Category: Essential Economics for Business: Ch 13

At the turn of the century, the UN Development Programme identified a series of seven Millennium Development Goals ( The article linked to below from the Guardian, considers the progress that has been made towards these goals. Urgent progress is required if the goals are to be met by the target date of 2015.

Poverty, hunger and disease: so much done yet so much left to do Guardian (10/12/07)


1. What are the seven Millennium Development Goals.
2. Discuss the action that is required if the goals are to be met by the target date of 2015.
3. Analyse the extent to which an increase in overseas aid will help to achieve the Millennium Development Goals.

In many parts of the world poor water and sanitation are one of the biggest killers. The article below looks at the situation in the shanty towns of Dhaka in Bangladesh.

Where death by water is part of daily life Guardian (26/11/07)


1. What is the difference between economic growth and economic development.
2. Assess the extent to which an increase in economic growth will help to deliver higher living standards.
3. Discuss the effectiveness of foreign aid as a policy to improve the standard of water and sanitation.

The fall in the dollar has continued with the value of sterling rising above $2.10 for the first time in 26 years. The articles below look at a range of issues related to the strong pound and there are also case studies of the impact on a guitar strings company and the manufacturer JCB.


1. Identify the main factors that have caused the fall in the value of the dollar. Use supply and demand to illustrate your answer as appropriate.
2. Assess the impact of the strong pound on UK exporters and importers.
3. Discuss whether intervention in the foreign exchange market may be appropriate to help UK exporters to remain more competitive in world markets.

Transfer pricing is a technique used by multinational companies to avoid tax liabilities in countries they regard as having high levels of taxation. The articles below from the Guardian give the results of an investigation by Guardian journalists into the elaborate structures that have been created by multinational companies in the banana industry to funnel their profits through tax havens like the Cayman Islands, Bermuda and the British Virgin Islands. In some cases they have paid an effective tax rate as low as 8% when the tax rate in their home country is 35%.

Revealed: how multinational companies avoid the taxman Guardian (6/11/07)
Bananas to UK via the Channel islands? It pays for tax reasons Guardian (6/11/07)
‘I get up at 4am, work to 6-7pm – it doesn’t feel like a life’ Guardian (6/11/07)


1. Define the term ‘transfer pricing’.
2. Explain how multinational banana companies use transfer pricing to reduce their tax liabilities.
3. “The trend in the last 30 years has been to shift the burden of tax away from companies on to the consumer and labour. Capital is increasingly going untaxed.” Discuss the advantages and disadvantages of this shift in the method of taxation.

The article linked to below from the Guardian by Larry Elliott argues that there are significant global imbalances in the world economy and that the IMF has to an extent ignored these imbalances. He argues that the sub-prime mortgage crisis, exchange rate movements and the rapid rise in oil prices are creating significant problems for the world economy.


1. Explain the main global imbalances identified by Larry Elliott in the article.
2. Analyse the likely impact of these imbalances on the global level of economic growth.
3. Explain the statement in the article: “Like many other countries in the region, the lesson China learned from the Asian financial crisis of 1997 was that it needed to build up a war chest of foreign exchange reserves that could be deployed in the event of a speculative attack.”