Controlling and Auditing CSR

The 2015 Eneco report covers various social and environmental issues that are related to the wellbeing of the firm and its relation to the environment in which it is operating.  These include environmental pollution, energy sustainability, safety performance in relation to preventing accidents in the energy production facilities and grid. The case of environmental pollution relates to the sensitive issue of global warming which has been attributed to emission of carbon, a gas that is being considered as a great contributor to this challenge. The global warming and pollution issue is of great challenge to the firm given the increasing political pressure for companies to take responsibility and uptake various measures that can reverse this trend. The production of energy is highly dependent on coal with many of the production plants using it due to its low price compared to relatively expensive gas plants (Eneco Holding N.V, 2015).  The issue has been how the company can maintain low carbon emissions for environmental sustainability.

In the case of safetly performance, the firm has to deal with the issue of minimal accidents for employees in the production plants by devoting attention to the working condition and raising safety awareness.  The performance for the firm in this sector has not been sufficient or satisfying since accidents continued to occur. Another issue is the provision of sustainability of energy for employees especially given that the firm has to undergo performance evaluation from the various NGO’s and customers.  The firm follows the One Planet Thinking principle with the consideration that energy consumption should be within the planets limit (Eneco Holding N.V, 2015). The report also highlights the issue of company’s mission especially in relation to new business model and focusing on being the best service provider which is measured through durations of energy supply interruptions and customer satisfaction.  The firm had been ranked 7^th among the providers of energy with measurement parameters being assets and investments in power production and environment-friendliness of the provided power. To this end, the firm invested heavily on infrastructure and energy generation sustainability with 25 % of supplied energy having been produced. The claims  on commitment to sustainability in energy production is corroborated by report that the firm has invested in various renewable energy initiatives like buying out part of Germany’s Lichtblick , that specializes in renewable energy (Eneco Holding N.V, 2015). 

The company has also invested heavily on renewable energy sources in form offshore wind firms which makes the information provided in the report assured to a large extent. However, all has not been well as portrayed in the report as the firm has previous faced opposition from campaign group against establishing such offshore wind firms especially when they are considered to be too close to the show. Other major companies have also portrayed their activities as having attained energy sustainability and improved engagement in environment conservation measures both at the national and international arena. In addition, just like the Eneco has previously faced objections to investing on more energy production facilities such as offshore wind firms, other firms have encountered similar challenges (Eneco Holding N.V, 2015). This is true for firms that have considered such endeavors as likely to lead to more emission of pollutant gases and thus increasing global warming. Therefore, these firms have been faced with various risks and dilemmas especially when their activities are opposed by local residents, regulatory authorities and even some campaign groups.

Discussion

Corporate social responsibility reporting assist in measuring the actual social performance of a firm against those social goals it aims at achieving and how the decision making process, guiding principles, business conduct and mission statement are aligned with the social responsibilities.  This reporting helps in highlighting how the firm has served the social interest of all its stakeholders.  The social and environmental endeavors undertaken by Eneco Holdings can be explored through the legitimacy and stakeholders’ theory.  Legitimacy theory provides various disclosing strategies that are adopted by firms to justify their existence and that if the services they offer in the market.   Organizations constantly seek to make sure that their operations are within the norms of the society in which they are located and hence, these companies embark on voluntary reporting on their activities (Horrigan, 2010). This is essential for any organization if the management view the activities they engage are anticipated by the communities in which their operations are located. There exist a social contract between the organization and the community and management has to showcase the extent to which it has fulfilled the terms of the contract.   In addition, the society has a range of expectations on how the operations of the organization should be carried out and the survival of the organization will be endangered if the society feels   the social contract has been breached (Horrigan, 2010).

 The social contract between the society and Eneco Holdings involves ways in which the firm will undertake its energy generation activities while ensuring that it has put measures of taking care of the environment. The firm then embarks on avoiding information asymmetry that may undermine its image if the perception in the society is that environmental pollution and global warming   has resulted from the operations and activities of the firm. By including information on the extent to which it has reduced emission of carbon as a pollutant, the organization is laying openly the impacts of its activities to the environment and the measures it is undertaking to counter them.    The firm highlights various measures it has undertaken to offset emissions of carbon from internal operations from the year 2008.   These measures include having climate neutral business operations in relation to employees, vehicles and even offices. The firm also engages in sustainability investment in other countries in form of certificates and credits, where it purchases carbon dioxide certificates, reducing carbon emission from forest degradation and deforestation .Such certificates relate to preservation of natural areas that are valuable to the community. It is clear that the report shows  the accountability of the firm which starts by fast owning up to the fact that its activities lead to  environmental  degradation and then undertaking various measures to offset or compensate such  effects especially where it is impossible to avoid them. The firms also disclose it is frequently changing its sustainability efforts as the society expectations are changing. The expectations of the society are not permanent but are always changing and hence the conditions of the socials contracts have also to change overtime. Eneco Holdings aims at gaining social approval by being responsive to the environment and the needs of the society that goes beyond its profits needs to the needs of the community. The firm shows accountability by filling the legitimacy gap, which is the difference between how the organization acts and society expectations especially in relation to the perception of how the organization should act.

Legitimacy  acts as a resource on which Eneco depends for survival  given that whenever managers of the firm consider the supply of any resources to be important for its continuity , they will adopt strategies that aims at continued supply of that resource . The firm will target disclosures and collaborate with other parties who are also viewed as legitimate by the society or stakeholders.  The company indicates that it prefers doing business with suppliers who have similar passion in relation to sustainability. This is based on the conviction that a shared focus on sustainability and quality results to innovation and optimization. For the firm to be considered accountable, the report highlights how the process of supplier selection is carried, where it assumes responsibility of the process and in the supply chains operations. As such suppliers are selected according to their performance and other factors such as service, price and quality.  In relation to the achievement of their goal, which is sustainable energy for everyone, the firm requires a specific degree of corporate social responsibility to be demonstrated by these suppliers (Eneco Holding N.V, 2015). As such the report explores the Supplier Code of Conduct which all the suppliers must sign, and through this, the firm portraying its level of accountability to the society and the environment. In addition, the firm earns its legitimacy by adhering to integrity seen in the high standards of conduct, where the rules, value standards applying to the company and Code of Conduct forms part of actions’ framework (Eneco Holding N.V, 2015).  The values that are implemented in the firm include collaboration, building trust, placing customer first and taking responsibility and these values guides behavior so that the firm is able to connect and strengthen its relation with various stakeholders.

 The reports also outlines how the firm comply with regulations or legislations which enables it avert risks relating to operation license and customer reputation. The compliance policy adopted by the firm and the compliance officer offers the necessary support required in this particular area.  In addition, the collaboration between the firm and outside parties who rank the firm’s performance in terms of environmental sustainability and community oriented programs indicates the social accountability of the firm.  This aligns to the desire of the firm to be viewed as a legitimate business in the community which is not only driven by the desire to maximize profits , but also an aim to have better services to customers and  being environmentally conscious.  The management also is shown to take remedial action if the operations of the firm deviate from the compliance policy and the ultimate social goal. Where managers think that the operations of an organization are not commensurate with intended social outcome or social contract for that matter, they may undertake remedial steps that will approve their legitimacy, pursuant to the aforementioned legitimacy theory (Horrigan, 2010).   Or such remedial action to be felt by external parties, publicized disclosure accompanies it as shown by the Eneco’s annual report.  Therefore, it I important to have corporate disclosures similar to the ones made in the annual reports of a firm.   For Eneco management to have the firm legitimized by all the stakeholders, it outlines the various disclosures that show its social accountability.  

Suggestions

Enhancing the ability of the firm to discharge its duty of accountability through reporting, the management should look at the CSR reporting as an opportunity for strengthening their business while contributing positively to society welfare (Mullerat, 2010). Reporting should be viewed as a way of communicating to the society the extent to which the firm cares about the issues affecting the society especially those that relates to its operation. To improve social accountability, the firm should embark on emphasizing the duties of directors and management, engage relevant authorities, engage the citizens, carry out internal audit on social reporting and take corrective measures where those duties are not carried out in accordance to provisions. The duty of management includes ensuring that reports inform the external stakeholders fully and truthfully of how the services offered can benefit the society and the impacts of its operations. They should ensure that no misrepresentation or withholding information about a specific service or product that would affect consumers or the environment in which they operate.

 Engaging the relevant authorities is important to ensure that the information provided in the report is correct according to legal assessment of facts provided and such information is what is required of them. Engaging the citizens will enable to deal with increased social movement visibility and demands from the society so as to avoid any collusion with the operations of the firm (Mullerat, 2010). Fully informed society will respond positively to social efforts undertaken by the firm.  Moreover, the audit on social reporting should include assessment on whether the availed information is truthful and relevant to external stakeholders. Afterwards corrective measures can be taken to align reporting to the intended purpose of reporting.

Reference

Horrigan, B. (2010). Corporate social responsibility in the 21st century: Debates, models and practices across government, law and business. Cheltenham, U.K: Edward Elgar.

Mullerat, R. (2010). International corporate social responsibility: The role of corporations in the economic order of the 21st century. Austin: Wolters Kluwer Law & Business.

Eneco Holding N.V, (2015).Eneco, connection and innovation. Annual report.

Future Trading Assignment

Upon the meeting by the Reserve Bank, the interest rates can be expected to remain on hold at about 1.5 percent with some sectors like housing market likely to be key deciding factors.  The indication by Australian Securities Exchange is that there is a 99 percent probability that no much significant change for the month will be experienced. It could be expected a zero probability change in interest rates will be experienced in the market.  In addition to the industrial sector impacts on interest rates, inflation and low wages are other factors which have the capacity to influence the decision taken by the Reserve Bank board.  Another determining factor is that the Bank could be expected to keep the cash rate a bit steady and inflation at a low of 1.5 % as it has done in previous decisions. While headline inflation in the market could be predicted to be over 2 %, for the year, the is no likelihood that policy makers will result to changes in policies , probably seeing this as being consistent the economy’s sustainable growth , while at attaining targeted inflation for the same period.  With such an understanding, ASX’s 30 Day Interbank Cash Rate Futures contract can be used by the users in hedging against overnight cash rate fluctuations and therefore, manage daily cash exposures well.  It could also be expected that the Reserve Bank will aim at aim causing a certain level of inflation since the economy is seen as growing, and these rates can be considered as a rough proxy for influencing health in the economy.   The rising dollar is becoming a concern for the bank, with a further increase in Australia dollar, past or towards 80 US cents could be expected to provoke RBA to reduce interest rates so as to try lowering the dollar and hence, sustain competitiveness for the country’s exports. 

The economy is undergoing transition, after the end of a boom in mining investment which had about 2.5 % expansion back in 2016.  There is has been a strong rise in exports while non-mining investments have seen the same king of increase in the same year.  Many of the measures consumer and confidence were at, or over the average.  In the same year, growth in consumption was robust as the end of the year approached even though growth in other areas such as household income was just low.  The zero probability of change in could also be explained by consistent low target rates level in February and March.  Hence, banks remain at a good position to continue lending. The cash rate has been depreciating since 2013, which has helped the economy to continue transiting following the aforementioned investment boom.  The Reserve Bank could not be expected to favor a cash rate that is appreciating since this can complicate the economy adjustment.  The trend shows that RBA target rate decision has maintained interest rates at 1.5 percent and this has been the forecast all along and it has remained true.  Previously, the interbank rate in the country has risen to 2.11 % in March from the February rate of about 2.09 percent.   The expectation is that the rate will be about 1.73 by end of 8 march – 4 April period and beyond given the past trend and the possibility of continued inter-bank borrowing in future. Looking forward, it can be expected the rate to stand at 2.04 over a 12 months period in Australia.

 In various markets, conditions are seen strengthening and prices are quickly rising while in other markets there is a decline in prices.  The housing sector has influenced by growth in rents and growth in borrowing and hence increased interbank exchange, driven by more demand for investors. With an increase in leveraging, there has been observed some increased supervisory measures that have strengthened the lending standards with some banks taking more cautions with engaging in futures contracts and even lending out in some market segments.  The interest rates have been seen to be the lowest in the cycle while there has been more sentiment towards a lift in cash rate.  The following months on the other hand may see an upward trend in the cash rates. Therefore, in its considerations, the RBA would want a lot of monitoring in the increased lending between banks and to property investors and also monitoring on information on the performance of the economy since the previous slump.  In addition, with consistent tracking of inflation rate below the range targeted by RBA for about the past 3 years, it is possibly that tension in housing market would be a major reason for possible future lower cash rates. This would be observed even in the case of lower attempt to induce spending by RBA and hence increase the inflation rate.  There is also the probability that major banks could have increased the interest rates using the end of last year’ data to avoid an unforeseen hikes of the rate.  However, if the bank would keep the official rates lower than in previous times, banks could be expected to put on hold the increase in their interest rates.   

 External forces could also affect how the AUD vs USD plays out, with the possibility that some factors such as business decision by major trading partners such as United States rising the AUD/USD rates rises. The rates for US dollars have the capacity to reverberate globally, while anything happening in bond markets in US can impact on Australian rates. Without RBA intervention to influence the rates, target rates can be expected to increase gradually overtime.  Such a scenario can be very fatal for the corporations in that have large debts and would indicate a big shift away from the normal low interest rates that have been experienced in the past.  In the long-run the RBA would refrain from further changes believing that it had reduced interests so much that it should increase them finally. A rise in Australian dollar has the possibility of lead to further actions from the bank.

ANALYSIS ABOUT BEIJING INCOME

With respect to the analysis of the income base of Beijing, it should be noted that economic census carried out by statistical authorities regarding the quarterly gross domestic product (GDP) and the value added by the three respective industries (primary industry, secondary industry, and agricultural industry) are the preliminary accounting information as from 2000-2016. The following are the quarterly indicators used to analyze its income as from 2000-20016

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

                        Computation formula for the GDP variable

Gross domestic product (GDP) = M + N + I + (X-Y)

Where M = consumer expenditure in the economy

            N = Government expenditure

            I = Additional investment made by the country

            X= Exports

            Y= Imports        (Glanville & Glanville, 2011)

References

Glanville, A., & Glanville, J. (2011). Economics from a global perspective: A text book for use with the IB diploma economics programme. Dolton: Glanville Books.

Data retrieved from: www.bjstats.gov.cn/English/.

Economic Analysis of Russia

The Russian economy is currently stable, this was after it faced a very long depression period. In the year 2015, the economy of Russia was at the verge of collapsing, with a 15.9% rate of inflation (Durach, 44). During this period the country was facing an economic collapse. This was however not the case in the year 2016, after the inflation rates dropped from 15.9% to 7.4% during the January - October period (Nalbandov, 70). The economy of the country has since stabilized, with the banking industry largely stabilizing in the country. In addition, due to economic growth, the amalgamated budget of local governments registered a surplus during the first eight months of the year 2016. Moreover, the balance of payment is stable in the country, thus showing how the country has been able to plan on how to manage its economy. The unemployment rate in the country is at 5.6%, being the minimum rate of unemployment ever registered in the country.

            Russia is an energy producing country, which depends on the export of oil and gas. These resources have really helped in raising the economy of the country (Durach, 45). However, due to the reduction in oil prices, the country faced a lot of economic problems, thus leading to very high rates of inflation. In order for the country to stabilize its economy, it had to first and foremost reduce its spending. The country therefore reduced its expenditure thus enabling it to control the rate of inflation. Moreover, economic sanctions have also made the country to suffer, thus making it to focus on other resources other than oil and gas. The country also tapped the reserve funds, hence being able to regulate its revenue collection and thus being able to stabilize the economy. The country is currently stable, but the reserve funds which are expected to be depleted by the end of 2017, are facing a very severe pressure (Nalbandov, 71).

            Economic sanctions and the falling of oil prices in the international market has negatively affected the country as a whole, making the cost of living to be very high. In addition, the rates of unemployment have been on the rise, after the economic sanction, since most investors’ assets were frozen (Durach, 45). This consequently made it very hard for foreign investors to invest in the country, due to the fear of falling victims. In addition, due to the economic stagnation in the country, two state banks have undergone recapitalization. This move has therefore seen most people losing their jobs, since the banks were looking for alternative ways of reducing their costs in order to increase profits. On the other hand, the country’s currency also destabilized, due to low foreign exchange in the country, thus making the currency to lose its value. Employees’ wages have therefore dropped, due to the high cost of living, and destabilization of the Rouble (Nalbandov, 71).

            The currency of Russia, the Rouble, has been destabilized, due to the economic sanctions, hence making it to lose its value. This has therefore translated to high costs of living in the country, and reduction in minimum wages for the employees. Due poor foreign exchange rates, the country has been facing financial crisis, since it cannot be able to cater for its needs. This move therefore saw the country using more than $135 billion from its reserves (Nalbandov, 71). The country had therefore to depend on its reserves in order to be able to stabilize its economy, thus in case it faces any kind of economic problems, then it will have to seek financial support from other countries. The destabilization of the rouble further led to high rates of inflation, thus making it hard for the country to be able to sustain itself without looking for alternative ways of funding itself (Durach, 46). This therefore made Russia to opt to use the reserve funds, thus being able to stabilize its currency and economy at the same time.

            Disposable income in Russia has been deteriorating since the year 2014 when Western sanctions were issued over its part in the Ukraine crisis. Consumers had less money to spend, and so they had to avoid shopping as a means of being able to save the little money that they had left. Customer demand in retail sales fell by 5.1% in the month of September and 5.2% by the end of July (Durach, 46). The fall of disposable income in the country has been consistent for the past 26 months. Through this time the wallets of the citizens of Russians have further shrunk by 15%. The rates of poverty have increased in the country thus making Russia to be among the top three countries with high poverty increase rates. On the other hand, food items demands reduced by 6.5%, whereas non-food items reduced by 5.3% (Nalbandov, 72). Retailers have therefore experienced less sales, receiving 1,5 million roubles less in revenue.

            Business in Russia has become non-profitable, this is so because, the demand of goods is very low, hence making it hard for businesses to be able to realize profits (Carbaugh, 31). In addition, due to the economic sanctions, most global companies have found it very hard to be able to conduct business in the country, since they cannot be able to trade easily with other countries. In addition, due to the increasing rates of inflation, the government has been forced to increase its taxes on commodities. This move has really affected many businesses thus making it hard for businesses to remain stable (Nalbandov, 72). Moreover, most businesses in the country have opted to exit the country, since they cannot be able to match the high taxes imposed on the products. In order for companies to be able to survive in Russia, they are forced to depend on external funding, this affects businesses since banks charge huge interests.

            Due to the European Union sanctions on Russia, Russia has banned food imports from European countries. This has therefore seen the country receiving less imports from European countries. Moreover, Poland, which was Russia’s leading trading partner, is now importing products from China. This moves saw Russia’s exports to Poland reducing by 5.9% hence affecting the economy of Russia (Nalbandov, 72). In addition, Russia has not been able to either export or import goods from the EU countries. The revenue earned from the sales of oil and gas has drastically dropped, since European countries were the main market of Russia’s oil. In addition, most countries have also banned their exports to Russia, due to the low demand of commodities in Russia. This move has therefore seen the rise in the prices of imports in Russia since most countries do not want to trade with Russia (Carbaugh, 31).

Work Cited

Nalbandov, Robert. Not by Bread Alone: Russian Foreign Policy Under Putin. , 2016. Internet resource.

Durach, Flavia. Public Opinion Towards the Eu: Triumphalism, Euroscepticism or Banal Representations?, 2016. Internet resource.

Carbaugh, Robert J. International Economics. , 2015. Print.

Finance

The global stock market has been on course of gains for five months as the price level recovery and trade induced by the United States elections shows its resilience.  There has been a strong growth in the largest economies of the world and the developing markets which has enabled the strengthening of this growth. This is amidst doubts from different quarters about the ability of the newly elected US administration to enact policies that are can support this growth (Herron, 2017).  The US stock market is moving on facilitated by better data, and this in turn has been enabled by a rebound in investors risk appetite.  The various sectors in the market face various uncertainties and growth opportunities driven by the change in government and the external pressures such as the successful Brexit Vote.  Any increment on government spending on infrastructure such as roads and military has the potential to impact on materials, energy and industrial stock (Herron, 2017).

 The stance of the new administration on environmental and financial regulation may lead to varied effects on the energy and financial stocks in the U. S markets. The stocks of health care firms may be driven by the advancement on various treatments and prevention drugs.  The biggest impact may be influenced by the big data sector, like real estate stocks which normally run modern data centers and warehouses and one can capitalize on this trend for better returns on investments (Herron, 2017).  The aim is therefore to invest in the stock market especially those that are being driven by big data since the show a high potential for future growth and better returns on investment. The U.S market may lead the international outlook since effects of European political path , monetary policy have not affected the higher valuations for the U.S stock index in comparison with international stocks (Fidelity Investments,2017).  The goal is to trade in the real estate shares in the United States stocks market.

The prediction for the real estate shares (IYR) in the next one month indicates a buy option falling between $ 77.76 and 78.07. This shows that the housing market has home prices will continue to have a steady period to period gains based on the track of real estate data from the simulations .  The real estate can augur well with the overall goal of securing future profits from a great amount of capital. This is an indication that home prices are more than likely to appreciate in future, even though they have weakened in the past.  With account equity of $ 25,000, the stock in real estate represents a good buying option.  The married put strategy was chosen for this investment which is also necessary in hedging the investment against future uncertainties. Married put serves a hedging tool since it allows for realistic forecast and expectations on the performance of the market (Olmstead, 2012).The goal of the investment was to achieve a net price for the iShare IYR of $ 90 over the short period of one month ending on April 17

Considering these are futures orders, there various risks that may relate to the movement in the markets and may lead to absence of closing transactions that have been executed.  The real estate is normally a cyclical industry whose prices are also volatile due to sensitivity to economic conditions prevailing locally and nationally, the interest rates, tax rates imposed on property and other related factors. A shift in the values real estate and even economic downturns may have considerable negative impact on the issuers in this industry. IYR is usually an EFT (Exchange Trade Fund) and hence represents a range of assets and due to its diversification, and investment in EFTS can be considered to be a strategy of lowering the risk as compared with investing in just a single asset (Olmstead, 2012).  IYR can also be said to encounter a high volatility and in the past, this market has had a volatility of between 13.3 % and 16.5 % per year.  Volatility is a measure of the extent to which a given asset moves up and down.  The liquidity of IYR can be said to be high due to the ease of bringing it into the market without any effect on the price of the involved asset.  It has a high volume of average daily trading. Given that the investment is faced by low risks, it suits those investors with a preference of assets with potentials for long-term growths that are likely to have a higher dividend payment for investors (Whaley, 2007).  Hence, IYR as an EFT investment tends not to follow the stock market which begins with a positive trend. Because of the nature of this product, high volatility and liquidity, IYR can be said to be an investment that involves very high risks.  A diversification on portfolio may fail to protect the investment against various risks in the market arising from credit risk, economic conditions and the fluctuations in the rate of interest.  The iShares Fund are normally bought or sold at the prevailing market prices and cannot be redeemed individually from the fund (Whaley, 2007). In this investment the past performances cannot be a guarantee for better results in the future and hence this investment faces major risks that need to be considered when choosing the investment strategies and the need for hedging.  This is due to the fact that those funds which focus   the investments on one single sector become more exposed to factors that affect the sector. They are also more volatile than funds that are directed in the investment in various sectors in the market. The price-to-earnings ratio is an essential measure that can be used in determining the value of this investment considering the degree of risks it has to experience.

 The right strategy for investing in IYR ETFs is the marriage put strategy, which can be used even when the investment on a stock or fund has already been made, and there is an overall optimistic attitude towards the investment (Whaley, 2007).  The strategy us best for this investment since it involves a long position in the fund or stock and it could be possible to buy a position of put option that is equivalent to the long position in this investment.  Therefore, some protection is provided by the buying of the put options, against any short-term fall in the prices and a level of maximum loss can be established in case there is an instant downside to a market reversal.  The nature of IYR EYF shows that real estate is a trending market on the basis of a long-term period of investment.  It goes through considerable and sudden changes in prices (Olmstead, 2012).  On the basis of price action, the results of IYR ETF simulations indicate that IYR has been solidly bullish since the initial order for the buy option.  It is interesting how the prediction for the futures all time high stands at about $ 88.7 for a period exceeding a month.  Stocks that experience a sharp decline in prices from their peaks normally have hard time while trying to increase at a level similar to half of the previous high. It would not be surprising then that for the above stock, the forecast indicates a high close in a period of more than one month.  As such, IYR’s   price increase could be interesting in case of a put option.  A short term interest on the IYR with a steady rise could be an indication of investor’s negative sentiment.  The marriage put strategy can serve to target a low price position for an individual stock that comprises of EFT and allow it to grow steadily over a long period of time.

A married put is an effective strategy that can be employed in case the options trader is optimistic about a given stock, needs benefits from the ownership of the stock but is cautious about the risks and uncertainties in the future (Yates, 2003). Hence given that IYR faces high level of risks both in the short-term and long-term and this strategy in the presence of such risks. The result is that the strategy is bullish, has limited level of risk and unlimited potential for returns on investments. It can be used also as a form of core holding or in fine-tuning the future investment mix.

A change in strategy from the marriage put to protective collar has shifted the prices of but does not lead to the achievement of the set goal. The  marriage put strategy had yield the highest future net price at $ 88.7  for the placed bid , which means that the target was missed with  about  $ 1.3 in net price. The change to protective collar strategy has resulted to a shift in buy option price to $ 77.8. In addition, the net price for this option for the period ending 17^th April reduced to $ 87.61, and indication that even after the change in the strategy, the goal set for $ 90 has not been met, and the target was missed with $ 2.39. Hence, the change in the strategy was not enough to enable the achievement of the set target in this investment. 

The change in the market trend can be due to other factors that cannot be controlled by adopting a different strategy such as the interest rates and the prevailing economic conditions.  The change in to the protective collar strategy was best for the already established long-term positions and the substantial amount of profits at $ 11 .2 per unit of the ordered quantity. From this trading activity , an important lesson learn is that investing in the stock market requires  the choice of the right strategy , evaluation of the risks involved in choice of the investment .  In order to achieve the set goals, it is important to try out view strategies for the purpose of hedging in market that is full of uncertainty.

Reference

Olmstead, W.E., (2012).Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks. FT Press

Whaley, R. E. (2007). Derivatives: Markets, Valuation, and Risk Management. Hoboken: John Wiley & Sons. 414-415

Yates, L. (2003). High performance options trading: Option volatility & pricing strategies. Hoboken, N.J: J. Wiley. 2-4

Herron, J., (2017). U.S. Stocks Rise With Oil, Pound Falls on Brexit: Markets Wrap. Retrieved from: https://www.bloomberg.com/news/articles/2017-03-28/stocks-climb-as-yen-weakness-to-buoy-japan-shares-markets-wrap

Economic Geography

Q1.

 The concept of Laisses-faire economic development failed due to the failures of economic theory.  Robert (2013) asserts that the theory of economy was developed in 18^th century by Adam Smith.   In 19^th and 20^th century, Alfred Marshall, John Keynes and Milton Friedman introduced free trade, price formation and stability and employment. In 20^th century, macroeconomics caused employment and inflation.  During this century, there was a great depression in Western industrialized world due to insufficient fund in employment. The economic doctrines affected the natural capital and allocation of resources. There was a political and economic downfall after the Soviet Union collapsed and after the development of high speed Internet (Roberts, 2013).  Labor forces were underutilized by Indian socialist and Chinese communist and they started off shoring   goods and services.  As a result of off shoring, Americans   employed cheaper foreign labor and stopped manufacturing goods. There was decline in professional occupations and technology as corporations employed foreign labor at lower remuneration.  Europe also followed the same steps as America and started off shoring productions. The process of off shoring resulted to lack of growth in consumer incomes and the Federal Reserve   provided credit for expanding consumer income (Roberts, 2013). This resulted to financial deregulation and financial crisis and Americans were unable to main consumption. The important thing to note is that economists made a mistake by referring free trade as off shoring.  There is a big difference between the two and in this case, off shoring led to many adverse effects such as unemployment and cause the Laisses-faire failure (Roberts, 2013).

Q2

Geopolitics in modern global politics plays a significant role in visualizing the world and implementing policies and interventions.  Agnew (2004) asserts that since the September attack in 2001, there attention on reorganization the world politics has increased and the U.S government   has emphasized the need for military intervention.  Geopolitics play role in creating theories and practices which are implemented in global context for the purpose of gaining control and power outside the boundaries. It originated in Europe and integrated the religious-based universal order. In modern global politics, geopolitics focus on ideological and normative power leadership uses normative resources to create national identity (Agnew, 2004).  Political organizations form powerful allies in making international decisions. Geopolitics has a strategic nature which is understood by focusing on soft geopolitics and hard geopolitics. The latter use militarism and war to gain control promote national security and access strategic natural resources. The soft geopolitics use coercive interactions and political-economic tactics for individual economic gain. The strategies help the political elites to focus on ‘ideological space’ and provide the best practices and enforce inter-state relations. The great powers are responsible in creating the hegemony to implement balance of power. Geopolitical also play a significant role in setting vision based on political sociological, free trade and markets control (Agnew, 2004). Geopolitics in modern politics emphasize on strategic interest in order to achieve a strategic partnership. For example, relationship between U.S and Egypt is based on creating broader peace, political realities and human rights. To strengthen the relationship, U.S has assisted Egypt in having a military power which has brought economic benefit.  Both countries enjoy peace and stability, and their military contact has sustained the bilateral relationship (Agnew, 2004).

Reference

Roberts, P. C. (2013). The failure of laissez faire capitalism and economic dissolution of the West.

Agnew John (2004). Geopolitics: Re-Visioning World Politics. Routledge

Why has it been so difficult to balance the budget in California?

Stanisevki and Fowler (2015) assert that since the period of the Great recession, California became “a state of paralysis”. The difficulty in balancing the budget emerged when there was a   high surplus in 1977-1978 which caused “taxpayer revolt” and adoption of Preposition. The article asserts that California is facing fiscal challenges and difficulties in budget balance due to ineffective institutional arrangements which has hindered effective decision-making. Lack of effectiveness in budgeting system has been brought by poor management in mobilization of revenue, education expenditure mandates, political division in revenue legislation and spending (Stanisevski & Fowler, 2015). Since 1978, the fiscal condition in California deteriorated due to the decrease in tax rate which then resulted to poor revenue mobilization. There education expenditure has contributed to fiscal problem due to the annual changes. Problem in budget balance is not brought by lack of budget affordability but rather it is brought by institutional ineffectiveness (Stanisevski & Fowler, 2015). Since the adoption of Preposition, the State legislature has been unable to raise revenues and to control expenditures. Generally, the article argues that there lack of effective budgeting process and it has led to long-term consequences.

Januta’s article provides important information based on problems facing California such as municipal revenues, property tax and so on. The author asserts Californians are facing many problems due to lack of funds. There are services which need to be fulfilled but there is shortage in finance which is contributed by lack of municipal property taxes. The contributing factors to these challenges are population expansion in urban areas, lack of expansion in municipal services, municipal costs inflation and lack of social and economic survives and development (Januta, 1968). Tax revenues are derived from property tax but the government derives its taxes from non-property taxes and such taxes are not suitable in dealing with problems which affect local problems. The point to note is that there is availability of municipal revenues but there is ineffective revenue-collecting process. There is an apparent unfairness on property tax. First, the tax property is regressive in that low paid workers are forced to pay high percentage of property taxes. There are also exemptions in property tax in that high administrative costs are included in the property tax and this leads to burden of taxation. Property tax in California has failed to  create economic relationship  in that tax focus on real property where new construction are undermined and  this negative effects  affects  both the investor and property owner (Januta, 1968).  Administration has failed to play its role in adjusting property tax in inflationary trend.  Note that sales revenue and income tax   increases when economy prospers and it is the role of administration to conduct property valuation. However, California is unable to administer tax and due to improper assessment, there is inevitability of inequities and taxpayer dissatisfaction (Januta, 1968).

Recommendations

Costello, Petaachi and Weber (2017) assert that balanced budget rules are effective in budget balance and they are associated with positive fiscal outcomes. The article argues that stricter budget laws are effective in tax increase, increasing asset sales, reduces expenditure and assist in fund transfer. Note that there is an inter-connection between asset sales and fund transfer and the two play role in budgetary requirement. In addition, both help the government in maximizing equity and effective utilization of resources (Costello, Petacchi & Weber, 2017). In this case, balanced budget restrictions controls the sales of assets and fund transfer. The article asserts that the important thing with balanced budget rules is that the government should be accountable in presenting a balanced budget, the legislature should be accountable in passing a balanced budget and fiscal period should not have a carried forward deficit (Costello, Petacchi & Weber, 2017). Generally, it is recommended that California should implement balanced budget rules in order to control the deficit. Tax policies will influence the government and State spending. For example, in property tax, politicians will control the deficit through inter-fund transfer.  Balanced budget rules influence the fiscal actions in that the State is able to deal with deficits through contemporaneous actions (Costello, Petacchi & Weber, 2017).

Reference

Stanisevski, D., & Fowler, L. (2015). IS CALIFORNIA BROKE OR IS ITS BUDGETING SYSTEM BROKEN?

EMPIRICAL EXAMINATION OF THE BUDGET AFFORDABILITY, THE INSTITUTIONAL

ARRANGEMENTS, AND THE GROWTH OF DEFICITS IN CALIFORNIA. Journal Of Public

Budgeting, Accounting & Financial Management, 27(3), 377-402.

Costello, A. M., Petacchi, R., & Weber, J. P. (2017). The Impact of Balanced Budget Restrictions on States'

Fiscal Actions. Accounting Review, 92(1), 51-71. doi:10.2308/accr-51521

Januta, D. (1968). The Municipal Revenue Crisis: California Problems And Possibilities. California Law

Review, 56(6), 1525.

Costs or benefits of an urban renewal project

To:

From:

Date:

Subject: Costs or benefits of an urban renewal project

            Urbanization is real and it is occurring rapidly over the years to point of no return. Urban renewal projects are therefore very vital in the current world that we are living in as they help to improve the old designed urban systems hence into modernized systems. However, it is important to understand that there are many chances that come along with pressure as well as responsibilities that people have to consider as they all move towards urbanization projects. It is upon us to make the difference as we cannot build cities in the same way that we have done all over the years. Therefore there are costs to be incurred during this urban renewal projects but with proper economic planning, these projects are able to be achieved.

            These urban renewal projects are important as they offer better use of the existing as well as proposed infrastructure. These projects will enhance city productivity and more development into intensive jobs and housing cities that also attract visitors due to their modernization. Despite the fact projects incur some expenditures, it is evident that these renewal projects in terms of urbanization, will clearly deliver an effective target that is able to offer more sustainable development in these urban cities.

            A balance should therefore be struck between all the aspects through adoption of precise, transparent and holistic evaluation mechanisms which meets all the interests of all the stakeholders involved. The involvement of all stakeholders will also aids in the cost benefit analysis that are used promote stakeholders as well as non financial values.

Yours sincerely,

Gender pay gap/inequality in the US

Introduction

The gender pay gap can be defined as the ratio of female compared to male using the earnings earned from employment. The average salary of women in the US is rated at 78% compared to that of men which is rated at 82%. This shows that there exists a pay gap since men are paid more compared to women regardless of the occupation and working hours. Discrimination plays a major role in the gender pay gap since women are discriminated and given less salaries compared to men in the same job group. The World Economic Forum (WEF) estimates that it will take more than 115 years for the pay gap to be close. This is a very long time since the gender pay gap in the US is getting worse compared to other countries. In addition, the WEF added that gender pay gap is narrowing at a very slow rate globally since currently women are said to earn what men used to earn a decade ago. In the US the gap stands at 64% indicating that women earn almost two thirds of what men earn within the same job group and working hours. The gap in the US is worsening since last year it was ranked at 66%. Both men and women within the same job group should earn equal amounts since the working hours and education levels are similar. This has never been the case though since in all countries globally, men make more than women. For instance in Brazil women do not even earn half of what men work even though they are performing equal amounts of job. Therefore this paper will focus on analyzing the gender pay gap in the US since the gap is known to be getting worse.

Gender wage gap can be described by a number of figures since it is now a global problem since women are paid little compared to men in the same job groups. The Census Bureau does the statistic on the wage gap and reports that on an annual base women get paid more than 70 cents for every dollar earned by men (Boeri, Patacchini & Peri, 2015). Another measure focuses on hourly wages including workers who work part time. The report from this measure is that women get paid 83 cents for every dollar earned by men (Boeri, Patacchini & Peri, 2015). Other measures tend to look at the occupation experience and education level since the two contribute to the gender wage gap. People should not make assumptions that measuring the gender wage gap correctly will solve the discrimination cases on gender wage against women.

There exist large racial and gender pay gaps especially in the US though some progress has been seen. A survey showed that in 2015 blacks earned 75% compared to whites. The white men lead in the hourly earnings compared to all other races and gender groups (Boeri, Patacchini & Peri, 2015). White men are seen to earn more compared to other people or groups within the same job group. Generally, white men earn more compared to other gender or race groups and have the largest numbers in the employment field. Asian and white women are seen to get more earnings compared to Hispanic and black women as well as men. This shows that racial discrimination has dominated the US since white and Asian women earn less than white men but more than the black and Hispanic men. Women living in America have tried to narrow the wages gap since 1980 (Boeri, Patacchini & Peri, 2015). The women want to get equal wages with the men since they get equal education opportunities meaning they have got equal capabilities. Research shows that more women compared to men are enrolled in different universities meaning that they want to get equal opportunities and wages with the men. White and Asian women have however narrowed the wage gap compared to the black and Hispanic women (Boeri, Patacchini & Peri, 2015). The Hispanic women performed worst in narrowing the wage gap while the white women performed best since they want wage equality. On the other hand, black and Hispanic men haven’t made any progress in bridging the gap between them and the white men.

Research has attributed the wage inequality issue to the level of education since few blacks and Hispanic people are enrolled in the colleges and universities. Workers in the US with a four year bachelor’s degree as said to earn more compared to those with high school education (Boeri, Patacchini & Peri, 2015). Most whites are educated compared to the black and Hispanic people who get few education opportunities compared to the whites. Wage gap in the US is however not only affected by the education levels but race, ethnicity and gender are put in place. Black men with equal education levels as white men earn less indicating that wage equality is affected by racial differences. Black men and women face discrimination therefore end up getting low wages compared to whites working in similar organizations with equal working hours. Black and Hispanic women with equal education levels are seen to earn 70% compared to white men showing that discrimination based on gender and race affect wage equality (Boeri, Patacchini & Peri, 2015).

Gender pay gaps are attributed to different causes and research shows out that rather than discrimination based on race, education and occupation experience plays a major role in widening the wage gap. In 2010, research found out that education accounted for 8% of the total pay gap while occupation experience accounted for 51% of that wage difference (Blau, Gielen & Zimmermann, 2012). The remaining percentage is attributed to different factors including discrimination. Most Americas argue out that racial discrimination does not happen at the places of work but majority of blacks suggest otherwise. 64% of blacks living in America feel that they are not treated fairly compared to the whites in different work places. Blacks feel they get discriminated compared to the whites in the organization (Boeri, Patacchini & Peri, 2015). White and Asian women are paid more than the black men which indicates blacks are face racial discrimination and eventually get paid in an unfair manner (Blau, Gielen & Zimmermann, 2012). Hispanics from the research felt that they were treated unfairly even during hiring since most organizations look out for whites. Both Hispanics and blacks feel that ethnicity is one of the challenges hindering them from becoming successful. They feel that if ethnicity did not exist, they would remain successful just like the whites since they have equal capabilities.

Women on the other hand feel that gender inequality has hindered them from attaining success. 27% of women feel that gender has made it hard for them to succeed in life while 7% of men feel that gender has hindered women from succeeding (Farrell, 2004). Most women from the research conducted said that gender discrimination at the places of work is on the increase and thus have to cope up with it. Women say that gender discrimination makes them earn less compared to men after performing similar amounts of work. Women feel that gender is one of the major contributing factors as to why they earn low wages.  Women think they can close the gap by being educated more (Farrell, 2004). This is not the case since men and women with equal education levels doing the same job are not equally paid. Men are paid more yet the work load and education level are similar. This clearly indicates that getting more education will not help close the wage gap. The wage gap tends to increase with increase in education level.

Women believe that they can close the wage gap by choosing different occupations as to those of men. Some people argue out that the wage gap widens as a result of how men and women are distributed to various occupations. Women can try closing the gap if they chose to work in occupations which do not favor men but are well paying (Farrell, 2004). This will even reduce cases of gender discrimination in the places of work since women will work in occupations that favor them therefore men will not be available. The gender wage gap problem can get solved if women fail to work in male dominated occupations and instead work in occupations that favor them and which are well paying (Levitt & Dubner, 2006). Women with children are expected to pay a motherhood penalty unlike men with children. This is unfair since both are supposed to be subjected to penalties thus men should pay fatherhood penalties as well.

The gender pay gap is usually a problem for women at all levels of the wage. Men always end up earning more than women in all levels and types of occupation. The wage gap however is highest at those occupations where employees are well paid. Research shows that women working in well paid occupations experience a wider gender pay gap compared to those who work in low paid occupations (Rosin, 2012). Women are paid less because of inflexible working hours and responsibilities they have to carry out at home. Immigrant women in the US experience gender wage gap since they are paid less compared to the native women. Foreign workers are disadvantaged in terms of wages but unfortunately foreign women are more disadvantaged and experience wide wage gaps. Research shows that the wage gap is expected to rise in the few years regardless of the education levels and occupation experience of women. Women are known to have less occupation experiences compared to men and this factor contributes to the gender wage gap (Rosin, 2012). Gender discrimination too plays a major role in the gender wage gap since most women face discrimination in the places of work regardless of the work experience.

Generally women do not work for similar amount of hours compared to men. Women are more likely to work in low paid jobs compared to men thus they end up earning low. Most organizations prefer people who work for long hours and some specific hours. These conditions do  not favor women since they have to take care of their families thus men tend to get such paying job opportunities (Levitt & Dubner, 2006). The wage gap tends to widen where women cannot work equally compared to men but narrows where women and men have equal working conditions. Women cannot work under certain conditions like men since they have much home responsibilities compared to men. This explains why the gender wage gap is expected to rise since responsibilities will not come to an end. Most women prefer working part time since the working hours favor them compared to men who prefer working on full time basis (Levitt & Dubner, 2006). Part time workers are lowly paid compared to those who work on full time basis. This explains why the wage gap will not close any time soon since women will continue working part time because of responsibilities therefore will end up getting low wages.

Conclusion

From the above discussion, it can be concluded that the gender wage gap is a major challenge globally since women face wage gap in the different places of work. The white men lead in the hourly earnings compared to all other races and gender groups. White men are seen to earn more compared to other people or groups within the same job group. Asian and white women are seen to get more earnings compared to Hispanic and black women as well as men. This shows that racial discrimination has dominated the US since white and Asian women are paid more than black men. Discrimination has widened the gender wage gap and will not end any time soon since women and men will continue working differently. Women will still have responsibilities at home that will hinder them from working longer hours compared to men.

References

Blau, F. D., Gielen, A. C., & Zimmermann, K. F. (2012). Gender, inequality, and wages. Oxford, UK: Oxford University Press.

Farrell, W. (2004). Why Men Earn More: The Startling Truth Behind the Pay Gap -- and What    Women Can Do About It. New York: AMACOM.

Rosin, H. (2012). The end of men: And the rise of women. London: Viking.

Levitt, S. D., & Dubner, S. J. (2006). Freakonomics. New York: Harper Collins Publishers.

Boeri, T., Patacchini, E., & Peri, G. (2015). Unexplored Dimensions of Discrimination. Oxford:   Oxford University press.

Karsten, M. F. (2006). Management, gender, and ethnicity in the United States. Westport, Conn. [u.a.: Praeger.

Economics

If resources were not used by the dominant class to control the producer class, it means that the allocation of surplus could be done collectively so that resource control is not concentrated in the hands of few individuals (McGuffey, 2014). The society would be classified in groups whose basis is not majorly on economic factors as happens in capitalism. It means that wages of the producer classes could not be maintained at low levels and hence there would be little surplus for the dominant class that control the resources. The society would be that the producer class would access more resources which could allow them to own property hence reducing the need for consistent employment. The level of poverty in the society could also remain low. Low paying occupations like house servants, farm workers or casual laborers would be reduced or eliminated as more people find economic freedom.

The American dream was pegged on the premise that everyone would have equal opportunity according to their achievement or ability. Over the last 100-150 years, the American economy has undergone many changes with significant impacts on social aspect of the community. With long economic recessions, it has become hard to guarantee a pathway to overall high economic empowerment, living standards equal opportunity and even economic mobility. While to some the American dream has become possible to achieve, most people have to dealing with the changing nature if the dream and hard economic times (Llopis, 2012). This has left a community that is striving to loosen grip of hard economic times. The dream has changed over time from job security, home ownership to comfortable retirement which has become hard for majority to finally achieve.

Reference

Summative assessment paper/presentation

The population projections for United states , China , Japan , Mexico and Brazil indicates the possible changes based on various assumptions about the rates of birth , deaths and overall net migration in the international arena. Hence, the values projected present the possible outcomes if the assumptions highlighted are to hold true. There are various factors that can influence the change components and there is no degree of certainty for predicting them. The total population for United States, Mexico, China and Brazil is expected to increase marginally by the year 2050 while the Japan population is expected to decrease.

 From 2000 to 2050 the projection shows the U.S population increasing from about 319 million from 2014 to about 400 million in 2050 > by 2030, one fifth of the population forecasted to be 65 years and above , with the trend indicating an aging population over the following decades. In the long-run, the total population for individuals below 18 years of age is expected to reduce from about 23 % to 20 % between 2014 and 2050 (United States Census Bureau, 2016). In addition, the working population is expected to reduce to around 57 % from 62 % in 2014 which indicated a reduction in the number of people with purchasing power. At the same time the percentage of population with an age 65 and above is expected to rise with about 9 % points by the year 2050. This means that country will have an increase in number of individuals reaching the retirement age with decreasing number of newborns in the population. The market across the country is expected to lean more towards the aged since they have the purchasing power and their percentage in the population will be increasing by 2050(United States Census Bureau, 2016).

The population projections indicate that China and Japan will experience a decrease in the population by the year 2050. Between 2000 and 2050, the population in China will be around 1.3 Billion people from about 1.4 Billion in 2015. This is a significant decrease considering that for such an observation to occur, the rate of death has to be higher than the birth rate. In addition, the projection shows the possibility of an increasing aged population with a striking growth in the 65 and above age category. The projections also indicate a decreasing fertility rate in China (United States Census Bureau, 2016). The percentage of the population for the children between 1 to 4 years of age is predicted to decrease for the years leading to 2050, with a percentage of about 3.2 % and 2.8 % currently for male and female child respectively while the population for people aged   over 64 years is about 2.1 percent, and the projection shows an increase in this trend. This case also applies to Japan, where total population is projected to reduce from 126.5 million in 2015 to 107.2 million in the year 2050. This decrease also involves a decreasing population of the young people, especially for the children between 1 to 4 years of age. The demographic trend indicates that the population percentage for the people aged above 64 years is increasing, a trend that is expected to continue into the future. The children population is expected to diminish into the future, following a previous trend that has been the same.  This decline is expected along a reduced rate of fertility trend, which will align to the predicted depopulation process. In the last projection of the year, the population for the children is expected to have decline to about 10.8 million across the country.  With a demographic trend showing a rapidly aging population, there is a similarity in demographic trend among the United States, Japan and China in the age category (United States Census Bureau, 2016). The highest rise in the aging population is indicated to found in China, followed by Japan and then United States.

However, a different trend is indicated in Mexico and Brazil in terms of demographic components. In Brazil, the population is expected to increase to 232.3 million in 2050 from 207. 4 million in 2015, a trend that has been observed since 2000. The percentage of aging population is shown to be increasing but at a slower rate than in the United States. Though mortality rate is expected to reduce by 2050, it will be marginally higher. This case can also be observed in Mexico where population is expected to increase to 150 million by 2050 from about 124.6 million people in 2015 (United States Census Bureau, 2016).  The fertility rate is expected to reduce in both countries but the percentage of children in the population is projected to be higher than United States in both countries. The percentage of aging population in the category of the group aged above 65 years is expected to increase but at a lower rate than that expected in United States. The overall data for the 5 countries indicates a similar trend, where aging population is increasing with fertility rate decreasing. However, Brazil and Mexico show a higher percentage of young population s compared to United States, Japan and China (United States Census Bureau, 2016).

As per the above data Japan will have the highest percentage demand between 2000 and 2050 for the retirement villages. This is because the percentage of population for the 65 years and above category is higher currently 3.8 and 4.0 percent for men and women respectively, higher than United States, China (2.1 %), Mexico (1.1 – 1.3 %) and Brazil (1.4 -1.7 %) (United States Census Bureau, 2016). In addition, this portion of the population is expected to increase by 2050, meaning the more people will be attaining the retirement age. On the other hand, Mexico will be having the highest percentage demand for the diapers products give that its current percentage of children is about 4 percent, and this trend is expected to increase by the 2050. China with the highest percentage increase in aging population and decrease in the younger population will have the greatest absolute increase in retirement villages demand. On the other hand, Mexico is projected to have the greatest increase in total population – over 26 million - with the largest percentage being young generation and hence it will have the largest absolute increase diaper demand.

The market in these countries may be compared in terms of culture and their long-term orientation. The change in the demographic trends can be related to how each country maintains connection with its past while addressing the current and future challenges.  The United States Power Distance score at forty is results from the emphasis on equality, a loosely-knit society and high level of geographical population (GEERT HOFSTEDE, n.d). This can indicate the desire to be self-dependant which sees reduced rate of births as the society is driven by competition for success. The microeconomic environment is expected to have cutthroat competition. The less the children burden the more capacity for mobility. With Japan as normative society where people are absorbed in achieving highest success, the market is based on a restrained culture and the perception of social norms restraining actions. More pursuit for personal achievements leads to reduced fertility. This can also be said of China; with its normative culture based on social norms orientation sees adoption of policies reducing the number of births. Mexico high score on masculinity shows a country whose market is driven by competition and with rigid behavior and belief codes.  Brazil is a society that holds with high regards the need for rules and regulation in the society (GEERT HOFSTEDE, n.d). The micro-economic environment is expected to be highly influenced by the regulation system that can dictate market competition and entry into the market. With various cultural differences across the country and different projection in population trend, the players in the microeconomic environment should be expected to react differently.

Conclusion

The comparison for the projected population between United States, Japan, China, Mexico and Brazil indicates a varying trend for the demand of both diapers and retirement villages. Japan and China projection shows a higher percentage of aged population by 2050 that United States while Mexico and Brazil shows a higher percentage of younger population. The different score in cultural aspects influence the trend of population composition and the micro-economic environment.

Reference

United States Census Bureau, (2016). U.S. and World Population Clock. https://www.census.gov/popclock/

GEERT HOFSTEDE. Cultural dimensions. Retrieved from:  https://geert-hofstede.com/countries.html

The Effect of Financial Institutions on Economic Growth in China

The relationship amid financial institutions and the economic development in China has for long dominated financial and development debates.  Some claims  have recently been made that financial institutions only impacts the economy as anticipated, it is clear that financial institutions structures and development  plays a crucial role in regard to economic development.  China is currently amongst the most significant developing nations globally in terms of its general contributions (Weber, 2016).  While financial institutions are established to be the greatest promoters of economic development in most states for china the case is distinct.  China, in particular, suffers from virtual weak financial as well as legal systems (Allen, Qian, & Qian 2007). The sustainability of the economic development of china as well as the stability of its financial system, therefore, does not only matter for its own sake but also for the global economy. The financial system in the state has been involved in continuous reforms since the late 20th century with the objective of increasing efficiency as well as the allocation of economic capital (Allen, Qian, & Qian 2007). However, the control approach that is used in governing financial institutions affects the country economy by slowing development.

The legal system and the formal banking industries in china can be described to be weak and thus they are unable to implement effective governance which leads to the lack of a connection between finance, development, and law (Weber, 2016).  The economic growth of the state is mainly supported by the informal financing industry which incorporates both the institutions and feeds.  China’s financial institutions are, however, characterized by less inefficiency as compared to other state’s banks but holds less economic development impact based on the poor governance (Weber, 2016). The financial system in china is highly dominated by banking as the nation mostly controls a high number of the banking institutions.  This, therefore, shows the lack of liberalization by the financial institutions.  Liberalization is crucial as it results in a higher rate of growth generally.  With the recognition of a more improved financial system in the country’s economic resources allocation, a number of financial reforms have been implemented by the government recently.  The financial markets have advanced lately but there is still the high presence of crucial gaps that requires a solution which lies certainly on liquid debt markets (Weber, 2016).

The governance of the financial institutions in china exposes the economic development to several risks.  The first risk is associated with the liberalization capital reform and the potential capital outflow rush (Allen, Qian, & Qian 2007).  This risk mainly destabilizes the general financial system’s operation thus affecting the economy.  The policy that governance the financial institutions places the financing system at  high difficulties thus transforming the economy to be more oriented on market rather  that being a command driven one. Financial capital flow should gain its freedom in the state as a part of reform. The county’s strategy towards the liberalization of capital account has permitted it to sustain a certain control degree over the movement of capital.  This approach particularly benefits the government alone by permitting it to retain its authority which generates tensions in regard to the high movement of capital. China’s financial system reduces the flow of capital into economic activates since operations are governed and directed by the state’s government (Allen, Qian, Qian, & Zhao, 2008). This, therefore, necessitates the private sector to fund most of the investments which are inadequate due to the high population of the state.

The present financial system in china is highly subjugated by an outsized banking sector that is characterized by low success. Decreasing the levels of loans that are not based on performance from the primary banks to attaining a normal status is a crucial necessity for a short period financial system modification (Allen, Qian, Qian, & Zhao, 2008).  In addition, the limitation of the stock industry in economic resources distribution has led to inefficiency thus slowing economic growth. Financial markets are slowly developing and this hinders the ability of the economy to grow since its potential is not exploited fully.  The financial system in the state is less successful because it is based on a standardized industry.  This industry, therefore, has no presence of governance methods, institutions and financing modes alternatives.  The financial sector is supposed to work in collaboration with financial banks as well as markets which will, in turn, support growth (Barth, Koepp, & Zhou, 2004).

The financial system in china is characterized by the crisis which is highly present in the stock market, real estate industry, banking industry as well as in the currency market. Over the previous year, the GDP development in china has slowed in a significant level (Barth, Koepp, & Zhou, 2004). The products prices have fallen and the different economic indicators have thus been damaged which incorporates the industrial productivity growth, imports as well as high reserves.  The present economic GDP, however, shows that the economic performance is stable based on the serving and the production sector’s performance (Barth, Koepp, & Zhou, 2004). Capital control is an approach that is adequately rooted in regard to the state’s financial system.  Despite the recent loosening of some controlled level, the control mechanism still affects the operation of most of the financial institutions. China is well established and recognized for its contributions globally (Barth, Koepp, & Zhou, 2004). However, its domestic economic growth is influenced by the banking institutions which are highly strained by-laws. Institutions crises’ are mainly influenced by the flow of capital.

Despite the fact that in the recent there has been notable economic freedom, its output is affected by the lack of high financial system’s degree (Heffernan, & Fu, 2005).  Most of the measured output has been contributed by the private sector which enjoys more freedom from strict governance. In comparison to the public financial industry, the private’s industry financial production has been increasing continuously in the previous decades. With the recent development of global trade, china’s economy has been experiencing high development. However, the state’s banking sector is being globalized slowly as the government still retains a high control regime of the economic sector.  There is a low efficiency that is associated with the financial institutions that are owned by the state while more progress can be traced from institutions that are owned by foreigners (Heffernan, & Fu, 2005).  Financial institutions control the economy in a significant way as economic growth relies on the flow of capital.  The economic development in china is slow since the private sector is responsible for the primary part of the development with little assistance from the public financial sector.  These, therefore, demonstrate that the state-owned institutions necessitate a high level of reforms to improve the performance of financial institutions with positive economic effects (Heffernan, & Fu, 2005).

The financial system in china exists in two different natures which are a public element that is directed by the government and a competitive market-based element.  This implies that the government directs most of the financial systems operations which impact productivity (Huang, 2008).  Institutes require liberation in order to be competitive and adopt a modernized strategy that will ease the development need. Governance freedom creates a favorable environment for business which increases production, performance and creates more jobs.  Currently, china has a high rate of unemployed persons because of the low economic production (Huang, 2008).  This, therefore, implies that economic stability is far from being achieved as the government as well as the financial institutions make fewer investments. The financial system in china permits less capital flow into the economy which leads to low business investment.  With the low business generation, this implies that the economy is weakened by decreased productivity (Huang, 2008).

In summary, due to the rapid financial system reforms, china is experiencing several economic challenges which slow its development. With the low economic growth, production has decreased thus affecting the employment rate. This implies that the revenue that is generated from its taxes is not the best currently.  The financial system of the country needs a transformation in order to support the need for a rapid development of the economy. Financial institutions are highly responsible towards economic growth but with the presence of operation freedom. The movement of capital should be liberalized to allow more financing of economic activities. High economic development requires a high flow of resources into the business world which impacts performance and well as revenue production positively.

            References

Allen F., Qian J., & Qian M. (2007).  China’s Financial System:  Past, Present  And Future. Retrieved from https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=978485

Allen, F., Qian, J., Qian, M., & Zhao, M. (2008). Review of China's Financial System and Initiatives for the Future. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1185877

Barth, James R., Koepp, R., & Zhou, Z. (2004). Banking Reform in China: Catalyzing the Nation's Financial Future. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=548405

Heffernan, S., & Fu, M. (2005). China: The Effects of Bank Reform on Structure and Performance. Retrieved from https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=903347

Huang, Y. (2008). Just How Capitalist is China? Retrieved from https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=1118019

Weber, O. (2016). The Sustainability Performance of Chinese Banks: Institutional Impact. Retrieved from https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2752439