留学生宏观经济assignment

初始条件和不同政策的影响
 

作文题目：转型期经济体的经济和政治的表现差异很大。讨论了初始条件（体制和资源）和不同政策转变过程中的影响，并利用至少两个实际的例子说明你的观点。
 

简介
 

大多数国家在世界上经历了经济衰退，在不同的时期有不同的原因，并制定不同的谋略来解决或减少损失。当国家从一个经济类型转变为其他经济类型时，他们经历了转型经济阶段。过渡期间，在不同的行业，如金融，工业和贸易部门，大多数国家的政府面临许多问题，这个问题已经存在了很长一段时间。本文将回顾经济转型前和经济衰退的过渡时期产生的原因。正如我们所看到的，在经济的各个领域都受到经济衰退的一些破坏和这些部门确实需要改革。
 

世界各地显著下降的经济体制，真的需要重组和改革。
 

Impact Of Initial Conditions And Different Policies Economics Essay

 

Essay topic: The economic and political performance of transition economies varies substantially.  Discuss the impact of initial conditions (institutional and resources) and different policies during transition and illustrate your argument using at least two practical examples.

 

Introduction

 

Most countries in the world had experienced economic recession in different period with various causes and developed diverse stratagems to solve it or reduce losses. When counties transformed into other economic types, they experienced transitional economy phase. During the transitional period, most countries’ government faced many problems, which had existed for a long time and emerged at that time, in different sectors such as financial, industrial and trade sectors. This essay will review what happened before and after economies of transition and the causes of economic recession during the transitional period. As we can see, every sector of the economy got some damage from economic depression and these sectors really needed to reform.

 

There was a significant decline in economies all over the world, which really needed to restructure and reform. Despite of the previous reports about the bad debt of different countries due to the economic crises, there was a bright side that gleaned these days. The issues emerging economies and policies were becoming more popular in some countries. Technology played an important role in our daily lives now. Generally, emerging economies referred to the scenario happening in different countries that were growing fast with their economy due to the use of advance technology. Thus, this should need to give more focus to understand what happened in transitional period, what emerging economies have implemented policies and the results in different countries.#p#分页标题#e#

 

General idea of the transitional economies

 

Most countries when their economies were in transitional phase, they concerned on restructuring and reforming of various sectors. Accordingly, the most important sectors of most countries’ economies were the financial sectors. This considered as the core of the economic crises as observe in the international market. Ocampo (2000) stated that during the early during 20th century, from early 1930s to the middle of 1990’s, reforming of financial sectors played essential role when the economic depression and financial crises appeared. For instance, the economic crisis happened in Mexico, which affected Mexican economy a lot, such as the Mexican currency devalued significantly at that time. The economic crisis also happened in Asia in 1997 (Ocampo, et. al, 2000).

 

Therefore, most emerging countries experienced damage and restructuring in different sectors of economies before, after and in transitional period. During transitional period, those countries adopted different policies and established new institutions and laws to solved problems which caused by the economic type transformation. The government should adjust policies with economic changes to suit to present circumstances. In other words, policies should are made to secure economy, reduce damage and avoid some unfavorable results happening. Established or adopted policies were very important in the emerging economies. Policies worked well could accelerate the rate of economic recovery.

 

The role of government policies for the Emerging Economies

 

In order to make the transitional process working appropriate and rebuild the governmental reputation, government should adopt and establish apposite policies cautiously. As long as the government could hold its trustworthiness, the economies could recover fast (Hekman and Sweeney, 1997). The reliable and cautious government could enforce policies efficiently and created a stable investment environment. Thus, investors had incentives to invest and enter one country, which led to a significant growth of economy. In addition, it could expect a large amount of capital inflow resulted from appropriate policies and stable investment environment. Good policies could give a win-win situation between the government and investors because the good economic environment attracted more investors. Looking in this way, the government was on the right track to increase economic growth by raising the rate of foreign direct investment.

 

Recovery plan was necessary before making big changes in different sectors. Investors were always looking for assurance by the government before they decided to invest. Hence, there were some policies that the investors could hold on prior to make a deal and met economic recovery plans. In some countries, there was a recommendation in the adoption of the free capital movements (Hekman and Sweeney, 1997). This gave wider opportunities to have a larger capital flow. However, government policies should be given time to study because once it failed, the economy was surely to deteriorate and might cause a serious loses. For sure, no countries wanted to let their economies to end up in this way.#p#分页标题#e#

 

Looking at some countries with mature economies, there was an optimal restriction in the capital markets for them to have more secure transactions. However, if emerging countries after the post war followed mature countries to set a restriction in the capital markets, they might have a very slow recovery rate. This showed that different countries had different economic problems and every country suited different economic policies. With combination of the emerging economies with their policies, they were able to recover and make themselves to create a peak of their economy. For example, a policy called payment union in the Eastern Europe that helped them recovered from economic depression. This policy was able to help some emerging economies that were in transitional phase to recover quickly because of the proper implementation. Good policies could be signals to the investors which government have established good investment environment and have enter into the reform phase. However, not all countries in the Europe were able to recover as fast as the other countries, which were member of the European Union (EU). The proper implementation and strict compliance of the policies were able to help countries recover from their poor economic performances.

 

Policies suggested by an international organization

 

United Nation (UN) that is one of the biggest organizations in the world it very concerns with different country’s economic development. It has shown an aggressive response towards the development of new policies for global financial resources. Economic consultations promoted to every member of UN and most members accepted the suggested policies to move toward the effectiveness of emerging economies. Additionally, UN took note of international movement to make sure that every country had all the necessary information they needed. For example, one of the UN’s promotions was teaching emerging countries how to utilize resources that they had rather than took other countries’ resources that might create conflicts. Plenty of resources were available in different countries if countries knew how to maximize them. There was a good way, which was to share some resources (ex. Information and technology) that could help the emerging economies to recover. Emerging economies leads to the rapidly development of global financial and economic infrastructure. This is more on cooperation, transparency and harmonious relationship between countries in different part of the globe (Pettis, 2001). Emerging economies are focus on the urban development since this is where most of the investments take place. Wealthy nations are very particular in urban planning.

 

Although urban planning was hardly an unfamiliar concept in wealthier countries, it seemed clear that a large extent market forces were driving urban expansion in those countries. In some cases, even government did not plan to do urban expansion, market forces often relied upon to ensure their continued economic viability. This view would modify to accommodate the circumstances of urban centres geared to governmental functions and/or nonprofit services. In the United States, for example, communities developed in conjunction with major military installations. However, the continuing viability of communities of any significant size appeared to be dependent upon the exigencies of the marketplace. Nevertheless, most economies seemed to rely upon large metropolitan areas to generate a continuation success of wide ranges of profit-seeking activities. The relationship appeared to be circular in the sense that the activities in question contributed to the ongoing viability of their metropolitan hosts. By the positioning in metropolitan complexes, profit-seeking activities took part in physically configuring these complexes.#p#分页标题#e#

 

Economic situation in different countries

 

After the recession, different emerging economies were able to flag themselves. Countries such as Singapore, India, Russia and Brazil took the stage against some bigger countries like the United Sated as well as EU. It was a turning point of new economies, which forecasted to shift as soon as possible. Prior to the recession, United States was driving the world economic development when it came to global terms and conditions as well as a model of economic policies (McKee, 1994). Nowadays, it was quite different wherein other countries were getting more attention. The recession resulted confusion in the United States when it came to the policy that they needed to implement. The Federal Reserve entangled itself to the decision of whether choosing economic growth over sustaining interest rates to keep inflation.

 

Despite of the recovery of the United States from recession, investors opened its way to different developing countries like India and South America. This made more sense knowing that even wealthy countries were not secure with the recession it was a little risk investing less with developing countries with an optimistic approach. They might choose to invest in emerging economies to make sure that their liquidity of capital especially during its peak season. However, emerging economies did not come alone; it was emerging all over the world.

 

It was very tough to look at the countries and put your investment depended on investor’s choice. In terms of percentage in increase of economic growth, the top ranking was China which able to sustain its 9% growth every year. Then, they wanted to make sure they were able to control inflation and attracted more investments came into China (Meyer, 2004). China was a good choice for investment knowing that they were more trade- and export-oriented as comparing to India. Even though India is not as strong as the increase in economy compared to China, they were able to hold their ground against recession. They were able to do this by focusing on the domestic side and creating more employment opportunity for their people.

 

Many countries were affected by financial crisis because it swept across whole world. This showed how the important to choose policies before making decision in time of economic crisis. Due to the banking system in Canada, it was considered that a country had the strongest financial system in the world. In other words, Canada was one of stable economies in the world because it had a good financial system. This gave more challenging role in Canada to prove that they had the ability to adopt and implement appropriate monetary and fiscal policies compared to the countries, which alleged inability to handle the economic crisis (Meyer, 2004).

 

The Changes in Emerging Economies

In transition period, there many changes happened in each emerging countries. For instance, due to the computerization, many emerging countries needed less human resources than past time. This led to an increase of unemployment rate.

 

The currency and monetary policies changes were also affecting emerging economies. If the country was able to control the value of currency this was where policies were important in helping the economic growth of the country. Pay attention to the rate of economic recovery it depended on the government overall abilities and the efficiency of execution (Ahlstrom and Bruton, 2006). With the aim of attracting investors to invest in one country that should made sure the outside information of the investment environment were positive signal. If the countries signaled the good economic condition, there were able to improve the foreign direct investment (FDI) sectors. Another important thing was most emerging economies were able to decrease the unemployment rate. Psychologically, worker’s performances affected every time they lose co-workers. Instead of people who were fired because of the computerization, countries were able to divert them to other fields (Ahlstrom and Bruton, 2006).

 

India was considered of the emerging economies that it was able to sustain the impact of economic recession due to its strong government control. Obviously, government was able to hold its standpoint in controlling the economy. Influence by the socialist movement, they got a high level of control over different sectors of the country. Since India has been to be low-income economy by the World Bank, investors thought this as a great opportunity to invest more in this country. In fact, the main asset of India was the great amount of work force that made the country more dynamic and expansive with their economy. The economic sector in on country could divided into different sectors such as manufacturing, financial, trade, service, retail and agriculture sectors; it was able to put the country to the second largest country in the world when it came to the volume of output. In every aspect of changes in every transitional economy and these economies worked hard to find out and establish good and new policies and institution.

 

The new investment environment in emerging economies

 

Investors should be carefully before taking investment decision. There was now what they called Global Emerging Fund, which was considered as the safest asset for investors to put their investment in this fund (Manolova, Eunni and Gyoshev, 2008). If investors participated in the stock market, they might eventually direct invested in any companies that were under the emerging economies. Moreover, investors should be cautious with this investment because investors were going to gamble in the stock market. Thus, investors should keep in mind that not all investments gave guarantee to state that were no risk existed in any portfolio. Investors must be wise when entered into stock market especially if only focused on one investment in one portfolio because this was more risky. There were many countries could be chosen when investors wanted to do some investment, such as India and China. Despite of any size of the corporate, these two countries were aspiring for a global player in the economic industry. Foreign investors were diverting in India to invest more as they anticipated its potential for the future growth in the economy.#p#分页标题#e#

 

Emerging economies were just the beginning of fast growth however if investors were looking for long-term growth they could diversify investment to achieve its long-term goal towards improvement (Drope, 2007). The process of diversification allowed investors looked for a place to drop their investments for a better service. This essay was talking here about the stock and bond funds. If investors were not able to do a successful diversification, they might end up in huge losses. A good diversification could make investments became more efficient and then helped the country improves its economic growth. Even though some countries suffered from economic recession, the investment environment was still hot for foreign stock and bond funds. Two good examples were China and India they were in the economic recession gave more confidence to US investors to divert their investments in these two countries. Industries such as retail, automaker and especially the electronic industries had stimulated interest in emerging economies before these industries were greatly affected by economic recession (Drope, 2007).

 

Indexes of economic growth- after transition until now

 

In order to understand some countries’ economic situation, which were emerging economies; here were some indexes we should look at. One of the common indexes to measure a country’s economic growth was the gross domestic product (GDP). This was one of the tools to measure income and the output of the economy of one country. According to the Central Intelligence Agency World Factbook (CIA) [1] (Manolova, Eunni and Gyoshev, 2008), there was a total of $65.61 trillion total GDP in the world. Another index in the emerging economies was the purchasing power parity, where you compared different currencies to the domestic currency that you had. In terms of the GDP as the index in the economy, despite of the economic recession happened in United State it still was one of the wealthiest countries with the GDP was $13.812 trillion (Bruton, Ahlstrom and Obloj, 2008). Comparing this to the world GDP, it was about twenty-five percent GDP. This makes them take dominant place of the global economy.

 

There was not much important to know that United States has the highest GDP, but what the more interesting thing was how many countries’ economic performance could follow USA. China was considered as the leader in Asia with $7.055 trillion in terms of the purchasing power parity (Bruton, Ahlstrom and Obloj, 2008). It had $3.281 trillion GDP, which is threatening United States in the position of the leadership in the global economy (Bruton, Ahlstrom and Obloj, 2008). There was much belief that China was able to overtake United Sates. Another Asian country that showed its steady policies was Japan. According to the World Bank, Japan was the third grew fast country in terms of economy. Looking at the purchasing power parity of Japan, they had annual income of $37,670 and that was on the top 25 list of the world the world. As above mentioned, India was making its mark to remember that they were now at the forth position that its purchasing power parity was $ 2,965 trillion. However, when we looked at these countries’ annual income per capita was quite low(Bruton, Ahlstrom and Obloj, 2008).#p#分页标题#e#

 

Conclusion

 

Emerging economies had suffered from the economic recession. If every country was able to meet the fast pace of economic activity, there was no more place for recession. Moreover, it also depended on how the government implemented the policies. It was very important to look at the long-term development rather than looking at the present circumstances. This was in anticipation with other set back that could weaken economy one more time. To learn from the previous experiences and made sure that the government still kept its trustworthiness and built a good investment environment to attract more investors. The issue about the development of emerging economies was arresting nowadays. To could all discussion of this essay, the new policies and institutions always came with the restructuring and reform. Furthermore, during the transitional period that selected appropriate policies was important to most emerging economies.