I was just reading here before I ended up going to bed and I came across an interesting article regarding TelMex and Carlos Slim aka. the worlds richest man. This article caught my interest due to researching Mexico and NAFTA and how certain industries in Mexico such as their energy and communication companies are monopolized by conglomerates of Mexican companies and their EXTREMELY wealthy owners. This would be a great step if the Mexican senate was showing true signs to help their economy by removing this monopoly and creating a unique communication competition in Mexico.
According to Al Jazeera, Carlos Slim's fixed line company controls 80% of the industry while his wireless company controls 70% of the wireless industry. This semi-monopoly has such a strong control over Mexico's communication industry very similar to their energy industry in which PEMEX controls virtually the entire industry and contributes a majority to the countries public spending. The new reform is also attempting to break up Mexico's television giants in order to open up the mexican communication and television industry up to competition. The Mexican senate hopes that this reform will also help draw in foreign companies and investment into these Mexican industries. The new bill also will allow for foreign companies to own 100 percent of the capital of a telecom company in comparison with the previous 49%. This step forward liberalizing their telecom industry is the first step of many that Mexico could make...Next step their energy industry.
Friday, May 3, 2013
Factory safety in Bangladesh
A garment factory in Bangladesh collapsed on itself April 24th. This event killed many, leaving even more missing. This is the type of event that lowers confidence in potential investors. There has been a lot of talk of major companies leaving Bangladesh over this event. Disney has stated they are halting all production in Bangladesh. Unfortunately this is not an isolated incident in Bangladesh, the New York Times covered a very similar fire in November of 2012. Despite the danger of the factories, some think that the threatened pull out of major companies would be even more disastrous. The Times says the industry is one of the strongest in the world, and second only to China. The decisions of these companies could set a historic precedent. If many of the companies stay, neglecting the ailing safety concerns, it could have discouraging results. If the companies enforce safety standards beyond those required by the state, they would be sacrificing profits. Unfortunately the most popular option is leaving the country all together, which could cripple the economy. Employing over 3 million people, the industry is strong, and with a and lifting the country from poverty, the Globe and Mail says the wages pay better than farming or casual labor.
As a Bangladesh struggles to raise themselves from poverty, safety is a low concern. They rate 144th in the world in terms of corruption. It is up to private firms to make the decision on what is safe. Companies want to cut costs, but they need consumers to buy products. If these companies enact some sort of corporate social responsibility will it be enough to assuage minds? It is the responsibility of the consumer to hold companies to some measure of decency by voting with their dollar. Nike in the past dealt with similar criticism with regards to child labor. They seem to have overcome their hurdle, not without admitting they "blew it". Events like these are incredibly hard to deal with, but lessons must be learned. The question stands as to whether or not these companies will learn from this most recent disaster.
As a Bangladesh struggles to raise themselves from poverty, safety is a low concern. They rate 144th in the world in terms of corruption. It is up to private firms to make the decision on what is safe. Companies want to cut costs, but they need consumers to buy products. If these companies enact some sort of corporate social responsibility will it be enough to assuage minds? It is the responsibility of the consumer to hold companies to some measure of decency by voting with their dollar. Nike in the past dealt with similar criticism with regards to child labor. They seem to have overcome their hurdle, not without admitting they "blew it". Events like these are incredibly hard to deal with, but lessons must be learned. The question stands as to whether or not these companies will learn from this most recent disaster.
The Tail End of Economic Recovery- New Challenges
Paul Krugman's article Not Enough Inflation reminds us that unemployment is not our only economic concern. Another two articles in the times report optimistic growth in jobs overall Job Data Ease Fear of Sharp Slowdown but particularly for educated Americans Idled Young Americans. He argues that if we allow lack of inflation to continue we may permanently establish a cycle of economic failure. It is a nice change of pace however to hear concerns over inflation instead of the immediate problems of unemployment. The stock market is improving due to the positive job numbers and means that the United States may be restoring reputation as a stable economy. Issues with the European Central Bank and their follies should help us remember that we must keep both unemployment and inflation on the radar as real concerns.
European Central Bank Cuts Interest Rates
On Thursday the European Central Bank cut its main interest
rate from .75% to .5%. This came after new signs of weakness emerge from the Euro
zone. In theory, this new cut to the main interest rate is done to encourage
economic activity. Lower interest rates decrease the cost of debt. It also
helps boosts the demand of debt which is then used to buy goods. It also
depreciates the Euro making the Euro zone a competitive place for exports but
expensive for imports. The problem with this policy relates to the expected
effects it will have in the market. The Euro zone maybe unified by one currency
but is experiencing big economic differences among the core countries of the
north and the economically weak countries of the south.
Germany the powerhouse of Europe has expressed its concern of low interest rates and its effect on investments that are not economical over the long term. An example which helps depict the huge differences between the North and South is the unemployment rate. Germany is facing a much lower unemployment rate of 5.4% compared to Spain’s 26.7%. The continued use of loose monetary policy that the ECB continues to uphold can in the long run increase inflation and cause an increase likelihood of new unforeseen bubbles like the housing bubble of the United States. This is not the only fear. Lower interest rates in the Euro zone harms savers by decreasing the interest rates they can get for their savings. The European Central Bank understands that it needs robust economic growth in all areas of the Euro zone and has done the only thing it can do currently, and that is to decrease the main interest rate. Economic disparities between the North and South will continue. Can a better banking union fix this problem or is this just the beginning of the end for the European Central Bank?
Germany the powerhouse of Europe has expressed its concern of low interest rates and its effect on investments that are not economical over the long term. An example which helps depict the huge differences between the North and South is the unemployment rate. Germany is facing a much lower unemployment rate of 5.4% compared to Spain’s 26.7%. The continued use of loose monetary policy that the ECB continues to uphold can in the long run increase inflation and cause an increase likelihood of new unforeseen bubbles like the housing bubble of the United States. This is not the only fear. Lower interest rates in the Euro zone harms savers by decreasing the interest rates they can get for their savings. The European Central Bank understands that it needs robust economic growth in all areas of the Euro zone and has done the only thing it can do currently, and that is to decrease the main interest rate. Economic disparities between the North and South will continue. Can a better banking union fix this problem or is this just the beginning of the end for the European Central Bank?
Can Japan turn its economy around?
Japan is the third-largest economy in the world, but like many other developed nations, it has not avoided financial crises in recent years. The biggest problems that have plagued the Japanese economy in recent years are deflation and a trade deficit. Both of these issues are big trouble for the economy, as it is very easy to get stuck in the cycle, according to The UK Independent. When a state faces deflation, businesses quit investing and consumers quit spending. As a result, prices stay low and wages don't increase. Hence, it is very easy for countries like Japan to get stuck in this cycle for years.
Recently, however, the Japanese government is implementing new measures to get Japan out of this state of deflation and trade deficit. In this plan known as 'Abenomics', the government is planning on expanding the money supply from 60 trillion Yen to 70 trillion Yen. One way that the government plans on doing this is by buying more of the country's own debt through government bonds. This method would be implemented within two years, which would shock the economy. According to The New York Times, the Japanese government also plans on producing an annual inflation rate of two percent.
These large measures have already caused a large trade deficit in recent months. Since November, the Japanese Yen has fallen twenty percent against the U.S. dollar, according to A BBC News article. As a result, imports have risen, but exports out of Japan have taken a hit. Since this is what Japan has been known for over the past several decades, this spells trouble.
There is great debate amongst economists and politicians as to the success of the "Abenomics" plan. When Prime Minister Shinzo Abe first came into office in December, Japanese stocks rose due to the anticipation of a fixed economy. Breaking the cycle of deflation is a keystone point of Abe's term as Prime Minister. However, some are starting to doubt if the Japanese government will really take the necessary drastic measures to get the economy back on track.
While the "Abenomics" plan would help the Japanese economy, the short-term effects would be very drastic, which is what scares many people. The new Bank of Japan governor, Mr. Kuroda, does not believe the side effects of this plan will cause a lot of damage. However, only time will tell. What is really important is that the new Japanese government keeps its promise to take drastic measures to get out of its economic slump. With the amount of time that the Japanese government has been in this debilitating state, drastic steps need to be taken.
Recently, however, the Japanese government is implementing new measures to get Japan out of this state of deflation and trade deficit. In this plan known as 'Abenomics', the government is planning on expanding the money supply from 60 trillion Yen to 70 trillion Yen. One way that the government plans on doing this is by buying more of the country's own debt through government bonds. This method would be implemented within two years, which would shock the economy. According to The New York Times, the Japanese government also plans on producing an annual inflation rate of two percent.
These large measures have already caused a large trade deficit in recent months. Since November, the Japanese Yen has fallen twenty percent against the U.S. dollar, according to A BBC News article. As a result, imports have risen, but exports out of Japan have taken a hit. Since this is what Japan has been known for over the past several decades, this spells trouble.
There is great debate amongst economists and politicians as to the success of the "Abenomics" plan. When Prime Minister Shinzo Abe first came into office in December, Japanese stocks rose due to the anticipation of a fixed economy. Breaking the cycle of deflation is a keystone point of Abe's term as Prime Minister. However, some are starting to doubt if the Japanese government will really take the necessary drastic measures to get the economy back on track.
While the "Abenomics" plan would help the Japanese economy, the short-term effects would be very drastic, which is what scares many people. The new Bank of Japan governor, Mr. Kuroda, does not believe the side effects of this plan will cause a lot of damage. However, only time will tell. What is really important is that the new Japanese government keeps its promise to take drastic measures to get out of its economic slump. With the amount of time that the Japanese government has been in this debilitating state, drastic steps need to be taken.
Sex, drugs and hope: How big business fought AIDS in South Africa
In the article, Sex, drugs and hope, author of the Economist, Schumpeter, describes how big businesses are taking an interest, and action, in huge social issues that would affect profitability of the company. In this particular article, how the prevalence of HIV/AIDS is an issue for employers in high skill or labor specific sectors.
As we’ve been talking about multinational corporations in class and the affects foreign investment can have on the development of a nation, and looking at factors that incentivize or deter foreign investment, this article seemed like an interesting factor in investment that I hadn’t thought about before.
Schumpeter begins by telling the all too common story of rising HIV/AIDS rates in Africa, citing that in 2002, in South Africa the infection rate was 17% in adults. Some industries were affected lesser or more so. For example, a mining company whose workers were often migrants who stayed at sex hostiles, were always close to prostitution, and the disease spread and increased. With a labor intense job, the skilled workers sickened, and were dying quickly. Often one was trained to take their place. Thus, slowing efficiency, and production. The company decided that “in the end it was a moral decision,” said Brian Brink, Anglo Mine’s Chief Medical Officer. The company started offering testing to all employees. Testing up to 80% of the workers. Then, posting daily reports about where, in what mine, it was statistically most safe to have sex. The company also offered anti-viral drugs for those with critical Tcell counts. In the end, they began to control the spread of the virus, and also combatted the death of their skilled workers who had contracted in.
The article goes on to discuss other companies in other industries who have followed suit. One last example, a beer company in Africa who gave out condemns to its workers because as a statistical fact, their product had the tendency to cause unprotected sex, in this case a life threatening side affect of a beer buzz.
Another issue mentioned, perhaps more closely to home, was obesity and diabetes. With now over 50% of the adult population in the U.S. suffering from diabetes the business culture will be affected, we are now looking to free market solutions.
Many questions come to my mind as I think about this concept in the future of businesses taking on social issues because it is economically advantageous to do so. First, this isn’t the first time companies are doing this, lobbying politicians is the daily practice of comapny’s. But by directly offering solutions to workers companies have the ability to gain a certain amount of control. In the case listed above, this company got to choose which drug company to buy from, who to give drugs to etc. On a macro scale this is a big deal. What if it was the sole responsibility of the employer to make all health care purchases and decisions for/with employees?
This issue of corporations in social issues is a major consideration when companies are deciding where to invest, and how they invest. In class, Johannes talked about how Chinese companies were funding huge development projects in Africa, using Chinese tools, and Chinese workers, so an AIDS epedemic at first may seem to not affect this industry, as they are Chinese workers. Yet, what if the Chinese workers become infected? This is a risk for China now. Also, in another instance, a company that would have employed African workers, boosting the African economy, will now bring its own workers because of the epidemic.
As this issue is uncovered it seems to go deeper and deeper into the implications social trends and issues can have on businesses. Then, how these considerations look differently all over the world.
As we’ve been talking about multinational corporations in class and the affects foreign investment can have on the development of a nation, and looking at factors that incentivize or deter foreign investment, this article seemed like an interesting factor in investment that I hadn’t thought about before.
Schumpeter begins by telling the all too common story of rising HIV/AIDS rates in Africa, citing that in 2002, in South Africa the infection rate was 17% in adults. Some industries were affected lesser or more so. For example, a mining company whose workers were often migrants who stayed at sex hostiles, were always close to prostitution, and the disease spread and increased. With a labor intense job, the skilled workers sickened, and were dying quickly. Often one was trained to take their place. Thus, slowing efficiency, and production. The company decided that “in the end it was a moral decision,” said Brian Brink, Anglo Mine’s Chief Medical Officer. The company started offering testing to all employees. Testing up to 80% of the workers. Then, posting daily reports about where, in what mine, it was statistically most safe to have sex. The company also offered anti-viral drugs for those with critical Tcell counts. In the end, they began to control the spread of the virus, and also combatted the death of their skilled workers who had contracted in.
The article goes on to discuss other companies in other industries who have followed suit. One last example, a beer company in Africa who gave out condemns to its workers because as a statistical fact, their product had the tendency to cause unprotected sex, in this case a life threatening side affect of a beer buzz.
Another issue mentioned, perhaps more closely to home, was obesity and diabetes. With now over 50% of the adult population in the U.S. suffering from diabetes the business culture will be affected, we are now looking to free market solutions.
Many questions come to my mind as I think about this concept in the future of businesses taking on social issues because it is economically advantageous to do so. First, this isn’t the first time companies are doing this, lobbying politicians is the daily practice of comapny’s. But by directly offering solutions to workers companies have the ability to gain a certain amount of control. In the case listed above, this company got to choose which drug company to buy from, who to give drugs to etc. On a macro scale this is a big deal. What if it was the sole responsibility of the employer to make all health care purchases and decisions for/with employees?
This issue of corporations in social issues is a major consideration when companies are deciding where to invest, and how they invest. In class, Johannes talked about how Chinese companies were funding huge development projects in Africa, using Chinese tools, and Chinese workers, so an AIDS epedemic at first may seem to not affect this industry, as they are Chinese workers. Yet, what if the Chinese workers become infected? This is a risk for China now. Also, in another instance, a company that would have employed African workers, boosting the African economy, will now bring its own workers because of the epidemic.
As this issue is uncovered it seems to go deeper and deeper into the implications social trends and issues can have on businesses. Then, how these considerations look differently all over the world.
Africa, Foreign Aid and Remittance
I found this article that primarily focuses on Ethiopia, Rwanda, and other African countries, but primarily the relationship with foreign aid. I thought that this could be an interesting post since we had just been talking about foreign aid in class, and also since the topic comes up on the exam.
In the article, Alexis Akwagyiram explains how the foreign aid given to countries like Ethiopia and Rwanda is allocated: toward healthcare and education (a positive) but also allegedly toward corrupt militia. The primary focus of the article, as I stated above is foreign aid, and how more and more African countries are taking steps toward positive regime change, a lot of the time because of political reasons-- to encourage continued foreign interest and investment. What is setting Rwanda apart from other countries, beside the fact that they have had their aid suspended, is their new development plan. The plan is the result of the realization that even though foreign aid is appreciated, "it's not sustainable as a long term development plan".
The article also briefly discusses remittances and explains the development plan in greater detail.
In the article, Alexis Akwagyiram explains how the foreign aid given to countries like Ethiopia and Rwanda is allocated: toward healthcare and education (a positive) but also allegedly toward corrupt militia. The primary focus of the article, as I stated above is foreign aid, and how more and more African countries are taking steps toward positive regime change, a lot of the time because of political reasons-- to encourage continued foreign interest and investment. What is setting Rwanda apart from other countries, beside the fact that they have had their aid suspended, is their new development plan. The plan is the result of the realization that even though foreign aid is appreciated, "it's not sustainable as a long term development plan".
The article also briefly discusses remittances and explains the development plan in greater detail.
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