Category: Economics for Business: Ch 24

Posted on

Growth or poverty – between a rock and a hard place

A recent report from the World Bank has suggested that developing countries need to grow significantly if they are to avoid high levels of poverty. The report suggested that without rapid and sustained growth up to 4 billion people could be living in abject poverty by 2050.

‘Choose growth or accept poverty for billions’ Guardian (22/5/08)
The Doha dilemma The Economist (29/5/08)

Questions

1. Summarise the main findings of the World Bank report.
2. Is rapid economic growth (a) a necessary condition and/or (b) a sufficient condition for alleviating poverty in developing countries.
3. Evaluate two policies that a developing country could adopt to raise levels of economic growth.
Posted on

Japan – releasing rice to the market

The market for rice has been in turmoil recently with shortages and rapid price rises. This crisis has led to Japan and the USA negotiating a deal to release the surplus rice held by Japan in silos. It is estimated that this deal would lead to around 1.5 million tonnes of rice being made available and this could help reduce the price of rice on global markets.

Japan’s silos key to relieving rice shortage Times Online (17/5/08)
Tokyo stockpiles rice while others go short Times Online (17/5/08)
Thai cartel idea outrages consumers Times Online (3/5/08)
Controlling crops goes against the grain Times Online (3/5/08)

Questions

1. Explain why Japan is holding surplus rice in silos.
2. Assess the impact of this ‘distortion’ on the global rice market.
3. With reference to the last two articles linked above, assess the likely impact of the cartel proposed by the Thai prime minister on the global market for rice.
Posted on

The cost of dead PCs

A significant illegal trade in ‘e-waste’ has developed with thousands of discarded computers arriving every day in the ports of West Africa. Once there, children are often used to dismantle them and extract metals . However, this has resulted in huge toxic dumps and serious health problems for resident in the surrounding area.

Breeding toxins from dead PCs Guardian (6/5/08)

Questions

1. Identify the principal external costs resulting from this illegal trade in e-waste.
2. Using diagrams as appropriate, show the impact of this market failure on the market for new computers.
3. Evaluate two policies that the international community could adopt to reduce this illegal trade in e-waste.
Posted on

The bread basket that is left to grow weeds

Large areas of land in the former Soviet Union and Eastern Europe are lying uncultivated due to export barriers and tariffs. Given the recent rapid rise in food prices, this fallow land (estimated to be around 23 million hectares) could help to reduce upward pressure on food prices.

Bread basket that is left to grow weeds Times Online (12/3/08)

Questions

1. Identify three different forms of protectionism.
2. Explain why the land identified in the article has remained uncultivated.
3. Discuss the arguments for and against these countries reducing tariffs on food.
Posted on

Britain – the land of the $5 ice cream?

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.

Questions

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.