An economy at its core is really just the production and consumption of goods and services of a community. Essentially an economy is how we survive as a civilization, which is why productivity and efficiency is essential. This is where specialization comes into play. Specialization is a focus or concentration on a specific task, objective, or function for maximum efficiency. Interdependence stems from specialization, causing economies to depend on each other for the goods and services they cannot provide for themselves. Interdependence creates risk because economies have to depend on other economies for the goods or services they do not produce themselves. When the good or service is provided the way the parties agreed then trust arises. When trust counters risk, there must be economic governance. I will argue in this paper that the key to success for any global economy is to specialize in as many economic sectors as possible, which is known as sectoral diversification. After the collapse of the Soviet Union in 1991 Russia suffered an economic collapse, with millions being thrown into poverty while corruption and crime spread rapidly. Russia experienced a Market Failure1. Since the collapse Russia has tried to develop a market economy and achieve economic growth. Russia’s economy was put under a lot of stress from the transition into a market economy. Declining productivity and a chronic fiscal deficit led to their 1998 economic crisis. Russia swiftly bounced back from the August 1998 financial crash. The main reason for their fast recovery is that world oil prices rapidly raised during 1999-2000. This allowed Russia to run a large trade surplus in 1999 and 2000. Russia is a good example of openness2, because of their oil trade. In 2011, Russia became the world’s leading oil producer, surpassing Saudi Arabia; Russia is the second-largest producer of natural gas; Russia holds the world’s largest natural gas reserves, the second-largest coal reserves, and the eigth-largest crude oil reserves (indexmundi). This abundance of fossil fuels is a good example of natural capital3. Until Russia’s admission into the World Trade Organization they did not allow outside petroleum companies to extract any of their oil this is called protectionism4. But after Russia’s admission in to the WTO they are now under the organizations regulation, which allows foreign companies to extract their resources, this is called heteronomy. Russia even has oil refineries since oil extraction and production is such a big portion of their economy, this is known as Scales of value addedness. Fossil fuels are a good sector to be specialized in, but because of this sectoral concentration5 Russia has a reliance on commodity exports which makes them vulnerable to boom and bust cycles. Russia’s economy suffered another market failure as a result of the 2008-09 global economic crises when oil prices plummeted. The government has embarked on an ambitious program to reduce this dependency and build up the country’s high technology sectors. The Brazilian economy experienced rapid growth and considerable diversification between 1950 and 1961 as a result of import-substitution industrialization. Traditional industries, such as textiles, food products, and clothing, declined, while the transport equipment, machinery, electric equipment and appliances, and chemical industries expanded (countrystudies). The Brazilian military government was the authoritarian military dictatorship, which ruled Brazil from March 31, 1964 to March 15, 1985. While the nation was under this military hierarchy6 their economy was not very efficient7 therefore the economy did not prosper. When they were relieved of this military dictatorship their economy had a lot of room to grow. The Brazilian economy is both capital intensive and labor intensive. Brazil is characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil’s economy outweighs…
Fundamentals of Macroeconomics
ECON/372 Principles of Macroeconomics
To understand the business cycle, one must understand that there are several intricate pieces to the puzzle to allow it to be whole and show the whole picture. If even one piece is missing the picture is not complete, and the cycle can come to a halt. First one has to understand the GDP, Gross Domestic Product. The GDP is price of all goods and services a country can produce at any given time. This is equal to the government…
Exploiting the vulnerable 5
Exploiting the Vulnerable.
The fast food industry sees children as a future as well as current market and hence brand loyalty at a young age helps in the quest of continued sales later. $15-17 billion is spent by companies advertising to children in the US. Over $4 billion was spent in 2009 by the fast food industry alone. Children are naïve about advertising and are easily controlled and exploited by the…
Derivatives and the Financial Crisis
Tessa M. James
Fred R. Becker, Jr
The National Bureau of Economic Research (NBER) defines an economic recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." Most economists identify recessions when a country experiences two or more quarters of contraction in the…
December 1, 2011
Econ 356, Prof. Carlson
Essay Number Three
After reading the two articles it is clear to me that Claudia Goldin is at the forefront of research on the economic role of women in the 20th century. Specifically, she addresses the topic of the growing participation rate of women in both the labor force and college attendance. There are a plethora of factors that contribute to these rising membership rates and it is evident that women have gone so far as to not only close the gender…
The Decision of a Lifetime
When you are about to graduate high school, you have to start making decisions that matter. You have to be mature and rational in your decision making. Especially when it comes to one of the most important decisions in your young adult life, where to go to college. For some the answer is easy, such as going to your parent’s alma mater or the school that offered you a scholarship. On the other hand, you have people…
AP Econ 3
Global Warming is caused by greenhouse gases. These gases; carbon dioxide,
methane, nitrous oxide, and fluorinated gases, cause heat to remain in the earths
atmosphere. Its called the greenhouse effect; the more greenhouse gases in the
atmosphere, the long the heat remains in the atmosphere. It works the same way as a
greenhouse; the earths atmosphere is the glass of the greenhouse (the glass also
works as the greenhouse gases). Global warming is a natural occurrence…
The primary authority for software revenue recognition is AICPA Statement of Position (SOP) No. 97-2, Software Revenue Recognition, which is the result of about 12 years of development work from 1985 through 1997. It applies to both public companies (according to SAB 104) and private enterprises.
Under SOP 97-2, recognition of revenue generally occurs at delivery if a four-part conjunctive test is met. Software delivery should be straightforward and require no special production, modification…
ECON 401 Assignment 1, version B- Globalization of markets: Moving away from an economic system in which national markets are distinct and entities, isolated by trade barriers and barriers of distance, time and culture, and towards a system in which national markets are emerging into one global market.
Example: McDonalds having to adapt their menus to people changing preferences. In order to stay competitive, McDonalds had to adapt a healthier menu. Also McDonalds realized that their customers…
Econ 201 301 Macroeconomics Final Report
Even though a lot of people seem to be talking about how bad our economy is and how bad things like the unemployment reals and Real GDP are, the economic situation is appearing to be looking up overall. For example, take a look at the growth in Real GDP.
According to The U.S. Bureau of Economic Analysis, the Growth in Real GDP in 2014 went up 3.5 percent and 4.6 percent, respectively. These numbers are positive and…