The Effects of Single Parenting on Children Essay Example for Free

The Effects of Single Parenting on Children Essay For as long as human families have existed, the core family group of a father, mother, and the children has been the ideal composition in what could be considered a balanced and fulfilling functional family. There had been many studies of the effects of having certain members of these groups on the family household present and absent. While there are many hypothesis of the effects of the children in the family in household with a missing parent, most of them are indeed negative and there had been studies that these can vary in many different aspects of a child’s upbringing. These effects will be discussed and functionality of the household family itself will be discussed to look at the issues mostly in the mother and child side. This is because typically in a single parent family it is usually the mother that the children will be left with after a divorce or separation takes place. It is true that in many circumstances that a single parent father may be left responsible for the children but this does not seem to occur nearly as likely as many times unwed pregnancies leave the mother responsible for raising the child. The fact is however that these occurrences of single parent families especially for single parent mothers are prevalent enough to be an issue. This is even more so as studies have indicated that unwed births, which increase the amount of single parent families, have been increasing as well. Trends have been found that in from the year 1960 and 1995 an increase of 26. 9% of unwed births has been seen while an increase of 4. 4% between the years 1995 to 2005. Studies in 2004 suggest that the percentage of women of ages 20-24 who have given birth to children are unmarried 55% of the time while women of ages 25-29 are unmarried 29% of the time when bearing children (5). The importance of this issue is well known and has been addressed for a long time since single mother circumstances has always been occurring for a variety of reasons. The biggest reason is most likely because the mother herself is the one who gives birth to the child, which naturally begins the relationship with the mother and child promptly at the start of the child’s life. In history men had been always been the sex responsible for representing their nation or group for military conflict and casualties in any engagement is mostly costly to the lives of the men who participate in the actual fighting. The loss of a women’s husband in general if either from war or otherwise will result in the woman being left alone to care for the child. Also since divorce, unwed pregnancies, or even rape will result in the mother’s absence in a father figure for the environmental upbringing for the child, the heart of the research in the single parent family usually involves the effects of the missing father. The importance of the father figure is substantial for the child even in the early days of infancy. Although it is the mother that is more responsible for the nurturing nature that the child requires, it has been shown that a father figure’s presence is significant even during infancy. There are differences in the way that a mother and father interact with a baby although these are limited mostly to one-sided communication and touch between the baby and the parent. The mother as mentioned before has the most interaction with the infant and is usually more comforting often speaking to the infant with more soothing and rhythmical fashion. This is different typically in father’s who usually express themselves in a more upfront manner with more physical touching as well as with firmer and abrupt vocal tones. This is important for the child even at the early stages of its development since these types of interactions from the father stimulate the child in a more fun, exciting, and adventurous level. A child that has these stimulations tend to score higher in brain development and critical thinking tests (6). The importance of a father figure is more prevalent in early childhood through the notion of physical play. Besides from the child having opportunity for fun through interaction with another person, a rougher and more challenging (though still comforting) environment that is beneficial for development. This type of play which is more predominant when provided from a father can present the child the opportunity to learn his own physical boundaries, the effect of its own actions on its surrounding world, and to learn about its own emotions while discovering the notions of winning and losing. Studies have proven that interactions with the father through play and otherwise teach children to become more emotionally aware of themselves and others. Studies have shown that these children will also get along better with siblings and peers better due to these emotional developments (6). These benefits for the child can also have lasting effects into later life for developing relationships with others. The father figure is also usually more responsible for influencing challenges and trying new things for young children. This is significant for the development of the child’s problem solving skills as well as his or her self-esteem when able to succeed in new or challenging situations. These can also help build independence as a father figure tends to allow the child to explore the world and try things out for him or herself. The father figure is also more responsible for disciplinary action towards the child which not only teaches the child what kind of behavior is appropriate or not, but also teaches them to be responsible for their actions. Not only by providing discipline, the father figure also sets a role model of responsibility that can cause the child to become less troublesome, able to take responsibility, and not blame others for their circumstances (6). From the start of the child’s life it is evident that the role of both parents is important for the development in healthy children. Aside from the individual roles which are provided by the two parents separately, the problems of having just one parent in the household to take responsibility of the child by him or herself can be hampering for the child’s development as well. There have been correlations that single parent family households may not provide the best living environment for a child. These negative aspects can originate from the actions of the single parent and from the child due to the differences in the environment of a single parent household. These can be because of economic issues as a single parent mother will have more responsibilities for herself to support the family without the assistance of a spouse. These responsibilities can also be trickled down to the child as well and both aspects can be stressful to the mother and to the child. Both of these factors can separately be detrimental to the physical and mental health to the child specifically (1). Studies show that adolescents that are raised by single parents tend to score lower in psychological tests which indicate lower levels of self-esteem, mental health, the ability to concentrate and learn in school, and to interact socially with others (1). There are several variances to how each of these types of results can occur with relevance to being raised in a single parent household. Stress being one of them can be shared by both the child and the parent as the presence in one can cause the other family member to experience it as well. The stress can occur from both economic and social hardships from being a single parent. With the higher level of responsibilities being put on the single parent, it is often seen that the child is left with more household duties than children with both a mother and a father. The higher amount of chores and stress brought on from them coupled with the stress felt by the child from parent can have negative effects on the child emotionally. The stress and worsen moods generated from these living conditions can increase the occurrences of mental illness and also bad behavior (1). This is also harder to deal with for the single parent as the larger workload put upon them and the stress that is brought with it leaves them with less resources and time to appropriately interact with the child. It can be noted also that adolescent children do communicate better with a single parent more and family decisions are made more so with participation with the child. This interestingly however correlates with more determents to mental health as well as self-esteem to the child (1). This can be because the said interactions between the parent and child may not always be positive ones due to the stress discussed earlier. It can be since a single parent may have to lay more responsibility upon the child, fewer rules upon the child’s behavior may be present which can have negative effect on the child’s mental health due to higher levels of insecurity. The higher level of decision making left on the child having negative effects on self-esteem and mental health may be due to greater insecurity and thoughts of incompetence from the child (1). All of these factors of stress, emotional stability, and mental health can have detrimental effects on not only the child’s academic and social progress but also later in life in the work environment as well as parenting their own offspring as well. The physical wellbeing of the child must also be addressed as those may also be compromised when brought up in a single parent family. The ability to provide all the needs to the child in a single parent household are typically lower due to the single parent having less time and resources. Although social programs are available for these situations, studies still prove that single parent children often receive less medical attention than those from with both parents. Plutzer showed in a study that only 57% of children have been brought to dental care facilities by their mothers while a 71% of those from double parent families have been seen (2). These can be again since the single mothers may not have the time to fully attend to these healthcare needs as a discrepancy can be seen in the health care even to the mothers themselves. This is most likely supported by the fact that interventions from the mentioned social programs take more consideration to the single mother families. This may fortify the thought that economic status may not play as big of a role in what can be provided for all these issues for the single parent children. If economic situations may not be the more contributing factor for these underprivileged children, it may be more to the parenting and relationship with the child and single parent that can be the cause. A study has been done to research environmental factors that can cause developmental disorders on young children that focus on children before adolescence and even infancy. These studies have indicated that children that have been raised by single parents are more likely to develop persuasive developmental disorders as well as mental retardation (3). It has also been shown that even in children with both parents present to them that these issues have higher occurrences due to inadequate parenting indicated in low test scores in communication and affected response from either or both parents. But to focus on these issues relating single parenting, it can be said that these problems are from parent performance when considering just environmental factors. It should be mentioned however that economic issues can have an effect in-directly to the higher amount of developmental problems seen in the children brought up by single mothers. The said before stress put on single mothers can cause inadequate parenting starting from birth and could have additive effects on the child during its development. Studies has also indicated that single mothers also have a higher chance of having mental disorders such as depression which can also be detrimental to raising the child at all stages of his or her upbringing (3). This falls back on the interaction with the child and mother that this interaction is much lower when the mother suffers from such ailments. Though studies on developmental disorders and especially mental retardation on young children and infants is relatively new, these can be a productive incentive to hit the issue of young people with behavior problems from a new angle. This is such since studies have proven that children with persuasive developmental disorders are much more likely to have more serious mental issues later in life. Also since mental retardation is predominantly thought to have more genetic causes than environmental. However more studies have proven that environmental factors especially with parent child relations can have a greater effect (3). There have been other instances where economic situations have not played the biggest role in the proper upbringing of a child by single mothers. An issue in Malaysia has risen to the increase of adolescent children in the country. It has been observed that a growing problem with adolescent children’s behavior has arisen due to higher levels of drug use, aggressiveness, gang activity, and other antisocial activity. A study was done on the issue with to focus on the home life and relationship with the children and their parents. This was centered on households where there were children being raised by single mothers since there was also a large increase in the amount of single mothers also occurring. The study covered many family backgrounds with varying economic and social statuses as well as single parent and married couple households. The results were that indeed children being brought up in households run by a single mother had higher chances of displaying antisocial behavior. However many variables were also tested such as the differences in income for these single mothers. It was shown that there was not much difference in the amount of children with these issues from single mother households where the mother earned a large income or low income (4). This fact implies that family structure or the interactions between the parent and the child are the reasons for the bad behavior. It could be thought that the income may be an indirect cause of this behavior since the workload and stress would affect the single mother, who does not have as many benefits in Malaysia. Since however this particular study did not see much correlation between the antisocial behavior of the children and the income of these single mothers, it can be assumed that family structure may play a larger role in the issue. The Islamic family has a core family style that involves having a father figure particularly active during the adolescent stage of the child. These roles that the older male figure in the household is to allow the child to experience the outside world and the responsibilities that come from the culture outside of the household (4). The absence of these older male figures to provide this to the children may put greater stress on the mother who has to solely be responsible for providing all the needs to herself and her children. This hypothesis is further strengthened by the results of the studies that even fully complete families with both he mother and father have seen increases in the amount of antisocial adolescents due to lackluster parenting (4). These ideas have been expressed earlier when discussing the other studies but are further reinforced by this one especially since this was done in a foreign context where the culture differs greatly from in the United States. Though there are many issues that can arise in children from single parent families and those issues can result in a variety of reasons, the focus on the studies presented show that a large amount of problems can come from the large responsibility put on single mothers. The single mothers put at a disadvantage to not having a partner must tend to the needs of her child both emotional and substantially, while at the same time supporting herself. This is a daunting task as much consideration must be put on raising a mentally and physically healthy child. Single mothers are left at an economic disadvantage compared to married mothers obviously, but the main issues come to the interaction between the parent and the child. These important interactions often become deterred one way or another due to the larger responsibilities put on the mother (and sometimes the child) to survive and the stress put upon the mother may affect the mood and psychological state she may be in. These all can have negative impacts on the child which can range from less than adequate habits for physical health, sociemotional issues that can result in antisocial behavior, or even possibly mental retardation and developmental disorders that can result from the lack of parenting during infancy. The biggest issue most likely stems down to the absence of both parents in the child’s life, however most social studies until recently have focused on the economical issues that these single mothers have to deal with. The social programs especially in the United States help with the lower amount of income that single mothers make however, while these income issues may have indirect causes to the problem, it is becoming more prevalent that the parent-child interactions may be the focus and should be implemented in further study as well so that the population may be educated for better care of these children.

Confucius in Modern China Essay -- philosophical ideologies

Every culture is composed of many philosophical ideologies that comprise the ever-changing nature of said nation. Many cultures do not have a monolithic, nor static nature; ideas such as Maoism, Daoism, Christianity, etc., challenge the preexisting notions that are part of a culture. Even though the Chinese government has established a strong strand against Confucianism, it is still a part of the Chinese culture in socio-political, economic, familial, and individual levels. Confucianism is still prevalent though business, education, the Confucian revival, the previous ties China had with Confucianism, and a return to old traditions as a default. Through the economic-business aspect point of view, Confucianism still holds sway over many of the actions and feelings in Chinese business, and some even say that, â€Å"it is impossible to do business in China and not feel the effects of Confucian philosophy† (Jacobs 29). For example, the sense of a social hierarchy is painfully obvious when foreign entrepreneurs do business with Chinese companies. In a business venture, â€Å"a British marketer who invited several Chinese guests to a trade promotion reception†¦ According to Chinese tradition, the glass of wine should have been presented to the highest trade official first† (Jacobs 29). This sense of hierarchy is also integrated into several manifestations of Chinese business management, particularly in an individual level that builds up to the corporation as a whole; due to the fact that the majority of people are expected to behave according to rank, they are disinclined to present ideas that may lead to the de velopment of the business. Jacobs also says that this explains â€Å"much of the inertia in Chinese businesses, particularly in state-owned en... ...ts influence is still strong. For example, â€Å"the Chinese state is allocating a $10 billion fund to sponsor a worldwide network of schools to promote Chinese culture and language† in the Chinese Bridge Program, which is viewed as he first step to a wider global acceptance of Confucian philosophy (Zhu). Speaking in a historical sense, in times of major social change, such as when the Communist party came into political power, Confucianism was derided and dismissed. Although political agendas and events try to mask the traditional ideologies of the Chinese people, recent political changes have said to create a new structure (Jacobs 30). Just as any other philosophy that has been imbued with a culture, Confucianism is not easy thing to dissolve; the basic principals form the basis of much of China†²s culture on a business, familial, socio-political, and individual levels.

Inflation and its Causes

All the substance regarding this report has been explained with uphill struggle and care. This write up has demonstrated in easy mode and is understandable by the reader. It will provide the intramural and threshold aura to read and it will cover all the requisites and proviso. One of the aesthetic and charming characteristics of this project is this, that it is composed and genial. ABSTRACT The capability of financial analysis over inflation effect on employment has been highly accentuated. This analysis has been acknowledged as the means through which the livelihood and other progressing goals of the routine matters can be enquired.This report delves into the financial analysis through relationship between inflation and employment of a country like Pakistan. Statistical analysis with reference to previous year's data provided by State Bank of Pakistan, inflation in the usual course of events with the help of examples. The verdict about financial analysis may facilitate policy maker s, employment agencies, organization to ascertain, existing cooperation's and besides customary the genteel maneuver to improve their lifestyle all over the country.METHODOLOGY Aspects about inflation relationship with employment in the country has been piled p by means of primary sources by interviewing Muslim Commercial Bank garden Town Branch in the Lahore; this was the part of our information collecting activity. Secondary information has been congregated through different economies, financial management and other books, internet sites of state bank of Pakistan, finance base sites in Pakistan, exiting reports on financial analysis and generals related to employment and inflation.Our foremost endeavor was to compile and evaluate all relevant information with reference to employment and inflation in Pakistan and to Judge against this analysis with standard set by international market. BACKGROUND & OBJECTIVES Role of Financial management in the improvement process continues to be a t the vanguard of strategy contest not only in this part of the world (Pakistan) but also in other countries. Most of the specifics about Financial Management Analysis have been renowned in the entire world.The compensation allege for Financial Analysis are infinite, containing calculated interest rate, installments, present value of future position of company in the market, ratio comparison, shares and bonds value calculation, money flow, decision making with respect to financial condition of a organization, budget making (is one of the most beneficial process through which we can easily access our resources), and above all calculating economic strengthened in country.By and large the premeditated role of financial management is perceived as accelerating the accomplishment of wider economic and social aspiration. Capitalist from all over the world suggests that financial management performing efficient role as participate by production and other departments in accomplish the eventu al target of a firms. TABLE OF CONTENT Executive Summary Inflation Causes of Inflation Inflation and its EffectsInflation and its Impact Economic Factors of Inflation Non-Economic Factors of Inflation Temporary Effects Permanent Effects Review 16 Theories about Employment 07 10 11 09 Fisher Effect 12 14 18 Relationship between Employment & Inflation 25 International Condition in Inflation Conclusion Appendix -Article 33 37 -Inflation Rates of Previous Years & Graphs 15 Employment 20 26 38 -Employment Rates Comparison EXECUTIVE SUMMARY 39 Our Project â€Å"Inflation and the Employment† basically contains the answer to this question â€Å"What is the Inflation†.What are the basic meanings of inflation and what re the meanings of inflation according to the economics point of view. What are the factors by which inflation rises? Inflation's effects which it create on the overall economy. It also describes the theories of famous economist â€Å"Fisher† about inflation . And how â€Å"Fisher† theories effect the inflation of overall economy. Then this project describes economic, non-economic, factors of inflation and its temporary and permanent effects on economy. Its effects on employment and how employment can be disturbed by the inflation.Different theories of different economists are considerate to get a clear ND better understanding of inflation. This project clears the relationship between inflation and employment through graphs. Then we presented conclusion of the project. In appendix project covers an article about inflation and employment rates of previous years & graphs and their comparison. INFLATION Definition Inflation is a process in which the average level of prices increases at a substantial rate over a considerable period over time.In short, more money is required to buy a given amount of goods and services. One can measure the rate of inflation as either he annual percentage rate increase in the average price level or decr ease in the value of money. There are many causes of inflation, but in general we can divide them to the one at the demand-side and the one at the supply side of the economics. Demand pull inflation occurs when aggregate demand exceeds existing supply, forcing price increases and pulling up wages, materials, and operating and financial costs.Cost- push inflation when price rises to cover total expenses and preserve profit margins. A pervasive cost-price spiral eventually develops as group and institutions respond to ACH other new round of increases. Deflation, as a reverse process, occurs when the spiral effects reversed. Even though today's inflation is more of a mix between these two basic inflation causes and inflation inertia, this is a good classification to start with. Effects of Inflation Effect of inflation, on other hand is a many layered as its causes.Inflation is usually thought as a negative phenomenon on the basis of traditional experiences with hyperinflation, but more exact analyses of the inflation effects have shown that they depend on the form of inflation and situation in national economy. One there no longer simplistically speak of effects of inflation. Despite the progress in understanding this phenomenon, there are still many subjects unclear and need consideration: potentially also advantages (benefits). Besides advantages and disadvantages of inflation, we also have to take into account costs of disinflation.Decisions of stabilizing economics policy for or against the disinflation depend on results of a two- fold cost-benefit analysis. Results from inflation-effects analysis are important component of explaining inflation, because inflation can be politically desired caused) for its potential net benefits. Costs and benefits of inflation essentially depend on whether it is fully or only partially anticipated. Important regulation factors are also individual institutional circumstances, such as presence of index and revision clauses in l ong-term contracts.Caused by economic effects, non-economic effects of inflation can also appear, like tax-refusal, citizen's reluctance, strikes etc. Different situations in national economy can lead to different effects of inflation. These situations of inflation as well as effects of inflation will be presented in the following research. INFLATION AND ITS IMPACT Lets us take an example of an economical participant (firm) that borrow a long-term loan worth of 10,000 RSI at fixed interest rate and annual annuity of 1,000 RSI. Let us assume now that an unexpected inflation doubles price and wages.Real worth of the wages has not changed, since the price also doubles (for double nominal wage this economic participant can now buy the same amount of goods and services as before), but the real worth of the annual annuity of his loan decreased. Nominal annual annuity is still 1,000 RSI, but the economic participant (borrower) has to work for that mount only half as much as before the infl ation occurred. Hence the real worth of his annual annuity cut in two; the borrower increased his wealth, whilst the lender decreased his real income.The other way around happens in a case of disinflation or even deflation, where the real worth of annual annuity of a loan increases and the borrower wealth decreases (lenders wealth increases). This kind of outcome occurs if the inflation has been stable for several years (inflation rate has neither increased nor decreased) and it increased suddenly, which means that it was not anticipated. However, if the increase in inflation is expected (on basis of different data about movement of economic variables in national economy and global markets), economic participants (individuals, firms, banks etc. Anticipate this increase. This means that the interest rates financial and capital markets will rise according to the inflation rate increase. Fisher's Effect: Where â€Å"in† is nominal rate, â€Å"r† is real interest rate and are inflation expectations. This expression is also known as the Fisher's effect and it shows that the negative effect of anticipated inflation on real money demanded is already included in nominal interest rate. When market interest rate accommodates to the inflation expectations, then the effect on income and wealth are mainly eliminated.Beside redistribution of income, inflation also has real effects on national economy. On one hand it affects output (GAP), which is a macroeconomic effect and on the other it affects allocation of resources in national economy and economic efficiency, which is a microeconomic effect. Anticipation and Balance All this factors cause the so-called inflation cost. On the other hand, it has already been stated that inflation can lead to some benefits. In order to analyze these effects more precisely, two characteristics of inflation or behavior of economic participants have to be defined.Inflation can be anticipated or unanticipated, which means that i t is/it is not built into all economic relations (contracts). Inflation can be balanced or unbalanced, which means that all price rise/do not rise with the same rate (relative price remain/don not remain unchanged). In reality these characteristics of inflation and behavior of economic participants combine and cause different economic situations, which are presented in the following table. Economic Effects of Inflation To summarize, we can divide effects of inflation into two groups; an economic and non-economic effects.We could also understand them as costs (advantages) and benefits (disadvantages) of inflation to a national economy. Economic effects are as follow: Income effect; by these effects we understand deviation of growth rate of the GAP its natural growth rate, caused by inflation. They don't include feasible shrinks in the natural growth rate of the GAP. Employment effect; which are in strong connection with income effects. Hence they are usually defined as difference tee n natural and actual rate of unemployment.Distribution effect; of which two are traditionally subjects of practical research and scientific analysis: effect of inflation on distribution of income and effect of inflation on distribution of wealth. Allocation effect; which are the most obvious with money (cash); in term of high inflation people (economic participants) want to get rid of money because real interest rate is usually negative and their demand for other assets increase. Price of inputs for production that are based on long-term contracts cannot rise as high inflation rate either; therefore missed investments are a common phenomenon.Theses are all allocation effects of inflation, also known as microeconomic effects. Effects on economic growth; connection between inflation and natural growth of the GAP definitely exists (at least on short term), but it is still for the most part unsolved. Phenomena, such as barter trade, parallel economy (also known as â€Å"grey economy') and corruption can appear or intensify and they all decrease natural growth rate of the GAP. These effects of inflation are also known as macroeconomic effects and are n strong connection with allocation (microeconomic) effects.Non-economic effects of inflation are caused by economic effects and are the following: tax-refusal, citizen's reluctance, strikes, revolts; rising etc. These effects are not a part of our research. Employment Effects of Inflation Employment effects are usually defined as difference between natural and actual rate of unemployment and are therefore in strong connection with income effects of inflation. That deviates of growth rate of GAP below its natural growth rate, caused by inflation.That is why these two types of inflation effects are examined together. Income and employment effects of inflation are known in two forms as temporary and permanent effects. Phases of Inflation Inflation usually passes over three typical phases: at first it is accelerated, the n it is steady (stabilized) and at last it decelerates. Temporary effects are mainly connected with accelerated and decelerated inflation, hence these two Phases are assumed to last for a shorter time, while permanent effects are connected with steady (stabilized) inflation.Employment and income effects of inflation are mainly temporary phenomena that last only as long as inflation is not yet fully anticipated. Whether these effects have positive or negative consequences for a national economy depends on the stage in which inflation is discovered and situation in which economy found. Let us examine two inevitable types of inflation now: accelerated and decelerated inflation. Accelerated Inflation Accelerated acceleration is often accompanied by income and employment effect (inflation-accompanied prosperity).However, these effects can only be expected, when the increase of inflation rate is caused by monetary demand-pull and induced supply-push is delayed (a time-lag has to emerge be tween decreased monetary emend-pull and induced supply-push). If the growth rate of the money volume in the further course of adaptation process remains unchanged, positive real effects are only temporary, because of the subsequent supply-push, induced expectations and wage bargaining.Real inflation effects can only be realized, if growth rate of the money supply rises continuously and by that stable inflation acceleration is provoked. Thus means that there can no longer be any applicable long-term trade-off between given inflation rate and unemployment rate. Decelerated Inflation there are quite common with decelerated inflation. Necessary prerequisite for a lasting decrease in inflation speed is a tight monetary-policy authorities are confident in their knowledge of the amount of tightening that is needed, they can move quickly to the required higher level for interest rates.However, to extend that there is more uncertainty on the effects of monetary policy changes, due to the dev elopment of financial markets, it argues for implementing a more gradualist approach. Such uncertainty could increase the risk that a strong policy action might lead to undesirable outcomes. Gradualist strategy central banks sacrifice the speed with which their target is obtained in order to avoid overshooting the target. The degree if gradualism will be dictated by other considerations, such as central banks anti- inflationary credibility.If it is poor, there is heightened risk that a gradual policy response would increase inflation expectations. Anti-inflation Economic Policy Policies of gradualism create stress between preemptive and reactive moves. An increase risk of â€Å"falling behind the curve† suggests that a gradualist policy may needed to be followed by more aggressive moves, if events appear to be turning out differently than expected. E. G. F health were to weaken the effect of higher interest rates, at the same time that wealth effects were stimulating consumpt ion, monetary policy would face an increasing risk of â€Å"falling behind the curve†.These tensions raise the importance of the monetary authorities, credibility and transparency. If inflation expectation is well anchored, policy actions will be more effective and thus the size of any move to achieve a given objective is likely to be smaller. A credible commitment to low inflation thus provides some insurance against â€Å"falling behind the curve†. Transparency reduces the risk that policy changes will destabilize arrests.Such a strategy would allow markets to adjust their anticipations appropriately and in this way, the risk of a disorderly adjustment of asset prices can be reduced. Permanent Effects If we presume that inflation was on long-term correctly expected and completely anticipated and that there was no wage bargaining, the (long-term) curve of aggregate supply growth SSL and the (long-term) Philips curve PACK in the presented basic model become vertical fu nctions of natural income-level growth rate as well as natural unemployment rate. Note: Donation Beta represents anticipation coefficient.Friedman-Phelps Hypothesis: This corresponds to the so-called Friedman-Phelps hypothesis, by which no income and employment effects can appear with completely anticipated inflation, I. E. Each on short term possible trade-off vanishes on long-term and income-growth rate as well as unemployment rate preserve on its natural level. Reacts to such policy (with downward correction of price level), the higher are inflation costs (expenses of such inflation fighting) and danger of premature collapse of tight monetary policy increases. Anti-inflation policy therefore has to keep inflation cost as low as possible, I. . T has to pursue an adaptation path that is close to SSL as well as PACK as it can be to achieve this, anti-inflation policy has to include well- measured and above all continuous decrease of money-supply growth rate and a series of accompany measures for adaptation of expectations and for softening the wage bargaining. Effect on output stabilization may well be positive and the same is true for overall social welfare, but we cannot forget that uncertainty about the policymakers preference leads to a higher inflationary bias and also inflationary cost.EMPLOYMENT The inadequacy of public employment as a source of additional Jobs are generally understood, and it is recognized that the use of this expedient is â€Å"to some extent a desperation measure†, the current employment program relies mainly on the stimulation of the private economy by means of an inflationary tax cut, the only other tool that is now regarded as being available for the purpose. The deliberate use of inflation as a means of increasing business activity and employment is based on J. M.Keynes' economic theories, and to see Just how our present findings apply to this situation, it will first be desirable to have a clear idea as to Just what Keyne s' contentions with respect to employment actually are. His theory was developed as an alternate to the so-called â€Å"classical† theory of employment, the previously orthodox economic doctrine in this field, and his explanations are expressed mainly in terms of contrast with the earlier views†. The classical theory of employment†, he says, â€Å"has been based†¦ On two fundamental postulates†¦ Namely: The wage is equal to the marginal product of labor. The utility of the wage when a given volume of labor is employed is equal to the marginal disability of that â€Å"amount of employment. † Translating the second postulate from the professional Jargon of the economist to the Renaults, he arrives at this alternative, and more understandable, statement: â€Å"That is to say, the real wage of an employed person is that which is Just sufficient (in the estimation of the employed persons themselves) to induce the volume of labor actually employed to be forthcoming†.Keynes accepts the first of these two postulates but denies the second. The most fundamental objection to this proposition, he says, is that it involves â€Å"the assumption that the general level of real analysis he shows that this assumption is erroneous, and he arrives at the same inclusion reached in the present analysis; that is, the general level of real wages is fixed by factors which operate independently of the bargaining process, and it is not altered by any manipulation of money wages.According to Keynes, the â€Å"classical† economists' basic mistake in their analysis of the employment situation is a result of their explicit or tacit acceptance of Says Law of Markets, a principle formulated by J. B. Say, one of the early French economists, which asserts that in so far as the price paid by the buyer is income for the seller, the act of production creates all of the archiving power required to buy the product. Keynes termed this principle â₠¬Å"an optical illusion, which makes two essentially different activities appear to be the same†.By virtue of its acceptance of this law, â€Å"The classical theory assumes that the collective demand price always accommodates it self to the aggregate supply price. Effective demand, instead of having a unique equilibrium value is an infinite range of values all equally admissible; and the amount of employment is indeterminate except in so far as the marginal disability of labor sets an upper limit. If this were rue, competition between entrepreneurs would always lead to an expansion of employment up to the point at which the supply of output as a whole ceases to be elastic†.Thus Says Law, Keynes contends, â€Å"is equivalent to the proposition that there is no obstacle to full employment†. Since there obviously is some obstacle to full employment, and since the ability to manipulate the real wage level assumed by the classical theory does not actually exist, Keynes rejected that theory and formulated a new concept in which for a given â€Å"propensity to consume† and a given rate of new investment. There will be only one level of employment consistent with equilibrium†.He summarized his new concept in these words: The outline of our theory can be expressed as follows. When employment increases, aggregate real income is increased. The psychology of the community is such that when aggregate real income is increased aggregate consumption is increased, but not by as much as income†¦ Thus, to Justify any given amount of employment there must be an amount of current investment sufficient to absorb the excess of total output over what the community chooses to consume when employment is at the given level.Here, then, we have Keynes' employment theory, as presented by its author, together with his explanation of the principal points of conflict between his ideas and the theoretical outlook shared by most of his predecessors: the â₠¬Å"classical† theory. This classical theory is a wage theory; that is, it is based on supply and demand reasoning applied to the price of labor. Since a lower price, according to the classical ideas, will increase the demand that is, the number of Jobs – there would appear to be no obstacle to full employment if the workers are willing to accept the appropriate wage.But the adherents of this viewpoint are victims of that unquestioning confidence in the universal applicability of the supply and demand principles that so often leads economists to apply these principles to issues which are not supply and demand problems at all. Considerations of supply and demand are not applicable to any situation unless the price is variable, and as Keynes has emphasized, the real wage rate, the true price of labor, is fixed by external factors (the factors that determine the rate of productivity) and cannot be arbitrarily changed.

Assessing Of A Multinational Company Essay Example Pdf - Free Essay Example

Sample details Pages: 8 Words: 2310 Downloads: 2 Date added: 2017/06/26 Category Business Essay Type Argumentative essay Did you like this example? A multinational company as stated by Madura (2010) is a firm that engages in some sort of international businesses, with globalization and diversification of multinational firms comes along with it certain exposures such as country risk and political risk along with certain financial risk. Multinational firm do face greater risk in such environment compared to domestic firms as they raise capital in one country because of low cost of capital and invest in another country and also produce goods in one country to be sold in different countries. The business of multinational companies carries with it certain types of risk while trading with different countries; The risk associated with multinational firms in contrast to domestic firms are global economic exposure, political risk, actions of host country, economic risk, exchange rate risk, cultural risk, operational risk, transaction risk, translation risk. Economic risk is a concern for multinational firms as fund amental changes of economic policy can be constraints to them and hamper their anticipated profit from the investment, which is also suggested by Glantz and Jonathan (2008) as the significant change in growth rate or in the economic structure that brings about a major change in return on investment than expected. Madura and Fox (2007) states that high level of inflations can be unfavourable to business as it affect the buying power of consumers and which could lead to decline in economic growth of that country. According to the World Bank, exchange rate risk is the unpredictability in the movements in exchange rate that results in the variability in the value of the investments (www.worldbank.org). This risk arises because of the value of investment varies with the exchange rate, if the foreign currency appreciates as at the time of remittance of profits by the subsidiary firm then the profit remitted will decrease for the parent company because of the exchange rate fluctuations. This risk is only of concern with those domestic companies who are dealing with foreign currency or doing a business of import or export. According to Apte (2006) transaction risk can be defined as a measure of variability in the value of assets and liability when they are liquidated. The important factor of concern is that transaction exposures usually have short time horizons and also the cash flows may be affected because of the effect of exchange rate movements. Other short term exposure in relation to it can be translation exposure which occurs. As noted by Buckley (2004) that, when the accounts of subsidiary firms are consolidated and the income or loss in foreign currency are translated home currency, then the consolidated profit will vary with the fluctuations in exchange rates. This risk is more of concern with accounting aspects and does not create much impact on overall economic value of the firm. With most multinational firms raising capital in one country and inv esting in another country carries a risk because if the firm is raising capital in The United Kingdom and makes investment in India because of better borrowing rate of interest at the time of investment and the interest rate increases more than anticipated then it can decrease the profitability of that investment because of the increase in interest payments. Similarly, a multinational firm also has to face operational issues and many a times has to abide or follow the dictates of the foreign country in setting up plant and also with employment of local people, which is not of any hindrance or issue for domestic companies. Rugman and Brewer (2001) notes political risk as one of a component of the international or country level risk faced by multinational firms. And Madura (2010) states that subsidiary firms may be taken over by the Government of the host country in case of extreme form of political risk, and local political factors of the host country can hinder the performance of the company. Political risk may be characterized as industry specific or being firm. Another major concern for multinational firms is the risk attached with certain country; country risk as defined by Calverley (1985) is, the potential losses that can arise because of the problems which may occur due to the political or macro-economic factors in a country. Much of the risk facing a company is related to the cyclical nature of the domestic economy of the home country. As multinational firms operates in different countries, the economic cycles are of those are not perfectly in the same phase, thus reduces the overall variability of the firms earnings. Thus, even though the riskiness of operating in any single country may exceed the operating risk in the other host country, much of that risk is eliminated through diversification. According to Business International Corporation as cited by Rugman and Brewer (2001) refers country risk as the exposure to either an outright loss or to an unanticipated lower earnings stream in cross border business, caused by economic, financial or socio-political events or conditions in a particular country that is not under the control of a private enterprise or individual. This type of risk exposure generally refers to the uncertainty about the current conditions or about the future conditions within a country which causes inherent stability or uncertainty about the future. Cultural difference in the operations of firms can also be attributed to the business environment of certain countries and as suggest (b) Cosset and Suret (1995) states that diversifying investment among politically risky countries not only improves risk return characters but also reduces overall risk in the business prospect of multinational firms as cited by Rugman and Brewer (2001). Although multinational firms are confronted with many additional risks when trading in different countries, but at the same time as a long term strategy , they can also take advantage of international diversification to reduce their overall riskiness through various foreign operations to cover up against foreign competitive intrusions in the domestic market and more closely monitor their international and domestic competitors, reducing the risk of being unaware by the new developments in different counties. The diversification strategy helps multinational firms to reduce the total risk they face. But according to Mcrae (1996) diversification of the investment portfolio is not the only approach to hedging the risk in foreign investments , political and economic risk is difficult to hedge but it can be dealt by using internal hedging techniques such as having the manufacturing unit in the host country, netting the payments and receipts. Madura (2010) is of the view that if the country risk is within the tolerable range to the enterprises, then the business prospect in that country needs to be given further observation as the risk of that cou ntry can be included in the capital budgeting and the firm can also increase the hurdle rate or discount rate to adjust with the level of risk perceived in that proposal. With the risk in international business for multinational firms, now they can avail insurance to cover the risk of expropriation of assets, the U.S. Government provides such insurance through the Overseas Private Investment Corporation, the cost of business proposal may increase with the addition of insurance premium for multinational firms but with this strategy the a part of the firms total foreign exposure will be covered Madura (2010). McRae (1996) suggests that to mitigate the political risk of a country it is imperative to be a part of it, multinational firms can hire and train local people and utilize local resources to improve its image and reputation. The firm can give a boost to local talent by the virtue of providing training and recruiting them. The firm can use the services of local industries for t heir business operations. Also, the firm can be part of the Governments social initiatives and may support a part of it, which will portray the firm as being in good interest of the country and this will be a strong hedge against any Governmental interference in the firms business. Multinational firms investment projects are highly exposed to the risk of fluctuations in the exchange rates, the term exchange rate refers to the situations in which movements in exchange rates changes the financial performance of firms, which are measures by the conventional financial statements or corporate cash flow (Dhanani 2003). When a multinational firm is exposed to the risk of unexpected changes, which is most likely to occur with countries with high inflations or instability of the foreign currency that may depreciate the value of the foreign currency in future, the multinational firm is exposed to risk of its future profits. The strategy for this type of risk to hedge the foreign currency a nd it can insure against exchange rate risk by selling the foreign currency futures as the firm will be antipating future profits to be remitted back to the parent company. Multinational firms can also borrow in foreign currency to cover this type of risk and also cover itself from local political and country risk as the prospect of the firm will also be a concern for the host country. Other strategy for multinational firm is to borrow foreign currency against its future earnings, sell the currency spot and at the same time make an investment of the money in the country of parent company. Other foreign exchange hedging technique would be to raise a loan in host country and the payment can be made from the payout of the business, the loan from the host country can also be used as additional liquidity in certain international market or make an investment in international money market. Also, the loan taken in the host country will cover the currency fluctuations as the funds gene rated from the local money market can be utilized in the investment in the same country, the advantage of it will be from the debt payment which can be made without the risk of currency fluctuation. And as portrayed by Madura (2010) that in case of extreme form of political risk the host country Government can takeover the subsidiary firm, so if for any reason situation like that occur where the government would want to take over the firm, the local lending bank or institution will attempt to prevent that. Multinational firms also have option of availing project finance for international exposure, so that the firms exposure is limited as it will only invest a part of the equity in the project. The advantage of this strategy is that the firm is secured by the projects future revenues from the business on and as this type of arrangement are non recourse loan, the creditor banks or lending institution would not be able to pursue the multinational firms for payment but only the assets and cash flows of the multinational firms project can be taken over by the lenders. This arrangement also protects the firm from hostile takeovers by governments because of the credit arrangement; under credit arrangement like this, all the existing liabilities will have to be borne by the host government. A multinational firm can mitigate some risk involved due to fluctuations in exchange and interest rate risks by means of hedging strategies. A multinational firm can net out its exposure in foreign currencies by netting out its receivables with payables, to be able to use this strategy efficiently, multinational firms need to be regularly updated with the cash flow of the subsidiary firms. Multinational firms can use forward contracts to hedge its foreign currency exposures; it can sell forward its net inflow of foreign currency and buy forward the net outflow of foreign currency and removes all the uncertainty regarding the domestic currency value of the payable or receivab le. As most multinational firms must have access to international money markets for short term borrowing and can also invest in the same market if it has additional funds. It can use the money market for hedging transaction exposure. It can also hedge with currency options, which provides more flexible method of covering the transaction exposure. A contracted foreign currency of a multinational firm can be hedge through purchase of a call option on the currency and the cash inflow can be hedge through the purchase of put option, as options are in particular significant where the cash flows are uncertain. Another strategy for multinational firms is hedging with currency futures, though it is similar to hedging with forward contracts in some respects but it differs because of the fundamental feature of future contracts. The advantage of this strategy is the liquidity it brings with it and as the agreements are generally with banks and large corporate with good credit rating so the futures hedge are convenient for the parties to the agreement. Multinational firms can also mitigate interest rate exposures by entering into Forward rate agreements, as stated by Hull (2006) it is a bilateral contract fixing the rate of interest that will apply to a notional principle sum of money for an agreed future time period. In case of this agreement, the notional principal amount is never transferred among the parties but only the compensation or settlement amount is exchanged among the parties. Multinational firms can enter into Interest rate swap agreement to benefit from differences in interest rates, Winstone (1995) suggest it as an agreement between two or more parties to swap obligations on two or more debt instruments or benefits on assets so that all can gain; an arrangement of swaping floating for fixed rate of interest among parties. It refers to the exchange between two parties of interest obligations (payments of interest) or receipts in the same currency o n an agreed amount of notional principle for an agreed period of time, in the same currency. A multinational firm can mitigate some risk involved due to fluctuations in exchange and interest rate risks by means of hedging strategies. Levi (2009) also states that a multinational firm is likely to be in a better position to avoid foreign exchange exposure than that of a domestic firm with local operations. Don’t waste time! 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