To What Extent the East Asian Model Is Transferable To Other Developing Countries1 Essay Example for Free

To What Extent the East Asian Model Is Transferable To Other Developing Countries1 Essay The economic status of East Asia has become one of the most flourishing and positively growing regional economies in the globe in recent times and something to reckon with. The region has turned to be the home of the global significance as well as the most affluent economy consisting of countries such as; Japan, China, Hong Kong, Singapore South Korea and Taiwan. There have been numerous and major factors that have turned the economic success of the region to be a positive gain to the countries (Chang, 14). Some of the key constructive factors that have contributed to the developments of the positive economic status in the region includes: positive legal and political environments for both commerce and industry, through the plentiful natural wealth of different kinds, to ample supplies of comparatively low-cost, trained, and flexible employment. The success of the regional economic developments can highly be adopted in many other developing countries. This paper looks into the extent into which the model that has been adopted by the East Asian region, and how well is it suited to be adopted by other developing countries globally (the suitability of the East Asian model into the development of developing countries’ economies) (Hira, 21). Literature review The most successful developing countries over the last over the last half a century have come from East Asia. The rapid economic growth of the eight Asian economies which is often referred to as ‘East Asian Miracle’ brought along two major questions; (I) what policies and other factors contributed to that growth? (ii) And can other developing countries replicate those policies to stimulate equally rapid growth? There have been numerous analyses on the success and also based on case studies econometric data, and economic theory, offers a list of the ingredients that contributed to that success (Kwon et al, 32). Researchers have been done, concerning the model deployed by the East Asian economies and how the countries have managed to navigate through economic crises. World Bank and financial institutions, has conducted the applicability of the development model applied by the East Asian countries into the developing countries. The development evidence of the East Asian fin ancial system has been impressive, especially when compared to that of other developing countries. How can such a record be accounted for? What lessons can we draw from it? What has been the role of public policy? These are questions that have aroused heated debate in recent years, especially among the mainstream neoclassical school and the non-orthodox or revisionists (Saggi, 36). According to World Bank 1993, the ‘East Asian Miracle’ model has been a positive gain to the Asian economies which can as well be adopted in the developing countries. In addition, Haggard, 2004 noted that, there is no fixed definition of what is contained in the ‘East Asian model’ of development. How economies grew, how industrial structures were transformed, how governments intervened in solving coordination problems, pursuing efficient policies, making credible commitments, etc. varied depending on time and location (Hughes, 18). Different writers select different characteristics, often depending on what country (or countries) they are studying, and, at times, in function of their ideological preferences. At the clear risk of over-simplification, but so as to maintain the discussion manageable, four major features will be selected that have, arguably, been both common to, and crucial for, the experiences of Japan, Taiwan and South Korea over the periods he re examined (Chang, 26). Introduction The historical, trade and industrial growth in East Asia described as ‘East Asian Miracle’ brought a huge attention into the world and has provided a large literature on the economic development theories since then (World Bank, 1993). The countries, Korea, Taiwan, Hong Kong, and Singapore, followed Japan, which itself was the very first country that succeeded, becoming an industrialized country outside the famous western economy, and achieved similar economic success in the phase of development following the Second World War from the 1950s to the 1970s and named as the four Asian Tigers. Then the three newly Industrializing economies (NIES) of Southeast Asia, Thailand, Malaysia, and Indonesia also managed to take off becoming large enough to reach the respective status of middle income countries in the second phase from the 1970s to the 1990s. (Chang 2006, World Bank, 1993, Jomo, 2001).The adoption of the given model led to the adoption of a strategies directed towards t his regional economic development and in turn coming to be a central aspect in development these economics and the model was denoted as the ‘East Asian Development Model (EADM)’. The model has different defining clauses and includes factors such as state control over finance, direct support for state owned enterprises by the government, import substitution industrialization in heavy industry and shift to export-led industry, a high dependence on export markets and a high rate of domestic savings among other practices. The nature of this model EADM was opposed to the protestations of the IMF-led Washington Consensus, model, which itself constitutes principles, and policies that are aimed at global economy work through the act of harmonizing the way that national economy operates. For example, the models work through the act of reducing barriers to international trade such as tariffs deregulation led to reductions in government control with the pushing for free trade practices. However, the World Bank’s influential study, on the East Asian Miracle represents the neo-classical claim in the current East Asian debate by acknowledging that, the frequent use of state intervention in the East Asian development process, but also inefficiency of the intervention. According to World Bank (1993), the intervention was not harmful, though still not helpful. However, it is widely recognized now that the export-push strategies in East Asia are very much linked to selective industrial policy and state intervention actively promoted economic growth in the region. According to Wade (1992), the development of a concept of the governed market theory, explains the East Asian success by three causes; (I) high levels of productive investment. (ii) Relatively an increased investment in certain key industries and finally (iii) exposure of many industries to international competition. It is argued that such economic policies, incentives, controls and risk spreading mechanism allow them to sustain rapid development, which produces different level productions and its huge outcomes in the private sector. This theory emphasizes on capital accumulation rather than resource allocation as per the orthodox theory as the principle source of growth (Nissanke Ernest, 11). It is unrealistic to assume that there is only one development model and it can be mostly agreed that nations have been taking their own or different ways of pursuing the EADM model with diverse development strategies. Hence, this paper will argue based on the World Bank’s famous distinctions of the model; Northeast Asian model; based on the Japanese paradigm of industrial policy and more active state intervention, which refers namely the NIEs countries Southeast Asian model; described that more open and market-friendly regimes, which refers ASEAN-3 countries; Thailand, Malaysia, and Indonesia It is often criticized that, the re-applicability of the Northeast Asian model by claiming is not possible in the contemporary context, not only because it ignores the importance of the global market, but also owing to the Unique historical context of Northeast Asia and the constraints under the new regime of the ‘WTO’. Therefore, the first goal of this paper is to refute the initial condition argument while addressing analytical shortcomings of this orthodoxy theory; it deals mostly with static concerns and thus has little say about dynamic changes, and also it downplays the social-political dimensions of the economic development, adopting just a kind of ‘economic determinism’ in their approach (Richter, 44). Positives from the East Asian Model Diversity in ecosystem, population, ethnicity, religion, social structure, and political regime Equally great diversity in GDP, per capita income, and economic development High growth sustained over a long period almost throughout the region. Associated with this high growth are high, savings and investment rates, active, but managed external opening, export orientation, industrialization, and general improvements in social indicators. Accomplishments and Characteristics of the East Asian Development Paradigm One of the major achievements of the model is the rapid economic growth of the region. For example, the implementation of the model led to the real income per capital grow four times bigger than it was previously in Japan, Taiwan, Hong Kong, Singapore, and South Korea. Another accomplishment of the model was declining inequality. This is whereby; the positive gains and economic developments were evenly distributed throughout the populations. Thirdly, the model led to a quick reduction of the technology gap through massive investment in human capital, importation of foreign technology, export orientation, and the opening of markets for foreign direct investment as a means of introducing advanced technology. Finally, the model led to reduction of poverty rates in the region (Saggi, 51). Adaptability of ‘East Asian Miracle’ into the Developing Countries (To What Extent Can the Model Be Used By the Developing Countries) Less developed, countries or better still developing countries globally are nations denoted by the poor living standard as well as underdeveloped in industrial aspects. Base as well as a low human development index, when compared to other countries. One of the aspects used to differentiate between a developed and an underdeveloped country is the value of the county’s GDP per capita. Less developed nations are countries that have not realized a considerable degree of industrialization in relation to their populations. In most cases, they are said to have medium or poor standards of livelihood. There is a well-built relationship connecting low earnings and high populace growth. Once an expansion strategy is chosen, the proper policy systems will in turn certainly be formed or laid down as the foot print to development, and in turn the outcome of economic growth is, to a greater extent, determined by whether the preferred developmental strategies are right or wrong. If only the m acroeconomic setting and government guiding principles are well thought-out, and not looking into positives and negatives of the given development plan, then a general idea of where the problems lie is impossible. Modification plans thus raised can barely give solutions to problems existing in the wealth of African states (Hughes, 40). The implementation of the East Asian Model in the developing countries would somehow be of great achievement in terms of development. One of the major contributors to the development of the East Asian is the growth driven by trade and investment. For each of the countries in the region, the long term growth path as well as the achievement of industrialization can be tracked by income trends as well as structural shifts in GDP and exports. The exceptional feature of East Asian growth is that it has been achieved through the very existence of East Asia as a powerful arena of economic interaction among its members, and not merely by â€Å"market-friendly† policies or good governance of individual countries alone (Kwon et al, 57). One of the achievement or realization that has contributed to the development of the East Asian regions in terms of economy is the realization of the economic growth through participation in a series of dynamic production network that is generated by pri vate firms. This has been benefited by Linked by trade and investment, a system of international division of labor with clear order and structure exists in the region. Taking this approach into the developing country, the model can be of positive gain to the developing nations. The model also explains the importance of the private sector in the economic development of a nation. This can be adopted in the developing nations as it would lead to the increase of the country’s GDP (Kwon et al, 68). Another point that can be borrowed from the East Asian development model is the interaction among the members of the region. Thus, can be deployed in other regions such as Africa and also becomes a success. This would lead to the formation of powerful arena in terms of economic interactions between different countries. Moreover, good governance should be adhered in order to achieve the benefits from the model implementations. For the developing countries to develop and adopt the model into positive gains, the developing countries, have no choice but to initiate development, and undertake international integration via trade and investment. The East Asia model has also described the need to have well established political, social and economical conducive environment for a better economic development. This van as well be adopted in the developing nations which are greatly denoted by poor political establishments, and deteriorated social and economic aspects (Hira, 71). One of the developing regions or countries is the African states. The biggest question that remains for the African states is: Can African learn from the ‘East Asia miracle’ development model? Yes, the model can be of great help to a number of African nations as majority of them are categorized as developing countries. Since 1970’s all the way to the late 1990’s, East Asia has experienced has embarked on a model that has resulted in an outstanding evidence of high and unrelenting fiscal growth. The model has become a development model to other developing regions as is the case of African states (Chang, 49). One of the major aspects of the model is the East Asian regions embarked on the plan to increase the value and the amount of exported goods and as well reduce the number of imported goods. Through the increase in the volume of exports from the Asian countries, there was an increase in the volume of finished goods and the success in export trade has seen maintenance of high deposition and domestic venture rates. This provides the capital essential for economic expansion. Consequently, reducing the dependence on foreign investment and embark on home trade, investment and in turn increasing the value of GDP (Nissanke Earnest, 63). Following the attainment of independence, the third world countries were faced with the task of identifying the right approaches to build up their economies. This was meant to exterminate poverty as soon as they could. Many of these countries (developing) turned to strategies that targeted industrialization acceleration. This opted choice by some countries brought along an economic system that was an unclear macro policy setting and designed distribution structures for properties and the micro-management need for self-sufficiency. The result of the countries that deployed this approach to develop their economy, were shocked as such economic structures smothered economic growth. In return the economies of these countries which followed such strategies didn’t step forward at all, as some of the nations fell behind development as they were faced with more problems (Chang, 80). In contrast to this scenario, the development plans adopted in the East Asia signified an extra choice and approach to economic development. The region members gave massive contemplations to their resource state of affairs, and in turn they took advantage of their ample labor availability resources which provided them with low costs of labor. This approach allowed them to establish industries that are labor intensive as an economy development take-off. In addition, in order to achieve positive results in their economy development, the countries had to adjust their industrial organization. This approach was deployed in the ‘East Asia miracle’ model, which turned to be a success in the region. However, the approach of the same by the developing countries would be of great benefit to the countries and their regions such as Africa (Richter, 55). Another advantage of the miracle model for the developing countries is that, it teaches the developing economies to sustain a constructive macro-economic situation as well as the correct basic policies. The Asian countries have maintained their debt within bearable limits. One of the factors that has dragged the economic development and prosperity of the developing economies is the massive and inability to control their debts. The countries are heavily indebted to the financial institutions such as the World Bank and IMF, such that, they are unable to control their debts owed to another stable and developed countries. With the inability to control their debts, the developing countries couldn’t control their inflation as well as both their home and foreign debts to a definite extent. Most of the developing countries are agriculture products dependent in terms of their productions. The East Asian models for economic development guaranteed the effectiveness of their policies whic h in turn was to enhance an increase in agriculture production (Jomo, 76). Other positive which can be of great advantage and can also be adapted into other developing countries includes the foundation of fundamental sound development policies. A large portion of economy development in East Asian can be attributed to getting the fundamentals needed correctly. These factors or fundamentals include responsible and disciplined fiscal and monetary policies, which are beneficial in maintaining moderate rates of inflation in the developing countries. Inflation is one of the factors that are a hindrance to economic stability in these developing countries. In addition, the model called for the conducive economic environment for private investment. For the developing countries, it helps realize the vital and the importance of the private sector in the economic development of the countries. In addition to the importance of the private sector in the economic development, the East Asian â€Å"miracle† model also advocated for high investments in education. To th e developing countries, investment in education, such as post secondary education, vocational and technical skill training developed a better educated labor force suited for rapid economic development (Kwon et al, 86). High rising and saving rates were also a practice advocated by the model. The East Asian governments developed a relatively sound and stable financial system. This was achieved through strengthening prudential regulations and supervision of financial institutions and setting limits on competition. They also expanded the financial system network by promoting postal saving systems to successfully increase the accessibility of financial savings instruments to non-traditional savers. Finally, the fundamentally sound development policies included actively seeking foreign technology through foreign licensing, capital goods imports, and liberalization of foreign direct investment. The policies were some of the adaptable policies what would work well with numerous developing countries globally (Hughes, 98). In fact, since the 1970s, Africa nations have continuously explored and re-assessed their development strategies, so as to seek out with a unique development pattern suited to Africa. This exploration is still underway. In this regard, African country can gain some ideas from the experiences of East Asia. A favorable macroeconomic policy environment is needed to support the practice of comparative advantage development strategies. For this purpose, productive factor markets and finished products, markets, which are feasible and fully competitive, must be established, so as to conform to the smooth operation of the market mechanism. Some African countries are making efforts in this direction while adjusting their structure. Meanwhile, they should pay special attention to adjusting policies (Hira, 89). Agricultural policy for agriculture remains the mainstay of the economy in most African countries; the support of the agricultural sector is significantly to economic development. The experiences in East Asia have shown that with the right agricultural policies and a measure, agriculture plays an important role in pushing the national economies forward. Many African countries have improved, to differing degrees, in prices and the circulation of goods, as well as agricultural tax policies. But there is a long way to go. Improving the management of State assets and raising profits in most African countries. State enterprises play a significant role in production and employment. However, poor profits and large losses have become an emerging problem facing economic development. Many countries have proposed the privatization of State enterprises. So far, the process has made little progress and has had little effect. In this aspect they still need to explore new methods of reform (Nissank e Ernest, 78). Defining government functions either under the marketing economy or the planned economy, government plays a very important role in economic development, only differing in its functions. The experiences in East Asia have indicated that the government should intervene only in the fields where it is needed, leaving markets to operate freely. Only in those fields, such as developing human resources, constructing and protecting infrastructure, environmental protection and so on. Where markets are not able to operate, will the government need to intervene? This will create a stable, sustainable and fair environment for the operation of market mechanisms. Choosing suitable development strategies and forming correct policies, this is a precondition for achieving favorable results, but not the full condition for ideal development. An effective and powerful government is a basic guarantee for the realization of the development aim. During the past three years, the African economies have contin ually risen and the overall situation has been improved. But the adjustment of strategies and improvements in external conditions requires time. Africa will be able to step on the path of continuous economic growth only if it undertakes long-term efforts and carries out suitable economic reforms (Chang, 101). Reasons why the development model won’t work with other developing countries Letdown of the East Asian growth Model Despite the progress made by the East Asia region in terms of economic developments, criticisms of the model have been raised as well as the models, adapted to other countries such as the developmental one. In addition, the adaptability and sustainability of the model have been questioned. The path trodden by East Asia has not always been smooth as some nations in the region failing to achieve high growth, and the states were hit by occasional setbacks. East Asia has had its share of hardships in its history, with hot and cold wars, social instabilities and financial crises. In addition, the structural weakness of the model is a posing threat to the adaptability of the system into other countries economy development. Despite the weakness, not a sign of the end of the system, it may instead be a signal that the model in dire need of repair in order to be a success even to other different regions (Nissanke Ernest, 92). Moreover, the East Asian model has evolved over time and adapted to the changes that has occurred in the region such a political, societal and economic changes which have not only occurred in Asia but also in other parts of the world. The fundamental question from this is whether the model can adapt to some of the most significant changes and developments that change the economic landscape of the developing countries such as democratization and domestic economic liberalization, globalization in parallel with regionalization, and the emergence of a new economy driven by information technology. The model can be able to adjust to significant changes in the region, but at the same time fail to adapt to the same changes in other regions such as Africa (Chang, 120). East Asian countries were constantly showing a lot of structural strains and rigidities. The model was hampered by four main failures that affected the credibility and applicability of the model into the developing nations globally. One of the failures is that, the model neglected the differences involving the government mechanism and the elected policy as well as the market liberalization. In addition, the failure to reorganize the financial structure was a stumbling block for the model to be adopted in the developing countries. Finally, the congested and non-transparent corporate sector within the developing countries such as the African states was a stumbling block to the implementation of the model (Kwon at al, 136). Asian Financial Crisis In 1997 Despite the growing status as one of the blossoming economic growth globally, the east Asia economy had to overcome some worrying and threatening financial crises. The Asian region was at some time faced with a severe financial crisis, Fro example is the ‘Asian financial Crisis in 1997’ also known as Asian Contagion. This was a succession of money devaluations that had spread through a good number of Asian markets. This financial menace started in Thailand, and spread to other Asian countries such as Hong Kong, Malaysia, Philippines, Indonesia and South Korea. The  Asian financial crisis  was a period of  financial crisis  that gripped much of East Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to  financial contagion (Harrold, 66). The currency markets first failed in Thailand as the result of the governments decision to no longer peg the local currency to the U.S. dollar. Currency declines spread rapidly throughout South Asia, in turn causing stock market declines, reduced import revenues and even government upheaval. According to Krugman’s Paul view, the east Asia economic growth had historically been due to the increase of capital investment. However, the total factor productivity of the region had only increased marginally or not increased at all. In the case of long term prosperity, there ought to have grown only in total factor productivity and not capital investment. The collapse of the Thai Baht in July 1997 was followed by an unprecedented financial crisis in East Asia, from which these economies are still struggling to recover. A great deal of effort has been devoted to trying to understand its causes. One view is that there was nothing inherently wrong with East Asian economies, which have historically performed very well. These economies experienced a surge in capital inflows to finance productive investments that made them vulnerable to a financial panic. That panic–and inadequate policy responses–triggered a region-wide financial crisis and the economic disruption that followed. In addition, The weaknesses of the financial sector in the East Asian region were masked by rapid growth and accentuated by large capital inflows, which were partly encouraged by pegged exchange rates (Harrold, 103). Key Root Causes Of The Asian Financial Crisis In summary, the main causes of the financial crises in Asia were: Large current account deficits that left the countries vulnerable to changes in investor confidence and macroeconomic conditions (i.e., slower growth). Overvalued exchange rates that were often pegged to the U.S. dollar, which was, at that time, appreciating quite rapidly. Rapid and unsustainable increases in asset prices, especially stock market and real estate prices. A currency mismatch between assets and liabilities that left banks and enterprises vulnerable to exchange rate devaluations. Inadequate bank regulation and supervision. Implicit and explicit government guarantees that made high-risk projects (including projects which relied upon continued appreciation in real estate prices) attractive to investors. Political instability Lessons learned from the Asian crisis In East Asia, in addition to supporting the International Monetary Funds programs, the Bank provided Structural Adjustment Loans to prop up and re-capitalize on selected banks by supporting bond issues. In addition, the World Bank set up credit lines to help finance imports. The Asian crisis menace came as an eye opener and as a surprise to policymakers, investors, and academics alike, where buy despite majority accepting the menace was expected it would have been controlled and avoided too. This would be of great help to the developing economies such as the African States cases. The recommendations that were passed for the prevention of Asian financial crisis prevention would be of great help to prevent the re-emergence of such a case again. In addition, the crisis was an eye opener to the economies of developing countries as well as the importance of the IMF. These include conditional financing, bail out from the such menaces as well as the structural adjustment package. As seen from the Asian Financial Crisis case, financial intervention from the International Monetary Fund and the World Bank played a vital role in reversing the scenario. As a result of the crisis, many nations adopted protectionist measures to ensure the stability of their own currency. Often this led to heavy buying of U.S. Treasuries, which are used as a global investment by most of the worlds sovereignties. Financial and government reforms in countries like Thailand, South Korea, Japan and Indonesia. It also serves as a valuable case study for economists who try to understand the interwoven markets of today, especially as it relates to currency trading and national account management. In summary, of the Asian financial crisis in 1997, the East Asia’s experience suggests that while a classic panic may have played a role, financial sector weaknesses were a major contributor to the recent financial crisis. Such weaknesses appear to reflect the inability of lenders to use business criteria in allocating credit and implicit or explicit government guarantees against risk. This implies that it would be prudent to accompany efforts to spur recovery in East Asia by reforms designed to strengthen the financial system. ‘East Asian Miracle’ Application To African Countries (Kenya) From the early 1970s onwards, the nations of East-Asia, also known as the Asian Tigers due to their astounding growth and expansion economically that demystified the conformist economic theory based on the western model of growth that adopted industrial development as an approach for overall development. Numerous researchers have pointed out that, contrasting the western model, the Asian model is premised on capital build up as well as that of human capital, which are seen as influential in the growth of these countries economies. The Asian economic growth has been very notable such that it has served as a textbook case for strategy makers in numerous Least Developing Countries such as is the case in Africa (Nyongo, 2007). This growth incident has baffled various economic historians as well as geographical experiences recorded so far leading to researchers to argue that, success in Asian countries was based on an updated version of primitive accumulation and that, their success can be a model if only their high savings rates can be replicated. This is in   contrast to African economies such as Kenya, which took off at the same time and indeed rate as the Asian economies. Contlarry of the Asian countries, Kenya recorded dismal and unsatisfactory growth and development over the last two decades prompting a number of scholars to call the incident â€Å"a crisis of proportion. This rather tremendous contrast between the two regions, that so recently shared a similar turbulent past, raises many questions which should be of interest as well as a challenge to policy makers, especially in Africa to discern what went wrong with their policies and policy implementation, against what went right with Asian coun tries. Such questions that beg urgent answers are even more pertinent when one considers that, Kenya was poised to grow faster than the Asian countries considering its resource advantages. For example, at the time of self-government countries such Kenya and Ghana were said to have had a healthier growth prediction than any country among the Asian tigers. According to the world bank, (2003) â€Å"it would be hugely important for African researchers, practitioners, and policy makers to have the opportunity to observe directly the economies of East Asia and Southern Asia themselves to discuss economic policy reform directly with the academics, practitioners and policy makers from the Asian region.† However, one point that should be kept in perspective is that, there are no two nations that are similar so as to assume that expansion and growth in one can be replicated in the other. One point to be noted in cases of development, there are some fundamental factors that must be in place for a country to latch into the development phase and the rest depends on the model the country pursues to sustain the development. Many policy makers and indeed some academics in Kenya, and Africa at large have, for quite some time now, tended to attribute Africa’s poor development record of its historical past, specifically blaming it on her colonial legacy, and later neo-colonial ‘manipulation by western countries’. Such attitude holds no ground when one considers that Asian countries had a comparable historical environment, which limits the extent to which these arguments can be held to justify the poor development record of many African states 50 years on. One point to be noted when it comes to Kenyan case and other African countries is that, African economies at the time, were not capable of creating good governance on their own, nor could they be expected to assemble the human and capital resources necessary to ensure a development process. According to Nissanke (1998), the failure of African states to economically develop like the Asian case, after independence is that, whilst all seemed to have a common goal of accelerating the pace of economic growth and thus development, they tended to diverge on such issues as: the role of the state, the degree of openness that could be accommodated, the desirable partner of investment in social services versus economic services, and the government-private sector relations. The long-standing results obtained   were not dissimilar, suggesting that, failure was the outcome of a wrong mix of policies which are uncoordinated, absence of institutions, external environment, lack of societal prepared ness, which were by and large   constraints overcame by their Asian counterparts. Elsewhere O’Connel (1996) commenting on such failure, emphasized that, African states and especially Kenya, have evolved from a shortage of capital diagnosis of the 1960s and 1970s, to a diagnosis of policy failure of the 1980s and, finally, to a diagnosis of institutional failures of the late 1990s. However, other researchers who, when comparing the source of growth in Asia with those of Germany, UK, USA and Japan, conclude that, by far the most important source of economic growth in these countries is capital accumulation, accounting for between 48% to 72% of their economic growth (Nyongo, 2007). Others have pointed out that, it is rather a combination of both capital accumulation and human capital accumulation (learning by doing) which have been the productive engine behind the unprecedented growth, pointing out that, physical capital critical in the growth process, is rather passive and subsidiary to human capital accumulation. This contrasts to the above group of industrialized nations where technical progress played a vital role in their development, accounting for between 46% and 71% of their economic growth (Aryeetey International Conference). Whereas capital accumulation and indeed human capital development accounts for growth differentials between Africa and Asian countries, it all depended on policy choices each the countries in Asia took, for such development has not been uniform in most Asian economies either. Rather, Asian countries which have recorded unprecedented growth episodes have combined not only right and consistent policies over time, but also their societal preparedness had an even greater role to play to this end. It has thus been pointed out that, countries such as Malaysia, Singapore, South Korea, Indonesia, Thailand, and of late Vietnam have all had an element of societal preparedness, which is highlighted in the culture of hard work, drive to succeed, and high propensities to save (Nyongo, 2007). Others even argue that, the Chinese culture (of hard work and their strive for excellence) entrenched in most of these countries in part explains their drive to grow at the rates that far exceed the growth recorded elsewhere. The dismal performance of a number of African economies has also been explained in the context that, factors attendant in the Asian region, were not to be found in African countries, and no wonder that, no one country latched into development phase close to the Asian Tigers (Aryeetey International Conference, 2003). Although many African countries have borrowed a leaf from their Asian counterparts, especially in the areas of human capital development, the new paradigm shift has mainly focused on institutional development. This is even more pertinent considering that, Africa has not been short of capital. Indeed, despite the massive foreign aid and to a lesser extent direct capital flows, African economies have not developed as expected. This reinforces the belief that, capital inflows, whether local or foreign, cannot make an impact in the absence of a conducive environment characterized by transparency, governments, good governance, democratic political economy, conducive economic, social-cultural, and legal environment (Harrold, 96). Findings and conclusions At the turn 21st century, there has much dialogue and discussion about the ‘miracle model’ in East Asia and its effectiveness in the economic development and its sustainability. The East Asian economic development model, which built the hypothetical and institutional structure of growth in the area, is liable along with the rest of what was one time called the East Asian Miracle. In an attempt to give a rich, textured analysis, it’s clear from the paper that, the model can be of positive gain to the developing countries in terms of economic development. Despite the ‘East Asian development model’ a workable option for the developing and less developed countries, it had its own shortcomings. The contributors provide a cohesive review of the East Asian development model, exploring its cultural heritage, the political context through which it arose, its basic assumptions, and its recent failures. In particular, they identify the causes and consequences of the Asian economic crisis, describe the features of economic development throughout the region, and discuss the strategic responses of Asian firms to newly  developing economies of countries such as African states. The sustainable and swift economic growth in East Asia has attracted wide attention in Africa, and they believe the successful experiences of East Asia should be followed to develop African national economy vigorously. It’s clear that the model deployed by the countries in the region (East Asia) was effective in raising the country’s GDP and in turn it was worthy to be deployed in the African countries which are an example of developing states. Despite the growing challenges over the time, the model can be of great help to numerous growing economies. However, the fact that the East Asian model is so attractive to many African countries is bound to have profound implications for development practitioners. Western aid is not the only game in town anymore, and the global development  agenda is no more immune from the influence of a rising Asia than the global economic system has turned out to be. Developing countries can now choose between an ever-growing variety of donors, trading partners, investors and development strategies. Whether or not we agree with the models they pick or even with the idea of a development model at all we would do well to listen to and engage with these views. Therell be no point in trying only to reform and improve western aid if the real debate is happening somewhere else. References Adams, Francis G.  Public Policies in East Asian Development: Facing New Challenges. Westport, Conn. [u.a.: Praeger, 1999. Print. Aryeetey, E., International Conference Asia and Africa in the Global Economy. (2003).  Asia and Africa in the global economy. Tokyo: United Nations University Press. Chang, Ha-Joon.  Rethinking Development Economics. London: Anthem Press, 2004. Print Chang, Ha-Joon.  The East Asian Development Experience: The Miracle, the Crisis and the Future. London: Zed / TWN, 2006. Print. Harrold, P., Jayawickrama, M., Bhattasali, D. (1996).  Practical lessons for Africa from East Asia in industrial and trade policies. Washington, DC: World bank. Hira, Anil.  An East Asian Model for Latin American Success: The New Path. Aldershot, England: Ashgate, 2007. Print. Hughes, Helen.  Achieving Industrialization in East Asia. Cambridge [England: Cambridge University Press, 1988. Print. Jomo, K S.  Growth after the Asian Crisis: What Remains of the East Asian Model? New York: United Nations, 2001. Print. Kwon, Jene K., and Jung Mo Kang. The East Asian Model Of Economic Development.  Asian- Pacific Economic Literature  25.2 (2011): 116-130.  Business Source Complete. Web. 11 May 2014. Nissanke, Machiko, and Ernest Aryeetey.  Comparative Development Experiences of Sub- Saharan Africa and East Asia: An Institutional Approach. Aldershot, Hants, England: Ashgate, 2003. Print. Nyongo, P. A. (2007).  A leap into the future: A vision for Kenyas socio-political and economic transformation. Nairobi: African Research and Resource Forum. Richter, Frank-Jürgen.  The East Asian Development Model: Economic Growth, Institutional Failure and the Aftermath of the Crisis. Basingstoke [u.a.: Macmillan [u.a., 2000. Print. Saggi, Kamal.  International Technology Transfer to Developing Countries. London: Commonwealth Secretariat, 2004. Print. Source document

Issues facing european low cost airlines

Issues facing european low cost airlines As predicted in the beginning of the millennium year by the International Air Transport Association, the low cost airline sector has grown at a rapid pace during the last decade from carrying 6.3% of the domestic and international passengers within Europe in 1999 predicting to increase to 16-18% in 2005 and has become the order of day in Europe. Although the European airline sector was dominated by flag carriers such as British Airways, Lufthansa, Air France etc. with a share of 70%, this fact transformed with the deregulations coming into effect, increasing the need for an optimal model of operation. That is, as the average airfares in the low-cost airlines sector account for just 3% of the average monthly EU industrial wage, customers turned towards these airline services (Datta Chakravarty, n.d). 3.0 Ryanair Profile in brief Ryanair Airlines, founded by the Ryan family was initially a full service conventional airline in 1985 which was introduced as an alternative travelling between Ireland and the UK to then state monopoly Aer Lingus. However due to financial issues it successfully restructured itself in early 1990s as the first low-fares, no frills carrier in Europe modeling based on Southwest Airlines. The responsibility of Ryanair was taken over by a management team lead by Michael OLeary and was soon floated on both Dublin and London Stock Exchanges in 1997 and admitted among NASDAQ 100 (OHiggins, 2007). Ryanair as a leading low-fares airline offers cheap flights to 150 destinations up-to-date along 1000 low cost routes and provide its customers with cheap and fast air travel excluding fuel surcharges with 100% possibility for online check-ins (Ryanair website, n.d). Although Ryanair has not published its vision and mission clearly, they look to find the big picture and set a broad direction and OLearys direction is to be the largest Low Cost Leader in the European airline industry. This vision is supported by absolute dedication to low cost performance in every element of the value chain, quick gate turnarounds, nonunion operations, performance-based incentive compensation plans, standardization on one type of aircraft, and flying (in most cases) to secondary airports, which provides significant savings for Ryanair (Box Byus, 2007). 4.0 Internal Analysis 4.1 Organizations Strategic Capability Analysis Ryanair has positioned itself as the largest low-fares carrier in Europe and as a business which returns value for money to its fare-concuious leisure and business customers. That is, as Ryanair explains, At Ryanair we guarantee you the lowest air fares on the internet. However our success is due not just to our low fares but also a winning combination of our No.1 on-time record, our friendly and efficient people and our new Boeing 737-800 series aircraft (Puget, 2003) which all add up to its value. Its ancillary services improve its value which is 13% of the total revenue. Although there are low-fares airline services in the European market due to the effectiveness of Ryanair it has been able to become market leader with 29.9% of market share in 2006. Their competitors have not been able to effectively copy the low cost strategy and usage of secondary and regional airports. Inimitable Organised Ryanair holds its uniqueness in its operating strategy which is based on low-cost. It adopts point-to-point flights to secondary or regional airports which no other service follows and occupies a one-way pricing policy which eliminates direct comparison with competitors (Ryanair, n.d). Ryanair is well organized within its low-cost strategy. It offers 100% online check-ins and flies to 150 European destinations along 1000 routes. There is no physical check in where passenger is required to forward his passport and reference number (Marketing Teacher Ltd, n.d). It has one-way pricing strategy which eliminates minimum stay requirements within airports (Ryanair, n.d). Valuable Rare 4.2 Company Resources The resources of Ryanair could be categorized and explained according to the following. Type Ryanair resources Physical resources Head office at Dublin airport Ireland 202 Boeing 737-800 aircrafts with 189 capacity 150 destinations through 1000 routes (as at 2010 April) Financial resources Total assets worth à ¢Ã¢â‚¬Å¡Ã‚ ¬4,634.2 million Shareholder equity of à ¢Ã¢â‚¬Å¡Ã‚ ¬1,992 million Total operating revenues worth à ¢Ã¢â‚¬Å¡Ã‚ ¬1,693 million (all as at 2006 March) Human Resource Over 6,300 employees (2008) CEO Michel OLeary Intellectual resources Market share of 29.9% (2006) Customer base of 34.9 million (2006) Largest travel website in Europe The fifth most recognized brand on Google Most profitable airline in the world based on operating and net profit margins on a per-airplane and per-passenger basis (2006) 4.3 Company Competencies No frill, low cost leadership could be considered the most significant aspect of Ryanair and thereby cater from low to middle level customers The ancillary revenue methods such as accommodation services, care rental, in-flight sales etc. which add up to 15.3% (2006) which had a 36% increase during 2005-2006 Possessing the preemptive advantage and being the market leader provides opportunity to expand into other markets including USA, Asia and Africa. Allowing internet access to its consumers leads to elevate sales and reduce the per-units cost Point-to-point short haul flights and usage of secondary and regional airports reduce passenger congestion and thereby avoid high airport charges. The personality of Michel OLeary has a great impact on the success of Ryanair where he personally looks into unique marketing strategies. 4.0 Industry Analysis 4.1 Porters Five Forces 4.1.1 Competitor rivalry -High and increasing The direct and main low-cost competitors of Ryanair include easyJet, Air Berlin, Germanwings, Lufthansa and Tranavia and the industry was joined by approximately 60 new low-cost airlines in 2004 (Experience Festival, n.d). A major reason for the development of this sector was the airline deregulation in 1997 due to which many companies were attracted towards the industry. This resulted in full-service airlines adopting the low-cost strategy eg. Aer Lingus 2002. The economical recession increased the aggressiveness of all competitors as they were compelled to survive in the market which resulted in frequent flyer programmes by many competing businesses including Lufthansa, Aer Lingus etc (flyertalk, n.d). However the attractiveness of the industry is high for Ryanair due to its low-cost structure, use of secondary airports and first-mover advantage along with experience of almost 2 decades. 4.1.2 Threat of new entrants Moderate Although it is accepted that the European budget airline industry is healthy with huge potential and incremental growth, the effect on Ryanair from new entrants could be considered as moderate due to its position in the market, its strong brand name and economies of scale achieved with time. For instance, Ryanair saved 42.6% of marketing and distribution costs through direct bookings in 2002 (Brophy George, 2003). Although the deregulation practices minimized the barriers of entering the industry challenging the market leader would consume both time and resources of the new companies. 4.1.3 Bargaining power of suppliers Low to Moderate Types of suppliers of Ryanair would mainly be fuel suppliers, aircraft suppliers, airport authorities and suppliers of support services. Travel agents would not count at present due to on line bookings. Ryanair has no control on fuel prices which is totally governed by world trade and Middle Eastern countries. However it has a very healthy relationship with the main aeroplane supplier, Boeing (Brophy George, 2003) which also provides the company with ancillary goods and services including technical support and training, spare parts support, training of flight crew etc. Accordingly it could be said that the power of suppliers is at low to moderate level. Eg. Ryanair cancelled its contract with OnAir, the supplier of the on board mobile communication service due to financial issues (Robertson, 2010). 4.1.4 Bargaining power of consumers High The passenger base of Ryanair was 34.9 million in 2006 and 58.5 million in 2008 (Ryanair, n.d) and increasing due to recessionary effects and current recovery stage resulting in attraction towards low-cost air travel. As Brophy and George (2003) explain, the power of buyers depends on standardization of product, elasticity of demand, brand identity and the quality of service. The switching cost is very low for customers due to the parity of services and online bookings. Accordingly Ryanair is compelled to practice competitive pricing. 4.1.5 Threat of substitutes Low to Moderate The major substitutes for air travel in Europe are rail, road and to some extent boat travel. With advantages such as ability of localization, easier accessibility along with safety railway is significant but may take longer to reach the destination. Ryanair with its low-fare structure is comparatively cheaper than railway which directly substitutes its services through excellent continental services. Road travel would provide similar benefits but Ryanair could overcome it through emphasizing on effective short haul schedules. Development in communication could also be a threat to some extent as business professionals could communicate through video conference etc. from one corner of the world to the other instantly sitting at their office desks. 5.0 Macro-environmental analysis 5.1 PESTEL analysis 5.1.1 Political Government laws and regulations regarding increase of airport landing charges The law for carbon emissions passed by the government on the aviation industry charging environmental taxes EU regulation to reduce the inconvenience caused to passengers by delays, cancellations and denied boarding where airlines are to provide standardized and immediate assistance to them Severe security measures imposed by UK authorities due to terrorist attacks 5.1.2 Economical Real GDP growth rate of EU at a reducing trend since 2007 -4.2% in 2009 (eurostat, n.d) Reduction in inflation rate of the EU from 3.7% in 2008 to 1.0% in 2009 (eurostat, n.d) Recessionary effects and current practices for recovery and depreciation of the US dollar 5.1.3 Social Increase in numbers of business travellers Negative perceptions on air travel due to safety issues Attraction to low-cost airlines after the economic recession 5.1.4 Technology Internet competition for online bookings Fuel efficiency, low carbon emissions and low noise emissions from Boeing aircrafts Other technological expansions e.g. Web sales 5.1.5 Environmental Cancellation of thousands of flights due to spread of volcanic ash from Iceland Strict regulations on carbon emissions Considerations on global warming and noise pollution 5.1.6 Legal Laws relating to airport charges and route policies Safety measures taken by governments due to terrorism regarding passengers and airline staff Regulation regarding misleading advertising 6.0 SWOT Analysis 6.1 Strengths Brand image and reputation Ryanair possesses the privilege of being the initial company to the low-fare air travel industry in Europe and thereby has the advantage of being the First Mover or preemptive mover. Most importantly as the market leader Ryanair presents its brand as a bundle of functional benefits including punctuality and efficiency (Puget, 2003). Pricing strategy As the first low-fares airline in Europe their pricing strategy was extremely unique where 70% of the seats are sold at lowest two fares and the rest is at higher prices with 6% sold at the highest and customers are ruled out of fuel surcharges (Marketing Teacher Ltd, n.d). Customers are content with the aspect of value for money and best prices compared to other competing airlines. Marketing strategy They utilize adverts which basically communicate the low-fares factor to its customers. Mostly they use controversy as their promotion method where for instance, bidding to purchase Aer Lingus, the Irish rival of Ryanair, charging  £1 per person for the use of washroom on board from 2010 (Crouthamel 2010), publishing controversy calendars with female cabin crew for charity purposes etc. Also another important factor is the ancillary services or non-flight scheduled services such as hotels, car hires, in-flight sales etc. 6.2 Weaknesses Cost Structure Ryanair is at continuous attempt to reduce costs at any possible situation and therefore it has a negative impact on customer satisfaction due to this high cost consciousness. According to a poll by TripAdvisor in 2006 Ryanair was voted as the worlds least favourite airline and Ryanair is ranked as a 2 Star low-cost airline by airlinequality.com (n.d) which also explains the negative perspective of customers about low quality. Also this cost structure is constantly challenged by the fluctuations of fuel prices. Staff issues Ryanair scores low regarding industrial relations where they are alleged of providing poor working conditions. Ryanair recruit young pilots who could work hard and with experience and knowledge gathered at Ryanair they tend to move on as a result of low commitment. 6.3 Opportunities Expansion to the USA The low-fares structure is not common in the US as it is in Europe and therefore Ryanair would be the first mover to the US domestic airline market as it plans to extend itself under a different brand for long haul flights between US and Europe (McGrath, 2007). It is said that Ryanair would be the cheapest USA flights in history and its popularity and success in Europe would spill over to the new brand. Recession Price has become an extremely important factor in making purchase decisions and therefore Ryanair could score due to its low-fares nature during and at the aftermath of the global economic recession. The grid (Appendix B) illustrates the increased demand towards Ryanair where its passenger numbers has grown by 13% from 2007-2008. New aircrafts and focus on business professionals Ryanair currently owns 189 Boeing 737-800 which are more environmental friendly and larger in capacity. Also discussions are underway for an order for 200-300 aircrafts for 2013-2016 requirements (centre for aviation, 2009). Also with changes in the business world and focus on countries such as China and USA the demand for long haul flights have increased. 6.4 Threats Fuel prices and other charges As Ryanair does not pass on fuel surcharges to its customers, the unpredictability in fuel prices and inexperience in effective hedging compared to its competitors it is at risk of continuing with lowering costs. Also increase in airport and handling charges and route charges due to expansion would also threaten its cost structure. Political influence As Ryanair operates in more than one country it is influenced by various legal requirements which are different to one another and therefore faces difficulties in standardizing processes and practices. 7.0 Recommendations Considering a much more structured marketing strategy which does not depend on controversy publicity. Taking measures to reduce negative publicity through practicing CSR projects and demonstrating ethical behaviour moving away from merely being profit conscious Proving customers with benefits of the low-cost structure through effective customer service which would increase numbers and thereby would positively affect profit margins although costs may increase in the process. 8.0 Conclusion Ryanair as the largest low-fares carrier and the market leader of the European budget airline market has been able to succeed due to its unique and out-of-the-box thinking. With a high rate of rivalry within the industry with big players such as easyJet, Lufthansa, Air France practicing competitive strategies time-to-time Ryanair is required to follow the correct strategies in order to remain at its throne. Accordingly effective analysis of its internal, external and industrial aspects would increase its possibilities. Ryanair with its low-cost strategy and powerful brand reputation could match its strengths with the opportunities in the market, especially those which have arisen due to the economical downturn increasing the demand for low-cost travel. Furthermore, due to its capabilities the industry attractiveness is at a high level for Ryanair. However the business is at a spotlight due to its controversy practices which they utilize as a means of publicity could negatively affect its brand in the long run and therefore should take steps to reduce these effects.

Ida B. Wells Essay -- essays research papers

Ida B. Wells Ida B. Wells (1862-1931) was a newspaper editor and journalist who went on to lead the American anti-lynching crusade. Working closely with both African-American community leaders and American suffragists, Wells worked to raise gender issues within the "Race Question" and race issues within the "Woman Question." Wells was born the daughter of slaves in Holly Springs, Mississippi, on July 16, 1862. During Reconstruction, she was educated at a Missouri Freedman's School, Rust University, and began teaching school at the age of fourteen. In 1884, she moved to Memphis, Tennessee, where she continued to teach while attending Fisk University during summer sessions. In Tennessee, especially, she was appalled at the poor treatment she and other African-Americans received. After she was forcibly removed from her seat for refusing to move to a "colored car" on the Chesapeake & Ohio Railroad, the Tennessee Supreme Court rejected her suit against the railroad fo r violating her civil rights in 1877. This event and the legal struggle that followed it, however, encouraged Wells to continue to oppose racial injustice toward African-Americans. She took up journalism in addition to school teaching, and in 1891, after she had written several newspaper articles critical of the educational opportunities afforded African-American students, her teaching contract was not renewed. Effectively barred from teaching, she invested her savings in a part-inte...

Software Piracy Essay -- Computer Software Copyright Violation

Software Piracy Software piracy is the copying and selling of copyrighted software. There are many types of software that can be pirated including operating systems, application programs, internet downloads, including music, software, or movies. Many people do this knowing that they are partaking in something illegal; however some people have no clue that they are breaking the law. In some cases a person may have inadvertently purchased pirated software. The consequences of having or distributing pirated software can be serious in some cases. Software piracy is a common practice that can be easily avoided. Software piracy is an equal offense to downloading of music, movies, books, magazines, or any other copyrighted material. It is as simple as downloading a program from the internet, or using a friend’s copy of Office. Software piracy can also be as complex as a computer store re-selling software with a fake or counterfeit product key or registration code. To avoid this look out for software that seems less expensive than it should be or software that comes with a key generator. If you suspect software piracy you can contact, The Software & Information Industry Association, on their website http://www.siia.net/piracy. On their website they are actually offering rewards of up to $50,000 to any person that reports a company that is using pirated software. People partake in software piracy because it as an easy way out of purchasing software. Some software programs can cost over a thousand dollars, whereas some only cost twenty or thirty dollars. Software piracy has said to have begun around the 1960’s. Over time it has grown and it accounts for â€Å"25% - 50%† of software curr... ... 83% Tunisia 82% Kenya 80% Thailand 80% Nicaragua 79% El Salvador 79% Bolivia 78% Guatemala 77% Lebanon 74% Romania 73% Morocco 73% Honduras 73% India 73% Philippines 72% Venezuela 70% Works Cited "Learn About Piracy." Prevent Software Piracy. 2005. Intuit. 8 November 2005. . "What is Piracy?" Anti Piracy. 2005. The Software & Information Industry Association. 8 November 2005. . "Massachusetts Man Pleads Guilty in New Hampshire Software Piracy Conspiracy." Software Piracy. 2005. U.S. Department of Justice. 8 November 2005. .

To What Extent Curleys Wife a Victim in Of Mice and Men Essay

In Of Mice & Men, the character Curley’s Wife is depicted as flirtatious, promiscuous, and insensitive. However, her husband Curley sees her as only a possession. Most of the workers at the ranch see her as a tart, whereas Slim, the peaceful and god-like figure out of all the men, see her as lonely. This answer will tell us to which extent, is Curley’s wife a victim, whether towards her flirtatious behaviour, or to everyone’s representation of her. The character of Curley’s Wife is very hard to unravel, as throughout the book, Steinbeck’s representation of women through characters such as George and Candy, is very harsh. This is because the sociological opinion at that time was that they were either, mothers, sisters, or prostitutes, as the audience soon see, George and other ranch workers refer to her as â€Å"bitch† â€Å"loo loo† and â€Å"tramp†. There were also a growing number of prostitutes during the Great Depression period, as they would offload their services to those whom were able to pay and have some decent income during the Depression. Other aspects that may make Curley’s Wife seem like a tart, is Curley’s â€Å"Glove Fulla’ Vaseline†. Curley literally keeps a glove full of Vaseline, in order to keep his hand soft, possibly for a sexual act. Curley boasts to Candy that the hand is for his wife, which tells us that she gives him consent to do these acts to her, and also, Curley’s nerve to inform fellow workers about his glove shows that he believes that his own wife is a tart, which is very controversial today, but back then, women were seen as nothing more than possessions, yours to do what you will. George informs Lennie to avoid Curley’s Wife at all costs, and not to talk to her, because of her promiscuous behaviour, he believes t... ...ars for the fidelity of his wife as he believes there is a chance that Slim could be with her, despite his good nature. This makes the audience believe that Curley knows his wife is capable of anything, and that he would rather have her under his control. However, the poignant side to Curley’s Wife’s victimisation is when she is victimised due to the stereotypical image of women, either mother or prostitute. This adds a dark shadow over her complicated character, because the way she dresses, and the shoes she wears, especially at the ranch of all places, is unnatural. Also, her manipulative ways ironically cost her life, as she was probably toying with Lennie being mentally handicapped. Overall, I believe that the way that Curley’s Wife has cast her impression upon everyone, has eventually made her a victim of society, the ranch workers, and most importantly, herself.

Is the Successful Reform of the United Nations Security

Reform of the United Nations Security Council has the support of the majority of the member states; theoretically, there is consensus on the issue. Ideas for reform include expansion of the number of permanent members of the Security Council and extending the veto powers currently held by the permanent members. However, this consensus has so far proved illusory, because agreement only exists in a vague form. When the debate is teased out it emerges that there is a lot of differing views on what reforms should take place and which states they should include. This essay aims to argue that UNSC reform is not possible because no consensus exists on who enlargement should include and whether the P-5 should remain the only veto holders. It is the intention of this essay to tiptoe through this political minefield and ultimately to argue that the Security Council must become more representative – that more members should be admitted to better reflect the world and the diverse opinions therein. The purpose of the United Nations is to bring the states of the world together in one place to resolve international issues and there can be no greater issue than that of security; it is imperative that the UNSC reflects world opinion not a minority of states. The proposed ideas for reform are mainly concerning expansion of the UNSC’s membership. It is argued by many that the power wielded by the P-5 is disproportionate and that this does not fairly reflect the world. As Kofi Annan stated: â€Å"in the eyes of much of the world, the size and composition of the Security Council appear insufficiently representative. (Annan 2002, quoted by Fassbender 2004, p. 341). Latin America, Africa and large parts of Asia and the Caribbean all lack a permanent member and that leaves these regions underrepresented in terms of UNSC security policy. It is felt that permanent membership and crucially the veto should be extended to states from these regions of the world. That no longer should the P-5 have such a crucial say in the security of the world, that these powers should be opened up to other states in other parts of the world. The other criticisms of the UNSC P-5 are that although they were the preminent powers in 1945 this is no longer the case. This criticism largely falls upon the UK and France and Russia who in 1945 were global empires but now longer are nowhere near as powerful and influential as they used to be. That there are now many states in the world that can equal the economic and military powers of the UK, France and Russia. It is argued that the UNSC should better represent the great powers of today rather than those of over sixty years ago. There is some consensus and support for the idea of expansion. However, many states put forward provisos with their messages of support. The United States is concerned that new members should be economically powerful with a large population and has a solid history in terms of democracy and human rights. The joint British-French statement argued the need for representation for Africa and quizzically did not put forward an African candidate and instead named their choices; Germany, Brazil, India and Japan (Joint UK- France Declaration, 2008). India expressed the need for the UNSC to also include developing states and that increase of permanent and non-permanent members was necessary. (India and the United Nations; UN Reform. ) Brazil argued that the UNSC does not represent today’s world and the limited number of states in its current composition was not a multilateral approach. The debate about veto reform is a non event as none of the P-5 will accept any reform to their veto rights (Rath, 2006, p. 59). There does not seem any way the P-5 could be stripped off the veto without their compliance and without a fundamental change in attitude, veto reform is impossible. The question of who should become new members of an enlarged Security Council is a very divisive issue. For every likely candidate there are several detractors as well as supporters. The most prominent candidates for becoming permanent members are the G-4 consisting of Japan, Germany, India and Brazil. These four are all seen as contributing generously to the UN and all have either large populations or economies. However, the most fundamental criticism of the G-4 is that it although it does expand the Council it still neglects a permanent seat for an African state. It also further weighs the Security Council with more industrialised rich countries (Bourantonis, 2005, p. 69). The group Uniting for Consensus actively argues against the accession of the G-4 to the UNSC and instead argues for an increase of non-permanent members. Uniting for Consensus is often seen as being driven by member states regional rivalries; Italy’s opposition to Germany’s bid is one example. Indeed, all of the G-4 have opponents, in South American it is argued primarily by Argentina that Portuguese speaking Brazil can not represent the rest of the Spanish speaking continent. Not all the criticisms of these candidates are to do with regional rivalries; the US was publicly supportive of Germany’s bid but the souring of relations over Iraq prompted Washington to change policy (Fassbender, 2004, p. 342). The issue of who supports who and why is a complicated issue but these examples stand to show that there is very little consensus amongst states about who might join a reformed UNSC and is the reason reform debate is so deadlocked. Reform of the Security Council is possible but will be very difficult; selecting members for expansion will prove divisive in international politics. The desirability of reform has been covered to some extent above with the need to better represent the world in the Security Council but the main issue for debate in this regard is the effect expansion could have on the workings of the UNSC. The argument against expansion conceptually posits that a Security Council with too many members loses its executive function. That the whole idea of this tier of the UN system is to have a few powerful and influential states to act together decisively. Thus enlargement -particularly of the veto- would cause more division among UNSC members and render the Council prone to deadlock, based on the simple logic that it is easier to get a smaller group to agree collectively than it is a larger group. The oft cited example is the failings of the League of Nations which was constantly paralysed by the need for unanimity among members to act (Weiss, 2003, p. 148). Although conceptually it is easy to argue this case, it does require some qualification with examples and there is an argument to be made that the UNSC is not at the moment a decisive body which has little to do with its size (Lund, 2010). Whether enlargement would make the UNSC more or less efficient depends upon whether we consider the current incarnation to be so. A better argument for enlargement not making the Council a committee was made by the German diplomat Dr. Gunter Pleuger, stating that enlargement of NATO had not made that body less effective which now include one more state, 26 than the proposed UNSC increase to 25 (Pleuger, 2005). This is a good example of an international body being able to act in concert whilst having a large membership, but NATO and the UN are very different. NATO members all share sympathetic policy goals and to some extent would consider themselves allies. However, the present P-5 alone or with the G-4 are not allies in great sense and although they might all support the idea of international peace and security they would have a much larger difference of viewpoint on conflicts than NATO. In conclusion, reform of the Security Council would require substantial work to be achieved and does risk souring of relations around the world. The prospect that the veto will be abolished seems very remote, whether new permanent members might have the veto extended to them is tied up with the question of the possibility of enlargement. So many factors remain to be agreed over reform, expansion is not possible without widespread consensus over the shape and size of a new Security Council. If those debates were resolved then the world could look to deciding candidates, another set of hard choices. To definitively state that reform is possible or is not possible is in itself impossible. There are arguments to be made for and against reform, we will have to wait and see what happens. Perhaps the more important part of the question is the desirability of reform, this in its vague sense does have some consensus in international politics. There does need to be a widening of the members of the Security Council; it does need to better represent the world. How this can be effectively implemented is where the debate really starts. The prospect of a deadlocked Security Council, paralysed by a lack of consensus among members is not desirable. Certainly, the simple solution to this would be to abolish the veto and rely upon a majority vote to pass resolutions, however this is not even vaguely a possibility. It is quite possible that an enlarged Security Council could be able to act decisively but it would certainly be a risky experiment and is therefore too much of a risk to take seriously. Desirable reform of the Security Council would require an overhaul and rethink of the whole system. Bibliography http://www.globalpolicy.org/component/content/article/228-topics/48674-pros-and-cons-of-security-council-reform.html

Revenue Cycle and Control Activities Essay

The revenue cycle for many companies is considered the primary source to earn revenue from the sale of goods or service. Good controls must be established to maintain the effectiveness of receivables and credit sales, not doing so can harm the company and might be costly to the business. Six classes of internal controls guides us in evaluating and designing transaction processing. They are authorization, supervision, segregation of duties, access control, independent verification, and accounting records. We will discuss each department that is involved in the revenue cycle, it’s activities, and control activities.The first section discusses the departments that make the revenue cycle , starting with Sales Department and ending with Billing Department, knowingly that collections must be received and adjustments must be made. The second section discusses the six activities mentioned earlier. Departments The revenue cycle is composed of five independent (in activities and personnel) departments that are required to make function and make a sale. Each department carry out it’s own, and every department depends on the the preceding department in order to function properly. An additional two activities must be considered in the revenue cycle are collection of receivables and adjustments to sales and receivables. Sales Department Every sales process starts with receiving a customer purchase order- by mail, in person, or telephone. Thus controlling the customer’s orders is carefully done, and operating procedures must be maintained in an adequate manners. The department then identifies and reviews items and quantities to determine whether the order can be placed, then they prepare The Sales Order. The sales order is not the standard format that the seller’s order processing system needs. The sales order has vital information, such as the customer’s name account number, description of the items sold quantities, and prices. A copy of sales order is placed in the open order file, the customer getting the ordered goods might take days or even weeks. The customer might check about the status of his or her order, order file is updated every time the status of the order changes .It also sets instructions to guide various divisions and department, including credit, finished goods, shipping, billing, and accounts receivable units. Credit Approval Department To provide independence to the credit authorization process, the credit department is organizationally and physically separate from the Sales Department. The credit approval department receives a copy of the sales order from the sales department. The document received serves as an authorization to preform a client credit check. The check includes investigating new customers’ ability to pay and creditworthiness, and a line of credit is established. Typically new checking new customers take time more that existing customers. A good control activity is a limit test, which measures the customer have unused credit. This process set an upper limit that the customer must not pass, if passing it the purchase order by the customer will be denied. Warehouse Procedures After a credit check has been performed and approved, and a sales order is received. The warehouse is responsible of issuing merchandise and items that were mentioned in the sales order to the shipping department. In a typical company that have finished goods in it’s inventory, this inventory is supervised and controlled by a storekeeper. He is responsible for issuing the goods. Another control activity must be done is updating the inventory records by the accountant, not by the storekeeper. This separation of duty prevents theft of inventory. The Shipping department When receiving the finished goods from the warehouse, the shipping clerk must reconcile the products received from the warehouse with the products mentioned in the sales order. This is an important control activity, which ensures send the right products and quantities to the customer who ordered them. Then this department prepares shipping documents , such as the bill of lading as they are loaded into the carrier- cars, trucks etc. These documents numerically controlled and are entered in a shipping register before being forwarded to the billing department. A gate control is done when shipments are made by truck, this ensure that goods have been recorded as shipments. The clerk enters these transaction and sends a shipping notice and stock release to the billing department. The Billing Department Upon receiving the Shipping notice and stock release from the shipping department, a sales invoice with any relevant information about the transactions and bills the customer. Billing departments are responsible of serially numbered shipping documents, comparing documents received from other departments, entering data from sales orderers and purchase order on the sales invoice, applying prices and discount to the invoice, make extensions and footing, accumulating total amounts. Controls should be done to ensure the accuracy of sales invoice before sending them to the customer, such as a second person review. The billing clerk enters the transaction into the sales journal and send the documents to the account receivables and inventory control department. Collection of Receivables Most receivables are either consisted of checks, and remittance advice and collected through the mail. The cashier is responsible for checks and depositing them, and the remittance advice will be forwarded to the account receivable or the data processing department, which will be recorded in the appropriate accounts. Reductions in the AR are posted periodically to the general ledger control account. Adjustments to Sales and Receivables All adjustments to sales for allowances, returns, and write-offs of account receivables should be supported by a credit memo which is serially numbered. This memo must be signed by an employee having no cash handling duties or maintenance over the customers’ ledger. Good Internal controls require that goods must be checked and examined before a credit is given, and the memo should have the serial number of the receiving report on the returned shipment. The treasurer give grant the credit manager the authorization to initiate the process of uncollectible receivable write off. Updating Inventory Records The inventory control function updates the inventory subsidiary from the information included in the stock release document which was prepared by the the warehouse. In a typical perpetual system, every item has it’s own record in the ledger containing data, such as units sold, units received m reorder point, EOQ, and standard cost. The stock release document decrease the amount of the inventory. Over a period of time the total reduction in inventory is summarized in a journal voucher and sent to the general ledger function. Revenue Cycle controls As mention earlier every department of the revenue cycle must have it’s own controls over is activities, doing so might prevent theft, error, fraud, and enhancing the it’s operations. Six controls are to be covered in this section regarding various department and activities in the revenue cycle Transaction authorization this ensure that valid transactions are processed only, and it include credit check and return policy for sales processing and remittance list for cash receipts. Credit Check as mentioned is function carry out by the credit department. This department might uses various test and techniques to determine if the customer is trust worthy or not. Different procedures and done to do credit check, depending on the organization, its relationship with the customer, and the materiality of the transactions. Approving for a new customer might take longer time that existing customer, and a decision that falls within the employee authority may be done quickly. However credit check must be done with consistency of the company’s policy. Return Policy is also a credit department task, the returns must be authorized by this department before receiving them. the nature of the sales and the circumstances determine the authorization granted. Again policies set by the organization, such as cash refunds, must be taken into consideration for granting returns. Remittance List verifies that customers checks and remittance advice match. This reconciliation might detect errors, such as an extra remittance advice or and absence of a customers’ check, it also might detect a difference between checks and remittances. This list authorizes the posting of a remittance advice to a customer’s account. Segregation of Duties it ensure that separate individual and department processes the transactions. The size and type of an organization affect this type of control, for instance a personally own small business might not need this kind of control, because the owner is the management. The revenue cycle has three rules about the system designers. First, transaction authorization should be separate from transaction processing, such as the warehouse department. The warehouse department cannot issue goods without the confirmation of the credit and the sales department. Second, asset custody should be separate from the task of asset record keeping. For instance, the warehouse department has physical custody over it’s inventory, but the inventory control is in charge of maintaining the record of inventory levels. Last, the organization must be structured so that fraud require collision between two or more individuals. This means that task should be separated, such as different record keeping individuals. An employee with a total record keeping responsibility, in a collusion with an other employee with custody might commit fraud. Separating task needs more people to commit fraud. Supervision is considered a compensating control for companies who have little number of employees to make a segregation of duties. Supervising those employees detects error made, and inadequate functions. This tool is used also in system with a good segregation function. For instance the mail room is a good place to commit theft for check received, cashing it, and destroying and evidence relating to the theft. Although this might be detected when complaints made by a customer about billing him again, but the best solution is preventing it from the beginning. Therefor a good supervision over employees is considered a good prevention control. Accounting Records this control activity describes how a firm’s documents, journals, and ledgers form the system in various stages of processing. It’s also an important feature of well-designed accounting systems. Prenumbered Documents, are sequentially numbered documents that allow every transaction to be uniquely identified. Tracking event related to documents through t system is easy. Special Journals, The revenue cycle uses a specific journals, such as sales journal and the cash receipts journal. Special journal groups similar transactions into a specific journal. Subsidiary Ledgers, there’s two subsidiary ledgers in the revenue cycle, the inventory and accounts receivables subsidiary ledgers. They provide links to the documents used to capture the events related to each subsidiary. General Ledgers, these are the basis for every accounting system, and for the preparation of every financial statement. Sales, Inventory, Cost of goods sold, AR, and cash are affected by the revenue cycle’s transactions. Files, temporary and permanent files are opened as a result from the revenue cycle. Some examples are, sales order files, shipping log, credit records file, back order file, journal vouchers, . Access Controls it’s used to grant authorization and permission to employee and access to the firm’s assets, such as the physical assets, cash and inventories. Ways in protecting these assets are: warehouse security, Daily cash deposits, safe/night deposit box, using safes. Access control over information involves restricting access to documents that control physical assets, such as journals and ledgers. Examples of the access risk: Removing one’s account from Account receivables ledger, do so he company can’t send the customer monthly statements. Access to sales order might trigger unauthorized shipment of a product. Access to general ledger and cash might steal and cover it up by adjusting the ledgers. Independent Verification the main reason independent verification is to verify and assure how accurate and complete the tasks are. Independent verification occur at various point is the process, so that errors are detected and dealt with quickly. Independent Verification in the revenue cycle occur at the following points. First, The shipping department reconciled the goods sent from warehouse with the quantity and type ordered by the customer. this is done by reconciling the stock release document with the packing slip. Second, The billing department reconciles sales ordered with the shipping notice to ensure sending the right invoice with the quantities and prices ordered by the customer. Last, Before posting to any control accounts, the general ledger function reconciles various journal vouchers and summary reports which were prepared independently. Other Controls include verifying approved buyer, this is not frequently used, but sometimes a purchase order might be completed and signed by and unauthorized person from the client company. Stamp approval on sales order. It is possible for sales orders to be fraudulently routed around the credit department and sent to the warehouse,s o an approval stamp to be used on each sales order. Prenumber sales order forms. Only prenumbered sales order documents should be used. By doing so, the company can track which sales order numbers did not reach the billing department, which may indicate that a delivery was not invoiced. Lock up unused sales order forms. It is possible for someone to enter an order to a shell company on an unused sales order form, fraudulently stamp it as approved by the credit department, and route it to the warehouse as authorization for a delivery. References. 1. Whittington, O.Ray, and Pany,Kurt.(2001).Principles of Auditing and other assurance services.13th edition.New York: Irwin. 2. Hermanson, Roger, and Strawser, Jerry, and Strawser, Robert.(1989).Auditing Theory and Practice.5th edition. Boston: Irwin. 3. Bragg, Steven. 2009. Accounting Control: Best Practices. New Jersey: Wiley & Sons Inc. 4. Hall, James. Accounting Information Systems. 7th edition. Ohio. Cengage Learning. 5. Wilkinson, Joseph and Cerullo, Micheal and Wong-on-Wing, Bernard and Raval, Vasant .2000 .Accounting Information Systems: Essential Concepts and Applications.Wiley 6. Mooney, Kate. 2008. The essential accounting dictionary. 1st edition. Illinois: Sphinx Publishing, An imprint of sourcebooks, inc.