus in danger compared to the normal 85.3% debt in the other Euro zones.

It is evident that the countrys financial issue is not only of interest to government heads but also private individuals and corporations in other nations. Every nation in the EU region is now affected by the financial crisis in Greece because they have to spend on bailing it out.

As a result, the financial crisis has transpired into the worlds economy. Research has shown that the effect the financial crises has had varies in different nations. This paper will discuss how the economic crisis in Greece is affecting the rest of the world.

Discussion

Greece struggle with a substantial debt load persists to affect the rest of the world. As the financial crisis in this country persists, it is experiencing a 16.3% rise in joblessness and a dramatic decrease in revenues (Madslien). Other effects of this financial crisis to the Greeks include the lack of pay increments, higher taxes, increased fuel prices, and increased retirement age.

The financial crisis in Greece has made many investors apprehensive about buying the government bonds being issued. As a result, interest charges are increasing as governments are forced to pay a larger risk premium. For instance, it is anticipated that due to this financial crisis, the Central bank in Europe will increase its interest rates up to 1.5% (Madslien).

European citizens are facing the problem of increased age retirement because of the financial crisis. Tax costs in the European region have been increased in an attempt to cover the financial cost of the crisis.

As a EU country Greece expects the rest of the EU members to bail it out and this has resulted in an increase in cost of living in these countries. The countries have been forced to increase their taxes and this has weighed on badly on their citizens.

Another effect the economic crisis in Greece to the rest of the world has been wealth reduction. In this regard, the net income of many people has greatly reduced as they are forced to pay large amounts in taxes. The fact that retirement age has increased has led to low salaries due to shrinking pensions.

Pension funds invest the pensioners money in stock markets, and since this has been affected by the crisis, the wealth of the pensioner is greatly reduced. Pension funds in the private sector are also having difficulties in making up for deficits in their income plans due to the diminishing asset values. The issue of wealth reduction has been heavily realized in nations such as Ireland, Portugal and Spain.

This crisis has also led to a slow economic recovery among many nations. This is due to lack of anticipations of any marked return in business ventures. For instance, due to the crisis, the economic development in the Euro zone has slowed by 0.3% to 0.4%. This has prolonged the suffering of the jobless since job creation has become slower compared to the times when this crisis was absent.

By now, the Euro zone redundancy rate is about 10% with Spain having 20% unemployment rate. The people who are employed find it difficult to negotiate for pay increases because they are scared of losing their current jobs and being jobless. Financial experts have predicted that salaries will remain the same and some will be reduced in the coming years if the financial crisis escalates.

The crisis has led to increased unemployment levels. Because of this, demand for goods produced by companies has fallen as people are having less money to spend. With a dwindling market, corporations have decreased their capital ventures in preparation for riding out the economic burden.

It is, therefore, clear that in an environment of reasonable demand and low competence in use rates, then there is no prospect of any remarkable proceeds in investment (Madslien).

Another effect of the crisis is seen in the currency moves. The virtual fall down of Greeces economy has affected the European Union. This is because all the nations in Europe use the same currency hence deteriorating the Euro dramatically. owing to Euro deterioration, the dollar has sequentially strengthened. The weakening of the Euro currency has led to larger interest rates and loan costs in the continent.

This has affected the capacity of other European nations to move away from their own financial downturns. For instance, Italy and Belgium have above 100% debt levels and this shows how the Greeces problem has potentially extended to other nations.

Finally, the fact that the crisis has made the Euro to fall alongside other currencies is advantageous to exporters in the euro zone since it makes the goods they sell overseas cheaper, leading to high demand. As a result, exporters have started recruiting more persons and investing more in buying production machines.

This has had a direct effect on the U.S since the cost of exports has increased hence restricting exportation. Since exports are vital for stimulating economic development as well as assisting nations to pull out of their own recessions, then this has offered a major impediment to any economic recovery.

Conclusion

As the Greek financial burden now approaches its fourth year, the world is watching how the country deals with its economic crisis. Since this countrys financial problem is international, then there is need for involvement by the outside world. Today, the world is struggling to come up with a solution to this financial burden.

Several packages and answers to this dilemma have been formulated but the world has to wait and see how the packages help in solving the crisis. Some people trust that a default is unavoidable and would have a domino effect on the financial organizations and nations in the world.

As a result, people outside Europe should be concerned about the economic crisis in Greece, as it will affect most if not all the countries in the world. In addition, they too are suffering from slower wage augmentation, increasing taxes and increasing retirement ages.

Works Cited

Madslien, Jorn. Why Greeces problems matter. BBC News, 2010. Web.

Introduction

According to the definition presented by Borensztein and Gregorio (1997), foreign direct investment (FDI) is the process through which a corporation directly invests in a nation other than its parent country. On the other hand, Graham (1991) defined foreign direct investment as the process through which a company purchases or constructs tangible assets in a foreign nation.

These assets can be in the form of land, processing plants, machineries, equipments, buildings and so on. From these definitions, it is evident that FDI is a process through which a corporation invests in a foreign counry. In the process, both the corporation and the host nation benefit from this process in terms of economic gains.

The concept of foreign direct investment has been present for several decades now. Between 1985 and 1988 for instance, foreign direct investment within the United States of America increased from $47 billion to $139 billion (Graham, 1991). This remarkable increase in foreign direct investment was attributed to the high level of commercial inflow within the nation.

Toyota is a prime example of a company that increased its investments in the automobile industry in the United States during the 1980s. As a result, therefore, the level of foreign ownership in the United States has increased tremendously. On the other hand, foreign direct investments have facilitated the economic growth of many countries especially in developing nations.

Despite the fact that foreign direct investments do not have a huge impact on the capital gains of these nations, their resulting impacts on their economic growth has been changing over the years especially because there are alternative sources of finance to support FDIs in developing nations.

Given these facts, therefore, this paper will focus on the impacts of FDIs on the virtuous circle of economic development. To achieve this, the paper will analyze the impacts that FDIs have on the economy of a given nation and the resultant effects.

The Impacts of FDI on the Host Nation

In the modern world, FDIs play an important role in maintaining and developing the economies of developed nations, emerging economies, countries that are in transition as well as developing nations (Tulug, 2004). FDIs increase the level of employment within the host nation, bring about modernization and technological development, enhance the level of international trade, increase the level of competition among domestic companies and play a critical role in the development of human capital formation.

Other than achieving economic success, FDIs are also helpful in achieving social needs of host nations. Through social corporate responsibility schemes, FDIs can introduce modern technologies that are safe for the environment. At the same time, these corporations can start up programs that aim at alleviating common social problems such as drug abuse, HIV/AIDS prevention and management and so on. However, the success of FDIs highly relies on the policies that have been put in place by the host nation.

These policies are essential in determining the relationship that will exist between the corporation, the host nation and the native population. The presence of well-defined policies is thus essential to ensure that the roles of each stakeholder are as well as the goals and objectives of the initiative have been clearly defined. Poor policies on the other hand might reduce the profitability of FDIs.

The balance of payments might also be affected. Consequently, conflicts might arise between the host nation and investing corporations. At the same time, the native community might have negative attitudes and perceptions towards FDIs especially if they do not benefit either directly or indirectly from them.

Therefore, to ensure that FDIs are successful in the short run and in the long run, a balance needs to be achieved between the benefits and shortcomings that can be accrued. It is as a result of this fact that several models have been developed to ensure that a virtuous circle of economic development is achieved. These models will not only guarantee that the goals and objectives of that have been set up through FDIs are achieved but also the economy of the host nation grows and develops at a remarkable rate.

FDI and Economic Growth

It has always been asserted that FDIs play a critical role in increasing the level of productivity and income in the host nation. However, it is difficult to ascertain precisely how FDIs achieve these goals (OECD, 2002). From studies that have been conducted, it is evident that FDIs have a huge economic impact as compared to local investments within the host nation.

Thus, for FDIs to be successful, they have to venture into the market and the economy of the host nation as Multinational Enterprises (MNEs) (OECD, 2002). However, the effect that MNEs have on the economy of developing nations is somehow different.

As Easterly (2003) asserted, the level of economic growth in developing nations is relatively low in terms of the impacts arising from MNEs as compared to the economies of developed nations. This trend has been attributed to the fact that fact that the level of education, technology, and infrastructural development in developing nations have not reached an optimum level to enable their economies to benefit fully from FDIs.

At the same time, the impaired financial markets of developing nations act as a barrier to economic development. Therefore, to achieve a virtuous circle of economic development, it has always been advised that either MNEs should initiate and be involved directly or indirectly in processes that will result in the development of infrastructure and improvement in the financial sector in host countries.

FDI and Trade

The goal of any nation is to achieve economic sustainability in the short run and in the long run. Industrialization is one of the avenues that play a critical role in achieving this goal. The level of industrialization in developing countries is very low. These nations import more than what they export. Such nations will therefore benefit from inward FDI contributions. Inward FDI is essential as it integrates the economy of developing nations by enhancing their level of foreign trade.

Through MNEs, developing nations tend to develop strong international networks in different industrial segments. Ultimately, these networks will boost the manner and level in which developing nations distribute, market, and sell their products at local and international levels. However, for all this to be realized, host nations need to have sound policies that will attract MNEs into their countries and support import and export processes (OECD, 2002).

To support the trading activities of host nations, host nations need to improve their level of exports to ensure that a desirable balance of payments is achieved. Through inwards investments, FDIs can overcome the financial constrain of host nations through resource endowments (OECD, 2002).

Here, MNEs explore and utilize the natural resources present in the host nation in a sustainable, effective and efficient manner hence increasing exports. The establishment of export processing zones (EPZ) has also enhanced the level of trade between host nations and the international community by increasing the level of imports and exports. From this analysis, therefore, it is evident that FDIs play a critical role in enhancing the trade within host nations.

FDI and Technology Transfers

Technology transfer has always been regarded as the most important contribution of FDIs to host nations (OECD, 2002). In most cases, MNEs have superior technology as compared the domestic industries. Therefore, with the presence of modern technology, the processes of producing, distributing and salling of goods and services within and outside the host nation will be enhanced.

Vertical integration is one of the channels through which technology spillovers from MNEs can become beneficial within the host nation. Here, MNEs impart the knowledge regarding new technologies to suppliers and purchases within the host nation through training, and provision of technical assistance that will ultimately modernize and upgrade the production process.

In the process, the quality of goods and services produced within the nation are improved. Horizontal spillover is also another channel through which MNEs can introduce new technologies within the host nation where other firms within the same industry will benefit. However, due to competition, the rates of horizontal spillovers are usually low.

However, for the host nation to benefit from technology transfer, the new technologies that have been introduced by the MNEs need to be in line with its business operations (OECD, 2002). Consequently, the difference in the level of technology between MNEs and domestic industries needs to be low. In the case where this difference is wide, firms within the host nation may fail to fully absorb the newly introduced technologies.

FDI and Human Capital Enhancement

Unlike the other FDI benefits that have a direct impact on the economy of the host nation, the impact that FDIs have on human capital investment is indirect. Consequently, it has been identified that MNEs play a minimal role in enhancing human capital within the host nation (Tulug, 2004).

It is thus the responsibility of the government of the host nation to ensure that its population is highly qualified and skilled to provide the established MNEs with the human capital that they require to support their operations. Therefore, scholars regard this practice as a strategy for host nations to attract FDI in their countries.

However, once MNEs have been established, they usually offer training and extension services to their employees. This is essential as it improves the skills and knowledge of the local population. As Borensztein and Gregorio (1997) asserted, there are individuals who use the skills, knowledge, and experience that they have acquired from MNEs to start up their own enterprises.

However, just like in the case of technology, the education gap between MNEs and the host nation should be minimal to ensure the spillover process is effective and successful in the short run and in the long run. To achieve this, it is advised that the host nation should educate its people to meet the skills and requirements that might arise as a result of setting up MNEs.

FDI and Competition

Through FDI, MNEs exert a lot of pressure on the host nations markets. Competition always exerts pressure on the firms that are currently operating in a given market. Therefore, the entrance of MNEs in a given industry will greatly enhance the level of competition the respective industry. However, it has always been stated that due to the influence that they have, MNEs outcompete domestic firms.

This eventually leads to their exit of domestic firms from the market (OECD, 2002). However, recent results from empirical studies that have been conducted by several scholars reveal that increased competition has positive impacts on the economy of host nations since it increases the level of productivity, reduces the selling price, and supports the equitable distribution of resources within the industry.

All these factors play a critical role in establishing a stable and sustainable economy in the short run and in the long run. Therefore, host nations need to come up with policies that will increase the ease at which MNEs can enter into their markets.

Conclusion

In the modern economy, FDIs play a critical role in the development and growth the global economy. However, developing nations have not fully benefited from the presence of FDIs within their economies. Therefore, with proper policies in place, FDIs will play a critical role in enhancing trade in developing nations at national and international levels, improve their level of technology, enhance their human capital, and increase the level of competition.

As a result, their production levels will be increased and firms will operate in an effective and efficient manner hence supporting economic growth and development through maximization of profits, improved balance of payments, stability of domestic industries as well as MNEs and an increased support from the local community. This will ensure the sustainability of the host nations economy in the short run and in the long run.

References

Borensztein, E and Gregorio, J 1997, How does foreign direct investment affect economic growth. Web.

Easterly, W 2003, How much do distortions affect growth, Journal of Monetary Economics, vol. 32 no. 1, pp. 187212.

Graham, E 1991, Foreign direct investment in the United States, Institute for International Economics, Washington DC.

OECD 2002, Foreign direct investment for development: Maximizing benefits, minimizing costs. Web.

Tulug, O 2004, What drives foreign direct investment into emerging markets, Emerging Markets Finance and Trade, vol. 40 no. 4, pp. 101-114.

Cultural Characteristics

Canada is a multicultural and bilingual society. Over the last three decades, there has been incredible transformation in the Canadian social way of living. These changes were brought by the baby boom generation. This generation was born between the period of 1946 and 1962. This generation is described by their unique pragmatic values, desire for empowerment, egalitarianism and hedonism.

They also supported and embraced their ethnic diversity. An investigation carried out in 2002 by CRIC showed that 59% support to the multiculturalism policy. Today, Canadians, reject all views that would suggest multiculturalism as a source of conflict, create ethnicity or cause inequitable sharing of government funding. Instead, they embraced the spirit that multicuralism policy has promoted greater national unity (Dasko, 2003).

Survey conducted by CRIC (2002) shows that multiculturalism cause brings cohesion and greater understanding with 73% believing that multiculturalism indeed brings about equality. Canada is also a bilingual country with English and French speaking Canadians. Surveys conducted showed that Canadians view bilingualism and multiculturalism as important aspects for their unique identity (Dasko, 2003).

People can learn and understand about Canadian cultures through movies, radio programs and the published literature from books, magazines and news papers. The federal government protects the countrys cultural resources to preserve the unique culture. This is done through protection of the National library and the conservation of the countrys heritage such as the museums, national treasures and archives (CLA, 2004).

Political Stability of Canada

Since 2006, the CPC party has been the ruling party. It has been having a minority government until the recent May elections that gave the Conservatives the first majority government. Political analysts argue that Canada has entered a period of relative political stability. The Prime minister has set priorities to improve the economic growth and shrink the budget deficit.

The new political landscape has been brought around by the Conservatives. This is evidenced by the pushing of the proposed budget through quickly and by ending labor disputes prevalent at the Canadian Post. The budget proposed by the Conservatives projects on cutting costs to balance its books by 2014-2015 (Reuters, 2011).

However, the parliamentary budget independent officer termed the proposed budget as being too optimistic compared to the high government operating expenses. The major policy questions to be raised by the Conservative governance include those of ending Canadian Wheat Boards marketing monopoly.

Others include how the Conservative governance will push major policy changes, how the democrats play their role as the official governing party and other political shifts that will be made to broaden the center movement to defend the Conservatives government (Reuters, 2011).

Market Stability

The global economic trends have laid down significant forces that are shaping the Canadian economy. The country has increased terms of trade (the prices of goods sold internationally compared to those being imported).

The increases in income have led to high market and economic stability. More funds have been invested into the manufacturing and other industries through advancing their machinery and equipment (Jenkins, 2008).

Other evidence of Canadian market stability is the weakening of the U.S. economy. This made the Canadian dollar to trade at a higher value than U.S. dollar. Canada has strong domestic demands. The current CPI inflation in Canada is 1.8 per capita with 1.5 percent core inflation. Canada has stayed on top of the global economy forces.

Canada has corrected the global economies challenges shifting the countrys economic risks to the down ward side. The outcome has caused reduction of policy rates by 50 basis points. Therefore, there is need to broaden the flexibility and adaptability through formulation of policies that would help the economy to absorb economic shocks (Jenkins, 2008).

Canada citizens are highly educated. It is the governments efforts to prepare the citizens with economic knowledge. They do so through certain initiatives such as establishing policies that ensure all information are accessible. Government must function as the model user and provider of economic nature (CLA, 2004).

Basic Economic Data and Economic Stability

Canadas economic stability is said to be stronger than that of the United State. However, it remains to be acutely vulnerable to political and economic commotion. The banking interest rate is low. There are claims that central bank will keep it that low to handle the economic situation in Canada.

Finance minister and the bank officials have raised concerns about the high bank loans debt levels of Canadian that could result to economic constrains when the rates eventually increases. The major key challenges to watch for are how the government handles the US export recovery, the strategies and approaches to be made in order to maintain high value of Canadian Dollar (Reuters, 2011).

Although the recent elections had little effects on the Canadian economy, Chilean Central bank investigation indicates that elections interfere with the scope of policy making. This further impedes long-term planning.

This is evidenced by the fact that several important bills on the parliamentary order paper are lost during the federal elections. The impact may not be felt directly, but there is slow down of operations in the legislature and financial sector that do interfere with the projects, programmes and other sectors that need governments attention or financial support (Reuters, 2011).

The minor problems that would cause political economic instability include the money spent during campaigns. As Atkins argued, Canada campaigns involve vote buying with empty promises; such challenges are said to affect the economy.

He cited the theory of business cycle ideas that incumbent governments will do things like ramp up spending during election (Reuters, 2011, p. 1). The costs incurred are cut after spending. This produces the boom and bust pattern (Reuters, 2011).

Canada has been listed among the ten largest subscribers and funders of the World Bank. Canada has 2.85 percent shares of the International Bank for Reconstruction and Development (IBRD) and voting share of 2.78. Her contribution to IDA (a sector of the World Bank dedicated to help the worlds poorest countries) sector has a 3.75 per cent donor share.

Description of Key Institutions, Political and Economic Systems

Governing system in Canada is that of constitutional Monarchy and federal system of parliament. This system was influenced by British parliament. It consists of 10 Provinces and three territories. The head of state happens to be the Queen of Canada. The monarchy appoints the royal representatives known as the Governor General.

The prime ministers advice is required during the exercise. It has been politically stable for a long period. The prime minister holds all the executive powers. He/she is the head of the government and the Cabinet. Governors and the prime minister appoint the cabinet members to lead the various ministries and agencies (Marleau & Camille, 2000).

There are approximately about thirty cabinet members. The monarchy, senate and House of Commons share the legislative power. Selection of members of senate is done by governor general in consultation with the Prime minister. The selection is given in such away that it gives equal regional representation to all thirteen territories.

House of Commons members are elected through a popular vote for duration of five years. By 2008 democracy index, economist ranked Canada 11^th position out of a hundred and sixty seven countries in the world.

Canada constitution is the supreme law of the land. All matters concerning immigration, maritime law are preceded over by the federal court of appeals and federal court trial division. The highest court is the Supreme Court of Canada that handles criminal and civil like cases (Marleau & Camille, 2000).

Canada is a democratic state with several active parties. The dominant political parties are Conservative Party of Canada (CPC), the Liberal Party of Canada, the New Democratic Party and the Bloc Quebecois (Reuters, 2011).

Summary of Major Current Issue Faced by the Country

The major issues facing the Canadian economy are the slowdown of the US economy, the global trade imbalances and the high competition from the emerging countries. The slow down of the U.S. economy has affected sectors such as the housing sector and credit markets.

The current large account imbalance has brought about great challenges to the Canadian economy. U.S. has been running a huge deficit for long while the Middle East countries like Asia have been running account surpluses. Two major approaches towards these imbalances have been suggested.

Those with large surplus should rely more on domestic demand while those with deficit accounts are encouraged to increase their savings rate (Jenkins, 2008).

Other challenges to the Canadian economy are in the integration of China and India in the global market. This has brought about high competition, making the two countries being perceived as threats especially by the countries that produce similar goods and services.

The major concern by the Canadians is the economy; this is in terms of unemployment. Other persistent issues are those concerning crime and environment. These are the common challenges worldwide (Jenkins, 2008).

Crime rate is not as high as in some countries. The people affected by the crimes vary with younger people getting more affected than the older people. Buckner explains that people from certain localities are more likely to face crime and violence.

Such localities include those of Columbia and Ontario. More so, women are more likely to face violence than men. Some of the possible solutions raised include those of changes in justice system, gun control laws and the return of capital punishment (Buckner, n.d.).

Canada is facing serious environmental issues including acid rain which is being attributed to the high industrialization. Serious soil erosion from the praire wheat is causing logging and pollution. This has threatened wild life and lifestyles of many people.

However, the problem seems get reduced with the increased efforts by the government to create awareness. In 2000, the government passed enviromemntal act that emphasized on sustainable development. Key challenges in the tourism industry are understanding tourists expectations, developing of aboriginal tourism and the efforts to adopt sustainable tourism and improvements of the infrastructure (Haggett, 2008).

According to labor organizations, health systems in Canada face some challenges. These includes increase in health expenditure, poor quality care, under qualified management, over staffing, monopolies and excessively high prices that are as a result of poor competition in the market, others include excessive bureaucracy and expensive administrative costs (Haggett, 2008).

References

Buckner, T. (n.d.). Canadians perception of Problems and violent crime. Articles by Taylor Buckner. Web.

CLA. (2004). Canadian library association political action task force: critical issues facing the government of Canada. Canadian Library Association. Web.

Dasko, D. (2003). Public attitudes towards multiculturalism and bilingualism in Canada: Canadian and French perspective on diversity. New York, NY: Cengage Learning.

Haggett, P. (2008). Encyclopedia of world geography. Ontario, Canada: Marshall Cavendish.

Jenkins, P. (2008). Trends and challenges in the global economy and what they mean for Canada and Ontario. Bank for International Settlement. Web.

Marleau, R & Camille, A. (2000). House of Commons procedure and practice Mont petit. Parliament of Canada. Web.

Reuters. (2011). Fact box- key political risks to watch in Canada. Reuters Articles. Web.

Background

Kenya is a developing country whose economy is mainly market based meaning that it is influenced by the activities in the world market (Background note, 2012). This is mainly due to the fact that the economy is driven by imports and exports. The economy thus depends on how good or bad the market prices are. Given that the country imports more than it exports, fluctuations in the world market prices may have a devastating impact on the economy. Kenya is also considered the Eastern and Central Africas financial, communication and transport hub. Countries such as Uganda, Rwanda, Burundi and Southern Sudan highly depend on Kenya for their economy to thrive while Kenya in return gains some revenue from these countries.

Kenya has been recording positive economic growth in the recent years. For example in 2010, the country had a gross domestic product of five percent. This was attributed to several factors including increase and improvement in tourism, telecommunications, transport, construction and a rise in agricultural production (Background note, 2012). During this period, Kenya received many English speakers who came to work in Kenya hence boosting the countrys hospitality industry. This also resulted into a great increase in employment in Kenya. Kenya has also recorded a general increase in computer literacy among the youth and this has led to an improvement in information and communications technology hence improved economy.

To ensure that the country attracts more investment, the government has put in place strategies to make the country investment conducive for both local and foreign investors, mainly from the United States and the Middle East. As compared to most East African countries, for example Tanzania and Uganda, Kenya has better infrastructure, ranking second after South Africa.

As we have seen, growth in Kenyas economy is beneficial to the countrys citizens as it leads to increased employment rates hence better living standards. Kenyas economic growth has also been beneficial to the neighboring countries and as well as the world market through imports and exports as well as investment. But Kenyas economic growth has not been without challenges.

Historic challenges for the economic growth in Kenya

After independence, the country focused on agricultural development (Adam, Collier and Ndungu, 2011). However, the main challenge with developing the agricultural sector was the overdependence on rain-fed agriculture. This has remained a challenge for Kenya even after almost 50 years of independence. The country has constantly experienced frequent droughts and reduced rainfalls which has greatly reduced agricultural production and hence slowed down economic growth rate of the country. Kenya depends on agriculture both for domestic consumption and exports. Reduced agricultural production has not only seen Kenya experience food shortages, but also reduced exports.

Another challenge for Kenya and most developing countries has been fluctuations in oil prices. The decline in Kenyas economic performance between 1974 and 1990 is attributed to a rise in fuel prices, which in turn led to increase in prices for other goods and services (Kenya-Economy, 2012). This had a negative influence on the countrys economic growth. The has also been foreign exchange controls, government interference in the private sector and lack of export incentives, which have all made the countrys domestic investment environment less attractive. Most foreign investors withdrew from the country while potential investors got discouraged leading to a slow growth.

The country experienced the worst economic performance in the early 1990s. The gross domestic product declined to below 4% while inflation rates rose to 100% as the government budget deficit increased to 10% (The Federal Research Division, 2007). All these factors negatively affected the countrys economic growth.

The government was seen to be mismanaging its resources and not doing anything to improve its economy. Therefore, the donors suspended their aid to Kenya until such a time when its economy would be seen to be doing better. The government, therefore, had to put in place some incentives to control this, which included seeking assistance from the World Bank, eliminating price controls and import licensing that had been previously introduced, and privatization of many government companies (Adam, Collier and Ndungu, 2011). The government also reduced the number of civil servants as part of the structural adjustment program, but this had a negative impact on the citizens lives especially those who lost their jobs.

The gross domestic product, however, picked up as from 1994, but stagnated again in 1997 due to poor weather conditions that affected many economic sectors including agricultural and the tourism (The Federal Research Division, 2007). The situation was further complicated by the general elections in the same year.

The government also failed to meet some requirements set by IMF on government reforms and this has led to the recent suspending of any loan to the country for three years (Kenya- Economy, 2012). Just like IMF, the World Bank has also placed on hold 90 million dollars the country had borrowed for infrastructural improvement.

The economy is and has been dependant on rain-fed agriculture and tourism that is usually greatly affected by cycle booms. Few agricultural products are produced in the country and are highly vulnerable to world fluctuation of prices. The population growth has outstrips economic growth and the country has not been able to recover from this.

Corruption in the country since independence has led to reduced economic growth since this factor scares away investors. There is also the HIV/AIDS pandemic that has been on the rise since the 1980s. This has reduced man power over the years and hence slowed down the economic growth of the country (The Federal Research Division, 2007).

Opinions about how this challenge may change in the future based on the past events

In my opinion, this challenge will change positively in the future. This is due to the following reasons. First, the country highly depends on agriculture as the main economic activity. Since the rains have proven to be very unreliable, the country has put in place irrigation schemes and green houses, which have led to an increase in agricultural production and hence will lead to an improved economy in the future. Second, the country also depends highly on tourism, which has proven not to be unreliable due to fluctuation booms. The government will thus use this knowledge to put in place other sources of revenue to substitute for tourism like improved information and communications technology.

Third, the 1997 general elections saw the country economic growth reduce because there were reduced economic activities. This was a lesson for the government to keep politics out of the countrys economy in future. Fourth, the government failed to put in place government reforms as stated by IMF in 1997. Hence IMF and the World Bank suspended their help. This contributed negatively to the countrys economy and the government now knows better. Therefore, the government will not play around with potential aides in the future. Last, but not least, the HIV/AIDS epidemic has been taken care of. The patients are adequately supplied with ARVs, which help them to be more productive in the countrys economy. There is also an initiative to replace manpower with machines so that a reduction in man power will not affect the countrys economic growth.

References

Adam, C., Collier, P. & Ndungu, N. (2011). Kenya: policies for prosperity. Oxford: Oxford University Press.

Background note: Kenya (2012). U.S. Department of State. Web.

Federal Research Division (2007). Country profile: Kenya. New York: Library of Congress-Federal Research Division.

Kenya- Economy (2012). Encyclopedia of the Nations. Web.

Introduction

The impression created whenever one talk about Vietnam is normally a negative one. It rings the bell of a series of political instabilities that had plagued the country for a long period. These instabilities have had substantial negative effects on the economic performance of Vietnam. It will be recognized that in the 1990s the country mostly depended on foreign aid from the international community. However, that gloomy trend is reversed and this has seen several positive changes realized in the country.

For instance in 1993, 58% of the population in Vietnam lived below the poverty line as internationally set (Karnow 12). However, by 2009, the figure had substantially reduced to 28%. The per capita income in Vietnam rose from as low as $225 in 1994 to a massive $1000 in 2010 (Mcmahon 130).This raises the question as to what factors could have enabled Vietnam to gradually shift from poverty to better times.

Data Collected

When Vietnam was given the green light to join the World Trade Organization, many people felt that it was indeed a good start to economic development in the country. The people of Vietnam had humble hopes that their country could now manage to move away from the rank of the poorest countries in the world by 2010, a position it had perpetually stayed in the past. Today, life in Vietnam is very reminiscent of any other developing country in the world. Though much of the population still lives in the rural areas, rural-urban migration is beginning to be seen in the country.

Vietnam has managed to achieve economic success courtesy of the renovation processes that were initiated in 1986. The country has managed to maintain an economic growth rate of over 7% in much of the last two decades. This faster growth is demonstrated in the economic developments that have been seen throughout the country. As a result, the country has managed to gain from its integration to the world. Much of these are realized because of the policy reforms that have characterized Vietnam in the last few years.

The economic reforms that were adopted in the late 10990s totally changed the manner in which economic activities were conducted in the country. Trade liberalization was advocated and this assisted in opening the doors of Vietnam to the whole world. The people could now benefit greatly from the flood of goods that came in through their shores. The competition posed by foreign trade enabled many industries in Vietnam to strengthen up in the face of globalization and other changes that were evidenced in the world.

Even though no political reforms have been instituted in the last few years, governance has relatively been good. This has been a great boost to the country as economic activities continue to blossom. In 2006, the government of Vietnam unveiled a development blueprint that was meant to make the country gain middle-income status by the year 2010. This paper, Socio-Economic Development Plan (SEDP), was anchored on four pillars that were meant to provide the ground upon which the economy would develop. Te first pillar included measures intended to accelerate the economic growth of the country.

Considering the turbulent times that have governed the history of Vietnam, the second pillar was fostered on improving governance in the country. The third pillar was formulated with a view to strengthen the social sector in the country and make every citizen feel part of the country. This was a good objective since it has been proven that countries only become successful if the citizen feel included in the transformation of their country. The fourth pillar on the other hand was initiated in light of the fact that the country is richly endowed with natural resources. It was proposed that protecting these resources be made a national priority to enable the country and its posterity benefit from them.

Analysis

There has indeed been a positive trend in achieving the objectives that were laid down in the various economic reforms instituted. Infant mortality in under five year olds was over 58 deaths per 1000 births in 1990 and this figure has been reduced by close to half at 25 deaths per 1000 births in 2010. On the other hand, maternal mortality rate was 120 deaths per 1000 births in 1990. In the year 2000, improvements in the health sector and other policy reforms across the country, reduced the figure to 60 deaths per 1000 births. The education sector in the country has not been left behind in the face of these improvements.

In 1990, the national enrollment rate in primary schools was 90%. Recognizing that the progress of the country heavily depended on the quality of its human resource, the government launched massive educational reforms that made huge numbers of children get an education. As a result, the national enrolment rate in primary schools by 2010 was 99% (Tucker 89). Food security in the country has also been improved. For instance in 1992, 25% of households in Vietnam could not manage 2100 calories per person per day. The figure has since reduced to less than 4%.

All prospects indicate that all the goals as outlined in the Millennium Development Goals MDGs will be achieved in the near future. This is as a result or the good economic trend that is realized in the performance of the economy. The opportunity to join the WTO made many people to invest in Vietnam. The relatively peaceful environment that characterized the country unlike many of its neighbors bolstered foreign direct investment in Vietnam. The influx of foreign capital into the country has had substantial gains to the people. Employment opportunities have continued to grow and this has really improved the economic performance of the country. A comparison with other Asian countries will prove the fact that Vietnam has greatly managed to spread its development tentacles at a faster rate.

One of the most important and interesting issues about economic development in Vietnam is the fact the government has been at the forefront in supporting policies that foster growth while at the same time allowing room to enable the private sector to flourish (Swash 37). Such a move is very critical given that the government can strategically know which areas to lay much stress on to achieve progress. All these improvements have been reflected in the manner in which the GDP of Vietnam has continued to maintain a steady growth rate. Currently the real GDP growth rate stands at 6.8%, which is a slight drop from an earlier figure of 8% in 2008 (Drury 25).

Challenges

In the face of all the progress and developments that have been seen in Vietnam, it has not been a smooth sail all along. The country is still ravaged by myriad problems that should be addressed by the government. HIV & AIDS continues to be a major challenge. Income disparities are also beginning to be felt as a challenge to eradicating poverty in the country. Increased rural-urban migration has also brought with it the negativities associated with over population in the towns. The government should therefore focus its energies in finding solutions to this growing wave of problems.

Works Cited

Drury, Peter. Socio-economic developments in Vietnam. A Global agenda 2.3 (2011): 23-6.

Karnow, Stansey. A History of Vietnam. New York: Penguin, 2010.

Mcmahon, Robert. Problems in the History of Vietnam. Toronto : Prentice Hall, 2011.

Swash, Rachel. Vietnam War and the Aftermath: The highs and lows. New York: John Wiley & Sons, 2010.

Tucker, Spencer. Vietnam: An Economic Perpective. Cambridge: Cambridge University Press, 2011.

Introduction

China is bordered by i4 countries among them include; Mongolia, North Korea, Vietnam and India. The country has a prosperous economy, and that has been diversity in the economy of the country. The research assignment below provides a one-week micro-economic analysis of China. The report focuses on the most important goods and services produced in China, GDP per capita, population size, and the type of government applied in China.

Most important goods and services produced in China

Based on one-week research, I found that, China produces almost everything one can think. More importantly, China is one of the top largest producers of tea in the world. Both white and green tee is produced in large amount, while black tea is produced in small amount. Other goods and services that are exported by China include: Wheat, rice, silk, salt, and Agricultural Apparel Automobiles among others.

China is also among the worlds largest producers of natural resources such as hydro power, coal, iron, petroleum, natural gas, aluminium, zinc, vanadium and other rare earth elements (Holober, pp.66-69). The country provides services on motorcycle business services, software, construction, chemical computer hardware services, real estate services, consumer electronic, and electrical equipment services among other many services.

The GDP per capita in china

The GDP per capital in China has been increasing over the recent times. This has been attributed to the restructuring of its economy, which has involved gradual liberalisation of commodity prices, rapid growth of the banking sector, and creation of independence for state owned enterprises.

The GDP in 2011 slowed down, to almost 9% from 10.5% in 2010 while in 2009, China registered a GDP of 9.2% as compared to the world statistic (Hobler, p. 35). These statistics indicate that, the country had been experiencing fluctuations in GDP because there are major reforms that have been taking place in the Chinese economy.

Population of China

The population of China has been increasing since the Second World War. The persistent increase in population can be attributed to the cultural believe that, people should have children to replace the soldiers lost in the war (Holober, p. 59).

This belief has made China to be among the world most populated countries in the world. The Chinese government encourages its people to adopt family planning techniques so as to manage the population increase. China Labour force stand at 706 million people, almost twice that of Europe (Hobler, p. 58).

China Government

China is a communist state with several administrative divisions within the government. The divisions of administration include the provinces, municipalities and autonomous regions, such as Inner Mongoria and Tibet among others. On 1st October 1949, Peoples Republic of China was established following an earlier replacement of Qing Dynasty on 1st January 1912. In China, for a political candidate to be elected, one must be a member of a political party, called Chinese Communist Party (CCP).

The CCP contains other eight small parties that it controls. The government has a constitution that was promulgated on 4th December 1982. In addition, the government has the arms of government which are: Legislature, executive and Judiciary. The country has a red flag with a large yellow five pointed star. The red colour represents revolution and the stars represent four social classes; the Working class, Peasantry, the urban Petty bourgeoisie, and the National bourgeoisie (Holober, p2).

Conclusion

The research has critically discussed the macro-economics setting of China. It is evident that China is rich in natural resources. In addition, the country has developed effective government structures to facilitate the production process. However, the population of the country has been growing at an alarming rate. Therefore, there is need for the government to reduce the rate of birth rate.

Work Cited

Holober, Frank. Raiders of China coast: Cia Cover Operation during the Korean war.Annapolis.Naval institute Press.1999.Print.

According to Contreras (n.d.), there are four major theories of economic development (1). They include:

1. Structuralism
2. Linear-stages-growth model
3. Neo-Marxist dependency model
4. Neoclassical revival model.

According to the structuralism school of thought, economic development can be achieved by expanding the internal economy of a give nation (Contreras 16).

To achieve this goal, it is essential for the state to transform its economy from relying on a traditional based economy that relies heavily on agriculture to a modern economy that is industrialized and comprises of a high urban population. Application of modern technology is one of the main conditions that has to be met.

This school of thought views modern technology as a tool that can be used to increase the production of a given nation, especially in the industrial sectors that might be using outdated technologies of means of production. Consequently, for economic development to be achieved, the concept of dualism has to be eliminated in developing nations.

This will ensure that these nations do not act as a source of cheap raw materials and market for finished products from developed nations. Therefore, it is essential for the government of developing nations to impose strategies such as the import-substitution policies that impose tariffs on imports to protect local industries and encourage the government to invest on local enterprises.

The Linear Stage-Growth model was applied in Western Europe as a means of reviving the economy of this region that had collapsed after the Second World War. According to the Marshall plan, economic development in this region could only be achieved through intense industrialization activities (Contreras 31).

However, unlike the structuralism model that viewed the internal environment as the key for economic growth, this model viewed the internal environment as an inhibitor of economic growth as a result of the pressure that would arise from a local institution and social ignorance.

Rostow Stages-of-Growth model was an influential tool in transforming the economy of Western Europe. According to Rostow, developed nations enjoyed high rates of economic growth due to the fact that they had passed through a series of stages to reach the take-off stage that is characterized by a self-sustaining growth. These stages include:

1. The traditional society
2. Preconditions of take-off
3. Take-off
4. Drive to maturity
5. The age of high-mass production (36)

On the other hand, developing nations have not yet passed through all these stages. Therefore, they cannot sustain their won economies and had low levels of investments and savings unlike developed nations that concentrated highly on investments and savings hence supporting economic growth and development.

This assumption led to the failure of its application in developing countries where the governments encouraged foreign direct investments as a source of savings and investments. However, these nations failed to prosper as compared to developing nations since they lacked a human capital that was skilled and experienced.

The Neo-Marxist approach was a modification of Karl Marx surplus doctrine applied on a global scale. This approach viewed developed nations as the capitalists who were extracting excessive value from developing nations.

According to the scholars who believe in this theory, developed nations buy raw materials from developing nations at a low price. However, the finished products from these raw materials are sold to developing nations at high prices hence bringing about debt and poverty as a result of the negative effect on the balance of payments.

Consequently, developed nations are reluctant to support industrialization activities in developing nations since this move would reduce the surplus they are gaining. However, this theory has been criticized since it stated that developed nations solely depend on developing nations to propose. Consequently, it states that achieving capitalization and industrialization in developing nations is impossible.

The neoclassical revival model dismissed the claims of the structuralism and Neo-Marxist models. Instead, it states that developmental challenges that are experienced in developing nations are due to poor policies and government intervention.

To averse this situation therefore, the government of developing nations should develop policies that encourage free trade, an efficient market, privatization of state owned enterprises. Most importantly, this model recommended that government intervention in trade and investments should be limited.

Millennial Development Goals

Millennial Development Goals (MDGs) are eight different goals that were set at the Millennial Summit that was attended by United Nations (UN) member states in the year 2000. The aim of these goals is to improve the overall well-being of individuals all across the world.

To achieve this vision, these goals focused on the social and economic factors that affect an individual and the overall global economy. Poverty eradication is one of the main goals that have to be achieved for this vision to be realized. In developing nations, poverty is a predicament that prevents economic growth and development. The inhabitants of these nations usually live under $1 per day.

However, poverty not only concerns itself with the income an individual earns but also the opportunities that he/she faces given the social and economic conditions of a given state. In most developing nations, the level of poverty has been enhanced as a result of social constraints that deprives individual the access of basic amenities such as shelter, education, and healthcare. Therefore, poverty can be regarded as a state of capability deprivation that hinders individuals from realizing their full potential.

Education is an essential component in achieving economic growth and development. It is essential for a nation to have a human workforce that has the skills and expertise to handle various economic, social, and political requirements. Education thus supports the realization of this requirement. Thus, it is the priority of every government in the world to provide primary education to its citizen.

It has always been stated that a nation is as healthy as its citizens. Thus, to achieve the MDGs, it is essential for governments especially in developing nations to ensure that its subjects have access to high quality medical services. The life expectancy of individuals in developing nations is slightly lower as compared to developed nations.

Consequently, the rate of maternal deaths and infant mortality are higher in developing nations as compared to developed states. Therefore, it is the duty of developing nations to come up with measures and policies that would ensure that its subjects have access to healthcare. In Cuban government for instance has set up universal entitlements to support education and healthcare.

Developed nations in Germany and North America on the other hand spend massively to support their education, healthcare programs, and social security. The USA for instance spends approximately 35-45% of its GDP to support these activities (Dreze and Sen 43). Therefore, developing nations need to increase their public expenditure to support education, healthcare, and social security programs.

Finally, MDGs aim at sustaining the global economy. To achieve this goal, the governments of member states have to ensure that their nations exhibit positive economic development and growth. To achieve this goal, it is essential for these nations to ensure that there is equitable distribution of resources within the economy.

Consequently, it is essential for member states to have positive diplomatic relations that would encourage trade and foreign investments. This will ultimately increase the level of savings and investments among member states hence supporting economic growth.

Works Cited

Contreras, Ricardo. Competing Theories of Economic Development. n.d. Web.

Dreze, Jean and A. Sen. India: Development Participation. Oxford: Oxford University Press, 2002. Print.

Introduction

According to the Bureau of Economic Analysis (BEA), the United States is one of the largest economies in the globe (An Update to the Budget and Economic Outlook, 2015). However, statistics from BEA indicate that the countrys economic growth rate has been dropping within the last six decades (An Update to the Budget and Economic Outlook, 2015). Throughout the 1970s and 1980s, the country economic growth rate stood at two percent.

This rate has reduced to 2 percent within the past one decade. The nation gross domestic product (GDP) stood at over 17400 billion dollars in the year 2014 (An Update to the Budget and Economic Outlook, 2015, para. 3). Economists and analysts have argued that various changes will be observed in the coming years. This discussion gives a detailed analysis of the projected trends in the next 1-3 years. The analysis will focus on the countrys GPD, unemployment rate, budget, foreign trade and investment, interest rate, and inflation.

Projected Trends in the Next 1-3 Years

Gross Domestic Product

The term gross domestic product (GDP) refers to the total monetary value of all the services and goods produced by a nation within a specific period (Schmidt, Shelley, & Bardes, 2015, p. 12). According to the World Bank, the countrys GDP is equal to around 28 percent of the global economy. This fact explains why the country is the largest economy in the world today. Economic analysts believe strongly that the countrys economy will remain unchanged in the next few years. This is the case because the economy has been growing steadily at a flat rate of 2 percent within the past ten years. However, some fluctuations might occur thus increasing the countrys GDP growth by 0.2 percent (Schmidt et al., 2015, p. 28).

According to the Conference Board, the country real GDP growth for 2016 might be 2.4 percent (An Update to the Budget and Economic Outlook, 2015). This means that the GDP will have remained more or less the same. This data was predicted in accordance with the current labor markets, productivity, and innovative practices in the country (Schmidt et al., 2015). The political climate expected next year can also have numerous impacts on the countrys economy. This situation explains why many experts believe that the GPD growth rate might decrease slightly in 2017 (An Update to the Budget and Economic Outlook, 2015). However, similar shifts explain why the level of fluctuation will not be high in 2018.

Unemployment

The United States unemployment rate has averaged 5.8 percent for the last six decades (An Update to the Budget and Economic Outlook, 2015, para. 5). The unemployment rate in October 2015 stood at 5.0 percent. This was the lowest unemployment rate level ever recorded since April 2008 (An Update to the Budget and Economic Outlook, 2015, para. 6). The unemployment rate has remained constant between 5.0 and 5.8 percent for the last few years. That being the case, experts believe strongly that the countrys level of unemployment will remain constant. More people have been quitting their jobs with others finding new employment opportunities (An Update to the Budget and Economic Outlook, 2015).

New jobs are also expected to emerge in various fields such as retail trade, food industry, construction sector, and healthcare. The economic policies embraced in the country are making it possible for more people to acquire new jobs. However, this move might not play a significant role towards reducing the unemployment rate in the nation (An Update to the Budget and Economic Outlook, 2015). This is the case because more people are in need of new job opportunities. The government has also not been using powerful measures to tackle the issue of unemployment.

The number of individuals without jobs is projected to remain the same in 2016. However, some skeptics have argued that the unemployment rate might increase in the first two quarters of 2016. This is the case because past researches have presented similar trends. The other important observation is that varied unemployment rates will be recorded for different racial communities (Schmidt et al., 2015). Experts and economic analysts encourage politicians and policymakers to identify new policies and strategies that can reduce the current level of unemployment in the country.

Budget

The American budget has been increasing steadily within the past few decades. The American treasury offers three groups of federal spending (Janda, Berry, Goldman, & Schildkrau, 2014, p. 16). These groups include mandatory spending, interest on debts, and discretionary spending (Janda et al., 2014, p. 16). Discretionary and mandatory spending expenses focus on different government programs. This fact explains why the two groups account for over 90 percent of the countrys budget. The third group focuses on the governments interests on every accumulated debt (Janda et al., 2014, p. 21). The budget for 2015 was 3.8 trillion US dollars (Janda et al., 2014). This amount represents around 21 percent of the nations GDP.

Statistics presented by CBO show that the budget deficit might reduce by 2 percent of the GDP in 2016 (Janda et al., 2014, p. 18). The same trend is expected within the next three years. Chances are very high that the governments budget will increase steadily within the next three years. This will be the case if the existing policies and laws do not change. This means that the budget might increase in accordance with the countrys GDP growth rate. Experts have also argued that the government might have to incur more expenses in order to support various healthcare programs (Janda et al., 2014, p. 20). Population growth and demographic changes will also influence the countrys federal budget for the next few years.

Foreign Trade and Investment

The US economy encourages more people to spend their earnings. The countrys labor force and innovative technology has been playing a significant role towards supporting its foreign trade operations. This fact explains why the nation will record a continued growth in foreign trade in the next three years (HSBC Global Connections, 2015). The country is properly positioned to support the trade needs of every advanced and emerging economy. Future projections also explain how the country will benefit significantly from emerging countries such as Brazil and China (Janda et al., 2014, p. 42). It is notable that trade has always represented a small percentage of the United States economy. However, modern changes and trade liberalizations will make it easier for the nation to achieve its goals.

Many US exporters are expected to do business with different business partners across the world. The country is also expected to embrace the power of research and development (R&D) in the next two years. This move will ensure the nation produces superior products and services that can support the needs of many consumers in different countries (HSBC Global Connections, 2015). As well, the desire for various raw materials is expected to rise in the next five years. These projected changes will definitely create more opportunities for the country. The nation will also increase its trade activities in different sectors such as information technology, banking, and international communication systems (HSBC Global Connections, 2015, para. 4).

Studies have also indicated that the country has been embracing new trade liberalizations. This has been achieved through the use of regional and bilateral trade agreements. The country has established new regional trade activities with different countries across the globe. Its bilateral trade operations with countries such as India and China will definitely support the countrys foreign trade. Bogusz (2013) believes that the nation will gain a lot from the projected trade activities (p. 76). Experts have encouraged different businesspeople to focus on various emerging markets. The approach will make it easier for the people to achieve their business objectives. The country will increase its investments in different foreign countries (HSBC Global Connections, 2015). The current trade agreements and stabilities experienced in different countries will increase the United States foreign investments.

Inflation

In 2015, the countrys inflation rate remained unchanged at 0 percent (FED Federal Funds Rate, 2015). However, the rate dropped significantly from the previous year. The rate of inflation was 0.8 percent in the year 2014. Statistics also indicate that the rate of inflation has decreased significantly within the past ten years. However, analysts believe that the current statistics will change within the next few years. This is the case because inflation cannot be constant (FED Federal Funds Rate, 2015). As well, inflation is known to have various benefits towards the continued growth and performance of an economy (Bogusz, 2013). Inflation rate changes also make it easier for economic analysts to make accurate decisions and strategies. The approach can make it easier for a country to achieve its economic goals.

Experts have estimated that the countrys inflation rate might increase slightly to 1.4 percent in 2016. This will be followed by another increase to 2.3 percent in the year 2017. The rate of inflation will have increased to 2.54 by October 2018 (Projected annual inflation rate in the United States from 2008 to 2020, 2015). The projected inflation rate will rise further from 2018 to 2020. These changes will be triggered by global changes and production costs (Bogusz, 2013). Prices will be expected to increase steadily in the coming three years due to the current changes in production, transportation, and business management (Projected annual inflation rate in the United States from 2008 to 2020, 2015, para. 4). Economists believe that such changes will be essential towards promoting the countrys economic growth. This is the case because Customer Price Index (CPI) changes from one period to another.

Interest Rate

The United States Federal Reserve monitors, dictates, and reports interest rates in the country (FED Federal Funds Rate, 2015). This fact explains why the term US interest rate refers to the Federal Funds Rate (FED Federal Funds Rate, 2015, para. 4). Within the past four decades, the country interest rates have averaged 5.93 percent (Bogusz, 2013). The lowest interest rate was recorded in 2008 and the highest in 1980. The important thing is to observe that the Federal Reserve System (FED) monitors the nature of the market in order to set the most appropriate interest rates. Sometimes the Federal Reserve might withdraw or add funds in order to get the most appropriate interest rate. Any change in the countrys monetary policy will definitely alter the Federal Funds Rate (Projected annual inflation rate in the United States from 2008 to 2020, 2015).

Projections indicate that the Federal Funds Rate in the United States might remain unchanged within the next 1-3 years. This is the case because FED has not embraced various strategies to monitor the interest rate. However, some experts believe strongly that the countrys economy is responding positively. For instance, domestic spending in the nation has been increasing steadily. As well, some of the economic threats affecting the country have reduced significantly within the last two years (FED Federal Funds Rate, 2015). The countrys inflation rate has also remained low for the past few years (FED Federal Funds Rate, 2015). That being the case, FED is reconsidering these developments in order to ensure the interest rate is raised to the targeted level. This discussion indicates that the inflation rate might increase steadily within the next three years. However, it is unclear whether the Federal Reserve will support these changes.

Conclusion

Schmidt et al. (2015) argues that the United States is one of the largest economies in the globe. The countrys GDP has been growing steadily at a rate of 2.0 percent. It is notable that the countrys budget will increase in the next three years. The US Federal Reserve will also monitor the nations inflation and interest rates in order to implement the best monetary policies in the future. The country is also expected to engage in different foreign trade activities. However, these projections might change depending on the political and economic forces that will affect the country within the next three years.

Reference List

An Update to the Budget and Economic Outlook: 2015 to 2025. (2015). Web.

Bogusz, C. (2013). The Budget and Economic Outlook: Fiscal Years 2013 to 2023. New York, NY: CBO.

.FED Federal Funds Rate: American central banks interest rate(2015). Web.

HSBC Global Connections: Helping businesses grow internationally. (2015). Web.

Janda, K., Berry, J., Goldman, J., & Schildkrau, D. (2014). The Challenge of Democracy: American Government in Global Politics. Stamford, CT: Cengage Learning.

Projected annual inflation rate in the United States from 2008 to 2020. (2015). Web.

Schmidt, S., Shelley, M., & Bardes, B. (2015). American Government and Politics Today. Stamford, CT: Cengage Learning.