Categories for Economics

World’s Top 10 Coffee-Producing Essay

World’s Top 10 Coffee-Producing Essay

Coffee is the world’s second largest traded commodity it is used not only for drinking but for soft drinks and cosmetics as well, it is second only to oil according to all imports and exports from all countries. They are two main types Arabica coffee (most people are used to this and are more popular) and there is Robusta coffee. In the last two years the prices of coffee have been gradually falling (Ycharts. (2013). Coffee Arabica Price) alongside this, the supply of coffee has also been falling.

Although there have been some price fluctuations at times and this could end up really affecting an economy that depends on coffee. The reason that this is such a big deal is because the countries that heavily depend on coffee exports are usually developing countries and with the price of coffee falls, so does their rate of development, these countries involve countries such as Vietnam, Ethiopia, Peru and Guatemala who are all within the world’s top ten coffee producers (Justin Doom.

(2011). World’s Top 10 Coffee-Producing Countries in 2010-2011).

When these economies are weakened, they face to their governments, who need to somehow intervene in the coffee market and try to stabilise the prices so that they can reach their ultimate goal to continue to develop. Price stability in the coffee market is an ideal scenario in a market where the prices for coffee do not alter drastically. They may raise a little or fall, but never by a noticeable amount, and are easy to predict, which can help coffee producers plan for the far future. It is not only important to coffee producers, but to the economy as whole, if the prices for coffee are unstable, for some countries this could have a huge impact on the inflation levels. The diagram below describes how an unstable price for coffee can increase and affect the short run aggregate supply and cause the general price level for the economy to rise and therefore causing inflation as they did in July 2012 (Ycharts. (2013)

There are several reasons why the prices of coffee have been fluctuating, but still gradually falling. The first reason is that coffee or coffee beans are extracted from plants. These plants must first be grown, then harvested. There is only so much mankind can do to ensure that there is always excess coffee however sometimes natural disasters can occur, and there is nothing that farmers can do to prevent this, when natural disasters occurs it means that farmers will have small yields and supply for coffee will be low, for example Colombia, one of the world’s leading coffee producers and exporters, in recent years have been experiencing poor weather conditions which have led to production falling by 12% to 7.809 million bags in 2011 which is a record low that hasn’t been seen since 1976. This can cause the price to increase seeing as coffee is the world’s second most demanded commodity. These poor conditions consisted of excessive heavy rainfall, disease, pest and limited sunlight (Zacks Equity Research. (2012)).

The graph below shows how the supply for coffee has decrease leading to a rise in price On the other hand this is just an example for Colombia and for the rest of the world the prices for coffee have been falling for the last four years, this is due to wealthy individuals and companies use their money to invest in the global coffee suppliers, and other large coffee producers such as Brazil (the world number three) has been turning out high yield and is expected to do so in following years. Fain Shaffer, president of infinity trading crop expects coffee to be traded by one dollar to a pound of coffee, figures which have not been seen since September 2006. (Alexandra Wexler. (09/17/2013)) Coffee prices may currently be relatively stable at the moment however according to research conducted by the Royal Botanical Edinburgh along with Ethiopian scientists and London’s Botanical Garden, Kew, have predicted that wild Arabica coffee will be extinct by the year 2080. If the prices begin to fall, all of a sudden the prices for coffee will no longer be stable. No country operates on a 100% free market.

All economies are mixed, some tend to be freer than others, however should a country find that prices are volatile or unfair, they can always rely on the government to intervene, aka government intervention. One way a government could help stabilise the price of coffee is through buffer stock schemes, these schemes focus on the prices of coffee and try to stabilize the price, they do this by first establishing the intervention price, this is a price the government thinks is most suitable for coffee. Once this has been established the government will then buy up a lot of coffee when the price is at its lowest, they continue to do this until prices for coffee begin to rise again, and to balance out the price to make sure it is at the intervention price. They are constantly buying coffee to balance out the price. This is an effective method in theory however in real life they do not work out as planned because the people in charge of the buffer stock tend to get greedy and try to maximise profits rather than help the economy as a whole and end up just constantly buying till they go bust.

A good example of a successful buffer stock scheme is in Brazil, for years Conab, Brazil’s official crop bureau has been buying coffee at low prices and uses it to help local producers when the selling price for coffee is too low. Between 2003-2004 Conab had just under four million KGs accumulated. (Geoff Riley. (2012)) Another issue with this is that it is very difficult for a government to raise enough money to buy up enough coffee to influence the natural supply and demand. It is also expensive to store large amounts of coffee and because it is an agricultural good it has a shelf life. Another method the government could intervene is through Subsidies. A subsidy is a grant given by the government in order to increase production, this would help producers who have produce low yields due to high taxation and or high costs If the government could make coffee more attractive this could help stabilise the price if supply started to fall. This however is not a very effective method because it can only help bring the supply of coffee back up, and it may be able to work to well, if producers begin to produce excess supply the prices of coffee could start to increase sharply leaving the prices unstable yet again.

Buffer stock schemes are the most ideal way for a government to ensure price stability, and the success of the scheme depends heavily on whether or not the Government can provide proper facilities to accommodate huge quantities of coffee and are able to afford to buy enough Coffee to be able to alter the market forces so that if prices go to high they can bring them down and if they go to low that they can bring them back up again, if not it could result in huge losses for the economy and even end up setting the country back. The supply and demand of coffee can and always will be prone to quick sudden changes due to circumstances that are unavoidable.

The Benefits of Microcredit to Bangladesh Essay

The Benefits of Microcredit to Bangladesh Essay

Bangladesh, with a population of more than 140 million, is one of the most densely populated countries in the world. Almost half of the total population is still living below the poverty line earning less than $1 a day. The various dimensions of the country’s poverty are manifested in terms of inequality in income distribution (in favor of urban areas), wage differentials between the formal and informal sectors, dramatic increases in the cost of living, unemployment and internal migration.

However, progress on a range of social indicators in Bangladesh over the last fifteen years has been striking in certain areas, and these have been endorsed largely to the mix of public and private service provision, including the pioneering approach of microfinance institutions (MFIs).

The government of Bangladesh faces an enormous challenge in reducing its poverty. However, the government cannot act alone as it cannot command all the resources and personnel to maintain progress in poverty alleviation. The MFIs have taken a key role in poverty improvement efforts and have been providing credit to these poor people who lack savings and capital but want jobs in the farm and non-farm sectors.

The banking sector in Bangladesh is dominated by the four state- owned commercial banks, but in addition there are five government owned specialized banks, 30 domestic private banks, and 12 foreign banks.

A few of these banks do lend extensively to rural areas most don’t even look at the rural areas of the country for lending money. But the poor people do not get access to formal financial institutions due to the lack of physical collateral. Unlike other countries, Bangladesh does not a have a proper substructure of small banks operating at a local level, and thus a strong structure NGO microfinance sector had been developed in Bangladesh. These MFIs have been able to reach the poor with collateral-free loans at affordable costs and can thus help the poor become self-employed. The micro-finance sector in Bangladesh is one of the worlds largest. Bangladeshi MFIs are best known for their groundbreaking, large-scale provision of microfinance services, principally tiny collateral-free loans to poor women.

Microcredit programs in Bangladesh are implemented by NGOs, Grameen Bank, state-owned commercial banks, private commercial banks, and specialized programs of some ministries of Bangladesh government. In the microfinance sector total loan outstanding is around TK 200 billion and savings TK140 billion that have been rendering among 30 poor people which help them to be self-employed that accelerates overall economic development process of the country. Through the financial services of microcredit, these poor people are engaging themselves in various income-generating activities and around 30 million poor people are directly benefited from microcredit programs.

Credit services of this sector can be categorized into six broad groups:

1. General microcredit for small-scale self employment based activities,

2. Microenterprise loans,

3. Loans for ultra poor,

4. Agricultural loans,

5. Seasonal loans, and

6. Loans for disaster management.

Loan amounts up to BDT 30,000 are generally considered as microcredit; loans above this amount are considered as microenterprise loans.

The Microcredit Regulatory Authority (MRA), established by the government in August 2006, received applications from more than 5000 private institutions (NGO-MFIs). But, around 1000 applications of them were found to be very small organizations that had fewer than 1000 borrowers or less than the USD 58,000 in outstanding loans that is generally considered as the minimum initial operating portfolio of a single branched MFI to be sustainable. However, till June 2010 the MRA had approved licenses in favor of 552 NGOs and 2910 have been rejected due to not meeting licensing criteria, such as non-existence of operations at field, inappropriate registration as an NGO, inadequate financial information, and so on.

Size and growth:

According to the size of institutions in terms of the number of borrowers served, MRA categorizes MFIs into five major types: very large, large, medium, small and very small. There are only two very large MFIs, viz., BRAC & ASA, each serving over four million borrowers. Table-2 shows year-wise number and percentage of the total number of institutions under these five categories for the last four years. Currently there are only 21 medium, 16 large and 2 very large MFIs operating in Bangladesh, together they constitute only 8 percent of the total. 92 percent NGO-MFIs are still either small or very small covering not more than 17 percent share of the market in terms of outreach and operations.


Despite certain success in reaching the poorer groups of households, it has been estimated that certain groups of extreme poor households do not take part in microcredit program. Geographical coverage of microcredit operation varies, with coverage thinnest in the poorer, more remote and less populous districts of the country’s north and southwest. Considering the geographical coverage of the MFIs in Bangladesh, more than 80 percent of the MF-NGOs have less than 5 branch offices and about half of them do not have any branch office at all.

In recent years, there have been some efforts in reaching these households by offering more flexible repayment schedules with a smaller loan sizes. Several studies also show that 15-30 percent of microcredit members are from ‘non-target’ groups as also measured by householder’s land size.

The success of microcredit programs depends on the following challenges:

1. Enhancing the Resources versus Reaching the Poor Client

2. Smaller versus Larger loan sizes

3. Increase in client-base versus Sustainability of MFIs


Women empowerment:

Women are given equal access to the Grameen schemes as a result; they have raised their status, lessened their dependency on their husbands and improved their homes and nutritional standards of their children. 90% of women who used begging as a means of survival now have roof over their heads and can support themselves.

Group Savings:

Group Savings have proven successful as group lending. Group savings have reached 698 million taka (US $ 23 Million approx), out of which 570 million taka 9US 419 million) are saved by women. The bank requires its borrowers to save. Each borrower saves one taka (2-5 cents) each week. As of today Grameen bank has collected so much money that they can collectively buy the largest enterprise in the country. The poorest of the poor in the country are entering the coterie of the elites.

Shift in the occupational pattern:

There has been a shift in the occupational graph from agricultural waged labor considered socially inferior to self- employed petty trader. Micro-credit has succeeded in graduating the poor from poverty level to a self sustained position.

Builds Trust among Poor:

Grameen has put trust back into the picture. The working of the Grameen is largely through trust. It believes in the enormous potential of each and every human being given enabling environment, even the poorest of the poor can peel off doubts and start exploring their abilities to find a life with full human dignity.

Spurs social change:

Micro credit had done what billions of dollars worth of AWACS (Air Borne Warnings and Control System) and Patriot missiles cannot, for decades the west has tried to defeat fanatical extremists militarily, this has been bloody, costly and highly unsuccessful, but quietly every day, the attraction of the militant Islam is being blunted at the ballot box and in the people’s hearts and minds, than to the economic development of the poor. Micro credit helps solve a host of intractable, long-term social ills related to poverty. In Bangladesh the use of contraception is one of the first behaviors to change. In fact formation of groups of women to meet regularly helps in discussing new ideas and sharing information, this serves as a potent factor in bringing about broad based social change, otherwise women are isolated. In Bangladesh micro-credit has led to an increase in participation of people in the mainstream economic and political process of society, and overall human development.

Very low default rate:

The default rate is astonishingly low compared to what Bangladesh commercial banks suffer. It is about 2% as compared to about 70% for agricultural loans and 90% for industrial loans. Yunus Says” The difference lies in the psychology of the borrowers. The rich can evade the consequences of non- payment, the poor cannot. They value loan sharks so much; that they are only too grateful for once aims a lifetime opportunity to improve them”. Micro credit has graduated the rural poor from the informal capital market controlled by the moneylender and local elite to institutionalized banking.

Positive impact on the families:

Independent studies show that micro credit has a host of positive impacts on the families that receive it. A recent world bank study by Shahid Khondkar (2003) show that micro-credit programs operating in Bangladesh over a long period of time have produced a greater impact on extreme poverty than on moderate poverty.” The results of this study indicate that micro credit not only affects the welfare of participants and non-participants, but also the aggregate welfare at the village level. In fact even in disaster situations and post conflict areas, it has helped rebuild economic activities and livelihoods. Hence acting as the coping mechanisms of the poor. This was successfully demonstrated during the floods in Bangladesh in 1998

Problems and constraints:

1. How to expand the outreach of micro credit.

2. Lack of funds.

3. Lack of initiative in creating financing institutions.

4. Absence of legal framework for creating micro credit institutions.

5. Lack of conceptual clarity

6. Absence of regulatory framework

United Nations response:

United Nations: General Assembly Resolution 52/194. The report of the Secretary-General on the International Year for the Eradication of Poverty (1996) and the First United Nations Decade for the Eradication of Poverty (1997-2006), recognizes that people living in poverty are innately capable of working their way out of poverty with dignity, and they demonstrate creative potential to improve their situation when an enabling environment and the right opportunities exist. Noting that in many countries of the world, micro credit programmes, by providing access to small loans to people living in poverty, have succeeded in generating productive self-employment. Freeing the people from the bondage of poverty leading to their increasing participation in the mainstream economic and political processes of the society.

The UN recognizes that micro credit programmers, in addition to their role in the eradication of poverty, have also been a contributing factor to the social and human development.


Strengthening local government is one of the most desired institutional changes needed for poverty reduction. Decentralization and participation are the buzzwords.

SHARE and ASA and GBUP in India, Nirdhan and SBP in Nepal, KASHF in Pakistan-All these are the leading replicas of Grameen Bank of Bangladesh. The question to be asked is why is it that the success rate of these institutions is not the same as that of its model i.e. the Grameen Bank? This needs to be looked into. The need of the hour is greater awareness and consciousness among the populace of the third world about the feasibility and the importance of the use of micro credit in their respective countries.


The system of this bank is based on the idea that the poor have skills that are under-utilized. A group-based credit approach is applied which utilizes the peer pressure within the group to ensure the borrowers follow through and use caution in conducting their financial affairs with strict discipline, ensuring repayment eventually and allowing the borrowers to develop good credit standing. The bank also accepts deposits, provides other services, and runs several development-oriented businesses including fabric, telephone and energy companies. Another distinctive feature of the bank’s credit program is that the overwhelming majority (98%) of its borrowers are women.

Grameen Bank continued to expand its outreach in Bangladesh in 2009 to bring new areas and new members within its operational fold. During the year, the bank opened 23 new branches bringing the total number of branches to 2,562 that dot the length and breadth of rural Bangladesh. Bank’s network–40 Zonal, 268 Area and 2,562 branch level offices–now encompasses 83,458 or over 99% of the country’s nearly 84,000 villages located in 479 upazilas or sub-districts in all 64 districts of Bangladesh. A fresh batch of 300,413 people joined the Grameen family in 2009, swelling the aggregate number to a staggering 7.97 million members.

Growing Importance of the Global Economy Essay

Growing Importance of the Global Economy Essay

How has the growing importance of the global economy affected your organization’s competitiveness? The global financial crisis continues to be a severe shock to most enterprises. The initial economic downturn, the worst since the Great Depression, has affected almost all sectors of the economy. Everyone and every organization that has felt the pain. The company I work for serve the basic insurance needs of the fast-growing but largely under-served American middle income market. While many insurers have moved up-market, we are firmly committed to helping working families and retirees get basic protection through long-term care, life and supplemental health insurance products, as well as annuities

How has your organization responded to this? My company offer consumer’s choice in how they buy insurance products.

They can buy direct from Colonial Penn, which has special expertise in direct sales. They can purchase products across the kitchen table through career agents from Bankers Life and Casualty Company, independent agents of our Washington National Insurance Company unit or through its Performance Matters Associates marketing arm, both of which also offer voluntary benefit products to employees at the workplace.

What recommendations would you make for your organization to improve its strategic decision-making? I would have consolidated and integrated all operations under a single resource with the goal of delivering improved customer service even as we reduced costs. A streamlined application and straight-through processing system has shortened customer and agent turn-around times and lowered application costs.

2013 CNO Financial Group, Inc. http//

Economic Growth and Economic Development Original Essay

Economic Growth and Economic Development Original Essay

In contemporary times, certain economic registers are used frequently. Arguably two of these most used terms in economics, ‘economic growth’ and ‘economic development’ are terms that just about everyone is at least remotely familiar with, even if they have not studied economics at all. Sometimes it seems everyone knows what economic growth and economic development is. Politicians use these terms all the time, and so do teachers, managers and even preachers. Often, people’s use of these terms may not be quite accurate, but one has to admit that most of the time they are never too far from the mark.

Insights into the aforementioned terms ‘economic growth’ and ‘economic development’ are given as follows…

Economic Growth

Economic Growth is an increase in a country’s real level of national output which can be caused by an increase in the quality of resources by education etc, increase in the quantity of resources & improvements in technology. Economic Growth can also be described as an increase in a country’s productive capacity, as measured by comparing gross national product (GNP) in a year with the GNP in the previous year.

In other words, Economic Growth is an increase in the real level of output as measured by the annual percentage in real GDP (Gross Domestic Product). Increase in the capital stock, advances in technology, and improvement in the quality and level of literacy are considered to be the principal causes of economic growth. In recent years, the idea of sustainable development has brought in additional factors such as environmentally sound processes that must be taken into account in growing an economy.

Measurement of Economic Growth

Economists usually measure economic growth in terms of gross domestic product (GDP) or related indicators, such as gross national product (GNP) or gross national income (GNI) which is derived from the GDP calculation. GDP is calculated from a country’s national accounts which report annual data on incomes, expenditure and investment for each sector of the economy. Using these data it is possible to estimate the total income earned in the country in any given year (GDP) or the total income earned by a country’s citizens (GNP or GNI). GNP is derived by adjusting GDP to include repatriated income that was earned abroad, and exclude expatriated income that was earned domestically by foreigners. In countries where inflows and outflows of this sort are significant, GNP may be a more appropriate indicator of a nation’s income than GDP. There are three different ways of measuring GDP

•the income approach
•the output approach
•the expenditure approach

The income approach, as the name suggests measures people’s incomes, the output approach measures the value of the goods and services used to generate these incomes, and the expenditure approach measures the expenditure on goods and services. In theory, each of these approaches should lead to the same result, so if the output of the economy increases, incomes and expenditures should increase by the same amount.

How to boost Economic Growth in a country

In order for a country to experience economic growth, certain things have to be done. In my own opinion, I believe that; As more people are employed, the amount of capital increases, education levels increase, the quality of capital changes, or the technology increases, the productive capacity of the economy increases. Therefore, the economy can increase its output giving consumers more disposable income, promoting an increase in consumption spending, and providing resources for business to use for further investment and government to use to provide public goods and services. Increased labor force participation increases output.

Expanded, improved education creates more productive workers. Business and government spending on research and development enhance our abilities to produce and allow each worker to become more productive, increasing incomes for all. Finally, to achieve a higher level of GDP in the future, consumers need to limit consumption spending and increase savings today, permitting businesses to invest more in capital goods. If resources are invested into building an economy now, future generations will enjoy a higher level of economic growth; our businesses will produce more goods and consumers can purchase more goods. Expansion of output at rates faster than our population growth is what gives us the opportunity to enjoy higher standards of living.

Economic development

Economic development is a normative concept meaning that the definition is variable however; the definition given by Michael Todaro is ‘’an increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice.’’ Economic development can be defined as the advancement of a nation or society according to several economic factors. Economic development generally includes such trends as technological innovation, improvements in the standard of living and life expectancy, and increases in the amount of invested assets per capita

At the core of the definition is the point that economic development is not just about dollars and cents but is about community well-being and creating communities that people want to live in. It is a constant challenge for small communities to hold onto their young people. There must be jobs and facilities that the next generation expects as a standard. Providing infrastructure on one hand and building social capital on the other will lead to community sustainability and resilience which eventually boils down to ‘’economic development’’

In a few words one can say that the scope of economic development includes the process and policies by which a nation improves the economic, political, and social well-being of its people.

Measurement of Economic Development

There are several criteria or principles to measure the economic development. Let us make a detailed study of these measurements for better understanding.

1. National Income:
Some economists have taken increase in the real national income as the indicator of economic development because per-capita income depends upon the national income. National Income is related with the final goods and services produced in a country. According to this method the state of continuous increase in national income can be taken as economic development. This is majorly applicable to the poor and middle class countries. Short-run increase in national income cannot be taken as economic development. Likewise increase in the national income as a result of increase in price of goods and services cannot be defined as economic development.

2. Per Capita Income:

Increase in per-capita income has been pointed out by some economists as a basis for measuring economic development; According to the classification given by the United Nations Organization in 1989, countries having per capita income less than 580 US dollars fall in the class of poor countries, countries having per capita income between 580 US dollars and 6,000 US dollars are in the middle class, and countries having per capita income more than 6,000 US dollars are in the class of rich countries.

According to World Development Report 2009, per capita income of Nepal is 340 US dollars. Such indicator makes the comparative study of different countries easy. On the basis of per capita income the economic growth rate of any country can be found out. The increase in per capita income of any country shows the increase in economic growth rate of the country The UNO experts in their report on ‘Measures of Economic Development of Underdeveloped Countries’ have also accepted this measurement of development.

3. Economic Welfare Index:

Economists like Colin Clark Kindleberger, D. Bright Singh, and Hersick etc. have suggested economic welfare as the measure of economic development. The term economic welfare can be understood in two ways: (a) When there is equal distribution of national income among all the sections of the society. It raises economic welfare. (b) When the purchasing power of money goes up, even then there is an increase in the level of economic welfare. The purchasing power of money can go up when with the increase in national income there is also increase in the prices of goods. That means economic welfare can increase if price stability is ensured. Thus economic welfare can boost with equal distribution of income and price stability. Higher the level of economic welfare, higher will be the extent of economic development and vice-versa.

4. Measurement through Occupational Pattern:

The distribution of working population in different occupations is also regarded as criteria for the measurement of economic development. According to Colin Clark there is deep relation between the occupational structure and economic development. He has divided the occupational structure in three sectors (a) Primary Sector:

It includes agriculture, fisheries, forestry, mining etc.

(b) Secondary Sector:
It consists of manufacturing, trade, construction etc.

(c) Tertiary Sector:
It includes services, banking, transport, etc.
In underdeveloped countries, majority of the working population is engaged in primary sector. On the contrary, in developed countries the majority of the working population works in tertiary sector. When a country makes economic progress, its working population begins to shift from primary sector to secondary and tertiary sectors.

5. Human Development Index (HDI):

The modern economists were not satisfied with GNP, per capita or national income as the principal measures of economic progress. According to them, the issue is not only how much growth but what kind of growth and as a result, they formulated the Human Development Index (HDI). This indicator was for the first time developed by United Nations Development Program (UNDP) in the year 1990.There were a number of measures which were included in this index, However, to keep the HDI simple and manageable, the following main variables were included in it (a) Life expectancy was chosen as a measure of long life (b) Literacy as an index of knowledge and (c) Real GDP per person which represents Income for decent living.

6. Physical quality of life index (PQLI):
This is non-income indicator of economic development because this uses physical quality of life as the indicator. This method of measuring economic development is based on the following three things. They are:– (a) Life expectancy

(b) Infant mortality
(c) Literacy.
Countries having low life expectancy, low literacy rate and high infant mortality will have low index. If in any country PQLI is increasing then it indicates the increase in the physical quality of the life of people. Increase in per-capita income does not necessarily indicate the increase in the facilities like healthy food, health, situation, education, etc. Therefore PQLI method is taken to be better indicator than per-capita income method.

In addition to these various indicators the following facts are also taken as the indicators of economic development. (a) Equality improvement.(b) Poverty alleviation(c) Quality of life (d) Capital formation(e) Fulfillment of basic needs.(f) Population growth rare (g) Increase in employment opportunities (h) Decrease in dependence on agriculture (i) Increase in entrepreneurship (j) Utilization of natural resources (k) Increase in export of finished goods. (l) Trade diversification (m) Extension of infrastructures


In general words, economic development refers to the problems of underdeveloped countries and economic growth to those of developed countries. The raising of income levels is generally called economic growth in rich countries and in poor ones it is called economic development. But this view does not specify the underlying forces which raise the income levels in the two types of economies. The problems of underdeveloped countries are concerned with the development of unused resources, even though their uses are well known, while those of advanced countries are related to growth, most of their resources being already known and developed to a considerable extent.

In fact, the terms “development and growth” have nothing to do with the type of economy. The distinction between the two relates to the nature and causes of change. These two terms may also be explained as the development is a discontinues and spontaneous change in the stationary state which forever alters and displaces the equilibrium state previously existing; while growth is a gradual and steady change in the long run which comes about by a gradual increase in the rate of savings and population.

This view has been widely accepted and elaborated by the majority of economists. Economic Growth does not take into account the depletion of natural resources which might lead to pollution, congestion & disease. Development however is concerned with sustainability which means meeting the needs of the present without compromising future needs. These environmental effects are becoming more of a problem for Governments now that the pressure has increased on them due to Global warming.

According to another school of thought, “economic growth means more output, while economic development employs both more output and changes in the technical and institutional arrangements by which it is produced and distributed. Growth may well involve not only more output derived from greater amounts of inputs but also greater efficiency, either, and increase in output per unit of input. Development goes beyond this two employ changes in the composition of output and in the allocation of inputs by sectors”. According to some classical economists the growth is an expansion of the system in one or more dimensions without a change in its structure, and development is an innovative process leading the structural transformation of social system.

Thus economic growth is related to a quantitative sustained increase in the country’s per capita output or income accompanied by expansion in its labor force, consumption, capital, and volume of trade. On the other hand, economic development is a wider term. It is related to qualitative change in economic wants, goods, incentives, and institutions. It describes the underlying determinants of growth such as technological and structural change. Development embraces both growth and decline. An economy can grow but it may not develop because poverty, unemployment and inequalities may continue to persist due to the absence of technological and structural changes. But it is difficult to imagine development without economic growth in the absence of an increase in output per capita, particularly when population is growing rapidly. Despite these apparent differences, some economists use these terms as synonyms.

Natural monopoly Essay

Natural monopoly Essay

I believe that times change and as they, change rules and regulations must adapt to the times. Therefore, the treatment of the different industries must represent the different industries as they grow. I do not think the Telephone and Broadcast should never have or ever be considered a “Natural Monopoly”. The concept of natural monopoly presents a challenging public policy dilemma. On the one hand, a natural monopoly implies that efficiency in production would be better served if a single firm supplies the entire market.

On the other hand, in the absence of any competition the monopoly holder will be tempted to exploit his natural monopoly power in order to maximize its profits. A “natural monopoly” is defined in economics as an industry where the fixed cost of the capital goods is so high that it is not profitable for a second firm to enter and compete. There is a “natural” reason for this industry being a monopoly, namely that the economies of scale require one, rather than several, firms.

Small-scale ownership would be less efficient.

Natural monopolies are typically utilities such as water, electricity, and natural gas. It would be very costly to build a second set of water and sewerage pipes in a city. Water and gas delivery service has a high fixed cost and a low variable cost. Electricity is now being deregulated, so the generators of electric power can now compete. But the infrastructure, the wires that carry the electricity, usually remain a natural monopoly, and the various companies send their electricity through the same grid. Cable as a “Natural Monopoly”

Nearly every community in the United States allows only a single cable company to operate within its borders. Since the Boulder decision [4] in which the U. S. Supreme Court held that municipalities might be subject to antitrust liability for anticompetitive acts, most cable franchises have been nominally nonexclusive but in fact do operate to preclude all competitors. The legal rationale for municipal regulation is that cable uses city-owned streets and rights-of-way; the economic rationale is the assumption that cable is a “natural monopoly.

” The theory of natural monopoly holds that “because of structural conditions that exist in certain industries, competition between firms cannot endure; and whenever these conditions exist, it is inevitable that only one firm will survive. ” Thus, regulation is necessary to dilute the ill-effects of the monopoly. [5] Those who assert that cable television is a natural monopoly focus on its economies of scale; that is, its large fixed costs whose duplication by multiple companies would be inefficient and wasteful. Thus, competitive entry into the market should be proscribed because it is bound to be destructive.

The Competitive Reality 1. A skeptic hearing exhortations that cable television is a natural monopoly that should be locally regulated could have some questions at this point. First, if cable is a natural monopoly, why do we need to guarantee it with a franchise? Economists Bruce Owen and Peter Greenhalgh argue persuasively that given economies of scale, if a cable company “is responsive and efficient in its pricing and service quality then there will be little incentive for competitors to enter, and no need for an exclusionary franchise policy.

“[9] Thus, if entry restrictions are necessary to arrest competition, the industry by definition is not a natural monopoly. 2. Second, if cable is a natural monopoly, is it necessarily a local monopoly? Some observers use the terms interchangeably, but there is no evidence that economic laws respect municipal boundaries. Given large fixed costs, does it make sense to award a local franchise to one company when another already has facilities in an adjacent community? Yet such “wasteful duplication,” as the natural monopoly proponents would call it, occurs frequently under the franchise system.

Local franchises make no sense in a true natural monopoly setting. 3. These questions, however, go to the heart of natural monopoly theory itself, a doctrine that is under increasing attack. [10] In the face of crumbling conventional wisdom in this area, the burden should be on the natural monopoly proponents to demonstrate that competition is not possible, and further, that regulation is necessary. Such a demonstration will prove impossible in the cable context. Cable is both extremely competitive, facing both direct and indirect market challenges, and, in any event, is better left unregulated.

For many decades, economic textbooks have held up the telecommunications industry as the ideal model of natural monopoly. A natural monopoly is said to exist when a single firm is able to control most, if not all, output and prices in a given market due to the enormous entry barriers and economies of scale associated with the industry. More specifically, a market is said to be naturally monopolistic when one firm can serve consumers at lower costs than two or more firms (Spulber 1995: 31).

For example, telephone service traditionally has required laying an extensive cable network, constructing numerous calls switching stations, and creating a variety of support services, before service could actually be initiated. Obviously, with such high entry costs, new firms can find it difficult to gain a toehold in the industry. Those problems are compounded by the fact that once a single firm overcomes the initial costs, their average cost of doing business drops rapidly relative to newcomers. The telephone monopoly, however, has been anything but natural.

Overlooked in the textbooks is the extent to which federal and state governmental actions throughout this century helped build the AT&T or “Bell system” monopoly. As Robert Crandall (1991: 41) noted, “Despite the popular belief that the telephone network is a natural monopoly, the AT&T monopoly survived until the 1980s not because of its naturalness but because of overt government policy. ” I hope that the above facts help support my beliefs that these industries should not be considered Natural Monopolies.

These companies just executed and had better site than other in the same industry had. Today ATT is just as strong as it ever was.

References Benjamin, S. M. , Lichtman, D. G. , Shelanski, H. , & Weiser , P. (2006). FOUNDATIONS. In Telecommunications Law and Policy . (2nd ed. ). (pp. 437 – 469). Durham, NC : Carolina Academic Press. Foldvary, F. E. (1999). Natural Monopolies . The Progress Report. Retrieved January 9, 2012, from http://www. progress. org/fold74. htm Thierer , A. D. (1994). UNNATURAL MONOPOLY: CRITICAL MOMENTS IN THE DEVELOPMENT OF THE BELL SYSTEM MONOPOLY . 14(2).

Analyzing the Polluter Pays Principle Through Law and Economics Essay

Analyzing the Polluter Pays Principle Through Law and Economics Essay

“The ‘polluter pays principle’ states that whoever is responsible for damage to the environment should bear the costs associated with it. ” The Polluter Pays Principle (PPP) is one of the internationally recognized principles that in? uence the shaping of environmental policy at both the national and international level. As one of the environmental principles that have developed ‘from political slogans to legal rules,’ it is also increasingly re? ected in national and international law. It is seen and analyzed both as a principle of environmental economics and as a principle of environmental law.

In environmental economics, it is discussed as an ef? ciency principle of internalization of environmental costs. As a legal principle, it is usually treated as a principle for the allocation of the cost of pollution prevention, and for liability and compensation for environmental damage. In general, it is regarded as an important and ‘right’ principle in the perspective of environmental protection. It is often mentioned together with other major environmental principles such as the precautionary principle, the principle of prevention and the principle of integration.

In general, it is regarded as an important and ‘right’ principle in the perspective of environmental protection. It is often mentioned together with other major environmental principles such as the precautionary principle, the principle of prevention and the principle of integration. The “polluter pays principle” (PPP or principle) requires the polluter to bear the expense of preventing, controlling, and cleaning up pollution. Its main goals are cost allocation and cost internalization.

In 1972, the Organisation for Economic Co-operation and Development (OECD) articulated the principle explicitly and in 1989 indicated that it should be applied to agriculture. Though the principle originated as an economic principle, since 1990 it has been recognized internationally as a legal principle. The PPP now plays an important role in national and international environmental policy. The European Community (EC) adopted the principle in the 1987 Single European Act, and it has appeared in international agreements, including the Rio Declaration of 1992.

The principle is an explicit part of legislation in some nations; in others, it is an implicit subtext for both environmental regulation and liability for pollution. Historical Evolution Of Polluter Pays Principle The polluter pays principle, like the other great towering principles that today influence international environmental law, such as: (1) the sustainable development principle; (2) the prevention principle; (3) the precautionary principle; and (4) the proximity principle, started as a political declaration without legal force.

The polluter pays principle has been included in documents with legal status. For instance, many modern constitutions in the European Union explicitly provide for a right to a clean environment and thus environmental policy principles also constitute environmental law. The right to a clean environment implies a duty of the state to protect its citizens, but it is questionable whether these principles or social rights can yet be considered subjective rights, meaning that they can be enforced by citizens in a court.

However, some see the right to a clean environment as a human or natural right existing independently of politically decided treaties. Finally, the polluter pays principles is now seen in specific pieces of legislation becoming more (or some might say ‘less’) than a grand constitutional statement of an intractable human right. OECD – the birth of the polluter pays principle Some explanation of the sometimes arbitrary course of the principle of polluter pays can be found in its historical development.

The principle first appeared in a legal context in a document prepared by the international Organization for Economic Cooperation and Development (“OECD”) and included the following recommendation: “The principle to be used for allocating costs of pollution prevention and control measures to encourage rational use of scarce environmental resources and to avoid distortions in international trade and investment is the so-called ‘Polluter Pays principle’.

This principle means that the polluter should bear the expenses of carrying out the above mentioned measures decided by public authorities to ensure that the environment is in an acceptable state. In other words, the cost of these measures should be reflected in the costs of goods and services which cause pollution in production and/or consumption. Such measures should not be accompanied by subsidies that would create significant distortions in international trade and investment”.

In 2001, the OECD Joint Working Party on Agriculture and Environment, after years of gestation and development by other organisations, stated that a new and expanded form of the polluter pays principle should provide that: “… the polluter should be held responsible for environmental damage caused and bear the expenses of carrying out pollution prevention measures or paying for damaging the state of the environment where the consumptive or productive activities causing the environmental damage are not covered by property rights. United Nations – the Rio Declaration This proclamation was proved, at least on paper, if not yet by jus cogens, in 1992 when the United Nations Conference on the Environment and Development delegates agreed on the Rio Declaration on Environment and Development (the “Rio Declaration”), which has been described as an “instrument of international jurisprudence [that] articulates policies and prescriptions directed at the achievement of worldwide sustainable development”.

It is of note that Principle 16 of the Rio Declaration provides that: “[n]ational authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment”. The principle’s appearance in such a seminal statement of the undamental principles of international environmental law demonstrates its significance in environmental liability regimes around the world. United States The principle has to some extent informed United States’ legislation, but its influence should not be overstated and commentators note that: “The United States, in contrast to the European nations, does not officially recognize the [polluter pays principle] as a distinct principle or policy mandate, but does, by natural political and economic inclination, closely follow its precepts in practice”.

Certain provisions of the United States’ Clean Air Act 1970 (the “CAA”) and Clean Water Act 1977 (the “CWA”) require polluters to satisfy environmental standards at their own expense; and the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) assigns liability for costs associated with cleaning-up sites contaminated by hazardous wastes. CERCLA is a notable milestone in the development of the polluter pays principle in the United States and commentators have noted that: “the polluter pays principle is one of the central objectives or goals of CERCLA”.

Flaws in the Polluter Pays Principle Few people could disagree with what seems at first glance to be such a straightforward proposition. Indeed, properly construed, this is not only a sound principle for dealing with those who pollute but is an extension of one of the most basic principles of fairness and justice: people should be held responsible for their actions. Those who cause damage or harm to other people should “pay” for that damage. This appeal to our sense of justice is why the “polluter pays principle” (PPP) has come to resonate so strongly with both policy makers and the public.

As a general rule, sound economic analysis of pollution and environmental problems must also be based on the principle of responsibility. Forcing polluters to bear the costs of their activities is good economics too; it not only advances fairness and justice, but also enhances economic efficiency. In other words, with appropriate policies based on a PPP, we should not have to give up the economic efficiency of a free market system based on private property in order to obtain environmental protection, nor vice versa.

But as with most such general principles, the devil is in the details. In this case, the details relate to three basic questions that any application of the PPP must answer. First, how do we define pollution and therefore a polluter? Second, how much should the polluter pay, once he is identified? Third, to whom should the payment be made? The answers to these questions are at the heart of whether any application of the PPP will be either just or economically efficient.

A correctly construed polluter pays principle would penalize those who injure other people by harming their persons, or by degrading their property. Too often, however, the PPP is misdefined and misused to suppress private economic activity that benefits the parties directly involved and does no specific damage to other people, but which offends those who oppose human impact on the environment and prefer to leave resources undeveloped. The objective is to restrain the resource use at the expense of the property owners and consumers without cost to those who wish to see the resources remain idle.

Under such a misapplication of the PPP, very often “a polluter” is not someone who is harming others, but is someone who is simply using his own property and resources in a way that is not approved of by government officials or environmentalists. In such cases there is no harm to be measured and no real victims to compensate. Consequently, the amount to be paid is not determined by the extent of any actual damage done. Rather, it is set at a level that curbs the politically disfavored activity to the degree desired by its opponents.

And finally, the payment (whether there are real victims or not) typically goes to the government in the form of a tax. In other words, in most cases, the PPP is used as cover to promote a political or ideological agenda rather than to ensure that real polluters pay compensation to real victims of their activities. Constitutional and Legislative Measures Stockholm Declaration of 1972 was perhaps the first major attempt to conserve and protect the human environment at the international level. As a consequence of this Declaration, the States were required to adopt legislative measures to protect and improve the environment.

Accordingly, Indian Parliament inserted two Articles, i. e. ,, 48A and 51A in the Constitution of India in 1976, Article 48A of the Constitution rightly directs that the State shall endeavour to protect and improve the environment and safeguard forests and wildlife of the country. Similarly, clause (g) of Article 51A imposes a duty on every citizen of India, to protect and improve the natural environment including forests, lakes, river, and wildlife and to have compassion for living creatures.

The cumulative effect of Articles 48A and 51A (g) seems to be that the ‘State’ as well as the ‘citizens’ both are now under constitutional obligation to conserve, perceive, protect and improve the environment. Every generation owes a duty to all succeeding generations to develop and conserve the natural resources of the nation in the best possible way. The phrase ‘protect and improve’ appearing in both the Articles 48A and 51A (g) seems to contemplate an affirmative government action to improve the quality of environment and not just to preserve the environment in its degraded form.

Apart from the constitutional mandate to protect and improve the environment, there are a plenty of legislations on the subject but more relevant enactments for our purpose are the Water (Prevention and Control of Pollution) Act, 1974; the Water (Prevention and Control of Pollution) Cess Act, 1977; the Air (Prevention and Control of Pollution) Act, 1981; the Environment (Protection) Act, 1986; Public Liability Insurance Act, 1991; the National Environment Tribunal Act, 1995 and the National Environment Appellate Authority Act, 1997; the Wildlife (Protection) Act, 1972; the Forest (Conservation) Act, 1980.

The Water Act provides for the prevention and control of water pollution and the maintaining or resorting of the wholesomeness of water. The Act prohibits any poisonous, noxious or polluting matter from entering into any stream or well. The Act provides for the formation of Central Pollution Control Board and the State Pollution Control Board. The new industries are required to obtain prior approval of such Boards before discharging any trade effluent, sewages into water bodies.

No person, without the previous consent of the Boards shall bring into use new or altered outlet for the discharge of sewage or trade effluent into a stream or well or sewer or on land. The consent of the Boards shall also be required for continuing an existing discharge of sewage or trade effluent into a stream or well or sewer or land. In the Ganga Water Pollution case, the owners of some tanneries near Kanpur were discharging their effluents from their factories in Ganga without setting up primary treatment plants.

The Supreme Court held that the financial capacity of the tanneries should be considered as irrelevant while requiring them to establish primary treatment plants. The Court directed to stop the running of these tanneries and also not to let out trade effluents from the tanneries either directly or indirectly into the river Ganga without subjecting the trade effluents to a permanent process by setting up primary treatment plants as approved by the State Pollution Control Board.

The Water (Prevention and Control of Pollution) Cess Act, 1977 aims to provide levy and collection of a cess on water consumed by persons carrying certain industries and local authorities to augment the resources of the Central Board and the State Boards constituted for the prevention and control of water pollution. The object is to realise money from those whose activities lead to pollution and who must bear the expenses of the maintaining and running of such Boards.

The industries may obtain a rebate as to the extent of 25% if they set up treatment plant of sewage or trade effluent. The Air Act has been designed to prevent, control and abatement of air pollution. The major sources of air pollution are industries, automobiles, domestic fires, etc. The air pollution adversely affects heart and lung and reacts with hemoglobin in the blood. According to Roggar Mustress, the American Scientist, air pollution causes mental tension which leads to increase in crimes in the society.

The Air Act defines an air pollutant as any ‘solid, liquid or gaseous substance including noise present in the atmosphere in such concentration as may be or tend to be injurious to human beings or other living creatures or plants or property or environment. ‘ The Act provides that no person shall without the previous consent of the State Board establish or operate any industrial plant in an air-pollution control area. The Central Pollution Control Board and the State Pollution Control Board constituted under the Water Act shall also perform the power and functions under the Air Act.

The main function of the Boards under the Air Act is to improve the quality of air and to prevent, control and abate air pollution in the country. The permission granted by the Board may be conditional one wherein stipulations are made in respect of raising of stack height and to provide various control equipments and monitoring equipments. It is expressly provided that persons carrying on industry shall not allow emission of air pollutant in excess of standards laid down by the Board. In Delhi, the public transport system including buses and taxies are operating on a single fuel CNG mode on the directions given by the Supreme Court.

Initially, there was a lot of resistance from bus and taxi operators. But now they themselves realise that the use of CNG is not only environment friendly but also economical. Noise has been taken as air pollutant within the meaning of Air Act. Sound becomes noise when it causes annoyance or irritates. There are many sources of noise pollution like factories, vehicles, reckless use of loudspeakers in marriages, religious ceremonies, religious places, etc. Use of crackers on festivals, winning of teams in the games, and other such occasions causes not only noise pollution but also air pollution.

The Air Act prevents and controls both these pollutions. The Environment (Protection) Act, 1986 was enacted to provide for the protection and improvement of the quality of environment and preventing, controlling and abating environmental pollution. The Act came into existence as a direct consequence of the Bhopal Gas Tragedy. The term ‘environment’ has been defined to include water, air and land, and the inter-relationship which exists among and between water, air and land and human beings, other living creatures, plants, micro-organism and property.

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If the gold standard was in use today, would it hinder economic growth Essay

If the gold standard was in use today, would it hinder economic growth Essay

The gold standard refers to a monetary system in which the unit of account of money will be fixed with the weight of gold. There are many people who argue that the gold standard should be implemented to bring down the inflation. By fixing the supply of money with gold, the government will not be able to issue money without having gold in reserve. However, on the other hand, there are experts who argue that by fixing the supply of money with gold, economic growth will be hindered as the amount of gold available on Earth is limited (Mises, 2009).

This paper will show that the gold standard will hinder economic growth. I’ll firstly argue that there is a limited amount of gold in this world. Secondly, economic growth is seen as limited. Lastly, the amount of commerce will eventually reach a level equal to the gold holdings by the central bank of the country. Economic growth will be hindered if the gold standard is applied as there is a finite amount of gold in the world.

Economic growth requires that there should be sufficient liquidity in the system.

By adhering to the gold standard, economic growth will be hindered as to supply more money, the government will first need to buy gold. (Skousen, 1997) Secondly, economic growth is seen to be unlimited. This doesn’t complement with the gold standard, as the amount of gold is limited in the world. If economic growth is to be unlimited, then there must be enough money supply to finance it. The gold standard makes to difficult for governments to issue money, which in fact limits economic growth. (Cagan, 1982)

Lastly, if the value of the dollar is limited by the amount of gold, then amount of commerce would reach a level equal to the gold holdings. In order for more money to be issued, the government would have to purchase more gold to back the increase in dollars issued. All the three points written above are influenced by the single factor that the supply is limited, while the demand for gold seems to be unlimited. (Cagan, 1982) Another problem with the gold standard is how to determine what weight of gold will equal to one unit of account.

Furthermore, the gold standard can be suicidal for developing economies. Developing economies will need to buy gold to finance their economic growth, which might already be to expensive to buy for them. Currently, these economies are able to finance it through a budget deficit. Moreover, how will the gold standard be able to handle the speed and complexity of today’s financial transactions? Lastly, if the world shifts to a gold standard, then all the governments will need to burn huge amount of fiat money to make sure that the money supply equals to the amount of gold in the economy. Eichengreen & Marc, 1997) In conclusion, I believe that although by adhering to the gold standard the level of inflation will come down. However, the economic growth of a country will be hinder. The major reason for this is the limited supply of gold. Furthermore, if the gold standard is implemented the prices of gold will shoot up, making it more difficult for developing economies to grow up. Lastly, the government will need to burn huge amounts of fiat money to make sure that the there is no extra money in the economy.

Gdp And Economic Welfare Essay

Gdp And Economic Welfare Essay

Gross Domestic Product (GDP) is the most important economic indicator and it is used for comparison purposes to see how countries are doing economic wise. It entails the aggregate production or output in a country. GDP can be measured using either the expenditure approach where all final expenditures are added or by the income approach where all compensations of employees and other forms of incomes are added up. GDP is used to measure an economy’s economic growth. Hartzenberg T et al (2005, 114).

The real GDP can be used to establish how an economy is performing and hence compare various economies as one can compare their outputs.

It is also important in the sense that it can be used for forecasting purposes and hence important in planning. This paper will distinguish the difference between economic growth which can be measured using GDP statistics and national welfare or people’s well being. According to McConnel and Brue in their distinguished book ‘Economics’, a country can be said to have economic growth when there is a positive increase in its GDP.

Economic growth is different from economic welfare and economic development.

Economic growth is characterized by an increment in natural resources, the quantity or quality for the human resources, as well as an improvement in technology that translates to increased productivity. Economic growth refers to a positive shift in the production possibility curve to the right or where economic efficiency is attained. McConnel and Brue (2005, 149). A country A could register a higher GDP than country B but this does not necessarily mean that country A is doing better in terms of economic welfare as there is a clear distinction between economic growth and national welfare.

This can be blamed on the limitations attached or rather linked to GDP calculation and analysis. (facstaff. uww. edu). Walter in the book ‘Economics’, noted that GDP ignores or rather omits household production which is an important sector in as far as determining the welfare of people is concerned. Wessels W (2006, 75). Alan and Laurence backed this idea in their book ‘Macroeconomics an integrated approach’ where they argued that GDP does not account for the unreported incomes which are earned in the ‘underground economy’.

A good illustration of unreported incomes is a situation where waiters fail to report all the tips they acquire while on duty. People may fail to report their actual incomes to evade taxes. Statistical problems could also have occurred creating the impression that country A had a higher GDP than country B though this may not be actually be the case. Some people may not divulge all the information regarding their incomes or expenditure leading to wrong GDP estimates. If country B has a very significant ‘underground economy’ then her citizens could be doing better than those in country A even though the latter had a lower GDP.

This is an indication that high GDP rates do not necessarily translate to better welfare for the citizens. Auerbach and Kotlikoff (1998, 136). When calculating GDP the aspect of leisure is ignored although it is very critical in as far as defining people’s welfare is concerned. Country A could register a higher GDP than country B but the citizens in country A could have been overworked leading to health complications. In this case, the high GDP could be at the expense of the people’s health and we cannot conclude that it ensured their welfare or well being. Wessels W (2006, 75).

Using GDP figures to determine the people’s welfare is inappropriate as it fails to include ecological costs incurred in the process of attaining the said GDP. Ecological costs include the costs of pollution. Country A could register a higher GDP than country B due to the fact that country A had better technology that ensured increased production. However, the increased production could have been realized in the face of increased air, water and land pollution all of which poses health hazards to the citizens. Wessels W (2006, 75). When such is the case then we cannot conclude that country B is doing better than country A.

People’s well being encompasses the people’s health and not just their economic well being. A country with lower GDP but ensuring that her environment is safe for her citizens is doing well in terms of national welfare even though it could record a lower GDP than one with a higher GDP but has a polluted environment. GDP ignores a country’s environmental quality and it fails to account for the consequences that an economic growth could come along with. Auerbach and Kotlikoff (1998, 136). GDP also focuses on output or production although it is consumption that could best explain people’s welfare.

For instance country A could sell more goods to other nations like country B since the demand for such goods in country B is higher. In this context, country B could be doing better than country A but since country A exports more it may create the impression that it is doing better. On the other hand, country B may register a lower GDP translating to being worse off as her net exports are negative but in the real sense they could be doing better. Focusing only on the output approach would lead to distortions while addressing the issue of national welfare.

Another critical issue cited by Wessels as a limitation of using GDP to evaluate a country’s or nation’s well being is the fact that government spending is valued at cost rather than at its value. Government projects in country A could have been at a higher cost than those in country B but an important aspect to consider here is how much the projects were worth to the citizens. This is because some important projects could be undervalued while worthless projects are overvalued and this will have a significant impact in as far as influencing the people’s welfare or well being is concerned.

Wessels (2006, 75). GDP calculation does not include the plight of the people in terms of health and life expectancy which are quite important in assessing the people’s well being or welfare. Country A could have a higher GDP than country B but if she has a lower life expectancy rate and is performing poorly in terms of general health of her citizens then we cannot argue that her citizens are better off than those of country B especially if in country B the life expectancy and general health is better.

Health which is a very important factor in determining the people’s welfare when calculating a country’s GDP people’s conditions health wise are only included if they increase the costs of the health system. A country’s health costs could be attributed to modern and advanced health technologies but this does not guarantee a nations well being health wise as the costs incurred may not match the benefits attained. Democracy or political freedom is an important part in determining people’s welfare. Good governance is one where respective freedoms are respected and most importantly democracy embraced.

Using GDP to evaluate people’s welfare is inappropriate as it does not provide any information regarding a country’s governance. Country A could register a higher GDP than country B but the political organization in country A could be oppressive to the citizens. In this context, we cannot argue that country A citizens are better than those in country B which could be exercising democracy and consequently not oppressing her citizens. (facstaff. uww. edu). Another vital issue in defining people’s well being is assessing social justice in a country.

If country A registered a higher GDP but was very poor in terms of the civil justice system then we cannot conclude that her citizens well being was ensured. Country B citizens could be doing better at a lower GDP level if she ensured an effective social justice system. An effective system ensures that the rule of law is embraced and people’s rights respected. This is important in ensuring that corruption which threatens people’s welfare as it only benefits a segment of the total population is kept at bay. Using GDP to compare the well being of people in country A and B could give a wrong impression of what is actually the case.

This is attributed to the fact that a country could have overly adjusted for inflation leading to the impression that increase in prices translate to hikes in prices even when this could be as a result of improvement in the products produced. Morse S (2004, 39). Another aspect that makes it inappropriate to compare country’s welfare using the GDP statistics is the fact that for such comparisons one must convert the currencies into the other country’s currency and when carrying out the conversions it is possible to understate a country’s GDP especially in the developing nations.

A country A could register a higher GDP than country B due to errors arising from conversions of currencies. (facstaff. uww. edu). Country A could have a higher GDP than country B but her citizens could be worse off than those of country B in terms of national welfare. This is attributed to the fact that country A could be characterized by many social evils as opposed to country B. Failure to include the non-market production in the calculation of GDP makes it an inappropriate tool in determining people’s welfare in an economy.

Such services like childcare, subsistence farming and care for the aged mean a lot in as far as people’s welfare is concerned. Country A could have a higher GDP but with a lower subsistence economy when compared to country B. A significant subsistence economy would ensure that a country’s food security is ensured and this would place her citizens at a better stance in as far as their well being or welfare is concerned. GDP fails to account for the effects or consequences of technology which has an impact in its determination.

In contrast GDP is more concerned on the value of the end product without taking to concern the efficiency of the technologies in question. If country A registered a higher GDP than country B but country A’s government invested more in sectors like education and health ensuring that her citizens were better off in those areas then we can conclude that country B’s welfare is doing well even if it has a lower GDP than country A. Treating investment in education and health as consumption rather than investments makes it difficult to estimate people’s welfare. Willis I (1997, 164).

Distribution of resources in a country is also a point to consider when using GDP figures to estimate people’s welfare. Country A could register a higher GDP than country B but this high GDP could have been arrived from a small insignificant proportion of the total population. This is to say that it is inappropriate to say that country A citizens are doing better than those in country B as the GDP is contributed by a small proportion while a large proportion of the society could be languishing in poverty. Income distribution is of much essence when determining people’s welfare in an economy.

The inequality issue and GDP arise more so in developing countries or third world as opposed to developed ones. Willis I (1997, 164). Social issues like family stability are also not reflected when calculating GDP although it has an impact on people’s welfare or well being. GDP in country A could be higher than that in country B as more money is being channelled into paying divorce cases lawyers or building more police posts in response to increased crime rates. This illustrates that it is inappropriate to make conclusions about people’s welfare using GDP.

In his book ‘The Japanese Economy’, Mitsuo Saito noted the inappropriateness of GDP as a tool of evaluating people’s well being due to the fact that it does not indicate the labour conditions, housing conditions, state of the social security or the urban life which are crucial in determining people’s well being. Saito M (2000, 13). Economic growth could be based on either the demand side or the supply side of an economy. The aggregate demand could increase due to an increment in the population size while aggregate supply could be due to the discovery of new natural resources.

Aggregate output is affected by the level of labour supply, the stock of accumulated capital, level of technology as well as the institutions in place. There is an inverse relationship between prices levels and output and when prices levels fall the output increases. Tanzi and Chu (1998, 203). Monetary and fiscal policies in a given economy would affect the country’s well being or welfare. The people’s welfare will be affected by the policies that an economy embraces. Good policies are those that aim for equitable economic growth in a nation. They ensure that the poor in the society are not worse off but instead uplift them.

This can be achieved through the application of equitable taxes such that people’s ability to pay is what determines the amount they are to pay all taxes. The rich will pay a higher amount than the poor in such cases. The government could also apply fiscal policies to ensure development for the poor in society.

References: Alan J. Auerbach, Laurence J. Kotlikoff. 1998. Macroeconomics: An Integrated Approach. MIT Press. Bernard Baumohl. 2007. The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities. Wharton School Publishing. Campbell R. McConnell, Stanley L.

Brue. 2005. Economics: Principles, Problems, and Policies. McGraw-Hill Professional Publishers. Measuring GDP and economic growth. Retrieved on 23rd November 2008 from http://facstaff. uww. edu/ahmady/courses/econ202/ps/sg3. pdf Mitsuo Saito. 2000. The Japanese Economy. World Scientific Publishers. Ian Wills. 1997. Economics and the Environment: A Signaling and Incentives Approach Allen & Unwin Publishers. Stephen Morse. 2004. Indices and Indicators in Development: An Unhealthy Obsession with Numbers? Earthscan Publishers. T. Hartzenberg, Buck Standish, A. Wentzel, V. Tang, T. Hartzenberg, S. Richards. 2005.

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Modern Age Essay

Modern Age Essay

Our world is constantly changing and some say that its better, but some say that it is worse. A famous author, Lynn White Jr. is saying that since the modern age we have had an ecological crisis that is slowly worsening every year. Another author, Immanuel Wallerstein, is saying that our world economy is actually doing well since the modern age and that it is better than in the past. Janet Abu-Lughod is a famous author who disagrees with a lot of what Wallerstein says but agrees that our economy is doing better than the past.

Lynda Norene Shafer is another author who tells us that the past did a lot of good for us, especially Southern India and China.

All these authors have much to say but they are too focused on one part of their arguments. Immanuel Wallerstein is one author who makes a good argument and approach towards the modern age. He approaches the modern age by stating many facts and explaining as to what he believes our world system should be like.

He states that since the sixteenth century, we have always had capitalist economies and world economies.

Wallerstein believes that our economy has many political units inside that loosely tie together the system. He believes that we should have an economy that is bounded by one big political structure that is unitary. Wallerstein disagrees with people thinking towards what capitalism is. He says, “Capitalism is not the mere existence of persons or firms producing for sale on the market with the intention of obtaining a profit” (1-2). Wallerstein is telling us that man has been producing many things with the sole purpose of making a profit on those things. He totally disagrees with this statement as being a definition for capitalism since he believes that it is not true.

Wallerstein also states the correlation between world economies and capitalist economies. He is telling us that, “Conversely, a capitalist economy cannot exist within a framework except that of a world economy” (2). What Wallerstein is saying to us is that world economies and capitalist economies go very well together. He says this because world economies are lacking a big, overall, unifying political structure that capitalism actually has. Finally, Wallerstein tells us that world systems before this modern one have always failed because of
that lacking capitalistic structure.

He says that, “What unifies the structure [world economy] most is the diversion of labor which is constituted within it” (1). Wallerstein says that the world systems never survived in the past, but only now because of the installment of capitalism in it. Overall, Wallerstein brings up many good points, but he is too focused on Europe and their responsibility on interconnecting world systems. Another author, Lynn White Jr. brings up many good points, but just as Wallerstein, is too Eurocentric.

Lynn White Jr. is another great author who approaches the modern age. He brings up ecology and its relationship with religion in the modern age. He brings up a very strong point as to global warming and a big ecological crisis would happen if we do not change or adjust our main religion. White Jr. believes that Christianity has led to a scientific revolution. What he also states which is very important, is that it is extremely crucial for us to adjust or completely change Christianity.

White Jr. believes that Christianity has led our ecology to such a crisis that it is already extremely difficult to help or even undo. Something very important that he says is, “More science and more technology are not going to get us out of the present ecological crisis until we find a new religion or rethink an old one” (11). He is suggesting that Christianity has been doing what it wants for the past centuries that it made our ecology terrible enough to put it in a crisis.

White Jr. also says that “For nearly two millennia Christian missionaries have been chopping down sacred groves, which are idolatrous because they assume spirit in nature” (11). This quote is very vital to interpret because it tells us all about what Lynn White Jr. is arguing about. He is saying that for the past 2,000 years, Christian persons do as they wish, but no one has even made a good attempt to stop them. He is also putting Europe responsible for the crisis that they have caused because Christianity starts in Europe.

Since no one has changed the ecological crisis that we have continuously, he says, “Hence we shall continue to having a worsening ecological crisis until we reject the Christian axiom that nature has no reason for existence save to serve man” (11). Lynn White Jr. is telling us that since no one is succeeding to stop Christianity from further worsening our crisis, we will fail in the future. We also have two female authors, Janet Abu-Lughod, and Lynda Norene Shafer, who explain Southernization and the Rise of the West.

Although many are familiar with the term Westernization, one might know that many centuries before, there has been what is called Southernization. Lynda Norene Shafer informs us of Southernization. She tells us that it basically means that there were many advances in southern parts of China and India. Southernization focused on advancements such as math and gold and most of these advancements come from India. Southernization also focused on trades when cotton was first domesticated.

This allowed many trades to open up where Indians could trade cotton clothing. One said that India had “clothed the world” (13). Another author, Janet Abu-Lughod talks about world systems and a little on the rise of the west. She actually disagrees with Wallerstein. She believes that there have actually been world systems a long time before the start of the European hegemony.

While Europe was as one might say, only a new start to an old life, there have been many agricultural exchanges such as crafts. Lughod believes that this was a global-made world system that took time before and during the thirteenth century. She says that world systems “Increased economic integration and cultural effervescence” (7). This disagrees with Wallerstein also because he thought the exact opposite.

In conclusion, all these important authors say much but one might say not enough. Wallerstein and White Jr. are too Eurocentric. Abu-Lughod is very focused on world systems and not enough on the Rise of the West. One might say that although these authors make good points, they should also talk about how their argument affects other parts of the world or even counter their argument.

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Disaster Paper Essay

Disaster Paper Essay

When you deliberate on a disaster, it becomes clear that any such event has three phases to it. Initially, there are antecedents that lead to the disaster. When enough antecedents have accumulated, the disaster occurs at that specific tipping time. Finally after the disaster has happened the final phase of resolutions occurs. The resolutions are steps that the society attempt to implement to revert the effects that the event has produced. Consider the Deepwater Horizon disaster that happened on July 17th 2010.

Upon critical review the group have identified series of antecedents that led to the disaster.

At the tipping point the disaster occurred, lives were lost and numerous crew members injured. After the initial shock of the disaster and evacuation of the crew engineers and BP staff attempted to close the well with numerous trials. Eventually policy makers were involved in development of the new safety policies. Numerous investigations and trials were performed to better understand the disaster and avoid similar events.

At the end numerous antecedents have been identified, the disaster was resolved and the consequences identified. The Deepwater Horizon accident was found to have multiple antecedents that caused this tragedy.

Specifically, a sequence of eight safety barriers that were breached led to the explosion which killed eleven people and caused widespread pollution throughout the Gulf of Mexico. At first the annulus cement barrier was installed improperly and did not isolate the hydrocarbons coming from the well. The shoe track barrier did not isolate the hydrocarbons. As a consequence these two events allowed hydrocarbons to rise up the well and aboard the Deepwater Horizon rig. The negative pressure test was incorrectly interpreted. The influx of hydrocarbons was not recognized until it was too late.

Well control response actions failed to regain the control of the well. This led the well flow to be diverted to the mud gas separator causing gas to be vented onto the vessel rather than being diverted over board. Safety fire and gas systems did not prevent hydrocarbon ignition from the engine room. Finally, the blowout preventer (BOP) emergency modes did not seal the well due to the accumulation of previous seven events mentioned above. With these eight events leading one to another, it was much more difficult to seize the explosions and fire that damaged the MUX cables and hydraulic lines.

This resulted in failure of the emergency disconnect system. To conclude, it is clear that specific and identifiable antecedents can be discovered and that their accumulations to a tipping point lead to the disaster. The second phase of the Deepwater Horizon disaster deals with engineers and BP technical staff trying to close the well so that the oil spill is stopped. To reduce the oil spill the leaking oil is set on fire with the hope that the spill will be reduced. On May 2nd, 2010 PB starts to drill a relief well that should overtake that leaking site.

On May 5th one of the leaking sites is capped, however oil continues to leak from the well. On May 7th BP engineers use the containment chambers to close the remaining leaks. The idea fails and is abandoned. On May 9th a “junk shot” approach is implemented, the following day “top hat” approach is planned out. The attempt to reduce the leak continues, numerous other approaches and plans are implemented to either reduce the oil spill or completely halt it. On august 4th BP reports that using the latest attempt the “static kill” appears to be successful and attempts to permanently seal the leak are in the process.

On September 19th the Deepwater Horizon leak have been permanently sealed. The nightmare that happened on May 2nd has been halted but not fully resolved. The environmental affect that the disaster caused will hunt the future of Gulf of Mexico waters for decades. For example, seahorse populations in the region decline and the Hippocampus zosterae, dwarf specie of seahorses, is on the verge of extinction. The role of engineers in the Deepwater Horizon disaster is immense. During the accumulation of antecedents there are evidences that engineers knew about chaos that was occurring on the Deepwater Horizon rig.

However, due to poor management and lack of communication between companies involved in the project, engineers had little impact in correcting the antecedents. Eventually, when the disaster occurred, the BP engineers tried various attempts and ideas to close the opened well. Lastly environmental engineers are and will be involved in cleaning efforts of the Gulf of Mexico waters. Therefore it is important to consider the engineers as not only the antecedents in a disaster but also as proactive members of society that attempt fixing the environment to pre-disaster state.

Therefore, engineering is involved with all disaster phases. As a group, we plan to incorporate each disaster phase into the final report and discuss how engineering process have been aiding the future avoidance of similar disasters. It is important to understand that media reports cover just a few aspects of disasters and news in general. In many cases the scope of media reports is within political and economic spectrums. Therefore further research into documents released by various commissions and investigators that are publicly available will be looked at and analysed by the group and its members.

The group process is moving according to the milestones developed and outlined in the proposal paper. Despite this, new opportunities in scheduling allows for the group to have a few extra meetings and perhaps finish the final report ahead of the scheduled time. The comparison chart of milestones is outlined below. Over all there are a few challenges that the group have to work through. As mentioned above the group plans to analyze some reports developed by the investigators of the disaster. The challenging part is to read through pages of technical analysis and to identify related parts for the assignment.

Since there are new group meetings, it should be possible to accomplish this task in professional manner. In addition the group will do a presentation on the project therefore these two meeting dates will be allocated towards that time. The final paper will contain a more detailed and chronological outline of the disaster phases. The paper will discuss the causes, antecedents and policy developments that occurred as of the result of the disaster. The general breakdown of the parts has not changed since they were assigned during the composition of the proposal paper.