What would you recommend, a degree in international commerce, or a general degree in 'economics' and a specialization in international trade?

Alfonso Llanes, Master Degree in International Development

Answered just now

An International Business Degree Program is a better choice because it covers subjects such as:

· International Trade Policies and Practices

· International Marketing

· International Management

· International Banking and Finance

· Global Supply Chain Management and Logistics

· International Strategic Management

· Computer Applications in Business

These courses are taught at the undergraduate level.

For higher education here is for example Saint Mary’s College of California’s Trans-Global Executive MBA curriculum:

· Travel to developed and emerging economies.

· Gain cultural and social insights on building sustainable and socially responsible organizations.

· Learn management and entrepreneurial skills, with a focus on global business.

· Protect the world’s environment and people while meeting profit goals.

· Learn about corporate ethics, corporate governance and social responsibility.

· Acquire understanding of diverse cultures by studying their art, history, politics, social norms and food.

Examples of Core Courses

In Saint Mary’s innovative MBA, curriculum includes developing global business analytics using integrated and interrelated course sets::

· Data Analysis and Research Methods in Global Business

· Economic Analysis for Global Business

· International Management

· Supply Chain Management

· Managing Global Competition and Cooperation

· Developing Global Business Strategies

· Global Corporate Governance and Social Responsibility

· Doing business in the Regional Business Environment

Development of these skills plus understanding of the world finances and global economics measurements for instance by The World Bank, IMF, UN, OECD and others. These international organizations follow development, environment, trade, transportation and many other issues affecting global interaction among countries and cultures.

What are the things you can tell about a company from the way it meets the demand in the market?

Alfonso Llanes, studied at Florida International University

Answered just now

Modern economics indicate that some new tools are necessary to present either a product or a service to potential customers in a demand-supply environment. When a business takes a product to market, whether it’s a basic commodity like beans or a highly engineered product like a digital camera, the company must make the product itself compelling and also have a workforce skilled in producing it at an attractive price. Neither of the two jobs is easily accomplished and a vast amount of management training and academic research have been devoted to these challenges.

Service Offering

The challenge of service-business management begins with design. It must effectively meet the needs and desires of a group of customers. In designing a service, managers must undergo an important change in perspective. Product designers focus on the characteristics that buyers will value, service designers do better if the focus is on the experiences customers want to have.

Service differentiation can be defined as providing a service poorly or with excellence.

To create a successful service offering, managers need to determine which attributes to target for excellence and which to target for inferior performance. For example, a store finds that exhibit areas and sales assistance are least valued by its customers, however, low prices and wide selection are most valued, and several other attributes rank at points in between.

Bill the customer in an acceptable way.

The classic approach to funding something of value is simply to have the customer pay for it, but often it is possible to make the payment takes less objectionable to customers. Not very often is done with à la carte pricing for the merchandise. For example a Commerce Bank is open late and on weekends—earning it high marks on extended hours—and it pays for that service by giving a half percentage point less in interest on deposits. Could it fund the extra labor hours by charging for evening and weekend visits? Perhaps, but a slightly lower interest rate is more palatable.

3. The Employee Management System

Companies often live or die on the quality of their workforces, to design a well-integrated employee management system; one must start with two simple diagnostic questions. First: What makes the employee reasonably able to achieve excellence? And what makes the employee reasonably motivated to achieve excellence?

4. The Customer Management System

The typical product-based, business buys materials and adds value to it in some particular process. The enhanced-value product is then sold to customers, who pay to receive it. In a service business, however, employees and customers are both part of the value-creation process.

Organizational survival requires that the methods leaders use to learn and to impart operational knowledge must change as fast or faster than the environmental changes that threaten viability. The focus must be to look beyond competition and market share to more fundamental questions of survival and sustainability in a turbulent and continuously changing world commerce

The most important indicator is the ability of the organization to adapt to changes in the market with enough agility to avoid extinction from a slow response or misreading of the economic factors that affected market behavior towards innovation. In order to survive in a globalized society and in a universe as a whole, we need to perceive change for what it is in the natural order of things. We need to recognize and study the techniques to become part of that natural order so that the organization survives and succeeds in any tempest of change. The harsh truth is that change is an accelerating phenomenon in the 21st century, a continuing process, which is here to stay.

The fundamental problem with bringing about organizational change is that people want things to stay exactly as they were. The crucial issue of success depends on a time and profound systemic change focusing on the challenge and the response time. Most strategic planning tends to concentrate on gaining a bigger slice of an existing pie.

Understanding the role and responsibility of the organization in the context of a dynamic environment is absolutely critical, much like a fighter plane flying at high speed around a mountainous circuit where extreme weather elements and changing direction are throwing up dramatic challenges to survival every second. The bottom line is that whether one is offering a product or a service to meet either a demand or supply niche factor analysis must be carefully considered.

Is International Trade and Commerce separate from Economic Theory?

Alfonso Llanes, Master Degree in International Development

Answered just now

If there is a point on which most economists agree, it is that trade among nations makes the world better off. Yet international trade can be one of the most contentious of political issues, both domestically and between governments.

In one of the most important concepts in economics, David Ricardo observed that trade was driven by comparative rather than absolute costs. One country may be more productive than others in all goods, in if it can produce any good using fewer inputs of capital and labor than other countries to produce the same good. Ricardo’s discernment was that such a country would benefit from trading by its comparative advantage—exporting products in which its absolute advantage was greatest and importing products in which its absolute advantage was comparatively less.

Trade brings dislocation of firms and industries that have competitive disadvantage. These firms face difficult adjustment because of more efficient foreign producers and often lobby against trade. So do workers which become social barriers and often lead to import taxes or tariffs and quotas to raise the price or limit the availability of imports.

Although, international trade has an economic component a student of the discipline must also be verse in international finance, banking, exchange rates and all the measurements use to assess the economic health of a nation. Both disciplines have evolved into more technical ways of building models for study, mainly, complex matrices of inputs and outputs for simultaneous analysis. More recent models include Artificial Neural Networks (ANN) using Bayesian statistics and probabilistic models.

One must bear in mind that both disciplines require intensive study of mathematical modeling and interpretation, However, international trade also includes the study of political and social sciences.

Why is managerial economics normative?

Normative economics is a branch of economics that states value for normative decisions about economic fairness. Its emphasis is on the result of the economy or what the objectives of public policy should be.

Positive economics states an economic issue and normative economics provides the numerical-value-based solution for the posed problem.

Different economists view the subject matter of managerial economics in different light but their conclusions have many features in common.

Managerial economics is concerned with decision making of economic data. It is concerned with identifying different choices and allocating resources.

Managerial economics is goal oriented as it targets maximum achievement of objectives and the way decisions should be made by the manager to achieve the ultimate solution to a problem.

Since managerial economics is a newly formed discipline, no uniform pattern has been adopted and different authors treat the subject in different ways. Nonetheless, the following topics are regarded as the range of the subject of managerial economics.

Relationship of managerial economics with other disciplines:

1. Analysis of demand data and forecasting

2. Analysis of cost and production

3. Analysis of pricing decisions and policies

4. Profit management and investment

5. Capital management and finances

6. Linear programming and theory of games application

Managerial economics has become increasingly mathematical in character. Businesses contend with various concepts which are measurable and analyzed by mathematical means such as statistics, probability and more recently neural networks of decision trees or probabilistic nature. The use of mathematical logic provides clarity of theories. It also provides a systematic frame of reference where quantitative relationship can be analyzed. Mathematics, therefore, is of indispensable help to managerial economics. The major problem confronting businesses is to minimize cost, maximize profit or optimize sales. To find out the solution for the overall problems, mathematical concepts and techniques are extensively used. Mathematical techniques like linear programming, games theory and so on help managerial economists to solve many of our societal problems.

Statistical methods provide a comprehensive base for decision-making and help the corporation to achieve the objective without much penalty. Statistical tools are a must for finding solutions of managerial problems. Managerial economists make use of various statistical techniques like theory of probability, co-relation techniques, regression analysis etc. in various business situations and modeling techniques.

Managerial economics has emerged as a special branch of knowledge in tandem with traditional economic theory in order to enhance the decision makers at various levels of a firms operation. Economic notions such as demand, costs, sales and its corresponding data analysis assist in applying models to the solution of problems in day-to-day business operation in a more scientific way.

Why do trade barriers exist?

Governments impose trade barriers in order to achieve economic, political and social goals. Whether these measures stand the test it depends on many economic factors.

· One banner is to protect domestic labor from noncompetitive foreign labor costs. This is probably the issue that holds more water among with the constituents of policy makers.

· Another argument made is that it improves trade deficits which many a time deprives people of lower priced or better quality goods from imported merchandise.

· Domestic manufactures argued that they need protection from imports in order to have the incentive to invest in the local economy in plant and equipment to replace imports.

· Aging and inefficient domestic industries demand government protection to prevent lower semi-finished goods from entering the production process by means of anti-dumping regulations.

· A government argument made is that it would increase revenue by imposing taxes and tariffs to imported merchandise.

· Another not uncommon way to disguise trade barriers is for a government to subsidize a particular domestic industry. Subsidies make domestic goods cheaper to produce than in foreign markets.

In general, most trade barriers are based on the principle of imposing some kind of cost on imports that raises the price of the traded products. When nations impose trade barriers against each other, it can soon bring international commerce to a halt resulting in a detriment for all.

Georgetown University Professor Marc L. Busch and McGill University Professor Krzysztof J. Pelc note that “modern trade deals are long and complex because they often tackle non-tariff barriers to trade, such as different standards and regulations, in addition to tariffs. Due to steadily decreasing tariff barriers since WWII, countries have become increasingly likely to enact trade barriers in the form of non-tariff barriers. National firms often lobby their own governments to enact regulations that are designed to keep out foreign firms, and modern trade deals are one way to do away with such regulations”.

• Trade barriers are mainly imposed on low technology manufacturing and agricultural goods. Industries such as textile mills, clothing manufacturing and footwear are the most common goods which are protected by trade barriers.
• Trade barriers are most criticized for the effect they have on the developing economies of the world. Developed countries call most of the shots on trade policies; goods such as crops that employ millions of people on developing countries still face high barriers. Trade barriers such as subsidies for mechanized agriculture lead to overproduction and dumping on world markets, thus, lowering prices and hurting poor-country farmers. Tariffs also hurt under developed economies that must depend on low prices for raw commodities and high costs for labor-intensive processed goods. The Development Index and the Global Competitiveness Index (CGI) are measures of the effect that current trade policies actually have on the developing world. Another negative aspect of trade barriers is that they result in limiting choice of products to people that must pay higher domestic prices and accept inferior quality. Non-tariff barriers include quotas, regulations concerning product content or quality, and other conditions that obstruct imports. One of the most commonly used non-tariff barriers are product standards known as ISO Standards.

The law of one price is the foundation of the purchasing power theory (PPP).

· This implies that given a currency the price of a good is the same wherever it is sold based on that chosen currency.

· It states that under free competition and in the absence of trade impediments, a good must sell for a single price regardless of where in the world it is sold.

· Currency could appreciate against other currency depending on relative comparison of PPP, GDP growth, inflation.

Theory of Purchasing Power Parity (PPP)

• The exchange rate between two counties’ currencies equals the ratio of the countries’ price levels. The theory asserts that all countries’ price levels are equal when measured in terms of the same currency; however, the empirical support for (PPP) and the law of one price has been weak in recent data.

• The prices of identical commodity baskets, when converted to a single currency, differ substantially across countries. Trade barriers can be of non-trade able nature such as economic size GDP/GDP ratio, nonetheless, this ratio is equivalent to comparing apples and oranges between an underdeveloped economy and a developed one. Notwithstanding, a comparison between apples and oranges can be made but then each economy will have to be broken down into individual components in order to understand the disparities on the aggregate components of each country. The following table shows the most common indicators use to measure the economic performance of a given nation.

GDP Growth Rate

Unemployment Rate

Inflation Rate

Interest Rate

Consumer Price Index CPI

Government Debt Current Account Balance of Trade Government Revenues

Government Debt Government Debt to GDP Government Spending To GDP

Capital Flows Tourism Revenues Crude Oil Production

Producer Prices

Prices Export Prices Import

CPI Transportation

Credit Rating to GDP Gold Reserves

Terrorism Index

COMMON MEASURES OF ECONOMIC PERFORMANCE

Departures from free competition

· The greater the transport costs, the greater the range over which the exchange rate can move.

· Pricing to market occurs when a firm sells the same product for different prices in different markets.

· It reflects different demand conditions in different countries. In general, interest rate differences between countries depend not only on differences in expected inflation, but also on expected changes in the real exchange rate.

· The failure of these propositions in the real world is related to trade barriers, departure from free competition and international differences in price level measurement.

· The Fisher effect is the proposition made by Irving Fisher that the real interest rate is independent of monetary measures, specifically the nominal interest rate and the expected inflation rate.

For example:

A deposit of $100 is made in a bank that is paying 5% interest per year. This would mean that by the end of the year the $100 would be worth $105. However If the inflation rate is 3% per year that means the real interest rate is nominally 2% for the year. Moreover, if the inflation rate is 6% per year, it means the original $100 is only worth $99 by the end of the year.

Production theory

production efficiency

factors of production

average productivity

marginal productivity

Total productivity

Production function

inputs

stages of production

diminishing returns

shifts of production function

outputs

Cost theory

opportunity

accounting

transaction

sunk

marginal

Theory of value

long-run

average

long-run

Production function

long-run

production

efficiency

return to scale

FOREX or the foreign exchange market has two tiers: the inter bank or wholesale market, and the client or retail market. Individuals using banks and non bank services comprise foreign exchange dealers, firms and the general public. These banking services include commercial and investment transactions, speculators and arbitragers, central banks and treasuries, and foreign exchange brokers. Currency exchanges also provide the platform for making cross rate exchange between two currencies, calculated from their common relationship with a third currency.

Regarding international trade, why do two trading banks in different countries use a 3rd bank to handle transactions?

Most U.S. exporters employ letters of credit (LCs) and documentary collections (DCs), the two most important trade finance tools and effect transactions through the international organization known as Society for Worldwide Inter-bank Financial Telecommunication (SWIFT). This organization is the global provider of secure financial messaging services.
Typically, international trade is conducted by two but many a time by three banks for risk minimization of the international transaction.
Issuing Bank
The Uniform Customs and Practice for Documentary Credits allow the issuing bank a reasonable amount of time after receipt of the documents to examine them and to honor the letter of credit by making the specified payment to the beneficiary. Then the issuing bank completes the transaction by receiving reimbursement from the bank customer for whom the letter of credit was issued.
Advising Bank
Also, it is the responsibility of the advising bank to make sure that the appropriate documents are collected and sent to the issuing bank.
Confirming Bank
Usually, the confirming bank is also the advising bank, but this is not a requirement, and the functions can be separate. To cover the risk of the issuing bank not paying, an exporter may have a bank in its own country confirm the letter of credit, in which case the confirming bank agrees to pay the exporter if the issuing bank defaults.

Why does the competition sometimes price the same?

Price or pricing is probably one of the most difficult issues to resolve in the theory of economics. Transformation from a raw material to a finish product goes through several stages of pricing which is finally reflected in the ultimate price to the consumer at the checkout counter.
How these prices are set is the quintessential question of modern economic systems. It doesn’t matter if the system exists in a controlled economy where the state controls all the means of production, a semi-controlled system where the means of production are shared by public and private sectors or a market economy where the means of production are left entirely to the market. Today, a pure market economy doesn’t exist anywhere because production leves is determined by the market but regulated by the government in all of its micro and macro stages of production.
There is a classic story about “price wars” that is set between two stores one across from the other selling a single item which is discounted every day when one store advertises it’s ask price the other bids it down. At the end, the losing party comes over and offers to sell to its competitor and end the war but wants to know how his competitor could sale below cost and stay in business he asks? I simply stole from your warehouse the other replies. In the short term, price wars are good for buyers, who are advantaged by lower prices.
Characteristically, the smaller, thinner margin firms cannot compete and must go out of business. The remaining firms absorb the market share lost by competitors. However, with fewer competitors in the market, prices tend to increase, and more often than not, prices end up higher than before the price war started resulting in a disadvantage for consumers.
What triggers price wars?
Oligopoly: If market segment is an oligopoly (few competitors), the actors will closely monitor each other's prices and be prepared to respond to any price cuts.
Penetration pricing: A new entrant to the market will most likely offer lower prices than established market prices.
Product differentiation: Some products are perceived as commodities, where there is little to choose between competitors-- like airline travel --and price is the main competing factor.
Process optimization: sellers may be incline to lower prices rather than shut down or reduce output if they wish to maintain an economy of scale. By the same token new processes may make it cheaper to manufacture the same product.
Predatory pricing: A competitor with a healthy bank account may intentionally lower existing prices in an attempt to collapse competition in that market.
Pre-Bankruptcy: Firms near bankruptcy will probably reduce their prices to increase sales volume and provide enough liquidity to survive.
Product competition: A competitor might gain market share by selling a product alternative at a lower price than the established product. This method of breaking into a new market is better than trying to match the prices of those already in the market.
Price discount: Discount pricing takes place when the merchant offers discounts in a variety of forms - quantity, rebates, loyalty rebates, seasonal discounts, periodic or random discounts and other questionable methods.
In financial modeling pricing is one of the four P’s component, the other 3 being product, promotion and place but price is the only revenue generating element among the four Ps, the other 3 belong on the marketing side of the ledger.
Some of the literature available on the subject of pricing includes “The Strategy and Tactics of Pricing”, by Thomas Nagle and Reed Holden outline nine "laws" or factors that influence how a consumer perceives a given price and how price-sensitive they are likely to be with respect to different purchase decisions.

Why do we no longer worry about the balance of payments like we used to back in the 60's?

Alfonso Llanes, Master Degree in International Development

Answered just now

Even though the terms are used interchangeably current account and balance of payments deficit— the balance of payments is the sum of all transactions between a nation and all of its international trading partners. The U.S. current account deficit is $469 billion and the United States' GDP was estimated to be $18.46 trillion in 2016.

These amounts converted all to billions gives: 469/18460=.025 which is a very small size of the total economy. The question today concerning the balance of payments is answered in part by applying this macroeconomic ratio. Globalization has greatly influenced how we view the new economic indicators associated with globalization and how we measure the differences in trade between countries, corporations and individuals. There are a current set of components used by governments to institute trade policy in a dynamic world economy where treaties agreements and unions take place in modern world commerce.

Import Deficits for Future Growth

Today, economists assert that deficits do not matter if the excess of imports is financing future economic growth. Even though importing capital goods may increase the trade deficit initially there will be a longer term benefit in terms of using these capital imports to increased domestic production and exports. As long as GDP is growing faster as an annual percentage in real terms than the current account deficit the deficit will not be a problem.

The value of the dollar these days depends much more on the supply and demand of financial market’s flows. The currency used to buy and sell goods and services represents a small fraction of daily currency transactions. Trading in foreign exchange markets averaged $5.1 trillion per day in US dollars, the total 2016 U.S. trade with foreign countries was $4.9 trillion for the entire year!

In the old days, capital markets were restricted through exchange controls, most currency transactions were used to facilitate trade. A current account deficit meant that the importer country had to demand more foreign currency to buy imports. Export prices fell and import prices rose, relatively, which helped solve the trade problem, but the higher import prices pushed up the inflation rate and thus the relative size of the deficit.

The Exchange Rate

An excessive current account surplus will eventually cause the value of the currency to rise. As was stated above trade in goods and services accounts for a much smaller proportion of currency trading these days, significant and prolonged surpluses and deficits will eventually affect the exchange rate.

If a country has a large current account surplus (like Japan) then domestic consumption is being diminished. It’s comparable to being a saver rather than a borrower. The saver probably has a much more secure future with savings. The borrower is borrowing to spend which leads to consumption today in exchange of hardship in the future.

Effect of Currency Devaluation

This involves reducing the value of the currency against other currencies like selling dollars in the open market would cause the value of the dollar to fall. The theory is that if there is devaluation in the currency, the price of imported goods will increase and the quantity demanded of imports will drop. It follows that exports will become cheaper and there will be an increase in the quantity of exports.

A big problem with devaluation is that it can lead to imported inflation where imports will be more expensive. Also, higher inflation can reduce a country’s competitiveness. As a result the improvement to the current account might only be temporary, rendering monetary policy with two conflicting effects.

Fiscal Policy for Deflation

An alternative to using monetary policy is to apply fiscal policy where a government could for example, increase income taxes. This action would reduce consumer discretionary income and lessen spending on imports. The advantage of fiscal policy is that it would not have any effect on the exchange rate while improving government finances.

However, this policy would conflict with other macroeconomic objectives by lowering aggregate demand which is likely to cause higher unemployment. This would discourage a government from risking higher unemployment just to reduce a current account deficit. Increasing interest rates would reduce spending on imports and improve the current account but, higher interest rates cause an appreciation in the exchange rate – a catch 22— of worsening the current account. If the economy is growing strongly, a rise in interest rates may not actually reduce consumer spending because income growth is high and confidence high, so the government has to act by weighting conditions as they occur.

The positive argument about deficits on trade is the main reason for the current account deficits that it allows consumers' standard of living to increase benefiting with the lower price of imported goods like new digital TVs, computers, refrigerators, washers, clothing and so on that are imported at a lower price than locally produced.

Lastly but of Personal Importance is Lower Wages

A policy used by many Eurozone economies facing a large current account deficit that cannot devalue within a single currency market is to reduce wages. Lower wages will reduce costs of production and improve competitiveness. Nonetheless, lower wages will also lead to lower aggregate demand and could lead to deflation and slower growth.

By not increasing real wages in relation to the value of the dollar (which has been the economic reality in America) it is also known as internal devaluation. By attracting capital inflows to a safe economic haven renders capital account surpluses, making the current account deficits easily financed which benefits Wall Street but not the salaried employee. The announcement of trade figures in the 50s and 60s, was as big as the announcement of the current Monetary Policy by the Fed on interest rates or money supply for the current quarter. If these figures were bad then it would have caused a run on the dollar triggering further problems for inflation. Today, not only the financial markets try to anticipate what the Fed is going to announce next but trade deficits are barely noticed and factored into any new policy because the focusing figure is the large difference in the ratio between trade deficit and GDP.

How does the Fed determine policy if asset prices are too high and wage growth is stagnant?

There is a substantial relationship between economic growth and the performance of financial markets where the stock market responds to futures in the economy not to its past performance.

Economists refer to this trend in financial markets as the difference between trailing and leading economic indicators. In essence, financial markets track leading economic indicators making projection of where the economy is headed. There are hundreds of economic indicators; but focusing on a few can provide important trends to make economic predictions.

For instance, unemployment rate in relation to full employment describes the curve consistent with what is considered full employment and wage pressures on the labor market. Financial markets will diligently review reports of jobless claims, the employment cost index and others statistics related to labor markets. Because labor costs represent roughly 70% of all production costs in the U.S., anything that leads to higher wages will mean higher production costs and more likely than not passed on as higher consumer prices of goods and services. Even small changes in any of these indices can send financial markets into turmoil.

In Economic theory the cost of production measures prices of inputs such as labor and raw materials costs to determine how those inputs affect the final price of producing goods.

Commodity production such as steel, paperboard, copper agriculture is at capacity, logjams will occur if additional demand increases for these commodities. Once all of the available capital is in use, output can only be increase by increases in capital or labor or both are added. This increases production costs, that in turn must be passed on to the users of these commodities and finally to the consumer of the finished good. Other indicators such as factory orders and durable goods orders can provide signs to the direction of commodity prices in the future.

The Producer Price Index (PPI) is a very useful leading indicator of price indices. The PPI tells us about changes in input prices that production is paying. Increases in the PPI are soon passed to the Consumer Price Index (CPI).

Positive variation in firm’s inventories indicates consumer demand for goods remains strong. In contrast, growing inventory levels might signal a weakening economy, production slowdowns and worker layoffs until the trend changes for a season of consumer consumption. The current consensus for full employment is on or about 4%- 4.2%.

The Federal Reserve Bank will raise interest rates when inflationary pressures are rising, or, if economic growth is weak and inflation low, the Bank will lower interest rates. Financial firms try to guess what the Fed’s next move will be in a a given a set of economic indicators and don't wait for the actual move always trying to make educated guesses and act as if the Fed’s will actually raise, lower or leave interest rates unchanged.

The reason is explained by the inverse relationship of bonds to market interest rates. Interest Rates have an inverse effect on the stock market as well. Rising rates almost always lead to lower stock prices as the overall market drops.

Economic theory also makes important distinctions that separate one market scenario from another:

· The amount of sluggishness in the economy, or in contrast how close the economy is to full employment and full use of its productive capacity for example at capacity utilization of 84%.

· The ratios between the amounts of growth-rate-of-aggregate-demand to aggregate-supply-growth. Aggregate supply growth is constant from year to year and reflects the economy's supply side growth of approximately 3% which equals:

Measuring a National Economy

GDP = C + I + G + NX

GDP, output, total income, total expenditure

C = consumption

I = investment

G = government purchases of goods and services

NX = export – imports

GDP: = The market value of final goods and services, newly produced within a nation during a fixed period of time.

Aggregate demand: = is altered by changes in fiscal policy (taxes (T) and government spending (G) and changes interest rates (r).

Stagnation of Wages Causation

Weak wage growth has had multiple reasons that can be traced back to the 1970′s. Historical statistics indicate that from 1948 until the early 1970′s, wages rose together with productivity. Nonetheless, since 1973, productivity has grown 72% while wages are up by merely 9%.

Income inequality has had an even wider gap. The top 5% of workers saw their wages increase by 60% since 1973 but the top 1% gained a 138% increase. Today, Fortune 400 CEO’s earn 296-times the average American wage—up from 24-times in 1973.

Globalization has been blamed for the decay on wages and on the sharing of productivity wealth but the catch in economic terms, is that cheap imports have provided Americans with lower prices offsetting somewhat the dysfunctional growth in wages.

Moreover, if the US takes a protectionist path, it would contract trade and push up the price of imports. Protectionist measures such as tariffs would negatively impact economic activity and diminish corporate profits. Tariffs are likely to encumber, not help, wage growth. Income inequality is also a tough fix.

A major reason for income inequality is the Federal Reserve’s ease with monetary policy. Thirty-five years of sinking interest rates and multiple spells of asset purchases have inflated asset prices but it has done little to increase wages.

What are some cyclical economic events?

Any cases where a series of events tends to happen every year, 5 years, 100 years, etc.

Alfonso Llanes, studied at Florida International University

Answered just now

Economic variations are the periodic lows and highs as a measure of economic activity. These include production levels, distribution, sales unemployment and inflation. Moreover, economic fluctuations affect wages, consumer demand, and the prices of raw materials and are categorized by its economic indicators. These variations can be seasonal; cyclical or irregular and could last for years.

Economic Indicators

Early warning indicators for business managers such as income growth usually follows higher consumer spending, which leads to increases in business spending. Unemployment or under employment can mean low consumer spending, leading to lower business revenues and profits. Inflationary forces drive up prices of raw materials and wages, increasing production costs. Inflation may lead to higher interest rates, which usually increases borrowing costs and decreases consumer spending as well as economic activity overall.

Seasonal Economic Fluctuations

Seasonal economic fluctuations are short-term variations of economic activity that generally follow a consistent pattern. For instance, amusement parks income rises during the summer months when there is activity in those sectors. Retail inventories commonly rise during the holidays as retailers prepare for these particular shoppers. In areas with harsh winters, construction slows down during the winter months and picks up during the summer. It follows that the businesses which supply these industries must plan for seasonal instabilities and have enough cash reserves to get them through the slow seasonal periods.

Cyclical Economic Fluctuations

Cyclical fluctuations are natural alternating periods of contraction and expansion in an economy that can than can last for several months or even years. Consumer and business demand falls during contraction and rises during expansion. Businesses and industry react to contractions by cutting back on employment, reducing expenses and delaying capital investment. A manufacturer may reduce the number of production shifts, while a retailer may delay expansion of the business. The reverse is true during economic expansion as consumer spending increases, leading to higher demand for products and services which results in production increases and new employment, which can also lead to higher prices and supply shortages.

Irregular Economic Fluctuations

Irregular economic fluctuations result from unusual events, such as war floods, strikes, civil conflict, bankruptcies and terrorist events. However the impact of these instabilities is usually limited to a determined industry or market. A flood may affect the distribution capability of goods within a specific region. In contrast, a major natural disasters or civil conflict can affect the supply chains of several industries.

How does government expenditure help increase economic growth?

Alfonso Llanes, studied at Florida International University

Answered just now

Macroeconomics of Taxation and Government Spending

The government has the exclusive function of finding the right balance between taxation and government spending for the purposes of macroeconomic fiscal policy. Government economic actions are not without consequences. When governments increase their spending, reduces available funds and increases the cost of capital, leading many businesses to abandon expansion projects. Likewise, when a government spends in excess of taxation a deficit spending occurs and must borrow funds to finance that deficit. Taxation can cause problems as well. Taxes tend to shift the balance for goods and services away from its optimum level, and thus, reducing consumer and producer surpluses.

Keynesian economics and new Keynesian economics are the various theories about how economic output is strongly subjective by aggregate demand as a total of spending in the economy.

John Maynard Keynes argued that the solution to the Great Depression was to stimulate the country ("inducement to invest") through some combination of two approaches:

Keynes outlined two approaches independent of each other or applied together to get a stagnant economy to evolve-- monetary policy with a reduction in interest rates and a fiscal policy with government investment in infrastructure by deficit spending.

Keynesian economics was the standard economic model during the latter part of the Great Depression, World War II, and the post-war economic expansion from 1945 to 1973.

The theory follows than when interest rates are low businesses and consumers borrowing cost is decreased, uneconomic investments become profitable, and large consumer sales which financed by debt like houses, automobiles, and appliances become more affordable. This is the function of central banks to guide interest rate through a variety of mechanisms called monetary policy.,

Expansionary fiscal policy consists of increasing net public spending, which the government can affect by taxation, deficit spending or both. Investment and consumption by government raises demand for production and employment, reversing the effects economic imbalance.

Contrary to some critical versions of it, Keynesian economics does not consist merely of deficit spending. Keynesianism recommends counter-cyclical policies. Such as raising taxes to cool the economy and to prevent inflation when there is abundant demand-side growth, and engaging in deficit spending on labor-intensive infrastructure projects to stimulate employment and stabilize wages during economic downturns. There is a counter economic argument for this recipe made by classical economists that one should cut taxes during budget surpluses, and cut spending – or, less likely, increase taxes – during economic slowdown.

How can one be the best export manager?

Alfonso Llanes, Master Degree in International Development

Answered just now

Posting from: Export Control Compliance Manager Bentley Systems

Bentley Systems is seeking an Export Control Compliance Manager. This role primarily involves managing the Company’s global export control compliance program and providing legal advice with respect to U.S. export control laws and regulations. The candidate will undertake a wide range of responsibilities including interpretation of US export laws and regulations, business counseling, applying for all necessary export authorizations, developing compliance policies and operating procedures, and providing training to employees.This position will report to the Compliance Director. The successful candidate will have at least 4 years relevant export compliance and experience. If this sounds like you, we should talk!

Location: Exton, PA

Job Code/Req ID: 14081

Key Responsibilities:

Conduct training on export compliance and other related topics to internal clients and Legal and Compliance colleagues.

Provide practical advice export compliance, including on aspects of certain transactions, contracts or other third party relationships involving the Company.

Conduct prohibited party screening (Denied Persons, Specially Designated Nationals List, Debarred Parties and the Department of Commerce Entity List, etc.).

Develop and maintain applicable policies, procedures and other internal controls.

Assist in the review of trade control clauses in international business contracts, provide recommendations and negotiate export control issues with customers and vendors.

Conduct prohibited party screening (Denied Persons, Specially Designated Nationals List, Debarred Parties and the Department of Commerce Entity List, etc.).

Review software, hardware, and related technologies for EAR encryption requirements, classifications, and reporting.

Proactively track legislative, regulatory and administrative developments and educate clients regarding their impact.

Draft opinions and materials to explain export compliance issues and considerations to clients.

Periodically post internally updates on significant issues of interest, guidelines, precedents, templates, etc., for use by other colleagues.

Build and develop effective working relationships with internal clients and other Legal and Compliance colleagues.

Continue to develop expertise in export compliance and other international trade topics through on-the-job training, CLE and workshops.

Qualifications:

Juris Doctorate degree and 4 years related experience.

Law firm and/or in-house legal experience in export compliance and extensive experience in the analysis, interpretation and application of export control laws and regulations.

Direct knowledge of U.S. export regulations including experience in their business application and the preparing or reviewing of export authorizations, advisory opinions, commodity and jurisdiction requests, and voluntary disclosures.

Experience with drafting compliance policies, communications, and training materials.

Excellent written and oral communication skills and the ability to relate and communicate with employees at all levels of the company.

Ability to travel domestic and international (

* This position requires access to export controlled articles, technical data, technology and services. U.S. citizenship, U.S. legal permanent resident status, protected person status under 8.S.C. § 1324b(a)(3), or U.S. government export authorization is required for access to these controlled articles, technology, data and services.

About Bentley

Bentley Systems is a global leader in providing architects, engineers, geospatial professionals, constructors, and owner-operators with comprehensive software solutions for advancing the design, construction, and operations of infrastructure. Bentley users leverage information mobility across disciplines and throughout the infrastructure lifecycle to deliver better-performing projects and assets. Bentley solutions encompass MicroStation applications for information modeling, ProjectWise collaboration services to deliver integrated projects, and AssetWise operations services to achieve intelligent infrastructure – complemented by worldwide professional services and comprehensive managed services.

Founded in 1984, Bentley has more than 3,000 colleagues in over 50 countries, more than $600 million in annual revenues, and since 2008 has invested more than $1 billion in research, development, and acquisitions.

Application

If you are interested, please apply to this link: https://career4.successfactors.com/sfcareer/jobreqcareer?jobId=14081&company=bentleyprod&username=