Market Orientation Assessment Essay

1.Customer Orientation Information about customer needs and requirements is collected regularly. DON’T KNOW (0) There is no statement in the article indicates that Psion has collected information about customer needs and requirements regularly. Our corporate objective and policies are aimed directly at creating satisfied customers. DON’T KNOW (0) Since there is no clear statement in the article whether Psion has collected information about customer needs and requirements regularly, the corporate objective and policies are also not clear if it aimed directly at creating satisfied customer. Levels of customer satisfaction are regularly assessed and action is taken to improve matters where necessary. DON’T KNOW (0) There is no statement in the article indicates that Psion regularly assess level of customer satisfaction and take action to improve matters where necessary. We put major effort into building stronger relationships with key customers and customer group. DON’T KNOW (0) The article did not indicate that Psion put major effort into building stronger relationship with their key customers and customer group. We recognize the existence of distinct groups or segments in our markets with different needs and we adapt our offering accordingly. AGREE (4) Psion saw that high-end organizer market was being invaded by new generation of smart-phones, those are phones with organizer capabilities built-in. Psion saw this as a market for integrated devices. Psion knew that their product as standalone organizer had a finite lifespan, thus Psion will create a connected device by did a strategic deal with Motorola to penetrate the market for integrated devices. It shows that Psion recognize the existence of distinct segment in the market with different needs and they create the connected devices to enter it. Total score for customer orientation: 4 Psion has questioned its future as a maker of handheld electronic organizers due to handheld market has changed too much by a new smart phone products which have functionality as organizer and a phone and also by cheaper organizers. However it seems there is no indication that Psion take any action to collect information from customer about current needs and requirements and put some effort to build stronger relationship with their major customers. Psion did read the signal of changes in the market through recent advertisement, instead. 2.Competitor Orientation Information about competitor activities is collected regularly. AGREE (4) Psion knows information about current activities of their competitors such as new products and excess capacity of the rivals. We conduct regular benchmarking against major competitor offerings. AGREE (4) Psion did evaluation about major competitor offering. There is rapid response to major’s competitor actions. AGREE (4) Psion apply strategic thrust to response the major’s competitor actions even it have fell through, and spent the last five months going through every option to see what other ways there were to preserve the strategic thrust. When Palm and Handspring done wrote off about $ 300m and make prices dived, Psion decide to pull out and will stop making handheld organizer but still continue to sell existing products. It shows Psion’s rapid response to what have done by the major competitors. We put major emphasis on differentiating ourselves from the competition on factors important to customers. DISAGREE (2) Psion do not put major emphasis on differentiating themselves from the competition on factors important to customers, described by Psion decision to stop making handheld and keep sell existing products. Total score for competitor orientation: 14 Psion knows information about current activities of their competitors, did evaluation about major competitor offering and response to major’s competitor’s action rapidly. However Psion do not put major emphasize on differentiation. 3.Long-Term Perspectives We place greater priority on long-term market share gain than short-run profit. DISAGREE (2) Psion still struggling to keep their existence and it makes them decide to put priority on making money. We put greater emphasis on improving our market performance than on improving internal efficiencies. DISAGREE (2) Psion decided to pull out and stop making handheld organizers even though they intend to keep exploiting the intellectual property it has gleaned from more than 20 years. Decisions are guided by long-term considerations rather than short-run expediency. AGREE (4) Psion decision to retain its 28 percent stake in Symbian and by the acquisition of Teklogix to move to the enterprise wireless market as a less risky market is clearly based on long-term consideration. Total score for long-term perspectives: 8 Due to currently struggling to keep their existence, Psion decided to put priority on making money compare than put priority on long-term market share and improving market performance. However decisions are guided by long-term consideration by move to les risky market. 4.Interfunctional Coordination Information about customer is widely circulated and communicated throughout the organization. DON’T KNOW (0) There is no indication about this matter in the article. The different department in the organization work effectively together to serve customer needs. DON’T KNOW (0) There is no indication about this matter in the article. Tension and rivalries between departments are not allowed to get in the way of serving customers effectively. AGREE (4) The article do not indicates clearly about tension and rivalries between department of Psion, but the article mentioned that there is provisional revenues from the combined enterprise division between Psion and Teklogix which shows that combined enterprise division expected to work closely without tension and rivalries each other to serve customers effectively and meet the expectation of revenues. Our organization is flexible to enable opportunities to be seized affectively rather than hierarchically constrained. DON’T KNOW (0) There is no indication about this matter in the article. Total score for interfunctional coordination: 4 5.Organizational Culture All employees recognize their role in helping to create satisfied end customers. DON’T KNOW (0) There is no indication about this matter in the article. Reward structures are closely related to external market performance and customer satisfaction. DON’T KNOW (0) There is no indication about this matter in the article. Senior management in all functional areas give top importance to creating satisfied customers. DON’T KNOW (0) Senior management meetings give high priority to discussing issues that affect customer satisfaction. DISAGREE (2) From the article, the most important issue is about strategic management to survive and keep the existence of the company, thus we conclude that  management meetings give high priority to discussing these issues instead of issued that affect customer satisfaction. Total score for organizational culture: 2 Total Score: 32 The highlight is on the struggle and effort made by company to stay alive, it tried to find new cooperation with other company to win over new market, decided to abandon the old market and focus on the less risk market In overall, they have lack market orientation that enables them to keep performing well in the respective market. It focused on the competitors instead on their customers, Psion saw the situation as failing without any hope, which maybe correct but maybe if they have taken another path , we may see the market of handheld product differently today

Words of Encouragement

Patrick Draughn Words of Encouragment From the outgoing class of 2012 to the incoming class of 2013 we would like to say congratulations to you all, you made it. It has been a long and the finish line is gradually approaching. This upcoming year will be the best and worst time s of your high school experience. There will be times when you can’t wait to get to school to show off your new outfit or to attend homecoming week. There will also be times where school is just not where you want to be today and your body will go but your mind stays at home.These times will come and these times will go but the one thing you must remember is not to forget why you come to school. Do not forget why you are attending high school. Don’t forget about the test on Monday because you were out with your friends this weekend and didn’t feel like studying. Don’t forget about the paper due next week because you were too busy deciding what to get Brittany or bobby something for t heir birthday. Don’t be late to class because you couldn’t decide what to wear with your fresh outfit or what accessories will match your dress.No this is not the time to slack off now is not the time to conduct the infamous virus known as senioritis. Now is the time to focus on your studies, guide your way through the path to graduation, and if you decide start figuring out what college you would like to attend if you haven’t decided already. To the prospective college students now is definitely not the time to get behind on your studies but to get a study plan started. Trust me it will be a necessity. I know there will be times where you feel like giving up and wanting to quit.I’ve been there, I’ve been up all night typing papers and having to get up at the crack of dawn the next morning for class. I’ve been beaten up in practice and having to come home to chores, siblings, and homework. I had the job where you had to work on weekends and homework was due Mondays instead of Wednesdays. I never said the road to graduation was easy but I promise it will be worth it, and after that road ends many more roads will begin to form. It’s always wise to plan your next destination and whether it may be college, military, workforce, or etc. make sure you’re making the right decision for yourself and no one else.You have control of your own destiny. I remember my senior year I was commander of the entire ROTC at my high school, captain of two sports teams, and I also had a job. Although there were times when giving up felt like the easiest thing to do I had to sit back and think was it the RIGHT thing to do. I received many rewards; honor roll, medals, even a state championship ring so it’s say to say I have accomplished many things throughout my high school experience but my biggest achievement was walking across that stage looking my principal in his face and shaking his hand while he gave me my diploma.I k new that I was finally finished everything was complete. I remember sitting down with my grandmother who is is a big influence on my life. We sat down and talked about college she told me how no one in our family has ever been to college and if I decided to go id be the very first. That was more than enough motivation for me to choose the right path for me so hopefully the right path for you students will be easy as well. In choosing your path I want you to remember one thing that my grandmother always told me.My grandmother was a very wise woman and although we had many conversations I never remember them all but I do remember that specific conversation over the rest because she told me something that has been engraved in my mind ever since that night. She said people can take a lot of things from you money, cars, clothes, homes, even your life; but there’s one thing no one will never be able to take from you and that’s your education. So to the upcoming senior class of 2013 I say good luck congratulations and may your road or path guide you to your destiny.

Response to a Personal Narrative on Arranged Marriage Essay

Should your family and cultural background determine who you love? How about who you marry? Sarita James is a South Indian young woman who wrote a personal narrative titled â€Å" let me find my own husband’’. In this story she recounts the pressures placed on her by her family to find a â€Å"suitable boy† for marriage. â€Å"Suitable boy† states Sarita is a term used by Indian families to describe a strong family candidate- someone who comes from the right religion, region, community, and family background. Within my circle of American born-cousins, however, we used the term to tease each other about our parents’ marriage schemes. Arranged marriage is not a romantic ideal. I feel a person’s background or upbringing should not have such a profound effect on whether or not this person is compatible for you. How can you marry someone solely on the basis that they go to the same church as you? Or are members of the same country club? In addition, Sarita says,† our family is both Indian and Catholic. Which was a rarity anywhere and yet I did not want to marry him. I found him to be boring and close minded-he read very little, and claimed he could never have a gay friend. He also did not see why Indian wedding dowries were problematic. I felt my family’s quiet pressure in his presence. I questioned his perennial attendance at our gatherings. â€Å"Do you think we could have just the family visit for Thanksgiving this year?† I asked my mother after two years of his visits. Sarita‘s mother would say, â€Å"But he’s a bachelor â€Å"she would say. â€Å"It’s our duty to host him†. After that he came again. Most of the time in regard to marriage, our concepts are of â€Å"romantic love†. I feel how he can really love you if your family has to pay his family for him to marry you! I don’t think you should marry someone you barely know. How do you commit yourself to someone your family chose for you as a partner? Sarita recalls feeling a deep emptiness she could not explain†¦ she cared for him but was not in love with him. Sarita knew her vision for their shared future had been naively optimistic. The â€Å"suitable boy’s family had accepted a dowry. He was supposed to marry someone else. What hurt most she realized, was the broken trust she had in her parents guidance. Sarita’s parents tended to overprotect and control her. They were denying her of her every wish, even the right to select her own spouse. I think Sarita felt too much pressure from her family. I find it unacceptable to put pressure on a couple involved. Often both partners are reliant on the parents who want them to take part in an arranged marriage for their futures as well as current welfare In conclusion, cultures such as India have had arranged marriages since the beginning of time. In America we have the freedom to make our own decisions on who we marry. Americans would not easily accept the practice of their parents having that much of an influence on who we decide to spend the rest of our lives with.

Final paper Essay Example | Topics and Well Written Essays - 1250 words - 13

Final paper - Essay Example This drastically reduced her total score and Elauf was not hired. The Equal Employment Opportunity Commission (EEOC) filed a case against the Abercrombie & Fitch Stores, Inc. claiming that the firm Abercrombie had violated Title VII of the Civil Rights of 1964 by rejecting to hire Samanatha Elauf due to her hijab (headscarf). The Equal Employment Opportunity Commission enforces the federal regulations that prohibit employment discrimination. According to Title VII of the Civil Rights Act of 1964 an employer may be liable when he or she rejects either to select and hire or discharge a worker based on a religious practise or observance only if the employer has tangible knowledge that there was need for religious accommodation and the definite knowledge of the employer emanated from a direct notification from the employee or applicant. Walsh (741) shares the view that the firm argued that Samantha did not notify the interviewer that she needed an accommodation. However, Elauf who was the plaintiff was wearing the headscarf for religious reasons. More to the point, during the interview at Tusla, Oklahoma in 2008 the store manager never mentioned to Elauf issues relating to the hijab. It was only later on that the district supervisor argued that the headgear disqualified Elauf from the job. It can therefore be assumed that the recruitment team was aware that she was wearing the hijab for religious reasons. Initially the district court ruled in favour of Elauf. The established that the EEOC had determined all elements of a prima facie case of discrimination, such as the firm’s awareness of Samantha’s need for a religious accommodation, and also ruled that Abercrombie had failed to rebut the EEOC’s showing on those elements. However, the Tenth Circuit reversed the summary grant. Law cannot get rel igion right (Sullivan 138). The appellate court overturned the decision and sided with Abercrombie & Fitch Stores, Inc. However, an article

Richard Wright's view about religion (according to the book, Black Essay

Richard Wright's view about religion (according to the book, Black Boy) - Essay Example In an effort to ascertain Wright’s overarching perspective on religion, this essay considers the development of Wright’s views on religion throughout his autobiography. Wright’s first confrontation with religion comes as a direct consequence of his going to live with his grandmother after leaving the orphanage. Up until this point Wright has made no attempt to gain overt sympathy from the reader, and indicates a number of uncouth actions that he participated in as a youth, including frequent cursing. Upon moving in with his grandmother the reader witnesses the confrontation of these two cultural perspectives. It is no surprise then that Wright’s early views of religion are an oppressive and overly restrictive oppressive system. Even as Wright enjoys the rural environment that surrounds his grandmother’s home, he openly rejects the restrictive internal environment. While one of the initial restrictions that Wright objects to occurs in regards to his grandmother’s belief that the only thing that should be read is the Bible, perhaps Wright’s first-outward objection to the religious restrictions is through the symboli c utterance of a curse word while he was taking a bath. Throughout the novel there are a series of such restrictions that function to characterize religion as an oppressive belief system, further articulating Wright’s views on the subject. For instance, Richard is unable to work on Saturdays because his grandmother so strictly follows religious principles; similarly, he is forced to become baptized in chapter 6 – after which Richard tells the others that were baptized that he feels no different after the ceremony. At the age of twelve, before I had had one full year of formal schooling, I had . . . a conviction that the meaning of living came only when one was struggling to wring a meaning out of meaningless suffering. At the age of twelve I had an attitude toward life that was to

Why was there a 'Scramble for Africa' between 1860 and 1900 Essay

Why was there a 'Scramble for Africa' between 1860 and 1900 - Essay Example The definition itself can form negative attitude towards this phenomenon. In history this period is characterized mainly by the cruel attitude of people from developed countries towards the people from less developed territories. Really, we can find many facts of cruel exploitation of one nation by another nation, facts of humiliation, which serve as the reason of such a bad attitude towards imperialism. It is a well-known fact that after the abolition of slavery, Africans appeared in not less difficult situation. They did not know how to live without a job and accommodation. Former slave owners also lost their labor force and experienced many difficulties. All these factors could influence the economy negatively, thus the quite different relations between Africans and Europeans should have been established. Here imperialism can be considered from the point of view of mutual advantage and beneficial cooperation between Europe and Africa. The 1880s brought many changes to the life of Africa and these changes can’t be called positive. There was a period in the history of African continent, when the European countries had been struggling for its territory and resources. â€Å"The nature of European imperialism remains very contested. Much of the discussion revolves around notions of empire by rule and ignores both the wider context of Western expansion and the recourse to ‘informal’ influence in large areas of the non-Western world† (Darwin 2013, p.1) It was a period of colonization. The great changes, which happen in Europe that time served as the reasons (Hobson, 2005). During this period Europe was going through rapid changes in economic, social and military aspects. Many parts of Africa were occupied by Europeans. Great Britain had a big part of the African continent beginning with Freetown in Sierra Leone, some fortresses near the Gambia, some places in Lagos and ending with the Gold Coast territory. The significant part of the cont inent was occupied by France. The colonies in Dakar and in Senegal, the land near river Senegal belonged to France (Simon, 1998). It had power over the Assinie and Grand Bassam and the cost of Dahomey. Moreover, France had a successful attempt to colonize Algeria already in 1830. Portugal and Spain had their territory in Africa as well. Portugal occupied the territories of Angola and Mozambique. Spain possessed lands in Ceuta and Melilla. The Ottoman Turks were among the most powerful colonists. They had power over Egypt, Tunisia and Libya (Bennet, 1984). The question is how such struggle for Africa can be explained. The reasons can be found in the events that had happened in Europe that time. â€Å"Here the growth of imperial rivalries in the late nineteenth century is explained in terms of a far-reaching series of geopolitical crises, ignited by processes of political and economic transformation in non-Western states in the Middle East, sub-Saharan Africa, and East Asia. It is ar gued, nonetheless, that conventional accounts grossly exaggerate the ‘tooth and claw’ nature of imperialist competition before 1914, which was closely constrained by the requirements of Europe’s own politics. Until, that is, the onset of the Great Depression, and the rise of radical nationalist states in Germany and Japan, created the conditions for unrestricted imperialist warfare on a global scale, with catastrophic results† (Darwin 2013, p.1). The most important reason was the abolition of the slave trade. In reality this abolition was related only to the trade out of the land and in the continent the situation was quite different. Slaves’ owners were not ready to lose them. The Muslim merchants continued

Does the mixture of debt and equity in a firm's financial structure Essay

Does the mixture of debt and equity in a firm's financial structure matter Why - Essay Example Primarily the equity shares are issued at ‘Par value’ but subsequent issues are made at premium. The company can finance its capital and revenue expenditure through the issuance of these shares or through its internally generated funds. The shareholder’s equity, as presented in the statement of financial position, comprises of retained earnings and issued and subscribed shares. Retained earnings are the accumulated profits from the period the company was incepted. These retained earnings or internally generated accumulated funds can also be utilized by the company in financing its assets. Debts are classified into current and non-current. Current debts include items such as accounts payable, accruals etc which arise in the normal course of business and pertain to company’s day to day operations. In order to understand the impact of debt in the capital structure of a company, it is imperative that the company should clearly get acquainted with the concept of debt. There is no universal agreement between the financial analysts all across the corporate sector when it comes to identifying what constitute a debt. It is considered a general notion that the long term debt as appearing in the balance sheet of the company constitutes the debt in the capital structure of the company. However, this definition of debt is way too broad and it includes the credits and short term overdraft of the company as well. The impact of debt on the capital structure can be analyzed from two different perspectives of financial accounting and financial management. Educated investors only invests in companies analyze several ratios such as current ratio, quick ratio and debt to equity ratio. Current ratio is quite important from the investor’s perspective as it tells the state of liquidity of the company and would it be able to pay off its long term debts in the future. The most commonly used liquidity ratio, the current ratio, which is calculated by comp aring the current assets and current liabilities. The strengthened the current ratio the more ability the company has to pay its debts and short term obligations over the next 12 months. The asset test, which is also regarded as the quick ratio, is calculated by subtracting the inventory balance from the total current assert balance. Out of the current assets mentioned, inventories are regarded as the one which takes comparatively more time to be converted into cash or cash equivalent. The gearing ratios indicate the level of risk taken by a company as a result of its capital structure. These ratios are a great source of determining the level of financial risk to which the company is exposed and thus helps in reducing it to the optimum. The equity ratio indicates how much of the entity’s assets are financed through the finances generated through the revenue generated from the operations of the entity and raising financing through equity issue rather than acquiring debts or ot her financial institution. In addition to the above, the cost of raising funds in the form of loan acquired from the bank or financial institutions is substantially less as compared to the cost of raising financing through shares or bonds. The cost of raising equity comprises of printing of shares, cost of listing the equity shares on the stock market

Sustainability in IT Essay Example | Topics and Well Written Essays - 2500 words

Sustainability in IT - Essay Example The economic perspective of sustainability is about creating a long lasting trade system. On the other hand, corporate suitability is about focusing on the impact of business on the environment and society. The adoption of principles pertaining to sustainable development is therefore extremely important (Newsome, Moore and Dowling, 2002, p. 303). Nevertheless, in reality sustainability and business do not makes a good pair as organizations often struggle to implement sustainability measures. IT Industry and Software Engineering Information technology can be portrayed as a tool which is used to record, store, classify and process data into meaningful information. The information or the process data is then used for different application. Software Engineering is another major area of the IT industry. It is defined as the application of a quantifiable, disciplined and systematic approach towards the development, design and maintenance of a software package. In software engineering, sust ainability is a crucial factor. Although software engineering does not have any direct impact on the ecology due to its virtual nature, the procedure employed for creating it impacts the environment. The IT industry has been a major producer of wastages basically due to its shorter product life cycle. Therefore, depending upon this phenomenon IT companies throughout the world are trying their best to embrace sustainable growth. Sustainability in IT industry Although the large number of studies has been carried out about sustainability, the studies related to the impact and advantage of sustainability on the IT industry have been hardly done before. With buzzwords such as ‘Green computing’ and ‘Green IT’ the relationship between IT and sustainability got strengthened. The primary rationale behind adopting sustainability in IT is not only due to the rules of government, but companies are also becoming socially and environmentally responsible. Now to illustrat e the subject of the project in broader way, a particular company which practices sustainable development will be chosen. Once the company gets determined, the topic will be addressed in the context of the company. On reviewing various IT companies around the world the appropriate company for this project is IBM. Discussion & Analysis Principles of Sustainability Sustainability has always been a subject that has discussed along with corporate social responsibility. The principles of sustainability are highly dependent on the aspects of corporate social responsibility. In general, there are six sustainability principles which help a community to ensure social, environmental, and economic systems get well integrated. The principles of sustainability are as follows: 1. Maintain and try to improve the living standards of the residents. The quality of life one leads is highly dependent upon the community where the individual lives. Some of the vital components of a community include heal th care, education, housing, income, legal rights and employments. Hence it becomes the duty of the organization to look after the welfare of the society and preserve the environment where it is presently operating. 2. Try to enhance the economic vitality of the community. In order to achieve sustainability, it is imperative to have a viable local economy. Furthermore, the economy which is sustainable also remains diversified so that it does not get disturbed by any of the external or internal disasters. Therefore,

Project management Essay Example | Topics and Well Written Essays - 1500 words - 3

Project management - Essay Example ________________________ helped me throughout the session and due to him, I become able to submit my work on time. Here I want to thanks my parents as well for all their prayers and support. By, Department of Project Management, Faculty of Management Sciences _____________________________________________ Dated: 15-04-2012 Contents Introduction 5 Main Body 6 Pert Technique: A Complete Overview 6 Conclusion 12 Bibliography 13 Introduction According to large number of professionals and corporate analysts, organisation has been referred to a place in which hundreds of people work together for the achievement of a specific goal. This is an obvious fact that, every organisation has the same perspective in its mind which is to broaden the net income recognition (Borodovsky & Gogarten, 2010, pp 25). The leniency of the organisations towards its bottom line and external shareholders is one of the main things for the organisational productivity and efficiency (Borodovsky & Gogarten, 2010, pp 4 6). The real dominance of an organisation lies in the fact that how well it uses its natural and human capital for the long run productivity and efficiency of the entity. Strategies are at the heart of an organisation and no organisation can sustain completely in this competitive environment without employing strategies. It is more than important for an organisation to timely check and measures its operational strategies to cope up with all sorts of challenges which the company may encounter during its operations (Borodovsky & Gogarten, 2010, pp 35). Organisation is basically a set of departments that collectively works for the long run efficiency of the company and inevitably, no organisation can sustain without the ad hoc working of its different departments (Borodovsky & Gogarten, 2010, pp 37) Finance department plays a decisive role in the productivity of an organization. Organizations always want to fly high with the help of high income generation (Borodovsky & Gogarten, 2010, PP. 49). Project Management and Project Evaluation is extremely important from the standpoint of an organization and there are numerous benefits attached with the same. The main perspective of this assignment is to pen down about the concept of PERT in Project Management. Main Body Pert Technique: A Complete Overview Project management is the discipline of forecast, organizing, securing and running property to convey about the successful completion of feature engineering cast goals and objectives (Ackerman, 2002, PP. 65). It is sometimes conflated with list management, however technically that is actually a superior intensity construction: a group of connected and somehow interdependent engineering projects. A foresee is an acting work, having a clear start and end (usually constrained by court, but can be by funding or deliverables), undertaken to assemble matchless goals and objectives, usually to earn about beneficial change or added regard The Project Management Instituted, an i nternational association for the predict management profession, has destroyed pitch management into the following areas of wisdom: Integration, Scope, Time, Cost, Quality, Human Resources, Communications, Risk, and Procurement Management. Each phase is precisely managed to establish a successful propel outcome, although the smooth of portion essential for each outlook varies according to the mass and precise objectives of the project. The primary

Greek Debt Crisis Essay Example for Free

Greek Debt Crisis Essay Europes debt crisis is a continuation of the global financial crisis and also the result of how Europe attempted to solve the global financial crisis that brought an end to a decade of prosperity and unrestricted debt. European attempts at defending itself against a deep recession, has now created a new crisis of unsustainable and un-serviceable sovereign debt. In early 2010 fears of a sovereign debt crisis, the 2010 Euro Crisis developed concerning some European states including European Union members Portugal, Ireland, Italy, Greece, Spain,(affectionately known as the PIIGS) and Belgium. This led to a crisis of confidence as well as the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany. Concern about rising government deficits and debt levels across the globe together with a wave of downgrading of European government debt has created alarm in financial markets. The debt crisis has been mostly centered on recent events in Greece, where there is concern about the rising cost of financing government debt. On 2 May 2010, the Euro zone countries and the International Monetary Fund agreed to a â‚ ¬110 billion loan for Greece, conditional on the implementation of harsh Greek austerity measures. On 9 May 2010, Europes Finance Ministers approved a comprehensive rescue package worth almost a trillion dollars aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility. Europes heavyweights spent massively on stimulation packages. However such attempts at defending themselves against a deep recession, has now created a sovereign debt crisis. The crisis in Europe has to do with the fear that some countries may be unable to pay back their use more money than they earn. Governments were able to borrow so cheaply in the past decade that running a deficit was often used to stimulate economic growth. One of the ways governments can raise money is through selling bonds, which are bought back after a number of years with interest added. Interest on government bonds has been low for most European countries because bonds were considered secure investments. The market worked on the assumption that governments would always be able to afford buying them back. But what if a country can’t pay back their loans? If a business or individual is in this position, they default and are found bankrupt. But countries can also default on their loans. Argentina defaulted on almost $100 billion of debt owed to the World Bank in 2002. Unemployment soared to 25 percent, GDP dropped by over 10 percent and the Argentine peso lost half its value overnight. This is the scenario that European leaders wanted to avoid when in 2009 concern started to mount over Greece’s ability to pay off its debt. Should Greece default, it would probably be forced to pull out of the euro with unknown but potentially grave consequences for the global economy debt. But debt in itself is not always considered a problem and European governments often. INTRODUCTION A DEBT CRISIS deals with countries and their ability to repay borrowed funds. Therefore, it deals with national economies, international loans and national budgeting. The definitions of debt crisis have varied over time, with major institutions such as Standard and Poors or the International Monetary Fund (IMF) offering their own views on the matter. The most basic definition that all agree on is that a debt crisis is when a national government cannot pay the debt it owes and seeks, as a result, some form of assistance. In the real world, of course, things definitely get messy. People are optimistic, hence they offer themselves for jobs they are not quite qualified for; they borrow money on more of a hope that their business plan will work out than a real knowledge of the difficulties and the problems ahead. There is also the government, who has entered the credit system to borrow money to finance its wars. If the wars turned out well then the bond holders got their money back. If the war was a disaster then the credit system crashed and bond-holders were lucky to get anything back. The causes of the current debt crisis are complex, rooted in economic policies and development choices going back to the 1970s and 1980s. When the Organization of Petroleum Exporting Countries (OPEC) quadrupled the price of oil in 1973, OPEC nations deposited much of their new wealth in commercial banks. The banks, seeking investments for their new funds, made loans to developing countries, often hastily and without monitoring how the loans were used. Some of the money borrowed was spent on programs that did not benefit the poor, such as armaments, failed or inappropriate large scale development projects, and private projects benefiting government officials and small elite. Meanwhile, as inflation rose in the U.S., the U.S. adopted extremely tight monetary policies that soon contributed to a sharp rise in interest rates and a worldwide recession. The irresponsible lending on the part of creditors, mismanagement on the part of debtors, and the worldwide recession all contributed to the debt crisis of the early 1980s. Developing countries were hurt the most in the worldwide recession. The high cost of fuel, high interest rates, and declining exports made it increasingly difficult for them to repay their debts. During the rest of the decade and into the 1990s, commercial banks and bilateral creditors (i.e., governments) sought to address the problem by rescheduling loans and in some cases by providing limited debt relief. Despite these efforts, the debt of many of the worlds poorest countries remains well beyond their ability to repay it. AIMS AND OBJECTIVES At the end of this assignment my aim is to learn: ââ€" ª What a Debt Crisis is? ââ€" ª The European countries affected by a Debt Crisis. ââ€" ª In detail about the Greek Debt Crisis. ââ€" ª The causes of the European Debt Crisis ââ€" ª The effects of the European Debt Crisis ââ€" ª The various solutions undertaken to resolve the European Debt Crisis The European Debt Crisis The European debt crisis is the shorthand term for Europe’s struggle to pay the debts it has built up in recent decades. Five of the region’s countries – Greece, Portugal, Ireland, Italy, and Spain – have, to varying degrees, failed to generate enough economic growth to make their ability to pay back bondholders the guarantee it was intended to be. Although these five were seen as being the countries in immediate danger of a possible default, the crisis has far-reaching consequences that extend beyond their borders to the world as a whole. In fact, the head of the Bank of England referred to it as â€Å"the most serious financial crisis at least since the 1930s, if not ever,† in October 2011. This is one of most important problems facing the world economy, but it is also one of the hardest to understand. Greece In the early mid-2000s, Greeces economy was one of the fastest growing in the eurozone and was associated with a large structural deficit. As the world economy was hit by the global financial crisis in the late 2000s, Greece was hit especially hard because its main industries — shipping and tourism — were especially sensitive to changes in the business cycle. The government spent heavily to keep the economy functioning and the countrys debt increased accordingly. On 23 April 2010, the Greek government requested an initial loan of â‚ ¬45 billion from the EU and International Monetary Fund (IMF), to cover its financial needs for the remaining part of 2010. A few days later Standard Poors slashed Greeces sovereign debt rating to BB+ or junk status amid fears of default, in which case investors were liable to lose 30–50% of their money. Stock markets worldwide and the euro currency declined in response to the downgrade. The downgrading of Greek government debt to junk bond status in April 2010 created alarm in financial markets, with bond yields rising so high, that private capital markets practically were no longer available for Greece as a funding source. On 2 May 2010, the Eurozone countries and the International Monetary Fund (IMF) agreed on a â‚ ¬110 billion bailout loan for Greece, conditional on compliance with the following three key points: ââ€" ª Implementation of austerity measures, to restore the fiscal balance. ââ€" ª Privatization of government assets worth â‚ ¬50bn by the end of 2015, to keep the debt pile sustainable. ââ€" ª Implementation of outlined structural reforms, to improve competitiveness and growth prospects. The payment of the bailout was scheduled to happen in several disbursements from May 2010 until June 2013. Due to a worsened recession and the fact that Greece had worked slower than expected to comply with point 2 and 3 above, there was a need one year later to offer Greece both more time and money in the attempt to restore the economy. In October 2011, Eurozone leaders consequently agreed to offer a second â‚ ¬130 billion bailout loan for Greece, conditional not only the implementation of another austerity package (combined with the continued demands for privatization and structural reforms outlined in the first programme), but also that all private creditors holding Greek government bonds should sign a deal accepting lower interest rates and a 53.5% face value loss. This proposed restructure of all Greek public debt held by private creditors, which at that point of time constituted a 58% share of the total Greek public debt, would according to the bailout plan reduce the overall public debt burden with roughly â‚ ¬110 billion. A debt relief equal to a lowering of the debt-to-GDP ratio from a forecast 198% in 2012 down to roughly 160% in 2012, with the lower interest payments in subsequent years combined with the agreed fiscal consolidation of the public budget and significant financial funding from a privatization program, expected to give a further debt decline to a more sustainable level at 120.5% of GDP by 2020. The second bailout deal was finally ratified by all parties in February 2012, and became active one month later, after the last condition regarding a successful debt restructure of all Greek government bonds, had also been met. The second bailout plan was designed with appointment of the Troika to cover all Greek financial needs from 2012-14 through a transfer of some regular disbursements; and aimed for Greece to resume using the private capital markets for debt refinance and as a source to partly cover its future financial needs, already in 2015. In the first five years from 2015-2020, the return to use the markets was however only evaluated as realistic to the extent, where roughly half of the yearly funds needed to patch the continued budget deficits and ordinary debt refinance should be covered by the market; while the other half of the funds should be covered by extraordinary income from the privatization program of Greek government assets. Mid May 2012 the crisis and impossibility to form a new government after elections and the possible victory by the anti-austerity axis led to new speculations Greece would have to leave the Eurozone shortly due. This phenomenon became known as Grexit and started to govern international market behaviour. Due to a delayed reform schedule and a worsened economic recession, the new government immediately asked the Troika to be granted an extended deadline from 2015 to 2017 before being required to restore the budget into a self-financed situation; which in effect was equal to a request of a third bailout package for 2015-16 worth â‚ ¬32.6bn of extra loans. On 11 November 2012, facing a default by the end of November, the Greek parliament passed a new austerity package worth â‚ ¬18.8bn, including a labor market reform and midterm fiscal plan 2013-16. In return, the Euro group agreed on the following day to lower interest rates and prolong debt maturities and to provide Greece with additional funds of around â‚ ¬10bn for a debt-buy-back programme. The latter allowed Greece to retire about half of the â‚ ¬62 billion in debt that Athens owes private creditors, thereby shaving roughly â‚ ¬20 billion off that debt. This should bring Greeces debt-to-GDP ratio down to 124% by 2020 and well below 110% two years later. Without agreement the debt-to-GDP ratio would have risen to 188% in 2013. Causes Many experts agree that the eurozone crisis began in late 2009, when Greece admitted that its debts had reached 300 billion euros, which represented approximately 113% of its gross domestic product (GDP). Meanwhile, the European Union (EU) had already warned several countries about their debt levels, which were supposed to be capped at 60% of GDP. In early 2010, the EU noted several irregularities in Greeces accounting systems, which led to upward revisions of its budget deficits. The negative sentiment led investors to demand higher yields on sovereign bonds, which of course exacerbated the problem by making borrowing costs even higher. Higher yields also led to lower bond prices, which meant larger countries and many eurozone banks holding sovereign debt in troubled countries began to suffer, requiring their own set of solutions. After a modest bailout by the International Monetary Fund, eurozone leaders agreed upon a 750 billion euro rescue package and established the European Financial Stability Facility (EFSF) in May of 2010. Eventually, this fund was increased to about 1 trillion euros in February of 2012, while several other measures were also implemented to stem the crisis. Countries receiving bailout funds from this facility were required to undergo harsh austerity measures designed to bring their budget deficits and government debt levels under control. Ultimately, this led to popular protests throughout 2010, 2011 and 2012 that culminated in the election of antibailout socialist leaders in France and likely Greece. In January 2010 the Greek Ministry of Finance highlighted in their Stability and Growth Program 2010 these five main causes for the significantly deteriorated economic results recorded in 2009. ââ€" ª GDP growth rates: After 2008, GDP growth rates were lower than the Greek national statistical agency had anticipated. ââ€" ª Government deficit: Huge fiscal imbalances developed during the past six years from 2004 to 2009, where the output increased in nominal terms by 40%, while central government primary expenditures increased by 87% against an increase of only 31% in tax revenues. ââ€" ª Government debt-level: Since it had not been reduced during the good years with strong economic growth, there was no room for the government to continue running large deficits in 2010, neither for the years ahead. ââ€" ª Budget compliance: Budget compliance was acknowledged to be in strong need of future improvement, and for 2009 it was even found to be A lot worse than normal, due to economic control being more lax in a year with political elections. ââ€" ª Statistical credibility: Problems with unreliable data had existed ever since Greece applied for membership of the Euro in 1999. In the five years from 2005–2009, Eurostat each year noted a reservation about the fiscal statistical numbers for Greece, and too often previously reported figures got revised to a somewhat worse figure, after a couple of years. Effects Many economists have argued that Greek should default and pull out of the euro. But according to a study released this September by UBS bank, Greece would suffer a painful economic contraction if it were to do so. According to its figures, a weak euro country such as Greece pulling out of the Euro would face a drop in GDP of between 40 and 50 percent, or a per person cost of between â‚ ¬9,500 and â‚ ¬10,500. According to Diego Valiante from the Centre for European Policy Studies, the effects on global financial system could be more severe than we could imagine. â€Å"We have discovered that the financial system is enormous and is just too big and interconnected to fail. We have to save the financial system from a collapse which would have repercussions on the economies and competitiveness of countries.† Valiante argued that if Greece went down, it would inevitably affect the rest of the global economy due to intertwined the relationships of global banks. If Greece defaults, then banks across Europe who bought billions of euros of Greek debt – because it was considered safe – would suddenly be left with worthless assets. This is where contagion kicks in. Other banks, unsure of who has bought Greek debt, will then start calling in debts out of fear that they cannot reclaim their loans. This then trickles down to businesses which would then be unable to raise the capital they need and Europe’s economies would inevitably experience another recession. Sigurd Nà ¦ss-Schmidt, from the think tank Copenhagen Economics, believes this process has already started. â€Å"Banks are losing trust in each other again. They don’t know who has enough assets and credit markets are freezing up,† he said at a recent lecture in Brussels. Solutions The failure to resolve the eurozone crisis has been largely attributed to a lack of political consensus on the measures that need to be taken. Rich countries like Germany have insisted on austerity measures designed to bring down debt levels, while the poorer countries facing the problems complain that austerity is only hindering economic growth prospects further. Perhaps the most popular solution proposed has been the so-called Eurobond, which would be jointly underwritten by all eurozone member states. The problem with this solution is mostly that of complacency. Some experts believe that access to low interest debt financing will eliminate the need for countries to undergo austerity and only push back an inevitable day of reckoning. Meanwhile, countries like Germany could face the brunt of the financial burden in the event of any Eurobond defaults or problems. With disagreements between rich and poor countries in the region, there is a risk that nothing will be accomplished and the situation will only worsen. In the end, there may not be any easy answer to the eurozone crisis, but financial markets continue monitoring the situation in hopes that a solution amicable to all countries arises. RESEARCH METHODOLOGY My source of knowledge was mainly the INTERNET, through which I used various sites wikipedia and related sites. CONCLUSION In conclusion I would like to say that, the EU finance ministers in their latest efforts to turn things around, have reached a deal on cutting Greek debt and given the green light for the country to receive the next pot of bailout money. Its been waiting since June for the cash and it means the government there will be able to pay workers wages and pensions in December. I also learnt that Greek debts will be cut by 40bn euros ( £32bn) and the country will get another 44 billion euros ( £35billion) of bailout loans. Several countries in the eurozone have borrowed and spent too much since the global recession, losing control of their finances. Greece was the first to take a multi-billion pound bailout from other European countries, followed by Portugal and Ireland. Their governments had to agree to spending cuts before the loans were approved. Greece is still in trouble though and needs more money. Many Greek people dont want any more tax rises and job losses, but tough spending plans have been pushed through so the government can receive its bailout cash. There have been angry protests on the streets and strikes at power stations. The Greek government is relieved at the latest deal, but the main opposition party, Syriza, doesnt think it goes far enough and called it a half-baked compromise. If Greece is unable or unwilling to keep paying what it owes, the country will effectively go bankrupt and probably become the first country to leave the euro currency. There are worries that other countries could do the same, threatening the strength of Europe. Life would also become even tougher for Greek people, who would feel much poorer as their money wouldnt be worth as much. Governments in other eurozone countries like Ireland and Portugal would have to pay more to borrow money and might have to raise taxes and cut spending to balance the books As the UK doesnt have the euro, it hasnt contributed to the bailout except through its membership of the International Monetary Fund, which lends to countries around the world. But some British banks have lent money to Greece and would lose billions if the country went bankrupt. They would lose even more if the problems spread to other countries like Spain and Italy. If the banks are hit hard there could be another credit crunch, making it much harder for British people and businesses to borrow cash for loans and mortgages. Companies in the UK also do many of their trade deals with firms in Europe, so financial problems overseas would affect British business too.

Marxism And Economic Liberalism A Comparison Politics Essay

Marxism And Economic Liberalism A Comparison Politics Essay It is the cause of trade that the science of economics existed, although both are the two sides of the same coin and their effect on the nations relations as well as their direct impact on the people cant be overlooked. It was also said since the existence of trading it was fundamentally international and we cant be basically engaged with trading if it was not open to the outside world. Fundamentally speaking, trading can be categorized as internal or international trading, the first said to happen with the boundaries of the state whereas the latter go beyond the boundaries of the state either between two countries or more which also includes the total sum of trading and the exchange of monies, goods and services. It is therefore, may be said, that there are two major theories that governs the international trade or political economy. First, the freedom of trade and industry as a general rule, although there might be some exceptions, but these exceptions do not make international tra de a license or trade monopoly of that nation only. But the state perform as a guarantor or protector to those traders from its nationals who trade with other nations by finding or creating corporations or institutions, their main tasks is to prosper the states trade and propose the necessary guarantees towards the political, monetary and commercial risks. Some time the state allow trading companies to use the countrys official label on some national products especially those agriculture products, as a mark to its quality and to promote and attract foreign investment to invest in those product and the whole sector thereafter. United state, Japan and the European Union are the world leaders in this regard. International trading in these countries is under the guardianship and supervision of the state, in terms of which products are allowed to be imported and those products that are not allowed to be imported, at the same time, the state (s) made regulations for some products to have proper licenses for the foreign trade transactions to be made. However, nowadays, the restrictions are declining and the countries are leaning towards easing some of these restrictions to promote the balanced international free trade. Marxism and Economic Liberalism comparison Marxism and Economic Liberalism as commercial policies were questioned by Smith as to whether they would increase or decrease the wealth of a nation. Smith proposed the following criterion in support of free trade rather than protectionism.  [1]   High tariffs created domestic monopolies resulting in higher prices leading to sloth, mismanagement and a failure to innovate. The most efficient allocation of resources was attained by self-interested individuals acting on their own behalves. Opportunity costs as to resource constraints meant that protecting one sector of industry from cheaper outside competition would distort resource allocations thus increasing production costs to another sector already efficient and competitive. The second theory was the formerly know Soviet Union Economic Theory or what is known to be as the Marxism, whereby the state was solely monopolizes the trade and exercises it through public institutions founded within municipal departments inside the state that has independent character for the trade to be one source from the total resources of state whole production, to fulfill the states economic plan. In the Marxist approach the economy is a site of exploitation between social classes, especially the bourgeoisie and the proletariat. Politics is to a large extent determined by the socio-economic context. Economic liberalism is the dominant perspective today due to the end of the Cold War, the influence of free-market capitalism, and globalization. However, the following specifies the major differences between the two international political theories  [2]  : Free Trade or Economic Liberalism: Liberalism as a coherent social philosophy dates from the late 18th century. At first there was no distinction between political and economic liberalism (economics was not considered a separate discipline until about 1850). Classic liberal political philosophy has continued to develop after 1900 as a purely conservative philosophy.  [3]   Whereas, Economic liberalism emerged as a set of criticisms of mercantilism, understood as the comprehensive political control and regulation of economic affairs which dominated European state-building in the 16th and 17th centuries. Economic liberals reject theories and policies which subordinate economics to politics. Adam Smith was the father of economic liberalism. He believed that markets tend to expand spontaneously for the satisfaction of human needs, provided that governments do not interfere too much. Economic liberals assume that economic policies should increase peoples prosperity. They favored specialization to achieve comparative advantage, free trade, and free markets. Since the 1980s, the global economy has witnessed its renewed dominance. Todays neoliberal economists see a greater role for economic institutions than did classical economic liberals.  [4]   An import liberal economic concept is that of comparative advantage. The law of comparative advantage was developed by David Ricardo. He argued that free trade commercial activities that are carried out independently of national borders will bring benefits to all participants because free trade makes specialization possible, and specialization increases efficiency and thus productivity. Paul Samuelson summarized the argument for free trade as follows: Whether or not one of two regions is absolutely more efficient in the production of every good than is the other, if each specializes in the product in which it has a comparative advantage (greatest relative efficiency) trade will be mutually profitable to both regions.  [5]  According to this logic, in a world economy based on free trade all countries will benefit through specialization and global wealth will increase. Marxism Marxist political economy, in contrast, starts from relations between people and classes, and tries to understand the economy not as a perfect clockwork mechanism but as a dynamic system full of contradictions and doomed to be replaced. Marx did not begin from scratch: he started from the insights of classical political economy a school of thought that the early capitalists gave birth to, as a means of advocating the new system against the defenders of feudalism.  [6]   Marxism sees history evolving through class conflict and revolution in which inequality is progressively eliminated. It achieved great influence after the Russian Revolution but has become less significant since the end of the Cold War. Today the only countries that call themselves Marxist are China, North Korea, Laos, Vietnam, and Cuba. Marxian economics remain influential in analyses of underdevelopment.  [7]   Marxism then has had a significant effect on the world of international relations. Whilst it is fair to say it is not as popular approach as realism or liberalism, it is perhaps the foremost critical response to these long-standing theories. The key ideas of Marxist thought, based in a questioning of what appears at first to be self-evident, is an indispensable tool to any study, let alone to one based so strongly on subjectivity as politics. It is also crucial in a world dominated by capitalism that we strive to look beyond it wherever possible; capitalism is not the be all and end all of political and economic systems even if it does set itself up to be so. Key thinkers such as Cox and Wallerstein have expanded on the basic ideas of Marx and as such made the theory far more applicable to the field of international relations, showing the importance of economics and social trends in state relations rather than the narrower view supported by other theories. Fundamentally, the leading role of the state has been challenged by Marxist authors, and here is where it looks like the approach will bear most fruit  [8]  . The modern world is a dynamic system where the historical power of the state appears to be subsiding in favour of global social movements and inter-state organisations such as the IMF and World Bank. The Marxist approach offers some of the best accounts of both these new sources of power, and no study of international relations would be completely without at least considering what a Marxist approach has to say about them. Different countries in different times has seen many political drifts throughout the history of mankind. Most of the time all of these drifts had the same ideas and goals but they tended to offer different methods of their success. All were mainly intended and focused at the wealth of the public but few of them managed to lead this or that nation to happiness. Liberalism and Marxism are among those political philosophies that have become popular in some countries as the principal forms of political principles. These movements are characteristic of relatively different attitude towards the role of government and political movements in the state. In order to answer the asked question in the beginning of this paper, we shall answer the following question: what are the differences of liberalism and Marxism and which tendency is more relevant nowadays? It is to be noted however, that the liberalism principles have been so popula in many countries around the word. Liberalist theorists claim that the government should play the most possible minimal role in life of the society. As liberalism evolved and during its development, its supporters had to face different allegations or accusations in leaving the public to the mercy of fate and due to various circumstances; some liberals had to change their prospects. Therefore, there appeared different trends among liberal adherents. Theorists of classical liberalism hang on to the idea that in any state individual freedom should be encouraged. The state should limit its regulation of business and economy and it should be assigned by state constitution. Individual property rights, defense of civil liberties and support of free markets are the guarantee of the successful development of a liberal state. In contrast to classical liberals social ones insist on more intensive governmental regulati on of economy, creation of state enterprises and welfare state. Social liberal theorists stand for creation of so-called positive liberty for people which will give them more opportunities, for example health care, education, material assistance (Richardson 263). While comparing the above state intervention to the life of society with the Marxist approach we immediately and clearly can realize their differences they are opposed. Marxist main idea as stated is the following: the state plays the leading role in the life of people at the same time the state is the only authority who can lead the society and provide it with welfare. In The Communist Manifesto (1848)  [9]  , Marx and Engels argued that the means of production determines the very nature of society. This is the linear idea of the base-superstructure relationship: The economy is the base of all social structure, including institutions and ideas. In capitalistic systems, profit drives production and thus dominates labor. Working-class groups are oppressed by the group (in power) who benefit from profit. All institutions that perpetuate domination within a capitalistic society arise from this economic system. Only when the working class rises against the dominant groups can the lib eration of the worker be achieved. Such liberation furthers the natural progression of history in which forces in opposition clash in a dialectic that results in a higher social order. This classical theory is called the critique of political economy. Think of the recent financial crises in Malaysia, Japan, Russian, and Latin America, thanks to the rapid (uncontrolled) movement of money. Marxist-based critical theory thrives today. Not all adherents to Critical Theory are strictly Marxist however. The basic ideas of dialectical conflict, domination, and oppression remain important. Much contemporary critical theory views social processes as over-determined, as opposed to Marxs simple base-superstructure model. They see social structure as a system in which numerous elements interact with one another. A number of approaches to Marxist communication theory can be taken. They all focus on two kinds of problems. As clearly stated above, both of the theories (liberalist and Marxist theorists) have different approaches to the state role in the life of the society. I believe, with what is seen now a days of modern development of countries, liberalism is the best fit political trend with all of its forms, but with more transparency from the politically and financially dominant countries like the United State, who is monopolizing the international authorities especially the financial bodies (IMF, world bank) to their interests. Today in many countries, especially in the undeveloped world, the right of individuals are exercised and can be seen interims of individuals rights to own property in equal way with the freedom of choice. The Current Financial Crisis The financial crisis of September 2008 probably surprised the conventional economists of benign globalisation  [10]  . However, it was expected and been anticipated by many economists (without having predicted its actual date), simply because for those who were predicting it was due to the natural development of the long crisis of late capitalism set in motion in the 1970s. To get a better picture of the current crisis, It is important to take a look back and revisit the first long crisis of capitalism, which shaped the 20th century, as there is such a striking parallel between the developmental stages of these two crises.  [11]   In 1873 of the nineteenth century the crisis of the industrial capitalism evolved. At the time profits levels collapsed, for reasons made clear by Marx. In its turn Capital reacted with a double move, by becoming more concentrated and expanding globally. Creating new monopolies seized profits at the highest possible value, derived from the exploitation of labour. They accelerated the colonial conquest of the planet. These structural transformations allowed profits to take off anew. In recent history, the crisis of capitalism took off in the 1971, when the dollar value went off the Gold Standard. To the same extent this effect of the 1873 crisis took place in the same terms of shrunken Profit , investment and growth levels collapsed again and had never recover their earlier levels between the years of 1956 and 1975. In its terns, Capital here responded as it did in the previous crisis, with a double move both to concentration and to globalisation. It also put in place structures which were to define the second Belle Époque (1990-2008) of financialised globalisation, permitting the oligopolistic groups to take their monopolistic dividend. The same discourse accompanied these moves: the market guarantees prosperity, democracy and peace; this is the end of history. The same rallying of European socialists to the new liberalism. However, this new Belle Époque was accompanied from the beginning by war, of the North against the South, starting in the 1990s. An d as the first financialised globalisation gave rise to 1929, the second led to 2008. We have now arrived at the crucial moment which heralds a probable new wave of wars and revolutions. And this despite the fact that the powers that be envisage nothing other than the restoration of the system as it was before its financial collapse.  [12]   As revealed by the crisis over the capitalist system, the current crisis showed a defect in the global capitalist system, where it was previously based on the commercial capital, and then turning to industrial capitalism, and has now shifted to financial capitalism. The fallback of the role of the institutions of the real economy whereby banks, large financial institutions, stock and bond markets played a major role in maximizing wealth, to an extent whereby the volume of world production of goods and services estimated to 48 trillion dollars compared to 144 trillion dollars the amount of money circulating in the financial markets. In the absence of the proper monitoring mechanisms for financial institutions, this crisis rocked the holiest of holies of capitalist (the lack of state intervention in economic activity). The crisis also brought to surface another problem, the problem of the international financial system, it is necessary in this regard to identify the nature of this system and identify the underlying mechanisms of its association with the dollar: Before 1914 the international monetary system was based on gold (the gold system) and the exchange rates of currencies against each other was based on content of gold behind each of them. Therefore, gold played a prominent role in self-regulation of the economic conditions of the countries and therefore to restrict the volume of money and stabilization in the value of currency. Between the period of 1914 1929 and due to the impact of the global economic crisis at the time when World War I disrupted the economic conditions in the monetary and financial world at large, global changes have taken place and the gold system was no longer appropriate to that era circumstances, and the result was, most countries abandoned the gold standard being utilized. In 1944 the International Monetary Fund was created under the Bretton Woods Convention whereby a new monetary system was introduced which was known as the (exchange in gold) which was based on the U.S. dollar exchange for gold at a price of $ 35 per ounce at the rate of $ 1 per 0.888671 grams of gold, and accordingly, the Central bank in America was committed to convert dollars into gold on this basis and according to the price advertised. the enormous potential of the United States of America in international trade and material resources available to it enabled them to undertake this role, the U.S. Central Bank took it upon itself to maintain the exchange rate of its currency against other currencies for the purchases and sales to the same price as advertised.   Therefore, other countries had to use the dollar in their official reserves alongside the gold and thus the Bretton Woods Agreement has added a unique feature to the dollar and made it the only currency to have a balanced price against gold. America at the time took advantage of its influential role in international trade, particularly with the massive gold reserves they maintain, making it in fact a rival to the International Monetary Fund and the role of the Fund has become a supplementary to the United State. Now a days the dollar is an important component of international liquidity next to gold, and maintained by most countries. Hence, and as a consequence to this situation, it became the duty of others, in particular the European Economic Community to defend the dollar exchange rates, and therefore made the United States to act on fluctuation of exchange rates from the site of the unconcern. Since 1971 and because of the shortage suffered by the U.S. balance of payments and the large decline in U.S. reserves of gold due to its replacement, the ability to exchange dollar with gold was stopped. Dollar began to experience sharp fluctuations in its value and thus emerged a new international scheme based on the currency floating. Following the new style of floating currencies, the turmoil emerged in the international monetary system and started a massive fluctuations in many currencies including the dollar itself, which resulted in redistribution of income and wealth at the international level for the benefit of rich countries.   Americans logic and believe that the U.S. economic recovery should be borne by the international community, particularly the European Union, because according to the American perspective, the revitalization of their economy will inevitably lead to revitalization of the economies of these countries, which means that these countries are countries in support of the actions of America. How can we come out of the current international financial crisis: To be able to come out of the current crisis countries must be able to restore confidence in the financial markets, first through the intervention of governments and central banks to ensure the availability of liquidity to the banking system, and then work on an international level to resolve the crisis. Whereby the crisis has revealed the interdependence of the global economy as a whole it is therefore every state responsibility to come out of the crisis to work together on condensing international efforts to re- investigate the current international monetary system, to give all countries full economic freedom and political right to choose to link their currencies to a basket of currencies to be agreed upon internationally. It is all countries responsibility to work on the repair of work mechanisms in the institutions of the International Monetary Fund and the World Bank and to reform the foundations created these institutions to reduce Americas hegemony on it. Work on the treatment and issues of financial control of the financial institutions through the management and supervision of international regulatory bodies by independent and fully transparent bodies. And finally, find a better management of international liquidity and stop the reliance on the dollar and the adoption of the special drawing rights with the composition of international reserves. Listen Read phonetically Dictionary View detailed dictionary

Examine The Export Led Growth Strategy Economics Essay

Examine The Export Led Growth Strategy Economics Essay Introduction This paper is focused to examine the export-led growth strategy. This is always believed that the developing countries can enhance their economy growth through the export promotion strategies. The economists such as Giles and Williams (1999) mentioned about export led growth which strategy have positive relationship between export and economy growth. There are number of factors are highlighted in literature review which are responsible most in the export led growth model. All factors are mentioned in this paper in detail. This strategy has been adopted by many developing countries and emerging countries to become out from recession. Some countries are successful to achieve their development goals but some are not. This paper research is based on secondary data research. The secondary data research provides wide range of data to analysis. For example Foreign Direct Investment (FDI) report says that the analysis is based on primary as well as secondary data, while the primary survey pr ovides limited information for the requisite analysis, the secondary database has been a major source of detailed firm- and plant-level analysis. The secondary database provided a rich source of plant-level data which has been used extensively in the analysis. The capitaline database provides data on more than 14,000 Indian listed and unlisted companies classified under more than 300 industries. The information used is based on FDI actually received (SEBASTIAN, N.J, 2010). In this report books, articles and journals used to examine the export-led growth and development policies of countries. The statics and data have collected from World Bank, Asian development bank and International Monetary Fund (IMF) reports. The debate is not new, in past two decades number of studies analysed on exports and economy development. Past studies such as (Krueger, 1978; Chenery, 1979; Tyler, 1981; Kavoussi, 1984; Balassa, 1985; Ram, 1985, 1987; Chow, 1987; Fosu, 1990; and Salvatore and Hatcher, 1991) in the favour of export led growth and economy development, but other studies such as ( Jung and Marshal, hereafter referred as JM,1985; Kwan and Cotsomitis, 1990; Ahmad and Kwan, 1991; Dodaro, 1993; Oxley, 1993; Yaghmaian, 1994; and Ahmad and Harnhirum, hereafter referred as AH, 1995) argue against the economy development. While we are examining the export led growth model in the point of view economy growth, then we also need to focus on globalisation as well. There are many types of globalisation for example globalisation of culture, globalisation of economy and globalisation of society. According to the Walker en Fox (1992) (MOSTERT, J, 2003) the global integration of the financial markets can be seen as an example globalisation. Walker en Fox argues than the process of financial globalisation is the most important part of the process of globalisation. Globalisation is the most important part of economy, Brittan (1998:2) states that as a whirlwind of relentless and disruptive c hange which leaves governments helpless and leaves a trail of economic, social cultural and environmental problems in its wake (MOSTERT, J, 2003). The world is connecting to each other via new technology, via phones, via satellite etc. But before 50 years ago it was not much easier then today. For example today Asian countries got number of mobile users. The big telecom companies of UK such as Vodafone and O2 are already invested in India (south Asia). Baldwin and Martin (1999) mentioned that the innovations and advances in transportation, information and communications technologies (RAJAN, Graham Bird and Ramkishen S., 2001). This report is mainly examining the export led growth model in developing countries. This paper examines the south Asia part of world and chosen country is India. This report is structured as section 2 brings overview of globalisation and literature review of globalisation, section 3 highlighted the economic globalisation and in section 4 impact of globalisati on, in further section 5 is about the overview of developing economies, section 6 spells out export led growth model and literature review of export led growth model, section 7 presents the some recommendations on the basis empirical studies result, the section 8 will discussed about the export promotion strategies which are adopted by India and critical examine the strengths and weakness of these promotion strategies, in the final part of this report is section 9 summarizes the discussion and conclusion. Overview of Globalisation Globalisation is the modern way which is changing the world trade system and world politics. The globalisation is the way to reduces the barriers between two countries and interchange the goods, services, labour and capital. Globalisation is popular and cheapest way to reduce the transportation cost, communication cost. It is the faster way to communicate, lower trade barriers and to raise the capital flows. In the result of globalisation the developing economies becoming more close with the world. As per United Nations University, In the new era of growing integration of economies and societies, individuals and corporations reach around the world further, faster, and more economically than before (HESHMATI, Almas, 2005). Literature review of Globalisation Globalization has its roots in the second-half of the eighteenth century. The period 1870-2000 is classified into (i) the first wave of globalization 1870-1913, (ii) the de-globalization period of 1913-50, (iii) the golden age of 1950-73, and (iv) the second wave of globalization from 1973 onwards (see ORourke and Williamson 2000; ORourke 2001; Maddison 2001; Williamson 2002; and World Bank 2002) (HESHMATI, Almas, 2005). Globalisation is a term that has become very popular and used in many different contexts in the literature. Before the impact of globalisation on Africa can be evaluated it is crucial that the meaning of globalisation should be clarified. The definition of globalisation should also be distinguished from terms like internationalization, regionalization and liberalization (MOSTERT, J, 2003). Some claims that globalisation is the breakdown between countries border, economy and communities. Giddens (1999) has characterized as a runway world. For better or worse, he says, We are being propelled into a global order that no one fully understands, but which is making its effects felt upon all of us (HELD, David, 2000). But we look other definition of globalisation given by Guy Brainbant, he says the process of globalisation not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNCs, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution (GOYAL, Krishn A, 2006). He also pointed out the negative aspects of globalisation as well. O Brien (1992:5) also links the definition of globalisation to geographical borders. OBrien distinguishes between national, international, offshore and global. National transactions take place between businesses in the same country (MOSTERT, J, 2003). In the end globalisation is related with exchange of service, goods or capital between countries. As Redding (1999:19) defines globalisation the increasing integration between the markets for goods, services and capital, Reddings definition also links globalisation to the breakdown of borders (MOSTERT, J, 2003). The Globalisation is transforming trade, finance, employment, migration, technology, communications, the environment, social systems, and ways of living, cultures and patterns of governance (STREETEN, Paul, 1998). Economic globalisation The concept of globalisation is very broad. The different people have different views and definitions about globalisation. Some economists view globalisation as positive effects on the world economy and world trade but some says globalisation has negative effects as well (see Bhagwati, 2002) (BHAGWATI, J, 2002). Today as we see the cultural, political and technological globalisation is important but we cant ignore economic globalisation as well. Robinson (2001) mentioned that the fulcrum of the various definitions of globalization seems to be wealth or economic development, the parameters within which many schools of thought view globalization is usually based on trade or economic activity (OBADAN, Mike I., 2008). The debate about globalisation is the lack of a clearly agreed definition of the concept- the word globalisation exists with many interpretations- but a clear concept is often missing (HELD, David, 2000). But if we see in general definition of globalisation is that it is fr ee movement of goods, service, labour and capital across borders (HESHMATI, Almas, 2005). As this concept is not new debate globalisation was started from 18th century and now it is in second phase. Whenever the economic crisis came in world for example after World War II or 1991 the countries started international trade. The motive behind this only is economic growth. In today competitive world every country wants to compete other and want to become a rich and powerful country of the world. For example China and India they opened their gate for trade with world and they are on the top in economy growth. However globalisation is not only economic globalisation or not only social or political or cultural globalisation, in other words globalisation is a multifaceted (Daouas, 2001; Obadan, 2001b and 2002b; IMF Staff, 2002; UNDP (Nigeria), 2001, etc) (OBADAN, Mike I., 2008). The economic globalisation is the central term concept of globalisation. International trade is participating in shrink the world. For example in UK or USA you can get easily Asian food or goods, the main exports are India and Pakistan. Brazil is the worlds no.1 coffee exports and Malaysia is the worlds no.1 AC (Air Conditioner) supplier. Another example is Multinational Companies become the main careers of the economic globalisation like McDonalds, KFC and some examples of merger of MNC such as Tata Motors (India) merger with Jaguar (UK) and Tata India merger with Bangladeshi company to make bicycle for exports to USA. In 1996, there were altogether only more than 44,000 MNCs in the whole world, which had 280,000 overseas subsidiaries and branch offices. In 1997, the volume of the trade of only the top 100 MNCs already came up to 1/3 of the worlds total and that between their parent companies and their subsidiaries took up another 1/3. In the US$ 3,000 billion balance of foreign direct investment at the end of 1996, MNCs owned over 80%. Furthermore, about 70% of international technological tr ansfers were conducted among MNCs (SHANGQUAN, GAO, 2000). The globalisation mostly viewed as context of economics but it include human rights and reduce the cost of transport, labour cost, communication cost. The main influence of globalisation on the world is to reduce the poverty. For example 30 years ago countries like India and China were very poor, but today these two countries have high purchasing power more than USA or any other developed country. Impact of Globalisation Globalization has accelerated growth in the region and contributed to poverty reduction (GHANI, Ejaz and Anand, Rahul, 2009). The impact of globalisation is different on developing and different on developed countries. Brittan (1998:8) indicated that globalisation led to an increase in the wealth of developed countries and also not to bigger poverty in the developing countries. As an example of the improvement in the developing countries Brittan referred to the improvement in the economic situation in the Asian countries (MOSTERT, J, 2003). But Hak-Min (1992:2) argued against the Brittan, he mentioned that the distribution of income between developed and developing countries has become less skewed by indicating that globalisation in the integrated world economy has lead to industrial growth in a limited number of developed countries. There are number of definitions of globalisation and thousands of critics as well in this world. In June 1996 at Communiquà © of the Lyon Summit of G7 the given the statement on the impact of globalisation, In an increasingly interdependent world, we must all recognize that we have an interest in spreading the benefits of economic growth as widely as possible and in diminishing the risk either of excluding individuals or groups in our own economies or excluding countries or regions from the benefits of globalisation (MUBIRU, Edward, 2003). According to Killick (2000) a significant part of the world and a large numbers of countries are now effectively participating in the processes of integration and globalisation. In this regard globalisation may be thought of as the integration of economies through trade, capital flows and information technology (MUBIRU, Edward, 2003). Frankel (2000:2) view globalisation as being one of the most powerful forces to have shaped the world economy during the past 50 years (LOOTS, ELSABE, 2001). In past two decades world economy is rapidly growing up. The world economy growth in 2010 is rose up as com pare to 2008-2009. According to CIA since 1946 economic crisis the gross world product grew by 4.6% on the bounced of exports (CIA, 2011). It will be continuing in 2011 and 2012 as well. According to IMF report expected economic growth at about 41/2 percent in both year (IMF, 2011). Amazingly the exports boost by 20% in 2010 from 2009. The above table shows about the largest economies of the world which GDP growth rate is very high and rapidly increasing. These five countries are world main exports, for example China in manufacturing, India for service and manpower, Taiwan in electronics, Brazil for coffee and transport equipment and South Korea is for semiconductors and wireless communication. (CIA, 2011) Largest Economies GDP (%) China +10.1 India +8.3 Taiwan +8.3 Brazil +7.5 South Korea +6.1 Table : Largest Economies GDP Among large economies, China (+10.1%), Taiwan (+8.3%), India (+8.3%), Brazil (+7.5%), and South Korea (+6.1%) recorded the biggest GDP gains-China also became the worlds largest exporter. Continuing uncertainties in mortgage and financial markets resulted in slower growth in Japan (+3.0%), the US (+2.8%), and the European Union (+1.7%), (CIA, 2011). The China and India has surprised the world by their economic growth. The China has gain economy by exports of manufacturing products. For example, Australia and China free trade agreement in 2002 (MAI, Dr Yinhua et al., 2005). Country like India is main manpower and service supplier for USA. India opened the trade gate after 1991 crisis. As per previous studies of impact of globalisation is the key event in world economy. According to Akin and Kose, during this gradual process, several emerging countries have gained in economic importance and have begun to influence economic developments in other countries (FIDRMUC, JARKO and KORHONEN, I IKKA, 2009). China is one of the most important exporting and importing nations worldwide. India seems to be following the development path of China more recently (see winter and Yusuf, 2007, and Yusuf et al., 2007), although India concentrates more on services than does manufacturing-oriented China (FIDRMUC, JARKO and KORHONEN, IIKKA, 2009). From last empirical studies and data statics we got the result that globalisation has participated a lot to boost up international trade. The international trade is the fast way to boost up economy and cash flows. The countries always implement new policies and international trade policies such as free trade and export led growth. Developing countries main focus is export led growth. The researchers mentioned that export led growth as hypothesis which gives country to achieve their development goals. Before we go further first need to know what is export led growth model. After that this report will focus on a one of developing country which is already focusing on this model and gained their economy up. The chosen country is India and India is developing country and situated in south Asia. The crisis came in 1991 India was affected most in the world. After the crisis India opened their trade gates and implements some new export promotion programmes. From the time period till now India is almost successful to achieve their goals. To get better understanding on India and these export promotions discussed later in this paper. This report will also examine the strengths and weakness of programmes which India set to achieve their development goals. On the basis of past empirical studies and research this paper will suggest some possible recommendations. Further start with export led growth, on the basis of past empirical studies we will try to find the definition of this model and also will focus on to find the relationship of export led growth and international trade. Overview of Developing Economies The World Bank has divided the world economies in three parts. First is developed economies means which countrys economy is high , second is developing countries which countrys economies is growing up and last one is least developed country which means poor countries. The developing world described as Africa, Asia and Latin America as compared to industrialized world such as Western Europe, Eastern Europe, North America and Japan (NAYYAR, Deepak, 2009). The division of world economies concept came in 19th century. While the world economy was increasing up in 19th century then the second phase of globalisation was started. We already discussed above about the globalisation and impact of globalisation on world economy. The developing country such as China is the important source for the world economy. China is following by India and there are more country will be in count in further time. China and India average growth rate surprised world economy. Today almost big countries are tradin g with china. China main export is manufacturing products and India is service. Why Country Do Export In general way export is the growth engine. There are lot of benefits are involved with international trade. The main reason for trade is comparative advantage. According to Feder (1982) exports helps economy in many ways such as greater capacity utilization, economies of scale, incentives for technological improvement and pressure of foreign competition, leading to more efficient management (IBRAHIM, Izani, 2002). Due to globalisation every country wants to become on peak. For example Brazil produces coffee most in the world and India is best in natural resources and tea. Iran and Iraq has lot oil to export to world. These country exports their products on high price unless they sell their product on domestic demand. According to Monir Tayeb (2000) countries do export because they presumed to supply foreign markets because it is profitable for them to do so (TAYEB, Monir H., 2000). He also mentioned that countries also interested to do Inter-industry trade (IIT); this is one type of international trade which is mentioned by Monir Tayeb (2000). The definition of IIT is that when a country tends to export one good and import a wholly different type of good. For example UK exports whiskey and imports the Brandy. Italy exports the wine to Germany and at the same time that it also imports German wines. In other way Inter-Industry trade occurs when two countries exchange different varieties of essentially the same type of good (TAYEB, Monir H., 2000). The question is what another benefits are involve with export? The different countries have different requirements for example in poor countries they export for economic growth and developing countries interested to do with both benefits development of their countries and comparative advantage. The developed country like USA has massive production of goods and electronic products so they do export to become more beneficial. But the most important is involved with export is government policies. How country export and wh at is the barriers for trade this is always decided by their governments. As per theoretical studies we will talk about the possible benefits which are involved with exports. So first is the comparative advantage second is economic growth and third is the development of country. First start with comparative advantage: Comparative Advantage: The British economist David Ricardo (1817) invented the theory of comparative advantage. The basic concept of advantage theory was written by Adam Smith in 1766 he set brought the theory of absolute advantage. He argued that countries would tend to specialise in international trade and in particular, that they would export goods they produced more cheaply than their trading partners and import goods they produced more expensively (TAYEB, Monir H., 2000). The above table is giving the simple hypothetical example of absolute advantage. Country Whisky (Cost per unit) Brandy (Cost per unit) United Kingdom  £7.00  £8.50 France  £8.50  £7.00 Source: Monir Tayeb (2000) In the example the UK whiskey is cheaper than France and the France Brandy is more cheaply then UK, because the consumer purchase France brandy from British sources and British consumers also do same they purchase from French suppliers. The key features of international trade are specialisation and exchange. Both countries are specialising in production of goods and they are exchanging their products to get benefit from absolute advantage. This concept simply says that it is good for both nations. This is good for world economy as well. Both countries who has good production of products and they can exchange their product on free trade agreement they will be beneficial both of them because they establishing their international market. This is also good for people because they are getting products on less money. Ricardo theory is based on physical and natural influences over competitiveness, technological and human factors which were given by shortly economists. The most effective mod el of comparative advantage was Heckscher-Ohlin (H-O) theorem. This model originally developed by Heckscher (1919) and Ohlin (1933) and today as Heckscher-Ohlin comparative model. This model assumption is about capital and labour. For example Japan makes the robots to assemble the cars and other motors. The key thing is the labour is costly than compared to Japan. For example India total export in 2010 was $201 billion and total import was $327 billion in the world it shows India import goods more than export. This country is exchanging their products such as petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel. The main exports partners are UAE 12.87%, US 12.59%, China 5.59%. The other thing is very important to notice is the role of government policies and financial institutions to get better advantage of comparative advantage. The studies for example Memedovic (1994) included the type of state (class base, administrative capacity and mode o f intervention) and argued that the help of the government can bring about changes in comparative advantage (SIEGFRIED BENDER, Kui-Wai Li, 2002). This is true the country do export because they have advantage of cheap labour. For example USA multinational companies have number of call centres in India. The USA average employee wages per hour is $18.00 to $22.00 per hour. But in India they are getting employee on $111 per month. India is the number one service exporter for USA. The below example is also of comparative advantage. Example: Comparative Advantage Lets quantify comparative advantage with an imaginary example. Suppose an acre of land in Canada can produce either 1 unit of wheat or 2 units of corn.3 And suppose an acre in the U.S. can produce either 3 units of wheat or 4 units of corn. The U.S. then has absolute advantage in both wheat (3 units vs. 1) and corn (4 units vs. 2). But we are twice as productive in corn and thrice as productive in wheat, so we have comparative advantage in wheat. Source: (FLETHER, Ian, 2010) The other model of comparative advantage named the specific factors theory is associated with Jones (1971). This model is only based on one factor is labour. But the H-O model considered two factors labour and capital. The below table is example of H-O comparative advantage model: Country Man-Made Fabric actual cost Opportunity Cost Cotton fabric actual cost Opportunity cost UK  £300 0.92  £325 1.08 Turkey 4500 TL 1.06 4250 TL 0.94 Source: Hecksher-Ohlin comparative advantage p.17 (TAYEB, Monir H., 2000) The above example is showing the labour cost difference between UK and Turkey. So this is also comparative advantage for the countries. Porter (1990) mentioned some competitive advantages in his study. The above are the advantages which Porter (1990) mentioned: The availability of skilled labour Locally available technology and know how Access to suppliers of key inputs Market proximity The local cost of inputs Vernons (1966) product life cycle theory is also important in trade. He determined that every product has life cycle, once product has launched it is in introduction stage, once product people used and the product become popular on domestic level. In short time the product start export to world. In the end we can say if country is interested to do export because of comparative advantage and economy growth as well. Export Led Growth In past decades there are many empirical studies has been analysed on export-led growth and world economy. The main topic for these studies was to examine the relation between exports and economic growth for example Giles and Williams (2000). Most of studies were focus on exports and GDP, but some other studies such as Hatemi-J and Irandoust (2001), Hacker and Hatemi-J (2003) and Bernard and Jensen (2004) focused on the exports and total factor productivity (TFP) growth. While these studies were focusing on Exports and GDP or TFT but studies such as Murphy, Shleifer, and Vishny (1989) were purposed the theory of Big Push industrialization1. Murphy, Shleifer and Vishny (1989) said that simultaneous industrialization of many sectors can be self-sustaining and profitable even if no sector can break even when investing alone.2 After the crisis of 1991 many Asian countries were under the recession time but countries like Thailand, Malaysia found the external way to overcome recession time . According to Felipe (2003) Since the East Asian financial crisis erupted in 1997, countries in the Asian and Pacific region have been immersed in a search exercise to identify what policies led to the crisis and recession, and what alternative set of policies would lead them back to a path of sustained and higher growth rates. The Asian countries were trying to rebalance their economy and GDP, for example Jomo (1998), Seguina (2000), Lim (2004) said that The majority view has been that the crisis was the consequence of a fundamental flaw in precrisis financial policies, which led to currency overvaluation, over borrowing, and over lending for the domestic economy; and speculative bubbles that eventually burst. The Thai government development policy was based on dual track strategy (Lian 2004). Relationships between Export and Economic Growth (Literature Review) This debate is controversy and number of empirical studies done already. Some authors suggested that open economy has positive effects on growth more than close economies (Sachs and Warner, 1995; Edwards, 1992, 1993, 1998; Srinivasan and Bhagwati, 1999; Krueger, 1997; Ben-David and Kimhi, 2000) (FREDERICO G. JAYME, Jr, 2001). Empirical evidence from developing countries support studies such as Taylor, 1993; McCombie and Thirlwall, 1999; Blecker, 1999b; Helleiner, 1996; UNCTAD, 1995 (FREDERICO G. JAYME, Jr, 2001). Trade is the key concept for the countries to grow. For example countries like Malaysia, China, India and Brazil they all are got benefits from trade. The countries do export for comparative advantage. For example Brazil is number one coffee production country and world main coffee exporter as well. The trade is the only way to right use of economys resources by imports of goods and service otherwise they have to sell at home with high resources cost. For example Ricardian m odel says that the welfare gains if any country specializes in producing goods in which it has a comparative advantage (FREDERICO G. JAYME, Jr, 2001). The Hecksher-Ohlin-Samuelson (H-O-S) model, on the other hand, shows the welfare gains, In the two-country model that each country specializes based on their factor endowments. The result of these models is that international trade is the way to achieve the international competitiveness and static productivity. International trade enable to countries reduce the transportation cost, production cost and reduce the labour cost in case of developing countries. Beck (2002) mentioned that Financial development and international trade are identified as macroeconomic variables as being highly correlated with economic growth performance across countries in the empirical growth literature (UDDIN, Md. Gazi Salah, 2005). The other example of empirical study of economic growth is Calderon and Liu (2003) says that the relationship between financial development and economic growth has now well recognized in the literature that financial development is crucial for economic growth and Chang (2002) mentioned that it is a necessary condition for achieving a high rate of economic growth (UDDIN, Md. Gazi Salah, 2005). Trade has a strong positive relationship with economic growth (Mazur and Alexander, 2001) (UDDIN, Md. Gazi Salah, 2005). Trade allows countries to set a large market for their domestic products. The two studies Prebisch (1950) and Singer (1950) about the effects of trade on income are based on two grounds First, incessant decrease in the international price of raw materials and primary commodities would lead, without industrialization in developing countries, to more profound differences between developed and developing countries. Second, for their Industrialization, developing economies require short or medium term protection of their infant industries. Furthermore, the structure of trade, under which exports are conc entrated on a few primary products and imports are constituted mostly by manufactured goods, renders developing countries overly dependent and vulnerable (RAZAFIMAHEFA, HAMORI Shigeyuki and Ivohasina F., 2003). The others author such as Levine and Renelt (1992) and Rodriguez and Rodrik (1999) emphasize on trade effects on economic growth. There are most studies done in the favour of trade effects on growth but there are some studies which are contradicted with these studies. For example Rodrik [1995] argues that in most studies of openness and growth, indicators used inappropriately reflect the trade regime (RAZAFIMAHEFA, HAMORI Shigeyuki and Ivohasina F., 2003). Edwards (1997) tests, for a data set of 93 countries, the robustness of the impact of trade on growth by introducing first alternatively and then simultaneously nine measures of openness. He said that each proxy for openness is correlated positively with economic growth and the composite index from those proxies also enters with a positive coefficient in the growth regression. Krueger (1978) study tested two hypotheses which has positive effects of openness on growth, first is more liberalized regimes result in higher rates of growth of exports, and second is a more liberalized trade sector has a positive effect on aggregate growth. Feder (1982) he analysed the set of 31 semi-industrialized count