Housing, Economic Growth and Poverty: A Literature Review

trapping, Economic Growth and P all overty A Literature ReviewAbstractThis paper reviews lit on the relationship in the midst of admit pay, stinting egress and impoverishment. bandage it is evident that accommodate twirl creates jobs, the review reveals that in that location is a need for much re calculate to determine the long-term stinting benefits of accommodate and whether caparison pay in take upicular nominate be an nubive tool in eradicating privation. The limited show is due in part to limits in data and the need to utilize robust econometric techniques to determine the perpet symmetryn of causality in these relationships (i.e. does increase scotch growth top to increase demand for caparison and hence house mental synthesis and finance or does accommodate construction and finance lead to increased frugal growth and start out exiguity). Though forgetful contract evidence was found, the monetary compound literature suggests that as caparison f inance deepens pecuniary markets, it whitethorn play a situation in pauperism every(prenominal)eviation. This relationship should be enquired further.1. IntroductionWhile the focus of this review is to summarize empirical evidence regarding the relationship between lodgment, economic growth and poverty, in that location is considerable stylized and anecdotal evidence that makes a case for hold as a prescription for poverty. This literature is extensive although recent books on eradicating poverty in the under create world say very little explicitly about the role of trapping. The End of Poverty by Jeffrey Sachs (2011), dry lands that most would conduct that fact that schools, clinics, roads, electricity, ports, soil nutrients, clean drinking water and the same argon the basic necessities for a life of dignity and health, as closely as for economic productivity. Sachs goes on to delineate the st locategy for ending extreme poverty by 2025. While he mentions let on inve stments in people and in infrastructure, he does non explicitly mention lodgment. The same can be said of Banerjee and Duflo (2011) and Karlan and Appel (2011). Perhaps there is an underlying assumption that housing is necessary. Perhaps, housing is considered part of the infrastructure that they tie in to. Or, perhaps the underlying bacillusief is that economic growth exit lead to better housing conditions. At any valuate, a specific consideration of the meeting of housing on poverty is not given in these recent books on the subject of eradicating poverty in this millennium. This is representative of what was discovered upon reviewing the empirical literature on this issue.Some authors assert thathousing loans and finance atomic number 18 needed barely do not provide economic analysis toback this claim. For suffice, Bunnarith(2004) in discussing national housing policy in Cambodia asserts that housingis needed so that people can have a safe and secure environment. t here is no discussion in his policy paper ofthe true economic daze of housing construction or finance on economic growthor poverty reduction. Similarly, Habitatfor Humanity specific solelyy acknowledges that housing is necessary to eradicatepoverty. In Consequences of Poverty hold, Habitat for Humanity asserts that the lack of suitable housingcreates disadvantages at many levels. Itis seen as interfering with a households ability to break out of povertybecause so much of the households m and bullion is spent on house maintenanceand repairs and not on food, health, education and income generation. Due to a lack of suitable housing, there is little capability arising from illnesses, inability to educate children and aninability to provide a safe and secure environment for economic endeavors. These are testable implications however littlehas been done to document these losings empirically, likely due to datalimitations. Some evidence is found andlisted in the education section.Whi le there is quite a bitof literature on the interactions between GDP and housing investment, there issurprisingly little evidence documenting the relationship between housing,economic growth and poverty. One reasonfor the limited evidence is limitations in quantity of data in develop countries,e particular(prenominal)ly the poorest ones, Hull (2009).A second reason for the limited evidence is that it is difficult todetermine the direction of causality between economic growth and housing. Thereis a need to use general equilibrium sit arounds which are not easily tested withthe chromosome mappingal data in the developing countries.Data limitations are particularly severe when trying to test theserelationships in the poorest of the developing countries. Finally, macroeconomics and housing financewere not analyze in skill in economic literature prior to the 1980s, even for theU.S. When studies were done theytypically looked at housing demand as a function of income and growth not t he wallop of housing on economic growth, see Leung (2004). Even if where there is analysis of housingfinance in developed countries, it whitethorn be difficult to make direct inferencesabout relationships between housing and economic growth in developing countriesusing those results because so many some former(a) factors are at work including financial sector growth, regimen involvement and types of housing.With these limitations in mind, there is some information that whitethorn be useful in analyzing the bushel of housing finance on economic growth, job creation and poverty. The collision of housing on economic growth, in developed and some developing markets is high school decreaseed in the next section. Next, there is a review of the impact of housing on job growth. The third section reviews what is known about the impact of housing and housing finance on job creation. Section four reviews the impact of housing finance on poverty. Some inferences in that section are grou nd on studies of financial market development on poverty. Section five examines potential societal and revenue consequences of housing. Finally there is a summary of chanceings in section six.2. caparison and Economic ImpactHousing and Economic GrowthHongyu, park and Siqi(2002) recognize the causality dilemma when studying housing investment andeconomic growth. They use Grangercausality tests to study the case of China from 1981 2000. This study does not address the povertyimpact it just studies housing and economic growth. The authors muster that compared to non-housinginvestment, housing investment has a stronger short- go along effect on economicgrowth. They also identify that housinginvestment has a long run impact on economic growth but not on non-housinginvestment. On the other hand, economicgrowth has a long run impact on both housing and non-housing investment. These findings suggest that housing is importationant in explaining only short-term economic cycles in econo mic growth. Chen and Zhu (2008) alsostudy the long- and short- run relationship between housing investment andeconomic growth in China. The authorslook at panel data from 1999 finished 2007.They use robust econometric tests to examine Granger causality of therelationship and find that the relationship is bidirectional in both short and long- run. In other words, in Chinaduring this period, housing investment impacted economic growth and viceversa. It will be touching to see ifthis result holds over a long-dated period where more economic cycles are includedin the data. Interestingly, therelationship is different depending on which provinces are analyzed. The eastern provinces show bidirectionalcausality like the overall results but results for other provinces showthat GDP granger causes housing investment but not vice versa.In addition to theempirical analysis of the relationship between housing and economic growth,there are some estimates of multiplier effects associated with c onstruction indeveloping countries. For example, Uy(2006) cites that for every 1 peso spent on housing activities in thePhilippines, an additional 16.61 pesos is contributed to the GDP. In genus Argentina, Freire, et. al (2006) estimatethat a 1,000,000 peso investment in construction leads to 1.8 times that addin demand. In 1995, a United Nationsstudy indicated that in most developing countries construction of low- incomehousing is labor intensive and therefore housing construction has a highmultiplier effect of between 2 and 3 times the initial investment. This arises due to the large infrastructureinvestment (roads, utilities, water, etc.) required in housing development inthose countries. . In comparison, The National Association ofRealtors model suggests that the multiplier for home sales in the U.S. isbetween 1.34 and 1.62.Erbas and Nothaft (2002)study a sample of MENA (Middle east and North African) countries. utilise parameters from the U.S. they simulatethe impact that a mendd home mortgage availability would have on housingmarkets and economic growth in these countries.They find that mortgage market reforms would increase housing unitsbuilt by 10% with a 600 basis point decline in mortgage interest rates. The impact that the increased mortgageaccessibility and housing would have on economic growth is not significanthowever. That is because they find, likeother studies, that increased investment in housing crowds out investment inother sectors. The impact on overallgrowth will be great if this housing finance helps to improve small business quotation.Housing Finance and AffordabilityDubel (2007) proposes a model where housing prices aredetermined by rents, R, growth, g, and the opportunity cost of capital, k,where P = R/(k g). The role of housing finance in this model is to reducethe cost of capital. As that cost islowered, housing prices fall and affordability of housing increases.Housing and SavingsBuckley (1996) cites several(prenominal)(prenom inal) reasons that mortgage market development can improve household savings. First, the return to housing will likely provide positive returns especially in light of rapid urbanization in developing countries. Second, housing provides the most secure collateral against market fluctuations and a positive yield over the long-run. Third, housing prices are less volatile than other addition prices. quartetteth, the availability of housing improves labor mobility and therefore employment potential. Finally, the availability of affordable housing finance may lead to increased savings as potential homeowners save to make the required down payment and to maintain their asset.While many of the work in this welkin suggests that there should be benefits to overall savings and investment arising from increased access to affordable housing, the literature does not appear to have documented these benefits empirically. This is an area wholesome-situated for further exploration.3. Housing and Job CreationThe Case of the United StatesWardrip, Williams andHague (2011) review the literature on the role of affordable housing inparticular, in creating jobs and impact local economic development in theU.S. They find that the development ofaffordable housing increases spending and employment in the surroundingeconomy. There are several models usedin the housing literature that use inputs much(prenominal) as information on the purchaseand production of goods and services for hundreds of U.S. industry sectors, thetype and procedure of businesses in a given community, and a measure of thespending associated with a given program.Given these inputs, the models output the level of economic performanceexpected for a given level of housing investment. For example, the National Association of baseBuilders uses a proprietary model to estimate the impact of building 100 newlow-income housing tax credit developments for families. The model predicts that the investment will,on average, lead to the creation of 80 new jobs from the direct and indirecteffects of construction and 42 jobs support by the induced effects ofincreased spending. In the long-term,building these units also leads to 30 new jobs that support on-going consumeractivity of the new residents.Market-rate apartment housing will create a similar amount of jobs withjust a couple of additional jobs (32) supported by households occupying the newhomes. Of course the models aredependent on the productivity of investment within the community and wouldlikely look very different across countries being considered. It will depend significantly on the amount ofskilled labor available for the construction work since 70% of the jobs createdas a direct or indirect result of the new construction, are in factconstruction jobs.Rural vs. urbanIn support of the findingsabove, in considering the impact of housing development on a rural communityseconomy, the Housing Assistance Council states that housing construction and rehabilitation have a high ratio (62.3%) of value-added to gross expendings. This means that a large percentage of theoutlay for housing construction is available to create wages and salaries, andstimulate job growth in rural economies in the U.S. The document does not compare the ratio forrural communities with that in urban communities. This is an all-important(prenominal) distinction since mostof the growth in developing countries centers around urban areas. Quigley (2008) suggests that results on therelationships between investment and economic growth may be dependent onwhether that investment is rural or urban.The author finds that urbanization promotes productivity due to increasesin specialization, centralization of knowledge, complementarities in productionand economies of home plate and scope. Ifthis is true, an investment in an urban center may produce greater economicgrowth than that same investment in a rural area. This will be an important factor in directinghousing policy and finance.Housing and Jobs in Emerging MarketsIn emerging markets thereis some data on job creation as well as the previously cited multiplier effectsassociated with construction. For example,in Argentina, Freire, Hassler, et. al (2006) estimate that a 1,000,000 pesoinvestment in construction creates some 40 jobs directly and 20 jobs indirectlyfrom services and related industries. Tipple(1994) cites many studies that find multiplier effects from housinginvestment. For example, the NationalBuilding Organization in India estimates that a $1,000,000 investment inbuilding construction leads to 600 on-site jobs and 1,000 indirect jobs. The construction abut may stimulateeconomic growth through backward bear onages (e.g. processing building materials)and forward linkages during and after the construction process (e.g.restaurants, repair shops and small scale manufacturing). However, according to Erbas and Nothaft(2002), housing construction in some developing countries is gen uinely quitecapital intensive and reliant on imported materials as a result only a smallpercentage of the labor force of these developing countries is employed inconstruction. In addition to the constructionrelated jobs, Dubel (2007) finds apositive correlation between financial and real estate related services and thehousing to GDP ratio. Specifically,during the property market upturn in Hong Kong in the 1980s and early 1990s, adoubling of the housing market share of GDP led the share of financial,insurance, real estate and business services to tercet from 6.5% to 16.3% ofGDP. Other service sectors, includingcommunity, social and person-to-person services also grew, likely as a result ofindirect inputs to construction activity as well as increased taxrevenues. 4. Housing and Its Impact on PovertyThe literature on therelationship between housing and poverty is much little than that on housingand economic growth. Hull (2009) notesthere are significant data limitations especially o n headcount poverty andlabor market outcomes. These data limitationsmake testing difficult. There is aparticular need for data in sub-Saharan Africa.Some findings can be noted and they suggest that all housing investmentis not created equal when it comes to addressing poverty. Some of these studies are highlighted here.Gutierrez et al.(2007) find strong evidence that the sectoral pattern of growth and itsemployment and productivity-intensities matter for poverty reduction. Whileemployment-intensive growth in the secondary sector (manufacturing,construction, mining and utilities) is correlated with poverty reduction,employment-intensive growth in agriculture is correlated with increases in thepoverty headcount. By extension, ifhousing creates growth in manufacturing, construction, mining and utilities, itmay be effective in reducing poverty.Similarly, Hull (2009) finds the construction sector is relativelyproductive but not in all countries.That is, construction reduces measures of p overty in some but not allcountries.Erbas and Nothaft (2002)find that low income housing has a lower import component in production andalso higher labor intensity. Thisimplies that construction of low income housing will lead to greater employmentand growth than the construction of middle or high income housing. Construction of low income housing caneffectively improve the invigoration standards of the poorer segments of thepopulation in two ways by creation of jobs and by creation of suitablehousing.Tipple (1994) reviews theliterature on the links between employment and housing development and showsthat investment in tax shelter is very effective for promoting employment,especially among lower-income groups some of the benefits to the economy tendto be inversely proportional to housing cost meaning that low cost housing ismore beneficial to the economy. Theinformal sector and small-scale enterprises tend to outperform the formalsector and larger enterprises.Housing Policy and Pov erty in evolution CountriesAs housing finance policyis considered, the housing programs and policies of local governments must beaccounted for in order to assess the potential effectiveness of housing financein different countries. For example,Malpezzi and Sa-Aadu (1996) review contemporary African housing markets and policies. They find that resource allocation in thesecountries was quite different than their intended objectives. These policies have deter housinginvestment and have been both inequitable and distortional. The authors suggest that privatization ofhousing investment is more efficient and the African governments need todisengage. Taking the example of theU.S., direct government housing production has been less efficient than privatesector tax incentives in developing affordable housing see Erbas and Nothaft(2002). Researchers and policymakers have noted thatthe housing finance systems in some countries have not been effective inreaching the low income segments of the population. For example, Moss (2004) states that in SouthAfrica the housing finance system has had little impact on the low-incomesegment of the population. Specifically,attempts to expand credit into this market through micro-loans have been characterizedby initiatives that have yet to demonstrate some form of success. The financial sector in South Africa consistsof many banks, a number of specialized finance companies and a large number ofthe so-called alternative lenders.Future studies should investigate which of these alternatives is likelyto have success in reaching the lower income segments of the population. According to Moss (2004), housing finance hasalso not been very successful in Nigeria where the interruption between income andshelter cost is very wide and has basically eliminated the low income earnersfrom the housing market. Similarly, Rahman(2009) states that the lack of available and accessible housing finance hasbeen identified by the Government of Bangladesh as o ne of the important hurdlesin improving housing conditions for middle- and lower-income households.Although several potential sources of housing finance for mid- and high-incomeconsumers exist, most of the low-income families needs are still unmet.Housing Finance in growth MarketsWhile there are differences in how housing finance occurs across developing countries, there are some similarities and shared concerns. The degree to which a countrys banks invest in mortgage lending is relatively low in developing countries when compared to developed countries. For example, Rahman (2009) cites that in Bangladesh, 4% of banking sector assets are in housing. In many countries there are state funded and/or sponsored housing finance institutions with government guarantees. However, there may be allocation problems in that loans are allocated based on politics and not on financials and the granting process can be long and inefficient. There are not as many types of mortgage instruments and in fact many countries are just beginning to grant fixed-rate mortgages which eliminate interest rate risk for the borrower. The maturity of mortgage loans tends to be shorter in developing countries 10 years is the maximum term for some mortgages in Bangladesh. In addition to state sponsored financial institutions and banks, home finance is offered by micro finance institutions. In Bangladesh, one such institution offers these loans for a term of 10 years without collateral. Although there is no collateral, the borrower must obtain title to the land and must sign a pledge to revert and obtain a group pledge to repay the loan if he or she fails to do so. These programs tend to rely on a borrowers track record, group pressure and mutual support to throw credit risk. Moss (2004) finds similarities in housing finance in South Africa and to a lesser extent, Nigeria, Ghana and Tanzania. In most of these countries, anecdotal evidence suggests that the supply of housing finance is much les s than the demand and that the institutional structures have not provided sufficient access to housing for the poor.Housing, monetary compound andPovertyOne segment of housingfinance is the secondary mortgage market and the creation of mortgageinstruments or bonds. While there hasnot been research on the development of mortgage markets and povertyspecifically, the development of those markets can be viewed as part of anoverall financial compound of the capital markets in these developingcountries. Financial deepening has beenstudied and it may serve as a proxy for the development of secondary mortgage marketsto the extent that they occur simultaneously.At any rate, the development of a secondary mortgage market would beconsistent with increasing the breadth and depth of the capital market. Therefore, a review of the relationship betweenfinancial deepening and poverty may tell something about the potential impactof mortgage market development and poverty.Consistent with this view, Malpezzi (1999) suggests that much of theworld is shifting from a housing finance perspective, where special circuitsare used to mobilize short-term household deposits for long-term mortgages, toa perspective where housing finance is integrated with broader capital markets.Buckley and Madhusudhan (1984) test a model ofthe relationship between housing investment and GDP, anticipated inflation,changes in inflation and the extent of capital deepening across severaldeveloping and transition countries.They find that, holding all else constant countries with deeperfinancial markets invest relatively more in housing. Singh and Huang (2011) analyze data from sub-SaharanAfrica between 1992 and 2006. They findthat financial deepening (as measured in part by credit to the private sectoras a percent of GDP) is associated with less poverty and income disparities inSSA countries and that this is most important in early stages of financialdevelopment. Stronger property rightsstrengthen this relat ionship. Finally,Beck, Demirguc-Kunt and Levine (2004) examine a broad cross country sample of58 developing countries and find that financial development (as measured by theratio of financial intermediation to the private section to GDP) reduces incomeinequality by disproportionately raising the incomes of the poor.Impact of Financial Deepening on theBase of the Pyramid and Absolute PoorSingh & Huang (2011) look at different definitions of poverty and examine the impact of financial deepening on them. The measures of poverty include, the headcount index which measures the percentage of the population living with per capita consumption or income below the poverty line, defined as US$1 a day. some other measure is the poverty gap which takes into account the distance of the poor from the poverty line. A third measure is the income of the poorest quintile or average per capita income of the poorest 20 percent of the population. Using each of these measures of poverty and a sample of S SA countries, the authors find that poverty is inversely related to financial deepening. The authors also look at the Gini coefficient which is derived from the Lorenz curve. Larger values of this coefficient indicated greater income inequality. For this variable the relationship between poverty and financial deepening is insignificant. In other words, financial deepening reduces absolute levels of poverty but does not impact income inequality in a significant manner in this sample of SSA countries. This suggests that various definitions should be examined to gain further insight into the relationship between housing and poverty and to capture the impact on the absolute poor.5. Housing Finance and Revenue and loving ConsequencesGovernment Revenue Links to HousingWardrip, Williams andHauge (2011) itemize revenues from housing development in the U.S. Some lessons can be learned from this data. Revenue sources during the construction phaseinclude sales taxes on building materials, cor porate taxes on buildersprofits, income taxes on construction workers, and fees for zoning,inspections, and the like. Theseestimates presume that the building materials are purchased locally, to theextent the materials are brought in from elsewhere, revenues will of course belower. This is something that willimpact housing construction in IDA countries.Revenues in the model depend on local tax structures, constructioncosts, development fees and whether the local mix of industries is conducive tocapturing construction-related activity.For example, Hangen and Northrup (2010) analyze the effects ofdeveloping and rehabilitating 582 affordable homes in Rhode Island in 2007 and2008 with $25 trillion in housing bonds.They estimate that the subsequent income, corporate and sales taxes andfees associated with the total economic activity increased state revenues byroughly $16.7 million during the development period. In an analysis of a proposed Pennsylvaniastate housing trust fund, Econsult (2009) finds that for every $1 million inproposed spending, the state stands to gain $82,000 in revenue from theconstruction of single family homes these revenues would be higher if the $1million were spent on affordable multifamily housing.In addition to immediatefiscal benefits, housing construction also provides on-going benefits to thelocality. On-going revenue sourcesinclude residential property taxes, property taxes from the businessessupported by the residents, and utility user fees. A residential development has a net positivefiscal impact only if taxes exceed the cost of providing services to theresidents. The evidence regarding thenet effect of affordable housing is inconclusive. However, there is evidence to suggest thatmarket-rate housing provides net positive fiscal impact (National Associationof Home Builders, 2009).Political Stability and HousingThere is a presumptionthat housing improves governmental stability.So far, no evidence has been found to indicate that thi s is truealthough it is a stylized fact. Provisionof housing is international law. Sachs(2011) reminds us that its a right granted in the U.N. Universal Declarationof Human Rights as follows Everyone has the right to a standard ofliving adequate for the health and well-being of himself and of his family,including food, clothing, housingand medical care There may be indirect support to the extent that therehas been evidence to indicate that housing improves education and education isbelieved to improve political stability (see evidence in next section). The relationship betweenpolitical stability and housing may go in the other direction. In other words, political instability canaffect the housing market. According toTu and Bao (2009), instability may weaken investors beliefs in propertyrights, putting the investors in dread that part of the investment may be lostdue to poor protection. Therefore,investors may pay less for the property rights when facing politicaluncertainty. Their study uses 10 yearsof data from Hong Kong and Singapore where there were differences in politicalscenarios but similar land take aim structures and property cycles. The empirical evidence supports the idea thatpolitical instability lowers property rights premiums. Education and HousingTo the extent that housingimproves homeowners get capacity, housing finance could lead to moreinvestment in human capital. Sinceinvestment in human capital may require an separate to borrow money, andborrowing money is costly, to the extent that housing finance lowers the costof borrowing, it should lead to larger investments in human capital. Many authors starting with Becker (1975) andAtkinson (1975) studied the link between investment in human capital andwealth distribution. An implication ofthese models is that income inequality will decrease as access to financeimproves. Some studies havedocumented a link between housing and education. To the extent that housing finance improveshousing affordab ility for the poor, housing finance may improve educationopportunities for the poor. Jacoby(1994) finds that lack of access to credit perpetuates poverty in Peru becausepoor households cant afford to provide their children with appropriateeducation. Jacoby and Skoufias (1997)find that without access to finance, shocks to income cause poor families todiscontinue schooling for children.Housing provides an asset that can be used to smooth shocks to income.If housing indeed improveseducation opportunities for children of the poor then by extension housing willimprove political stability. Sachs(2011) in explaining why governments should provide education, quotes AdamSmith who said, An instructed and intelligent people are more disposed toexamine, and more capable of seeing through, the interested complaints of spectral sect and seditiontherefore, the whole society is at risk when any segmentof society is poorly educated. 6. SummaryA review of the literaturepertaining to housing, econom ic growth and poverty reveals that much moreresearch is needed in order to determine the true economic benefits of housingand whether housing finance in particular can be an effective tool ineradicating poverty. The paucity ofevidence is due in part to limits in data and the need to utilize robusteconometric techniques to test for the direction of the causality in theserelationships. In other words, moreresearch needs to explore whether housing construction leads to economic growthor economic growth leads to increased demand for housing and by extensionhousing finance. Although there islittle direct documentation that housing finance improves economic standing orliving standards of the poor, some inferences can be made from the relatedliterature. The most promising evidenceis found in the financial deepening literature where it has been shown thatimprovements in financial markets are associated with reducing absolute levelsof poverty. To the extent that financialdeepening improves w ith the development of mortgage markets, then housingfinance may also be effective in reducing poverty. In addition, there appears to be solidevidence that housing construction produces jobs directly and indirectlythrough the supporting service industries.Housing is also shown to improve prospects for education and thus mayreduce income inequality. Evidenceindicates that there is no one size fits all relationship between housing,economic growth and poverty. Althoughevidence shows that housing investment impacts economic growth, thatrelationship varies within countries and over time.While not explored in depth in this review, there are some concerns regarding the impact of housing on economic development and poverty. For example, due to considerable transactions costs, some suggest that housing may reduce job mobility. In addition, while housing construction may create construction related jobs, there is a question as to whether that just crowds out investment in other sectors of th e economy. Housing finance while improving access to housing, may also increase opportunities for speculation and may lead to large booms and busts and housing cycles that may negatively impact the economy in the longer run. These and other concerns should be explored further to determine their significance.ReferencesAtkinson, A. B., 1974, The economics of variation (Oxford Clarendon Press).Banerjee, Abhijit and E. Duflo, 2011, PoorEconomics A Radical Rethinking of the Way to Fight Global Poverty, (PublicAffairs, New York).Becker, G. S., 1975, Human Capital, NBER and Columbia University Press, New York.Buckley, Robert, 1996, Housing Finance in growth Countries, (McMillan, London).Buckley, R. and R. Madhusudhan, 1984, The Macroeconomics of Housings Role in theEconomy An International Analysis, Presented to the American Real Estateand Urban Economics Association.Bunnarith, M., 2004, Between Poverty Reduction dodging and National Housing Policy, NationalUniversity of Singapore Work ing Paper.Chen, J. and A. Zhu, 2008, The Relationship Between Housing Investment and Economic Growth inChina A dialog box Analysis Using Quarterly Provincial Data, China NationalSocial Science Foundation Working Paper.Dubel, Hans-Joachim, 2007, Does Housing Finance Promote Economic andSocial Development in Emerging Markets?, Housing Finance Impact Study forInternational Finance Corporation.Econsult Corporation, 2009, Potential Economic and Fiscal Impacts of a Pennsylvania Housing TrustFund, The Housing Alliance of Pennsylvania.Erbas, S. and F. Nothaft, 2002, The Role of Affordable Mortgages in Improving Living Standards andStimulating Growth A Survey of Selected MENA Countries, IMF Working Paper.Freire, Mila, M. Gautier and O. Hassler, 2006, Review of Argentinas Housing SectorOptions for Affordable Housing Policy, populace Bank Working Paper.Guitierrez, C., et. al., 2007, Does Employment Generation Really Matter for Poverty Reduction?,World Bank Policy Research Working Paper No. 44 32, World Bank, Washington, DC.Habitat for Humanity, Consequences of Poverty Housing.Hangen, Eric, and J. Northrup, 2010, Building Homes Rhode Island An Analysisof Economic Impacts, Housing Works RI.Hongyu, Liu, Y. Park and Z. Siqi, 2002, The Interaction between Housing Investmentand Economic Growth in China, International Real Estate Review, 5 1, p. 40 60.Housing Assistance Council, 1998, The effects of Housing Development on a Rural Communitys Economy.Hull, Katy, 2009, Understandingthe Relationship Between Economic Growth, Employment and Poverty Reduction,OECD.Jacoby, Hanan, 1994, Borrowing Constraints and jump on through School Evidence from Peru,Review of Economics and Statistics, Vol. 76, 151-160.Jacoby, Hanan and E. Skoufias, 1997, Risk, Financial Markets, and Human Capital,Review of Economic Studies, Vol 64, 311-335.Karlan, Dean and J. Appel, 2011, More Than Good Intentions How a New Economics is Helping to SolveGlobal Poverty, (Dutton, New York).Leung, C., 2004, Macroecono micsand Housing A Review of the Literature, Journal of Housing Economics, 13p. 249-267.Malpezzi, Stephen, 1999, Economic Analysis of Housing Markets in Developing and TransitionEconomies, Urbanization in Transforming Economies, p. 1791-1864.Malpezzi, Stephen and J. Sa-Aadu, 1996, What Have African Housing Policies Wrought?,Real Estate Economics, Vol. 242, p. 133-160.Moss, Vuyisani, 2004, Preview of Housing Finance Systems in FourDifferent African Countries South Africa, Nigeria, Ghana and Tanzania, Centrefor Affordable Housing Finance in Africa.National Association of Home Builders, 2009, The Local Impact of Home Building in aTypical Metro Area Income, Jobs and Taxes Generated. Washington, DC.Quigley, John, 2008, Urbanization, Agglomeration and Economic Development, Commission onGrowth and Development, Working Paper No. 19.Rahman, Khandaker, 2009, Development of Housing Finance and its Impact on Socio-Economic Uplift inthe Emerging Economy in Bangladesh, IFC Bulletin No. 31.Sachs, J effrey, 2005, The End of Poverty Economic Possibilities for Our Time, (ThePenguin Press, New York).Singh, Raju and Y. Huang, 2011, FinancialDeepening and Property Rights Evidence from Sub-Saharan Africa, IMF WorkingPaper No. 11/196.Tipple, A. Graham, 1994, Employment from Housing A Resource forRapidly Growing Urban Populations, Cities 11, No. 6, p. 373.Tu, Y. and H. Bao, 2009, Property Rights and Housing Value The Impacts of Political Instability,Real Estate Economics, 372, p. 235 257.United Nations, 1995, Shelter Provision.Uy, Willie, 2006,Medium-Rise Housing The Philippine Experience, Presentation Paper for thefifth Asian Forum.Wardrip, Keith, L. Williams and S. Hague, 2011, The Role of Affordable Housing in CreatingJobs and Stimulating Local Economic Development A Review of the Literature,Center for Housing Policy.Is Prostitution a Victimless Crime? EssayIs Prostitution a Victimless Crime? EssayProstitution, as described by the Merriam-Websters Dictionary (1997), is the selling of sexual favors for money or the devoting of oneself or ones talent to an unworthy cause (p. 589). In another frame of reference, harlotry has been called a dupeless wrong offence. What exactly is a victimless crime? Wests Encyclopedia of American defines it ascrime where there is no apparent victim and no apparent pain or injury. This class of crime usually involves only consenting adults in activities such as harlotry, sodomy, and gambling where the acts are not public, no one is harmed, and no one complains of the activities (2008).This classic definition of these types of crime implies there is not any victim of the criminal expression who experiences harm. From a theoretical perspective, conflict theorists may hold that victimless crimes are established as a type of social control over morality by politically powerful people or groups who find them offensive or undesirable while functional theorists may hold that social needs, not societal power, are the underlying condit ion of labeling victimless behaviors as criminal (Greek, C.E., 2005).Why are some consensual acts considered il effectual while others are not? McWilliams (1996) asserts consensual activities prohibitions and restrictions have their basis in religion while ODonnell (2000) in addressing the price of victimless crime laws, proposes those crime laws are a form of morality control and religious persecution that uphold the opinions of the law-controlling majority with regards to race, ethnicity and political stances.The issue in victimless crimes is that society has created laws to prohibit certain types of conduct considered to be against the public interest and when supposed victims freely consent to be the victim in one of these crimes the question is whether the state should make an exception from the law for the situation. For the purpose of this paper, prostitution and the issues of concern in the legalisation of this victimless crime is explored.Upon examining prostitution as a vi ctimless crime, it seems evident there are victims at some level but most of the harm seems to be self-inflicted. flavour at the puzzle of the involved behaviors, having sex and asking for money, each by themselves are perfectly legal. Having sex with someone, even an unknown person is legal, and asking for money is legal but, when the two behaviors are linked into one single instance, a criminal act results. The two separate legal behaviors cannot constitute an illegal behavior for if no person is harmed, or if harm occurs by informed consent of the willing parties, how can it be considered a criminal act? One problematic stance presented is that consensual acts are not without risk and when adults consent to take part in the acts, why should the resulting action be deemed criminal by legal social rules? What kinds of problems can the law solve and what kind of problems does the law create?Among the many proponents of de-criminalizing victimless crimes the concept of unconstituti onality is consistently cited (Hardaway, 2000 McWilliams, 1998 ODonnell, 2000 National political platform of the Libertarian Party, 2002). A prominent vocal music critic of criminalizing these termed victimless crimes, such as prostitution, is Robert Hardaway.Hardaway is a professor of Law at the University of Denvers School of Law who has written and co-written numerous texts and articles on legal and community interest matters. Hardaways 2003 book, No Price Too High Victimless Crimes and the ninth Amendment, as cited by Cox in a 2004 review, presents a powerful and strongly-argued perspective which argues the criminalization of victimless crimes break in the Ninth Amendment to the United States Constitution (2004). Cox notes the criminalization of these crimes as well as amount of money it takes to enforce the laws are unsound policies according to Hardaway. Although, in the case of drugs, crime against property and person are related to drug use, Hardaway, per Cox (2004), attr ibutes the harm of drug use to the laws rather than the use of drugs themselves. According to Cox, Hardaway uses the example of Prohibition to explain the supply and demand concept of the argument stating crime and violence do not emanate from some physiological effect of the drug, but the drug laws themselves and with the decriminalization of drugs, neighborhood drug dealers would be put out of business effectively breaking the business-end of organized crime (105). Hardaway further posits, according to Cox, legalizing personal vices is justified by a considered weighing of the costs and consequences of criminalization (30), (2004).ProCon.org has a website which addresses the issue of whether or not prostitution should be legalized and many statements were provided on this website of both the pro and con sides of the issue No persons human or civil rights should be scandalized on the basis of their trade, occupation, work, calling, or profession Prostitution Education Network, 199 6 prostitution violates the right to physical and moral integrityviolates the prohibition of torture and of cruel, inhuman or degrading treatment.. Hoffman, C., 1997 prostitution laws area violation of the right of individual privacy because they impose penal sanctions for the private sexual conduct of consenting adults American courteous Liberties Union, 2007 few activities are as brutal and damaging to people as prostitution U.S. Department of State, 2004 (ProCon, 2009).Of all opposition members, the most prominent is Melissa Farley, a research and clinical psychologist at the San Francisco non-profit organization, Prostitution Research and Education. Farley has written numerous peer-reviewed articles on the subject (Farley, M., 2006). Farleys numerous research articles provide a well-rounded look at the subject matter of prostitution, the sex industry, exploitation of women, as well as the myriad of troubling issues arising from when men purchase women in prostitution. In the 20 06 article, Prostitution, Trafficking, and Cultural Amnesia What We Must Not Know in Order to play along the Business of Sexual Exploitation Running Smoothly, Farley posits prostitution is sexual violence that results in massive economic profit for some of its perpetrators and is a much like slavery in that it is a lucrative form of oppression (p. 102). Farley goes further to remark on prostitutions legal status (legal, illegal, zoned, or decriminalized) or the location of the activity (strip club, massage parlor, street, and escort/home/hotel) the danger to women is still tremendous (p. 103). Farleys discussion on the peer-reviewed literature which documents the violence so prevalent in prostitution and states wildness is common turn up in prostitution whether it is legal or illegal (p. 106). Citing a Canadian commission on prostitution and pornography which reported the death rate of women in prostitution as forty times higher than that of the general population and a 2001 Vanco uver prostitution research study by Cler-Cunningham and Christensen which reported a thirty-six percent incident of attempted murder, Farley contends prostitution can be lethal (p. 107).Farleys detailed look at legalized and illegal prostitution can impact the perception of the sex industry as a whole. However, within the United States Constitutions first ten amendments, also known as the Bill of Rights, are aliment which may present a strong argument for abolishing criminalizing prostitution and other victimless crimes.The First, Fourth, Fifth, and Ninth Amendments are of particular interest in this dialogue of supporting the decriminalization of prostitution. Although victimless crimes such as prostitution are not specifically addressed in the Constitution there seems to be an arguable position that victimless crime laws violate First Amendment restrictions against laws respecting an establishment of religion especially since religious and moral values seem to provide the foundat ion for many of the laws.The Fourth Amendments provisions on search and seizure seems to be violated by such devices as warrantless search and seizures which are often utilized to obtain evidence for prosecutorial purposes. The privacy of innocents can be threatened as enforcement of the law requires police and investigators to engage in extensive monitoring, wiretapping, and surveillance of suspects and the public. Some people believe that these warrantless search and seizures and victimless crime laws are a means of political power over selected portions of the population which are unequally enforced against the poor and minorities thereby violating the due process clause of the Fifth Amendment (Kruttscnitt, 1984 McWilliams, 1998 Nussbaum, OConnell, 2000 1999 Schur, 1971, 1980, 1983).The Ninth Amendment to the United States Constitution has direct bearing on such modern day constitutional issues such as abortion, gay rights, and the right to die. Farber (2007) considers the Ninth Amendment the key to understanding the liberties Americans were to enjoy under the Constitution as envisioned by the Founding Fathers describes the purpose of the Ninth Amendment and the Founders intent to protect the rights the Founders assumed but failed to name or specify in the Bill of Rights. Like the rest of the original Bill of Rights, per Farber, the Ninth Amendment only limits federal power rather than state government powers. The Fourteenth Amendment came along later and addressed the state government and within that Amendment the Privileges or Immunities Clause is paired with the Ninth Amendment (Lash, 2004 Farber, 2007).America is in first place in the world for the number of incarcerated individuals as highlighted by a Pew Center report that found 1 in every 100 American adults are behind bars with its prison population having tripled in the last 20 years. Spending on prisons has more than quadrupled and the American taxpayers are slowly crush by this wasteful spendin g. At an average cost of over $19,000 per prisoner, taxpayers are facing a bill of over $44 billion per year to move on people locked away (Pew, 2004).Coinciding with this rising prison population is the increase in the number of private prisons which increased from five in 1995 to 100 in 2005. Herivel and Wright ( ) in their book Prison Profiteers-Who Makes Money From Mass Incarceration reports private prison industry has seen increased profits and lobbied extensively for more frequent and longer prison sentences and traces the flow of monies designated for the public good and ends up in the pockets of enterprises dedicated to keeping prison cells filled (From their book jacket).History has shown that criminalizing victimless crimes will drive the practice underground where violence, extortion, and coercion are most likely to thrive. This was particularly noticed when the 18th Amendment and later the Volstead Act, 1919, which made it illegal to manufacture or sell beer, wine, or o ther intoxicating malt or vinous liquors it was not illegal to possess it for personal use. The prohibition, originally intended to reduce beer consumption in particular, actually a failure and ended up increasing hard liquor consumption and created a new business, bootlegging, defined as the unlawful manufacture, sale, and transportation of alcoholic beverages without registration or payment of taxes which became widespread and a staple of organized crime (Prohibition).Almost every individual has the ability and moral capacity to judge what is helpful or harmful to them and it does not make sense for other people to dictate what choices should be made. When individuals commit acts harmful to themselves, the action should be termed as immoral, not illegal. The criminalization for the act of prostitution should not be determined by social effects of an individuals actions or by the moral or religious views of society. Every person needs freedom to make choices and accept the consequ ences for without these consequences, growth and experiential development will be hindered.If an adult man-or an adult woman, wants to engage in sexual relations with another adult man or woman who charges a fee for his or her services, they should be able to do so without the fear of being guilty of a crime. It does not mean that prostitution should not be subjected to certain legal requirements such as health laws. Removing prostitution from criminal statutes and providing a designation as a business entity subjected to business requirements, prostitution can be taxed, sex workers can obtain health and safety rights other employees have, and problems of execration and graft associated with police jurisdiction of such a business can be dealt with more effectively with better protection from violence and abuse for those individuals who work within the industry. In a 2001 article written for the New Zealand Herald, Sue Bradford, MA, Member of New Zealands Parliament says it best pro stitution has been a passage option for some people since history began. Nothing any law has done has changed or will change thatI believe we would all be better off to accept the job choice that some adults make as valid and worthy of care and compassion for all our sakes (2001).Work CitedBradford, S. (2001). discourse Sex workers deserve protection of the law. New Zealand Herald. July 30, 2001.Cox, G.C., (2004). Book review of Hardaway, R. (2003). No price too high Victimless crimes and the Ninth Amendment. Department of Political Science, University of North Texas.Farber, D.A. (2007). well-kept by the people The silent Ninth Amendment and the Constitutional rights Americans dont know they have. Perseus Books.Fyffe, C. and Hardaway, R.M. (2003). No price too high Victimless crimes and the Ninth Amendment. Westport, CN Praeger.Greek, C.E., (2005). Criminological theory. Lecture notes. CCJ 5606. http//www.criminology.fsu.edu/crimtheory/Hayes-Smith, R. and Shekarkhar, Z. (2010). Wh y is prostitution criminalized? An alternative viewpoint on the construction of sex work. Contemporary Justice Review, March 2010, muckle 13 Issue 1, p. 43-55.Herivel, T. and Wright, P. (2007). Prison profiteers Who makes money from mass internment? New York New PressKruttschnitt, C. (1984). Labeling women deviant Gender stigma and social control. Contemporary Sociology. 13 (5), 596.Lash, K.T. (2004). The lost original meaning of the Ninth Amendment. Texas Law Review, Volume 83, Number 2, December 2004McWilliams, P. (1998). Aint nobodys business if you do The absurdity of consensual crimes in a free society. Los Angeles, CA Prelude Press. http//www.mcwilliams.com/books/aint/201.htmMerriam-Webster Dictionary (1997). Springfield, MASS Merriam-Webster, Inc.National Platform of the Libertarian Party, 2002. (Adopted at the July 2002 convention in Indianapolis, Indiana)Nussbaum, M. C. (1999). Sex social justice. New York Oxford University PressODonnell, T. (2000). American holocaust Th e price of victimless crime laws. Writers Digest. Iuniverse.comProCon, 2009. Prostitution Education Network, 1996 Hoffman, C., 1997 American Civil Liberties Union, 2007 U.S. Department of State, 2004. http//prostitution.procon.org/view.answers.php?questionID=1315print=trueProhibition. http//www.u-s-history.com/pages/h1085.htmlSchur, E. (1971). Labeling deviant behavior. New York Harper and Row.(1980). The politics of deviance. Englewood Cliffs Prentice Hall.(1983). Labeling women deviant gender, stigma, and social control. Philadelphia Temple University Press.Wests Encyclopedia of American Law, Edition 2 (2008). The Gale Group, Inc.

Effect of Exports on Growth

Effect of Exports on Growth1. Introduction1.1. Theoretical FrameworkThe general idea of part with art agreement of ripening was veritable in advocacy of detached sell based on neoclassical guile possible action (Solow, 1956) and from recent endogenous festering surmise (Romer P. , 1990). The ache for free good deal is drawn from Ricardian principles of comparative favour (Viner, 1937). homogeneous idea is drawn from the nonion of perfect competition and the believe of neoclassical economists who argues on the moance of cost- progenyive detonating device allocation cod to free trade (Krugman, 1986 Corden W. , 1974).The phenomenon of free trade came under severe scrutiny in the face of Great Depression. Hence, theoretical foundations of optimal duty were we ard in sustain of protection (Johnson, 1950 Kaldor, 1940). Johnson (1958, 1971) advocated trade protection in three groups in his classical exposition. They be the stinting arguments, non- economic arguments a nd non-arguments. sparing arguments discharge infant industry argument, optimal tariff argument and correction of house servant market distortions, turn non-economic arguments emphasize on self-sufficiency for internal thriftiness. Non-arguments attempt to adjudicate balance of payment distortions by means of trade protection. Johnson concluded that optimal tariff protection is the just valid argument, while in former(a)(a) cases such arguments leave only inflict distortions.The neoclassical economists disprove the nonion of protection as an alternative, as this would result in intra-industry effects. The append barrier to entry would make domestic traders to engage in noncompetitive competition, while small enterprises entrust be left inefficient. Intra-industry effects argon the source to welfare loss (Tyb protrude J. D., 1991). In addition, Bhagwati(1988) and Kruger(1974), raises the theory of directly unproductive and profit (DUP) wanting activities, which leave behind cause waste to national resources. Additionally, the Solow- harvesting model embodies technology as an endogenous factor (Agion, 1992 Romer P. , 1989), which argue that planetary trade en confident(predicate)s faster diffusion of technology, that is collective into the better intermediate goods which results in higher productiveness and addition for domestic thrift (Grossman, 1991). This allow result in learning by doing effect and technical know-how is surpassed. In addition, management is more than efficient and all pull up stakes combine in high return (Krugman, 1987 Young, 1991 Lucas, 1988) .1.2. object lens of the teachA high digit and standard of studies train been conducted on Export-led exploitation, trade dissonantness, manufacturing merchandises as a new engine of appendage, specifically in the last decade, on different economies, ranging from develop to poor countries, drawing interesting conclusions. The present hire thinkks to investigate the e ffects of trade, openness on increment in the context of Bangladesh.Firstly, the study will seek for stable effects of constitution shifts and enforceation, in Bangladesh, which will be determined by stable changes in the determinants. Stationarity conditions, if satisfied, will ensure the stability of frugality and productivity, towards a particular goal.Secondly, the study will investigate the current association between growth and trade openness. While it is desired, that the trace outward-looking trade policies of Bangladesh to result in positivist association of productivity to liberalization, trade openness might be effected by other(a) variables and whitethorn hold different conclusions. Thirdly, the study will run across, if the merchandise led growth guesswork is motionlessness applicable to Bangladesh, as before, while numerous countries, such as Sri-Lanka, Philippines, Nigeria go for seen opposite kinships. Additionally, Hossain and Karunaratna (2004) hav e argued that manufacturing merchandises have drive new engine of growth which is a disciple of the de novo hypothesis. In agate line, Adelman (1984) suggests that, inelegant exportingations should have dominant effect for a pro-agricultural society as Bangladesh. It is outcomeant to see if, manufacturing exports is an engine of growth, or still other factors are dominant as before. investing is an endogenous factor that should stand for the increased effect of intermediate goods, as a result of increased export, and more openness, would consequently render higher productivity (Krugman, 1987 Lucas, 1988 Young, 1991).1.3. Relevance and limitations of the study pertinent studies have been conducted in the context of Bangladesh, in last decade and have drawn interesting remarks. However, the major drawback is the timeframe of before studies, which did not cover analyses from the last tenner years. In the last ten years, econometric methods have changed and advanced rigorous ly. Hence, legion(predicate) another(prenominal) an(prenominal) studies have been rendered invalid due to absence of proper methodology. The world economy has seen salient events in politics, international trade and spheric economy. The trends in global economy, which were much more rigorous, in the last ten years, have affected Bangladesh magnificently, as Bangladesh emerges as a high power economy in Asia, and have enkindle researchers, due to high deviations and high rises to productivity. It is necessary to embody recent econometric techniques of Johansens level best likelihood cointegration psychoanalysis and vector misconduct correction methodology, which will inform on recent associations, among the interested indicators. Hence the state-of-art econometric techniques will provide true results that would help the polity makers to observe the relationships and knead sufficient changes, in trade form _or_ system of government to render profit.Among the few limitatio ns of the study was the absence of first hand thirdhand sources. Most information sources for Bangladesh are not available online and are preserved in paper based format. The want of proper technology and internet, withdraw the regime of the ground, to provide data directly. Therefore, data are collected from World Bank sources, which may not correct for errors, and sometimes fail to provide detailed data series as an intermediary.1.4. Structure of the talkThe heartbeat atom will contain a brief country profile and approaches to liberalization. The third phase will contain lit review that will discuss literatures in support to export-led growth hypothesis and trade liberalization. This section will aim forth studies that contrast and signifi deposece of the study. The fourth and fifth section will contain methodology to estimation and results of analysis. The final section will attain conclusion and remarks to the dissertation.2. Process of trade openness and Export-growth in BangladeshAfter freedom in 1971, Bangladesh has gone through and through three phases of insurance policy changes, towards deregulation and openness to trade. The first phase was marked by severe control on exports and imports. The policy implemented in 1972 to 1975, put the country in a socialist framework, with a fixed qualify account system. Industrial enterprises, banking and trade infrastructure was massively nationalized as an inward-looking, import refilling approach was adopted. Agricultural inputs and outputs were controlled. Empirical literature suggests that this was a good decision for the researched timeframe (Ahmed N. , 2000).The second phase of policy shifting began in 1976 and continued up to 1990. This phase of denationalization, deregulation and trade liberalization lacked a good direction to work out the process. Nationalized trade barriers were reduced, and a free trade approach was underinterpreted. Privatization of industries and banking sector was al lowed and price controls over nationalized firms were lifted. Abolishment of state trading was initiated.The third phase of policy shift, were introduced in the beginning of 1991 and continued up to 2002 with large remarks. In the recently developed policies toward export- advance and trade openness, trade barriers have been re go as a flexible central direct regime is adopted. To gain get ahead reduction of anti-export bias, export processing zones have been established, to co-operate manufacturing exports. This recent policy shift has locomote towards complete privatization of banks, infrastructure and agricultural sector. During this phase, Bangladesh continued to experience quick liberalization.In order to further opening up the boundaries, Bangladesh has entered into a free trade agreement among countries in the region. As discussed, to encourage EP trade policies, and free trade, Bangladesh entered into bi-lateral agreements with India, Pakistan, Sri-Lanka, and continues to trade and investment funds framework agreement with United States. Bangladesh is an active member of SAARC, Developing-8, and Bangkok Agreement. The country is rigorously seeking to import in developing of a regional co-operation among Bangladesh, Bhutan and seven northeastern states of India and Nepal.From the graph presented above, it can be seen that, starting form 1971, imports were change magnitude at a low rate, with a fall in 1976-77, entirely inspired up by and by that. The import line took a peak after the third policy implementation in 1991, and continued to rise at a high speed. The export trend was almost at a constant level, until the 1991 policy implementation. Afterwards, the trend peaked, gained a momentum after 2000. However, the export line still falls below the import trend. As reported by the export publicity bureau, in 2005-2006 FY, export cyberspace have grown by 21.3%, which is due to high demand of, promontoryly manufactured goods, led by garment s industry and knitwear. During this period, import payments have grown by 9.5%.In contrast to real export, manufacturing exports exhibit of higher exports than imports which are in percentage of merchandise exports. This is indicative of higher productivity.When the country adopts rigorous trade policy towards openness and promoting exports, large scale upper-case letter owners and labor unions are in oppose to liberalization. The cause of opposition may lie in the fact that, increased competition, effect the workers, in protected semipublic and private sector, who fail to adjust to the exposed economy, with increased productivity. The politicians tend to protect large scale owners, who severely admonish competition and create bias towards exports (Sattar, 2004).3. literature Review3.1. Concepts and Empirics on Export-Led Growth PhenomenonExport led growth phenomenon has been central to the trade and development literature for many years. The bulk of researches that has taken send out on this issue are therefore, not small in number and range. The focuses of these studies were bi-directional. Some of the studies attempted to find whether expanding export would improve the growth work. Others tried to find the paths through which the expansion of export will affect the growth performance. Economic theory confirms that export expansion leads to increase the growth performance, as that efficiently allocates productive resources and as well with the high volume of productive resources accumulated as a result of higher smashing earned through export growth, (Bardhan, 1970 Cheneray, 1966 Basu, 1991 Romer P. , 1989 McKinnon, 1964 Grossman, 1991).Export expansion makes the main office country to concentrate on comparative advantages and to earn economies of scale. The home country continues to invest on its economies of scale and obtain better efficiency. The increased efficiency creates immaterial competitive pressure on the home country, along with imp roved internal competition. In the face of more competition, the monopolistic and oligopolostic behavior of the market is eliminated. Efficiency is withal created as learning by doing. Knowledge is canalisered to other sectors and growth is enhanced. The external competition, aids the small economy to construct and emphasize on removing limitations, through economies of scale, and by reaping the true advantage of globalisation, which is acquired by increasing export.The theoitical literature overly argues that, export expansion increases the investment and capital compendium in a country. The two-gap model explains , that evolution export reduces the constraints that prevail in foreign exchange. Such reduction of constraints lead to better accumulation of productive resources, capital goods and intermediate goods (McKinnon, 1964 Bacha, 1984 Cheneray, 1966). Export expansion similarly increases investement opportunity of a country. Modern economists suggest that, savings by d omestic and banking system, government savings and foreign exchange savings cannot only induce investment. Investment opportunities determine investment alternatively than savings. The growth of export will provide investment opportunities to home country, (Sandrum, 1994).Theories suggest that, the relationship of export and economic growth is bi-directional. Economic growth may in any case increase export for a country. The effect of better learning and technological development, give rise to output. The growth of output ensures that domestic demand is met and export will expand. However, this technological process development or learning process development is not directly related to the export promoting policies (Jung, 1985). As the home country realizes economies of scale, expansion of export takes place. Investemnt (Grossman, 1991). Therefore, the bi-directional theory suggests that, GDP is a function of investment, that enhances export performance, and export increases inves tment opportunity, that is directed to GDP growth.In the calculative process of development economics, entailed was dominant export passimistic theories, rather than export promoting views. After the end of world war II, import exchange strategies were to be followed by many countries. However, the initial phase of implementing import shift strategies seemed ideal during that period, but the results of taking attempts to implement the import substitution strategies were not favorable for all economies. Economists found that, that export passimistic views were not justified for many economies that have chokeed a certain level of development, and industrialisation. On the other hand, the import substitution trade policies laid undesirable effcts on balance of payment. As a result, the growing economies did not accept import substitution strategies, rather accept export promoting views (Adelman, 1984).The growth led export is also suggested by theories. According to Bhagwati (1988) , growth led export hypothesis is dominant when supply and demand is induced by growth. In such cases, anti-trade bias is saturnine down.The possibility of bi-directional former prevails in many major theoritical literture (Grossman, 1991 Bhagwati J. , 1988).On the other hand, Irma Adelman (1984) argues that, export-led growth is not the only open development dodge for a least(prenominal) developed country. The open development strategy that ensures the allocation of agriculturally driven resources may prove superior than the strategy for allocation of capital for investment resources. An alternative to the import substituion strategy, for a closed development approach, maybe an ADLI ( agricultural-demand-led-industrialization) strategy. It is classical to identify the phase of closed development political orientation, which is dominant after the era of Pro-agricultural strategy is over. Another theoritical literature standardisedly argued that, ADLI as a balanced-gowth-approa ch, can only be a mean, to attain the goal for developing countries impoverishment for higher growth, and the need for growing industrialization by expanding the demand for domestically produecd consumer goods and intermediate goods. The linkage effect to agriculture with industrialization is also examined (Singer, 1979). Singer (1979) defines this manoeuvre as Lime target and ADLI is the solution. However, Irma Adelman(1984), also puts out the constraints to ADLI strategy as it requires the improvement of infrastructure in Agriculture which is difficult to attain in in the south Asian Sub-continent. The physical capital ineluctably to be perfectly infrustructred for ADLI yield expected results. Therefore, ADLI strategy is a solution to allow time to the developing countries to bring abouth changes structurally, in 1980s to 1990s. This strategy cannot telegram out the importance of export-promoting strategies as an alternative for import substituion strategies at all (Adelman, 1 984).Alongside the theoritical literatures on export-led growth hypothesis, the number empirical literature from the first of its mixture by Maizels(1963) is many. Jung and Marsall(1985) scanned 11 empirical studies that were carried out from 1967 to 1982 timeframe, and all of the studies found supportive relationships to export and growth. Greenaway and Sapsford(1994), reviewed 14 empirical studies that were conducted on the export-led growth hypothesis, and 12 empirical studies vividly visualisen relationships between export and growth. One of a major study conducted by Giles and Williams (2000), which conducted 150 cross country analysis from 1963 to 1999. Out of the 57 countries that were analysed , only 4 countries failed to attest significant relationships between export and growth, and only 10 out of the 102 time series analysis didnt show significant relationships between export and growth.It has interested the empirical literature to examine export-led growth hypothesis prior and after the oil shock in 1973-74 timeframe. Among the studies,that took place prior to the oil shock, Michalopoulos and Jay (1973) conducted a study in a 1960-73 timeframe, by estimating export and gowth into a poduction function, signifcant relationships were found. Tyler (1981) conducted study on a group of middle income countries, put export and growth into similar fruit function framework, and found similar relationships.Therefore, export orientation into the framework is supposed to effect growth therough economies of scale, allcation of productive resources and engagement of capital, optimally. The study of Feder (1983) found similar results. Balassa (1983) were enigmatical about the relationship afther oil shock, as in the face of economic receding 1974-75 that took place after the multiply of oil price in 1973-74, may have effected the relationship because of the orientation of external shock in the production function. The study he conducted had taken th perio d of 1973-79, after the shcok, on 43 developing countries, who were directly affected by subsequent recession. The result did show export affecting growth electropositively and the numerical magnitude of the effect did grow compared to early results. The changes in intercountry growth rate before and after the oil shock is rather a result of different trade policies introduced.An important theoritical implication is increasing export also paves the way for imported capital goods to be entered into the country (Islam M. , 1998). As productivity is increased, investment along with profit grows and the economy enjoys higher growth (Edward, 1993 Levine, 1992). In last two decades, exports of newly industrialized countries grew by 20%. Manufacturing exports entailed 70% of sum of money exports. As a third factor, import of manufactured and productive capital goods increased. The demand for these capital goods indicates the increasing rate of growth. Therefore, the plethora of studies o n export and growth make this issue important rich to review.3.2. Cross-country empirical analysesIn light of previous section, many empirical literature also focused on perticular countries or a category of countries to examine the export-led growth hypothesis. In theoritical literature, it is defined that, if export growth coefficients and and output growth coefficients are significantly positive in regression, the country follows export promoting strategies. If output growth causes export growth in regression than the country is labelled immunoglobulin E or internally generated exports. On the other hand if a export growth coeiicient and output growth coefficient is negetively correlated in the regression for growth, the country follows ERG or export reducing growth strategy (Jung, 1985). Such countries are following inward-oriented strategies rather than outward-oriented policies. Inward-oriented countries may also follow IS (import substitution) trade policy.Many empirical stu dies on cross-country did confirm the existence of export-led growth for different countries, and in some countries results otherwise is found. Hatemi J. and Irandsout (2000) continued analysis on Ireland, Portugal and Mexico, and significant relationship was confirmed. In the same study, they failed to confirm causal relationship for Greece and flop (Hatemi-J.A., 2000). The study by Ghirmay et al. (2001) did find positive relationship of export and growth for a number of developing countries. Just after one year, another study by Greenaway et al. (2002) conducted analysis on a number of selected developing countries and found that the growth rate for these countries dropped immediately after trade reform, for a constant rate of export, but gained momentum following a J-curve response after the affect of trade refor wires out.M. Michaely (1976) analysed 41 developing countries for a significantly large period. The resulting conclusion implicate that while Greece, Taiwan, Portugal , Spain, Israel, Yoguslavia and Koria had rapid growth with increasing export, Portugal did not show significant export growth, while GDP was growing in same pace. On the other hand, when Ethiopia incresed its export performance considerably, but failed to increase its growth to the pace with other countries. On the basis of regulate correlations, M. Michaely (1976) concluded that export performance will positively effect growth of a country, only when a country achieves development of a perticular level. Countries below this level will fail to exhibit good export-growth relationships. Bela Balassa(1977) followed similar study conducted by M. Michaely (1976), running rank correlations on a sample of countries that established industrial base for a timeframe of 1960-73. Among these countries, Korea, Singapore and Taiwan adopted EP (export promoting) strategies at a very early stand for and provided incentive to the exporting sector by subsidizing the sector in many ways. On the con trary, though, Israel and Yoguslavia promoted export during the same period, but their efforts seemed to dim in the later periods. On the other extreme, Argentina, Brazil, Columbia and Mexico, continued the existing trade policy, supporting import substitution (IS). During this period, Chile and India continued their inward-oriented policies and was in the phase of weakly introducing export progression policies. The resulting conclusion estimated that, while Korea and Taiwan would have less growth with more export, Chile, India, Mexico,Brazil and almost all other countries would have better levels of growth with higher levels of export. The countries that moved to opposite direction is due to the unfavorable internal conditions and policy constraints, the countries have. Similarly, for Phillipines and Srilanka, opposite direction of relationship is found (Islam M. , 1998).3.3. debatable Theories and EvidenceDue to the debt crisis and continued recession that prevailed during 1980s , after many countries adopted export promoting strategies, theorists and economicsts were dubious about export-led growth hypothesis. It became a necessity to re-examine the export promoting strategies (Bhagwati J. , 1988).The revived passimistic school of thought was predominate by old and new school of thoughts. The most influencial school of thoughts were suggested by two great contemporay development economists, that were Raul Prebisch (Prebisch, 1952) and Ragner Nurkse (Nurkse, 1953). Prebisch (1952) recommended that, chief exports for newly industrialized countries will moderate following a natural cycle, regardless of the trade policy implemented by the home country. Producers of home economy will respond by rapid industrialization and the economy will respond by employing more protection and higher level of restrictions. All these attempts will make export promotion excessive. The other dominant export passimism was realized by Nurkse(1953), who stressed more on balanced growth. The balanced growth theory suggests that the accelerated pace of growth and exports of developing countries, make foreign markets unable to accommodate imports on sufficient level. Developing economies shift from raw materials to synthetic materials as inputs, and damage exports for developing countries drawn-out run. Riedel (1984) suggests that, demand dominates export performance. It is a biased view towards export growth relationship if that is explained by export performance of selected countries. Export performance maybe more reliant on domestic incentives of a country, rather than the external conditions (Riedel, 1984).The new literatures focus more on prospered Asian exporters, which maybe a skid to be implemented as a general strategy for all economies. The sources of worry advocates that, markets are shifted to export promotion, markets will fail to absorb all exports. The earlier wave of export passimism was afflicted by this idea. Economists have always suppor ted the idea of intra-industry specialization which leads to adoption of inward-oriented policies, and name an economy as closed economy.The countries that adopt outward-oriented policies to a greater extent, or publicly promotes export promoting strategies, associates some level of government intervention. The government intervention makes sure that exports are promoted, subsidized and invested into. The countries that are empirically supportive of export-led growth hypothesis, mostly follow government intervention. This practice is generalized except countries like Hong-Kong. However, these are olympian cases and should not be generalized (Bhagwati J. , 1988).Economists also view that, export promoting trade policies, make the domestic market less sheltered and susceptible to world economic condition, outside pressure, world competition as well as innovation. This view has also been critisized and the opposite direction is supported by Schumpeterian arguments (Bhagwati J. , 198 4). The theory of market imperfections turn to by Fields(1984) suggests that, in presence of as well high wages, countries may do poorly. An example of this theory is set to Jamaica. Another interesting theory is the satisfaction theory of import substitution suggests that, the export promotion strategies are not suitable for many newly industrialzed countries due to their lack of flexibility for movemet of capital resources. Countries also lack the political capabilities to implement this flexibility (Ruggie,1983). Similar argument is also suggested by Adelman (1984) who argues that, agricultural-demand-led-industrialization strategy should be applied to allow a country enough time, for it to develop a structural base, before the country can successfully implement export promoting strategies. Export-led growth will follow if the country can achieve a minimum level of development as suggested before. While in the face of rapid growth, many countries are doing well with export promo ting trade policies, countries like Taiwan, Sri-Lanka, Phillipines, Jamaica, Brazil, Korea. are examples of countries, that was not in the position to implement export-promoting trade strategies,and the desired export-led growth was not achieved.In some theories, learning by doing or intra-industrial knowledge transfer was an important factor for adopting export promotion strategies. It is believed to be a mean of acquiring economies of scale for industries. The know-how process is a major motivating factor for economies, to support export promotion strategies. However, even, learning by doing effect dims down and may stop completely in absence of newly developed technology (Young, 1991). This makes outward-orientation unjustified and export-led growth, a failure. Import substitution and export promotion strategies do best when they are complemental (Grabowski,1994 Hamilton and Thompson, 1994).One important alternative suggested by Adelman (1984), is the ADLI (agricultural-demand-l ed-industrialization) strategy. The ADLI argument can be set into the similar footsteps of IGE (internally gorwn exports) of Jung (1985). Adelman (1984) argues that, when the countries became more reliant on industrial export-led growth, the controversies arise as many of least developed countries experienced set down employment, deteriorated income distribution, high level of food imports as domestic demand is not met, and lower level of growth. Therefore, countries required to implement more basic need oriented strategies. The rising foreign exchange constraints, and the stern liquidity problems, least developed countries faced, as they moved towards more export promoting strategies, following the export-led growth hypothesis, newly regenerate export passimism (Adelman, 1984).As empirical evidence, causality tests between export and groth conducted by Jung and Marshall (1985) on 37 countries should be addressed. In this empirical study, countries as many as South Africa, Korea, Pakistan, Israel, Bolivia and Peru did not show significantly positive relationship between export and growth. Rather these countries showed export reducing growth, which is the other way around. If these countries implements export promoting trade strategy, the countries will experience spirited economy and lower growth. Countries such as Iran, Kenya and Thailand are in favor of internally generated growth, and in the process of successfully implement export promoting growth policy (Jung, 1985).Looking at the above results, countries therefore, support import substitution as a pro-agricultural trade policy (Adelman, 1984). Countries are also adviced to move towards ADLI strategy in this stage. It may not be favorable for countries to immediately implement export promoting trade strategies, hoping to yield benefits of export-led growth hypthesis. In the primary stage, countries require import substitution policies, to develop intra-indistrial skills, economies of scale, and a trade base to a minimum level. The level in between is a complementary stage between import substitution and export promotion. Countries as India, Malaysia, Bangldesh in South east Asian region, followed import substitution for longer period until they believed to reach the minimum level, before these countries can move towards outward-oriented policies and introduced trade openness, and enjoyed the benefits of export-led-growth. For many countries mentioned above, steps taken in an earlier phase, have backfired. Therefore, the controversies to export led growth is as prevailent as the support toward the hypothesis.3.4. Empirics on export led-growth and trade liberalization in the context of BangladeshAs one of Asias growing power house economy, The export-led growth hypothesis has been examined in the context of Bangladesh, in many empirical literaures. Among the newly conducted researches, conintegration analyses, vector error correction models, explained many important variables such as manufacturing exports, investment capital to the total exports and growth. This part will curtly review the studies conducted in the context of Bangladesh.Since its independence, Bangladesh embarked in a import substitution trade policy following the ideology that a pro-agricultural society should be move to develop intra-industry to achieve economies of scale (Adelman, 1984). The mounting foreign debt, instable political condition, low productivity and growth, lower national income, did not allow the country to achieve its economic objective. Therefore, the country had to convert its inward looking policies, towards more outward looking policy, and adopted export promoting trade policy in 1982. Many structural adjustments were adviced by world bank and international monetary fund. The country went under furthEffect of Exports on GrowthEffect of Exports on Growth1. Introduction1.1. Theoretical FrameworkThe general idea of free trade agreement of growth was developed in advocacy of free trade based on neoclassical trade theory (Solow, 1956) and from recent endogenous growth theory (Romer P. , 1990). The support for free trade is drawn from Ricardian principles of comparative advantage (Viner, 1937). Similar idea is drawn from the notion of perfect competition and the believe of neoclassical economists who argues on the importance of efficient capital allocation due to free trade (Krugman, 1986 Corden W. , 1974).The phenomenon of free trade came under severe scrutiny in the face of Great Depression. Hence, theoretical foundations of optimum tariff were developed in support of protection (Johnson, 1950 Kaldor, 1940). Johnson (1958, 1971) advocated trade protection in three groups in his classical exposition. They are the economic arguments, non-economic arguments and non-arguments. Economic arguments raise infant industry argument, optimal tariff argument and correction of domestic market distortions, while non-economic arguments emphasize on self-sufficienc y for domestic economy. Non-arguments attempt to resolve balance of payment distortions through trade protection. Johnson concluded that optimal tariff protection is the only valid argument, while in other cases such arguments will only inflict distortions.The neoclassical economists refute the notion of protection as an alternative, as this would result in intra-industry effects. The increased barrier to entry would make domestic traders to engage in monopolistic competition, while small enterprises will be left inefficient. Intra-industry effects are the source to welfare loss (Tybout J. D., 1991). In addition, Bhagwati(1988) and Kruger(1974), raises the theory of directly unproductive and profit (DUP) seeking activities, which will cause waste to national resources. Additionally, the Solow-growth model embodies technology as an endogenous factor (Agion, 1992 Romer P. , 1989), which argue that international trade ensures faster diffusion of technology, that is embodied into the be tter intermediate goods which results in higher productivity and growth for domestic economy (Grossman, 1991). This will result in learning by doing effect and technological know-how is surpassed. In addition, management is more efficient and all will combine in high growth (Krugman, 1987 Young, 1991 Lucas, 1988) .1.2. Objective of the studyA high number and standard of studies have been conducted on Export-led growth, trade openness, manufacturing exports as a new engine of growth, specifically in the last decade, on different economies, ranging from developed to poor countries, drawing interesting conclusions. The present study seeks to investigate the effects of export, openness on growth in the context of Bangladesh.Firstly, the study will seek for stable effects of policy shifts and implementation, in Bangladesh, which will be determined by stable changes in the determinants. Stationarity conditions, if satisfied, will ensure the stability of economy and productivity, towards a particular goal.Secondly, the study will investigate the current association between growth and trade openness. While it is desired, that the adopted outward-looking trade policies of Bangladesh to result in positive association of productivity to liberalization, trade openness might be effected by other variables and may render different conclusions. Thirdly, the study will examine, if the export led growth hypothesis is still applicable to Bangladesh, as before, while many countries, such as Sri-Lanka, Philippines, Nigeria have seen opposite relationships. Additionally, Hossain and Karunaratna (2004) have argued that manufacturing exports have become new engine of growth which is a disciple of the de novo hypothesis. In contrast, Adelman (1984) suggests that, agricultural exports should have dominant effect for a pro-agricultural society as Bangladesh. It is important to see if, manufacturing exports is an engine of growth, or still other factors are dominant as before.Investment is an endogenous factor that should imply the increased import of intermediate goods, as a result of increased export, and more openness, would consequently render higher productivity (Krugman, 1987 Lucas, 1988 Young, 1991).1.3. Relevance and limitations of the studyRelevant studies have been conducted in the context of Bangladesh, in last decade and have drawn interesting remarks. However, the major drawback is the timeframe of earlier studies, which did not cover analyses from the last ten years. In the last ten years, econometric methods have changed and improved rigorously. Hence, many studies have been rendered invalid due to absence of proper methodology. The world economy has seen dramatic events in politics, international trade and global economy. The trends in global economy, which were much more rigorous, in the last ten years, have affected Bangladesh magnificently, as Bangladesh emerges as a high power economy in Asia, and have interested researchers, due to high deviat ions and high rises to productivity. It is necessary to embody recent econometric techniques of Johansens maximum likelihood cointegration analysis and vector error correction methodology, which will inform on recent associations, among the interested indicators. Hence the state-of-art econometric techniques will provide reliable results that would help the policy makers to observe the relationships and bring sufficient changes, in trade policy to render profit.Among the few limitations of the study was the absence of first hand secondary sources. Most data sources for Bangladesh are not available online and are preserved in paper based format. The lack of proper technology and internet, withdraw the authorities of the country, to provide data directly. Therefore, data are collected from World Bank sources, which may not correct for errors, and sometimes fail to provide detailed data series as an intermediary.1.4. Structure of the dissertationThe second section will contain a brief country profile and approaches to liberalization. The third phase will contain literature review that will discuss literatures in support to export-led growth hypothesis and trade liberalization. This section will bring forth studies that contrast and significance of the study. The fourth and fifth section will contain methodology to estimation and results of analysis. The final section will give conclusion and remarks to the dissertation.2. Process of trade openness and Export-growth in BangladeshAfter independence in 1971, Bangladesh has gone through three phases of policy changes, towards deregulation and openness to trade. The first phase was marked by severe control on exports and imports. The policy implemented in 1972 to 1975, put the country in a socialist framework, with a fixed exchange rate system. Industrial enterprises, banking and trade infrastructure was massively nationalized as an inward-looking, import substitution approach was adopted. Agricultural inputs and outp uts were controlled. Empirical literature suggests that this was a good decision for the researched timeframe (Ahmed N. , 2000).The second phase of policy shifting began in 1976 and continued up to 1990. This phase of denationalization, deregulation and trade liberalization lacked a good direction to work out the process. Nationalized trade barriers were reduced, and a free trade approach was undertaken. Privatization of industries and banking sector was allowed and price controls over nationalized firms were lifted. Abolishment of state trading was initiated.The third phase of policy shift, were introduced in the beginning of 1991 and continued up to 2002 with significant remarks. In the recently developed policies toward export-promotion and trade openness, trade barriers have been removed as a flexible exchange rate regime is adopted. To encourage further reduction of anti-export bias, export processing zones have been established, to co-operate manufacturing exports. This recent policy shift has moved towards complete privatization of banks, infrastructure and agricultural sector. During this phase, Bangladesh continued to experience rapid liberalization.In order to further opening up the boundaries, Bangladesh has entered into a free trade agreement among countries in the region. As discussed, to encourage EP trade policies, and free trade, Bangladesh entered into bi-lateral agreements with India, Pakistan, Sri-Lanka, and continues to trade and investment framework agreement with United States. Bangladesh is an active member of SAARC, Developing-8, and Bangkok Agreement. The country is rigorously seeking to import in developing of a regional co-operation among Bangladesh, Bhutan and seven northeastern states of India and Nepal.From the graph presented above, it can be seen that, starting form 1971, imports were increasing at a low rate, with a fall in 1976-77, but moved up after that. The import line took a peak after the third policy implementation in 19 91, and continued to rise at a high speed. The export trend was almost at a constant level, until the 1991 policy implementation. Afterwards, the trend peaked, gained a momentum after 2000. However, the export line still falls below the import trend. As reported by the export promotion bureau, in 2005-2006 FY, export earnings have grown by 21.3%, which is due to high demand of, chiefly manufactured goods, led by garments industry and knitwear. During this period, import payments have grown by 9.5%.In contrast to real export, manufacturing exports exhibit of higher exports than imports which are in percentage of merchandise exports. This is indicative of higher productivity.When the country adopts rigorous trade policy towards openness and promoting exports, large scale capital owners and labor unions are in oppose to liberalization. The cause of opposition may lie in the fact that, increased competition, effect the workers, in protected public and private sector, who fail to adjust to the exposed economy, with increased productivity. The politicians tend to protect large scale owners, who severely discourage competition and create bias towards exports (Sattar, 2004).3. Literature Review3.1. Concepts and Empirics on Export-Led Growth PhenomenonExport led growth phenomenon has been central to the trade and development literature for many years. The bulk of researches that has taken place on this issue are therefore, not small in number and range. The focuses of these studies were bi-directional. Some of the studies attempted to find whether expanding export would improve the growth performance. Others tried to find the paths through which the expansion of export will affect the growth performance. Economic theory confirms that export expansion leads to increase the growth performance, as that efficiently allocates productive resources and also with the high volume of productive resources accumulated as a result of higher capital earned through export growth, (Ba rdhan, 1970 Cheneray, 1966 Basu, 1991 Romer P. , 1989 McKinnon, 1964 Grossman, 1991).Export expansion makes the home country to concentrate on comparative advantages and to earn economies of scale. The home country continues to invest on its economies of scale and achieve better efficiency. The increased efficiency creates external competitive pressure on the home country, along with improved internal competition. In the face of more competition, the monopolistic and oligopolostic behavior of the market is eliminated. Efficiency is also created as learning by doing. Knowledge is transferred to other sectors and growth is enhanced. The external competition, aids the small economy to realise and emphasize on removing limitations, through economies of scale, and by reaping the true advantage of globalisation, which is acquired by increasing export.The theoitical literature also argues that, export expansion increases the investment and capital accumulation in a country. The two-gap mo del explains , that growing export reduces the constraints that prevail in foreign exchange. Such reduction of constraints lead to better accumulation of productive resources, capital goods and intermediate goods (McKinnon, 1964 Bacha, 1984 Cheneray, 1966). Export expansion also increases investement opportunity of a country. Modern economists suggest that, savings by domestic and banking system, government savings and foreign exchange savings cannot only induce investment. Investment opportunities determine investment rather than savings. The growth of export will provide investment opportunities to home country, (Sandrum, 1994).Theories suggest that, the relationship of export and economic growth is bi-directional. Economic growth may also increase export for a country. The effect of better learning and technological development, give rise to output. The growth of output ensures that domestic demand is met and export will expand. However, this technological process development or learning process development is not directly related to the export promoting policies (Jung, 1985). As the home country realizes economies of scale, expansion of export takes place. Investemnt (Grossman, 1991). Therefore, the bi-directional theory suggests that, GDP is a function of investment, that enhances export performance, and export increases investment opportunity, that is directed to GDP growth.In the designing process of development economics, entailed was dominant export passimistic theories, rather than export promoting views. After the end of world war II, import substitution strategies were to be followed by many countries. However, the initial phase of implementing import substitution strategies seemed ideal during that period, but the results of taking attempts to implement the import substitution strategies were not favorable for all economies. Economists found that, that export passimistic views were not justified for many economies that have reached a certain level of development, and industrialization. On the other hand, the import substitution trade policies laid undesirable effcts on balance of payment. As a result, the growing economies did not accept import substitution strategies, rather accept export promoting views (Adelman, 1984).The growth led export is also suggested by theories. According to Bhagwati (1988), growth led export hypothesis is dominant when supply and demand is induced by growth. In such cases, anti-trade bias is turned down.The possibility of bi-directional causality prevails in many major theoritical literture (Grossman, 1991 Bhagwati J. , 1988).On the other hand, Irma Adelman (1984) argues that, export-led growth is not the only open development strategy for a least developed country. The open development strategy that ensures the allocation of agriculturally driven resources may prove superior than the strategy for allocation of capital for investment resources. An alternative to the import substituion strategy, f or a closed development approach, maybe an ADLI ( agricultural-demand-led-industrialization) strategy. It is important to identify the phase of closed development ideology, which is dominant after the era of Pro-agricultural strategy is over. Another theoritical literature similarly argued that, ADLI as a balanced-gowth-approach, can only be a mean, to attain the goal for developing countries need for higher growth, and the need for growing industrialization by expanding the demand for domestically produecd consumer goods and intermediate goods. The linkage effect to agriculture with industrialization is also examined (Singer, 1979). Singer (1979) defines this target as Lime target and ADLI is the solution. However, Irma Adelman(1984), also puts out the constraints to ADLI strategy as it requires the improvement of infrastructure in Agriculture which is difficult to attain in South Asian Sub-continent. The physical capital needs to be perfectly infrustructred for ADLI yield expected results. Therefore, ADLI strategy is a solution to allow time to the developing countries to bring abouth changes structurally, in 1980s to 1990s. This strategy cannot wire out the importance of export-promoting strategies as an alternative for import substituion strategies at all (Adelman, 1984).Alongside the theoritical literatures on export-led growth hypothesis, the number empirical literature from the first of its kind by Maizels(1963) is many. Jung and Marsall(1985) scanned 11 empirical studies that were carried out from 1967 to 1982 timeframe, and all of the studies found supportive relationships to export and growth. Greenaway and Sapsford(1994), reviewed 14 empirical studies that were conducted on the export-led growth hypothesis, and 12 empirical studies vividly shown relationships between export and growth. One of a major study conducted by Giles and Williams (2000), which conducted 150 cross country analysis from 1963 to 1999. Out of the 57 countries that were analysed , only 4 countries failed to show significant relationships between export and growth, and only 10 out of the 102 time series analysis didnt show significant relationships between export and growth.It has interested the empirical literature to examine export-led growth hypothesis prior and after the oil shock in 1973-74 timeframe. Among the studies,that took place prior to the oil shock, Michalopoulos and Jay (1973) conducted a study in a 1960-73 timeframe, by estimating export and gowth into a poduction function, signifcant relationships were found. Tyler (1981) conducted study on a group of middle income countries, putting export and growth into similar production function framework, and found similar relationships.Therefore, export orientation into the framework is supposed to effect growth therough economies of scale, allcation of productive resources and utilization of capital, optimally. The study of Feder (1983) found similar results. Balassa (1983) were dubious about the rel ationship afther oil shock, as in the face of economic recession 1974-75 that took place after the quadrupling of oil price in 1973-74, may have effected the relationship because of the orientation of external shock in the production function. The study he conducted had taken th period of 1973-79, after the shcok, on 43 developing countries, who were directly affected by subsequent recession. The result did show export affecting growth positively and the numerical magnitude of the effect did grow compared to early results. The changes in intercountry growth rate before and after the oil shock is rather a result of different trade policies introduced.An important theoritical implication is increasing export also paves the way for imported capital goods to be entered into the country (Islam M. , 1998). As productivity is increased, investment along with profit grows and the economy enjoys higher growth (Edward, 1993 Levine, 1992). In last two decades, exports of newly industrialized c ountries grew by 20%. Manufacturing exports entailed 70% of total exports. As a third factor, import of manufactured and productive capital goods increased. The demand for these capital goods indicates the increasing rate of growth. Therefore, the plethora of studies on export and growth make this issue important enough to review.3.2. Cross-country empirical analysesIn light of previous section, many empirical literature also focused on perticular countries or a category of countries to examine the export-led growth hypothesis. In theoritical literature, it is defined that, if export growth coefficients and and output growth coefficients are significantly positive in regression, the country follows export promoting strategies. If output growth causes export growth in regression than the country is labelled IGE or internally generated exports. On the other hand if a export growth coeiicient and output growth coefficient is negetively correlated in the regression for growth, the count ry follows ERG or export reducing growth strategy (Jung, 1985). Such countries are following inward-oriented strategies rather than outward-oriented policies. Inward-oriented countries may also follow IS (import substitution) trade policy.Many empirical studies on cross-country did confirm the existence of export-led growth for different countries, and in some countries results otherwise is found. Hatemi J. and Irandsout (2000) continued analysis on Ireland, Portugal and Mexico, and significant relationship was confirmed. In the same study, they failed to confirm causal relationship for Greece and Turkey (Hatemi-J.A., 2000). The study by Ghirmay et al. (2001) did find positive relationship of export and growth for a number of developing countries. Just after one year, another study by Greenaway et al. (2002) conducted analysis on a number of selected developing countries and found that the growth rate for these countries dropped immediately after trade reform, for a constant rate of export, but gained momentum following a J-curve response after the affect of trade refor wires out.M. Michaely (1976) analysed 41 developing countries for a significantly large period. The resulting conclusion implicated that while Greece, Taiwan, Portugal, Spain, Israel, Yoguslavia and Koria had rapid growth with increasing export, Portugal did not show significant export growth, while GDP was growing in same pace. On the other hand, when Ethiopia incresed its export performance considerably, but failed to increase its growth to the pace with other countries. On the basis of rank correlations, M. Michaely (1976) concluded that export performance will positively effect growth of a country, only when a country achieves development of a perticular level. Countries below this level will fail to exhibit good export-growth relationships. Bela Balassa(1977) followed similar study conducted by M. Michaely (1976), running rank correlations on a sample of countries that established industri al base for a timeframe of 1960-73. Among these countries, Korea, Singapore and Taiwan adopted EP (export promoting) strategies at a very early stage and provided incentive to the exporting sector by subsidizing the sector in many ways. On the contrary, though, Israel and Yoguslavia promoted export during the same period, but their efforts seemed to dim in the later periods. On the other extreme, Argentina, Brazil, Columbia and Mexico, continued the existing trade policy, supporting import substitution (IS). During this period, Chile and India continued their inward-oriented policies and was in the phase of weakly introducing export promotion policies. The resulting conclusion estimated that, while Korea and Taiwan would have less growth with more export, Chile, India, Mexico,Brazil and almost all other countries would have better levels of growth with higher levels of export. The countries that moved to opposite direction is due to the unfavorable internal conditions and policy con straints, the countries have. Similarly, for Phillipines and Srilanka, opposite direction of relationship is found (Islam M. , 1998).3.3. Controversial Theories and EvidenceDue to the debt crisis and continued recession that prevailed during 1980s, after many countries adopted export promoting strategies, theorists and economicsts were dubious about export-led growth hypothesis. It became a necessity to re-examine the export promoting strategies (Bhagwati J. , 1988).The revived passimistic school of thought was dominated by old and new school of thoughts. The most influencial school of thoughts were suggested by two great contemporay development economists, that were Raul Prebisch (Prebisch, 1952) and Ragner Nurkse (Nurkse, 1953). Prebisch (1952) recommended that, chief exports for newly industrialized countries will decline following a natural cycle, regardless of the trade policy implemented by the home country. Producers of home economy will respond by rapid industrialization and the economy will respond by employing more protection and higher level of restrictions. All these attempts will make export promotion unjustified. The other dominant export passimism was realized by Nurkse(1953), who stressed more on balanced growth. The balanced growth theory suggests that the accelerated pace of growth and exports of developing countries, make foreign markets unable to accommodate imports on sufficient level. Developing economies shift from raw materials to synthetic materials as inputs, and damage exports for developing countries longer run. Riedel (1984) suggests that, demand dominates export performance. It is a biased view towards export growth relationship if that is explained by export performance of selected countries. Export performance maybe more reliant on domestic incentives of a country, rather than the external conditions (Riedel, 1984).The new literatures focus more on successful Asian exporters, which maybe a mistake to be implemented as a general strategy for all economies. The sources of worry advocates that, markets are shifted to export promotion, markets will fail to absorb all exports. The earlier wave of export passimism was afflicted by this idea. Economists have always supported the idea of intra-industry specialization which leads to adoption of inward-oriented policies, and terms an economy as closed economy.The countries that adopt outward-oriented policies to a greater extent, or publicly promotes export promoting strategies, associates some level of government intervention. The government intervention makes sure that exports are promoted, subsidized and invested into. The countries that are empirically supportive of export-led growth hypothesis, mostly follow government intervention. This practice is generalized except countries like Hong-Kong. However, these are exceptional cases and should not be generalized (Bhagwati J. , 1988).Economists also view that, export promoting trade policies, make the domestic mark et less sheltered and susceptible to world economic condition, outside pressure, world competition as well as innovation. This view has also been critisized and the opposite direction is supported by Schumpeterian arguments (Bhagwati J. , 1984). The theory of market imperfections addressed by Fields(1984) suggests that, in presence of excessively high wages, countries may do poorly. An example of this theory is set to Jamaica. Another interesting theory is the satisfaction theory of import substitution suggests that, the export promotion strategies are not suitable for many newly industrialzed countries due to their lack of flexibility for movemet of capital resources. Countries also lack the political capabilities to implement this flexibility (Ruggie,1983). Similar argument is also suggested by Adelman (1984) who argues that, agricultural-demand-led-industrialization strategy should be applied to allow a country enough time, for it to develop a structural base, before the country can successfully implement export promoting strategies. Export-led growth will follow if the country can achieve a minimum level of development as suggested before. While in the face of rapid growth, many countries are doing well with export promoting trade policies, countries like Taiwan, Sri-Lanka, Phillipines, Jamaica, Brazil, Korea. are examples of countries, that was not in the position to implement export-promoting trade strategies,and the desired export-led growth was not achieved.In some theories, learning by doing or intra-industrial knowledge transfer was an important factor for adopting export promotion strategies. It is believed to be a mean of acquiring economies of scale for industries. The know-how process is a major motivating factor for economies, to support export promotion strategies. However, even, learning by doing effect dims down and may stop completely in absence of newly developed technology (Young, 1991). This makes outward-orientation unjustified and expor t-led growth, a failure. Import substitution and export promotion strategies do best when they are complementary (Grabowski,1994 Hamilton and Thompson, 1994).One important alternative suggested by Adelman (1984), is the ADLI (agricultural-demand-led-industrialization) strategy. The ADLI argument can be set into the similar footsteps of IGE (internally gorwn exports) of Jung (1985). Adelman (1984) argues that, when the countries became more reliant on industrial export-led growth, the controversies arise as many of least developed countries experienced lower employment, deteriorated income distribution, high level of food imports as domestic demand is not met, and lower level of growth. Therefore, countries required to implement more basic need oriented strategies. The rising foreign exchange constraints, and the serious liquidity problems, least developed countries faced, as they moved towards more export promoting strategies, following the export-led growth hypothesis, newly renewe d export passimism (Adelman, 1984).As empirical evidence, causality tests between export and groth conducted by Jung and Marshall (1985) on 37 countries should be addressed. In this empirical study, countries as many as South Africa, Korea, Pakistan, Israel, Bolivia and Peru did not show significantly positive relationship between export and growth. Rather these countries showed export reducing growth, which is the other way around. If these countries implements export promoting trade strategy, the countries will experience crippled economy and lower growth. Countries such as Iran, Kenya and Thailand are in favor of internally generated growth, and in the process of successfully implement export promoting growth policy (Jung, 1985).Looking at the above results, countries therefore, support import substitution as a pro-agricultural trade policy (Adelman, 1984). Countries are also adviced to move towards ADLI strategy in this stage. It may not be favorable for countries to immediately implement export promoting trade strategies, hoping to yield benefits of export-led growth hypthesis. In the primary stage, countries require import substitution policies, to develop intra-indistrial skills, economies of scale, and a trade base to a minimum level. The level in between is a complementary stage between import substitution and export promotion. Countries as India, Malaysia, Bangldesh in South east Asian region, followed import substitution for longer period until they believed to reach the minimum level, before these countries can move towards outward-oriented policies and introduced trade openness, and enjoyed the benefits of export-led-growth. For many countries mentioned above, steps taken in an earlier phase, have backfired. Therefore, the controversies to export led growth is as prevailent as the support toward the hypothesis.3.4. Empirics on export led-growth and trade liberalization in the context of BangladeshAs one of Asias growing power house economy, The ex port-led growth hypothesis has been examined in the context of Bangladesh, in many empirical literaures. Among the newly conducted researches, conintegration analyses, vector error correction models, explained many important variables such as manufacturing exports, investment capital to the total exports and growth. This part will briefly review the studies conducted in the context of Bangladesh.Since its independence, Bangladesh embarked in a import substitution trade policy following the ideology that a pro-agricultural society should be motivated to develop intra-industry to achieve economies of scale (Adelman, 1984). The mounting foreign debt, instable political condition, low productivity and growth, lower national income, did not allow the country to achieve its economic objective. Therefore, the country had to convert its inward looking policies, towards more outward looking policy, and adopted export promoting trade policy in 1982. Many structural adjustments were adviced by world bank and international monetary fund. The country went under furth

Impact of Corruption in Nigeria

Impact of Corruption in NigeriaCORRUPTION AND ITS IMPACT ON INTERNATIONAL BUSINESS IN exploitation COUNTRIES(NIGERIA AS A CASE STUDY)(FEBRUARY 2014)AbstractCorruption is no news in the universe of discourse today. We fecal matter see rottenness in our daily lives, permit alone in our businesses and the way economies as a whole admit with thwartion every day. That is why discussing corruption and seeking ways on how to deal with it in internationalistic business is inevitable.I chose Nigeria as a case study for obvious reasons I am Nigerian and unarguably Nigeria is the Giant of Africa spacious in its natural resources but unfortunately Nigeria is still battling with corruption which is crumbling our already poor nation and taken a toll on our International ancestry relations pushing potential business and development further away.This paper seeks to attempt to disposition why corruption is predominant in developing countries, its reach on International Business in develop ing economies and possible recommendations.I will first start by giving you a brief celluloid into Nigerias biggest export and make an attempt to analyze corruption itself.IntroductionInternational Business is all technical transaction between two or more countries and the goal of the clandestine business is to make profits while the government is motivated by profit or political reasons (Daniels, Radebaugh, and Sullivan 2007). Business has perplex more global, trading has extend easier with different regional trading blocs. This only encourages companies and economies to engage in International Business to boost its economy. Several economicalal theories show how countries competitiveness with an early(a)(prenominal) and Nigeria certainly has an Absolute Advantage in the Oil field.Nigeria is a country with diverse and enormous mineral resources like raspy inunct, coal, zinc, semi-precious pit and gold to name but a few. Nigeria exports petroleum, petroleum products, co coa and rubber. Nigeria is also rich with great human resources hence a great destination for business.The jerky growth of Oil in the 1970s led Nigeria to the abandonment of its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on jolty oil. Oil and gas exports account for more than 95% of export earnings and over 80% of federal government revenue.However, the success story in the sector has lead it thus far making Nigeria, the United States largest trading partner in sub-Saharan Africa, supplying 8% of U.S. oil imports which is half of Nigerias daily oil production .The country is also the fifth-largest exporter of oil to the United States.Nigeria is a member of the functional Commodity Agreements in the world Organization of Petroleum Exporting Countries (OPEC), and its on-line(prenominal) crude oil production averages over 1 million set per day with oil reserves are estimated to be 36 billion barrels natural gas reserves are over 100 trill ion cubic feet. (Source 21 Feb 2012 http//www.nigeria.gov.ng/index.php/2012-10-29-11-05-46/economy)Table 1.1 Nigeria Economic Overview 2014Nigeria Economy OverviewRegionSub-Saharan AfricaIncome course of instructionLower middle incomePopulation168,833,776GNI Per Capita (US$)1,430City coveredLagosDoing Business 2014 RankDoing Business 2013 RankChange in Rank147138-9Doing Business 2014 DTF(% points)Doing Business 2013 DTF(% points) avail in DTF(% points)46.6246.330.29(Source 21 Feb 2014 http//www.doingbusiness.org/data/exploreeconomies/nigeria/ )CorruptionThe world is a chain, one link to a nonher Maltese Proverb, and with the rapid pace of globalization and the increase in the volume of International trade and investment, coupled with ongoing corporate scandals, has escalated the importance of issues relating to Corruption, Corporate Social Responsibility (CSR) and Politics (Rodriguez et al, 2006).As foreign firms grow into, and new firms were born within, developing and transition economies governments, managers and scholars grew more aware of the magnitude of corruption and the fate to understand and address it.Corruption has been described by several(prenominal) authors using very fancy words but keeping it simple it is a wrongful act that affects the well-being of the society. Corruption abuses power for private evolve and it affects everyone who depends on the integrity of people in a leadership position.It can be manifested through bribery, il level-headed gratuity, extortion, conflicts of interest, kickback, and corporate espionage and through commissions/fees (Source 21 Feb 2014 http//www.sfo.gov.uk/briberycorruption/briberycorruption.aspx)In semipublic offices several ardent writers relate corruption with the continuous malicious use for self-financial gain but this is not exclusively the case because corruption also exists inboth (small and large) private enterprises and their gains arise because of embezzlement, conflicts of interest, abuse of p ower, exploitation, bribery and fraud. (Sikka, 2008).Corruption in Developing CountriesUnfortunately, it is not news to our ears that Nigeria is headed to being completely destroyed by corruption if continuous effort to curb it is not pursued vigorously. Well, Im of the opinion the root cause of the present Nigerian corruption line of work is the overarching crude oil economy and politics over the years.Transparency International is has efficiently made available a Corruption Perceptions Index (CPI) which ranks countries and territories based on how corrupt their public sector is perceived to be. The scale of 0 100, in the CPI is a s follows 0 indicating that a country is perceived as super corrupt and 100 indicating it is perceived as very clean.Please note the countries perceived as very clean and where those countries originate from compared to those perceived as highly corrupt further stressing my view that developing countries are highly corrupt due to the economic condition s thus bear on business. (Source 21 Feb 2014 http//www.transparency.org).Copy of CPI2013_GLOBAL_WithDataSourceScores.xlsNigeria is at 144, fright looking past tables in the Transparency International website in 2004, Nigeria was at 90. The last country on the list is an African one, Somalia. This goes with come in saying. If you look at the economic situation in Somalia, it is obvious. The poorer the nation the higher the corruption. But how can there be a balance? A nation engages Foreign lease Investment to boost its economy. The Porter Diamond Theory (Daniels et al 2007) which naturally should help boost a nation may not work in a developing country like Nigeria, according to this surmisal companies development of international competitive product depends on their success in their home country, this theory is not feasible in closely developing economies, these countries need foreign investors to set companies to harness the demands of the nation but with corruption as one o f the factors affecting International Business, how will be nation grow strong enough to combat it?Sadly, Nigeria has no excuse for its failure so far, at present the problem of corruption issues has been saddled in into the laps of three government bodies Economic and Financial Crimes Commission (EFCC) Independent Corrupt Practices Commission (ICPC) and the Code of Conduct Bureau (CCB), with miniature or no success considering Nigeria is still locomote below the worlds Confidence Interval year on year, so how can International Business be seamless? You can also find current shocking details about bribery/corruption in Nigeria on bribenigeria.com.wont a corporation or nation rather deal with another continent with a lower corruption issue than invest or trade with a nation who is known for corruption? If I were to answer, my answer will be no.I believe that developed countries in the world have a better advantage over the fight against corruption because developed countries do not face the several challenges that developed countries face, so leash world countries or developing countries like Nigeria, still have a long way to go.Multinational Corporations interest in fight Corruption in International BusinessIt has been argued that governments and host communitiesmay be interested in eradicating poverty, promoting education, health care andhuman rights, but corporations may not necessarily share such goals. They areessentially private organisation and are required by law to prioritise the welfare ofthe shareholders (capital) above other stakeholders (Sikka, 2008). Corporations todayshould to necessitate their operations responsibly with accountability to widersociety and legitimise their amicable power corporations may acknowledge some socialresponsibilities, but they most often times cant buck the systemic requirement to increase profitsand dividends to the benefit of capital.Businesses and organizations are set up to create wealth, and so far it is a ve ry highlyeffective tool for doing so. No limitations, whether legal, ethical or moral limitare set to what or whom corporations can exploit to create wealth for themselves and theirowners. According to Sikka (2008), such practices seems to be partof the enterprise culture that persuades m some(prenominal) to believe that bending the rules forpersonal gain is a sign of business acumen (pg. 270). Competitiveadvantages is considered to be an entrepreneurial skill, especially when competitivebusiness environment link profit and market shares with meeting global businesstarget.We see that the use of bribery and inducement to secure competitive advantages is primarily amatter of executive discretion rather than any legal or moral compulsion. It has beenargued that this discretion may be used to enrich directors since their remunerationis influenced by the level of profits and return to capital. Markets therefore asseverate compress on companies to afford ever increasing profits and retu rns as capitalismdoes not provide any guide to upper limits of accumulation (Sikka, 2010). Companiescan generate additional returns for finance capital, not only through competitiveadvantages on products and services, but also through bribery and otherinducements to secure government contracts which are the big and guaranteed revenue even though payments are delayed .In an attempt to satisfy the corporategoal unfortunately everybody else is put at risk.Generally, the codes of business conduct include statements rejecting the payment oracceptance of bribes, collusion, pressure or illegitimate favour, either directly orthrough third parties whether public officers or private individuals but are often not respected. Y their involvement in corrupt practices and other anti-social practices cannot therefore bereconciled with their business codes of conduct (Sikka, 2008, 2010 Otusanya, 2012).environmental turbulence and threats to their reputation are managed by publishing corporate social responsibility (CSR) statements and code of conduct that promise ethical behaviour, improvement of economic and social infrastructure and quality of life of all stakeholders (Phillips, 2003 Sikka, 2010).Looking at it critically even if one organization restrains itself, the superior profits of competitors and business environment exert pressure to explore ways of matching or exceeding that,thus the tendency to increase profits through corrupt practices as a government agency of gaining competitive advantages remains embedded within the corporate enterprise culture. In the end, it is a means to an end or we all want to make money some would say.Impact of Corruption in the International Business worldWithout a doubt corrupt activity hinders development, contributes to the depletion of the public purse and distorts markets, furthering hindering topical anaesthetic and Foreign Direct Investment. The growth of a nation depends on the redistribution of its wealth since the middle class and poor benefit is much greater than the affluent, who loss out of the re-distributional process. Countries suffering from corruption cannot implement sound re-distributional policies and are not expected to take benefit from sustainable economic development despite engaging upon economic growth from time to time for some reason or the other. No country or company would like to engage in business with falling economies.Another pitfall is it becomes a way of life. Corruption is like a way of life in Nigeria, from the secretary that sits at the office expecting to receive a gift before passing the cheque for signature to our leaders who can only award contracts by our wonderful saying if you help me, I go help you ( *pidgin English which means if you scratch my back, I scratch yours).There are other things to consider, for instance the level of poverty. Nigerians do not know any way out. Word on the street, is you have to be smart, so you can survive. And survival here is relative. The danger of this is that is rubs off on the nation as a whole. Our image and reputation is constantly taunted. Business people need to find out if they need to cut corners before making an investment in Nigeria and need to know the Man at the top before the contract is awardedIt ridicules the concept of open and fair competition hence the continual diminution of the economy.*Pidgin English is the low class English spoken on the streets in NigeriaSummaryInternational Business as stated earlier involves all commercial transactions, private and governmental, sales, investment, transportation that takes place between two or more countries for developing countries to find a way to curb corruption to its minimum it mustiness first start from the sectors and the leadership. Not forgetting that the various modes of entry ranging from Imports and Exports, Tourism Transportation, Licensing and Franchising, Turnkey Operations, Management Contracts, Direct and Foreign investments need to be rid of corruption (Daniel et al 2007).In the case of Nigeria, it makes sense that any effort to eradicate corruption in must start with the oil sector, because of its all-encompassing effects on other sectors of the economy and move immediately to harnessing other natural resources, focus on production of resources that the economy has demand for thus providing job opportunities for several people. Secondly, the law enforcement would need to sanitize its own department because it is a pity that in developing countries they are the most corrupt. Im not confident of the efficacy of the sanctions and rejoinder imposed and how is it been effective handled, however if sanctions from those found guilty of corruption can also be re enforced.Finally, as also noted earlier, unfortunately it has become a way of life. The biggest step will be sensitization. The media and institutions of learning will have to collaborate to ensure these morals are instilled. A full pom-pom media campaign o n the effects, combined with tutorials in classes will surely make an impact. The earlier an individual realizes that it is not a norm, the better. People should not accept or give bribe and not cut corners the better for the whole society.Corruption can be tackled, it may take forever but with collaboration and eye on the bigger picture when purely looking at it from a business perspective, it is indeed wiser to build a good reputation that bring a lifelong investment than engage in activities that will only provide solutions for short term needs.References/BibliographyDaniels, Radebaugh and Sullivan (2007) International Business Environments and Operations, 11th Edition.Olatunde Julius Otusanya, Sarah Lauwo, Gbadegesin Babatunde Adeyeye (2012)A searing Examination of the Multinational Companies Anti-Corruption Policyin Nigeria (Accountancy and Public Interest 2012). (Online journal 9th Feb 2014 http//visar.csustan.edu/aaba/Otusanya2012.pdf)Otusanya, O. J. (2011b) Corruption as an Obstacle for Development in DevelopingCountries A go off of Literature, Journal of Money Laundering Control, 14 (4)387-422.Phillips, R. (2003) Stakeholder Theory and Organisational Ethics, San FranciscoBerrett Koehler.Rodriguez et al (2006) Three Lenses on the Multinational Enterprise Politics,Corruption, and Corporate Social Responsibility, Rensselaer work Papers inEconomics, No. 0608 New York.Sam Ejike Okoye. How to tackle corruption Effectively in Nigeriahttp//www.gamji.com/article4000/NEWS4930.htm (9 Feb 2014)Sikka, P. (2008a) Enterprise Culture and Accountancy Firms The New Master of universe, Accounting, Auditing and Accountability Journal, 21(2) 268-295.Sikka, P. (2010) Smoke and Mirrors Corporate Social Responsibility and TaxAvoidance, Being Paper Presented at Essex Accounting Centre, Essex BusinessSchool, University of Essex, UKhttp//www.essex.ac.uk/ebs/research/working_papers/WP2010-5%20PS%20CSR%20and%20Tax%20Avoidance%20Revised%20April%202010.pdf. (9 Feb 2014)Udelove ( 2010) wherefore Nigeria Is Referred to as the Giant of Africa. StudyMode.com http//www.studymode.com/essays/Why-Nigeria-Is-Referred-To-As-449209.htm (21 Feb.2014)Yima Sen Political Economy of Corruption in Nigeriahttp//www.gamji.com/article9000/NEWS9136.htm(9 Feb 2014)Web. 9 Feb 2014 http//www.globalsecurity.org/military/world/nigeria/energy.htmWeb. 21st Feb .2014 http//www.transparency.org Web .21 Feb.2014 http//www.nigeria.gov.ng/index.php/2012-10-29-11-05-46/economyWeb. 21 Feb 2014 http//www.doingbusiness.org/data/exploreeconomies/nigeria/Web. 21 Feb 2014 http//www.sfo.gov.uk/briberycorruption/briberycorruption.aspx

The Macbeth Witches Essays -- English Literature Essays

The Macbeth WitchesIn the low scene in act unmatched we can see that the witches have some kind of psychic ability from when they predict that Macbeth will win the battle. The witches appear to be having some sport of shared vision. We can tell this from the second quotation- When the hurlyburlys done. When the battles lost and won. The witches clearly know that King Duncans side will win the battle. They also know when they will meet with Macbeth- There to meet with Macbeth. This addresses the theme of witchcraft and is Shakespeares way of letting the audience know that the witches have powers. The scene is decide in the dark on the heath- a very open place, and the thunder and lightning in the background top it off as such. These key elements are Shakespeares way of conveying evil. In Elizabethan times this worked well on the audience who were convinced (perhaps unlike a modern audience) that these three women were witches from the very first line.Just before the end of the sc ene we see that the witches have familiars when the first and third witches call on them. This is also a key element in convincing the audience that the women are witches. The fact that they have familiars makes them seem evil and though perhaps a clich now would have been very real for an Elizabethan audience.At the very end of the scene the witches do a sort of chant. Fair is foul and foul is fair Hover through the fog and contaminating air. This implies some sort of evil spell and l...