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Covered interest arbitrage Simultaneously, the arbitrageur negotiates a forward contract to sell the amount of the future value of the foreign investment at a delivery date consistent with the foreign investment's maturity date, to receive domestic currency in exchange for the foreign-currency funds. For example, as per the chart at right consider that an investor with $5,000,000 USD is considering whether to invest abroad using a covered interest arbitrage strategy or to invest domestically. The dollar deposit interest rate is 3.4% in the United States, while the euro deposit rate is 4.6% in the euro area. The current spot exchange rate is 1.2730 $/€ and the six-month forward exchange rate is 1.3000 $/€. For simplicity, the example ignores compounding interest. Investing $5,000,000 USD domestically at 3.4% for six months ignoring compounding, will result in a future value of $5,085,000 USD. However, exchanging $5,000,000 dollars for euros today, investing those euros at 4.6% for six months ignoring compounding, and exchanging the future value of euros for dollars at the forward exchange rate (on the delivery date negotiated in the forward contract), will result in $5,223,488 USD, implying that investing abroad using covered interest arbitrage is the superior alternative | https://en.wikipedia.org/wiki?curid=1681652 |
Covered interest arbitrage If there were no impediments, such as transaction costs, to covered interest arbitrage, then any opportunity, however minuscule, to profit from it would immediately be exploited by many financial market participants, and the resulting pressure on domestic and forward interest rates and the forward exchange rate premium would cause one or more of these to change virtually instantaneously to eliminate the opportunity. In fact, the anticipation of such arbitrage leading to such market changes would cause these three variables to align to prevent any arbitrage opportunities from even arising in the first place: incipient arbitrage can have the same effect, but sooner, as actual arbitrage. Thus any evidence of empirical deviations from covered interest parity would have to be explained on the grounds of some friction in the financial markets. Economists Robert M. Dunn, Jr. and John H. Mutti note that financial markets may generate data inconsistent with interest rate parity, and that cases in which significant covered interest arbitrage profits appeared feasible were often due to assets not sharing the same perceptions of risk, the potential for double taxation due to differing policies, and investors' concerns over the imposition of foreign exchange controls cumbersome to the enforcement of forward contracts | https://en.wikipedia.org/wiki?curid=1681652 |
Covered interest arbitrage Some covered interest arbitrage opportunities have appeared to exist when exchange rates and interest rates were collected for different periods; for example, the use of daily interest rates and daily closing exchange rates could render the illusion that arbitrage profits exist. Economists have suggested an array of other factors to account for observed deviations from interest rate parity, such as differing tax treatment, differing risks, government foreign exchange controls, supply or demand inelasticity, transaction costs, and time differentials between observing and executing arbitrage opportunities. Economists Jacob Frenkel and Richard M. Levich investigated the performance of covered interest arbitrage strategies during the 1970s' flexible exchange rate regime by examining transaction costs and differentials between observing and executing arbitrage opportunities. Using weekly data, they estimated transaction costs and evaluated their role in explaining deviations from interest rate parity and found that most deviations could be explained by transaction costs. However, accommodating transaction costs did not explain observed deviations from covered interest rate parity between treasury bills in the United States and United Kingdom. Frenkel and Levich found that executing such transactions resulted in only illusory opportunities for arbitrage profits, and that in each execution the mean percentage of profit decreased such that there was no statistically significant difference from zero profitability | https://en.wikipedia.org/wiki?curid=1681652 |
Covered interest arbitrage Frenkel and Levich concluded that unexploited opportunities for profit do not exist in covered interest arbitrage. Using a time series dataset of daily spot and forward USD/JPY exchange rates and same-maturity short-term interest rates in both the United States and Japan, economists Johnathan A. Batten and Peter G. Szilagyi analyzed the sensitivity of forward market price differentials to short-term interest rate differentials. The researchers found evidence for substantial variation in covered interest rate parity deviations from equilibrium, attributed to transaction costs and market segmentation. They found that such deviations and arbitrage opportunities diminished significantly nearly to a point of elimination by the year 2000. Batten and Szilagyi point out that the modern reliance on electronic trading platforms and real-time equilibrium prices appear to account for the removal of the historical scale and scope of covered interest arbitrage opportunities. Further investigation of the deviations uncovered a long-term dependence, found to be consistent with other evidence of temporal long-term dependencies identified in asset returns from other financial markets including currencies, stocks, and commodities. Economists Wai-Ming Fong, Giorgio Valente, and Joseph K.W | https://en.wikipedia.org/wiki?curid=1681652 |
Covered interest arbitrage Fung, examined the relationship of covered interest rate parity arbitrage opportunities with market liquidity and credit risk using a dataset of tick-by-tick spot and forward exchange rate quotes for the Hong Kong dollar in relation to the United States dollar. Their empirical analysis demonstrates that positive deviations from covered interest rate parity indeed compensate for liquidity and credit risk. After accounting for these risk premia, the researchers demonstrated that small residual arbitrage profits accrue only to those arbitrageurs capable of negotiating low transaction costs. | https://en.wikipedia.org/wiki?curid=1681652 |
Eric Roll, Baron Roll of Ipsden (born Erich Roll; 1 December 1907 – 30 March 2005) was a British academic economist, public servant and banker. He was made a life peer in 1977. Roll was born in Nowosielitza, Austro-Hungarian Empire and grew up near Czernowitz in Bukovina, which became part of Romania and is now part of Ukraine. His parents, Matthias and Fanny Roll, were of Middle European origin. His father was a bank manager, and his mother's brother was a distinguished member of the law faculty at the University of Vienna. When World War I saw Russian troops burned down the village, his family took refuge in Vienna. His parents then sent him to England in the 1920s and he studied at Birmingham University. Shortly afterwards, he completed his PhD and published his first book. He mixed with artistic and creative circles. By the age of 28, Roll became Professor of Economics and Commerce at University College, Hull, appointed with the backing of John Maynard Keynes and Lord Stamp. Perhaps his most enduring work from this time was the publication in 1938 of his book "A History of Economic Thought", which subsequently went through several editions. During World War II, however, he was recruited to the civil service as deputy head of the British Food Mission (1941–1946), where he was principally involved in the procurement of food supplies - most notably dried eggs. He made a number of contacts in the United States and rejected the offer to head the General Agreement on Tariffs and Trade, instead joining the British Ministry of Food | https://en.wikipedia.org/wiki?curid=1684926 |
Eric Roll, Baron Roll of Ipsden His economic experience and contacts made him invaluable in the post-war government and he was the British representative in the Paris discussions on Marshall aid. He played an important role in the setting up of European and trans-Atlantic institutions before rejoining the Ministry of Agriculture, Fisheries and Food. Roll was about to accept the vice-chancellorship of Liverpool University, but was asked to go to Washington, D.C. as economic minister at the British embassy from 1963 to 1964. Then, when Labour won the 1964 election, he became permanent secretary of the new Department of Economic Affairs, despite not agreeing with its development. Roll was also a director of the Bank of England between 1968 and 1977, chairman of the merchant bankers SG Warburg, and a director of "The Times". Roll became Joint President of the Policy Studies Institute, London, in 1978. He was chairman of the Bilderberg meetings between 1986 and 1989. Roll was appointed a Companion of the Order of St Michael and St George (CMG) in 1949, a Companion of the Order of the Bath (CB) in 1956 and a Knight Commander of the Order of St Michael and St George (KCMG) in 1962 and was made an of the Legion d'Honneur. He was created a life peer as Baron Roll of Ipsden, of Ipsden in the County of Oxfordshire, on 19 July 1977. Roll married Winifred Taylor in 1934 and they had two daughters, Joanna and Elizabeth. Lady Roll died in 1998. | https://en.wikipedia.org/wiki?curid=1684926 |
Private highway A private highway is a highway owned and operated for profit by private industry. Private highways are common in Asia and Europe; in addition, a few have been built in the United States on an experimental basis. Typically, private highways are built by companies that charge tolls for a period while the debt is retired, after which the highway is turned over to government control. This allows governments to fulfill immediate transportation needs despite their own budget constraints, while still retaining public ownership of the roads in the long term. An obstacle to private highways is that government regulation can stifle price flexibility and introduce negotiation and paperwork requirements that increase operational expenses, while having to compete against free public roads. In addition, private highways lack some advantages that governments have, such as sovereign immunity against liability for accidents, the use of eminent domain power to acquire private property for roads and the ability to issue tax-exempt securities. Free-market roads are advocated by libertarians, who consider them more efficient, safer, and more cost-effective than public roads. The Interstate Highway System provided for in the Federal Aid Highway Act was a federally funded, non-toll system. According to Simon Hakim and Edwin Blackstone, "by 1989, [private] roads comprised just of the 3.8 million miles of streets and roads in the United States and only out of the of the interstate system | https://en.wikipedia.org/wiki?curid=1685936 |
Private highway " The National Center for Policy Analysis and the Cato Institute have proposed that the Demsetz auctions commonly used to award franchises be replaced with Present Value of Revenues auctions in order to reduce risk and thus required rates of return by private highway owners. Under this system, contractors would bid an amount equal to the present value of cash flows from user fees they are willing to accept for the project. The lowest bid would win. Boarnet and DiMento believe that private highways will become more important as the rise of gasoline-efficient hybrids causes a decline in gas tax revenues. Many highways are constructed under a "build-operate-transfer" model in which ownership ultimately goes to the government. As of 2003, the Hong Kong government was planning to securitize five toll tunnels and a toll bridge through bond issues. India also has a private highway under-construction between the two cities of Bangalore and Mysore in the state of Karnataka. A vast number of the country's road projects have been upgraded under a public-private partnership, thus operating similar to private highways. In Indonesia, all toll roads are built by private companies, and private toll roads are being built in Bangladesh. Mexico has some highways operated by private companies. The 108 km Highway 407 ETR through the Greater Toronto Area is operated privately under a 99-year lease agreement with the provincial government. The highway uses electronic toll collection | https://en.wikipedia.org/wiki?curid=1685936 |
Private highway Users who do not have a toll tag (called a "transponder") in their vehicle are tracked by automatic number plate recognition, with the toll bill being mailed to the address of the plate on file. There are also some private highways in the United States. Of the 11,000 kilometers of France's highways, 8,000 km are under private concession. 3,120 kilometers of Italy's highways (comprising 56% of the country's toll roads) are controlled by Autostrade Concessioni e Costruzioni Autostrade. According to Forbes, "Autostrade was an early Electronic Age entry, computerizing to its highway system in 1988". The M6 Toll was the first private toll motorway in the United Kingdom. The project was described by as a "43 km dual three lane (plus hard shoulder), £485.5 million motorway" with six toll stations. | https://en.wikipedia.org/wiki?curid=1685936 |
Cost curve In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, productively efficient firms optimize their production process by minimizing cost consistent with each possible level of production, and the result is a cost curve. Profit-maximizing firms use cost curves to decide output quantities. There are various types of cost curves, all related to each other, including total and average cost curves; marginal ("for each additional unit") cost curves, which are equal to the differential of the total cost curves; and variable cost curves. Some are applicable to the short run, others to the long run. There are standard acronyms for each cost concept, expressed in terms of the following descriptors: These can be combined in various ways to express different cost concepts (with SR and LR often omitted when the context is clear): one from the first group (SR or LR); none or one from the second group (A, M, or none (meaning “level”); none or one from the third group (F, V, or T); and the fourth item (C) | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve From the various combinations we have the following short-run cost curves: and the following long-run cost curves: The short-run total cost (SRTC) and long-run total cost (LRTC) curves are increasing in the quantity of output produced because producing more output requires more labor usage in both the short and long runs, and because in the long run producing more output involves using more of the physical capital input; and using more of either input involves incurring more input costs. With only one variable input (labor usage) in the short run, each possible quantity of output requires a specific quantity of usage of labor, and the short–run total cost as a function of the output level is this unique quantity of labor times the unit cost of labor. But in the long run, with the quantities of both labor and physical capital able to be chosen, the total cost of producing a particular output level is the result of an optimization problem: The sum of expenditures on labor (the wage rate times the chosen level of labor usage) and expenditures on capital (the unit cost of capital times the chosen level of physical capital usage) is minimized with respect to labor usage and capital usage, subject to the production function equality relating output to both input usages; then the (minimal) level of total cost is the total cost of producing the given quantity of output. Since short-run fixed cost (FC/SRFC) does not vary with the level of output, its curve is horizontal as shown here | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve Short-run variable costs (VC/SRVC) increase with the level of output, since the more output is produced, the more of the variable input(s) needs to be used and paid for. Average variable cost (AVC/SRAVC) (which is a short-run concept) is the variable cost (typically labor cost) per unit of output: SRAVC = wL / Q where w is the wage rate, L is the quantity of labor used, and Q is the quantity of output produced. The SRAVC curve plots the short-run average variable cost against the level of output and is typically drawn as U-shaped. However, whilst this is convenient for economic theory, it has been argued that it bears little relationship to the real world. Some estimates show that, at least for manufacturing, the proportion of firms reporting a U-shaped cost curve is in the range of 5 to 11 percent. Since fixed cost by definition does not vary with output, short-run average fixed cost (SRAFC) per unit of output is lower when output is higher, giving rise to the downward-sloped curve shown. The average total cost curve is constructed to capture the relation between cost per unit of output and the level of output, "ceteris paribus". A perfectly competitive and productively efficient firm organizes its factors of production in such a way that the usage of the factors of production is as low as possible consistent with the given level of output to be produced | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve In the short run, when at least one factor of production is fixed, this occurs at the output level where it has enjoyed all possible average cost gains from increasing production. This is at the minimum point in the above diagram. Short-run total cost is given by where P is the unit price of using physical capital per unit time, P is the unit price of labor per unit time (the wage rate), K is the quantity of physical capital used, and L is the quantity of labor used. From this we obtain short-run average cost, denoted either SATC or SRAC, as STC / Q: where formula_3 is the average product of capital and formula_4 is the average product of labor. Within the graph above, the Average Fixed and Average Variable cannot start with zero, as at quantity zero these values are not defined since they would involve dividing by zero. Short-run average cost (SRATC/SRAC) equals average fixed costs plus average variable costs. Average fixed cost continuously falls as production increases in the short run, because K is fixed in the short run. The shape of the average variable cost curve is directly determined by increasing and then diminishing marginal returns to the variable input (conventionally labor). The long-run average cost (LRATC/LRAC) curve looks similar to the short-run curve, but it allows the usage of physical capital to vary. A short-run marginal cost (SRMC) curve graphically represents the relation between marginal (i.e | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve , incremental) cost incurred by a firm in the short-run production of a good or service and the quantity of output produced. This curve is constructed to capture the relation between marginal cost and the level of output, holding other variables, like technology and resource prices, constant. The marginal cost curve is usually U-shaped. Marginal cost is relatively high at small quantities of output; then as production increases, marginal cost declines, reaches a minimum value, then rises. The marginal cost is shown in relation to marginal revenue (MR), the incremental amount of sales revenue that an additional unit of the product or service will bring to the firm. This shape of the marginal cost curve is directly attributable to increasing, then decreasing marginal returns (and the law of diminishing marginal returns). Marginal cost equals w/MP. For most production processes the marginal product of labor initially rises, reaches a maximum value and then continuously falls as production increases. Thus marginal cost initially falls, reaches a minimum value and then increases. The marginal cost curve intersects both the average variable cost curve and (short-run) average total cost curve at their minimum points. When the marginal cost curve is above an average cost curve the average curve is rising. When the marginal costs curve is below an average curve the average curve is falling. This relation holds regardless of whether the marginal curve is rising or falling | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve The long-run marginal cost (LRMC) curve shows for each unit of output the added total cost incurred in the long run, that is, the conceptual period when all factors of production are variable. Stated otherwise, LRMC is the minimum increase in total cost associated with an increase of one unit of output when all inputs are variable. The long-run marginal cost curve is shaped by returns to scale, a long-run concept, rather than the law of diminishing marginal returns, which is a short-run concept. The long-run marginal cost curve tends to be flatter than its short-run counterpart due to increased input flexibility. The long-run marginal cost curve intersects the long-run average cost curve at the minimum point of the latter. When long-run marginal cost is below long-run average cost, long-run average cost is falling (as additional units of output are considered). When long-run marginal cost is above long run average cost, average cost is rising. Long-run marginal cost equals short run marginal-cost at the least-long-run-average-cost level of production. LRMC is the slope of the LR total-cost function. Cost curves can be combined to provide information about firms. In this diagram for example, firms are assumed to be in a perfectly competitive market | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve In a perfectly competitive market the price that firms are faced with in the long run would be the price at which the marginal cost curve cuts the average cost curve, since any price above or below that would result in entry to or exit from the industry, driving the market-determined price to the level that gives zero economic profit. Assuming that factor prices are constant, the production function determines all cost functions. The variable cost curve is the constant price of the variable input times the inverted short-run production function or total product curve, and its behavior and properties are determined by the production function. Because the production function determines the variable cost function it necessarily determines the shape and properties of marginal cost curve and the average cost curves. If the firm is a perfect competitor in all input markets, and thus the per-unit prices of all its inputs are unaffected by how much of the inputs the firm purchases, then it can be shown that at a particular level of output, the firm has economies of scale (i.e., is operating in a downward sloping region of the long-run average cost curve) if and only if it has increasing returns to scale. Likewise, it has diseconomies of scale (is operating in an upward sloping region of the long-run average cost curve) if and only if it has decreasing returns to scale, and has neither economies nor diseconomies of scale if it has constant returns to scale | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve In this case, with perfect competition in the output market the long-run market equilibrium will involve all firms operating at the minimum point of their long-run average cost curves (i.e., at the borderline between economies and diseconomies of scale). If, however, the firm is not a perfect competitor in the input markets, then the above conclusions are modified. For example, if there are increasing returns to scale in some range of output levels, but the firm is so big in one or more input markets that increasing its purchases of an input drives up the input's per-unit cost, then the firm could have diseconomies of scale in that range of output levels. On the other hand, if the firm is able to get bulk discounts of an input, then it could have economies of scale in some range of output levels even if it has decreasing returns in production in that output range. For each quantity of output there is one cost–minimizing level of capital and a unique short–run average cost curve associated with producing the given quantity. The following statements assume that the firm is using the optimal level of capital for the quantity produced. If not, then the SRAC curve would lie "wholly above" the LRAC and would not be tangent at any point. Both the SRAC and LRAC curves are typically expressed as U-shaped. However, the shapes of the curves are not due to the same factors. For the short run curve the initial downward slope is largely due to declining average fixed costs | https://en.wikipedia.org/wiki?curid=1689345 |
Cost curve Increasing returns to the variable input at low levels of production also play a role, while the upward slope is due to diminishing marginal returns to the variable input. With the long run curve the shape by definition reflects economies and diseconomies of scale. At low levels of production long run production functions generally exhibit increasing returns to scale, which, for firms that are perfect competitors in input markets, means that the long run average cost is falling; the upward slope of the long run average cost function at higher levels of output is due to decreasing returns to scale at those output levels. There is some evidence that shows that average cost curves are not typically U-shaped. In a survey by Wilford J. Eiteman and Glenn E. Guthrie in 1952 managers of 334 companies were shown a number of different cost curves, and asked to specify which one best represented the company’s cost curve. 95% of managers responding to the survey reported cost curves with constant or falling costs. Alan Blinder, former vice president of the American Economics Association, conducted the same type of survey in 1998, which involved 200 US firms in a sample that should be representative of the US economy at large. He found that about 40% of firms reported falling variable or marginal cost, and 48.4% reported constant marginal/variable cost. | https://en.wikipedia.org/wiki?curid=1689345 |
Neomercantilism is a policy regime that encourages exports, discourages imports, controls capital movement, and centralizes currency decisions in the hands of a central government. The objective of neomercantilist policies is to increase the level of foreign reserves held by the government, allowing more effective monetary policy and fiscal policy. | https://en.wikipedia.org/wiki?curid=1689494 |
Depository Institutions Deregulation and Monetary Control Act The of 1980 (, ) (often abbreviated DIDMCA or MCA) is a United States federal financial statute passed in 1980 and signed by President Jimmy Carter on March 31. It gave the Federal Reserve greater control over non-member banks. | https://en.wikipedia.org/wiki?curid=1690499 |
Payment schedule The payment schedule of financial instruments defines the dates at which payments are made by one party to another on for example a bond or derivative. It can be either customised or parameterised. The schedule is generated based on a set of rules and market conventions to define the frequencies of the payments. These parameters include: The schedule consists of a series of dates that define exactly when payments will be made. The payment schedule can also be linked to achievement or fulfillment of certain predefined tasks or events or even stages against which payments are required to be made by one party to another | https://en.wikipedia.org/wiki?curid=1695323 |
Factor cost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market prices. This allows the effect of any subsidy or indirect tax to be removed from the final measure. The concept of factor cost is focusing on the cost incurred on the factor of production. It can be defined as the actual cost incurred on goods and services produced by industries and firms is known as factor costs. Factor costs include all the costs of the factors of production to produce a given product in an economy. It includes the costs of land, labor, capital and raw material, transportation etc. They are used to produce a given quantity of output in an economy. The factor cost does not include the profits made by the producing firms or industries or the tax which they incur on producing those goods and services. We can simply categorize it as the cost of producing a product from unfinished good to a semi finished good or a finished good up to the desired output level. In a microeconomic analytical framework, profit maximization by the firm makes the desired level of capital depend on the cost of labour and capital factors. Firms have a choice among several possible productive combinations, and choose the one that minimizes its costs, and thus maximizes its profits. In the short term, when the level of production is constrained by market outlets, it is the relative cost of the factors of production that is taken into account | https://en.wikipedia.org/wiki?curid=1696377 |
Factor cost Thus, if the cost of capital rises in relation to wage costs, it is in the firm's interest to limit investment expenditure by substituting a greater quantity of labour for capital. In the long term, where the production programme is not constrained by market outlets, it is the real cost of each factor that is taken into account in the investment decision. Empirical studies at the macroeconomic level have long failed to show the impact of factor costs on investment (Dormond 1977). This relationship between the cost of production factors and the level of investment appears to be theoretically sound. The concept of "user cost of capital" has been integrated by Crépon and Gianella. They carried out a study by integrating many elements: bank interest rates specific to each company, balance sheet structure, taxation of companies and shareholders, inflation and depreciation. This indicator provides a rigorous assessment of the effective cost of capital. Over the period considered in this study (1984-1997), the cost of capital fell significantly, mainly as a result of the easing of real interest rates. Taxation contributed only marginally to the decline in the user cost of capital. Its variations have been erratic: corporate taxes declined from the mid-1980s to 1995, but the tax burden increased thereafter. From this study they were able to distinguish two effects of a variation in the user cost of capital: a substitution effect and a profitability effect | https://en.wikipedia.org/wiki?curid=1696377 |
Factor cost An increase in the cost of capital should encourage firms to substitute labour for capital, thus increasing the demand for labour (substitution effect). At the same time, however, a rise in the cost of capital increases the unit cost of production for the firm, thereby raising its prices, and may reduce the demand for capital (profitability effect). The proposed estimates suggest that the profitability effect dominates the substitution effect. An increase in the cost of capital would therefore lead to a fall in demand for both factors of production, capital and labour, and thus penalise employment. https://www.persee.fr/doc/estat_0336-1454_2001_num_341_1_7472 | https://en.wikipedia.org/wiki?curid=1696377 |
International economics is concerned with the effects upon economic activity from international differences in productive resources and consumer preferences and the international institutions that affect them. It seeks to explain the patterns and consequences of transactions and interactions between the inhabitants of different countries, including trade, investment and transaction. The economic theory of international trade differs from the remainder of economic theory mainly because of the comparatively limited international mobility of the capital and labour. In that respect, it would appear to differ in degree rather than in principle from the trade between remote regions in one country. Thus the methodology of international trade economics differs little from that of the remainder of economics. However, the direction of academic research on the subject has been influenced by the fact that governments have often sought to impose restrictions upon international trade, and the motive for the development of trade theory has often been a wish to determine the consequences of such restrictions. The branch of trade theory which is conventionally categorized as "classical" consists mainly of the application of deductive logic, originating with Ricardo's Theory of "Comparative Advantage" and developing into a range of theorems that depend for their practical value upon the realism of their postulates. "Modern" trade analysis, on the other hand, depends mainly upon "empirical analysis" | https://en.wikipedia.org/wiki?curid=1700209 |
International economics The theory of "comparative advantage" provides a logical explanation of international trade as the rational consequence of the comparative advantages that arise from inter-regional differences - regardless of how those differences arise. Since its exposition by David Ricardo the techniques of neo-classical economics have been applied to it to model the patterns of trade that would result from various postulated sources of comparative advantage. However, extremely restrictive (and often unrealistic) assumptions have had to be adopted in order to make the problem amenable to theoretical analysis. The best-known of the resulting models, the Heckscher-Ohlin theorem (H-O) depends upon the assumptions of no international differences of technology, productivity, or consumer preferences; no obstacles to pure competition or free trade and no scale economies. On those assumptions, it derives a model of the trade patterns that would arise solely from international differences in the relative abundance of labour and capital (referred to as factor endowments). The resulting theorem states that, on those assumptions, a country with a relative abundance of capital would export capital-intensive products and import labour-intensive products | https://en.wikipedia.org/wiki?curid=1700209 |
International economics The theorem proved to be of very limited predictive value, as was demonstrated by what came to be known as the "Leontief Paradox" (the discovery that, despite its capital-rich factor endowment, America was exporting labour-intensive products and importing capital-intensive products) Nevertheless, the theoretical techniques (and many of the assumptions) used in deriving the H–O model were subsequently used to derive further theorems. The Stolper–Samuelson theorem, which is often described as a corollary of the H–O theorem, was an early example. In its most general form it states that if the price of a good rises (falls) then the price of the factor used intensively in that industry will also rise (fall) while the price of the other factor will fall (rise). In the international trade context for which it was devised it means that trade lowers the real wage of the scarce factor of production, and protection from trade raises it. Another corollary of the H–O theorem is Samuelson's factor price equalisation theorem which states that as trade between countries tends to equalise their product prices, it tends also to equalise the prices paid to their factors of production. Those theories have sometimes been taken to mean that trade between an industrialised country and a developing country would lower the wages of the unskilled in the industrialised country. (But, as noted below, that conclusion depends upon the unlikely assumption that productivity is the same in the two countries) | https://en.wikipedia.org/wiki?curid=1700209 |
International economics Large numbers of learned papers have been produced in attempts to elaborate on the H–O and Stolper–Samuelson theorems, and while many of them are considered to provide valuable insights, they have seldom proved to be directly applicable to the task of explaining trade patterns. Modern trade analysis moves away from the restrictive assumptions of the H-O theorem and explores the effects upon trade of a range of factors, including technology and scale economies. It makes extensive use of econometrics to identify from the available statistics, the contribution of particular factors among the many different factors that affect trade. The contributions of differences of technology have been evaluated in several such studies. The temporary advantage arising from a country's development of a new technology is seen as contributory factor in one study. Other researchers have found research and development expenditure, patents issued, and the availability of skilled labor, to be indicators of the technological leadership that enables some countries to produce a flow of such technological innovations and have found that technology leaders tend to export hi-tech products to others and receive imports of more standard products from them. Another econometric study also established a correlation between country size and the share of exports made up of goods in the production of which there are scale economies | https://en.wikipedia.org/wiki?curid=1700209 |
International economics The study further suggested that internationally traded goods fall into three categories, each with a different type of comparative advantage: There is a strong presumption that any exchange that is freely undertaken will benefit both parties, but that does not exclude the possibility that it may be harmful to others. However (on assumptions that included constant returns and competitive conditions) Paul Samuelson has proved that it will always be possible for the gainers from international trade to compensate the losers. Moreover, in that proof, Samuelson did not take account of the gains to others resulting from wider consumer choice, from the international specialisation of productive activities - and consequent economies of scale, and from the transmission of the benefits of technological innovation. An OECD study has suggested that there are further dynamic gains resulting from better resource allocation, deepening specialisation, increasing returns to R&D, and technology spillover. The authors found the evidence concerning growth rates to be mixed, but that there is strong evidence that a 1 per cent increase in openness to trade increases the level of GDP per capita by between 0.9 per cent and 2.0 per cent. They suggested that much of the gain arises from the growth of the most productive firms at the expense of the less productive | https://en.wikipedia.org/wiki?curid=1700209 |
International economics Those findings and others have contributed to a broad consensus among economists that trade confers very substantial net benefits, and that government restrictions upon trade are generally damaging. Nevertheless, there have been widespread misgivings about the effects of international trade upon wage earners in developed countries. Samuelson's factor price equalisation theorem indicates that, if productivity were the same in both countries, the effect of trade would be to bring about equality in wage rates. As noted above, that theorem is sometimes taken to mean that trade between an industrialised country and a developing country would lower the wages of the unskilled in the industrialised country. However, it is unreasonable to assume that productivity would be the same in a low-wage developing country as in a high-wage developed country. A 1999 study has found international differences in wage rates to be approximately matched by corresponding differences in productivity. (Such discrepancies that remained were probably the result of over-valuation or under-valuation of exchange rates, or of inflexibilities in labour markets.) It has been argued that, although there may sometimes be short-term pressures on wage rates in the developed countries, competition between employers in developing countries can be expected eventually to bring wages into line with their employees' "marginal products" | https://en.wikipedia.org/wiki?curid=1700209 |
International economics Any remaining international wage differences would then be the result of productivity differences, so that there would be no difference between unit labour costs in developing and developed countries, and no downward pressure on wages in the developed countries. There has also been concern that international trade could operate against the interests of developing countries. Influential studies published in 1950 by the Argentine economist Raul Prebisch and the British economist Hans Singer suggested that there is a tendency for the prices of agricultural products to fall relative to the prices of manufactured goods; turning the "terms of trade" against the developing countries and producing an unintended transfer of wealth from them to the developed countries. Their findings have been confirmed by a number of subsequent studies, although it has been suggested that the effect may be due to "quality bias" in the index numbers used or to the possession of "market power" by manufacturers. The Prebisch/Singer findings remain controversial, but they were used at the time—and have been used subsequently—to suggest that the developing countries should erect barriers against manufactured imports in order to nurture their own “infant industries” and so reduce their need to export agricultural products. The arguments for and against such a policy are similar to those concerning the "protection" of infant industries in general | https://en.wikipedia.org/wiki?curid=1700209 |
International economics The term "infant industry" is used to denote a new industry which has prospects of gaining comparative advantage in the long-term, but which would be unable to survive in the face of competition from imported goods. This situation can occur when time is needed either to achieve potential "economies of scale", or to acquire potential "learning curve" economies. Successful identification of such a situation, followed by the temporary imposition of a barrier against imports can, in principle, produce substantial benefits to the country that applies it—a policy known as “import substitution industrialization”. Whether such policies succeed depends upon the governments’ skills in picking winners, with reasonably expectations of both successes and failures. It has been claimed that South Korea's automobile industry owes its existence to initial protection against imports, but a study of infant industry protection in Turkey reveals the absence of any association between productivity gains and degree of protection, such as might be expected of a successful import substitution policy. Another study provides descriptive evidence suggesting that attempts at import substitution industrialisation since the 1970s have usually failed, but the empirical evidence on the question has been contradictory and inconclusive. It has been argued that the case against import substitution industrialisation is not that it is bound to fail, but that subsidies and tax incentives do the job better | https://en.wikipedia.org/wiki?curid=1700209 |
International economics It has also been pointed out that, in any case, trade restrictions could not be expected to correct the domestic market imperfections that often hamper the development of infant industries. Economists’ findings about the benefits of trade have often been rejected by government policy-makers, who have frequently sought to protect domestic industries against foreign competition by erecting barriers, such as tariffs and import quotas, against imports. Average tariff levels of around 15 per cent in the late 19th century rose to about 30 percent in the 1930s, following the passage in the United States of the Smoot–Hawley Tariff Act. Mainly as the result of international agreements under the auspices of the General Agreement on Tariffs and Trade (GATT) and subsequently the World Trade Organization (WTO), average tariff levels were progressively reduced to about 7 per cent during the second half of the 20th century, and some other trade restrictions were also removed. The restrictions that remain are nevertheless of major economic importance: among other estimates, the World Bank estimated in 2004 that the removal of all trade restrictions would yield benefits of over $500 billion a year by 2015. The largest of the remaining trade-distorting policies are those concerning agriculture. In the OECD countries government payments account for 30 per cent of farmers’ receipts and tariffs of over 100 per cent are common | https://en.wikipedia.org/wiki?curid=1700209 |
International economics OECD economists estimate that cutting all agricultural tariffs and subsidies by 50% would set off a chain reaction in realignments of production and consumption patterns that would add an extra $26 billion to annual world income. Quotas prompt foreign suppliers to raise their prices toward the domestic level of the importing country. That relieves some of the competitive pressure on domestic suppliers, and both they and the foreign suppliers gain at the expense of a loss to consumers, and to the domestic economy, in addition to which there is a "deadweight loss" to the world economy. When quotas were banned under the rules of the General Agreement on Tariffs and Trade (GATT), the United States, Britain and the European Union made use of equivalent arrangements known as "voluntary restraint agreements" (VRAs) or voluntary export restraints (VERs) which were negotiated with the governments of exporting countries (mainly Japan)—until they too were banned. Tariffs have been considered to be less harmful than quotas, although it can be shown that their welfare effects differ only when there are significant upward or downward trends in imports. Governments also impose a wide range of non-tariff barriers that are similar in effect to quotas, some of which are subject to WTO agreements. A recent example has been the application of the "precautionary principle" to exclude innovatory products | https://en.wikipedia.org/wiki?curid=1700209 |
International economics The economics of international finance does not differ in principle from the economics of international trade, but there are significant differences of emphasis. The practice of international finance tends to involve greater uncertainties and risks because the assets that are traded are claims to flows of returns that often extend many years into the future. Markets in financial assets tend to be more volatile than markets in goods and services because decisions are more often revised and more rapidly put into effect. There is the share presumption that a transaction that is freely undertaken will benefit both parties, but there is a much greater danger that it will be harmful to others. For example, mismanagement of mortgage lending in the United States led in 2008 to banking failures and credit shortages in other developed countries, and sudden reversals of international flows of capital have often led to damaging financial crises in developing countries. And, because of the incidence of rapid change, the methodology of comparative statics has fewer applications than in the theory of international trade, and empirical analysis is more widely employed. Also, the consensus among economists concerning its principal issues is narrower and more open to controversy than is the consensus about international trade. A major change in the organisation of international finance occurred in the latter years of the twentieth century, and economists are still debating its implications | https://en.wikipedia.org/wiki?curid=1700209 |
International economics At the end of the second world war the national signatories to the Bretton Woods Agreement had agreed to maintain their currencies each at a fixed exchange rate with the United States dollar, and the United States government had undertaken to buy gold on demand at a fixed rate of $35 per ounce. In support of those commitments, most signatory nations had maintained strict control over their nationals’ use of foreign exchange and upon their dealings in international financial assets. But in 1971 the United States government announced that it was suspending the convertibility of the dollar, and there followed a progressive transition to the current regime of "floating exchange rates" in which most governments no longer attempt to control their exchange rates or to impose controls upon access to foreign currencies or upon access to international financial markets. The behaviour of the international financial system was transformed. Exchange rates became very volatile and there was an extended series of damaging financial crises. One study estimated that by the end of the twentieth century there had been 112 banking crises in 93 countries, another that there had been 26 banking crises, 86 currency crises and 27 mixed banking and currency crises, many times more than in the previous post-war years. The outcome was not what had been expected | https://en.wikipedia.org/wiki?curid=1700209 |
International economics In making an influential case for flexible exchange rates in the 1950s, Milton Friedman had claimed that if there were any resulting instability, it would mainly be the consequence of macroeconomic instability, but an empirical analysis in 1999 found no apparent connection. Neoclassical theory had led them to expect capital to flow from the capital-rich developed economies to the capital-poor developing countries - because the returns to capital there would be higher. Flows of financial capital would tend to increase the level of investment in the developing countries by reducing their costs of capital, and the direct investment of physical capital would tend to promote specialisation and the transfer of skills and technology. However, theoretical considerations alone cannot determine the balance between those benefits and the costs of volatility, and the question has had to be tackled by empirical analysis. A 2006 International Monetary Fund working paper offers a summary of the empirical evidence. The authors found little evidence either of the benefits of the liberalisation of capital movements, or of claims that it is responsible for the spate of financial crises. They suggest that net benefits can be achieved by countries that are able to meet threshold conditions of financial competence but that for others, the benefits are likely to be delayed, and vulnerability to interruptions of capital flows is likely to be increased | https://en.wikipedia.org/wiki?curid=1700209 |
International economics Although the majority of developed countries now have "floating" exchange rates, some of them – together with many developing countries – maintain exchange rates that are nominally "fixed", usually with the US dollar or the euro. The adoption of a fixed rate requires intervention in the foreign exchange market by the country's central bank, and is usually accompanied by a degree of control over its citizens’ access to international markets. Some governments have abandoned their national currencies in favour of the common currency of a currency area such as the ""eurozone"" and some, such as Denmark, have retained their national currencies but have pegged them at a fixed rate to an adjacent common currency. On an international scale, the economic policies promoted by the International Monetary Fund (IMF) have had a major influence, especially upon the developing countries. The IMF was set up in 1944 to encourage international cooperation on monetary matters, to stabilise exchange rates and create an international payments system. Its principal activity is the payment of loans to help member countries to overcome "balance of payments problems", mainly by restoring their depleted currency reserves. Their loans are, however, conditional upon the introduction of economic measures by recipient governments that are considered by the Fund's economists to provide conditions favourable to recovery | https://en.wikipedia.org/wiki?curid=1700209 |
International economics Their recommended economic policies are broadly those that have been adopted in the United States and the other major developed countries (known as the ""Washington Consensus"") and have often included the removal of all restrictions upon incoming investment. The Fund has been severely criticised by Joseph Stiglitz and others for what they consider to be the inappropriate enforcement of those policies and for failing to warn recipient countries of the dangers that can arise from the volatility of capital movements. From the time of the Great Depression onwards, regulators and their economic advisors have been aware that economic and financial crises can spread rapidly from country to country, and that financial crises can have serious economic consequences. For many decades, that awareness led governments to impose strict controls over the activities and conduct of banks and other credit agencies, but in the 1980s many governments pursued a policy of deregulation in the belief that the resulting efficiency gains would outweigh any "systemic risk"s. The extensive financial innovations that followed are described in the article on financial economics. One of their effects has been greatly to increase the international inter-connectedness of the financial markets and to create an international financial system with the characteristics known in control theory as "complex-interactive". The stability of such a system is difficult to analyse because there are many possible failure sequences | https://en.wikipedia.org/wiki?curid=1700209 |
International economics The internationally systemic crises that followed included the equity crash of October 1987, the Japanese asset price collapse of the 1990s the Asian financial crisis of 1997 the Russian government default of 1998(which brought down the Long-Term Capital Management hedge fund) and the 2007-8 sub-prime mortgages crisis. The symptoms have generally included collapses in asset prices, increases in risk premiums, and general reductions in liquidity. Measures designed to reduce the vulnerability of the international financial system have been put forward by several international institutions. The Bank for International Settlements made two successive recommendations (Basel I and Basel II) concerning the regulation of banks, and a coordinating group of regulating authorities, and the Financial Stability Forum, that was set up in 1999 to identify and address the weaknesses in the system, has put forward some proposals in an interim report. Elementary considerations lead to a presumption that international migration results in a net gain in economic welfare. Wage differences between developed and developing countries have been found to be mainly due to productivity differences which may be assumed to arise mostly from differences in the availability of physical, social and human capital | https://en.wikipedia.org/wiki?curid=1700209 |
International economics And economic theory indicates that the move of a skilled worker from a place where the returns to skill are relatively low to a place where they are relatively high should produce a net gain (but that it would tend to depress the wages of skilled workers in the recipient country). There have been many econometric studies intended to quantify those gains. A Copenhagen Consensus study suggests that if the share of foreign workers grew to 3% of the labour force in the rich countries there would be global benefits of $675 billion a year by 2025. However, a survey of the evidence led a House of Lords committee to conclude that any benefits of immigration to the United Kingdom are relatively small. Evidence from the United States also suggests that the economic benefits to the receiving country are relatively small, and that the presence of immigrants in its labour market results in only a small reduction in local wages. From the standpoint of a developing country, the emigration of skilled workers represents a loss of human capital (known as brain drain), leaving the remaining workforce without the benefit of their support. That effect upon the welfare of the parent country is to some extent offset by the remittances that are sent home by the emigrants, and by the enhanced technical know-how with which some of them return | https://en.wikipedia.org/wiki?curid=1700209 |
International economics One study introduces a further offsetting factor to suggest that the opportunity to migrate fosters enrolment in education thus promoting a "brain gain" that can counteract the lost human capital associated with emigration . However, these factors can be counterweighed on their turn depending on the intentions that remittances are used for. As evidence from Armenia suggests, instead of acting as a contractual tool, remittances have a potential for recipients to further incentivize emigration by serving as a resource to alleviate the migration process. Whereas some studies suggest that parent countries can benefit from the emigration of skilled workers, generally it is emigration of unskilled and semi-skilled workers that is of economic benefit to countries of origin, by reducing pressure for employment creation. Where skilled emigration is concentrated in specific highly skilled sectors, such as medicine, the consequences are severe and even catastrophic in cases where 50% or so of trained doctors have emigrated. The crucial issues, as recently acknowledged by the OECD, is the matter of return and reinvestment in their countries of origin by the migrants themselves: thus, government policies in Europe are increasingly focused upon facilitating temporary skilled migration alongside migrant remittances. Unlike movement of capital and goods, since 1973 government policies have tried to restrict migration flows, often without any economic rationale | https://en.wikipedia.org/wiki?curid=1700209 |
International economics Such restrictions have had diversionary effects, channeling the great majority of migration flows into illegal migration and "false" asylum-seeking. Since such migrants work for lower wages and often zero social insurance costs, the gain from labour migration flows is actually higher than the minimal gains calculated for legal flows; accompanying side-effects are significant, however, and include political damage to the idea of immigration, lower unskilled wages for the host population, and increased policing costs alongside lower tax receipts. The term globalization has acquired a variety of meanings, but in economic terms it refers to the move that is taking place in the direction of complete mobility of capital and labour and their products, so that the world's economies are on the way to becoming totally integrated. The driving forces of the process are reductions in politically imposed barriers and in the costs of transport and communication (although, even if those barriers and costs were eliminated, the process would be limited by inter-country differences in social capital). It is a process which has ancient origins, which has gathered pace in the last fifty years, but which is very far from complete. In its concluding stages, interest rates, wage rates and corporate and income tax rates would become the same everywhere, driven to equality by competition, as investors, wage earners and corporate and personal taxpayers threatened to migrate in search of better terms | https://en.wikipedia.org/wiki?curid=1700209 |
International economics In fact, there are few signs of international convergence of interest rates, wage rates or tax rates. Although the world is more integrated in some respects, it is possible to argue that on the whole it is now less integrated than it was before the first world war, and that many middle-east countries are less globalised than they were 25 years ago. Of the moves toward integration that have occurred, the strongest has been in financial markets, in which globalisation is estimated to have tripled since the mid-1970s. Recent research has shown that it has improved risk-sharing, but only in developed countries, and that in the developing countries it has increased macroeconomic volatility. It is estimated to have resulted in net welfare gains worldwide, but with losers as well as gainers. Increased globalisation has also made it easier for recessions to spread from country to country. A reduction in economic activity in one country can lead to a reduction in activity in its trading partners as a result of its consequent reduction in demand for their exports, which is one of the mechanisms by which the business cycle is transmitted from country to country. Empirical research confirms that the greater the trade linkage between countries the more coordinated are their business cycles. Globalisation can also have a significant influence upon the conduct of macroeconomic policy | https://en.wikipedia.org/wiki?curid=1700209 |
International economics The Mundell–Fleming model and its extensions are often used to analyse the role of capital mobility (and it was also used by Paul Krugman to give a simple account of the Asian financial crisis). Part of the increase in income inequality that has taken place within countries is attributable - in some cases - to globalisation. A recent IMF report demonstrates that the increase in inequality in the developing countries in the period 1981 to 2004 was due entirely to technological change, with globalisation making a partially offsetting negative contribution, and that in the developed countries globalisation and technological change were equally responsible. Globalisation is seen as contributing to economic welfare by most economists – but not all. Professor Joseph Stiglitz of the School of International and Public Affairs, Columbia University has advanced the infant industry case for protection in developing countries and criticised the conditions imposed for help by the International Monetary Fund. Professor Dani Rodrik of Harvard has noted that the benefits of globalisation are unevenly spread, and that it has led to income inequalities, and to damaging losses of social capital in the parent countries and to social stresses resulting from immigration in the receiving countries. An extensive critical analysis of these contentions has been made by Martin Wolf, and a lecture by Professor Jagdish Bhagwati has surveyed the debate that has taken place among economists. | https://en.wikipedia.org/wiki?curid=1700209 |
Autonomous consumption (also exogenous consumption) is the consumption expenditure that occurs when income levels are zero. Such consumption is considered autonomous of income only when expenditure on these consumables does not vary with changes in income; generally, it may be required to fund necessities and debt obligations. If income levels are actually zero, this consumption counts as dissaving, because it is financed by borrowing or using up savings. contrasts with induced consumption, in that it does not systematically fluctuate with income, whereas induced consumption does. The two are related, for all households, through the consumption function: where | https://en.wikipedia.org/wiki?curid=1701388 |
Foreign Agricultural Service The (FAS) is the foreign affairs agency with primary responsibility for the United States Department of Agriculture's (USDA) overseas programs — market development, international trade agreements and negotiations, and the collection of statistics and market information. It also administers the USDA's export credit guarantee and food aid programs and helps increase income and food availability in developing nations by mobilizing expertise for agriculturally led economic growth. The FAS mission statement reads, "Linking U.S. agriculture to the world to enhance export opportunities and global food security," and its motto is "Linking U.S. Agriculture to the World." USDA posted its first employee abroad in 1882, with assignment of Edmund Moffat to London. In 1894, USDA created a Section of Foreign Markets in its Division of Statistics, which by 1901 numbered seven employees. It was succeeded over the next few decades by increasingly larger units. Creation of this series of units in Washington to analyze foreign competition and demand for agricultural commodities was paralleled by assignment abroad of agricultural statistical agents, commodity specialists, and "agricultural commissioners". Moffat went out as a "statistical agent" of USDA's Division of Statistics but with the status of Deputy Consul General on the roster of the Department of State at London. Subsequent USDA officials assigned overseas, however, did not enjoy diplomatic or consular status | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service This impeded their work, which at that point consisted mainly of collecting, analyzing, and transmitting to Washington time-sensitive market information on agricultural commodities. In 1924, USDA officials Nils Olsen and Louis Guy Michael and Congressman John Ketcham began drafting legislation to create an agricultural attaché service with diplomatic status. The legislation passed the House multiple times, but it did not pass the Senate until 1930, in part due to opposition from then-Commerce Secretary Herbert Hoover. Hoover, however, eventually supported the legislation in order to garner support of the farm bloc during his presidential campaign. Accordingly, the was created by the Act of 1930 (46 Stat. 497), which President Herbert Hoover signed into law on June 5, 1930. The law stipulated that the FAS consist of overseas USDA officials. The USDA also created a Division within the Bureau of Agricultural Economics to serve as the FAS's headquarters staff in Washington, D.C., naming Asher Hobson, a noted economist and political scientist, as its first head. The 1930 Act explicitly granted the USDA's overseas officials diplomatic status and the right to the diplomatic title "attaché". In short order, FAS posted additional staff overseas, to Marseille, Pretoria, Belgrade, Sydney, and Kobe, in addition to existing staff in London, Buenos Aires, Berlin, and Shanghai. In Washington, Hobson hired Lazar Volin, a Russian émigré, as the agency's first D.C | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service -based regional analyst, to specialize in the study of Russia as a competitor to U.S. agriculture. In 1934, Congress passed the Reciprocal Trade Agreements Act, which stipulated that the President must consult with the Secretary of Agriculture when negotiating tariff reductions for agricultural commodities. Secretary of Agriculture Henry A. Wallace delegated this responsibility to the Division, and thus began the FAS's role in formulation and implementation of international trade policy. The FAS led agricultural tariff negotiations, first concluding a new tariff agreement with Cuba, followed by Belgium, Haiti, Sweden, Brazil and Colombia. By 1939, new agricultural tariffs were in place with 20 countries, including the United Kingdom, the United States' largest agricultural trading partner. This new responsibility spurred a change in field reporting from overseas offices. In order to negotiate tariff agreements, the FAS needed comprehensive information on the domestic agricultural policies of trading partners, and the primary source of this information was the agency's field offices abroad. Thus, in addition to traditional commodity reporting, the attachés and commissioners were called on to add policy analysis to their portfolios. On December 1, 1938, the Division was upgraded, made directly subordinate to the Secretary, and renamed simply the Foreign Agricultural Service. On July 1, 1939, however, President Franklin D | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service Roosevelt ordered all diplomatic personnel, including the agricultural attachés and commissioners, transferred to the Department of State. The was abolished, and its headquarters staff was renamed the Office of Foreign Agricultural Relations (OFAR). At that time the Director of Foreign Agricultural Relations, Leslie A. Wheeler, was appointed by executive order to the Board of the Foreign Service and the Board of Examiners, an acknowledgement of OFAR's status as a foreign affairs agency. OFAR began handling food aid in 1941 when President Roosevelt and the Congress authorized $1.35 billion of food assistance to Great Britain. During this period OFAR also led negotiations that resulted in creation of the International Wheat Council, and began assisting Latin American countries to develop their agriculture. This latter effort was related to the need for strategic commodities as World War II loomed, as well as the need to tie South America closer to the Allies and thereby to keep Nazi Germany from gaining a foothold in the New World. During World War II, OFAR analyzed food availability in both allied and enemy countries, and promoted the stockpiling of 100 million bushels (2.7 million metric tons) of wheat for feeding refugees after the anticipated end of the war. After the war OFAR was instrumental in carrying out land reform in Japan and offering agricultural technical assistance under the Marshall Plan and the Point Four Program | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service By 1953, OFAR had roughly 400 agricultural specialists working on development programs in 27 foreign countries. OFAR also continued food aid programs, particularly using the Agricultural Act of 1949's authorities to donate surplus commodities. The intent of these efforts was first, to combat communism; second, to promote export sales of U.S. agricultural products; and third, to improve diets in foreign countries through extension of technical assistance and technology transfer. At this point OFAR directed the work of overseas technical assistance programs while the Department of State directed the work of the agricultural attachés. Frictions began to develop as the Department of State began to deny USDA requests for information from the attachés, leading to pressure from both agricultural producer groups and influential congressmen for the attachés to be returned to USDA control. OFAR participated actively with the Department of State in negotiating the General Agreement on Tariffs and Trade (GATT), signed in 1947 and expanded through subsequent negotiation rounds, although agriculture was not a major focus until the Uruguay Round of negotiations. At the same time, OFAR was heavily involved in founding the UN Food and Agriculture Organization, with Director of Foreign Agricultural Relations Leslie A. Wheeler playing a particularly instrumental role. On March 10, 1953, Secretary of Agriculture Ezra Taft Benson abolished OFAR and reconstituted the Foreign Agricultural Service | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service In April 1954 FAS handed off national security–related technical assistance to the International Cooperation Administration (USAID's forerunner) and began to concentrate on foreign market development for U.S. agricultural commodities, signaling a radical shift in the agency's focus. On September 1, 1954, following passage of H.R. 8033 (P.L. 83-690), the agricultural attachés were transferred back from State Department to FAS. In the same year, Congress passed Public Law 480 (P.L. 83-480), the Food for Peace Act, which became the backbone of FAS's food aid and market development efforts. Agricultural attachés began negotiating agreements for concessional sale of U.S. farm commodities to foreign countries on terms of up to 30 years and in their own local currencies. In 1955 FAS began signing cooperative agreements with groups representing American producers of specific commodities in order to expand foreign demand. The first such agreement was signed with the National Cotton Council. This activity came to be called the Market Development Cooperator Program, and the groups themselves to be called "cooperators". In 1961 the General Sales Manager of USDA's Commodity Stabilization Service (CSS) and his staff were merged into FAS, bringing with them operational responsibility for export credit and food aid programs. In particular, the General Sales Manager was responsible for setting prices for export sale of USDA-owned surplus commodities that had been acquired through domestic farm support programs | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service At the same time, the CSS Barter and Stockpiling Manager was also moved to FAS. In the postwar era USDA's Commodity Credit Corporation was heavily involved in efforts to barter CCC-owned commodities acquired via domestic farm support programs for strategic commodities available from foreign countries short of hard currency. By the mid-1960s, however, as European and Asian economies recovered, the emphasis on barter waned. In 1969 the General Sales Manager and his staff were split off to form a separate USDA agency, the Export Marketing Service (EMS). In 1974, however, EMS was re-merged with FAS. In 1977, under pressure from the Congress, the Carter Administration created an "Office of the General Sales Manager" nominally headed by the General Sales Manager, but in reality still a subunit of FAS and subordinate to the FAS Administrator. In 1981 the Ronald Reagan Administration abolished the Office of the General Sales Manager and formally restored its status as a program area of FAS. During that time, the GSM's responsibilities expanded from mere disposition of surplus commodities to management of commodity export credit guarantee programs, foreign food assistance programs, and direct credit programs. The Foreign Agricultural Service, a foreign affairs agency since 1930, was included in the Foreign Service Act of 1980. Agricultural attachés were offered the choice of remaining civil servants or being grandfathered into the Foreign Service | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service Since that time the vast majority of agricultural officers overseas, just like State Department officials overseas, have been Foreign Service Officers. Since 1953, 12 former agricultural attachés have been confirmed as American Ambassadors. Trade tensions with the European Economic Community (EEC) boiled over in 1962 with the first "Chicken War", a trade dispute arising from the EEC's application of protective tariffs on poultry meat imported from the United States in retaliation for President Kennedy's imposition of a ceiling on textile imports and raising of tariffs on carpets, glass and bicycles. FAS negotiators and analysts, including future Administrator Rolland "Bud" Anderson, supported talks that resulted in the EEC paying $26 million in damages, though in Anderson's words, "We won the battle but lost the war as U.S. exports of these products to Europe soon became insignificant". The so-called "Chicken War" was a precursor to numerous other trade disputes, including the 2002 "Poultry War", when Russia retaliated against the United States' steel tariffs by barring imports of U.S. poultry meat, and the dispute over the European Union's ban on imports of U.S. beef produced from cattle treated with growth promotants. In 1972 a short grain crop in the USSR resulted in the Soviet Union quietly concluding grain purchasing contracts from a relatively small number of the secretive private multinational grain traders who dominated world trade in cereals | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service Because crop surveys in mid-spring had given the impression of a normal crop, FAS's agricultural attaché in Moscow chose not to follow up with additional crop observation travel, and thus missed a severe drought that set in after the last trip. As a result of this lapse, international grain traders and exporting nations were unaware of the Soviets' dire need for massive grain imports. By the time the scope of Soviet purchases became known, the USSR had locked in supplies at low, subsidized prices, leaving other importers and consumers scrambling for what was left at significantly higher prices. This event, known as the "Great Grain Robbery", led to creation in the of a satellite imagery unit for remote sensing of foreign crop conditions, negotiation of a long-term grain agreement (LTA) with the Soviet Union, and imposition of an export sales reporting requirement for U.S. grain exporters. It also impressed on FAS the need for "boots-on-the-ground" observation of crop conditions in critical countries. In the 1980s, the European Economic Community (EEC) emerged as a competitor for export sales, particularly of grain. EEC export restitutions (subsidies) undercut U.S. sales, with the result that farm-state Members of Congress, led by Senator Bob Dole of Kansas, pushed through new legislation authorizing broader subsidization of commercial export sales. This Export Enhancement Program (or EEP, though it was originally called "BICEP" by Senator Dole) was used primarily to counter EEC subsidies in important markets | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service Use of EEP opened the United States to criticism from less developed countries on the grounds that export subsidies undercut their own farmers by depressing global commodity prices. By the mid-1990s EEP was largely abandoned in favor of negotiating for a multilateral ban on agricultural export subsidies; it was last used, for a single sale, during the Clinton administration. With founding of the World Trade Organization in January 1995, trade-distorting domestic agricultural supports were capped in all member states and absolute import quotas were banned, but negotiations on eliminating export subsidies continue still. FAS has managed food assistance programs since 1941, and today uses a mix of statutory authorities. The traditional programs are Section 416(b) of the Agricultural Act of 1949, which makes surplus commodities available for donation overseas, and Title I of Public Law 480 (Food for Peace), which authorizes concessional sales. These programs were designed to support government-to-government transactions. The 1985 Farm Bill created the Food for Progress program, which facilitated delivery of food aid through non-governmental organizations as well as foreign governments. Food for Progress can draw on multiple sources, including in-kind surplus commodities and appropriated funds. The most recent addition to the array of FAS-implemented food aid programs is the McGovern/Dole International Food for Education and Child Nutrition Program | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service Named in honor of Senator Dole and Senator George McGovern, it supports school feeding programs in less developed countries, and reserves authority for supporting maternal and child health programs. It was authorized by the 2002 Farm Bill and reauthorized in 2008. Funding sources have varied since the pilot Global Food for Education program was deployed in fiscal year 2001, often combining both appropriated funds and funding from the Commodity Credit Corporation’s borrowing authority. After a nine-year hiatus from international agricultural development work at USDA, on July 12, 1963, Secretary Orville Freeman ordered creation of an International Agricultural Development Service (IADS), which was subordinate to the same Assistant Secretary of Agriculture as but separate from FAS. IADS served as USDA's liaison with USAID and other assistance organizations, linking them to USDA expertise in pursuit of developmental goals. Matthew Drosdoff was hired effective February 19, 1964, to be the first permanent Administrator of IADS. In March 1969, after the Richard Nixon Administration came to power, IADS was briefly merged into FAS, then in November 1969 was split out into a separate Foreign Economic Development Service (FEDS). On February 6, 1972, FEDS was abolished and its functions transferred to the Economic Research Service, where it became the Foreign Development Division | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service In 1977, Quentin West proposed consolidating three USDA units involved in technical assistance and development work into a single agency to be called the Office of International Cooperation and Development: the Foreign Development Division, the Science and Education Administration, an interagency consortium funded by foreign currency earnings, and FAS' International Organization Affairs Staff. West's proposal was accepted and thus OICD was created, with responsibility for technical assistance, training, foreign currency-funded research, and international organization liaison. In 1994 USDA's Office of International Cooperation and Development was merged with FAS, bringing technical assistance back to FAS after a 40-year absence. In 2003 FAS posted agricultural officers to Baghdad, not for the by-then traditional purposes of market intelligence and market development, but to reconstruct the Iraqi Ministry of Agriculture. FAS also began organizing USDA contributions to Provincial Reconstruction Teams in Iraq and Afghanistan. This marked FAS' return to national security work. Secretary of Agriculture Tom Vilsack has pledged to continue and to expand that work. FAS' role in national security work, however, remains controversial. From 1930 to about 1934, division heads in USDA, including the heads of the Division, had no formal title, but were referred to as "In-charge", though the "Official Register of the United States Government" listed them as "Chief" | https://en.wikipedia.org/wiki?curid=1704694 |
Foreign Agricultural Service Beginning around 1934 and until 1938, the head of FASD was called the "Chief". When FAS was renamed in 1938, the head was titled "Director", and that title carried over into OFAR and then the renewed FAS until 1954. The first head of FAS to bear the title "Administrator" was William Lodwick in that year. Heads of the and Office of Foreign Agricultural Relations since 1930 have been (periods as acting head are in "italics"): General Sales Managers since 1955 have been (periods as acting GSM are in "italics"): Administrators of the Office of International Cooperation and Development and its predecessors from creation until it was merged with FAS in 1994 were (periods as acting Administrator are in "italics"): Agricultural officers who have served or are serving as Ambassadors are: | https://en.wikipedia.org/wiki?curid=1704694 |
Budget set A budget set or opportunity set includes all possible consumption bundles that someone can afford given the prices of goods and the person's income level. The budget set is bounded above by the budget line. In set notation, for consumption goods formula_1 with associated prices formula_2, the budget set is where formula_4 is income, and the consumption set formula_5 is assumed to be the nonnegative orthant in formula_6. Graphically speaking, all the consumption bundles that lie inside the budget constraint and on the budget constraint form the budget set or opportunity set. By most definitions, budget sets must be compact and convex. | https://en.wikipedia.org/wiki?curid=1706527 |
Energy intensity is a measure of the energy inefficiency of an economy. It is calculated as units of energy per unit of GDP. High energy intensity means high industrial output as portion of GDP. Countries with low energy intensity signifies labor intensive economy. Many factors influence an economy's overall energy intensity. It may reflect requirements for general standards of living and weather conditions in an economy. It is not atypical for particularly cold or hot climates to require greater energy consumption in homes and workplaces for heating (furnaces, or electric heaters) or cooling (air conditioning, fans, refrigeration). A country with an advanced standard of living is more likely to have a wider prevalence of such consumer goods and thereby be impacted in its energy intensity than one with a lower standard of living. Energy efficiency of appliances and buildings (through use of building materials and methods, such as insulation), fuel economy of vehicles, vehicular distances travelled (frequency of travel or larger geographical distances), better methods and patterns of transportation, capacities and utility of mass transit, energy rationing or conservation efforts, 'off-grid' energy sources, and stochastic economic shocks such as disruptions of energy due to natural disasters, wars, massive power outages, unexpected new sources, efficient uses of energy or energy subsidies may all impact overall energy intensity of a nation | https://en.wikipedia.org/wiki?curid=1706565 |
Energy intensity Thus, a nation that is highly economically productive, with mild and temperate weather, demographic patterns of work places close to home, and uses fuel efficient vehicles, supports carpools, mass transportation or walks or rides bicycles, will have a far lower energy intensity than a nation that is economically unproductive, with extreme weather conditions requiring heating or cooling, long commutes, and extensive use of generally poor fuel economy vehicles. Paradoxically, some activities that may seem to promote high energy intensities, such as long commutes, could in fact result in lower energy intensities by causing a disproportionate increase in GDP output. Figures of energy consumption used in statistics are energy sources marketed through major energy industries. Therefore, some small scale but frequent consumption of energy source like firewood, charcoal peat, water wheel, wind mill are not in its count. In countries, which does not have such developed energy industries or people with highly self energy efficient life style, report smaller energy consumption figures. Various nations have significantly higher or lower energy intensities. Of course, these numbers were produced with a mix of 2003 and 2004 figures, many of which are estimates. Actual mathematical models should use precise data of appropriate matching periods of study. Several countries, like Sweden, Norway, France, and Canada, have made the transition to operating on low-carbon utilities | https://en.wikipedia.org/wiki?curid=1706565 |
Energy intensity Norway and Canada have made the switch to hydro power; France relies on nuclear power. Since these countries have made the shift, they produce about a fifth of the carbon emissions in comparison to 13 other countries, like some including USA, Japan, and Italy. An inverse way of looking at the issue would be an 'economic energy efficiency,' or economic rate of return on its consumption of energy: how many economic units of GDP are produced by the consumption of units of energy. It is not directly causal that a high GDP per capita must have lower economic energy efficiencies. See the accompanying chart for examples based on the top 40 national economies. can be used as a comparative measure between countries; whereas the change in energy consumption required to raise GDP in a specific country over time is described as its energy elasticity. is a measure of energy efficiency of nation's GDP. | https://en.wikipedia.org/wiki?curid=1706565 |
Production set A production set is the set of all combinations of inputs and outputs that comprise a technologically feasible way to produce. It is used as part of profit maximization calculations. | https://en.wikipedia.org/wiki?curid=1706577 |
Rationalization (economics) In economics, rationalization is an attempt to change a pre-existing ad hoc workflow into one that is based on a set of published rules. There is a tendency in modern times to quantify experience, knowledge, and work. Means–end (goal-oriented) rationality is used to precisely calculate that which is necessary to attain a goal. Its effectiveness varies with the enthusiasm of the workers for the changes being made, the skill with which management applies the rules, and the degree to which the rules fit the job. Rationalization aims at an efficiency increase by better use of existing possibilities: A same effect can with fewer means, or with same means to be obtained. In the industry thereby frequently the replacement of manpower is designated by machines (rationalization investment). It is the reasonable, appropriate organization of operational conditions under changing conditions to increase with the goal, productivity and economy. Julien Freund defines rationalization as "the organization of life through a division and coordination of activities on the basis of exact study of men's relations with each other, with their tools and their environment, for the purpose of achieving greater efficiency and productivity". The rationalization process is the practical application of knowledge to achieve a desired end. Its purpose is to bring about efficiency, coordination, and control of the natural and social environment | https://en.wikipedia.org/wiki?curid=1706964 |
Rationalization (economics) It is a product of "scientific specialization and technical differentiation" that seems to be a characteristic of Western culture. Rationalization is the guiding principle behind bureaucracy and the increasing division of labor, and has led to an increase in both the production and distribution of goods and services. It is also associated with secularization without its more positive component of humanism, with depersonalization and with oppressive routine. Increasingly, human behavior is to be guided by observation, experiment, and reason ("zweckrational"). Change in human character is expected to be part of the process; rationalization and bureaucratization promote efficiency, and materialism, both of which are subsumed under Weber's concept of "zweckrational". | https://en.wikipedia.org/wiki?curid=1706964 |
Risk Management Agency The (RMA) is an agency of the U.S. Department of Agriculture, which manages the Federal Crop Insurance Corporation (FCIC). The current Acting Administrator is Heather Manzano. The (RMA) was created in 1996 by the Federal Agriculture Improvement and Reform Act of 1996 to operate and manage the Federal Crop Insurance Corporation (FCIC). The FCIC was created in 1938, during the Great Depression, to provide insurance for farmers to allow them to profit from crop production, even under difficult agricultural and economic circumstances. Many American farmers were forced to leave their farms as a result of the Dust Bowl during this period. The (RMA) has three program areas: Insurance Services, which provides federal crop insurance to American farmers; Product Management, which develops and reviews crop insurance products to ensure actuarial soundness; and Compliance, which monitors federal crop insurance programs for fraud, waste, and abuse. The RMA is managed by an Administrator appointed by the United States Secretary of Agriculture. The RMA Administrator serves as the non-voting manager of the Federal Crop Insurance Corporation Board. The RMA employs Deputy Administrators to manage each of the three program areas, as well as a Chief Financial Officer, Chief Information Officer, a Director of the Office of Civil Rights, and a Director of the Office of External Affairs. There are ten RMA regional offices around the country. The RMA employs more than 450 people in offices around the country | https://en.wikipedia.org/wiki?curid=1707092 |
Risk Management Agency The RMA had an operating budget of $74.8 million during Fiscal Year 2016, and managed more than $102 billion in insurance liability during 2015. | https://en.wikipedia.org/wiki?curid=1707092 |
Initiative for Policy Dialogue The (IPD) is a non-profit organization based at Columbia University in the United States. IPD was founded in July 2000 by Joseph E. Stiglitz, with support of the Ford, Rockefeller, McArthur, and Mott Foundations and the Canadian and Swedish government, to enhance democratic processes for decision making in developing countries, to ensure that a broader range of alternative are on the table and more stakeholders are at the table. The organization is a global network of more than 250 leading economists, political scientists, civil society representatives, and practitioners from all over the world with diverse backgrounds and views. IPD intends to help countries find solutions to pressing problems, and strengthen their institutions and civil societies. IPD helps developing countries explore the full range of economic solutions and move beyond the narrow range of policy alternatives currently at the center of international debate. The organization's approach is based on the recognition that all economic policies entail trade-offs that benefit some groups more than others, and there is no one set of policies that is best for all countries. IPD analyzes the trade-offs associated with different policies and provides governments and civil society with a framework for analysis. The programs improve the information available to the policy community, but leave the final decisions to the country's political process | https://en.wikipedia.org/wiki?curid=1711388 |
Initiative for Policy Dialogue IPD emphasizes diverse participation and broad civic involvement in economic policymaking, and facilitates a more democratic discussion of development around the world. The organization's accessibly written publications, research, and public conferences enable more stakeholders to participate effectively in policy debates. IPD encourage public participation and improved access to information by webcasting many of their conferences, inviting civil society and local media, and training journalists in economics reporting. The programs facilitate the exchange of ideas, resulting in more informed dialogue and, they hope, improved economic policymaking. IPD’s primary vehicles for outreach and collaboration are its task force, country dialogue, and journalism training programs. IPD task forces convene experts to study and write policy-oriented publications on complex, controversial economic issues such as transparency, governance, poverty, and environmental economics. IPD has launched over 20 task forces to date. The task forces are in the process of publishing overview chapters written for policymakers as part of a book series with Oxford University Press and Columbia University Press. IPD country dialogues allow IPD to bring its task force work directly to developing countries | https://en.wikipedia.org/wiki?curid=1711388 |
Initiative for Policy Dialogue Country dialogues foster an open and inclusive dialogue by convening diverse stakeholders such as senior government officials, opposition parties, NGO representatives, and academics to discuss economic policy options in the host country and improve the quality of official decision-making on economic policy issues. The IPD journalism program helps strengthen journalists' economic literacy and equips them to report and write about the major economic issues confronting developing economies. With enhanced reporting and information, civil society is able to participate more effectively in the policymaking process. IPD books delve deeper into alternatives for prevailing issues by examining the central issues in contention, as well as the impacts on different groups, the risks associated with each alternative, and an analysis and interpretation of the experiences of those who have tried each. These books are unique in that they are geared toward policymakers and civil society and are written as part of a collaborative process, bringing in voices from both the North and South. The books lay out policy options including the risks and trade offs inherent in each that allow for a more meaningful discourse. | https://en.wikipedia.org/wiki?curid=1711388 |
Market value added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. If MVA is positive, the firm has added value. If it is negative, the firm has destroyed value. The amount of value added needs to be greater so than the firm's investors could have achieved investing in the market portfolio, adjusted for the leverage (beta coefficient) of the firm relative to the market. The formula for MVA is: where: MVA is the present value of a series of EVA values. MVA is economically equivalent to the traditional NPV measure of worth for evaluating an after-tax cash flow profile of a project if the cost of capital is used for discounting. | https://en.wikipedia.org/wiki?curid=1716701 |
Labor intensity is the relative proportion of labor (compared to capital) used in any given process. Its inverse is capital intensity. has been declining since the onset of the Industrial Revolution in late 1700s, while its inverse, capital intensity, has increased nearly exponentially since the latter half of the 20th century. Labor-intensive industries: A labor-intensive industry requires large amount of human labor to make its goods or services. In these industries labor costs are more important than capital costs. is measured in the proportion to the amount of capital to produce goods or services. The higher is the labor cost the more labor intense is the business. Labor cost can vary because businesses can add or subtract workers bases on business needs. When it comes to controlling expenses, labor intensive businesses have an advantage over those that are capital intensive and require a large investment in capital equipment such as the automobile industry. When it comes to include economy of scale, labor intensive industries deal with many challenges: they cannot pay workers less by hiring morelabor-capital ratio. In case of high level of inflation in the economy, the labor-intensive industry can suffer to some extent. In time of high level of inflation, the laborers are more likely to reveal their unwillingness to work at the same level of wage, as inflation lowers their earnings. Before the industrial revolution, the major part of the workforce was employed in agriculture. Producing food was very labor-intensive | https://en.wikipedia.org/wiki?curid=1721123 |
Labor intensity Advances in technology and worker productivity have moved some industries away from labor-intensive status, but many remain including mining, agriculture. Examples of labor-intensive sectors: · Nursing: difficult to replace with machinery. · the agricultural industry: Jobs in this industry, which is closely related to the cultivation of foodstuffs that must be picked with minimal damage to the plant as a whole (such as fruit from fruit trees), are particularly labor-intensive · Textile · Fruit picking: Certain types of fruit need picking by hand. It is difficult to get machines to pick strawberries and apples from trees. · Teaching. · Mining · Niche products: If a firm specialises in a niche market, there will be less scope for economies of scale and lower fixed costs. In this case, we tend to see higher labour-intensive production. For mass-produced. Pottery is a main example of niche product. The role in the economy: For the underdeveloped and developing economies, labor intensive industry structure can be proved to be a better option than a capital intensive one for a quick economic development . For the countries, which are not rich and generate low level of income, labor intensive industry can bring economic growth and prosperity. In most of the cases, these low income countries suffer from scarcity of capital but benefit from abundant labor force such as some African countries | https://en.wikipedia.org/wiki?curid=1721123 |
Labor intensity The use of this abundant labor force properly in industry production, may lead to experience industrial growth. China as the land of workforce, manufacturing industries contribute about 35 per cent to country's gross domestic product. The country has also become one of the world's leading manufacturing bases and leading suppliers of products such as household electric appliances, garments, toys, shoes and light industrial products. Supply of perfectly skilled labor to any industry can trigger the industry growth rate. In this way, the underdeveloped countries can improve their industrial economy without proceeding to heavy capital investment. Moreover, exportation of the products manufactured by labor intensive industries can strengthen the export base of any developing Country. These exports help the economies in earning foreign exchange, which can be used for importing essential goods and services. Measurement: There are multiple ways to measure labor intensity: These two measures are different ways of measuring labor intensity, Neither is superior in itself, the choice of measure depends on the specific issue of interest. However there is a limitation of this two measures: they only measure direct labor intensity and they exclude the extent to which sectors are linked to another sector of the economy. For instance, a given sector may itself not be particularly labour-intensive, but it might utilise (as inputs) the output of other sectors that are highly labour-intensive | https://en.wikipedia.org/wiki?curid=1721123 |
Labor intensity A solution could be to consider employment multipliers by sector. Employment multipliers essentially indicate what increase (decrease) in economy-wide jobs could be associated with a given increase (decrease) in final output of a sector. | https://en.wikipedia.org/wiki?curid=1721123 |
Economic policy of the Bill Clinton administration The economic policies of Bill Clinton, referred to by some as Clintonomics (a portmanteau of "Clinton" and "economics"), encapsulates the economic policies of United States President Bill Clinton that were implemented during his presidency, which lasted from January 1993 to January 2001. President Clinton oversaw a very robust economy during his tenure. The U.S. had strong economic growth (around 4% annually) and record job creation (22.7 million). He raised taxes on higher income taxpayers early in his first term and cut defense spending and welfare, which contributed to a rise in revenue and decline in spending relative to the size of the economy. These factors helped bring the United States federal budget into surplus from the fiscal year 1998 to 2001, the only surplus years after 1969. Debt held by the public, a primary measure of the national debt, fell relative to GDP throughout his two terms, from 47.8% in 1993 to 31.4% in 2001. Clinton signed North American Free Trade Agreement (NAFTA) into law, along with many other free trade agreements. He also enacted significant welfare reform. His deregulation of finance (both tacit and overt through the Gramm-Leach-Bliley Act) has been criticized as a contributing factor to the Great Recession. Clinton's presidency included a great period of economic growth in America's history. Clintonomics encompassed both a set of economic policies as well as governmental philosophy | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration Clinton's economic (clintonomics) approach entailed modernization of the federal government, making it more enterprise-friendly while dispensing greater authority to state and local governments. The ultimate goal involved rendering the American government smaller, less wasteful, and more agile in light of a newly globalized era. Clinton assumed office following the end of a recession, and the economic practices he implemented are held up by his supporters as having fostered a recovery and surplus, though some of the president's critics remained more skeptical of the cause-effect outcome of his initiatives. The Clintonomics policy focus could be encapsulated by the following four points: Prior to the 1992 presidential campaign, America had undergone twelve years of conservative policies implemented by Ronald Reagan and George Herbert Walker Bush. Clinton ran on the economic platform of balancing the budget, lowering inflation, lowering unemployment, and continuing the traditionally conservative policies of free trade. David Greenberg, a professor of history and media studies at Rutgers University, opined that: In proposing a plan to cut the deficit, Clinton submitted a budget and corresponding tax legislation that would cut the deficit by $500 billion over five years by reducing $255 billion of spending and raising taxes on the wealthiest 1.2% of Americans | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration It also imposed a new energy tax on all Americans and subjected about a quarter of those receiving Social Security payments to higher taxes on their benefits. Republican Congressional leaders launched an aggressive opposition against the bill, claiming that the tax increase would only make matters worse. Republicans were united in this opposition, and every Republican in both houses of Congress voted against the proposal. In fact, it took Vice President Gore's tie-breaking vote in the Senate to pass the bill. After extensive lobbying by the Clinton Administration, the House narrowly voted in favor of the bill by a vote of 218 to 216. The budget package expanded the earned income tax credit (EITC) as relief to low-income families. It reduced the amount they paid in federal income and Federal Insurance Contributions Act tax (FICA), providing $21 billion in relief for 15 million low-income families. Clinton signed the "Omnibus Budget Reconciliation Act" of 1993 into law. This act created a 36 percent to 39.6 percent income tax for high-income individuals in the top 1.2% of wage earners. Businesses were given an income tax rate of 35%. The cap was repealed on Medicare. The taxes were raised 4.3 cents per gallon on transportation fuels and the taxable portion of Social Security benefits were increased. Clinton enacted Small Business Job Protection Act of 1996 which reduced taxes for many small business | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration Furthermore, he signed legislation that increased the tax deduction for self-employed business owners from 30% to 80% by 1997. The "Taxpayer Relief Act" reduced some federal taxes. The 28% rate for capital gains was lowered to 20%. The 15% rate was lowered to 10%. In 1980, a tax credit was put into place based on the number of individuals under the age of 17 in a household. In 1998, it was $400 per child and in 1999, it was raised to $500. This Act removed from taxation profits on the sale of a house of up to $500,000 for individuals who are married, and $250,000 for single individuals. Educational savings and retirement funds were given tax relief. Some of the expiring tax provisions were extended for selected businesses. Since 1998, an exemption could be taken out for those family farms and small businesses that qualified for it. In 1999, the correction of inflation on the $10,000 annual gift tax exclusion was accomplished. By the year 2006, the $600,000 estate tax exemption had risen to $1 million. The economy continued to grow, and in February 2000 it broke the record for the longest uninterrupted economic expansion in U.S. history. After Republicans won control of Congress in 1994, Clinton vehemently fought their proposed tax cuts, believing that they favored the wealthy and would weaken economic growth | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration In August 1997, however, Clinton and Congressional Republicans were finally able to reach a compromise on a bill that reduced capital gain and estate taxes and gave taxpayers a credit of $500 per child and tax credits for college tuition and expenses. The bill also called for a new individual retirement account (IRA) called the Roth IRA to allow people to invest taxed income for retirement without having to pay taxes upon withdrawal. Additionally, the law raised the national minimum for cigarette taxes. The next year, Congress approved Clinton's proposal to make college more affordable by expanding federal student financial aid through Pell Grants, and lowering interest rates on student loans. Clinton also battled Congress nearly every session on the federal budget, in an attempt to secure spending on education, government entitlements, the environment, and AmeriCorps–the national service program that was passed by the Democratic Congress in the early days of the Clinton administration. The two sides, however, could not find a compromise and the budget battle came to a stalemate in 1995 over proposed cuts in Medicare, Medicaid, education, and the environment. After Clinton vetoed numerous Republican spending bills, Republicans in Congress twice refused to pass temporary spending authorizations, forcing the federal government to partially shut down because agencies had no budget on which to operate | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration In April 1996, Clinton and Congress finally agreed on a budget that provided money for government agencies until the end of the fiscal year in October. The budget included some of the spending cuts that the Republicans supported (decreasing the cost of cultural, labor, and housing programs) but also preserved many programs that Clinton wanted, including educational and environmental ones. Below are the budgetary results for President Clinton's two terms in office: This pattern of raising taxes and cutting spending (i.e., austerity) in an economic boom coincides precisely with the advice of John Maynard Keynes, who stated in 1937: "The boom, not the slump, is the right time for austerity at the Treasury." However, this remarkable success did not stop conservative pundits from trying to discredit this achievement. Their argument essentially goes like this: Although debt held by the public was reduced, the surplus funds paid into Social Security were used to pay those bondholders, in effect borrowing from one pocket (future Social Security program recipients) to pay down the other (current bondholders), such that total debt rose. However, while this is true, this is also how the proverbial "math works" for all the other modern Presidents as well. It is not accurate to discredit the exceptional fiscal austerity of the Clinton era relative to other modern Presidents, which nevertheless coincided with a booming economy by virtually any measure | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration It is also relevant to point out that this booming economy occurred despite Republican warnings that such tax increases on the highest income taxpayers would slow the economy and job creation. Perhaps the boom would have been even greater if larger deficits had been run, but this was not the argument made at the time. The Personal Responsibility and Work Opportunity Act (PRWORA) of 1996 established the Temporary Assistance for Needy Families (TANF) program, which was funded by block grants to the states. This program replaced the Aid to Families with Dependent Children (AFDC) program, which had open-ended funding for those who qualified and a federal match for state spending. To receive the full TANF grant amounts, states had to meet certain requirements related to their own spending, as well as the percentage of welfare recipients working or participating in training programs. This threshold could be reduced if welfare caseloads fell. The law also modified the eligibility rules for means-tested benefits programs such as food stamps and Supplemental Security Income (SSI). CBO estimated in March 1999 that the TANF basic block grant (authorization to spend) would total $16.5 billion annually through 2002, with the amount allocated to each state based on the state's spending history. These block grant amounts proved to be more than the states could initially spend, as AFDC and TANF caseloads dropped by 40% from 1994 to 1998 due to the booming economy | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration As a result, states had accumulated surpluses which could be spent in future years. States also had the flexibility to use these funds for child care and other programs. CBO also estimated that TANF outlays (actual spending) would total $12.6 billion in fiscal years 1999 and 2000, grow to $14.2 billion by 2002, and reach $19.4 billion by 2009. For scale, total spending in FY 2000 was approximately $2,000 billion, so this represents around 0.6%. Further, CBO estimated that unspent balances would grow from $7.1 billion in 2005 to $25.4 billion by 2008. The law's effect goes far beyond the minor budget impact, however. The Brookings Institution reported in 2006 that: "With its emphasis on work, time limits, and sanctions against states that did not place a large fraction of its caseload in work programs and against individuals who refused to meet state work requirements, TANF was a historic reversal of the entitlement welfare represented by AFDC. If the 1996 reforms had their intended effect of reducing welfare dependency, a leading indicator of success would be a declining welfare caseload. TANF administrative data reported by states to the federal government show that caseloads began declining in the spring of 1994 and fell even more rapidly after the federal legislation was enacted in 1996. Between 1994 and 2005, the caseload declined about 60 percent | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration The number of families receiving cash welfare is now the lowest it has been since 1969, and the percentage of children on welfare is lower than it has been since 1966." The effects were particularly significant on single mothers; the portion of employed single mothers grew from 58% in 1993 to 75% by 2000. Employment among never-married mothers increased from 44% to 66%. The report concluded that: "The pattern is clear: earnings up, welfare down. This is the very definition of reducing welfare dependency." Clinton made it one of his goals as president to pass trade legislation that lowered the barriers to trade with other nations. He broke with many of his supporters, including labor unions, and those in his own party to support free-trade legislation. Opponents argued that lowering tariffs and relaxing rules on imports would cost American jobs because people would buy cheaper products from other countries. Clinton countered that free trade would help America because it would allow the U.S. to boost its exports and grow the economy. Clinton also believed that free trade could help move foreign nations to economic and political reform. The Clinton administration negotiated a total of about 300 trade agreements with other countries. Clinton's last treasury secretary, Lawrence Summers, stated that the lowered tariffs that resulted from Clinton's trade policies, which reduced prices to consumers and kept inflation low, were technically "the largest tax cut in the history of the world | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration " The three-nation NAFTA was signed by President George H. W. Bush during December 1992, pending its ratification by the legislatures of the three countries. Clinton did not alter the original agreement, but complemented it with the North American Agreement on Environmental Cooperation and the North American Agreement on Labor Cooperation, making NAFTA the first "green" trade treaty and the first trade treaty concerned with each country's labor laws, albeit with very weak sanctions. NAFTA provided for gradually reduced tariffs and the creation of a free-trading bloc of North American countries–the United States, Canada, and Mexico. Opponents of NAFTA, led by Ross Perot, claimed it would force American companies to move their workforces to Mexico, where they could produce goods with cheaper labor and ship them back to the United States at lower prices. Clinton, however, argued that NAFTA would increase U.S. exports and create new jobs. Clinton while signing the NAFTA bill stated: "...NAFTA means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement." He convinced many Democrats to join most Republicans in supporting trade agreement and in 1993 the Congress passed the treaty. While economists generally view free trade as an overall positive for the nation's involved, certain groups may be adversely affected, such as manufacturing workers | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration For example: Officials in the Clinton administration also participated in the final round of trade negotiations sponsored by the General Agreement on Tariffs and Trade (GATT), an international trade organization. The negotiations had been ongoing since 1986. In a rare move, Clinton convened Congress to ratify the trade agreement in the winter of 1994, during which the treaty was approved. As part of the GATT agreement, a new international trade body, the World Trade Organization (WTO), replaced GATT in 1995. The new WTO had stronger authority to enforce trade agreements and covered a wider range of trade than did GATT. Clinton also held meetings with leaders of Pacific Rim nations to discuss lowering trade barriers. In November 1993 he hosted a meeting of the Asia-Pacific Economic Cooperation (APEC) in Seattle, Washington, which was attended by the leaders of 12 Pacific Rim nations. In 1994, Clinton arranged an agreement in Indonesia with Pacific Rim nations to gradually remove trade barriers and open their markets. Clinton faced his first defeat on trade legislation during his second term. In November 1997, the Republican-controlled Congress delayed voting on a bill to restore a presidential trade authority that had expired in 1994. The bill would have given the president the authority to negotiate trade agreements which the Congress was not authorized to modify–known as "fast-track negotiating" because it streamlines the treaty process | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration Clinton was unable to generate sufficient support for the legislation, even among the Democratic Party. Clinton faced yet another trade setback in December 1999, when the WTO met in Seattle for a new round of trade negotiations. Clinton hoped that new agreements on issues such as agriculture and intellectual property could be proposed at the meeting, but the talks fell through. Anti-WTO protesters in the streets of Seattle disrupted the meetings and the international delegates attending the meetings were unable to compromise mainly because delegates from smaller, poorer countries resisted Clinton's efforts to discuss labor and environmental standards. That same year, Clinton signed a landmark trade agreement with the People's Republic of China. The agreement–the result of more than a decade of negotiations–would lower many trade barriers between the two countries, making it easier to export U.S. products such as automobiles, banking services, and motion pictures. However, the agreement could only take effect if China was accepted into the WTO and was granted permanent "normal trade relations" status by the U.S. Congress. Under the pact, the United States would support China's membership in the WTO. Many Democrats as well as Republicans were reluctant to grant permanent status to China because they were concerned about human rights in the country and the impact of Chinese imports on U.S. industries and jobs. Congress, however, voted in 2000 to grant permanent normal trade relations with China | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration Several economic studies have since been released that indicate the increase in trade resulting lowered American prices and increased the U.S. GDP by 0.7% throughout the following decade. Clinton signed the Financial Services Modernization Act or GLBA in 1999, which allowed banks, insurance companies and investment houses to merge and thus repealed the Glass-Steagall Act which had been in place since 1932. It also prevented further regulation of risky financial derivatives. His deregulation of finance (both tacit and overt through GLBA) was criticized as a contributing factor to the Great Recession. While he disputes that claim, he expressed regret and conceded that in hindsight he would have vetoed the bill, mainly because it excluded risky financial derivatives from regulation, not because it removed the long-standing Glass-Steagall barrier between investment and depository banking. In his view, even if he had vetoed the bill, the Congress would have overridden the veto, as it had nearly unanimous support. Politifact rated Clinton's claim that repeal of Glass-Steagall did not have "anything to do with the financial crash [of 2008]" as "Mostly True," with the caveat that his claim focused on removing the separation of investment and depository banking and not the broader exclusion of risky financial instruments (derivatives) from regulation. These derivatives, such as the credit default swaps at the core of the 2008 crisis, were basically used to insure mortgage-related securities, with AIG the major provider | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration This encouraged more mortgage-related lending, as AIG theoretically stood behind the mortgage securities used to finance the mortgage lending. However, AIG was not effectively regulated and did not have the financial resources to make good on its insurance promises when housing defaults began and investors began to claim the insurance payments on mortgage securities in default. AIG collapsed spectacularly in September 2008, and became a conduit for a large government bailout (over $100 billion) to many banks globally to which AIG owed money, one of the darkest episodes in the crisis. Clinton presided over the following economic results, measured from January 1993 to December 2000, with alternate dates as indicated: Clinton has been heavily criticized for overseeing the creation of the North American Free Trade Agreement (NAFTA), which made it more affordable for manufacturing companies to outsource jobs to foreign countries and then import their product back to the United States. Some liberals and progressives believe that Clinton did not do enough to reverse the trends toward widening income and wealth inequality that began in the late 1970s and 1980s. The top marginal income tax rate for high-income individuals (the top 1.2% of earners) was 70 percent in 1980, then lowered to 28 percent in 1986 by Reagan; Clinton raised it back to 39.6 percent, but it remained far below pre-Reagan levels | https://en.wikipedia.org/wiki?curid=1723248 |
Economic policy of the Bill Clinton administration Clinton's administration also afforded no benefit to unionized labor and did not favor strengthening collective bargaining rights. Lower unemployment rates were another large part of Clinton's macroeconomic policies. Many argue that Clinton cost many Americans jobs because he supported free trade, which some argue caused the U.S. to lose jobs to countries like China (Burns and Taylor 390). Even if Clinton did cost Americans some jobs because of free trade support, he allowed for more jobs than were lost because the unemployment rate of his presidency, and especially his second term, were the lowest they had been in thirty years (Burns and Taylor 390). Others attribute this to sustained declines in interest rates, which fueled a booming stock market and job growth in a booming technology sector. As mentioned previously, Clinton has been criticized by some observers as having played a long-term role in leading to the Great Recession with the aforementioned Gramm–Leach–Bliley Act as well as the Commodity Futures Modernization Act of 2000. | https://en.wikipedia.org/wiki?curid=1723248 |
Fiscalism is a term sometimes used to refer the economic theory that the government should rely on fiscal policy as the main instrument of macroeconomic policy. in this sense is contrasted with monetarism, which is associated with reliance on monetary policy. Fiscalists reject monetarism in a non-convertible floating rate system as inefficient if not also ineffective There are two types of Fiscalism: - Contained fiscalism does not allow the economy to grow or decline as much as possible. - Elevated fiscalism does not allow the economy to decline but, it does allow for the economy to grow unrestrained relies heavily on Keynesian theories which states that an active government intervention is necessary to ensure economic growth and stability. For fiscalists, employment is of primary concern. Y (income) is the independent variable in PY = MV (where P = price level, M = amount of money, V = velocity/turnover of money), changes in which affect effective demand. So fiscalists hold that Y needs to be controlled through fiscal policy, which affects effective demand. Effective demand draws forth investment to meet profit opportunity, and effective demand is income-dependent, since consumption cannot be funded by drawing down savings, selling assets, or financed by borrowing sustainably. If supply and demand are stabilized at optimal resource use, they unemployment is reduced | https://en.wikipedia.org/wiki?curid=1725257 |
Fiscalism The holy grail of macroeconomics is full employment along with price stability, which implies highly efficient use of resources while controlling price level. In the first place, MMT rejects the monetarist explanation virtually in toto, claiming that it is based on an incorrect view of actual operations of the Treasury, central bank, and commercial banking, and how they interact. Secondly, MMT explains how to succeed in the quest for the holy grail through employment of the sectoral balance approach developed by Wynne Godley and functional finance developed by Abba Lerner. The thrust of this approach is to maintain effective demand sufficient for purchase of production (supply) at full employment by offsetting non-government saving desire with the currency issuer's fiscal balance. This stabilizes aggregate demand and aggregate supply at full employment (adjusting aggregate demand wrt changes in population and productivity) without risking inflation arising owing to excessive demand. Note that this does not apply to price level rising due to supply shock, such as an oil crisis provoked by a cartel exerting a monopoly, or shortage of real resources., e.g. due to natural disaster, war, or climate. This is a separate issue and must be addressed differently according to MMT. In a non-convertible floating rate monetary system, the currency issuer is not constrained operationally. The only constraint is real resources | https://en.wikipedia.org/wiki?curid=1725257 |
Fiscalism If effective demand outruns the capacity of the economy to expand to meet it, then inflation will result. If effective demand falls short of the capacity of the economy to produce at full employment, then the economy will contract, an output gap open, and unemployment will rise. This view is based on a Treasury-based monetary regime, in which money is created through currency issuance mediated by government fiscal expenditure. Issuance of Treasury securities to offset deficits functions as a reserve drain, which functions as a monetary operation that enables the central bank to hit its target rate rather than being a fiscal operation involving financing. Similarly, taxes are seen not as a funding operation for government expenditure, but as a means to withdraw non-government net financial assets created government expenditure, in order to control effective demand and thereby reduce inflationary pressure as needed iaw the sectoral balance approach and functional finance. This view is quite the opposite of the credit-based monetary presumptions of monetarists, which MMT regards as appropriate to a convertible fixed rate regime like the gold standard but not to the current non-convertible floating rate system that began when President Nixon shut the gold window on August 15, 1971, and was later adopted by most nations, excepting those that pegged their currencies, ran currency boards, or gave up currency sovereignty as did members of the European Monetary Union in adopting the euro as a common currency | https://en.wikipedia.org/wiki?curid=1725257 |
Fiscalism It is important to note that MMT economists are NOT recommending the adoption of a Treasury-based monetary system. Rather, they are asserting that the present monetary system is already Treasury-based operationally, even when governments choose to impose political restraints that mimic obsolete practices and create the impression that these are operationally necessary. MMT also recommends an employer assurance program (ELR, JG) to create a buffer stock of employed that the private sector can draw on as needed. This reduces idle resources and presents the possibility of achieving actual full employment (allowing 2% for transitional) along with price stability, which monetarism presumes inflationary. The ELR program also establishes a wage floor as price anchor for price stability. | https://en.wikipedia.org/wiki?curid=1725257 |
Calgary School The is a term used to refer to a group of academics and former students from the University of Calgary's Political Science, Public Policy, Economics, Law, and History departments in Calgary, Alberta, Canada. While many might consider themselves conservative, there are other themes that bind its members. These include support for strong provinces, limits to the power of the federal government, and greater Western influence in Ottawa. The term, originally a play on the Chicago school of economics, was coined by American political scientist David Rovinsky. The school is not an official organization and has no membership list. The first six below were included in the group in an article in "The Walrus", the rest in a letter by Tom Flanagan to the "Literary Review of Canada": The school has at times included other academics from the University of Calgary and other universities, many of whom would disagree on important matters of politics and political theory. As well, it is politically and socially connected to others who share a common view of politics, including members of the former Reform Party of Canada, Canadian Alliance party and current federal Conservative Party of Canada. The school is politically conservative and has been described in "The Walrus" as supporting "a rambunctious, Rocky Mountain brand of libertarianism" that seeks "lower taxes, less federal government, and free markets unfettered by social programs such as medicare that keep citizens from being forced to pull up their own socks | https://en.wikipedia.org/wiki?curid=1725874 |
Calgary School " Strong provinces and a reduced role for the federal government are seen by some members of the School as a natural corollary of these positions. There are tensions between the socially conservative and economically conservative factions within the school. Bercuson publicly criticized Morton's social policies, saying "[they] were hard to stomach for a libertarian." Such division brings into question whether its members reflect a coherent "school" of thought. The members of the school, particularly Flanagan, are also said to be followers of the American political philosopher Leo Strauss, their detractors interpreting this as sharing his "deep suspicion of liberal democracy." Flanagan himself has specifically denied charges that he is a Straussian, calling himself rather a Hayekian, referring to the Nobel Prize–winning economist and political philosopher, Friedrich Hayek. While it is always difficult to gauge the impact or influence of such groups, it appears that its members have played a role in the reshaping of Conservative politics in Canada since 1993. The long dominance of the centrist Liberal Party of Canada at the federal level in Canadian politics was maintained in part during the 1990s by competition between two right wing parties, the older Progressive Conservative Party of Canada and the newer Reform Party of Canada. Members of the School, notably Flanagan, worked hard to turn the Reform Party into the dominant right wing party and later to encourage a coalition of conservative parties | https://en.wikipedia.org/wiki?curid=1725874 |
Calgary School In December 2003, after a decade of division, he worked on the merger of the Progressive Conservative Party of Canada and the successor to the Reform Party the Canadian Alliance that created the new Conservative Party of Canada. Flanagan played a key role in the development of the new party's platform, helped to build its successful fundraising campaign, and worked on its 2006 election campaign. The first leader of the new Conservative Party, Stephen Harper (elected in March 2004), and later prime minister, had been a student at the University of Calgary, participating in discussions with members of the School and Preston Manning in the lead up to the formation of the Reform Party. Harper played a role in the development of the Blue Book; which help developed the policies of the Reform Party. Ted Morton's elevation to the cabinet of the Progressive Conservative government of Alberta and later to the position of finance minister in the Ed Stelmach government and energy minister in the first Alison Redford-led government, is another perceived route of influence for the School. At the same time, members of the school are involved with the Wildrose Party led by Danielle Smith, with Flanagan working for the party as campaign director for the 2012 provincial election against the Progressive Conservative government. This suggests differences among its members as to how best to pursue any shared political agenda | https://en.wikipedia.org/wiki?curid=1725874 |
Calgary School In May, 2018, the Canadian Taxpayers' Federation presented their annual "Tax Fighter Award" to four members of the Calgary School—Cooper, Flanagan, Knopff and Morton. See https://www.dropbox.com/s/jmbbqrkmps0gujf/Taxfighter%202018%20v4.mp4?dl=0 | https://en.wikipedia.org/wiki?curid=1725874 |
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