Category: Economic

In the recent time, a significant number of research papers are focused on the investigation of the economic inequality on the global scale. According to the researchers, colonialism is a major explanation behind todays differences in income inequality across countries (Angeles 1155). The economic gaps between the developed and the developing parts of the world experience dramatic growth. The rise in awareness regarding these issues demonstrate that the causes provoking inequalities and the economic underdevelopment must be evaluated and recognized to elaborate the effective methods for the improvement of the current situation and provide the balanced distribution of wealth among nations.

According to Cypher and Dietz, colonialism may be defined as the plundering of resources of an economically and military weaker country by a stronger nation that may also result in a severe demographic crisis (78). According to the recent research findings, the economic inequality was significantly higher in those countries where the number of the European colonies was bigger (Angeles 1155). It is observed that the colonization of the countries by the Europeans may be considered as the factor that predetermined the patterns of the local social, political, and economic institution development. The participation of the European settlers in the development of these institutions played a significant role in the provocation of the economic weakness of the colonized countries (Acemoglu, Johnson and Robinson 1369).

According to Promes, colonialism is defined as the domination of one group of people over another; this was made manifest through a condition of monopoly in the exploitation of natural resources, labor, trade, and fiscal revenues by the dominant power (6). Colonialism is the phenomenon that takes place when the technically advanced and developed civilization comes into contact with the less developed civilization. In this way, the dominant nation obtains the monopoly over human, economic, and natural resources in the region, and takes control over the informational and cultural sources as well. In case the monopolistic pattern of behavior successfully continues, the domination of one culture over another becomes stronger and progressive. It is observed, that the progressive colonization is characterized by the discriminative and manipulative attitudes in educational, legal, cultural, linguistic, and administrative dimensions of the social structure. As a result, social class divisions and socio-economic inequality occur. According to Promes, these internal divisions and structures would then remain intact long after the colonies had achieved independence (7).

The excess exploitation of resources by the ruling political forces during the period of colonization results in the economic underdevelopment and the low growth rates in the post-colonization period. According to the researchers of the African colonial experience, the poor political and economic development in the region was caused by both direct and indirect modes of rule. Under indirect rule, exploitation activities by the colonial ruler create distrust between the indigenous privileged class and other people, harming postcolonial economic and political development in Africa (Mizuno and Okazawa 406). Through the historical analysis, it was established that the colonial rulers and the ruling indigenous groups may exploit the local natural and economic resources for their benefit and personal consumption. At the same time, the subordinate groups cannot be fully aware of the extent and quantity of the taken resources. As a result, the imbalance of wealth distribution takes place.

According to the further research findings of Mizuno and Okazawa, when the non-indigenous colonial rulers withdraw from the state, the privileged group takes control over the political power (406). Nevertheless, the ideologies and beliefs that were formed throughout the colonization period may significantly affect the policies and legal regulations designed and adopted by a new local government. The tyranny of the colonial ruler makes the ruled group suspicious of the ruling group and leads to inefficient activities of the ruled group, such as underinvestment and revolt (Mizuno and Okazawa 406).

As Angeles claims, the income inequality growth inevitably followed the increase in the number of the European settlers in the colonized regions (1159). It is explained by the fact that the Europeans were able to benefit from the work of the native population and extract a larger part of the countrys production (Angeles 1159). On the colonized territories, the distribution of wealth was usually balanced among the members of the European population. Therefore, when the Europeans became the dominant majority, the inequality reached the normal level. There are a few colonies that became populated by the European majority: Australia, the USA, Canada, and New Zealand. This type of colonies is known as New Europes (Angeles 1159).

According to Angeles, another type of colonization is the Settler colonies (1159). In the Settler colonies, the Europeans constituted the large minority of the overall population. The European minority groups became more skillful in the appropriation of the regional resources while the indigenous people usually had limited access to land and its resources. As a result, they were obligated to work for European settlers to survive. In this way, in this colonial type, the minority groups became a privileged group with an advantageous political and social status that was succeeded by the European settlers descendants. As a result, the wealth was disproportionally distributed throughout the period of colonization. The Settler colonies were the countries of the Latin America and Africa.

According to the researchers of the colonial relationship in the Latin America, the interrelations between the native Mexicans and the mixed dominant population groups are characterized by ethnic discrimination, political dependence, social inferiority, residential segregation, and juridical incapacity (Promes 8). It is mentioned that the social structure during the period of the Mexican regions colonization is characterized by the social class division that may be defined primarily in terms of ethnicity. As the process of globalization and development of capitalism started gathering pace, the changes in the local economic and social conditions emerged. The interrelation between the global and regional economic forces in the 19^th century Mexico, conspired to keep native communities marginal, inward-looking, and isolated from the outside world (Promes 9). The regulatory policies and political ideas used throughout the centuries of Mexican colonialism continued to be applied by the governmental authorities to keep the minor native groups economically and socially inferior. In this way, even when Mexico became an independent state the balance between the indigenous people and other national groups stayed as it was in times of the colonization by Spain.

According to Couze, nowadays, the global economic inequality may be considered the central politico-economic problem, affecting social cohesion and conflict (226). As it is possible to assume, the inequality is the consequent result of the defects in the political and regulatory mechanisms that induce the misdistribution of economic resources on both regional and global scales. Colonialism is the social structural phenomenon that also involves the political aspects. According to Gonzalez Casanova, the researcher in anthropology, who focused on the investigation of the issues of social and economic inequality in the Latin world, the responsibility for the resolving of the problem is on the national officials (33). The process of decolonization may proceed through the application of the various educational, economic, and political tools, programs, and policies.

According to the neoliberalisms perspective, individual as a living being is premised on the universalization of property and competition as founding principles of society (Couze 226). According to the given principles, a person is largely driven by the self-interest in his/her economic performance. The principles of economic competition and individualism create the commonly accepted values of the capitalist society. Along with the principle of the economic redistribution (taxes, debts, charity, etc.), these values are regarded as the intrinsic elements of the social cohesion.

The legacies and beliefs inherited by the indigenous people from the times of colonization do not simply vanish after the country attains independence. The beliefs play a significant role in the formation of peoples attitudes towards political and economic systems. And as it is demonstrated in the previous literature findings, the colonial social concepts can affect social interactions. The level of indigenous population trust or mistrust towards its rulers influences the political and economic development on the national scale.

The comprehension of the multiple aspects affecting the economic development and wealth distribution in the global society such as political power, social privileges, cultural values, etc. can help to elaborate the novel political instruments that would allow achievement of the redistributive justice through the development of new economic culture and fostering new social and ethical values of equality.

Works Cited

Acemoglu, Daron, Simon Johnson, and James Robinson. The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review 91 (2001): 13691401. Print.

Angeles, Luis. Income Inequality and Colonialism. European Economic Review 51.5 (2007): 1155-1176. Print.

Couze, Venn. Neoliberal Political Economy, Biopolitics and Colonialism A Transcolonial Genealogy of Inequality. Theory, Culture & Society 26.6 (2009): 206-233. Print.

Cypher, James, and James Dietz. The Process of Economic Development, New York: Taylor & Francis, 2008. Print.

Gonzalez Casanova, Pablo. Internal Colonialism and National Development. Studies in Comparative International Development 1.4 (1965): 27-37. Print.

Mizuno, Nobuhiro, and Ryosuke Okazawa. Colonial Experience and Postcolonial Underdevelopment in Africa. Public Choice 141.3-4 (2009): 405-419. Print.

Promes, Molly Ellen. Toward a New Theory of Structural Inequality: Internal Colonialism and the Case of Oakland, California. Order No. 1505104 University of Oregon, 2011. Ann Arbor: ProQuest. Web.

Introduction

Economics surrounds daily interactions that exist between scarce resources and unlimited wants. Everybody in an economic setup has limited resources that are needed to satisfy whatever he or she wants. As a result, they tend to achieve the unlimited wants using the available resources within their reach. The essay elaborates four key points namely market economy, regulations and laws on economy, economic decisions, and pricing of goods with respect to the market structure of the USA (Selwyn, 2014). These four key points are derived from the article Prediction: Economic Collapse, Civil Unrest in America by 2016 by Selwyn in 2014.The paper will also elaborate how current market systems have affected the USA economy.

Key points Relevant in Economic Newspaper

The first key point in economics is a market economy, a setup where people and private enterprises make decisions on matters concerning the production and utilization of products (Mitry, Smith, & Matula, 2014). Most enterprises under market economy reap high profits since they design unique production techniques, which are cheap and self-sustaining. For instance, the US can be categorized under market economy. A case is seen in the journal where banks escalate money prices that have led to inflation (Mitry et al., 2014; Selwyn, 2014).

A price level is the second point. It indicates how lowness or highness of the prices of commodities in the market within a given period. The price levels, especially in the oil and gas sector, have been noted to drop in the recent past (Mitry et al., 2014). Although a fall in prices is noted in gas and oil sector, market economy of the US still faces inflation since the private banks provide their monetary rate irrespective of the existing governmental regulations. As indicated in the article, an economic collapse is predicted due to such financial activities (Selwyn, 2014).

Regulations, decisions, and laws that are made in the private sector and/or the government affect business activities (Selwyn, 2014). Such laws and decisions fall under microeconomics. They elaborate the quantities and prices of commodities and services in a particular market. Furthermore, they deal with government regulations on taxes, prices, and quantities of products that are in the market (Mitry et al., 2014).

On the other hand, macroeconomics deals with economic systems at the national and global levels. Its main objective is to elaborate the acceptable price levels, national income, employment strategies, and production systems (Selwyn, 2014). It also provides information on the government taxes, price levels, and spending in a given country (Mitry et al., 2014).

Market Structure as a Concept of Economics

The organization of a given market based on its characteristics is termed market structure Baldwin & Scott, 2013). The structure of a given market ensures that both pricing and competition exist. Furthermore, it lays emphasis on market shares that are captured by the existing businesses (Baldwin & Scott, 2013).

Effects of Market Structure on the US Economy

The regulations and competition that are present in a given market can have both positive and negative effects on the national economy (Syverson, 2004). For instance, competition ensures that businesses achieve high prices for their goods. Such enterprises get high profits due to the barriers that are created to control market entrants and competition. When lower barriers exist, enterprises that are more new establish in the market thereby bringing about intense competition (Baldwin & Scott, 2013). For example, the USA has a market economy with lower barriers to new enterprises. As a result, competition is exhibited in the market setting (Baldwin & Scott, 2013).

As indicated in the journal, prices keep on shooting up due to individual decisions and frequent printing of money. This situation has adverse effects on the US economy since more banks determine their monetary values. In this case, price inflation occurs (Selwyn, 2014). Contrary to the above statements on the inflation of prices, it is noted that the global economy swift from low to high levels may result in the worsening of the US economy (Mitry et al., 2014). It is clear that financial and structural instabilities also exist in Europe and other upcoming economies such as China and India (Mitry et al., 2014). Current statistics show that the economic freedom score of the United States has dropped from 76.2 in 2015 to 75.4 in 2016 (Mitry et al., 2014). This situation is a clear indication that the regulatory burden of the country continues to increase with a view of regulation the international economy.

Conclusion

As revealed in the journal, the US economy has been hitched by various factors such inflation. Although the journal presents a prediction of an economic collapse, it can be said that the US government strives to counter various factors that can affect it economy adversely. There is also a plan to ensure that the economy remains stable through the establishment of regulations on most commodity prices. As a result, many businesses have complied with such regulations to ensure that they avoid losses. Furthermore, firms in the US are striving to innovate with a view of introducing new products that will most likely offer profitable opportunities in the international market.

Reference List

Baldwin, W., & Scott, J. (2013). Market Structure and Technological Change. Web.

Mitry, D., Smith, D., & Matula, T. (2014). Reconsideration of Globalization and Free Trade: Imperatives for Changes in Economics, Business, Political Science, and International Relations. ASBBS Proceedings, 21(1), 469.

Selwyn, D. (2014). Prediction: Economic Collapse, Civil Unrest in America by 2016.Web.

Introduction

Unemployment forms one of the major government concerns in most countries and states of the world. In situations of elevated levels of unemployment, many people are left with no money to spend thus leading to low demand for products.

Decrease in demand makes many businesses and companies to go out of business or lay-off their workers as the level of unemployment grows. Through physical policy and multiplier effect, the government is able to manipulate the economy by controlling or managing demand levels (Slater, 2007).

Aggregate demand

According to Keynesian, reduction in tax manipulates aggregate demand thus stimulating or reviving the economy. When taxes are lowered, people remain with more money to spend thus increasing the aggregate demand for products. Increase in aggregate demand leads to rise in Real GDP thus reviving the economy (Sheffrin, 2003).

Physical policy

The issue of fiscal policy is entirely based on Keynesian economics as derived by John Maynard Keynes theories. According to Keynes theory, the government is capable of influencing the economy by either increasing or decreasing taxes and manipulating its spending level.

Manipulating governments spending leads to change in position of the aggregate demand because the government forms part of the aggregate demand. By cutting taxes, the government increases disposable income of consumers. The consumers will now have more money in their pockets to spend.

This happens when the economy proves to be sluggish. When the public consumption or spending increases, more money is pumped into the economy leading to an expansionary effect.

On the other hand, reduction in the level of governments spending and increase in taxes contracts the economy. Therefore, expansionary fiscal policy which involves tax reduction and rise in government transfer payments shifts the aggregate demand curve to the right thus reviving the economy (Larch, 2009, p. 125).

Contractionary fiscal policy involves tax increase and reduction in government transfer payments thus shifting the aggregate demand curve to the left (Larch, 2009, p. 126).

Multiplier effect

Considering Keynesian multiplier, the economy is supposed to encounter a rippled effect. This is due to funding by the government which increases level of consumption. Rise in consumption levels increases level of aggregate demand for products thus leading to growth of economy from recessionary period.

Keynesian suggests that growth of economy from recessionary period encourages employment (Heyne, 2002). This is because of high demand from people to consume more thus making supply firms to increase in number and hire more workers.

In multiplier effect, an increase in spending like rise in government outlays is actually a multiple of that increase and continues in the same trend until a potential is reached. The increase in spending decreases considerably after every step making the multiplier process to tape-off and allow for equilibrium attainment (Sheffrin, 2003, p.121).

In the case of closed economy, decrease in tax payments at these steps increases consumer spending and multiplier effect size thus increase in aggregate demand. This revives the economy.

Conclusion

In general, revival of economy largely depends on the aggregate demand. Tax reduction seems to be one of the actions that shift the aggregate demand curve. Reduction in taxes makes more money available to consumers thus leading to increase in consumption.

Increase in consumption is associated with increased demand for products and rise in spending levels. This pumps money into the economy leading to its revival. Fiscal policy and multiplier effect also affects aggregate demand thus stimulating the economy.

References

Heyne, P. (2002). The economic way of thinking. Journal of economy, 6(2), 46-59.

Larch, M. (2009). Fiscal policy making in the European union. An Assessment of Current Practice and Challenges, 2(14), 121-127.

Sheffrin, M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey: Pearson Prentice Hall.

Slater, S. (2007). Economics (9th ed.). London: Routledge.

The United Arab Emirates (UAE) is made of seven emirates which form the federation. The federation is rich in oil and natural gas, which happens to be its major exports and foreign exchange earner. Despite the economy prosperity of the rich oil country, the UAE faces some domestic and external challenges. The paper evaluates UAEs main economic challenges, domestic issues, and its relations with the rest of the world.

The UAE was not adversely hit by the global financial crises like most of the developed states as its economic growth has been steady but slow. The UAEs 2013 economic report shows that the property market was affected after property prices declined amid the downturn (Audi Saradar Group 1). As a result, its GDP declined although it has since increased, albeit at a slow pace. In 2012, the CPI for the UAE had increased by 0.7 % as a result of sustained growth of the UAEs Central Bank foreign assets (Audi Saradar Group 1).

However, Dubai Statistics Centre (DSC) has reported that increase in processing of electricity, housing, water, and gas, hotels, transport, and furniture increased consumer prices (Emirates News Agency 1). Additionally, Economic Report 2013 shows that in 2012, the total CPI had reached 117.29%, which represented a 0.5% increase compared to 2011 (Audi Saradar Group 2). The economy was also affected by inflation of 0.7%, which was a result of increased food prices.

The UAE labor market largely depends on foreigners from all walks of life. Since the 1990s, immigrants have been a major driver of the UAEs economy as most of the domestic laborers lack the required skills to undertake available jobs (Malit and You 1). For this reason, most of the UAE nationals do not find employment in the skilled labor market. As such, the federation is affected by unemployment issues. For example, in 2011, the unemployment rate in the United Arab Emirates was 11.8% for UAE nationals compared to 1.9% for non-nationals (Abu Dhabi Government 1).

Moreover, the unemployment rate in the total UAE labor force in 2011 was 2.8%, which has so far increased to 4.3%. According to Albuainain (2), the unemployment rate of UAE nationals is higher compared to that of foreigners. This is because most of the nationals are excluded from the workforce as they lack the required skills and expertise. The unemployment rate in the UAE has negative effects on economic growth as the government is forced to spend more on social benefits (Albuainain 1).

The UAE enjoys positive relations with the international community and the rest of the world. For example, the UAE is the largest consumer of U.S goods in the region. A report released by the Congressional Research Service on October 17, 2013, has established that in 2012, U.S. firms exported nearly $22 billion worth of goods to the UAE. Over 1,000 U.S. companies have offices there, and there are 60,000 Americans working in UAE (Katzman 26). This means that the UAE positively relates well with major economies like the U.S. Moreover, most of the UAEs workforce is composed of foreigners from developed and developing nations. Additionally, its foreign policy supports the establishment of peace in the region. However, the UAE has been criticized for its deteriorating human rights situation and trafficking (Katzman 26).

In conclusion, the UAEs domestic challenges have affected its GDP and economic growth. The global financial crisis affected the growth of the economy, although it has since started to grow steadily. The UAE has a large unemployment rate among its nationals compared to foreign employees. Also, the UAE has positive relations with the international community and the rest of the world, although it has been criticized for its deteriorating human rights situation.

Works Cited

Abu Dhabi Government. Abu Dhabi Emirate: Facts and Figures. 2013. Web.

Albuainain, Reem M. Unemployment Rate in the United Arab Emirates: The Case of Abu Dhabi. Working Paper 0404. 2013. Web.

Audi Saradar Group. UAE Economic Report: Sustained Recovery Prospects despite Lingering Challenges. 2013. Web.

Emirates News Agency. Dubai CPI 03% in October. 2012. Web.

Katzman, Kenneth. The United Arab Emirates (UAE): Issues for U.S. Policy. Congressional Research Service. 2013: 1-27. Print.

Malit, Froilan, T and Ali Al Youha. Labor Migration in the United Arab Emirates: Challenges and Responses. 2013. Web.

Firstly, the budget, income, and substitution has an influence on the current situation on the beef market and affect the grills popularity simultaneously. Firstly, the earnings and budget of the household control the consumption of the particular products and behavioral patterns (Pagoso, Dinio and Villasis 89). In turn, various meat substitutes are present including direct and indirect competition. Additionally, people can select other methods of the meat preparation such as cooking at home. Furthermore, the restaurant and cafes, which offer the various dishes with meat, can be considered as the potential threat to the beef consumption. In this instance, the presence of these matters can negatively influence the demand due to the inability to provide affordable prices for the current income and the lack of ability to minimize the threats from the substitutes.

It remains evident that the beef and grills markets are interdependent due to the necessity to be used at the same time for some cases. In turn, the increasing popularity of the grills might be a core reason for the escalation in the beef consumption disregarding its high prices and rarity. Furthermore, the increased costs of beef are the primary drivers of the growth of the prices for grills due to the interdependency of the components. Additionally, the concept of marginal utility is applicable, as the positive marginal utility implies the increase of the consumption of the additional good maximizes the popularity of the initial product among consumers (Jain and Ohri 92). In this case, the amplified demand is correlated with the marginal utility, as the customers are highly satisfied with the consumption of the products, which are promoted by the celebrity. In turn, the demand for beef increases the demand for grills and vice versa.

Nonetheless, the rationality of the customers choices is questionable, as it is highly affected by the psychological influence. It remains apparent that the companies use celebrities to modify the perceptions of the customers by using authorized views (Pringle 77). In this instance, the demand for the beef and grills is driven by the promotion of the products by George Foreman. In this situation, the actions of the customers are logical from the psychological perspective due to the high influence of the authorities on the process. Nonetheless, the rationality of the consumers desire to purchase beef is questionable, as the prices tend to grow. In the context of this case, despite the ability of the prices to have a significant influence on demand, the role it was revealed that various social and psychological factors tended to affect the purchasing abilities of the customers (Antonides 51).

Lastly, it remains evident that the prices of the final product are dependent on the costs of the resources, which are vital for the production (Johanson, Lundberg and Ryberg 16). In turn, the natural hazards caused the dramatic loss of cattle due to the presence of the increased levels of death in its population (Economist Beef Prices). Consequently, the presence of these matters was a primary reason for the rise in the prices due to the scarcity of the production resources and the presence of the adverse external factors. Nonetheless, it remains evident that the situation will stabilize as the farm slowly regaining the missing population of the cattle. Nevertheless, it might slightly increase due the fluctuations in the prices of the products, which are required to feed the domestic animals.

Works Cited

Antonides, Gerrit. Psychology in Economics and Business: An Introduction to Economic Psychology, Berlin: Springer Science+Media, 2013. Print.

Economist Beef Prices Can Stay High into 2015. Clipsyndicate. Clipsyndicate, 2014. Web.

Jain, Tehli, and Veil Ohri. Principles of Economics, New Delhi: VK Publications, 2010. Print.

Johanson, Kaj, Peter Lundberg and Robert Ryberg. A Guide to Graphic Print Production, Hoboken: John Wiley & Sons, 2012. Print.

Pagoso, Christonal, Rosemary Dinio and George Villasis. Principles of Economics, Manila: Rex Book Store, 2008. Print.

Pringle, Hamish. Celebrity Sells, Hoboken: John Wiley & Sons, 2004. Print.

Introduction

Regardless of the hyper-modernity of Seoul as a first world status economy, social exclusion remains a challenge to the government and the society. Relocating to South Korea can be interesting, but it can come at a cost. Many migrant workers are forced back in their closet by inadequate remuneration and social discrimination. South Korea is one of the countries that are trying to overcome social exclusion and inequality in the workplace. This is due to the high level of discrimination of the marginalized groups who are not recognized and are often mistreated by the society. In this paper, we shall define social exclusion as the lack of belonging, recognition, and acceptance in the community. Social exclusion affects marginalized groups in the society, for instance, the migrant in South Korean in their workplace.

The causes of social exclusion in South Korea have been accelerated by the lack of active government policies and services to deter migrants exploitation. Moreover, it has also been caused by the changing economic and social factors in the marketplace (Melanie, 2014, para.5). Usually, migrant groups are excluded because they are deemed vulnerable and hopeless in South Korea. Many migrants who travel to South Korea have an initial optimism of a better life. However, this is not the case; most of the migrants in South Korea have encountered racial discrimination, exploitation, harassment, and social exclusion. According to a survey conducted by Zaami (2015), many migrants who stay in South Korea have never come to feel at home because they are discriminated in the workplace. Consequently, majority have found their way back to their countries. However, those who do not return are exploited mainly in the workplace by their employers. In this paper, we shall analyze the social exclusion in South Korea especially toward the migrant in the economic, social, and political aspects.

Case study

Jeong was a 24-year old migrant from China who committed suicide due to discrimination and exploitation in the workplace. She threw herself under the train because her employer had withheld her salary for 13 years while in South Korea (The guardian, 2009, para. 1). Moreover, he did not allow her to move to another organization where she could earn her monthly pay. In her letter, she argued that she decided to commit suicide because it was the only way out. Jeong had worked for 13 years with the hope that she could earn enough money to go back to her country China. However, due to the social exclusion and exploitation, she committed suicide because it was the only solution to her problems. She had tried to contact the local authorities in South Korea to help her, but they failed because they perceived her as a migrant.

Economic and financial inequality in South Korea

Social exclusion of the migrant in South Korean is a challenge that continues to affect the society. Although many people do not realize it, it has negatively contributed to inequality in the workplace and wealth distribution in the country. The migrants in are the most affected people in a society that is highly heterogeneous. As noted by Amnesty International, Jeong is not the only migrant who has committed suicide due to exploitation. Chun Tae a Chinese migrant in South Korea ended his life by self-immolation because he believed that it was the only way to end his troubles in life (Anuradha & Eser, 2002, p. 384).

He had tried his best to contact the local and national government to improve working condition through demonstration without much success. Although his death led to a rapid change in labour laws, more need to be done to prevent exploitation of the excluded migrants in the country. Since they do not have representatives in power that can fight for their right, they are discriminated in the workplace and the economic sphere of wealth distribution. Migrant exploitation, in South Korea, has increased in the last twenty years. The migrant minority population in South Korea is extremely heterogeneous and is mostly made up of workers from China, UK, North Korea, and Russia. South Korea is estimated to host 400, 000 migrants who come from different social, geographical and linguistic background. These migrants are united by the social exclusion facing them in South Korea as foreign laborers.

In recent years, international community has complained to the Korea government due to migrant exploitation and harassment in the workplace. For instance, in 2009, human right watchdog noted that there is a significant increase in migrant abuse in the workplace. Specifically, the human right watch group noted that many migrants had complained about workplace exploitation and discrimination such as unfair dismissal, reduced wages, and unsafe workplace. Although the migrants have complained to the local authorities, little has been done to improve working conditions. Further, the human right watchdog noted that migrants suffer from physical, psychological, and sexual abuse.

The general perception in South Korea is that migrants are job stealers and criminals. Although foreigners and international students are highly respected, migrant workers are socially excluded and suffer prejudice. This notion is supported by a survey conducted by Migrant Workers TV where most of the South Korean interviewed showed little or no interest in the migrant working conditions. Most of them argued that migrants smelled and that they are job stealers who should go back to their countries. This is a misconception because most of the migrants workers are well educated and entered the country legally. Many of the migrant workers entered Korea through brokers who promised them high salaries. Contrary to their expectations, they are paid low wages and in most cases, their working condition is 3D (difficult, dangerous, and dirty). Migrant workers face social exclusion because they are in a foreign country where no one cares.

According to a report by Amnesty International, a Ghanaian worker lost one arm as he was trying to escape verbal abuse from his employer. Even before he was release from the hospital, the employer discharged him without paying his medical bills. Today, he cannot be able to work and is facing a difficult life in a foreign nation. This case shows how social exclusion in South Korea plays a significant role in social exploitation in the workplace. Moreover, migrant workers are mistreated, and they are paid low wages. The working condition of the migrant is pathetic because they are perceived as desperate. For instance, three Thailand female migrant workers were admitted to hospital after being exposed to toxic chemicals. The employer did not pay their hospital bills, but discharged them after 3 days. According to Chung, Choi and Litman (2014) the Korean worked in safe working conditions in separate rooms that were never exposed to chemicals (p. 490). This shows that social excluded migrants do not enjoy human dignity in South Korea because they belong to foreign nations.

Social exclusion in the workplace is supported by the Labour Standard Act, which protect workers against exploitation (Art. 49). Article 47 prescribes the minimum wage but has certain loopholes that allow employers to exploit migrants. For instance, the law permits employers to increase working hours. It does not specify the minimum wage that should be paid to migrant workers on probation. The argument is workers who complain are likely to lose their jobs in a country where the culture, government, and language are unfamiliar. Moreover, the law only permits workers to search for a job for two months, which sometimes compelled them to alternative jobs illegally. The illegal jobs increase their chances of being prosecuted and exploited. If a migrant worker is arrested, they face severe human right exploitation.

However, although the social exclusion of migrant in South Korea has been gaining recognition from the government, there remain excluded from the national grid and assurance of safe working conditions. Anuradha and Eser noted that the discrimination of migrant workers gained local and international condemnation after the demonstration of Nepalese industrial trainee that led to the creation of Federal of Trade Union. This organization was mandated to ensure that companies observed human rights of migrant workers. Local private firms have also supported migrant rights such as Borderless world Corporation that provide interpretation of bank transaction to migrants. Moreover, Nonghyup Bank assists migrants with legal fees and advice on adoption of Korean names. These companies work together to help migrants gain access to good working condition and fair remuneration in the workplace.

The South Korean migrant trade union has urged the governed to heed UN Convention on the rights of all migrant workers and their families that was formed in 2003. Although the United Nations resolution can be useful in ensuring good working conditions for the marginalized migrant workers, the success of such an endeavor relies on the willingness of the society to respect migrant workers. Although being a migrant worker in Korea is legal, the working conditions are vigorously discriminating. Nevertheless, being a migrant worker in Korea is stigmatizing in a culture where discrimination is a daily occurrence. Usually, migrant workers must keep their families and social life a secret or risk being disowned and fired. Being a migrant worker in South Korea means, you have to accept a life of secrecy and isolation to be successful. This is exacerbated by the harsh reality of living in a homogenous society that has a deep fear of foreign influence.

According to a survey conducted by Gallop poll of Korea argued that only 37 percent of those interviewed supported social inclusion of the migrant workers. However, the generation gap was pronounced in the sense that those between the ages of 18-37 favored social inclusion of migrant workers. However, only 13 percent of those between the ages of 45-65 favored social inclusion of migrant workers (Abigail & Audrey, 2007, p. 153). The social exclusion in Korea has increased because most of the employers are the older generation who do not support social inclusion of foreigner. However, this trend is expected to diminish as the young generation take over in the next 20 years.

Addressing social exclusion

Today, there are many ways the government and the society can be able to overcome social exclusion. The federal government is planning to implement measures that will ensure equality of the marginalized group. However, they must make sure that any changes will have substantial benefit for the minority. The government can be able to address inequality using its budgetary measures mainly to reduce the level of unemployment that is facing migrant workers in South Korea. The president can be able to implement a national poverty reduction strategy that will ensure the needs of the most vulnerable people are met (Ightman & Gingrich, 2012). Moreover, the government should commit to investing in projects that will benefit the excluded population such as economic opportunities and education. For instance, the government should order all county governments to meet the threshold of equity for job opportunities, especially to the excluded population.

The government should eliminate barriers to employment of the excluded population that has been identified by various groups. For instance, the national government should compel the private sector in the economy to implement safe working conditions for migrant workers. This will ensure that the minority have access to job opportunities and in good working conditions. Moreover, the federal government should develop rules that will ensure fair remuneration of all migrant workers (Deborah, 2014, para. 4 ). For instance, the government should eliminate loopholes in the labour laws to ensure there is a minimum wage that will ensure parity in the workplace. Moreover, the government should prosecute employers who exploit workers, which will serve to deter migrant exploitation (Tim, 2014, para. 6).

Social exclusion of migrant workers can be eliminated by educating the society to respect migrant. The major challenge facing migrant workers is a result of a societal refusal to accept foreigners to work in their country. The South Korean government should dismantle barriers to trade and other professions. Kiran (2002) noted that South Korea has been attracting massive business opportunities from the outside world (p. 34). However, these business people have been discouraged by discrimination of foreigners. Specifically, the migrants from China are opting to return to their country because they consider South Korean hostile against them. Since South Koreans are allowed to invest and work other countries without discrimination, they should reciprocate by eliminating barriers to proper working conditions.

The South Korean government has established Foreign Workers Employment related law, which is a sign that they recognize migrant exploitation in the workplace. These rules were set up to promote good working condition and fair remuneration of workers. It also supports fair treatment of migrant workers in the workplace. However, the discrimination of migrant workers shows the Korean authorities has failed to ensure foreign migrant are respected. Moreover, it displays the failure of the government to implement international standards of non-discrimination in their treatment of foreign migrant workers. The government can ensure they are treated fairly by enforcing these laws. Moreover, the government should prosecute employers to breach this rules, which will act as a shield against discrimination in the workplace. South Korea should also ratify international human right and labour treaties that advocate for all migrant workers rights to be respected regardless of their legal status (Jennifer, 2014, para. 3).

For instance, South Korea should accede to the ICCPR, which is a formal treaty that protects the right of migrant workers. Moreover, the government should ensure that all migrant workers enjoy the same human right as stipulated in ILO. The ILO argues that everyone is entitled to fundamental human right without discrimination of any kind. Moreover, it clearly stipulates that everyone is has a right to enjoy their human right without discrimination.

Conclusion

Social exclusion in South Korea has been accelerated by lack of strong government policies in the workplace. It has also been caused by the changing economic and social changes in the market. Employers discriminate migrant women who have now been compelled to seek jobs in semi-skilled occupation in manufacturing companies that increase chances of them being exploited. They also have little access to social and health services compared to their white counterparts. When the minority groups are excluded because they are deemed vulnerable, they are more likely to assert themselves inappropriately such as involving themselves in criminal acts. Migrants in South Korea are more likely to be unemployed or underemployed even though they have higher education compared to their Korean counterparts. This is because migrants are discriminated and exploited in the workplace. The government can be able to overcome these challenges by adhering to international standards that require all employers to respect human right in the workplace.

Transcript/round table

Good morning ladies and gentlemen, today we shall discuss social exclusion in South Korea. We shall first begin by defining social exclusion. Social exclusion is the lack of belonging, recognition, and acceptance in the society. Social exclusion has affected the migrant workers in South Korea. We shall study social exclusion of migrant workers in South Korea. Specifically, we shall analyze Jeong a 24-year old migrant from China who committed suicide due to discrimination and exploitation in the workplace. She threw herself under the train because her employer had withheld her salary for 13 years while in South Korea.

We have learned that migrant workers are discriminated because employers. According to Kim (2012) South Korea is one of the most ethically harmonized nations with little acceptance of foreign influence (p.683 ). Migrant workers and other foreigner represent 3.6 percent of the population. The culture in South Korea is very insular and does not accept foreign migrant workers regardless of their immigration status. Consequently, migrant workers face both racial discrimination and migrant -phobia that defines their life. Irrespective of how successful you become, South Korean do not accept foreign influence and will always view migrant workers as intruders. Migrant exploitation, in South Korea, has increased in the last twenty years. The migrant minority population in South Korea is extremely heterogeneous and is mostly made up of the migrant from China, UK, North Korea, and Russia. However, over the years, the right of migrant workers gained local and international recognition after the struggle of Nepalese industrial trainees who brought together all migrant workers and human right groups to fight for good working conditions and fair treatment in the workplace.

The government can be able to eliminate discrimination in the workplace by implementing international human right principles such as ILO. These principles are important to ensure that migrant workers are respected in the workplace. However, although the ILO principle stipulates that all workers should enjoy the same rights, South Korean government has not implemented these fundamental principles (Lim, 2010, p. 62). In most cases, migrants are paid low wages and work for longer hours. Furthermore, most of the migrant always complain they are denied the right to become members of a trade union and are physically abused by their employers.

The existing discrimination in South Korea shows that the government has failed to implement international treaties that denounce discrimination of migrant workers in the workplace. These principles are set out in many of the international human right treaties that have been ratified by the South Korean government. The principles obligate South Korea to guarantee workers including migrant all individual rights without any discrimination. Therefore, the government should develop a national plan of action to promote international principles ensures individual rights of migrants is protected without discrimination. Finally, the government should also establish stringent laws that will ensure a minimum wage for all migrant workers in their workplace. Moreover, the government should educate citizens the importance of respecting and treating migrant workers with dignity.

References

Abigail, B. & Audrey K. (2007). Affirmative action and employment equity:policy ideology and backlash in Canadian context. Journal of political economy, 79(1), 145-157.

Anuradha, B., & Eser, A. (2002). The interaction between culture and entrepreneurship in London and migrant businesses. International small business journal, 20(4):371-393.

Chung, Y., Choi, K., & Litman, T. (2014). Social exclusion and transportation services: A case study of unskilled migrant workers in South Korea. Habitat International, 4(4), 482-490.

Deborah, M. (2014). Under banked and overcharged: creating alternatives to Alternative Financial Service Providers. Web.

Ightman, N., & Gingrich, L. G. (2012). The Intersecting Dynamics of Social Exclusion: Age, Gender, Race and Migrant Status in Canadas Labour Market. Journal of Canadian Ethnic Studies, 44(3), 121-145.

Jennifer, P. (2014). Community grants miss poorest areas; Citys spending of $40 million a year appears to send more cash downtown than to suburbs. Web.

Kim, N. (2012). The Migrant Workers Movement in the Democratic Consolidation of Korea. Journal Of Contemporary Asia, 42(4), 676-696.

Kiran, M. (2002). A Special Kind of Exclusion: Race, Gender and Self-Employment. Journal of Canadian Ethnic Studies, 27(1), 26-50.

Lim, T. (2010). Rethinking Belongingness in Korea: Transnational Migration, Migrant Marriages and the Politics of Multiculturalism. Pacific Affairs, 83(1), 51-71.

Melanie, K. (2014). Black Canadian self-employed women in the twenty-first century: a critical approach. Web.

The guardian, (2009). Social inclusion: Fighting Social Exclusion and Injustice in Korea. Web.

Tim, A. (2014). Bank accused of racial profiling after migrant customer arrested: Toronto man files $225,000 suit, says he is looking for answers. Web.

Zaami, M. (2015). I Fit the Description: Experiences of Social and Spatial Exclusion among Ghanaian Migrant Youth in the Jane and Finch Neighbourhood of Toronto. Journal of Canadian Ethnic Studies, 47(3), 69-89.

Business Recommendations Based on Economic Projections

Business recommendations basing on projections are very core in the achievement of the expectations or even better the achievement in terms of time and profitability. The companys projections which cover a period of five years shows that the business needs to be expanded and at the same time increase the profits.

In order to achieve this milestone, the company must make some decisions which will catapult the attainment of these expectations. The various perspectives of future projections therefore provoke decisions that govern the same set objective.

Larsons future expansion plan clearly shows that the company is faced by challenges throughout its life cycle and therefore there should be decision to act as antidotes during challenging times and better the performance during the most profitable or maturity stage of the business (McConnell, Brue & Flynn, 2009).

The decisions that are appropriate for the company therefore go hand in hand with the projections.

GDP Growth Rate in United State

The positive increase in the GDP in the fourth quarter should be maintained. For maintenance of this it is in order that the following decisions are necessary; the personal consumption should be encouraged through quality products and price incentive for the clients, improving exports through extensive marketing outside USA and encourage private investors so that the running capital is increased (Bureau of Economic Analysis, 2009).

The GDP of Germany increased by 0.7% in the last quarter of the previous year. The upward trend can be maintained or even made better through the use of various strategies. First the company greatly depends on export as the main economic pillar.

It is recommendable therefore that the export policies that encourage export should be implemented, these include better relationship with other countries and increase of market across the world. The goods being exported can be diversified at the same time exploration of internal market to increase or maintain the GDP (Global Finance, 2010).

Consumer Loyalty

Consumer loyalty is largely based on their confidence on the companys products. The best way therefore for the company to win and maintain consumer base is to ensure that the quality of the product is up to the expectations of the consumer. Customer support relations should be implemented such that the clients views and recommendations gathered and implemented.

This helps the clients to feel part of the company and therefore increase their loyalty and consequently the customers will improve their willingness to spend (Bea, 2010).

Economic Future

The economic future of the company is based on proper decision making at every phase during the companys life cycle to ensure that there are enough measures put in place for instance during the growth stage, marketing is very instrumental and customer promotion is also key.

Expansion

The expansion of the business should be based on adequate research of the market. It is important to carry out an extensive study about the competitors also so as to have enough information. The management should also carry out efficient site survey to ensure a strategic position to capture the market.

The quality of production in the new plant however should be maintained to ensure a good brand name in the market and thus increase consumption, increasing the revenue of the company.

U-SHAPED Economic Future

This has projected a reduction in the sales in the following year. It is recommended therefore that the company should ensure that their consumers are given incentives so as to encourage them to buy the goods. Due to lack of loans the company should seek for external investors who are willing to buy in order to increase the sales.

The company should also introduce credit facilities since this will help in increasing sales during the times when the client are financially disadvantaged. Alternatively the companys production should be shaped to fit the demand to save on cost of production by avoiding over production (Orit & James, n.d).

The V-SHAPED Economic Future

The cost of fuel-cell plug in vehicles should be made lower during the introductory stage so that it can attract more consumers in the rather competitive field and overpower the alternative sources. Marketing of the products superiority over the current battery is of importance and therefore the company can maintain some static performance before capturing the market and increase drastically.

W-SHAPED Economic Future

The intermittent future of the company can be evaded through exploration of alternative production of cheaper batteries to gather for the demands throughout all the seasons. The company should put in place measures such as price regulation, incentives and credit facilities during the moments when the company is experiencing downward trend.

During the times when the company is on an upward trend they should invest in winning a brand in the market through the use of quality and rebranding where possible. The production also should be in tandem with consumption. The company should also explore exporting their goods to other countries and thus increase market base to aid during the times when the performance is low (Virts, & Garrett, 1970).

The W-Shaped economic future, details a recovery cut short by recession, then a second rebound. The slowdown in this unstable economy has created a major problem for Larson to cut back on business expansion to other countries.

In conclusion it is important to develop efficient measures to ensure that destructive anticipations are averted while positive projections are promoted (Robbins & Judge, 2007).

References

Bea. (2010). U.S. Department of Commerce & Bureau of Economic Analysis. Web.

Global Finance. (2010). Germany Country Report:GDP data and GDP forecast. Web.

McConnell, C.R., Brue, S.L., & Flynn, S.M. (2009). Econmoics: Principles, Problems, and Policies. New York, NY: McGraw-Hill Irwin.

Orit, G., & James, L. (n.d). Profit Pools: a fresh look at strategy. Harvard Business Review, 76(3), 139.

Robbins, S., & Judge, T. (2007). Organizational Behavior (12th ed.). Upper Saddle River, NJ: Prentce Hall.

Virts, J.R., & Garrett, R.W. (1970). Weighing risk in capacity expansion. Harvard Business Review, 48(3), 132.

Introduction

New York is one of the globally recognized cities due to its high economic development. The citys economic growth has undergone several developments from the previous decades to date. This essay highlights most of this progress. The first section explains the citys overall economic performance.

The second section focuses on the citys current state with respect to sectoral distribution. The third part highlights the evolution of the citys economy in the immediate past. The fourth part describes the drivers of the economic changes.

The fifth section focuses on the part played by public authorities in the citys structural changes. The sixth part is about the citys main problems and suggested economic strategies that can be applied in addressing the problems. The final part is the conclusion.

The overall performance of New York Citys economy

The improvements of New York Citys economic development have benefited both households and firms. This is from 1975 during which New York encountered a serious financial crisis. From that time New York ceased depending so much on debt finance, lowered property based taxation besides improving its financial reports.

Although the overall tax burden has been high, there has been a sharp reduction in the amount of tax used in offsetting short  term loan. Firms and households have also greatly benefited from development in the citys public transport network which occurred especially towards the end of the nineteenth century.

A locations attractiveness especially to investment is enhanced by public safety. During 1980s when New York City experienced an economic boom, crime rate was quite high but reduced drastically in 1991 during a recession. This trend went on for the next decade.

Study shows that a sharp decline in the citys crime rate was experienced in its poorest areas (Okuyama & Chang, 2004, p. 59). Although there has been an enhancement of land and labor prices as a result of the developments in the commercial and residential settings, the citys amenities have not been without some liabilities.

Key among these include high taxation on businesses, public schools and residences. However, statistics reveal that improvements have overwhelmed liabilities over the recent years.

As far as the citys industry mix is concerned, the focus has mainly been on the financial services industry. The growth of the city has been enhanced by investment in this sector, with most of the firms preferring to be close to each other.

Moreover, patterns in the broader economy tend to be beneficial to regions with many growth industries. A comparison in the performance of these industries with those of other nations shows that a good number of local industries have expanded more in job growth than in income growth.

Compared to other parts of the nation, the potential of the citys expansion is low due to land and space limitations. Recently, rapid job growth at a national level has been evidenced by industries that are highly concentrated in the city. This trend is expected to continue in the coming years.

Specifically, nationwide job and earning growth has resulted from industries that deal in services such as securities, education, motion picture, management, social and legal services (Okuyama & Chang, 2004, p. 60).

On the other hand, there is a lower representation of industries that deal in manufacturing services since their performance in employment and earning is quite weak. This is apart from the industry of apparel manufacturing that is among the citys industrial leaders.

Since the city has been focusing on businesses and industries that are high-value-added, comparing the citys employment patterns with those at the national level tends to underestimate New York Citys genuine performance.

Research shows that the high demand for its goods and services is the reason behind the metropolitan areas outstanding income growth (Okuyama & Chang, 2004, p. 61-63).

Further research has depicted that the average income per worker has shown consistent growth in New York City compared to other parts of the nation. If this trend has to continue, the city has to register more income growth as compared to job growth.

The present structure of New York Citys economy, as identified by the sectoral distributions of output and employment

The service sector of New York is comprised of an industry mix that is broad and favorable. However, the financial sector emerges as the main driver of the citys economy. In 2000, 5% of the citys employment and about 20% of its earnings were from the securities industry.

This is the time that the shares were compared to other periods in history and were approximately eight times the respective national figures. It is thus no wonder, the local economic landscape is dictated by the trends in the financial sector.

Recent study shows that the greater local economys cycles is greatly influenced by the performance in the financial sector, especially the securities industry.

The citys medium term growth projections seemed to have been threatened by the contraction in Wall Street employment. This contraction was as a result of the September 11 attack, national recession and certain weakness in the financial markets.

The slight fall in securities employment in the other parts of the country shows that these losses in jobs are due to both industrial and city specific factors. Financial services form a key sector that should be monitored weighing the general health in both the lower Manhattan and the greater regional economy.

In the long term, the great financial services industry is likely to continue being greatly influenced by the internet and advancement in Information and Communications Technology (Okuyama & Chang, 2004, p. 63).

The New York firms are much different from those in other cities such as Chicago and Los Angeles. This difference is with regard to their kind and degree of specialization. For example, research has revealed that most of the legal firms in New York have been highly specialized in international expertise.

While large firms that are based in other US cities have expanded to New York, the large New York firms on the other hand, have set up other major foreign international financial centers as well as Washington, D.C, this city being a step in the international chain of transactions (Sassen, 2001, p. 154).

Increase in investment banking has been the main spring of growth of these services in New York. A third of the national legal services employment is based in New York with up to half of the profits from this sector being generated from the city.

As compared to other major US cities, New York has the largest number of law farms. This is due to a number of reasons. First, due to increasing concentration of top notch international law firms, the expense of expanding internationally is not feasible for most of the firms.

Secondly, a law firm has other options through which it can attend to its foreign clients which is by directly exporting legal services and forming contracts with local firms for delivery of services. There is an increase in the degree of specialization in a number of the advanced services.

For instance, a number of legal firms that are corporately specialized tend to be used by large firms. Moreover, the rise in management consulting has tended to specialize more in institutional investment.

Earlier, there was competition in the sector of management consulting from other cities like Boston and Los Angeles but the dynamism in the financial industry has made New York to be at the top in this sector.

This high degree of specialization has led to the need for reliance on other resources and services. Firms contact a lot during the production stage. These firms can target diverse markets at the regional, national and international levels but still exhibit agglomeration economies at the production point.

Therefore, in spite of higher operational costs, New York vividly emerges as a desirable location for sectoral distribution of output and employment (Sassen, 2001, p. 155).

How the Economic Structure Evolved in the Immediate Past

The average yearly rate of GDP over sometime is normally used to represent the national economic growth. Due to the absence of an official output measure at the level of a city, the trend in the growth of real income and jobs is normally used to gauge the growth in economy.

In most places, these measures go together but for the case of New York City, the case of economic growth is presented in very unique perspectives.

For three decades, the city has had a constant average total employment. Despite the increase in jobs in the 1990s, the total employment was almost the same for all the years apart from 1999 that had a slight increase.

The highest level of total employment was highest in 1969. On the other hand, the income of city workers has been rising at the rate of about 3.5% per year.

Restructuring in industry and occupation is said to be the cause of the citys trend in brisk employment and an increase in real earnings. A shift towards jobs that offer better income and increase in productivity growth in the current jobs are the main causes of rise in average earnings in the city.

In the 1980s, the citys rise in the average real earnings was due to the growth of jobs in the Finance, Insurance and Real Estate (FIRE) sector. The recession of early 1990s caused a temporal reversal in most of the job gains.

Nevertheless, real earnings in the city were boosted by job expansion in some service sectors that were highly paying together with the economic recovery of the city since the mid 1990s. At this time, there was a national rise in earnings per job while in New York City there was a rapid increase in earnings per job.

Therefore, the city had greater earnings in comparison to the rest of the country which was enhanced by the productivity of existing employment and getting hold of a rising share of jobs that were highly productive (Okuyama & Chang, 2004, p. 54).

Moreover, as from 1976, there has been an increase in New York Citys cost of housing. This implies a rising cost of living in New York relative to other parts of the nation with a steep rise especially in the last half of the 1990s.

Statistics on New York Citys land price and wage show that before September 11, the patterns in these two aspects were favorable because there had been an increase in land price and income over all horizons.

The citys attraction to both firms and households accounts for the increase in land price while income rise show that the New York location is greatly valued by businesses as compared to households. However, change in demographic characteristics with time can be another explanation for increases in wage (Okuyama & Chang, 2004, p. 57).

As many people ushered in the new millennium (2000), the citys economy was booming as its real estate market and other local government surpluses expanded. Compared to the 1970s, the condition of the city had improved in many respects. The citys economic growth rate was anticipated to increase by about 6%.

The problem of unemployment was reduced due to the rise in job opportunities in the service and business sectors. In 1999, the profits registered by Wall Street had grown by more than a third in comparison to the situation for the two previous years (Sites, 2003, p. 63).

The context impelling Changes in New York

The changes in the growth of New York Citys economy is a product of a number of factors. First, there is the September 11 attack. A lot of cyclical and long-term trends that were underway were accelerated by the terrorism attack.

The adjustment in structure can be observed in the finance sector which constitutes the economic sector that was affected by the attack to a large extent.

For purposes of cost reduction, the finance sector has been carrying out its activities away from its location for quite a long time. Nonetheless, the rate at which changes have been taking place after the attack is alarming.

After September 11, there has been a monthly decline in employment especially in the insurance and finance sectors. A greater percentage of employment loss in the finance sector was experienced in Manhattan relative to the suburban part of the region (Congress, 2001, p. 22246).

However, research shows that the New York City as a business location was not permanently damaged by the attack. Albeit, the city has some risks.

There is a rise in competition for jobs and earnings which is within the city and even with other cities. The leading industries in New York are supposed to intensify innovation so as to discover commodities that will justify the expensive cost of living in the city (Chernick, 2005, p. 9).

Private investments have been pursued by government agencies and the latter have been strongly opposed by both the preservationist forces and the neighborhood.

The city has also experienced changes in relations between men and women that have resulted in the transformation of the economy, renewed attitudes and new family structures. The use of space has been affected by this as women look for proper housing facilities, work and aid in their parental duties.

The increased participation of women in the labor force and the strains they have felt as a consequence of the double burden of home and work have expanded their need for convenient job locations better transportation systems and day care (Kleniewski, 2004, p. 179).

The economic significance of New York as a city has been heightened by the rising integration of the economy. This is due to the increase in global investment opportunities of the citys dominant finance sector. Also, New Yorks status has been threatened by globalization as other aspirants have created increased competition as they compete for the citys economic niche (Kleniewski, 2004, p. 179).

Besides, the growth in the real estate market was driven by a number of factors such as the leasing activity from the new media, highly developing internet and advanced technology present in the sector of business service. The city had also grown in population compared to the way it was three decades earlier.

The population growth was mainly due to the immigrants (Sites, 2003, p. 63). The high population of employed people provided ready market for the citys products and services causing its economic growth to continue climbing.

Role of Public authorities in facilitating the Structural Changes

For many years, the private market provision of housing was supplemented and regulated by the New York City and state governments. For quite some time, there were several tax exemptions and abatements available. The house developers with limited profit were eligible for lending from the city and the state.

After some time, the regulatory measures of the city started affecting the housing supply in a negative way. In the private housing market, the government intervened through rent control which was argued to discourage people from investing in low cost housing thats under private ownership (Bellush & Netzer, 1990, p. 204).

The zoning resolution that was reached at several decades back had restricted accepted densities for the citys new residential construction. In the mean time, there was a slowdown by the Housing Authority in building traditional houses for the low income earners.

This occurred because the city costs were more than the federal standards while the design and social criticism for projects increased. The Housing Finance Agency then intensified its banking services through mortgage buying and lending for housing.

Several years after its inception, it became one of the institutions that offered securities that were tax-exempted. Its credit rating exceeded that of the city government (Bellush & Netzer, 1990, p. 205).

The efforts of the public authorities saw the revival of New York City in 1990s. Both building of the city and reconstruction of projects was as a result of the partnership between public authorities and market investors.

One of the main aspects of this endeavor was that the government agencies extension of coercive and displacing measures towards the urban residents, specifically the low income earners.

The New York City through policy initiatives such as housing, welfare and policing was able to coordinate with the government in eliminating some social impediments so as to clear the way towards good economic growth (Sites, 2003, p. 62).

These innovations earned mayor Giuliani a lot of credit due to politics and government that had contributed towards changing of the citys public image and not necessarily because of the prosperity of the local economy.

Problems faced by the New York City and Proposed Economic Strategies for solving them

The largest contributors to the economy in the city are a few sectors that include finance, real estate and insurance. Despite this being a great financial center, unemployment can at times be on the rise. For instance, in 1985, 50% of the city dwellers were not employed. Besides, residents with past criminal convictions are discriminated in employment (Deadwiley, 2009, p. 87).

Secondly, housing cannot be afforded by the low income earners especially in the central part of the city. Harlem and the Bronx are regions that have slums (E-Learning and Teacher Education, 2010, p. 1). Also, there are thousands that are homeless in Manhattan.

Thirdly, theres an environmental problem as a result of waste production. The city generates a large amount of waste on daily basis with the main problem being the wastes disposal. This is also accompanied by green house gas emissions.

In solving the problem of unemployment for the majority of the city residents, the city should diversify in other sectors apart from the existing few to enable residents who have diverse skills in other sectors to get jobs.

Also, the Civil Act Rights of 1964 should be amended to enable individuals with past criminal offenses to seek employment without being discriminated to enable them contribute towards the citys economic growth.

Second, the problem of housing can be solved by city governments intervention to ensure that there are different categories of houses according to the affordability of tenants. This will give the low income residents an opportunity to secure housing in the central city.

Third, the problem of waste disposal can be solved by the city authority under the mayor. This can be addressed by devising an effective environmental waste disposal policy. The city authority should help in contribution of funds to purchase equipment that is energy efficient and one that can be used in public houses and offices.

Moreover, the city authority should devise waste management plans to facilitate proper disposal and management of wastes in firms and households.

This will lead to employment of more residents as part of the waste management team. Pollution due to carbon and green house emission can be minimized by adopting a policy that encourages use of hybrid cars and green buildings.

Conclusion

New York City has undergone growth in its economy along the past decades. The citys most active sectors are finance, insurance and real estate.

The structural development of the citys economy and growth of these sectors has been driven by national and local authority involvement, high population, high competition and ready market due to the high population.

However, despite this economic progress, the city experiences some problems such as housing, environmental pollution and unemployment. These can be dealt with through application of relevant economic strategies.

Reference list

Bellush, J., & Netzer, D., 1990. Urban Politics, New York Style. NY: M.E. Sharpe.

Chernick, H., 2005. Resilient City: the Economic impact of 9/11. NY: Russell Sage Foundation.

Congress. 2001. Congressional Record, V. 147, Pt. 16, November 8, 2001 to November 28, 2001. Washington D.C: Government printing Office.

Deadwiley, E., 2009. Civil Death in New York State: How New York State Utilizes Criminal Conviction Records to Impede the Economic Growth of Formerly Convicted People. NY: iUniverse.

E-Learning and Teacher Education, 2010. Urban Development: Problems Facing New York. E-learning and Teacher Education. Web. Web.

Kleniewski, N., 2004. Cities and Society. Malden, USA: Blackwell Publishing.

Okuyama, Y., & Chang, S., 2004. Modelling Spatial and Economic Impacts of Disasters. Springer-Verlag: New York.

Sassen, S., 2001. The Global City: New York, London, Tokyo. Princeton University Press: Princeton, NJ.

Sites, W., 2003. Remaking New York: primitive globalization and the politics of urban community. Minneapolis: University of Minnesota Press.

Introduction: William Hinton and His Vision of the Long Bow Reform

It is certainly hard to believe that an American man, even the American man who had been living in China for a considerable amount of time, could depict certain changes in the Chinese society and analyze the factors that contributed to a specific implementation of a certain reform. Weirdly enough, William Hinton did; in his analysis of the Long Bow Reform, the author gives credit to where it belongs, at the same time outlining the obstacles that the reformers faced.

Thesis statement

Despite the fact that originally, the economical reform that was carried out in the Long Bow Village, was intended for the fair distribution of the land resources, some of the aspects of the procedure were more than contradictory and quite controversial, which, therefore, discredited the very idea of the Long Bow Village reform.

It must be admitted that the reform itself pursued rather noble goals. According to the previous records, China needed a more fair land distribution: Social scientists, reformers, and revolutionaries were all attuned to the problem of unequal land distribution, seeing landlessness as the force that drove impoverished peasants into the cities and absentee landlordism as an inefficient way to manage land production (Bossen 86). However, mainly because the reform did not take into account the specifics of certain settlements, the available human resources were used unreasonably, which led to rather deplorable effects in certain parts of China, such as the Long Bow Village.

Following the Track of Hintons Notes: The Original Intentions

It is worth mentioning, however, that the land reform that was carried out in the Long Bow Village, was supposed to help solve the problems related to land ownership and grant peasants the land that they had been deprived of for so long.

Turning over the old system of land use

As it has been explained above, landlordism led to a number of undesirable outcomes, such as the fact that the state had very little regulation over the land, and that the land was sold to the people who offered the landlords the greatest amounts of money instead of the people who could actually make the land prosperous and fruitful, etc. As Bossen noted, Many farmers were impoverished by the drop in commodity prices and the loss of markets for textiles (Bossen 86). Offering that the land belonged to peasants, the reform allowed for a better control of the land. Therefore, it can be concluded that the original meaning of the reform was to minimize the impact of private businesses on the land and to let the government take control over it.

When urban intellectuals get down to work

Another idea that underlies Hintons research is that the Party must have been trying to promote the Communist ideas among the urban intellectuals by offering them the ideas of equal rights and freedoms (Hinton).

When the Ideas Were Put into Practice: The Associated Obstacles and Controversies

Unfortunately, the key problem of the agrarian reform was its vagueness and stiffness; with a bit more flexibility and a due amount of care, the key ideas of the agrarian reform could be applied in regard to the specifics of certain towns and villages.

Village residents are no soldiers

Of all the mistakes that were made in the course of the land reform implementation, the unwillingness to consider the specifics of the venue and the local residents was the most drastic one, which the Long Bow Village case illustrated graphically. According to what Hinton claims, the disadvantages of turning peasants as military soldiers were obvious from the very start: Mao Tse-Tung, long before he became chairman of the Chinese Communist Party, catalogued the weakness exhibited by peasants as revolutionary soldiers (Hinton 56). Anyway, Hinton was absolutely correct in that it was a bad idea to force the village residents to perform the functions of soldiers.

When the road to liberation is paved with thorns

Along with the fact that they could hardly start struggling for the better future without any previous experience of such fights, the citizens of the Low Bow could hardly embrace the new Socialist values that the Communist leaders bestowed on them. In addition, the new reform triggered radical changes that created the environment in which the residents of the Low Bow Village were not used to existing. Thus, a number of questions concerning the new way of life piled up, left without any answers: Even if all the means of production could be equally divided, what was to prevent the old processes of differentiation which had originally produced landlord and tenant from producing them all over again? (Hinton 55).

Reconsidering Hintons Argument: There Is More than Meets the Eye

Being able to watch the reform being implemented, as well as observe the outcomes of the reform and peoples reaction toward the latter, Hinton seems competent enough to talk about the mistakes that the Chinese government made. According to Hinton, apart from admittedly pointless efforts to turn the villagers into warriors, the political leaders should have abstained from changing the environment in which the villagers were used to live in so drastically.

Switching from one extreme to another: commandism vs. emancipation

Offering people too many freedoms in return for the years of tyranny of the upper class has never been a reasonable idea, and the infamous Long Bow Village case is the most graphic example of that. While it was important to grant the villagers with constitutional rights and freedoms, it was a mistake to offer escalating emancipation, which must have rather embarrassed the peasants than boosted their confidence. Hinton remarks, however, that the initial intent of the Chinese leaders offered going in the right direction: The work team must make the village Communists aware of the real dangers of commandism, loose morals, self-indulgence, dishonesty and petty corruption. It must help them root out of these dangers completely, irrevocably (Hinton 335), yet the implementation of these ideas left much to be desired.

Mere mortals pursuing the ideas of the Party

It was also quite unusual that the Party imposed the roles of soldiers on the people who had actually never had battle experience before. It can be assumed, therefore, that, without the governments guidance, peasants would have never resorted to violent actions. Thus, it can be concluded that, by encouraging the peasants fight against the landlords, the Chinese government was pursuing its own goals of promoting Communist ideas among the villagers.

The Expected and the Actual Outcomes of the Reform: Analyzing the Mistakes

To understand the significance of the land reform and the lessons learned from it, analyze the outcomes of the land reform in China and comment on what lessons the Chinese government learned after the deplorable effects of the reform were observed. However, Hinton mentions only briefly what should have been done instead. Considering steps that are more adequate will help learning the historical lessons better.

What the reform results turned out to be

According to what Hinton says, the outcomes of the agriculture reform in China turned out not as favorable for the Chinese government as the latter had expected them to be. The troops got out of hand quite quickly. It should be mentioned, however, that drawing into meaningful action of hundred peasants (Hinton 363) contributed to shaping the nations identity.

What could have been done in a different way

When reconsidering the effects of the agrarian reform in China, one cannot help feeling somewhat disappointed, because the reform could have been carried out in a much better and much more efficient way. If the government could create well-organized troops out of the village dwellers and control their actions better, instead of chaotic bloodbath for the sake of getting some scraps of land, one would have had an upheaval against the injustice of greedy landlords.

What the key source of problems was

As it has been mentioned, very few citizens of the village could actually confront landlords as a military unit; as a matter of fact, the dwellers of the Long Bow Village could hardly master the art of fighting. In essence, the governments grandeur plans on forming military unions out of the local dwellers failed because the latter did not have the required skills. As the existing records say, Through violent struggle, peasants were able to extract some money, but far from enough to satisfy the many peasants who still suffered in poverty (DeMare 228).

What lessons can be learnt

Judging by the results of the implementation of the agrarian reform in the settings of the early XIX century Communist China, one must admit that, even if people support the ideas of the government and if there is passion about a certain task to be accomplished, it is still required that the government should control the actions of the citizens. In addition, needless to mention, the Long Bow example shows that, no matter what circumstances, aggression and violence are never the answers. The conclusion to be drawn for Hintons story is that, even when there is the need to transform civilian residents into soldiers, military training is essential, since fighting skills do not come out of nowhere.

Conclusion: Hintons Experience in China and the Weight of His Argument

Overall, Hintons work seems surprisingly strong and quite neutral in its political tone, which makes it rather objective and definitely engaging read. Hinton has proved the fact that the outcomes of the land reform that as carried out in the Long Bow Village differed from the ones that the Chinese government aimed at because of the conflict between the Maoist ideas, which the reform pursued, and the specifics of the residents of the Long Bow village.

Works Cited

Bossen, Laurel. Chinese Women and Rural Development: Sixty Years of Change in Lu Village, Yunnan. New York, NY: Rowman and Littlefield, 2002. Print.

DeMare, Brian James. Turning Bodies and Turning Minds: Land Reform and Chinese Political Culture, 19461952. Ann Arbor, MI: ProQuest, 2008. Print.

Hinton, William. Fanshen: A Documentary of Revolution in a Chinese Village. Berkeley, CA: The University of California Press, 1997. Print.

Introduction

Chinas may regain its previous economic growth rate, and recover from the increasing capital outflows. The main challenge involves its rapidly enlarging current account and financial account in opposite directions. The outflows are mainly caused by the expected reduction in open market operations by the US Federal Reserve. Chinas growth relies on the growth of its major trade partners. The EU and the US show signs of growth, which may have a positive impact on Chinas balance of trade. The depreciating Yuan may also increase competitiveness. The current account has a surplus for each of the five years since 2009. The current account balance declined between 2009 and 2010. It regained momentum in 2012 with increasing levels of positive balances. The country reported financial account deficits for the last four years. Both imports and exports increased in the five-year period, except in 2012, which had a decline in the quantity of exported goods. Chinas exchange rate market operates under a managed exchange rate system.

China relies on foreign exchange more than other countries. The appreciation against the USD can be explained by the global financial crisis, which reduced production, and exports by American and European firms. The depreciation towards the end of 2013 and the beginning of 2014 can be explained by the capital outflow from China. Another reason for the changes could be the reforms that allowed the exchange market to float a little bit since 2005. The Chinese authorities have allowed the currency to appreciate in trying to reduce the gap between the market equilibrium rate and the managed exchange rate. China has the highest interest rates among the group, which shows the expected risk in China is high. China has pursued monetary policies to increase the money supply through an economic stimulus package in 2009.

Japan has maintained low-interest rates, even though they are not matched with a high economic growth rate. The European Central Bank has set lower and lower interest rates since 2009. The US has maintained the same level of its prime interest rate in the five-year period. The Chinese economy is more reliant on exports, which explains its reduced growth during the global recession. The government has used taxes and an expansionary monetary policy to increase the availability of capital in targeted sectors. China may not regain its initial trend in the balance of payments in the short run because of the nature of its current account and financial account. They are increasing in opposite directions. However, it may regain the initial GDP growth rate in the short run.

Body

The balance of payments for China for the last five years

The categories for the current account, financial account, and capital accounts. (Statistical discrepancy)

Table 1. Source: Central Bank of the Republic of China (Taiwan)

Current account trend in the five-year period

Chinas current account surplus or deficit for each year

The current account has a surplus for each of the five years since 2009. The current balance declined between 2009 and 2010. It regained momentum in 2012 with increasing levels of positive balances.

Chinas financial account surplus or deficit for each year

The country reported financial account deficits for the last four years. The company reported the first deficit of USD 358 million in 2010, followed by USD 32,046 million in 2011. By 2013, the deficit had grown to USD 41,164 million.

Changes over time

The deficits have increasingly become large towards 2013. As portrayed in graph 1, the financial account trend has a steep downward-sloping graph. It shows that the rate deficit in the financial account is increasing at a high rate. The current account is increasingly becoming larger positively when the financial account is increasingly becoming larger negatively. The capital account is fairly stable.

The reason China has the surpluses or deficits, and the reason they may have changed over this time

Table 2. Source: Central Bank of the Republic of China (Taiwan).

Both imports and exports increased in the five-year period, except in 2012, which had a decline in the quantity of exported goods. Services and income balances did not represent a decline in 2012. It follows that the decline in 2012 on exports, and the slower rate of growth of exports relative to imports are the main causes of the reduced balance of trade. Between 2009 and 2010, the balance of trade declined because imports are increasing at a higher rate than exports.

Table 3. Source: Central Bank of the Republic of China (Taiwan).

The deficit in the financial account may have been caused by increasing direct investments abroad, as shown in table 3. Investments in portfolio assets (equity and debt securities) also decreased by a large margin between 2008 and 2009, which declined from USD 3,527 million to USD -31,699 million. Two reasons can be listed for the deficit in the financial account. One is the increased borrowing, and the other is the increase in direct investment abroad.

The record of the data for the last five years for your countrys private Savings (S), Investment (I), Public Savings (T-G), and Current Account (CA) as a percentage of GDP. (Draw a graph in the body)

Table 4.

According to graph 2, the proportion of private savings (S) has a downward trend when public savings (T-G) has an upward trend. Aggregate investment has a fairly horizontal trend, which indicates that there is little change in their values. The current account is presented by itself in graph 3 because of its small-sized percentages. It shows a declining proportion. The current account regained stability between 2012 and 2013.

Currency

Primary currency used in China

The central bank in China is known as the Peoples Bank of China, which has a mandate to issue circulating notes. The official name of its currency is known as the Renminbi. The unit of the currency is the Yuan (Triami Media BV par. 1).

Type of exchange rate system

Chinas exchange rate market operates under a managed exchange rate system, which involves the government purchasing and releasing a large number of foreign currencies to keep it at the desired level. Morrison (26) explains that China carried out reforms on the foreign exchange market in 2005. It follows a managed exchange rate system instead of a floating exchange rate system against major currencies.

Chinese Yuan (CNY) todays value against the US dollar, the Euro and the Yen

In April 2014, 6.2352 Yuan was exchanged for USD 1, and 1 Yuan has been exchanged for 16.4270 yen. It has been exchanged 8.6146 Yuan for Euro 1 (Fusion Media Ltd., table).

Comparison of the Yuan against the currency of the five main trade partners

Its five major partners include the US with USD 514 billion, Hong Kong with USD 401 billion, Japan with USD 312 billion, The Republic of Korea with 274 billion, and Taiwan with USD 197.28 billion (China Daily, 1-5). Morrison (21) includes the EU with USD 559 billion of total trade.

Trend

The USD and Euro have been presented in one graph for better comparison (see Appendix A, for tables). The values have been inverted for better comparison.

When 1 Yuan exchanges for more foreign currency, it indicates an appreciation of the Yuan. In graph 4 and graph 5, the Yuan has appreciated against the US Dollar, the Euro, the Japanese Yen, and the Korean Won. It is shown by an upward trend that indicates that 1 Yuan is exchanged for more of these currencies. The Yuan is fairly stable against the Taiwan Dollars and the Hong Kong Dollars. Towards the end of 2013, the Yuan showed signs of depreciating, as shown by a downward trend in the USD and Euro.

Dependence

China relies on foreign exchange more than other countries. Morrison (26) explains that China had about 60% of the GDP relying on net exports in the last decade. The Euro Area (28 countries) had 30%, the rest of Asia had 35%, and the G7 countries had 16% (Morrison 26). It shows that China relies more on the foreign exchange market than its major trade partners. Compared on their proportion of global trade, China accounted for 17.5% of global exports in 2013, and 21.1% of imports (JETRO, table). The US accounted for 18.9% of exports and 8.5% of global imports in 2013. Table 5 below shows that China is reliant on foreign exchange more than its major trade partners.

Table 5. Source: JETRO .

Recent shocks

The Yuan (CNY) has depreciated against the currency of its five major trade partners since January, 2014 (see Appendix A). It may be a move by the Chinese monetary authorities trying to create competitive advantage by creating a weaker Yuan. It can also be that there is less demand for the Yuan in the foreign exchange market.

The changes that have occurred in the foreign exchange rate against the five major currencies since January 2009. (Use monthly or quarterly figures)

The Yuan appreciated against the US dollar consistently since 2009, only showed signs of depreciation at the beginning of 2014 (see Appendix A). The Yuan depreciated against the Euro in October and November, 2009, and August and September, 2010. The Yuan appreciated in the other months. It appreciated at the beginning of 2012, and started to depreciate in the middle of 2013 (see Appendix A). It has been more volatile towards the Euro in the five-year period, compared with the other currencies. The Yuan had inconsistent fluctuations against the Korean won in the five-year period. It appreciated in some months of 2009, followed by depreciation in 2011, and appreciation in 2012. The Yuan started to depreciate against the Won towards the end of 2013, and beginning of 2014. The Yuan was fairly stable against the Taiwan Dollars and Hong Kong Dollars, but showed signs of depreciation at the beginning of 2014.

The three reasons for the changes in the Yuans exchange rate during the five-year period.

The appreciation against the USD can be explained by the global financial crisis, which reduced production and consumption by American and European firms and households. It resulted in less demand for USD by Chinese investors, and foreign consumers.

The depreciation towards the end of 2013 and beginning of 2014 can be explained by capital outflow from China. One of the reasons for the outflow of capital is the expected quantitative easing tapering by the US Federal Reserve (The Peoples Bank of China 29). Quantitative easing (QE) tapering refers to the reduction of money supply by the government through open market operations. The reduction in the amount spent on open market operations is likely to increase market interest rates. The Peoples Bank of China claims that weak fundamentals in the emerging markets are the fundamental reason for the volatility (30). Investors prefer the US to China when interests are similar because China is considered to have weak regulations. However, the expected QE tapering in the US affected most emerging economies such as Indonesia, Turkey, and India (The Peoples Bank of China 32).

The third reason for the changes could be the reforms that allowed the exchange market to float a little bit since 2005. Morrison (26) discusses that the Chinese authorities have allowed the currency to appreciate in trying to reduce the pressure between the market equilibrium rate and the managed exchange rate.

The Yuans forward (either 30, or 90, or 180 days into the future) value today against the US dollar, the Euro and the Yen

The forward value for the US against the Yuan for 30 days is about 6.13 Yuan for 1 USD. It is 6.12 Yuan in 90 days, and about 6.02 Yuan for 1 USD in 180 days (Scotiabank 13). Most analysts forecast the dollar against major currencies, which makes it difficult to obtain a forward for the Yuan against the Euro, and the Yen. However, if the Yuan depreciates against the dollar as expected, it is likely to depreciate against the Yen, and the Euro.

Based on your country and the other three countries, what would explain (three reasons) this change in value over this time period?

The main reason that the Yen is expected to depreciate against the dollar is that the Chinese government is likely to take action to cause the Yuans depreciation by releasing more foreign currencies. It would like to maintain its competitiveness advantage.

Another reason is that America has more exports than imports. Chinas imports are increasing at a higher rate than exports, which may result in a further deficit in the balance of trade. It may cause the Yen to become weaker.

The third reason is that the capital outflows may continue when the US government implements the QE tapering that was postponed in 2013.

Interest rate and GDP

Chinas (prime or central) interest rate and real GDP values since January 2009 compare with the interest rates and real GDP in the US, EU and Japan. (Use monthly or quarterly figures).

According to graph 6, the quartely real GDP shows that only the EUs GDP has a strong upward trend, which shows consistent improvement. The US and Chinas GDPs are also increasing, but a lower rate than the EU. China has more frequent quarterly fluctuations compared with the other economies. Japan is fairly constant (see Appendix B and Appendix C, for tables).

Sources: Bank of Japan (table), European Central Bank (table), FRED (table), National Bureau of statistics of China (table), OECD (table), The Peoples Bank of China (table), Triami Media BV (table).

Chinas (prime or central) interest rate and real GDP figures compared with the interest rates and real GDP in the US, EU and Japan.

Chinas central bank rate has been at 6% in the past one year. Japan has the second lowest interest rates, but its economic growth rate is the lowest in the group. The EU, through its European Central Bank (ECB), has integrated much lower rates in 2013 and 2014 than Japan. China has the highest interest rates, which may indicate that China is considered highly risky by banks and investors compared with the group. However, China had a real GDP growth rate of about 7.7% year on year, which is higher than in Japan (National Bureau of statistics of China, table). Only the EU indicates a higher growth rate as shown in graph 6.

The changes in value of these variables since January 2009.

China

In China, interest rates have increased since 2009, from 5.31% in the first quarter 2009 to 6.56% in 2013 (Q4), for the central interest rate. A major increase occurred in 2011 from 6.06% in the first quarter to 6.56% in the third quarter (The Peoples Bank of China, table). The GDP fluctuated frequently between 2009 and 2013 (see Appendix B). The GDP trend is that all first quarters have a lower GDP, and all fourth quarters have a higher GDP than the other quarters.

US

The US has maintained its prime rate at 3.25% since 2009. The quarterly real GDP has increased consistently in all quarterly figures. It shows an upward trend that does not change downwards (FRED, table).

EU

The interest set by the ECB have been reduced from 1.50% in the first quarter 2009 to 0.25% in the last quarter 2013, for the ECB fixed rate (European Central Bank, table). The ECB marginal rate has changed from 2.25% to 0.75% within the same period. The interest rates have reduced almost consistently within the EU. The EU real GDP is not consistent as that of the US. There are increases in some quarters, and decreases in others. However, the fluctuations are less frequent compared with those in China.

Japan

Interest rates fell from 2.30% in 2009 (Q1) to 1.20% in 2013 (Q4) for the long-term lending rate (Bank of Japan, table). The short-term lending rate remained constant during the five-year period at 1.475%. Japans quarterly GDP has fluctuations similar to China in frequency, although the margins are smaller.

Based on Chinas values and the other three countries, the reasons for the change in the values over the five-year period.

Three reasons for the occurrence of the fluctuations

1. The global financial crisis created a global recession that affected many countries. Most monetary authorities were trying to keep the interest rates low to encourage economic growth. It was seen in the US, the EU, and Japan. Only China shows increasing interest rates when all others are decreasing their interest rates. China reported economic growth, even after the financial crisis. The other economies were in recession, so they had to lower interest rates to increase the availability of credit for investment.
2. China has been associated with high risk because there is inconsistency in enforcing contracts, and adhering to the rule of law (The Peoples Bank of China 30). Higher risk has to be associated with higher interest rates.
3. One of the reasons for the fall in growth rate in China, and its fluctuations is that China is reliant on exports more than the other countries. The other countries rely more on domestic consumptions than balance of international trade (Morrison 26). China relies on fixed asset investment, and exports. Relying on domestic consumption would reduce fluctuations.

The type of fiscal and monetary policies that China has pursued since January 2009. (Be specific: government spending, taxes, money supply, etc.)

China has pursued monetary policies to increase money supply through an economic stimulus package of $586 billion in 2009 (Morrison 2). The government also postponed the purchase of mature bonds, which maintains a high money supply. The Peoples Bank of China (2) discusses that M2 money supply went up by 14.2%, year on year growth, in 2013. M2 represents currency, deposits, and checks. M0, which stands for currency in circulation, went up by 5.7% in 2013, to reach 5.6 trillion Yuan (The Peoples bank of China 2). The increase in money supply is supposed to lower interest rates. Interest rates have begun to drop as it is indicated in 2014.

Another monetary policy implemented by the government is to control interest rates. The Chinese government launched a loan prime rate (LPR) system centralized quote, which is similar to the one used in the US. In the US, the prime rate considers 10 large banks. The Chinese made up a panel of 9 large banks (The Peoples Bank of China 14). They want to create ability to lead other financial institutions in setting a common level of interest rates.

The government also uses taxes and incentives to target particular industries. Morrison (26) discusses that China lowers the cost of capital and engaging in the manufacturing sector.

Explanation for the changes in interest rates and real GDP from the fiscal and monetary policies that were implemented.

The LPR system and the increase in money supply can explain the falling interest rates in 2014. The fluctuations can be explained by the influence of the global financial crisis. China relied more on exports when the global recession took place. As a result, reduction in exports to the advanced economies caused the reduction in the GDP growth rate. The GDP growth rate was 9.6% between 2008 and 2011, and 7.7% between 2012 and 2013 (Morrison 2). The Peoples Bank of China (36) explains that export growth rate dropped further after 2012.

The recovery in 2011, which occurred after the falling growth rate in 2010, can be explained by the stimulus package. Increased money supply creates more liquidity for investment.

The use of taxes and incentives on the manufacturing sector has resulted in higher growth in the manufacturing sector at the expense of other sectors. It distorts the utilization of resources from areas that provide the highest opportunity cost. On the other hand, China overtook the US as the major manufacturing country in 2010. In 2011, Chinas gross value added on manufactured commodities was 30.5% of GDP compared with 12.3% in the US, and 18.7% in Japan (Morrison 8). It can explain the recovery that China has shown in 2013, after a decline in exports in 2010 and 2011. Table 6 below shows that the change in exports between 2012 and 2013 is larger than in the other periods.

Table 6.

Comparison of the changes in fiscal and monetary policies to the changes the current accounts since January 2009.

The current account declined in 2010 and 2011, and then it regained its balance in 2012. In 2013, there was a much higher increase. It shows that the government requires more money to carry out its expenditure. The financial account has grown more on the negative side, which shows increased borrowing to finance government operations.

Impact of the changes in fiscal and monetary policies in relation to the changes in the current account.

Increased expenditure requires the government to sell bonds, which is the case for a fiscal policy. In a policy that requires the government to issue economic stimulus packages, the government increases the money supply by electronically crediting the accounts of the persons that receive the amount. It is an expansion monetary policy, which increases the current account, and decreases the financial account.

Reducing taxes and issuing incentives on the manufacturing sector, decreases the amount that the government receives as income. It increases the current account, and reduces the financial account.

Conclusion

Chinas current account and financial account have been increasing rapidly in opposite directions since 2009. The current account is increasingly becoming larger positively when the financial account is becoming larger negatively. The rate at which the two accounts are increasing is higher than in the earlier periods. The capital account has been fairly stable in the five-year period. Chinas economic growth may have slowed down between 2010 and 2011, but it has shown signs of recovery in 2013. The increase in capital outflow was mainly caused by the expected reduction of quantitative easing by the US, which may indicate that investors prefer the US to China when interest rates are similar.

Chinas manufacturing sector may continue to grow, even though it has been criticized for having excess capacity. It takes away resources from other alternative uses that would have given higher returns. The appreciation against the dollar may soon be contained if the Chinese government takes action to release part of its foreign reserves, as it has been its usual response, except for the last few years. The CNY appreciated because the government changed its system in 2005, and after 2009 it has tried to match the market equilibrium rate gradually. Chinas may regain its previous economic growth, which relies on the growth of its major trade partners. The EU and the US show signs of growth, which may have a positive impact on Chinas balance of trade in the long run. The depreciating Yuan may also strengthen competitiveness.

Appendices

Appendix A

Source: Fusion Media Ltd. (tables).

Appendix B

Sources: FRED (table), and National Bureau of statistics of China (table).

Appendix C

Sources: National Bureau of statistics of China (table). Bank of Japan (table). European Central Bank (table). The Peoples Bank of China (table). Triami Media BV (table). FRED (table).

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