To make 2-3 comments/ distinctice inputs on any 2 topics not allotted to your group latest by midnight 03-12-2008.
Group AA three topics:
- How democratic is WTO : Power and Politics in WTO
http://www.aftinet.org.au/papers/kwa1.html
http://focusweb.org/publications/Books/power-politics-in-the-WTO.pdf
http://economictimes.indiatimes.com/News/PoliticsNation/Allow_Kamal_Nath_to_negotiate_at_WTO/articleshow/3300374.cms
- Analyse India’s foreign Trade
refer Reading in booklet India on the Move
- What should be done about Citi Bank?
http://onthescene.blogs.foxnews.com/category/money/
Group BB three topics:
- Reforms needed in WTO
http://www.huffingtonpost.com/daniel-altman/whos-afraid-of-the-big-b_b_47951.html
refer Reading in booklet China and WTO
- Implications of a country’s dwindling Forex Reserves
http://www.rediff.com/money/2008/nov/22indias-forex-reserves-dip-by-5-billion-dollars.htm
- The Politics in allotment of World Sports Events to various bidding cities
Group CC three topics:
- Analysing end of cotton subsidy proposal at WTO
- Looking at Kenya 2030 Vision, assess long-term potential of doing business in Kenya
http://www.investmentkenya.com/Documents/Publications/Vision_2030_BROCHURE%20_July_2007.pdf
- What Steps can World Governments collectively take to counter the current crisis?
http://www.usatoday.com/news/world/2008-11-23-apec-bush_N.htm
Group DD three topics:
- What Cultural Fitment advice would you give to a New Zealand company towards doing business in India?
http://www.cyborlink.com/besite/india.htm
- How about doing business in Philippines – analyse all dimensions
http://focusweb.org/
- Should US government bail-out auto giants?
http://specials.rediff.com/money/2008/nov/20sl1.htm
http://specials.rediff.com/money/2008/nov/20sd01.htm
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How about Doing Business in Philippines by Harish K Advani - Roll No. 24
A. Brief Points to be Considered by Investor are as follows
The Philippines with its strategic location, is a gateway to the huge Asian market. What makes it attractive destination include
1. A pool of English-speaking people who are highly trainable.
2. A large potential market for consumer goods on account of its fast-growing population. Its ASEAN affiliation provides further opportunities for access to the large ASEAN Free Trade Area (AFTA).
3. The foreign-investor friendly posture of government. It has manifested its commitment to create conditions that attract foreign investments. The processing of foreign investments is facilitated through a one-stop shop at the Board of Investments. Liberalized policies and regulations on foreign investments continue to be put in place.
4. Availability and accessibility of special economic zones and free ports in various parts of the country where locators are granted fiscal and non-fiscal incentives.
5. A highly developed legal system.
B. Business Culture
1. Business matters are always best dealt with on a face-to-face basis in a warm and pleasant atmosphere. The Filipino likes to be indirect, talk about mutual friends and family, exchange pleasantries, and share a joke or two. Only after establishing a cordial atmosphere will people negotiate. To a Filipino, cultivating a friend, establishing a valuable contact and developing personal rapport are what make business wheels turn.
2. Filipinos would rather avoid “loss of face” or public humiliation. Therefore, Filipino contacts prefer an atmosphere of calm and restraint, avoid direct confrontation, and would typically offer a polite reply coupled with a smile rather than an outright negative feedback to the other party’s ideas. A “yes” may mean a lot of things therefore one should be aware of the subtleties of a particular conversation.
3. Observing office etiquette is also important. When reprimanding employees, take them aside and do it privately. Be as gentle as possible and always make it a point to end the meeting with some show of personal concern for his family to make him feel he is still part of the team and that the criticism is not personal. Again, this is consistent with avoiding “loss of face”.
4. English is the official business language. Most correspondences, contracts, and other documents are written in English. Among Filipinos, however, it is common to hear “Taglish” (a combination of Tagalog, a regional dialect from which the Filipino language is largely based, and English, or shifting back and forth between the two languages) during informal conversations. Body language and hand gestures (e.g., a raised eyebrow, a faint smile, a scratch in the head) are also integral to how Filipinos express themselves. Texting, or sending short messages through mobile phones, has now become a choice medium.
What Cultural Fitment advice would you give to a New Zealand company towards doing business in India? by Harish K Advani - Roll No. 24
A. Indians are generally not punctual or particular about starting the meetngs on Time
B. Indians are genrally conservative in Dress Code.
C. Indian are not very particular when you discuss Business matters on Dinner
D. Indians don't get offended when you visit their house without any prior appointment
E. India has rich cultural diversity, so we shall be more cautious and particular while making or providing input directed toward particular religion,caste or creed. Or i will say that we shall respect all religions.
WHAT SHOULD BE DONE ABOUT CITI BANK:
The U.S. Government is making an investment of $20 billion in Citigroup, the government plan also guarantees up to $306 billion in risky loans. This is on top of the $25 billion the government has already pumped into Citigroup. The money will come in exchange for shares that will pay eight percent back to the taxpayer; Citigroup also agrees to place limits on executive pay and help homeowners facing foreclosure.
As part of the plan, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.
If U.S. Government had allowed these big investment banks to stand on their own many would have failed but those banks that played it safe over the last decade would have had their chance to make big money by buying up the pieces dirt cheap. Not to mention that we would already be on the road to recovery instead of worrying who the next bank to fail is going to be. We are so afraid of another Great Depression that we are doing everything in our power to cause one.
The only difference is that instead of runs on retail banks we now have runs on investment banks. The purpose of the anti-trust legislation that we have thrown out the window in the last twenty eight years was to prevent companies from getting so big as to put the economy at risk all by themselves. One more failure of Reaganomics. We think the deficits of the last 8 years are big the deficits of the next 2 years are going to make them look like lunch money.
One other question I have is if Citi is a worldwide corporation with 200 million accounts world wide then why are we alone expected to bail them out. Wall street exhausted it's ability to steal from the poor and give to the rich so now the U.S. government is doing it for them.
Implications of a country’s dwindling Forex Reserves
Assessing the appropriate level of accumulated reserves requires taking into account the
initial motives for holding these reserves, in order to come up with a quantitative norm.
Building on the experience of currency crises, the IMF Guidelines for Foreign Exchange
Reserve Management recognise that “official foreign exchange reserves are held in support of a range of objectives”, including to:
• “support and maintain confidence” in monetary and exchange rate policy, including the
capacity to conduct foreign exchange interventions;
• “limit external vulnerability by maintaining foreign currency liquidity to absorb shocks
during times of crisis or when access to borrowing is curtailed, and in doing so,
• provide a level of confidence to markets that a country can meet its external obligations.”
Not so long ago, the required level of forex reserves was inferred from empirical rules of
thumb such as the “three months of imports” rule. After the experience of the 1990s, when financial crises were triggered by a drying-up of capital inflows, the ability of economies relying on international borrowing to service their external debt became a central criterion.
The “Greenspan-Guidotti” rule thus recommends that reserves should enable full coverage of total short-term external debt in order to be able to pay back that debt in event of sudden stops, i.e. if and when foreign lenders do not roll-over their loans.
Bhupendra Singh, Roll No - 14
=============================
Topic 1: Should US government bail-out auto giants?
1) It is setting the wrong example by supporting incompetencies.
2) The bailout package should be effectively used by helping the 1st Tier companies who dealt with these almost bankrupt company. This would ensure limited fallout of the crisis.
3) It has nothing to do with the global recession, but everything to do with the technology and competencies in the global market.
Topic 2: - The Politics in allotment of World Sports Events to various bidding cities
1) Give a thought to the olympics being alloted to china to make spying easy and more depthfully.
2) The allotment also deals with allocation of huge financial resources which can make any city's future and add to the coutry's pride.
3) It also gives infrastucture not only to the city but also to budding sportsperson to develop and test themselves on the international platform infra, giving them less nervousness at the final stages of competition.
Thanks,
Bhupendra
--
1.Some items considered by investor for setting up a business in philippines:
* Philippines has a strategic location in SE Asia just like singapore.
*Good English Speaking Graduate man-power that can easily be trained.
* Liberal policies of govt twrds FDI
* Concerns regarding In-fighting among different groups and security risk.
2.Should US government have bail-out packages for auto giants?
* Can give -ve signals to the auto industry and other competitors
* Bail-out packages can be misused by the top executives for settling their own accounts.
* Can have +ve effect of stabalising the Auto_giants in view of on-going financial crisis.
Regards,
Anish Matta
Roll No.4
The Citi Bailout: What Do You Believe?
1. CITI bank mangement were fully aware of High Risk while doling out loans & now they should not expect any help.
2. Banks like should only offer Pure Vanilla Banking instead of becoming utilities.
3. Governments & Financial systems should be structured in a manner where upon failure like these do not hold the whole economic system for Ransom.
Should US government bail-out auto giants?
1. What are the criterion for bailing our other Banks & leving Lehmann & Auto Giants?
GM is asking for $25 billion whereas CITI was given $20 billion without even asking questions. CITI's Projected req are more than $200bn
2. If the Idea is to save JOBS. Auto makers should be bailed out.
Shiv Raj Gupta
Roll No# 79,
EMP Oct 2007
Topic 1: Should US government bail-out auto giants?
1. In my opinion US govt. shouldn't bail out the auto giants. Their demand of bail-out is more towards the consumption and in no way they are going to help out in increasing the liquidity. So again they would run into the same situations again.
2. They don't have any fuel efficient models, so they wouldn't be able to compet with Japaneese auto makers.
3. They need to invest lot in technology before they start surviving.
Topic 2: - The Politics in allotment of World Sports Events to various bidding cities
1. By hosting any of the World level sport event it brings the country in the lime light (on the world map).
2. Helps in boosting the tourisum market.
3. Helps in getting the quick financial aid for building up the infrastructure.
4. Through advertisments, commercial rights, sponsors it gives a big boost to the economy of the country.
What Steps can World Governments collectively take to counter the current crisis?
•Measures must be designed not only to restore growth and financial stability, but also to minimize the negative social impact particularly in emerging and low income countries.
•All countries must address the risks associated with excessive leverage and improve their regulatory and supervisory regimes in order to deliver improved risk assessment and management by financial institutions, to enhance transparency and accountability in financial markets, as well as to strengthen international cooperation to identify and respond preemptively to national and international systemic risks.
•Need to improve the supervision and governance of financial institutions, at both national and international levels.
•It is important to address the issue of pro-cyclicality in financial market regulations and supervisory systems.
•Another related issue is the one on the role financial institutions and the fact that they should have common accounting standards and clear internal incentives to promote stability and that action needs to be taken, through voluntary effort or regulatory action, to avoid compensation schemes which reward excessive short-term returns or risk taking.
•Regulators and supervisors should enhance their vigilance and cooperation with respect to cross-border flows.
•In cases where severe market disruptions have limited access to the necessary financing for counter-cyclical fiscal policies, multilateral development banks must ensure arrangements are in place to support countries with a good track record and sound policies.
How about doing business in Philippines?
•The Philippine business environment is highly personalized. A proper introduction by a trusted intermediary is the best way to enter this market.
•Business matters are always best dealt with on a face-to-face basis in a warm and pleasant atmosphere. While many Western businesspersons thinks that time is gold and want to get to the point immediately, the Filipino likes to be indirect, talk about mutual friends and family, exchange pleasantries, and share a joke or two. Only after establishing a cordial atmosphere will people negotiate. No matter what the final result, the discussions should always end cheerfully.
•In setting up appointments, especially in government offices, it is most advantageous if a “go-between” or someone with previous connections to that office can make some form of introduction on behalf of the requesting party. Mid-morning or afternoon meetings are preferred, and a follow up call to confirm the meeting a day before is recommended. Allow for at least fifteen minutes leeway before your Filipino contact arrives for an appointment. For VIPs, waiting time could be longer.
•Business lunches and dinners are usually arranged personally over the phone and confirmed by the secretary. The person who invites customarily pays. A guest does not order the most expensive items on the menu, unless the host insists otherwise. It is also customary to have a drink before sitting at a dining table. A pleasant atmosphere and a minimum of formality is the tone. Business is not usually discussed until after establishing a convivial ambience, usually after soup or appetizer.
•Persons may come and stay in the Philippine for business, pleasure or health reasons without a visa for not more than 21 days and are exempt from payment of immigration fees and charges. This may be extended for another 38 days through a visa waiver. Thereafter, they may apply for the regular monthly extensions for a maximum stay of one year and fifty-nine days.
•Temporary visitors who have been allowed to stay in the country for more than six (6) months may apply for Alien Certificate of Registration (ACR) and Certificate of Residence as Temporary Visitor (CRTV) with the main office of the Bureau of Immigration (BI) or with its sub-ports, which have territorial jurisdiction over these aliens.
Neha Baveja
A. What should be done about Citi Bank?
DEVELOPMENTS
Citi announced 52,000 job losses worldwide. Chief executive Vikram Pandit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees. Shares in the firm have fallen sharply since the start of the year and are trading more than 80% down since January. Saudi Prince Al-Waleed Bin Talal's decision to buy about $350m (£236m) of its shares on Thursday did not calm investors' nerves. Citigroup has lost more than $20bn in the past year because of the global financial crisis. The bank has reported four straight quarterly losses and some analysts believe the bank will not return to profitability until 2010.
US GOVERNMENT SUPPORT
The US government will inject $20 billion in fresh capital and give guarantees for about $306 billion of Citigroup's troubled loans, in a bid to save the beleaguered US banking giant from collapse. The $20 billion funds being injected into Citi would carry an interest rate of 8.0 per cent for the first few years, a higher rate than that charged for other banks borrowing money from the $700 billion federal bailout fund. In return, Citi will offer the government preferred shares. Citi will also modify, if possible, troubled mortgages held in the $306 billion pool, according to the guidelines issued by the Federal Deposit Insurance Corp (FDIC). Citi is trying to churn off its risky assets and put them under a separate government-supported company for managing bad assets or `bad bank'. Citi has over $2 trillion in total assets and another nearly $1.2 trillion in bad assets, which are mostly off-balance sheet. Citi hammered out the agreement with the treasury department, the Federal Reserve and the Federal Deposit Insurance Corporation after its stock plunged 60 per cent to below $4 a share last week. The stock is down 87 per cent so far this year. According to the plan, the US government will freeze Citi's bad assets of around $306 billion, including mortgage-backed securities. Citi will, however, have to absorb the first $29 billion in losses and 10 per cent of the remaining bad assets. Treasury will absorb the next $5 billion in losses while the FDIC will take on the next $10 billion in losses. The treasury will also absorb any losses beyond these.
OPTIONS
Several options are available for Citi, including the sale of some of its assets and merger with other banks, as the company's share price sank. The bank also announced plans of massive job cuts even as CEO Vikram Pandit insisted that the bank was strong and had no liquidity problems. The bank has operations in more than 100 countries. Citi's executives last week debated options as the company's share price sank, including merging with another bank or selling off businesses.
B. Should US government bail-out auto giants?
The three big American car makers - Chrysler, Ford and General Motors - have told a Senate hearing in Washington that they could enter bankruptcy if they are denied US$25 billion in emergency government aid. Ford's president said the failure of a firm like his would have a deep impact on the entire US economy.
At a packed Senate Banking Committee hearing on the auto industry's future Nov. 18, most senators seemed to agree that the companies had brought many of their problems on themselves. The need for Detroit to produce more fuel-efficient vehicles, and to streamline their business operations, has long been evident, said Panel Chairman Sen. Christopher Dodd (D) of Connecticut. Auto-industry leaders laid blame on the worldwide economic downturn, however, pointing out that per-capita sales have plunged to their lowest point since World War II. They pleaded for a financial bridge to carry them over the chasm of the current recession.
Considering the facts, an auto bankruptcy would not be a good thing, particularly given the weakness of the overall economy. However, solving their financial problems should be done in a manner which "leads to long-term sustainable viability”. The Big Three are weighed down by excessive labor costs, nameplate proliferation, and inefficient dealer networks. Only in reorganization could an automaker address these problems directly.
Now, the most likely scenario for aiding the struggling auto sector is loosening the language on already passed energy legislation that will provide $25 billion in loans for automakers and suppliers to upgrade plants that are being converted to put more fuel-efficient vehicles into U.S. driveways. That money could be used to pay other bills and would be enough for General Motors (GM) and possibly Chrysler to stave off bankruptcy until the Obama Administration takes office in January, automakers and Democrats hope.
SHILPA MALHOTRA
ROLL NO 64
EMP OCT 07
A. Implication of Dwindling Forex Reserves on India
We need to understand why in recent times Forex Reserves have decreased by $5 Billion for India as country. This is because of the Financial Liquidity Crisis in USA, FIIs who have invested in India started taking out money out of Indian Markets to meet the demand for money in their own country. Thereby it created the shortage of Dollar in India thereby appreciating it, whereas deprecating the Indian Rupee.
In short the direct impact of dwindling Forex Reserves the depreciation of Rupee versus Dollar. This result in making
Exports Cheaper e.g. Indian Textiles
Imports Costlier e.g. Oil
But this is not moment of Rejoice for Indian Textile Industry e.g. Industries situated in Tirupur or Kirrur. This is because though Indian Textile Goods have become cheaper but there is no demand in US and European countries for the same, in a way pushing this industry again in dark.
How Government can control it as follows
Focused Exchange Rate mechanism to prevent volatility in market and thereby reducing price liquidity
Measures to attract Foreign Investment and Stabilize Exchange rates
Ease FDI Norms to attract Foreign Exchange Inflows into Economy
Removal of cap on Non Resident External(NRE) Rupee Account and Foreign Currency Non Resident (FCNR Account)
B. Politics in Allotment of World Mega Sports Events to Various Bidding Cities
Let us first define what Mega Sports Events are? Mega Sports Events are short term events of fixed duration with long term consequences for cities that stage them. E.g Cricket World Cup, Olympics, Common Wealth, Football world cup.
The Big Cities are so much excited about hosting World Sports Events because of Political and Economic Benefits associated with it, as mentioned below
Political Benefits – Gain International prominence, National prestige, Flaunt the Power
Economic Benefits – Development of Tourism Industry, Infrastructure, Transport, Creation of Jobs
To quantify the economic benefits, here are the numbers – South Korea earned $4 Billion in 1988 Olympics, Spain earned $26 Billion in 1992 Olympics, whereas China is estimated to earned $70 Billion in 2008 Olympics in comparison to spending of $40 Billion.
Because of above mentioned benefits there is rise in number of cities (increase in demand) to host Mega Sports Events whereas number of events are limited (limited supply). Now in order to earn such Mega Events with grand flavor it is obvious that cities need to have large amount of money. Keeping in view the economic benefits and the limited money resources at Government end, it is observed that Private Partners also play a bigger role in staging of these events by contributing the large amount of money. And here enters the factor of favoritism when hidden interests of private partners come in play. These private partners joined hands with governments and form a Public Private Partnership Model (PPP) and start influencing the Events Schedules, Planning so as to take maximum benefits out of the same. Of late it has been observed that Contribution Public Money has decreased whereas contribution of Private Money has increased. This trend has brought in the element of Politics in Bidding of World Sports Events. Other element which is associated with these events is the high risk associated with returns because of the inflation and other financial conditions prevalent at the time of hosting these events, though planning is done well in advance, but if financial conditions go against then cost of hosting these events increases too much.
Therefore need of hour is to have effective, efficient and transparent Sports Governance system in place before it is too late that politics starts controlling these events for their own selfish interests.
Should US government bail-out auto giants?
YES, the US govt should bail out the auto-giants in this hour of crisis as so much of social capital is at stake.
The US govt should use the tax payers money only to counter-guarantee debts raised by these companies against specific approved restructuring programs.
The US Govt should take over a reasonable stake in these companies in lieu of the bail-out given to them and hold these shares as a trustee of the tax-payers whose monies were used for the bail-out.
The Politics in allotment of World Sports Events to various bidding cities
Mega Sporting events, like the Soccer WC, are so important because they give shape to the vision of a multiracial, meritocratic and free society. Highlight the underlying thread that binds people on account of their humanity—irrespective of the boundaries of geography, frontiers, race, caste or class.
These tournaments break the conventional and artificial barriers created by contemporary politics and politicians. Eg. Where else (Soccer WC) has America’s military, technological and economic strength been rendered so irrelevant? In which other forum could Iran’s participation be so seamlessly secured?
Sport mega-events provide unique opportunities for the pursuit of symbolic politics—a chance to signal important changes of direction, reframe dominant narratives about the host, and/or reinforce key messages of change related to the mobilisation of societal support for certain dominant 'ideas of the state'.
GAURAV DHAWAN
ROLL # 21
===================================
Topic 1 "How democratic is WTO : Power and Politics in WTO "
Analysis :
The World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade. The WTO has 153 members, which represents more than 95% of total world trade.
The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the Ministerial Conference.
Formally speaking, the WTO makes decisions through consensus and a one-country, one-vote system. Yet actual decision-making is done with a great deal of informality, and largely behind closed doors between only about 25–30 Members.
The ‘consensus’ arrived at is then imposed on the rest of the Members as a take-it-or-leave-it package. In such a system, the majority of developing countries are reduced to damage control and scrabbling to secure negligible benefits. Most receive nothing, and silently acquiesce against their better judgment, condemning themselves to a system that has so far proved highly unbalanced and detrimental to their interests. They do this to avoid the political and economic repercussions of displeasing the powerful Members.
==================================
Topic 2 : “Implications of a country’s dwindling Forex Reserves”
Analysis: Foreign exchange reserves (Forex reserves) in a strict sense are only the foreign currency deposits and bonds held by central banks and monetary authorities. It includes foreign exchange and gold, SDRs and IMF reserve positions.
The quantity of foreign exchange reserves can change as central bank implements monetary policy. A central bank that implements a fixed exchange rate policy may face a situation where supply and demand would tend to push the value of the currency lower or higher (an increase in demand for the currency would tend to push its value higher, and a decrease lower). In a fixed exchange rate regime, these operations occur automatically, with the central bank clearing any excess demand or supply by purchasing or selling the foreign currency. Mixed exchange rate regimes ('dirty floats') may require the use of foreign exchange operations the targeted exchange rate within the prescribed limits.
Large reserves of foreign currency allow a government to manipulate exchange rates - usually to stabilize the foreign exchange rates to provide a more favorable economic environment. Manipulation of foreign currency exchange rates can provide the stability that a gold standard provides, but in practice this has not been the case.
There are costs in maintaining large currency reserves. Fluctuations in exchange markets result in gains and losses in the purchasing power of reserves. Even in the absence of a currency crisis, fluctuations can result in huge loses. For example, China holds huge U.S. dollar-denominated assets, but the U.S. dollar has been weakening on the exchange markets, resulting in a relative loss of wealth. In addition to fluctuations in exchange rates, the purchasing power of FIAT MONEY (types of currency whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another currency, but instead from a government's order (fiat) that it must be accepted as a means of payment) decreases constantly due to devaluation through inflation. Therefore, a central bank must continually increase the amount of its reserves to maintain the same power to manipulate exchange rates. Reserves of foreign currency provide a small return in interest. However, this may be less than the reduction in purchasing power of that currency over the same period of time due to inflation, effectively resulting in a negative return. In addition, large currency reserves could have been invested in higher yielding assets.
=================================
GAURAV DHAWAN
ROLL # 21
Analyse India’s foreign Trade
India statistics
• India is the most culturally,
linguistically and genetically diverse geographical entity after the African continent.
Population
• 2008 estimate1,147,995,904
• 2001 census1,027,015,248
• Density 349/km²
GDP (PPP)
2007 estimate - Total $2.965 trillion
• Per capita $2,563
GDP (nominal)
2007 estimate - Total $1.100 trillion
• Per capita $941
• It has the world's twelfth largest economy at market exchange rates and the fourth largest in purchasing power
• Bounded by the Indian Ocean on the south, the Arabian Sea on the west,and the Bay of Bengal on the east,India has a coastline of
7,517 kilometers (4,671 mi).
• It borders Pakistan to the west.
People's Republic of China, Nepal,
and Bhutan to the north-east; and
Bangladesh and Myanmar to the
east.
• India is in the vicinity of Sri Lanka, the Maldives, and Indonesia in the Indian Ocean.
• Four major world religions, Hinduism,Buddhism, Jainism and Sikhism originated there, while
Zoroastrianism, Judaism,
Christianity and Islam arrived in the first millennium CE and shaped the region's diverse culture.
FDI EQUITY INFLOWS into India
Cumulative amount of FDI inflows (From April 2000 to July 2008)
• In Rs Crore 382167
• In US$ Million 91,534
Amount of FDI inflows during 2008-09 (From April toJuly 2008)
• In Rs Crore 51440
• In US$ Million 12,320
Cumulative amount of FDI Inflows (Up to July2008)
• In Rs Crore 321540
• In US$ Million 74,829
Lt Col Vishal Sharma,SM
Cultural fitment advice to New Zealand company towards doing business in India :
1.New Zealand company should make a plan to work in Multi-Cultural Eviorenment of India.
2.New Zealand company should avoid any step which can strike social balance in India because Power Distance ranking is 77 & moreover it is accepted by Population as a cultural norm.
3.Indian Market is much ready to test & accept new product because its uncertainity avidance ranking is lowest i.e. 40.
4.New Zealand company should plan its policies in accordance with a Hindu family Mindset because it is dominating section with 81% of population.
Analysis of doing business in Philippines in all dimensions :
Philippines population is majorly comprised of dependents of migrants so there will be less intrest in spending in Entertainment than Making property
We can not start a business there which will require a Large Labour input because there is lack of labour resource.
Before entering in Philippine Market new company should do all requirements to protect its product from Grey Market which is a major threat for business in Philippine.
Reforms needed in WTO
Can the WTO Serve the Interests of Developing Countries?
When the Uruguay Round was being negotiated, there was a notable lack of enthusiasm from the developing countries. Largely passive spectators, with a great number not even represented during the negotiations, the developing countries were dragged into unenthusiastic endorsement of the Marrakesh Accord of 1994, which sealed the Uruguay Round and established the WTO. There were a few developing countries in the Cairns Group, a group of US-aligned developed and developing agriculture exporting countries, who took an active role in pushing the WTO in the hope this would improve market access for their agricultural products in the North, but they were a small minority.
To try to sell the WTO to the South, the US evoked the fear that staying out of the WTO would result in a country's isolation from world trade (like North Korea) and stoked the promise that a "rules-based" system of world trade would protect weak countries from unilateral acts by big trading powers. With their economies dominated by the IMF and the World Bank, and with the structural adjustment programs pushed by these agencies having as a central element radical trade liberalization, most developing country delegations felt they had no choice but to sign on the dotted line.
In the wake of the collapse of the Seattle meetings, an opinion has emerged that reform of the World Trade Organization (WTO) is now the program that activist organizations, governments, and citizens must embrace. Cited by some as a positive sign is United States Trade Representative Charlene Barshefsky's comment, immediately after the collapse of the Seattle Ministerial, that "the WTO has outgrown the processes appropriate to an earlier time." '
Also seen as an encouraging gesture was UK Secretary of State for Trade and Industry Stephen Byers' statement to the Commonwealth Trade Ministers in New Delhi that the "WTO will not be able to continue in its present form. There has to be fundamental and radical change in order for it to meet the needs and aspirations of all 134 of its members."
Lt Col Vishal Sharma,SM
ROLL NO 72
Hemant pandey
Roll No. 26
EMP-OCT-07
- Implications of a country’s dwindling Forex Reserves
India's foreign exchange reserve fell by $5.01 billion to $246.35 billion during the week-ended November 14, 2008 as the Reserve Bank of India intervened in the markets to check steep depreciation of the rupee.The reason of depreciation of rupee was due to high selling by FII that put pressure on Rupee. It shows the our economy is very much depenedent on the Foreign Investers.
Currently, major part of our GDP comes from service sector, which in turn is dependent on US and european countries. Due to this any turmoil is these countries directly impacts our economy. To remove the dependencies from other countries, we should create demand internally. For this government should increase spending on basic infrastructure. This will in turn increase the demand for service sector internally. For example: computerisation in India will provide more opportunity to IT industry within our country itself.
Less dependency on service sector. Governemnt should focus on the development of Manufacturing sector as well.
Intervention of RBI in money market has cascading effect on the economy. The heavy intervention by the central bank in the forex markets is also putting pressure on liquidity as RBI sells dollars in the market and sucks out rupee resources. This affects the domestic liquidity, due to this industry growth gets affected. Most of the corporate has put their expansion plan on hold due to this liquidity crunch. Hence, it decrease the employment oppotunities in the countries. Since population is increasing but employment rate decreased, this will increase the unemployment also.
To deal with rupee depreciation, government should take fiscal measure to have permanent affect. Instead of depending on monetary policy, government should take concrete fisacl measure to make our economy more independent and strong internally.
Roll No.: 33
Kapil Kumar Mishra
1. Should US government bail-out auto giants?
Companies that cannot perform have to be let to die a natural death. Better companies will emerge and take their places. Free market and free enterprise should be just that. The minute you start bailing out some companies, what about the other industries that are suffering? I think that the auto industry should take care of themselves! Why should CEO's of the auto industry and the banking industry still make millions and there industries fail?
A blank check is not going to fix a problem that has been evolving for decades. Auto giants are asking for a bailout so that they can restructure and compete with foreign automakers, but that is not the problem that put them in this mess in the first place.
1. The problem is in their business model,
2. Their refusal to listen to the consumer,
3. Their products are not fuel efficient and harming environment.
The auto industry did this to themselves and $25 billion will not fix a mess that has been 50 plus years in the making. While I understand that thousands of workers will lose their jobs, if even one of the automakers goes bankrupt, I also feel that in the long term, these workers will be able to find jobs in better industries and that will survive the free market. It seems tragic to allow this to happen, but in the long-term, it is probably the best route for their economy.
2. Reforms needed in WTO
Developing country governments and international civil society must not allow their energies to be detoured or hijacked toward reforming the WTO. Today's need is not for another centralized global institution, reformed or unreformed, but for the decentralization of institutional power, and the creation of a pluralistic system of institutions and organizations interacting with one another amid broadly defined and flexible agreements and understandings.
Developing countries and international civil society should aim not at reforming the WTO, but instead radically reducing its power through a combination of passive and active resistance, so that it might be checked by other international organizations, agreements, and regional groupings. These would include such diverse actors and institutions as the United Nations Conference on Trade and Development, international human rights and environmental agreements, the International Labor Organization, and evolving regional organizations. In a more fluid, less structured, more pluralistic world with multiple checks and balances, the nations and communities of the South will be able to cane out the space to develop based on the values, rhythms, and strategies of their own choosing.
I was a part of the Group CC, the most inetersting topic to go through was - the steps that world govt. would collectively take to emerge from the current crisis.
Here are some of the point which were felt worth sharing-
The global financial crisis can be overcome within 18 months by acting "quickly and decisively," Pacific Rim leaders said Sunday as they pledged to make food cheaper, governments cleaner and markets more open.
Further there was also pledging to maintain free trade despite domestic pressures. "We are convinced that we can overcome this crisis in a period of 18 months," the leaders of the Asia-Pacific Economic Cooperation forum said. "We have already taken urgent and extraordinary steps to stabilize our financial sectors and strengthen economic growth."
The APEC leaders also said they were deeply concerned about instability in food prices, were committed to
1. battling corruption and piracy, 2. supported "decisive and effective long-term cooperation" to combat climate change.
The leaders called for greater APEC participation in the IMF and other multilateral lenders. Japan said last week it was ready to lend up to $100 billion to the Washington-based lending organization, but China has so far resisted entreaties to dig into its $1.9 trillion in reserves.
India and China's ability to resist the global economic slowdown will greatly influence whether the crisis drags the world into a depression, a top Pacific Rim trade community economist said Tuesday.
"If China and India come through this crisis with very good growth rates that would be very important for the rise of global economy,". The International Monetary Fund has said emerging economies -- which include China and India -- will account for the world's entire projected 2.2 percent overall growth next year.It estimates rich nations' economies will together grow by just 0.1 percent this year while the developing world will grow by 5 percent.China's economy has grown feverishly, in the double digits annually for 15 years while India's has grown at slightly less than 10 percent. Together, the two countries have about 40 percent of the world's people.The IMF readjusted its growth estimates last month, projecting that China's economy would grow 9.7 percent this year and 8.5 percent in 2009. India's is estimated to grow 7.8 percent and 6.3 percent, respectively.
In both countries, the production drop would be far softer than rich countries. The economy of the United States, where the crisis originated, is projected to shrink to -0.7 percent next year with euro-zone similar.
China, India, Russia and Brazil currently have the world's largest cash reserves and at last weekend's G-20 summit in Washington they demanded a greater say in world economic and political forums.
Of the four, only China and Russia are APEC members. But the host of last week's summit, U.S. President George W. Bush will be in Lima to work with them on finding a way out of the crisis.
APEC has just three Latin American member and their projected growth rates for 2009 are Peru with 9 percent, possibly the region's highest, Chile with 4 percent and Mexico with about 1 percent.
There is a prevailing opinion among APEC's members, whose economies account for 60 percent of global economic growth, that all trade protection should be removed, said Buckle, a New Zealander who heads its economic committee.
"The reasons for this I think are very clear. If economies do embark on protectionist measures that tends to have a more negative effect on the global situation," he said. " We saw that in the 1930's when the economies responded to the international crisis at that time by putting up trade barriers."
Coming next to the "vision Kenya 2030" these were there the findings .. part of group cc
Under the guidance of the Economic Recovery Strategy for Wealth and Employment Creation (ERS), the Kenyan economy has recovered and resumed the path to rapid growth.
The economy is expected to grow by more than 6 per cent in 2007 from 0.6 per cent in 2002.
The growth has been widely distributed, covering all economic and social sectors resulting in
reduction in poverty levels from 56 per cent in 2002 to 46 per cent in 2006. Also this growth
has not only impacted positively on the indicators of other MDGs, for example, education,
health, gender, and environment, but also availed more resources to address the MDGs across
the economy. Currently, more resources have been devolved to the local level through such
schemes as the Constituency Development Fund, the Local Authority Transfer Fund, the
Constituency Bursary Fund, and the Constituency Aids Fund among others to directly
address the MDGs at this level. Despite the development registered under the ERS, the
country continues to face challenges in infrastructure and in institutional reforms the need for highest efficiency in production at firm and household levels.
On the whole, Kenyans
have reason to be satisfied by the results even though much remains to be done. ERS expires
in December 2007 and Kenya will embark on a new long-term vision to guide her development in the next 25 years.
Kenya Vision 2030 is new long-term development blueprint for the country. It is motivated
by collective aspiration for a much better society than the one we have today, by the year
2030. The aim of Kenya Vision 2030 is “the globally competitive and prosperous country
with a high quality of life by 2030.” It aims at transforming Kenya into “a newly industrialising,
middle income country providing a high quality of life to all its citizens in a clean and secure environment”.
In other words the vision aspires to meet the MDGs for Kenyans. The Vision was consultative and inclusive stakeholders’ process carried out between October 2006 and May 2007. Specifically, the process involved international and
local experts, ordinary Kenyans and stakeholders from all parts of the country. Between July
and August 2007, the contents of the Vision 2030 were again subjected to open consultations
in all districts in Kenya, before the finalization of the document.
The Vision is anchored on three key pillars: Economic; Social; and Political Governance.
The economic pillar aims to achieve an economic growth rate of 10 per cent per annum and
sustaining the same till 2030 in order to generate more resources to address the MDGs. The
vision has identified a number of flagship projects in every sector to be implemented over the
vision period to facilitate the desired growth that can support the implementation of the
MDGs on a sustainable basis. In addition the vision has flagged out projects addressing the
MDGs directly in key sectors such as agriculture, education, health, water and environment.
The social pillar seeks to create just, cohesive and equitable social development in a clean
and secure environment. The political pillar aims to realise an issue-based, people-centred,
result-oriented and accountable democratic system.
P Ragul
Roll No. 43
Group: BB
Posting reg. Doing business in Phillipines by DD
The people are Lower middle income class and total population is around 87 Million
Philippines is ranked 140 out of 181 economies. Singapore is the top ranked economy in the Ease of Doing Business
Some more statistics on Phillipines when copmared globally with other countries
Ease of Doing Business - Rank 140
Starting a Business - Rank 155
Dealing with Construction Permits - Rank 105
Employing Workers - Rank 126
Registering Property - Rank 97
Getting Credit - Rank 123
Protecting Investors - Rank 126
Paying Taxes - Rank 129
Trading Across Borders - Rank 58
Enforcing Contracts - Rank 114
Closing a Business - Rank 151
Rank
P Ragul
Roll no. 43
Group BB
Analysing end of cotton subsidy proposal at WTO
The reason why WTO ask US to end cotton subsidies was because of the two major prohibitions exhibited by WTO.
Prohibited Subsidies. Two types of prohibited subsidies were identified by the
WTO panel: unscheduled export subsidies (i.e., subsidies applied to commodities not
listed on a country’s WTO schedule or made in excess of the value listed on the
schedule);3 and import substitution subsidies which refer to subsidies paid to domestic
users to encourage the use of domestic products over imported products. Both Step 2
export payments and export credit guarantees were found to operate as prohibited export
subsidies. Step 2 domestic user payments were found to operate as prohibited import
substitution subsidies. Under the WTO’s Agreement on Agriculture, prohibited subsidies
are treated with greater urgency than actionable subsidies — in particular, they are given
a shorter time frame for compliance.
Pawan Kumar
Group AA
Roll No. 47
- What Steps can World Governments collectively take to counter the current crisis?
1. The government should boost production, ask the public sector to expand by placing orders and universalise ration to increase consumption.
The government has the blank check to begin a massive program of public works. One of the best ways is to funnel money into state government for distribution on infrastructure projects.
2. The government can help troubled homeowners by working with banks to renegotiate failing mortgage before foreclosure. The government should define the conditions (homeowners able to make the new payment, for example) for the assistance and see that they are strictly enforced.
Homeowners meeting the qualifications would see their mortgage interest rates lowered and the term extended. The resulting payment would be one the homeowner could reasonably expect to make.
- What Cultural Fitment advice would you give to a New Zealand company towards doing business in India?
1. Formal Dressing
Men are generally expected to wear a suit and tie for business, although the jacket may be removed in the summer. Women should wear conservative dresses or pantsuits.
When dressing casual, short-sleeved shirts and long pants are preferred for men; shorts are acceptable only when exercising. Women must keep their upper arms, chest, back, and legs covered at all times.
2. Communications
The word "no" has harsh implications in India. Evasive refusals are more common, and are considered more polite. Never directly refuse an invitation, a vague "I’ll try" is an acceptable refusal.
Do not thank your hosts at the end of a meal. "Thank you" is considered a form of payment and therefore insulting.
3. Behaviour
Never point your feet at a person. Feet are considered unclean. If your shoes or feet touch another person, apologize.
Dwindling Forex reserves :
In the recent past the focus on management of foreign exchange reserves has increased. There are various reasons for this :
1. Emergence of Euro as an alternate currency to dollar
2. Change in the exchange rate regimes
3. Change in perception on adequacy of reserves and its role in managing crisis
4. Operational use of "reserve targets" while calculating financing gaps by IMF.
Apart from these there are various other reasons like increase in transparency and accountability at various levels.
The primary objective of the countries, while maintaining the reserves is to cope up with the short-term fluctuations in exchange markets. Many countries use foreign exchange reserves for stability and integrity of the monetary and financial system as well.
The outflow of funds results from the sale of foreign currency to the authorized dealers through open market operations. The resultant effect of the sale and purchase of foreign currency determines the level of foreign exchange reserves in a country.
• A decrease in forex reserves means the country is susceptible to external shocks.
• The ability to cope up with short-term fluctuations in exchange markets goes down
The Politics in allotment of World Sports Events to various bidding cities :
Sports and Politics have had a close relation over the years even though a lot of sports hosting bodies and cities may chose to argue over it.
Whether its been the Olympics, Football world cup or Formula 1, the premier sporting events in the world, there hosting cities and organizations have been decided more than sheer merit or sport.
Most of the cities which host these events see these games as a long term potential in the investments which would change the city for good. The kind of infrastructure required for the city to host the events can be used to further enhance the country and the city’s growing stature and importance in the world stage.
Barcelona was a little known town in Spain when it hosted the Olympics in 1992. The games brought spot light and fame to the Spanish town and now its known for being home to one of the best football teams in the world. The Spanish Grand Prix is one of the best known in the Formula 1 circuits in the world.
China which hosted the bid for 2008 Olympics showcased its might and development by successfully hosting the games. The amount of money which China and the US & European companies would have invested in the games infrastructure would run into hundreds of billions of US dollars.
Similarly, South Africa hosting the World Cup football in 2010 would be a landmark event being the first African nation to host any premier world class event. Although South Africa has been hosting international sports events like the the Cricket World Cup in 2003, the Rugby World Cup , Women’s world cup of Golf and the inaugural A1 Grand Prix in Durban. The football games would serve as a platform for South Africa to change its perception of a state still fighting the ghost of Apartheid and Racism.
Should US government bail-out auto giants?
The basic argument against bailing out GM (and Ford and Chrysler) is fairly simple: They're dinosaurs who can't compete, don't make good cars, have a terrible corporate culture, and will never get better. If we're willing to bail out companies like these, where will the bailouts stop?
The basic argument in favor is also fairly simple: Even if all that stuff is true, and even if in normal times we'd let them die, right now we're on the edge of a truly catastrophic recession. Killing them off, along with the 2-3 million jobs they support, could be just the catalyst that turns a catastrophic recession into a full-blown depression. We'd be cutting off our economic noses to spite our free market faces.
Thanks and Regards,
Mohit Jairath
Oct07 EMP-37
" every second counts " - lance armstrong
sachin satvik
roll no 56
INDIA and NEWZEALAND exports :
--------------------------------
-NZ is the least corrupt country
-IT,POWER,education is exported threre
-BIG INDUSTRIES THERE ARE :
airports,tourism.
FALL IN FOREX RESERVES IN INDIA :
--------------------------------
-GREENSPANS RULE:forex should equal 12 months of need
- exports are getting cheaper and imports costly now a days
-economic reserves are dercreasing.
Phillipines :
-------------
-prone to eathquakes
-fastest growing economy
7% gdp growth rate
-corrupt beaurocracy
-BPO,startbucks ,KFC,Mc Donanlds.
Question :What Steps can World Governments collectively take to counter the current crisis?
In this time of extreme financial crisis , which is heading to take the shape of great depression , if certain necessary steps are not taken immediatley, following are the proposed items for the worlds governments:
1) Take immediate action to control unemployment , by interacting with the companies and propsing them the pay-cut or other measures rather than firing the employees , as it will futher reduce the overall morale and economies will take the further downward trends.
2) Keep on having the free trade among the countries , rather than trying to protect the own industries as it will further choke down the growth prospects.
3) World econonmies should come together to ensure that developed and developing countries will not put any further investment or trade barriers and steps should be taken to have bail out the suffered companies to prevent the cascading effect.
What Cultural Fitment advice would you give to a New Zealand company towards doing business in India?
Folowing are the things that New Zealand company must take care while doing business in india:
Communication:
1) Do not thank your hosts at the end of a meal. "Thank you" is considered a form of payment and therefore insulting
2) Offical language is hindi , punjabi. English is the only foreign lamgauage which will widely spoken across the country
Behavior :
1) Beckoning someone with the palm up and wagging one finger can be construed as in insult. Standing with your hands on your hips will be interpreted as an angry, aggressive posture.
2) Gifts are not opened in the presence of the giver. If you receive a wrapped gift, set it aside until the giver leaves
Appearance:
The use of leather products including belts or handbags may be considered offensive, especially in temples. Hindus revere cows and do not use leather products.
What Cultural Fitment advice would you give to a New Zealand company towards doing business in India?
Hierarchy
Of all the cultural influences that most impact Indian business culture, hierarchy plays a key role. With its roots in Hinduism and the caste system, Indian society operates within a framework of strict hierarchy that defines people's roles, status and social order.
For example, within companies manual labour will only be carried out by the "peon" (roughly equivalent to a 'runner'). It is not uncommon for the moving of a desk to take hours. This is because no-one in the office will carry out the task but the "peon", who, if otherwise engaged can not do so.
Doing Business - Building Relationships
Doing business in India involves building relationships. Indians only deal favourably with those they know and trust - even at the expense of lucrative deals. It is vital that a good working relationship is founded with any prospective partner. This must take place on a business level, i.e. demonstrating strong business acumen, and at a personal level, i.e. relating to your partner and exhibiting the positive traits of trustworthiness and honour.
Doing Business - Meetings and Negotiations
Meetings should be arranged well in advance. This should be done in writing and confirmed by phone. Avoid meetings near or on national holidays such as Independence Day, Diwali or either of the two Eids. Avoid the heat by scheduling between October and March.
Punctuality is expected, although being 10 minutes late will not have disastrous consequences. Flexibility is paramount. Family responsibilities take precedence over business so last minute cancellations are possible when doing business.
When entering a meeting room you must always approach and greet the most senior figure first. Meetings should always commence with some conversation. This is part of the 'getting to know you' process. Favourable topics of conversation are the latest business news, the fortunes of the Bombay Stock Exchange or cricket. Avoid talking about personal matters and, if new to India, do not comment on matters such as the poverty or beggars.
If your business dealings in India involve negotiations, always bear in mind that they can be slow. If trust has not yet been established then concentrate efforts on building a rapport. Decisions are always made at the highest level. If the owner or Director of the company is not present, the chances are these are early stage negotiations.
Indians do not base their business decisions solely on statistics, empirical data and exciting PowerPoint presentations. They use intuition, feeling and faith to guide them. Always exercise patience, show good character and never exhibit frustration or anger.
When negotiating avoid high pressure tactics. Do not be confrontational or forceful. Criticisms and disagreements should be expressed only with the most diplomatic language. Indian society has an aversion to saying "no" as it is considered rude due to the possibility of causing disappointment or offense. Listen carefully to Indians' responses to your questions. If terms such as "We'll see", "I will try" or "possibly" are employed then the chances are that they are saying 'no'.
Doing Business in the Philippines
The Philippine business environment is highly personalized. A proper introduction by a trusted intermediary is the best way to enter this market.
Economy
The Philippines is a cool newly industrialized country with an economy anchored on agriculture but with substantial contributions from manufacturing, mining, remittances from overseas Filipinos, and service industries such as tourism, and increasingly, business process outsourcing.The Philippines is listed in the roster of the "Next Eleven" economies.
Politics and government
The Philippines has a presidential, unitary form of government (with some modification; there is one autonomous region largely free from the national government), where the President functions as both head of state, and head of government, and is commander-in-chief of the armed forces. The president is elected by popular vote to a single six year term, during which time she or he appoints and presides over the cabinet.
Administrative divisions
The Philippines is divided into three island groups: Luzon, Visayas, and Mindanao. These are divided into 17 regions, 81 provinces, 136 cities, 1,494 municipalities, and 41,995 barangays.In addition, the Section 2 of Republic Act No. 5446 asserts that the Philippines has acquired dominion, and sovereignty over Sabah, North Borneo.
Demographics
The Philippines is the world's 12th most populous country, with a population of over 90 million as of 2008.As of 2007, 8% of Filipinos are living abroad as migrant laborers. Roughly half of the country's population resides on the island of Luzon. Manila, the capital, is the eleventh most populous metropolitan area in the world. The literacy rate was 92.6% in 2003,and about equal for males and females.
Culture
Philippine culture is a fusion of pre-Hispanic Austronesian (Malayo Polynesian) civilizations mixed with Hispanic, and American. It has also been influenced by Chinese, Arab, and Indian cultures.
Business Culture
Business matters are always best dealt with on a face-to-face basis in a warm and pleasant atmosphere.
In setting up appointments, especially in government offices, it is most advantageous if a “go-between” or someone with previous connections to that office can make some form of introduction on behalf of the requesting party.
Moreover, as in most Asian cultures, Filipinos would rather avoid “loss of face” or public humiliation. Therefore, Filipino contacts prefer an atmosphere of calm and restraint, avoid direct confrontation, and would typically offer a polite reply coupled with a smile rather than an outright negative feedback to the other party’s ideas..
Philippine business has its own etiquette. For example, as a show of respect, Filipinos usually address people by their titles (e.g., Architect Cruz, Attorney Jose, Dr. Romero) although the professional might request a more informal approach (e.g., addressing them by their nicknames) after the formal introduction.
Handing out business cards (preferably bearing your position or title) is standard procedure, although the manner in which the cards are exchanged tend to be rather informal as compared with other cultures.
Observing office etiquette is also important.
English is the official business language,
Business lunches and dinners are usually arranged personally over the phone and confirmed by the secretary. The person who invites customarily pays.
Christmas is also a time to show appreciation to people with whom you have regular dealings with, e.g., the security guard, doorman, messenger, as well as good customers and clients, through token gifts.
Sumit Mahajan
07EMP02-65
Topic 1: Some items considered by investor for setting up a business in philippines:
-Concerns regarding In-fighting among different groups and security risk.
-Good English Speaking Graduate man-power that can easily be trained.
-Liberal policies of govt twrds FDI
What Steps can World Governments collectively take to counter the current crisis?
Topic 2: "How democratic is WTO : Power and Politics in WTO "
-The World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade
-WTO makes decisions through consensus and a one-country, one-vote system. Yet actual decision-making is done with a great deal of informality, and largely behind closed doors between only about 25–30 Members.
-The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the Ministerial Conference.
1 Reforms needed in WTO
To remove politics in WTO and to maintain the democracy and acceptability of the world, following reforms / steps can be taken
A) Developing Countries are the biggest stake holder in WTO. It should work in the favour of WTO.
B) Developing A more equitable and fair trading framework in WTO.
C) Reduction in number of tariff rate quotas in progressive manner.
D) Substantial reductions in all forms of domestic support should be undertaken by the developed countries.
2. What Steps can World Governments collectively take to counter the current crisis?
a) World Government should work on Corruption and piracy in the market
b) Need to improve the financial institutions.
c) Regulators should enhance their vigilance on every transactions.
d) Work to enhance the people’s confidence.
Roll No. 63
Hemant Pandey
Roll No. 26
EMP-OCT-07
Looking at Kenya 2030 Vision, assess long-term potential of doing business in Kenya
• As Kenya is focusing on Tourism industry, there would definitely be opportunity in this sector. There would be opportunities in hospitality and other service sectors, which are indirectly dependent on the tourism industry.
• There is also growth in sector dependent on the agriculture. This would be related to food processing, fertilizer and etc.
• There is also good opportunity in Retail, Manufacturing, Education and BPO sector as well.
• Overall we can conclude that, since Kenya is under developed countries. Hence there is a lot of growth opportunities in all the sectors. But before entering into the Kenya, one has to consider Social environment to ensure the smooth operations. Since, most of the Kenya population is uneducated, hence it’s really difficult to find skills labor in Kenya and hiring expert from outside may really be costly.
• Hence before establishing any company in Kenya, one has to do cost benefit analysis. Definitely there is a long term growth opportunities, but on what cost. Kenya is very poor country; their people can not afford luxury. Hence, in my opinion we should wait for some time when Kenya could come up to certain level where its population could spend more and could afford luxury also. We should wait until majority of poor population of Kenya move into middle segment.
Looking at Kenya 2030 Vision
Assess long-term potential of doing business in Kenya
Kenya 2030, working with the vision of making Kenya a newly industrialized middle income country., providing High Quality life for all the citizens.
As a strategy they are working on the three Pillars.
1. Economical Pillar: In this they are working on the Economic development program aimed at achieving GDP 10% for next 25 years.
2. Social Pillar: Provide the cohesive society with social equity in clean & secure environment.
3. Political Pillar: To provide Democratic political system, based on the issue base politics that respects rule of law.
Long-term potential of doing business in Kenya
Looking at their vision 2030, main sectors which can be focused are,
Infrastructure & Development
Scope: In Tourism,BPO, Education & Training, Water Sanitation, Urbanization
Service:
Scope: Agriculture, Education & Training, Health Care , Insurance
Manufacturing:
Scope : Agriculture equipments, Health care equipment, Computer hardware
How about doing business in Philippines – analyse all dimensions
Social: The most serious problems facing the Philippines today are: uneven development in the country, corruption and incompetence in government and a minority population that has never been fully integrated into the broader society and economy.
Political: The Government should address ingrained structural problems of the economy by initiating tax and financial reforms, eradicating the discrepancies in income and economic development in the country, improving the peace and order situation, and curbing corruption and the growing communist insurgency.
Economy: The countrys gross domestic product surpassed earlier forecast of 4.3 to 5.5 percent. Economists are wary that the country’s strong economic performance will be reversed by rising oil prices and high interest rates.
Business Opportunities: Some of the key economic indicators are showing signs of resiliency as shown in the increase in domestic consumption, volume of inward investments and job opportunities. However, the political instability due to uncertainty in the elections will continue to weigh down investors confidence.
Sign of Improvement: Amidst a gloomy economic backdrop, there are positive signs of growth and development in the Philippine economy after the elections.
Regards
Ashish Garg
Roll No. 10
Commerce Ministry has released the recent foreign trade data covering Q1 2007-08. The findings:
1. Exports have increased by 18% to $ 34.3 bn. In Q1 2006-07, the growth was 14%.
2. Imports by 34% to $ 54.9 bn. Oil imports by 4% to $14.8 bn and non-oil imports by 50% to $ 40 bn. In Q1 2006-07 the growth was 37%.
3. As imports have increased faster, Trade deficit has increased by a 75% to $ 20.6 bn. Last year, Q1 it grew by 100%.
Hence, all is within the trend. So what is the concern?
1. With rupee appreciating and since it works with a lag, exports would slow down and imports would increase.
2. That would mean higher trade deficit
3. We would need higher service exports to manage the deficit.
4. As rupee is appreciating, getting higher service exports would be tough.
5. Hence, most likely we would see higher current account deficit and to finance it, the capital flows would be higher, compounding the problems further.
Kanungo.s.Nayak
Roll-30
By:
Anuj Dhingra
R.No - 6
- Implications of a country’s dwindling Forex Reserves
The rupee is depreciating because FIIs are selling stocks and repatriating dollars to pay back the loans that they had taken from American Banks. This is happening through out the world and that is why $ is appreciating through out in spite of the pal of gloom over the American economy. If Rupee is losing value against the dollar, I guess we should allow it to happen so that the FIIs shell out more Rupee per Dollar that they wish to repatriate. This would ensure that they pay the price for their pull out. If any of the critical areas like Oil Prices or Capital Goods Imports are suffering on account of Rupee Depreciation, it would be better to use fiscal measures (duty reductions) to reduce the rupee cost of such imports than Rupee appreciate for every one. This would mean encouraging repatriation on a large scale. If FIIs had borrowed money to invest in Indian Stock Markets and had used the borrowed money to manipulate the market to their advantage, it is only fair that they pay the price for it. That is the only way to teach a lesson to greedy speculators who botched the plan to fleece the gullible small investors of India. Ultimately, every stock market speculator gains only by siphoning off the real savings of the small investors through manipulation of the stock prices.
- Should US government bail-out auto giants?
At a time when rich countries are pouring trillions of dollars to save their banks which were involved in reckless and irresponsible activities, around $250 million appear like a drop in the ocean. These banks should be closed down so that the tax payers dont lose their money and the middle class survive. The executives of these ailing companies should be put behind bars, but they are lobying with USA Govt to give them more funds. I think they should be classified as beggars. Fortunately India is much better than these African coutries whose photgraphs are shown on rediffmail. Thank god for that. However the Indian Govt should not bail our industrialsist who have also made mess of their organisation otherwise we will also be in trouble.
Citibank bailout :
2nd largest US bank.200 million customers all over the world.
Over 2 trillion in assets. Close to 2 trillion liabilities.Already alloted $25billion from the US TARP programme.
If there was no bailout then:
1.Complete freeze of the credit market.
2.Stock market crash continues.
3.Reduces people confidence to invest.
4.US takeover of Japanese and Chinese banks.
The bailout was announced on Friday and on Monday the stock market increased by 900 points - the largest single day rise since 1987
Second TOPIC :
India's Foreign trade
Top 5 foreign investors in India:
USA,Mauritius,UK,Japan,Southkorea
Indian Export/Import statistics April-Sept 2008 :
Exports - $95 billion
Imports - $154.7 billion
Oil Imports - $55billion
Trade deficit - $59.7 billion
29% of the import is Oil.
Biggest Indian export markets
US,UAE,China,Singapore,UK
Biggest Indian import markets
China,US,SaudiArabia,UAE,Iran
R.GUNASEKARAN
ROLL NO:49
CITI RELIEF
•Global banking giant Citigroup, with roots dating back to 1812, was rescued by the US Government with a billion-dollar package. The action aimed to strengthen its capital base and increase liquidity. The bank had earlier received a $25-billion capital injection via preferred stock by the US Treasury.
•This time around, the US Treasury will infuse $20 billion in 8 per cent preferred stock under the Troubled Asset Relief Program. The next step is a Government guarantee on a portfolio of $306 billion of securities, loans, and commitments, which are backed by residential and commercial real estate and other assets as agreed by the US Government.
•Citi will issue an additional $7 billion in preferred stock to the Treasury ($4 billion) and the Federal Deposit Insurance Corp (FDIC, $3 billion), bringing the total equity infusion to $27 billion. The guarantee is for 10 years on residential assets and for 5 years on non-residential assets.
•The rescue is beneficial to Indian PSU banks since Indian banks are maintaining Nastro balance with citi bank. Nastro balance is an account that one bank maintains with another bank, a foreign bank, in foreign currency. The loss on this account is not covered under federal Deposit Insurance Corporation; hence, the fall of Citi would have doomed prospects of our banks. The relief package in a way saved our banks also from crisis.
DWINDLING FOREX RESERVES
•The country has seen its foreign exchange reserves shrink more than $63 billion — enough to fund 600 Moon missions — in less than six months as exports slumped, trade deficit widened on a surge in the oil import bill and foreign investors pulled out of the stock market.
• The fast depletion has serious implications, as it could bring more pressure on the rupee, which has already depreciated about 20 per cent this year and made everything from imported machinery to foreign travel and education more expensive. A weaker rupee could also reverse the recent slide in inflation.
•The government, however, is hopeful that the situation would change once its policy responses begin to play out and stability returns to global financial markets. Centre is trying to induce NRI deposits and tap sovereign wealth funds, especially from the Gulf. Efforts are also underway to revive exports growth.
especially from the Gulf.
•On one hand due to less demand in foreign market, the country could not able to make cheap exports but on the other hand the imports have become more costly.
Hi Friends,
My first topic is:
1. Reforms needed in WTO (or whether reforms needed in WTO)
Developing country governments and international civil society must not allow their energies to be detoured or hijacked toward reforming the WTO. Today's need is not for another centralized global institution, reformed or unreformed, but for the decentralization of institutional power, and the creation of a pluralistic system of institutions and organizations interacting with one another amid broadly defined and flexible agreements and understandings.
It was under such a more pluralistic global system, where hegemonic power was still far from institutionalized in a set of all encompassing and powerful multilateral organizations, that Latin American and many Asian countries were able to achieve a modicum of industrial development in the period between 1960 and 1970. It was under a more pluralistic world system, with a GATT that was limited in its power, more flexible, and more sympathetic to the special status of developing countries, that the East and Southeast Asian countries were able to become newly industrializing countries through activist state trade and industrial policies which departed significantly from the free market biases enshrined in the WTO.
The alternative to a powerful WTO is not a Hobbesian state of nature. It is always the powerful that stoke this fear. In a world marked by a multiplicity of international and regional institutions that check one another, the reality of international economic relations would be a far cry from the propaganda image of a "nasty and brutish" world. Of course, the threat of unilateral action by the powerful would be ever present in such a system, but it is one that even the powerful hesitate to take for fear of its consequences for their legitimacy, as well as the reaction it would provoke in the form of opposing coalitions.
Developing countries and international civil society should aim not at reforming the WTO, but instead radically reducing its power through a combination of passive and active resistance, so that it might be checked by other international organizations, agreements, and regional groupings. These would include such diverse actors and institutions as the United Nations Conference on Trade and Development, international human rights and environmental agreements, the International Labor Organization, and evolving regional organizations. In a more fluid, less structured, more pluralistic world with multiple checks and balances, the nations and communities of the South will be able to cane out the space to develop based on the values, rhythms, and strategies of their own choosing.
And the second topic is
2. What should be done about Citi Bank?
If further proof were needed that the world financial order has changed, the $20 billion bailout of mighty Citibank is it. It is one of America’s oldest and most innovative banks. Citibankers were always of a subtly different cut from their fellow bankers. Citibank went into overseas markets long before its competitors and often secured an inside track by attending to the financial needs of government elites and leading local organizations. Arguably since the heyday of CEO John Reed, that ability to size up a market and act to the best advantage deserted top management, who finally allowed the bank to be dragged along with the rest of the crowd into the subprime debacle.
Citibank is receiving its new capital injection from the US taxpayers because like insurance giant AIG, which is getting $40 billion, it is simply too big to fail. The cash comes from $700 billion allocated to the purchase of stakes in ailing financial institutions. But this is only a fraction of the burden the US budget is now being asked to bear. Among other financial commitments, there is now up to $800 billion in Federal Reserve support for mortgage and consumer credit markets, up to $600 billion in Fed purchases of US dollar commercial paper and certificates of deposit, up to $1.8 trillion in Fed purchases of top-rated US dollar commercial paper and up to about $1.9 trillion in new Federal Deposit Insurance Corporation guarantees for banks. It would be wrong to imagine that all this committed money will actually be spent and indeed some will be recouped. However, analysts now say the rescue money on the table for the US alone is approaching $8 trillion. This will have to be financed through a combination of new government debt and printing dollars.
If Washington along with many other governments is partially underwriting the bad debts of a failed financial system, a key question arises. If these debts were so bad commercial investors were not prepared to risk them, why should governments shoulder them on behalf of taxpayers? Is this not simply akin to squeezing an air bubble further down, rather than outside of a pipe?
To press the point further, the reason the markets collapsed in the first place was a sudden plunge in investor confidence. Now governments are stepping in where private investors feared to tread. But these governments must themselves find ways to fund their financial system rescue packages. They will, therefore, issue debt. How much more confident are investors likely to be when effectively the same distressed underlying assets are presented to them, this time repackaged with government guarantees?
There is still a lot of investment cash out there looking desperately for value. However, the flood of governmental debt will not all be equally inviting. Investors will pick and choose and governments which are already deeply in shock will pay high prices, if they can move their paper at all. Little Iceland and Latvia already face bankruptcy. Far bigger fish may follow.
Paramjit Singh
Roll No 44
Kenya Vision 2030: DrivingChange in National DevelopmentAcross Kenya
Does Kenya need Vision 2030, its strategic plan for the next 23 years? Or would 2020 vision be more useful?
Repositioning of the Coast Circuit, opening under-utilised parks and providing niche products have been unveiled as the key drivers towards the government achieving Vision 2030 through the tourism sector. The strategy aims at making Kenya one of the top 10 long haul tourist destinations, offering diverse and high end experiences by 2012 to a target five million tourists.
With Kenya's weather, and the sort of rains that are now common, roads are going to need repairing more and more frequently. So how about building a brand-new, high-speed, wide-gauge line linking Mombasa with Nairobi and Kampala – a futuristic railway running oversize rolling stock – from the Indian Ocean across the Rift Valley to central Africa, perhaps carrying 3000 passengers and freight. This could serve as a blueprint for the future of mass transportation in similarly suitable environments. Compared with building the same line in Europe, construction costs on much of the low-population-density route would be minimal; exports would boom; the tourists would come; the wildlife and the environment would be preserved; and Kenya would once again have an asset to be proud of, running alongside its famous, nineteenth-century “lunatic line”.
Second Topic :
Bail out of auto giants :
Ford,GM and Chrysler need a bailout from the US Govt. There were the companies who sponsored US during the world wars.They contribute significantly to the US GDP.
So do they require a bailout ?
GM has been in loss for more than a year now.It's not the financial crisis that caused this auto crisis.These cars are comparatively less fuel efficient than the Asian giants- honda, toyota and Hyundai.They do not have any green car like the asian car makers. That means no innovation.Why should an American owning a toyota pay higher tax to save a Ford / GM .
First a restructuring is required in these companies.The US Govt can then fund them if required.
CBS/AP) The U.S. government unveiled a $20 billion rescue plan on Sunday for troubled banking giant Citigroup, once the country's biggest and strongest financial institution.
The action, announced jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. after a weekend of tense negotiations, is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already-crippled financial system and the U.S. economy.
President George W. Bush said Monday he consulted with President-elect Barack Obama on the Citigroup rescue. Mr. Bush said there is "close cooperation" between his administration and the Obama camp.
Mr. Bush, speaking outside the Treasury Department after consulting with Secretary Henry Paulson, also said the measures used to help Citigroup could be extended to other institutions in need of federal assistance.
"We have made these kind of decisions in the past. We made one last night and if need be we will make these kind of decisions to safeguard our financial system in the future."
In addition to an investment of $20 billion in Citigroup, the government plan also guarantees up to $306 billion in risky loans. This is on top of the $25 billion the government has already pumped into Citigroup.
The money will come in exchange for shares that will pay eight percent back to the taxpayer; Citigroup also agrees to place limits on executive pay and help homeowners facing foreclosure, reports CBS News correspondent Kelly Wallace. But some analysts say the bailout doesn't go far enough - and that the company will need much more from Uncle Sam.
"The $20 billion is about 10 percent of what Citicorp needs to get back to financial health," said Sean Egan of Egan-Jones Ratings Company. "They need about 200 billion, they got 20."
Still, some experts said the government's action was necessary.
"If Citigroup had not been bailed out, then the whole financial system could collapse," said Princeton economics professor Paul Krugman on CBS' The Early Show.
But is the government bailout of Citigroup well-structured, and are taxpayers getting a fair deal here?
Krugman, author of "The Return of Depression Economics and the Crisis of 2008" (Norton), says on first read, no.
"Most of the people who have looked at it, the small hours of this morning, have said this is a lot of taxpayer risk in return for not much," Krugman told co-anchor Maggie Rodriguez.
"It looks like a very sweet deal for Citigroup management, very sweet deal for Citigroup shareholders, to the extent they have anything left - not very good for the taxpayer. This was not good."
With other bailouts seemingly having done nothing to boost consumer confidence, Rodriguez asked, why do it if it is not well-structured?
"Well, you know, things could be worse, you know? That's been the moral of this crisis: things can always be worse,' Krugman said, "and they have been getting worse.
"Things could be much worse than they are. It's what hasn't happened, not what has, is the justification. We had to do this, but we should have done it better."
As part of the plan, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.
Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.
In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup. In addition, Citi said it will issue warrants to the U.S. Treasury and the FDIC for approximately 254 million shares of the company's common stock at a strike price of $10.61.
As a condition of the rescue, Citigroup is barred from paying quarterly dividends to shareholders of more than 1 cent a share for three years unless the company obtains consent from the three federal agencies. The bank is currently paying a dividend of 16 cents, halved from a 32-cent payout in the previous quarter. The agreement also places restrictions on executive compensation, including bonuses.
Importantly, the agreement calls on Citigroup to take steps to help distressed homeowners. Specifically, Citigroup will modify mortgages to help people avoid foreclosure along the lines of an FDIC plan that was put into effect at IndyMac Bank, a major failed savings and loan based in Pasadena, Calif.
Under the IndyMac plan, struggling home borrowers pay interest rates of about three percent for five years. Rates are reduced so that borrowers aren't paying more than 38 percent of their pretax income on housing.
The IndyMac plan also was used as a model for a new program by mortgage finance companies Fannie Mae and Freddie Mac and for two other failed thrifts taken over by the government on Friday. FDIC Chairman Sheila Bair has been pressing Treasury to use $24 billion from the $700 billion bailout program to put the mortgage modification program on national footing, but Paulson is opposed to that idea.
Overseas Markets, Wall Street Respond
Wall Street showed relief early Monday over the government's plan to bail out Citigroup - a move it hopes will help address some of the uncertainty hounding the financial sector. Stock index futures contracts indicated the market was poised to extend a sharp rally from Friday.
Investors also cheered the idea that the government could introduce another economic stimulus plan. President-elect Obama is set to introduce his economic team on Monday, which is key to putting into place a huge economic recovery plan that targets saving or creating 2.5 million jobs during the next two years.
Krugman said that the announcement that Obama has picked New York Federal Reserve president Tim Geithner as his Treasury Secretary and Lawrence Summers to head the White House National Economic Council (whom he described as "terrifically smart and terrifically forceful guys") is good news.
"Great to have the best people on board," Krugman told Rodriguez. "This is the one thing really encouraging right now."
It looks like a very sweet deal for Citigroup management, very sweet deal for Citigroup shareholders, to the extent they have anything left — not very good for the taxpayer. This was not good.
Economist Paul KrugmanIn a relief rally over the government's plan to bail out Citigroup, Wall Street barreled higher for the second straight session. The Dow Jones industrials soared nearly 390 points, bringing their two-day advance to more than 880, or 11 percent.
Asia breathed a little easier after the U.S. government cast a lifeline to Citigroup, averting what many believed would have been a catastrophe for the global financial system.
Yet shares of financial companies dropped across the region as the bailout, widely expected by investors given Citigroup's size and scope, highlighted persistent worries about the problems facing the banking sector.
Critics said the bailout creates a moral hazard that will eventually backfire because it effectively rewards the bank for taking unacceptable business risks.
"This challenges the existing rules in the industry and might affect the fairness of competition," said Yu Xiaoyi, chief researcher for Guangfa Securities, in the Chinese southern city of Guangzhou. "This should be a lesson for China's own banks about risk controls."
But many welcomed the deal as saving the global financial system, already stricken by the year-old credit crunch that originated from a mountain of toxic mortgages in the U.S., from further mayhem.
"If they didn't help, the damage would be beyond imagination," said Teck-Kin Suan, economist at United Overseas Bank in Singapore. "The scale is so much larger than Lehman Brothers," the storied Wall Street investment bank that filed for Chapter 11 bankruptcy protection in September after the U.S. government refused to rescue it.
"One thing that makes this time particularly difficult is that the financial system is broken," Mark Zandi of Moody's economy.com told CBS News."It's now increasingly difficult to get credit, whether you are someone with a good credit score or a business with a pristine balance sheet. That's going to make this particular recession, particularly severe."
Some are hoping this week at least will be somewhat calm, because there are not a lot of big economic numbers being released, and it's a short trading week because of the Thanksgiving holiday.
Meanwhile, Citigroup Hires … In The Philippines
Citigroup may be cutting jobs worldwide, but it is hiring more workers in the Philippines, where it plans to establish a regional hub for its call centers, company officials said Monday.
"Citi is repositioning in Asia Pacific but we remain focused on growth," country business manager Mark Jones said in a statement.
"As we review our operations and see where we can be more efficient, something which we have been doing even before the downtrend in the global financial markets, we in the Philippines are optimistic that instead of reducing headcount, we will be growing," he added.
He did not elaborate on the number of expected new jobs to be created. Citigroup currently more than 4,000 employees in the Philippines. The planned additional call centers mostly deal with overseas customers.
The Philippine Daily Inquirer quoted Jones as saying the company would likely hire 1,000 more people in the coming year. This could not immediately be confirmed independently.
Last week, Citigroup Chief Executive Vikram Pandit announced 50,000 additional job cuts on top of 22,000 cuts previously announced.
The CITI GROUP bailout..
It looks like a sweet deal for Citigroup management, very sweet for Citigroup big shareholders, to the extent they have anything left but not very good for the taxpayer. This is not good.
But is the government bailout of Citigroup well-structured, and are taxpayers getting a fair deal here?
With other bailouts seemingly having done nothing to boost consumer confidence, why do it if it is not well-structured?
Should US bail out auto giants?
Whether the auto giants should be bailed out or not should not be decided by Americans . They are giant multi-nationals whose customers around the globe have chosen their products out of the trust of being American brands. It is not exaggerating if it is said that those brands are also pride of America and selection of them were also based on the belief that America is a responsible nation. If the authorities turns a blind eye to the customers and does nothing to save the auto giants, will people in other countries be able to trust American brands or America in the future?
sunil sachdeva
RN 67
Pawan Arora
Roll No. 46
EMP-Oct'07
How about doing business in Philippines – analyse all dimensions
Social: The most serious problems facing the Philippines today are: uneven development in the country, corruption and incompetence in government and a minority population that has never been fully integrated into the broader society and economy.
Political: The Government should address ingrained structural problems of the economy by initiating tax and financial reforms, eradicating the discrepancies in income and economic development in the country, improving the peace and order situation, and curbing corruption and the growing communist insurgency.
Economy: The countrys gross domestic product surpassed earlier forecast of 4.3 to 5.5 percent. Economists are wary that the country’s strong economic performance will be reversed by rising oil prices and high interest rates.
Business Opportunities: Some of the key economic indicators are showing signs of resiliency as shown in the increase in domestic consumption, volume of inward investments and job opportunities. However, the political instability due to uncertainty in the elections will continue to weigh down investors confidence.
Sign of Improvement: Amidst a gloomy economic backdrop, there are positive signs of growth and development in the Philippine economy after the elections.
Should US government bail-out auto giants?
Auto Giants: "Never stand begging for what you have the power to earn," the Spanish author Miguel de Cervantes once said. Such a thought should inspire General Motors, Ford and Chrysler and they should try to stand by their own.
Government: A Democratic Congress, unwilling or unable to approve a $25 billion bailout for Detroit’s Big Three, appears ready to punt the automakers’ fate to a lame-duck Republican president. Caught in the middle of a who-blinks-first standoff are legions of manufacturing firms and auto dealers — and millions of Americans’ jobs — after Senate Democrats canceled a showdown vote that had been expected Thursday.
Public: It is a popular thought among people that it may save jobs but it would reward companies for pursuing bad business practices.
Need for Change: The three companies, whose gas-guzzling vehicles have been losing market share to Japanese rivals for years, are lobbying for the money to help them restructure and survive the economic downturn. They should concentrate on R&D for fuel-efficient vehicle.
Financial Institutions: Loosing confidence as Goldman Sachs suspended its rating on GM and said it would be difficult for Chrysler to survive without help.
Reforms needed in WTO-
At this time of global financial turmoil, strengthening the international trading system is essential. Countries may be inclined to revert to protectionist measures and strong leadership is needed to drive trade reform.
Members of the World Trade Organization (WTO) now have a stark choice in their efforts to conclude the Doha Round of world trade talks. We can sit on the sidelines and point to the economic turmoil as another reason why a conclusion is not possible at this time. Or, we can galvanize our efforts and ensure that the WTO makes a strong and timely contribution to boosting global economic confidence.
I am convinced we must choose the latter course.
A Doha deal would provide a significant boost for world markets. The removal of distortions in agricultural trade would directly benefit the developing world, as would freer trade in services. Were a Doha deal to be concluded on the basis of what was on the table earlier this year, developing countries would be the major beneficiaries. They would contribute one third of the savings from tariff reform and receive two thirds of the benefits.
It's time for the WTO to step up to the plate.
In Australia, our own trade policy is based on the twin pillars of improving market access for our exports overseas, and domestic structural reform to boost our international competitiveness. Australia can't make the most of trade liberalization in overseas markets unless our own economy is competitive and productive.
Developing countries face the same challenges. We cannot simply urge developing countries to enhance structural change without building their capacity to do it.
The Rudd Government came to office committed to raise Australia's development assistance effort to 0.5 percent of our GNI by 2015. We made a significant down payment to that goal in our first Budget earlier this year.
Like other international donors, Australia provides support under the broad rubric of aid for trade. That is, we support institutional capacity building in developing countries, as well as practical measures to boost their economic competitiveness.
Our work on capacity building has already commenced in our own neighborhood, where the Rudd Government has demonstrated our commitment to promoting stability, growth and prosperity in partnership with the nations of the Pacific.
At the recent Pacific Islands Forum meeting in Niue, regional leaders agreed that pursuing greater economic integration should be a regional priority. Leaders agreed to work towards starting negotiations on the regional economic arrangement known as PACER Plus at the next Forum Leaders' meeting in 2009.
Australia wants to help the Pacific engage more deeply with the regional economy, but to do so in a way that helps them take full advantage of the opportunities of greater market access. We will work with our Pacific neighbors to strengthen their capacities to trade within the region and beyond.
We are committed to funding regional education and training initiatives, and have recently announced the Pacific Seasonal Worker Pilot Scheme. The Scheme aims to link the concept of labor mobility to skills formation as part of a capacity building exercise.
Trade reform and development assistance are complementary strands of our effort to promote greater and more equal global economic development. We need a coherent approach to building the capacity of developing countries to enable them to reap the benefits of greater engagement in the global trading system.
Australia stands ready to assist, through our aid for trade efforts and through our advocacy for a fairer global trading environment, so that developing countries reap the full benefits from international trade.
By working in tandem, policy coherence in trade and aid offers the greatest potential to empower the world's poor through sustainable economic growth.
Should US government bail-out auto giants
Over in the real economy, perhaps the biggest story is the impending and highly likely merger of GM and Chrysler, in which GM would swap its 49% stake in GMAC, its consumer finance company, to Cerberus (which owns the other 51%), in exchange for Chrysler, which is currently owned by Cerberus. It seems that the deal may hinge on financial assistance from the government, at least according to six governors attempting to pressure the dynamic duo of Paulson and Bernanke to help out. Until Thursday, GM was seeking $10 billion from the Treasury Department’s $700 billion bailout fund - yes, the same one that has been used to recapitalize banks - but Paulson’s preference is that GM tap a $25 billion low-interest loan program set up by the Energy Department in September.
It’s easy to argue for bailing out the auto industry, with its hundreds of thousands of factory workers, as opposed to the financial sector and its Wall Street bonus babies. (It’s less easy to argue for bailing out Cerberus, which is a private equity firm.) But I want to point out one difference.
The business of a bank is borrowing and lending money. Banks currently face two problems. The first is a crisis of confidence: people who lent them money aren’t sure they will get it back, because no bank - no matter how sound - could pay back all its creditors at once. (The whole point of a bank is to borrow short and lend long.) If this were the only problem, government deposit insurance and the new loan guarantees would take care of it, and the banks would be fine. The second problem is a potential solvency crisis: it’s possible that banks’ assets have declined in value to the point where they are worse less than, or not much more than, their liabilities. The answer here is recapitalization: giving the banks more capital, in exchange for ownership shares. If you give banks enough capital to offset the losses on their assets, there’s no general reason to believe they can’t go forward and make profitable loans, especially with the cost of money as low as it is. They don’t have to do anything particularly intelligent or risky with the money; it’s just to compensate for past mistakes. If you do have a reason to believe that a specific bank will not have a viable business in the future (for example, its whole business was subprime lending), you don’t recapitalize it - and we know that Paulson has been turning at least some banks down.
The auto business, like most businesses, is more complicated. You have to design and manufacture cars that people want, and for which people will pay more than they cost to manufacture. You have huge investments in fixed assets (factories that can’t be easily converted to new uses), technologies (hybrid engines, or the lack thereof), and human capital that constrain your ability to develop new products and offer them at competitive prices. In this kind of business, it’s possible that no amount of cash will make a company viable going forward. GM is currently losing about $1 billion of cash per month, according to analyst estimates. If you loan GM $10 billion (or make a $10 billion capital injection), and nothing else changes, all that means is GM survives for 10 months longer before everyone gets laid off. The $10 billion loan only makes sense if that money, or those extra 10 months, will enable GM to somehow become a profitable company on a going-forward basis.
This is a different kind of question than you have to ask about a bank before recapitalizing it. Bank of America and JPMorgan may need more capital in the future to compensate for the deterioration of their past loans, but few people expect that they won’t be able to make money in the future. With GM, there is a real question as to whether it can become a profitable company at all. The story is they just need to buy time until the Chevrolet Volt comes out, but there’s not a lot of evidence that by the time it does, it will be competitive with whatever Toyota and Honda have engineered by then.
I’m no expert on GM, so I’ll leave it there. It’s possible that GM is on the brink of a turnaround and it just needs $10 billion more in loans. I really hope that’s true. (And in any case, the Energy Department has already allocated $25 billion in low-interest loans for US auto manufacturers.) The point I want to emphasize is that the criteria to use in deciding whether to bail out GM are different than the ones to use in evaluating banks - and have nothing to do with which one we have warm and fuzzy feelings about.
Nisha Khanna
Roll#41
Power and politics at WTO:
The World Trade Organization (WTO) has often been portrayed as the pinnacle of
the multilateral system of global economic governance.
Why it has achieved this reputation is puzzling since it is one of the most
undemocratic organizations around. Formally speaking, the WTO is a one-country,
one-vote system. Yet actual decision-making is done by a process called
“consensus,” in which the big trading powers impose a consensus arrived at among
themselves on the rest of the body. In the WTO, formal parliamentary sessions
where decisions are made in democratic institutions are reserved for speechmaking.
Real decisions are made in backrooms by informal caucuses whose members are
not determined by formal rules and votes but by informal agreement among
significant players.
This non-transparent, non-accountable system of decision-making is one of the
elements that has contributed to the crisis of legitimacy of the WTO. After Seattle,
there were expectations that reform of the decision-making process would be at
the top of the WTO agenda. Instead, the organization lurched into the Fourth
Ministerial Conference of the WTO with its decision-making structure unreformed,
and Doha has now become a byword for the perversion of democracy and the
thwarting of the will of the majority via intimidation, threat, and bribery on the
part of the strong.
The decisionmaking
process has become the Achilles heel of the organization.
Nisha Khanna
roll#41
Citi bailout:
Apparently Citibank and the U.S. government (i.e., we taxpayers) have reached a deal whereby we will backstop something like $300-billion in screwed assets on Citi's balance sheet. ... Here is the gist:
Citi will carve out $300-billion in troubled assets, which will remain on its balance sheet
The first $37-$40-billion in losses on those assets will go to Citi
The next $5-billion in losses will hit Treasury
The next $10-billion in losses will go to the FDIC
Any more losses will go to the Fed
There will be no management changes at Citi, because, you know, they are all fine and upstanding people who have done nothing wrong
There will be some compensation limitations, but those have not yet been made clear
To be clear, this is not a "bad bank" model. Assets are not, apparently, being taken off the Citi balance sheet and put into another entity walled off from the Citi biological host. Instead, they are being left on the Citi balance sheet, but tagged and bagged for eventual disposal via taxpayers. ...
1)Power and politics in WTO
Discussion point
How decision making can be impoved to make WTO more transparent,accountable
>Voting, as provided for in the WTO Agreement, based on equal rights seems to be
the best safeguard against the domination of a few economically powerful countries and
the only way to give developing countries some negotiating weight.
>Formal meetings
Whilst it may be impossible to rid the WTO of informal meetings between members,
there can be rules which make it clear that their outcomes have no place in formal
meetings. Only discussions, which have taken, place in formal meetings and have been
recorded should provide the basis for negotiations.
>Broader governance issue
Any institutional reform of the WTO should take into account the broader picture of
global governance.
2)Politics in Allotment of World Mega Sports Events to Various Bidding Cities
Reasons for existence of politics in allotment of world mega sports event:
1)Around the world urban areas are using big events to try to regenerate and promote particular places.
2)World mega sports events are believed to be the perfect occasion for the city to fulfil its longstanding general need for infrastructure and installations.
3) World mega sports events can stimulate the economy and generate employment.
Munish Singhal
Roll No: 38
Should US Bailout Auto giants ??
US should bailout three auto giants but before that they need to make sure contract with trade unions are re negotiated and salary of senior executives are trimmed and tied to the company performance in next few years. Even though it is global economy and free trade but if need arises any country should protect interest of their people by saving jobs and help domestic companies/industry.
Politics in WTO
Though it is claimed that WTO is most democratic organisation as every country has right to vote and decisions are taken on consensus. BUT WTO is in fact one of the most undemocratic organisations around. At critical moments of WTO negotiations, there simply are no procedural rules. The rules of decision-making that do exist are frequently flouted.
Consensus means that a single member, no matter who, is able to object to, and hold up a decision on any issue. This theoretical understanding is also used by the Secretariat and the influential countries as evidence of the WTO’s democratic nature. In practice, consensus is assumed when there is no formal objection to a decision by any Member present at the meeting. It does not mean active agreement, merely the absence of
objection. Silence is therefore taken to mean consent. Consensus decision-making can be democratic if and only if countries are free to voice their dissent. In practice, the power politics at play in the WTO means that dissent by any one country in a formal meeting, and the consequent blocking of consensus, is rare.
Parijat Sharma
Roll no 45
Should US Govt bailout Auto giants.
1. The govt should bail them out for short term but pursue seriously as a followup to bailout and see how exactly can future be made comparatively safer.
2. A bail out is necessary else we will have huge unemployment (both direct and indirect) and it will cause a already weak economy start weaker. To prevent a crash govt needs to move in. A large level unemployment in US will do huge loss to global economy!!
3. Govt needs to really consider what and why r these auto giants not competitive. Depending on the need of the hour govt should force these companies to relook at their strategies for future.
Who's Afraid of the Big Bad WTO?
1. The non-transparent, non-accountable system of decision-making is one of the
elements that has contributed to the crisis of legitimacy of the WTO. This needs to be fixed.
2. Most nations receive nothing, and silently acquiesce against their better judgement and has no interest in the whole process. The compliance is out of force and not choice.
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