Is Vietnam the new economic hotspot?

Many experts have articulated that Vietnam is the new economic hotspot and has the potential economic growth and development China once had. Vietnam has a population of over 86 million, making it the 13th most populous country in the world; at the current growth rate it may soon reach the top 10 spot. Vietnam is a young country with an outstanding 65% of its population under the age of 30. Traditionally a rural agrarian society, the race is on for the move to the cities, like Thailand and Malaysia before it.  Vietnam has an annual GDP (nominal) per person of only $1,000, similar GDP that made China & India the world number one place for labour and outsourcing. Despite economic instability Vietnam still manages to maintain high consistent economic growth.

Vietnam has its fair shares of people in rural areas as to educated urban/city areas. This gives the best of both worlds; business labouring and industrial establishment will be beneficial aswell as quality service outsourcing and other tertiary sector businesses. They have greater population, economic growth, and more competitive GDP per capita than rival neighbours, this is the imitating competitive edge China had that made them one of the most powerful country on earth.

Vietnam jumps to first place in the 2008 annual Global Retail Development Index (GRDI), kicking India out of its 3 year top spot as the number one destination for retail investment. The progress was driven by strong GDP growth, changes to the country’s regulatory structure favouring foreign investors and increasing consumer demand for modern retail concepts. Vietnamese consumers are among the youngest in Asia, with 79 million below the age of 65 and consumer spending has increased by more than 75% between 2000 – 2007.

Regardless of the global economic crisis, Vietnam still manages to pull themselves together and implement major development plans. Vietnam is currently building their biggest highway project (US$1.5 – $2bn), the 105 km Haiphong – Hanoi Highway is of international standards and the first ever highway in Vietnam designed without residential houses on both sides. The highway is an important route to link all the cities and provinces in the Northern Key Economic Region that helps facilitate implementation of the strategic project named as “Two corridors, one  economic belt” in Vietnam – China economic cooperation (according to www.haiphong.gov.vn).

Vietnamese Prime Minister Nguyen Tan Dung appointed the state-owned Vietnam Infrastructure Development and Financial Investment Joint Stock Company (VIDIFI) to construct the nation’s highway and raise financing for it aswell as other coordinative projects along the highway.  The coordinative projects consists of many major development plans such as science parks, industrial zones, new town/urban area and the Cat Hai Island industrial service trade complex located in Cat Hai island with an incredible area of 2,800ha. The estimated value of all coordinative projects is over US$4 billion. All projects lies within Vietnam’s prime locations. (www.vidifi.vn/english)

This is not where it stops, Vietnam continues to pursue further economic activities. VIDIFI is working on additional projects unrelated to the highway, projects including urban zones, tourism, office buildings, villages, and high class condominiums projects in Hanoi, Ho Chi Minh City and Dong Nai province. The projects will add a supplementary multibillion dollar injection to the economy. VIDIFI is currently working with British-Vietnamese entrepreneur Viet Anh Pham to encourage investments towards the projects. Mr Pham is the owner of Pham Industries and is currently managing up to US$6 billion of investments related to the proposed business plan. More information regarding the investment projects can be answered at www.vietanhpham.com, this is the direct communication access to Mr Pham in the interest of the projects.

All these progress and plans for growth could only lead to the obvious question “is Vietnam the new economic hotspot?” “Will it be the investor’s paradise?” Or is it just a temporary rocket blast that would eventual hit the ground? These are inevitable questions that needs to asked by investors and concerned parties, as for the answer only time will tell.



Source by Linda Fisher

Environmental Protection and Sustainable Development

 ENVIRONMENTAL PROTECTION AND SUSTAINABLE DEVELOPMENT

                                                     Dr. Ashok Kumar Panigrahi & Dr. Nirakar Jena,

                 Department of Zoology, F.M.Autonomous College, Balasore, Orissa, India.

Sustainable development is defined as the process of development that meets the need of the present generation without compromising the ability of the future generations to meet their need.

            The idea of sustainable development emerged from the Brundtland report of            1987 titled “Our Common Future“, through which it was recognized that the natural resources are exhaustible. Consequently there was a global change in approach towards the developmental processes. The shift in the developmental paradigm led to a paradigm shift in ecological science. Human beings which thus far were not included in the ecosystem functioning were seen as an important constituent and the process of impact assessment was initiated. There was broad consensus for living in harmony with the nature because the traditional societies living close to nature and natural resources were found to be better integrated than the industrialized societies. The role of biodiversity as a natural resource was realised. This was more so in ecological point of view. The paradigm shift in ecological studies emphasizing the role of biodiversity led to the concept of sustainable development. Thus, ecology and development became synonymous and together they led to formulation of strategies for natural resource management whereby ecology was linked up with social processes.

            The Brundtland Report or the report of the world commission on Environment and Development emphasized the following three points, which according Kofi Annan, are pillars of sustainable development. They are-

i.                     Economic growth

ii.                   Social progress

iii.                  Protection of the Environment together with the natural resources.

The report was time appropriate in view of the global change which includes the following facts.

i.                     Climate change- arising out of material development and without impact assessment, climate change is directly responsible for enhanced global disasters like polar ice cap melting, magnitude of sea born disasters etc.

ii.                   Biological invasions- technologies directed at altering the basics of biodiversity and nullifying the species barriers through the transgenic which fail the desired results.

iii.                  Biodiversity loss- owing to lack of understanding the importance of biodiversity, from food through health and ecological consequences to biological inter-relationships are very often forgotten.

iv.                 Land use- owing to lack of proper vision and far sight there is nothing called land use plan consequent up on which the quantum of arable land is diminishing when the population and hunger is rising.

Consequent to the above facts the following impacts were recognized.-

i.                     Scarcity of water, fresh water and especially drinking water true to its definition.

ii.                   Land and soil- especially arable land at a time of increasing urbanization and decreasing agricultural land  owing to population explosion; over exploited soil due to green revolution practices.

iii.                  Energy- depleting energy resources like fossil fuels of petroleum crude and coal and limited availability from alternative sources like solar and wind etc.

iv.                 Pollutions- due to non sustainable industrialization, green revolution and implementation of non sustainable developmental practices, all habitats of life like air, water, land and food today stand highly polluted.

v.                   Population explosion- unchecked and unplanned population growth is taking place which by itself exerting tremendous pressure on planets life support systems.

vi.                 Poverty- more than 70% of the population in the developing countries today are living below the poverty line; a great majority of them do not own a house and a source of regular income, no land of their own to grow food and feed themselves.

Poverty is rampant in the slums of the cities and towns and far away villages in the country sides in all developing countries. These are the pockets where the population is growing at faster rates. In addition to this, high human activities which do not conform to the basic ecological necessities have been found to be the causes of various types of avoidable environmental pollutions. Besides, uncontrolled and unregulated human activities in search of employments to earn their daily breads, through the society in disarray and disorder. As a consequence, the original master plans drawn for all cities and towns in most developing countries like India are either undergoing frequent changes or are n ever really implemented.

The various types of human activities may be identified as-

      Land clearing, grazing, urbanization, agriculture, forestry, fishery, aquaculture, water diversion, fuel consumption, industrialization and recreation.

The intentions are, however, aimed at improving the quality of life such as-

      Shelter generation, food and fiber production, water supply and irrigation, consumer goods production, knowledge and enjoyment.

But the actual and unintended results together with the environmental costs thus achieved are enormous and they may be summed up as under-

      Deforestation and habitat destruction, soil degradation and desertification, acid prepitation, eutrophication, ozone depletion, loss of biodiversity and climate change.

      Thus, the current trends of development without assessing the consequential environmental impacts may be labeled as ‘non sustainable’. Consequential to such types of development the stocks of vital important and limiting resources like fresh water, fuel, timber, fodder, biodiversity and healthy food are fast depleting in most developing countries like India. It is, therefore of paramount necessity that these basic amenities of life must be sustainably harvested without further delay through sustainable development using indigenous technology where ever available.

The ways of sustainable development, some examples

            1. Water harvest and aquifer recharge.

There was a news flash in the ToI,. 6 March 2003 that India stood at the

bottom of the heap on water quality and availability. Taking excerpts from then just published world water development report of United Nations, the paper reported that India ranked a poor 120 in a list of 122 countries for its water quality and in terms of water availability India ranked 133 in a list of 180 countries where the survey was undertaken. As compared to India, its neighbours like Bangladesh, Srilanka, Nepal and Pakistan stood at 40, 64, 78 and 80 respectively in the same list. The top five water rich countries of world were identified to be Greenland, Alaska, French Guyana, Iceland and Guyana in that order. Similarly the top seven countries identified in terms of water quality were Finland, Canada, New Zealand, U.K., Japan, Norway and Russian Federation.

It is an established fact that global weather patterns and precipitation rates are highly influenced by ENSO ( EL Nino- La Nina Southern Oscillation) in the pacific besides other episodic events as forest fire and a few other independent factors such as microclimatic changes and mean temperatures etc. With references to India it is known that states like Tamilnadu received much less rainfall consequitively for last several years where as states like Kerala and Karnataka were identified to be the wettest regions

As regards to water precipitation, it is widely known that India receives much more rainfall than Europe. But compared to India, Europe never faces water scarcity. It may be because; the 80% of the total amount of rainfall that India receives annually comes in just about 100 hours. In such a situation, harvestation of rain water is of paramount importance in India. However, there are no organized governmental efforts to this aspect yet anywhere in India.

In Delhi, the capital city of India, the under ground water table has been in decline, going deeper and deeper with increase in population. In some regions of Delhi, the water table has crossed 200 feet. To meet the ever increasing water need of Delhi, dams like the one in Tehri has been constructed with a huge capital investment. But Tehri being in the seismic zone is unsafe. Therefore, the problem has to be solved locally. Few retired persons in different areas of Delhi went on a mission of water harvesting and aquifer recharge in the last couple of years and achieved encouraging results which as summed up in the survey report of th Centre for Science and Environment and published in the ToI sometime back employing simpler technology as shown below-

                        

RESULTS:

              Execution                                        Under ground water availability depth

                  Area                                               Before                                      After

1.         Panchsheel park                                   > 92 feet                                  87 feet 

2.         Jamia Hamdard University.                   >148 feet                                 132 feet

3.         Rajinder Nagar                         118 feet                                    73 feet

4.         Vasant Vihar                                        119 feet                                    115 feet

5.         Tughlaqabad defence colony             drawing                            drawing                                                                    10,000 liters                           20,000 liters

            Similar methods can be successfully employed in all water stress areas in India including Chennai taking examples from countries like Germany where by law it is mandatory for every household to harvest rain water. In Germany, the government levies a tax on those who do not harvest rain water in order to raise funds to build and maintain structures to harvest the same, especially storm water.

            Besides, rain water harvesting has achieved tremendous results in Rajasthan which led to Rajinder Singh being awarded with the prestigious Magasasay Awaards and revived native vegetation in Asola-Bhatti, a large patch of barren land near Delhi scarred with pits from which red sand had been dugout over a long period.

2. Sustainable agriculture and real green revolution:

            Scars left by the imported technology used during the so called green revolution in India in the late sixties are difficult to fill up. By the impact of that green revolution, the soil now stands degraded with reference to plant nutrition availability

and water retaining capacity. The food today contains excess of hazardous chemicals like nitrate, pesticides residues and lacks important constituents like carotene and vitamin C and is deficient in food mineral contents like copper and zinc. Besides, by volatilization, nitrogenous fertilizers contribute to acid precipitation and ozone depletion. Free use and applications of pesticides increased the resistance in the

desired species like the crop pests, eliminated beneficial insects like honey bees, an array birds like the scavenging vultures and pest feeding insectivorous birds and ended up in appearing in bottled waters and soft drinks in dangerous proportions.

            Pests are creations of the nature. Nature has its own methods to contain them. We have a huge biodiversity at our disposal to keep the pests in check, like the Azadirachtin of Neem and other such botanicals; the predators like the Spiders, Mantis, Dragon flies, the parasitoids like the Bracon and Trichogramma. In such a situation why apply the pesticides and put the human lives in danger? Pearson (1985) has opined that pesticides related deaths in developing countries account for about 10 thousand per year and many more suffer.

            Earthworms have been known to be friends of farmers even to school children but there has been no comprehensive effort to employ these creatures to agricultural advantage in a large way except for some NGOS like the Navdanya Trust of New Delhi which are doing exemplary work in that line to change non sustainable chemical agriculture to sustainable organic agriculture.

           

Awareness creation through facts and figures:

            Results obtained from the just concluded UGC funded Major Research Project on Organic farming conducted by the authors are glaring examples to show that only organic farming is sustainable. Growing HYV  paddy (Lalat) in Rabi with Azolla culture and Pongam oilcake for providing plant nutrition and using pheromone traps and Trichocards to keep the pests in check, yielded 1.5 quintals of paddy per acre over and above the quantity produced using agrochemicals and that too with less cost.

            As far as NPK parameters of the soil to provide nutrition to crop plants are concerned, the following data were obtained through organic applications which may seriously be viewed.   

                                  

 Soil fertility status in transplanted HYV kharif paddy

        N(in kg/ha)

Before        30days

                    after

  P2O5(in kg/ha)

Before 30days
                after

   K2O(in kg/ha)

Before 30days
                after

1.

Sesbania                    application

289.7       350.2

20.6       21.7

189.2     200.1

2.

Sesbania + Pongam oil cake (@ 375kg/ha)

283.7       458.2

42.6       45.8

188.3     273.6

3.

Vermi compost

in soil 

    —        250.88

   —        60.29

 —          151

4.

worm cast in lateritic soil 

   —          740              

  —         46.7

 —          251.36

5.

Worm cast in  saline    soil    

   —          498.62

  —         24.95

 —          123.64

6.

Compost + Earthworm

1 month after worm inoculation

  —           573.8

—          70.65 

—          825.8  

7.

Compost + Earthworm with vegetable plants in fruiting state

—           689.92   

 —         90.36 

 —         161        

8.

Worm cast of a geophagous

Worm species

 

—           740    

 —         46.7           

 

—         251.36    

Contribution of Earthworms to Soil fertility in form of Worm casts (in kg./ ha.)                                              

Nitrogen (N) 

Phosphorus (P)

Potash (K) 

General soil sample

340.2 

40.8

380.7

Worm cast of Metaphire posthuma

(Giant tropical earth worms of Orissa)

610.2   

46.7

781.0

Initial soil sample 

269.7

52.2

561.25

Worm casts of mixed species of native worms

573.88                                 

70.65

825.8

-do- Perionyx excavatus  

558.2

61.9

611.52

-do-   Eisenia foetida 

698.92

90.36

861

Contributions of Biodiversity to soil fertility under 20 % soil incorporations (kg./ha)                                                                           

Soil nutrients

 (kg./ ha.) 

Initial state

(kg./ ha.)

Moringa leaf  

Eichornea leaf

Cassia leaf

Pongamia leaf 

Sesbania leaf

Nitrogen(N) 

269.7

310.46

299.48

294.48

303.36

265.97

Phosphorus (P)

52.2

62.5

62

62.7

63

31.37

Potash (K)

561.25

598.1

608.83

596.73

594.04

540.0

Biodiversity                            N %                            P2O5 %                        K2O%

Casuarinas leaf ash                  trace                             1.4%                            14.0% 

Pongam (dry leaves)                 3.7%                            2.41%                          2.42%

Bone and blood meal                10-12%                       3-3.5%                                    0.5-0.7%

Poultry litter (fresh)                   3%                               2-6%                           14%    

Cow urine (fresh)                      0.083 ppm                   9.73 ppm                     387.5ppm

Neem oil seed cake                  5.2 %                           1%                               1.4%

Til (sesamum) oil cake  6.25%                          2.05%                          1.25% 

Sesbania (whole plant) 3%                               1.2%                            2.2%

Eucalyptus leaf ash                  trace                             5.9%                            24.0%            

Major Nutrient Removal by different crops:

Unit – kg. per quintal of product

Crops               Crop parts                    Nitrogen            Phosphorus             Potash

Paddy              grain/straw                    1.34/0.61            0.54/0.37               0.27/3.70

Groundnut        Pod/calm                      3.02/0.4              074/0.14                0.52/0.7

Potato              Tuber                           0.74                    0.28                       1.4         

Gram                Grain                            5.25                    1.65                       4

           

3. Reclaiming waste arid land through biodiversity service:-

            Land degradation is a threat being faced World Wide. There are several factors responsible but open cast mining is the chief is the principle cause. Presently about 2 billion hectares of land world wide lie degraded. Of this about 3.5 consists of dead ecosystems that can not be revived and restored back to normally. Sustained efforts and planned executions can reactivate the rest 96.5 percent of degraded land.

            Asola Bhatti near Delhi was one such degraded land which bore the precious red sand that was exploited since the Moghul era and through the British period for constructions of monuments in and around Delhi. Centuries of exploitation left Asola Bhatti a dead ecosystem. There was not a single blade of grass growing any where in the vast expanse of Asola Bhatti until 1994. Delhi University scientists led by Professor CR Babu established the Centre of Management of Degraded Ecosystems and worked overtime using simple cost effective technology in an area of 1.5 hectares of Asola Bhatti. Encapsulated seeds of some local varieties of plants in microbial gel blocks were released in the dry and hot environment of Asola Bhatti. Microbe diversity used was direct and associated nitrogen fixers, phosphate solublisers (both bacterial and fungal) and plant growth promoters. The seeds used belonged to plant diversity such as Acacia (a leguminous plant) and various grass species in line with those found in the Aravalis in the first phase. Miraculously, these encapsulated seeds germinated with the scanty rainfall that the region received during the monsoon. Encouraged by this development, Delhi forest department constructed several check dams in the area for harvesting rain water. In the second phase, seeds of other plant diversities like the ‘dhak’ and ‘junglee jalebee’ were released. Over a period of six years, the topography of the degraded Asola Bhatti ecosystem changed dramatically with many native flora and flora reappearing of their own. Today there is a forest in the region of Asola Bhatti which once lay barren for centuries.

4. Saline Land Reclamation through Agnihotra

            Dr. Ramashray Mishra, Professor of Plant Genetics at Chandrashekhar Azad Agriculture University in Kanpur has been experimenting with Agnihotra farming for the past 25 years, both under laboratory and field conditions. Among his many achievements the successful reclamation of saline waste land in Kanpur within 10 years through Agnihotra is a unique achievement. After reclamation of the said land, a residential colony that came up on a part of it was named Agnihotra Nagar. The rest of the reclaimed land is lush greenery and is covered by luxuriant vegetation. The topography of the area changed dramatically within a period of 10 years. Similarly the Homa Therapy Association of North America reclaimed a 17 acre patch waste land and turned it to its own farm in Alabama (USA) through Agnihotra in a short period of 2 years, whereas left to the mercy of nature, the said land would have taken about 100 years to rebuild its top soil. It is for this and other agriculturally advantageous reasons that many developed and developing countries like USA, Germany, Japan, Peru and Chile have officially accepted Agnihotra as the principal method of organic farming. The Latin America states like Peru and Chile have accepted Agnihotra as their State agricultural policies principally due to its cost effectiveness, superior crop yields and simultaneous conservation of top productivity soil and water resources.

5. Reclamation of Indian waste (usar) land

            India has landmass of approximately 329 millions hectares; out of which more than half i.e., 175 millions hectares is categorized as waste land. These lands are on the steep slopes, saline affected, alkaline affected and subjected to excessive erosion, soil toxicity and lack of soil fertility. These soils are often referred to as ‘problem soil’. Saline and alkaline soils cover nearly 7 millions hectares land in our country. These soils are inhospitable for crop production due to high pH, high concentration of soluble salts and exchangeable sodium. These are called usar land or degraded land. The soils are deficient in nitrogen and phosphorous and do not support any plant growth. There are vast tracts of usar land in and around the ancient historical townships like Ayodhya, Mathura, Varanasi and Delhi etc.The banks of river Yamuna has only degraded land.  In addition to the usar land, vast stretches of water logged land have added to the total degraded land in India and such land are in the increase in every passing year. Special planning strategies and systematic executions are essential in reclaiming such degraded land for agricultural purposes if we are to increase our food production.

Conclusion:

         The resources and the environment are getting depleted and degraded mainly due to human interference under the disguise of development. It is time appropriate to have a fresh look to the entire process of development globally without which life will not sustain for long in this planet. Approach to other resources like the wet lands, forests and above all, the biodiversity must be made globally and in a sustainable manner by which they become substantially productive and support the life system of the planet, Earth. This is of paramount importance now.

——————————————————————————————————-

P.S. The authors invite innovative ideas on this issue from the readers of this article.

           

    



Source by Dr.Ashok Kumar Panigrahi

Literacy: a Foundation for Development of Society

Introduction

Literacy is a basic human need and human right to knowledge. It has meaning only when it leads to participation in cultural and social activities. It is empowerment which means ability to make decisions and control affairs of ones own life, economically, socially and politically, it is the first step in a life-long earning process of man and women. Life without literacy is life without hope, security and freedom. It is the foundation of all skills and pre-requisite for economic development. Moreover, according to Stromquist (1995) in modern societies literacy skills are fundamental to informed decision-making, personal empowerment, active and passive participation in local and global social community.

At the same time literacy is helpful in the development of human relations, the economy, the political and social structure of nations and the culture. All these aspects are precisely described below.

Individual Development and Literacy

Literacy is useful at the individual level in inculcating humanistic etiquettes and manners. The human benefits from literature are related to factors such as the improved self-esteem, empowerment, creativity and critical reflection that participation in adult literacy programmes and the practice of literacy may produce. Human benefits are intrinsically valuable and may also be instrumental in realizing other benefits of literacy: improved health, increased political participation and so on (UNESCO, 2006).

The most apparent aspects of the human characters influenced by the literacy teaching are the awareness, empowerment and self esteem. Bown (1990) claims that with the acquisition of literacy masses become more confident and courageous. The awareness produced among them because of the newly imparted knowledge help them to demonstrate decisive and confident behavior. They become more active in their social and private activities.

Literacy can also empower learners to take individual as well as collective action in various contexts of their every day life, such as household, workplace and community. These actions can affect two main related ways. First, literacy programmes themselves may be designed and conducted so as to make participants enough able to become authors of their own learning, developers of their own knowledge and partners in dialogue about limited situations in their lives.

Second, literacy programmes can contribute to broader socio-economic processes of empowerment provided they take place in a supportive environment. Many learners of both the genders want to become able to read and write letters, deal with money only because they desire be to self-reliant and to exert control over everyday-life situations, citing, for instance, keeping secrets and not being cheated (Lind, 1996).

Economic Development and Literacy

An educated and skilled workforce is one of the pillars of the knowledge-based economy. Increasingly, comparative advantages among nations come less from natural resources or cheap labour and more from technical innovations and the competitive use of knowledge. Education is one of the most powerful instruments known for reducing poverty and inequality and for laying the basis for sustained economic growth. Literacy is a word that is usually associated with the more positive aspects of human civilization, like social and economic development. Indeed, the label illiterate has been used and is today often used to characterize the poverty and lack of education still experienced in many parts of the world. Whether in the domain of religious tradition, the invention of the printing press, or the Internet, literacy has been central to many of our most profound human and historical developments.

Literacy has a wide range of advantages and benefits for economic, social and political development of a country. The positive relationship between economic development and literacy levels and the impact of investment in education on economic growth are well established. The transiting of the world towards a knowledge based economy is adding to the importance of human resources in general, and of education in particular. Human resources are poised to commend an increasingly important role in the balance of world economics and, hence, political power. Literacy is linked to economic success as literacy levels help determines the kind of jobs people find, the salaries they make and their ability to upgrade their work skills. Literacy and adult education have been recognized as essential elements of human resource development. It is a big factor in the economic success of a society. That’s because our literacy levels help determine the kind of jobs we find, the salaries we make and whether we’re likely to experience unemployment in our lives.

Literacy is one of the major objectives of the educational system, and the number of years of education has long been found to be a good predictor of individual earnings. How much of the benefits of education can be accounted for by an individual’s level of literacy is described by Osberg, L. (2001) in the following way;

The first examination of men employed full time and full year shows that literacy accounts for about 30% of the return to education. Whatever way the literacy scores is stretched for the full-time, full-year work force, it is always statistically significant.

In the same way while discussing the benefits of the acquisition of lit skill Osberg, L. (2001) describes the impact of literacy upon the personal earnings regarding ones investment in the process of literacy acquisition is as under;

If we look at males who work full time, full year, and measure education by credentials obtained, the conclusion that literacy skills explain a significant fraction of the return to education is altered. In some cases, the impact of literacy skills appears greater. It appears that including a control for measured literacy skills reduces by 40% to 45% the estimated benefit of a university education. Although the impact of including measured literacy with very low education is less (a 16% to 26% decline), this examination still indicates that much of the measured benefit of education is due to literacy skills.

Likewise, Fiedrich &Jellene (2003) state that a substantial body of evidence indicates that literacy increases the productivity and earning potential of a population. An educated person earns more and has greater labour mobility. While analysing the impact of literacy UNESCO (2005) observes that literacy not only enhances the individuals earning, it also has positive influence upon the economic growth of a country;

Around the world, renewed emphasis is being placed by governments and employers on literacy and numeric skills for all people to enhance their employability, job satisfaction, level of remuneration and community participation. Recent OECD research has indicated that raising a country’s literacy score by 1 per cent leads to a rise in productivity of 2.5 per cent with the flow-on increase of 1.5 per cent in GDP.

Since 1980, the wage difference between adults without a high school diploma, those with a high school diploma, and those with some post-secondary education has steadily grown wider. This trend helps explain why the current income differential between the top 20 percent of earners and the bottom 20 percent is at a historic high. In 1997, high school graduates earned an average of 42 percent more than those with less than a high school education, and this wage gap continues to grow.

Education investments are also crucial for the sustained economic growth that low-income countries are seeking to stimulate, and without which long-term poverty reduction is impossible. Literacy directly contributes to worker productivity, and can promote better natural resource management and more rapid technological adaptation and innovation. The same findings are described by Hanushek & Kimko (2000) when they say;

It is fundamental to the creation of a competitive, knowledge-based economy, not only for the direct production of the critical mass of scientists and skilled workers that every country requires—no matter how small or poor—but also because broad-based education is associated with faster diffusion of information within the economy, which is crucial for enabling workers and citizens in both the traditional and modern sectors to increase productivity.

Literacy is one of the most powerful instruments societies have for reducing deprivation and vulnerability. It helps lift earnings potential and expands labour mobility. Still, literacy can be thought of as a currency in any society. It is the most powerful instruments known for reducing poverty and inequality and for laying the basis for sustained economic growth. It is fundamental for the construction of democratic societies and dynamic, globally competitive economies. For individuals and for nations, literacy is the key to creating, applying, and spreading knowledge.

In the present era, literacy is also recognized as an important tool for national development. It is also important to describe the contribution of literacy in various aspects of other development. Literacy is often understood as something that is good for the individual and society. According to Carr-Hill, R. A. et al. (2001) the education of each individual has the possibility of making others better off (in addition to the individual benefits). Specifically, a more educated society may translate into higher rates of innovation, higher overall productivity through firms’ ability to introduce new and better production methods, and faster introduction of new technology.

UNESCO (2005) discussed the relationship of literacy and development as under;

A community cannot foster development without an educated population. Businesses, large or small, are unlikely to choose to invest if skilled or trainable human resources are unavailable. Similarly, a community cannot retain educated people without an attractive economic environment.

Social Development and Literacy

Literacy may also have social consequences that are important objectives for national policy planning. Particularly in developing countries, the gender dimension of illiteracy has been raised in this regard, as the majority of illiterate or low-literate adults tend to be female in the poorest developing nations (Stromquist, 1999). Furthermore, there are numerous empirical relationships between literacy and fertility, infant mortality, and so forth. It is an admitted fact that literacy occupies an essential place in the life of the community. Beyond a reflection on citizenship, we put forward the idea of an active society in which individuals have a sense of freedom, but also one of responsibility. There will be no progress for mankind without an awareness that each one of us has for their freedom and their responsibility, whether in their community, their nation or in the world. Links between education and society are strong, and each influences the other. Education can help change society by improving and strengthening skills, values, communications, mobility, personal prosperity and freedom. UNESCO (2006) observes the influence of literacy upon the social life of an individual in the following way;

The practice of literacy can be instrumental in people’s achievement of a range of capabilities such as maintaining good health and living longer, learning throughout life, controlling reproductive behavior, raising healthy children and educating them. Improving literacy levels thus has potentially large social benefits, such as increased life expectancy, reduced child mortality and improved children’s health. The evidence has often focused on the benefits of education, as opposed to literacy per se, but evidence on the effects of adult literacy programmes is beginning to accumulate.

The changes in society have also affected our roles as parents and family members. Parents are the first and most important teachers of their children, and their role is becoming increasingly more demanding. Standards-based education reform is raising the bar for children, and higher standards may force more children out of the traditional school system before they have acquired needed skills. Children profit from the support of educated, concerned parents in meeting the learning challenges that face them. Parents need adequate literacy skills to help children prepare to enter school and to support children’s continued learning. In homes where parents have low literacy skills and do not model literacy as an important value, children’s learning can suffer. In fact, problems associated with low literacy are often intergenerational. Parents with low literacy skills are often unable to help prepare young children for school or participate fully in the academic activities of their school-age children

The services of literacy regarding social life are much obvious in four major aspects namely health, gender equality, education, and reproductive behavior. Above all literacy also has implications for the safety of the communities. Along with the traditional components of literacy, citizens may need higher order thinking and problem-solving skills, computer and other technology-related skills, literacy skills necessary for the workplace, and literacy skills appropriate for family life.

The acquisition of literacy benefits personal health. Particularly powerful for girls, it profoundly affects reproductive health, and also improves child mortality and welfare through better nutrition and higher immunization rates. A growing body of longitudinal research evaluating the health benefits of literacy programmes points to the same impact as that of education, and indeed in some cases, to a greater impact. For example, infant mortality was less among Nicaraguan mothers who had participated in an adult literacy campaign than among those who had not, and the reduction was greater for those made literate in the literacy campaign than for those made literate in primary school (Sandiford et al., 1995). Similarly, Bolivian women who attended literacy and basic education programmes displayed gains in health-related knowledge and behavior, unlike women who had not participated in such programmes (UNESCO, 2006). Moreover, it seems that in the future education may be the single most effective preventive weapon against HIV/AIDS.

But, the results of literacy programmes that directly address health related instructions had not proved much successful. Some studies indicate that literacy programmes that themselves attempt to transmit health information have not been particularly successful as the participants preferred reading and writing over receiving health knowledge (Robinson-Pant, 2005). Thus, in the countries with low literacy rates there is need of such literacy programmes that stress upon the acquisition of the reading and writing skills rather than some technical skill or training in a particular field.

As far as the impact of literacy of gender equality is concerned it had proved helpful in reducing any kind of such inequality. Education is a great leveler whereas the illiteracy being one of the strongest predictors of poverty. Primary education plays a catalytic role for those most likely to be poor, including girls, ethnic minorities, orphans, disabled people, and rural families. By enabling larger numbers to share in the growth process, literacy can be the powerful tide that lifts all boats. The gender inequality between the men and the women is being tried to reduce through giving more stress to the female literacy, limiting the ways in which gender equality can be addressed holistically and directly through the programmes themselves. The programmes have thus tended to concentrate specifically on women’s inequality rather than gender equality. Participation in adult literacy programmes does enable women to gain access to and challenge male domains by entering male-dominated areas of work, learning languages of power previously associated with men and participating in household finances. Examples of elite languages newly available to women include English in Uganda and posh Bangla in Bangladesh (Fiedrich and Jellema, 2003). Similarly, in some Bangladesh households, literacy has enabled women to become involved in the financial management of the household, previously controlled by men (Maddox, 2005). In India, an evaluation of a literacy programme showed that women learners had a strong desire to earn. Similarly, women may become aware of further education possibilities or of information about AIDS prevention through literacy.

The productive behavior is also influenced with the literacy acquisition. The negative correlation between education and fertility is well established (Cochrane, 1979). For example, studies based on demographic and health surveys find that, on average, a 10% expansion in the primary gross enrolment ratio lowers the total fertility rate by 0.1 children and a 10% increase in the secondary gross enrolment ratio by 0.2 children (Hannum and Buchmann, 2003). Moreover, the mechanisms whereby education may reduce fertility include its effects on women’s autonomy, infant mortality and child health, spouse choice, marriage age, female employment outside the home and the costs of educating children.

Another important aspect of the social advantages of literacy is that it has significant educational benefits. Literacy on one hand supports the cause of education. But, on the other hand it is itself influenced by the level of education. For example, the parents who themselves are educated, whether through schooling or adult programmes, are more likely to send their children to school and more able to help the children in the course of their schooling. It used to be thought that literacy contributes to the development of abstract reasoning (UNESCO, 2006). In general, the effects of literacy are more likely to be determined by formal schooling, socialization, and the cultural practices of a particular society than by literacy.

Cultural Development and Literacy

Literacy has an important relation with the culture. This relation is of two modes. Firstly, literacy influences the culture. It is helpful in bringing the cultural change and preservation of the present cultural values and norms. Moreover, the transformation of culture, in one way or the other, is also dependent of literacy. Secondly, literacy itself is influenced by the prevailing cultural environment as planning of a literacy programmes is usually done according to the present culture along with the future needs and requirements. That is why the literacy materials, and the strategies of literacy imparting always correspond with the cultural aspects.

At the same the cultural benefits of literacy are harder to identify clearly than benefits in terms of political participation. Adult literacy programmes may facilitate the transmission of certain values and promote transformation of other values, attitudes and behaviors through critical reflection. They also provide access to written culture, which the newly literate may choose to explore independently of the cultural orientation of the literacy programmes in which they participated. Adult literacy programmes can thus be instrumental in preserving and promoting cultural openness and diversity. However, ‘any effect that literacy may have on the culture (i.e. what people believe and how they do things) of an individual or group will be slow, will not be easily and immediately accessible, and will be difficult to identify as the outcome of a single intervention such as a literacy and adult education programme’ (Farah, 2005).

The impact of literacy in the cultural change is also very important. It brings in to action new concepts, norms and values after enabling the people to analyze their existing attitudes and behaviors as literacy programmes can help challenge attitudes and behavioral patterns. Indeed, this type of cultural transformation is central to the Foreran approach, which aims to develop skills of critical reflection (Freire, 1987). Literacy programme also try to affect other cultural aspects as stated by UNESCO (2006);

Many programmes also aim to promote values such as equity, inclusion, and respect for cultural diversity, peace and active democracy. However, such transformation typically is limited.

Adult literacy programmes can help preserve cultural diversity. In particular, literacy programmes that make use of minority languages have the potential to improve people’s ability to participate in their own culture. This has been observed in programmes whose outcomes included the writing down of folk tales (Chebanne et al., 2001).

But, new approaches to literacy suggest that literacy is always contextualized, situated within a particular socio-cultural setting. There is a growing awareness that there is no one universally applicable form of literacy. Rather, there are different literacy’s and literacy practices for different groups (occupational groupings, for example) and for different kinds of activities (religion, education, commercial activities etc) and for different social and institutional contexts.

Now if we consider above presented framework of literacy it becomes essential that the planning of literacy programmes should be done very carefully so that it can become inline with the ever changing culture.

Political Development and Literacy

Literacy is a tool for creating the political awareness among the masses. It helps them to understand the nature of government in their country and ways for effective communication with it for the solution of their problems. Literacy possesses the empowering potential that can be translated into the increased political awareness and participation. It in return contributes to the quality of public policies and the democracy.

As far as the relationship between education and political participation is concerned, it is well established (Hannum and Buchmann, 2003). Educated people are to some extent more likely to vote and voice more tolerant attitudes and democratic values. According to Carron et al. (1989) participation in adult literacy programmes is also correlated with increased participation in trade unions, community action and national political life, especially when empowerment is at the core of programme design. Evident are there that the expansion of education may contribute to the expansion of democracy and vice versa (UNESCO, 2006). In return the democratic classroom practices are the most effective means of promoting civic knowledge and engagement among students.

Likewise, literacy has the potential to benefit disadvantaged ethnic groups and the minorities of different states. But, this benefit is of literacy become doubtful because in some countries the traditional caste system is too strong that it does not permit the members of minority group or disadvantaged people even to have a meal with them or allow them to participate in their ceremonies or social .activities. The same fact is precisely advocated by Hannum and Buchmann (2003) in the following words;

A range of experiences appears to support the statement that ‘It is not safe to assume that expansion in access to education will allow disadvantaged minorities to “catch up” with initially advanced ethnic groups, at least in the short run’.

Conclusion

By keeping in view over all importance of literacy, it can easily be concluded that:

1. Literacy makes the people more consistent in their attitudes and actions, more polite and civilized in their dealings, more accurate and perfect in their decisions and reliable in their every day life. Moreover, literacy helps in building confidence among individuals by providing them the necessary knowledge and skills to combat their problems and difficulties. Finally, literacy occupies an essential place in the life of the community. Beyond a reflection on citizenship, we put forward the idea of an active society in which individuals have a sense of freedom, but also one of responsibility. There will be no progress for mankind without an awareness that each one of us has for their freedom and their responsibility, whether in their community, their nation or in the world.

2. Few countries are unconscious to the perception that a literate and skilled populace can have an important impact on the social and economic life of each nation. Numerous claims have been put forward that a given minimum rate of literacy is a prerequisite for economic growth in developing countries. In the context of global competition, adult illiteracy will lead to economic ruin.

3. Literacy or basic education is really become as effective tools to help people solve the problems they face in their daily life and also assist them to live in harmony with their rapidly changing environment. People today have to be able to realize that they can use education to seek vocational skills to improve the quality of life so as to reach happiness which is based on each individual’s personal experiences, complete happiness can be achieved when there is no physical or emotional conflict between man and his environment physically or mentally. This shows that basic education or literacy today plays the important role as the tools that will enable individual to create his own harmony between himself and today’s rapidly changing surroundings especially the world today.

4. The impact of literacy in the cultural change is also very important. It brings in to action new concepts, norms and values after enabling the people to analyze their existing attitudes and behaviors as literacy programmes can help challenge attitudes and behavioral patterns

5. The most important aspect of education is that without it all learning comes to a stop. We would literally be thrown back in time to before there was reading or writing. Literacy is important because it makes us who we are. It makes us individual, and distinct. Literacy is the key to all learning and the path to the future. Moreover, the advantages of literacy go on forever, but one more example of how literacy helps us is that without it we are nothing in today’s world. Being illiterate in today’s world often means low paying jobs, little to no respect from our peers, and the constant question of how long will I be able to work here. Being literate gives us advantages; being illiterate gives us none, it only gives us obstacles.

Bibliography

Bown, L. (1990) Preparing the Future: Women, Literacy and Development, Action Aid Development Report No. 4, London: Action Aid /ODA.

Carr-Hill, R. with Okech, A., Katahoire, A., Kakooza, T., Ndidde, A., Oxenham, J. (2001) Adult Literacy Programs in Uganda, Washington D.C.: Human Development Africa Region, The World Bank.

Carron, G., Mwiria, K.,and Righ,G. (1989) The Functioning and Effects of Kenyn Literacy Program. Research Repaort No.76. Paris: International Institue for educational Planning.

Chebanne, A., Nyati-Ramhobo, L., and Youngman, F. (2001). The Development of minority Languages for Adult Literacy in Botswana: Towards Cultural Diversity. Paper presented at International Literacy Conference held at Cap town, 13-17 Nov 2001.

Cochrane, S.H. (1979) Fertility and Education: what do we really know? Baltimore Md.: The John Hopkins University Press

Farah, I (2005).Improvment in Quality of Life Indices: Role of Women Literacy in Rural Punjab, Pakistan. InMadhu Singh(ed) Institutionalizing Life Long Learning: Creating Conducive Enviourment for Adult Learning in Asian Context.

Fiedrich, M. and Jellema, A. (2003) Literacy, Gender and Social Agency: Adventures in Empowerment, DFID Research Report 53, September 2003

Freire, P. and Macedo, D. (1987) Literacy: Reading the Word and the World. Bergin & Farvey Publishers, Farvey South Hadley, MA, USA.

Hannum, E. and Buchmann, C. (2003). “The Consequences of Global Educational Expansion: Social Science Perspectives.” New York: American Academy of Arts and Sciences. http://www.amacad.org/publications/monographs/Ubase.pdf

Hanushek, E. A., and D. Kimko. (2000). “Schooling, labor-force quality, and the growth of nations.” American Economic Review 90:1184-1208.

Lind, A. (1996). Free to Speak Up’ Overall Evaluation of the National Literacy Programme in Namibia. Namibia:Directorate of Adult basic Education.

Maddox, I. (2005). Assessing the Impact of Women’s Literacies in Bangladash: An Ethnographic Inquiry. International Journal of Educational Development No. 25 pp123-132.

Osberg, L. (2001). Needs nad Wants: What is Social Progress and how should it be measured. The Review of Economic Performance and Social Progress 2001. Vol. I pp23-41

Robinson-Pant, A. (2005) ‘The Sicial Benefits of Literacy’. London: Routledge

Sandiford, P.J., Cassel, M. Sanchez, G. (1995) ‘The impact of women’s literacy on child health and its interaction with access to health services’, Population Studies 49.

Stromquist, N. (1995) ‘Romancing the State: Gender and Power in Education’ Comparative Education Review 39 (4): 423-54

Stromquist, N. (1999) ‘Women’s Education in the Twenty First Century. Balance and Prospects’, in R. Arnove and C. Torres (eds) Comparative Education. Dialectic of the Global and the Local,: Rowman & Littlefield.

UNESCO, (2005). Education For All Global Monitoring Report, 2005 Paris: UNESCO.

UNESCO, (2006). Education For All Global Monitoring Report, 2006 Paris: UNESCO.



Source by Aijaz Ahmed Gujjar

Fiscal Policy or Monetary Policy, which will help us out of the recession?

There is sometimes confusion around the difference between fiscal policy and monetary policy. Fiscal policy; Measures employed by governments to stabilize the economy, specifically by adjusting the levels and allocations of taxes and government expenditures.1 Monetary policy; The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates.2

Which one will help our current economic situation? While both are instruments that can be used by the government to influence the economy, monetary policy employs interest rates and money supply in this effort, while fiscal policy refers to taxing and spending by government to help stimulate the economy.

There are two means by which the government employs fiscal policy to influence the economy – taxing and spending. In a recessionary period like we are experiencing today, with increasing unemployment and slow business growth, government spending is a means of stimulating economic activity. Cutting taxes is another means by which government can put money back into the pocket of the consumer during a recession and thus stimulate economic growth. Conversely, during times of economic expansion, government may increase taxes, taking money out of the consumer’s pocket in an effort to moderate economic expansion and quell inflation.

The current fiscal policy in the U.S. is sometimes called a loose or expansionary fiscal policy, one in which government spending is higher than revenue. The reverse is known as a tight fiscal policy, a fiscal contraction, during which revenue outweighs spending. During a fiscal expansion, such as the one we’re in now, the desired effect of spending is to restore the output of goods and services, the gross domestic product, and put employees back to work. This, in turn increases the demand for goods and services and the overall health of the economy.

Unfortunately the fiscal policy of spending more than the revenue earned does not take into account the population confidence and emotional condition. The problem with the administration “printing more money” to create large stimulus packages to get businesses to start growth projects and expansion which in turn creates jobs and lowers unemployment, is that if the confidence of the business owners and executives is so low that they are remaining reluctant to begin growth and are continuing to add lay offs instead of hiring. This quickly becomes the vicious cycle, as the lay offs continue and consumer spending decreases, businesses decrease in production, causing more lay offs and less tax revenue is generated. With less revenue being generated and an increased need for stimulus, the administration is tempted to provide more stimuli at the expense of deficit growth.

While for the past decade or two the Federal Reserve Chairman Alan Greenspan was able to keep the United States from entering a recession by merely using monetary policy to regulate interest rates, with the situation we are in now monetary policy adjustments have little or no impact on our current economy.  One must take into account a large reason of why the economy was easily regulated by monetary policy was the fact that the technology and real estate booms were experiencing out of control record expansion, consumer and business confidence was at an all time high, Wall Street and the stock market were experiencing record growth and profits and the unemployment rate was at an all time low. 

The drastic change started in 2006 when the “perfect storm” hit Wall Street and the Capital had a drastic change in administration and congress control.  With the combination of the technology crash in 2001, the Wall Street crash from September 11th 2001, the real estate bubble burst in 2007, bringing down Wall Streets biggest banks and insurance companies, and the drastic change in fiscal policy with an administration change in 2008 the economic situation was ripe for a dramatic change of direction and the recession was inevitable.

Though there are many philosophies, from the “experts,” as to how we can and should treat this current economic situation, I have to think that the solution of instilling confidence in the small business owners to drive the economic turnaround is the quickest and safest bet.

Today, we stand on the threshold of economic recovery. According to the September 16th issue of The Wall Street Journal, “Federal Reserve Chairman Ben Bernanke said Tuesday that the recession was ‘very likely over,’ as consumers showed some of the first tangible signs of spending again.” As small business owners, it’s now time to move out from under the cloud of fear and stand beside the banner of recovery.

Do you remember the 1983 film Mr. Mom, starring Teri Garr and Michael Keaton? In the film, Jack (Keaton) and Caroline (Garr) are married with three kids and living in the suburbs of Detroit, Michigan, during the 1980s recession. As the movie opens, Jack has just lost his job in the auto industry, [a big business], and Caroline has been hired by an ad agency, [a small business], forcing Jack to trade roles and become a stay-at-home Mr. Mom. 3

Like this fictional storyline, it is the small business growth that will help the struggling middle class recover and greatly instill consumer confidence, which in turn drives the economy forward. I know a large part of the of small businesses fear is the unknown of the administrations fiscal policy, taxes and mandatory healthcare expense, however that is just hearsay at this point and the current administration is starting to get the message of how the general public feels, with the results of the recent elections in New Jersey, Virginia and Massachusetts, that a majority of the people don’t want those types of tax increases and out-of-control spending. I am fully aware that the high ticket item industries, such as the auto and real estate industries, have been damaged so badly that a lot of those small businesses that were associated with those industries are gone forever, however the owners and entrepreneurs of those business, which have proven to have the knowledge and skills to start and run a successful business, need the confidence and assets to start a new venture in another industry.  The government needs to concentrate the stimulus dollars towards the current and past small business owners to begin to grow the confidence and economy through their fiscal policy.

Having been a small business owner myself, I was put in the situation where the cost of maintaining the business was far outweighed by the risks, like having clients go out of business unexpectedly while having outstanding bills to my business. The risks coupled with increasing fees, costs of doing business and the overwhelming employee costs, made it impossible for the business to grow and my personal investment was increasing, while the venture capitalist monies disappeared. The only clear choice for my partners and I was to close the business and for me to become a “Mr. Mom” and stay home with my children. With increased capital made available by the feds fiscal policy I would be much more likely to again take on the risks of starting up another small business.

This supports the theory that the current administration needs to stop the rhetoric of how they are going to fix the economy, stop dumping stimulus money at the large corporations that self perpetuated their current economic failings and begin to create a new fiscal policy that will support and encourage expansion and growth of the small businesses in America. I have to conclude that the fiscal policy has to change and be implemented first before the monetary policy can take effect.

We all must hope that the current administration finds the complicated formula and balance between increasing the stimulus and increasing confidence soon, as the economy needs to be on the upswing before the monetary policies of lowering interest rates can again have an effect and banks in turn begin to have the confidence to take on the risks of loaning money again.

1 Britannica Concise Encyclopedia 2009.
2 Investopedia.com 2009
3 Begin Your Economic Recovery. Lower Your Prices Now! January 20, 2010, Small Business Trends, By Susan L Reid 



Source by Paul J. Santucci

Economic Growth And Gdp Estimation:

Economic growth and GDP estimation:

Introduction:

Economic growth is determined by the level of GDP, economic growth is therefore determined by the changes in the level of GDP, Keynes model of measuring economic growth states that the level of income in a country is determined by adding up consumption, investment, government expenditure and net exports. There are however various approaches in the measurement of the level og GDP and this includes the income approach, expenditure approach and the product approach. In this paper we determine the level of GDP as a function of inflation, net exports, foreign direct investment and domestic investment. The estimation of this model was made using data for the UK economy for the period 1970 to 2002, however for any estimated model there is ned to determine the statistical significance oif the model and also whether all the assumptions of the OLS estimation model are met such as the absence of autocorrelation and Heteroscedasticity.

In this case we will use time series data and this type of data there is a risk of autocorrelation, autocorrelation can be defined as the case where one of the assumptions OLS is violated which states that the error terms in two different periods of observations have zero covariance. Therefore the existence of autocorrelation means that our estimates are not BLU. This paper therefore involves the effort to remove the problem of autocorrelation and therefore involves the estimation of three different models.

Results:

The first estimated model states that LGDPt = b1 + b2LXt + b3LFDIt + b4LDIt+b5INF, meaning that the GDP level is a function of exports, foregn direct investment, domestic investment and the level of inflation, the results of our estimated model are as follows:

LGDPt = 11.15785 + 0.366704 LXt -0.006544 LFDIt + 0.265253 LDIt-0.001313 INF

This means that if we increase the level of exports LX by one unit then the level of LGDP will increase by 0.366704 assuming all factors are held constant, if we increase the level of foreign direct investment LFDI by one unit then the level of LGDP will decline by 0.006544  assuming all factors are held constant, if we increase the level of LDI by one unit then the level of LGDP will increase by 0.265253 assuming all factors are held constant and finally if we increase the level of inflation INF by one unit then the level of LGDP will decrease by 0.001313.

Statistical significance:

We perform a two tail test on the estimated coefficient at 98% level, the following table summarizes the results of the test:

98% level of test(two tail test)

variable

coefficient

T statistic

T critical

null hypothesis

alternative hypothesis

null hypothesis

C

b1

14.3179

1.281552

b1 = 0

b1 ≠ 0

reject

LX

b2

13.04894

1.281552

b2 = 0

b2 ≠ 0

reject

LFDI

b3

-1.01064

1.281552

b3 = 0

b3 ≠ 0

accept

LDI

b4

5.183639

1.281552

b4 = 0

b4 ≠ 0

reject

INF

b5

-1.45926

1.281552

b5 = 0

b5 ≠ 0

reject

All the estimated coefficients are statistically significant at 98% two tail test apart from the LFDI coefficients which is not statistically significant.

Coefficient of determination R square for this model is 99.2292% meaning that there is a very strong relationship between the explanatory variables and the dependent variable, this value means that 99.229% of variations in LGDP are explained by the explanatory variable.

Other tests:

98% level of test(two tail test)

null hypothesis

alternative hypothesis

t statistics:

T critical

null hypothesis

b2

b2 = 0

b2 > 0

13.04894

1.281552

reject

b3

b3 = 0

b3 > 0

-1.010641

1.281552

accept

b4

b4 = 1

b4 > 1

-14.35866018

1.281552

reject

b5

b5 = 0

b5< 0

-1.459259

1.281552

reject

From the above test it is clear that b2 is greater than 1, b3 is equal to zero, b4 is greater than 1 and b5 is less than zero, further a test for autocorrelation with reference to the Durbin Watson test whose coefficient is 0.646833  shows that there is autocorrelation.

Estimation two involved the estimation of the model LGDPt = b1 + b20LXt + b21LXt–1 + b30LFDIt + b31LFDIt–1 + b40LDIt + b41LDIt–1 + b50INFt + b51INFt–1 + b5LGDPt–1 + ut, this model involves time lagging the variable in the model, it involves increasing other variables that describe the previous values, after estimation the results are as follows:

LGDPt = 3.251747+ 0.068721 LXt + 0.011649 LXt–1 + 0.001123 LFDIt – 0.003232 LFDIt–1 + 0.250335 LDIt – 0.156964 LDIt–1 – 0.001963 INFt + 0.000493 INFt–1 + 0.719464 LGDPt–1

Test statistics for statistical significance are summarised in the following table:

98% level of test(two tail test)

variable

coefficient

T statistic

T critical

null hypothesis

alternative hypothesis

null hypothesis

C

b1

2.447224

1.281552

b1 = 0

b1 ≠ 0

reject

LXT

b20

0.959683

1.281552

b20 = 0

b20 ≠ 0

accept

LXT_1

b21

0.154077

1.281552

b21 = 0

b21 ≠ 0

accept

LFDIT

b30

0.293811

1.281552

b30 = 0

b30 ≠ 0

accept

LFDIT_1

b31

-0.79871

1.281552

b31 = 0

b31 ≠ 0

accept

LDIT

b40

4.820457

1.281552

b40 = 0

b40 ≠ 0

reject

LDIT_1

b41

-2.78611

1.281552

b41 = 0

b41 ≠ 0

reject

INFT

b50

-2.94661

1.281552

b50 = 0

b50 ≠ 0

reject

INFT_1

b51

0.738533

1.281552

b51 = 0

b51 ≠ 0

accept

LGDPT_1

b5

6.532978

1.281552

b5 = 0

b5 ≠ 0

reject

The coefficients of LXt , LXt–1 , LFDIt , LFDIt–1 and  INFt–1 are not statistically significant at 98% test level, however all the other coefficients are statistically significant.

The correlation of determination value for this model R squared is equal to 0.997893 which means that there is still a very strong relationship between the explanatory variables and the dependent variable, the value means that 99.7893% of variations in LGDP are explained by the independent variables.

Regarding autocorrelation the Durbin Watson test value is equal to 2.026241, the value two mean that there is zero autocorrelation and therefore we can conclude that the addition of lagged variables into our first model has eliminated autocorrelation although there is a certain level of autocorrelation in the model and therefore the estimates are not BLU.

Our third estimation involves the estimation of the model LGDPt = b1 + b20LXt + b21LXt–1 + b30LFDIt + b31LFDIt–1 +b40LDIt + b41LDIt–1 + b5LGDPt–1 + ut, this model involves the removal of the inflation variable in the model, after estimation the model the following were the results:

LGDPt = 2.322694+ 0.137682 LXt – 0.054333 LXt–1 – 0.002289LFDIt – 0.004492 LFDIt–1 + 0.278083 LDIt – 0.185637 LDIt–1 +  0.750794LGDPt–1

Statistical significance of the estimated coefficients is summarized in the table below:

98% level of test(two tail test)

variable

coefficient

T statistic

T critical

null hypothesis

alternative hypothesis

null hypothesis

C

b1

1.734605

1.281552

b1 = 0

b1 ≠ 0

reject

LXT

b20

1.799921

1.281552

b20 = 0

b20 ≠ 0

reject

LXT_1

b21

-0.66139

1.281552

b21 = 0

b21 ≠ 0

accept

LFDIT

b30

-0.55771

1.281552

b30 = 0

b30 ≠ 0

accept

LFDIT_1

b31

-1.03266

1.281552

b31 = 0

b31 ≠ 0

accept

LDIT

b40

5.274759

1.281552

b40 = 0

b40 ≠ 0

reject

LDIT_1

b41

-2.99087

1.281552

b41 = 0

b41 ≠ 0

reject

LGDPT_1

b5

6.101389

1.281552

b5 = 0

b5 ≠ 0

reject

From the above summary of statistical tests it is clear that The coefficients of LXt–1 , LFDIt ,and LFDIt–1 are not statistically significant, however all the other coefficients are statistically significant at 98% test level.

Correlation of determination in this model R squared is equal to 0.997034 meaning that 99.7034% of variation in the dependent vatrriable is explained by the explanatory variables, therefore there is s strong relationship between the independent and dependent variable.

Tests for autocorrelation show that the Durbin Watson test value is 1.959273, this shows that autocorrelation has been reduced from the previous estimates, however the value is not equal to 2 and therefore the estimates are not BLU

Conclusion:

From the above analysis it is evident that the level of GDP which signify economic growth can be estimated using the value of exports, foreign direct investment, domestic investment and inflation, the first estimated model violates the assumptions of OLS regarding autocorrelation and therefore there is a need to state the model again, the second model estimated includes time lagged variables for all the independent variables involved and also the time lagged GDP level. This helps reduce the level of autocorrelation in the first model although it is still exhibits autocorrelation, our third model involves the stating the model again but this time in the absence of inflation and the time lagged inflation variable, this also reduces autocorrelation but the model  still exhibits autocorrelation.

From the above study therefore the second and third model can be used to estimate the level of GDP because they exhibit low autocorrelation, the level of R squared from the model show that there are very strong relationship between the variables, this discussion above shows how we can reduce autocorrelation and remove the problem so that we come up with a best linear unbiased model, therefore the models can be used to estimate GDP and also for forecasting.

References:

David Cox (2001) Applied Statistics: Principles and Examples, McGraw Hill press, New York

Leonard Henry (1991) Statistics, Oxford University Press, Oxford

Appendixes:

Dependent Variable: LGDP

Method: Least Squares

Date: 04/17/08   Time: 14:20

Sample: 1970 2002

Included observations: 33

Variable

Coefficient

Std. Error

t-Statistic

Prob.

C

11.15785

0.779293

14.31790

0.0000

LX

0.366704

0.028102

13.04894

0.0000

LFDI

-0.006544

0.006475

-1.010641

0.3208

LDI

0.265253

0.051171

5.183639

0.0000

INF

-0.001313

0.000899

-1.459259

0.1556

R-squared

0.992292

Mean dependent var

27.56269

Adjusted R-squared

0.991191

S.D. dependent var

0.216879

S.E. of regression

0.020355

Akaike info criterion

-4.812252

Sum squared resid

0.011601

Schwarz criterion

-4.585509

Log likelihood

84.40216

F-statistic

901.1990

Durbin-Watson stat

0.646833

Prob(F-statistic)

0.000000

Dependent Variable: LGDPT

Method: Least Squares

Date: 04/17/08   Time: 14:33

Sample: 1971 2002

Included observations: 32

Variable

Coefficient

Std. Error

t-Statistic

Prob.

C

3.251747

1.328749

2.447224

0.0228

LXT

0.068721

0.071608

0.959683

0.3476

LXT_1

0.011649

0.075604

0.154077

0.8790

LFDIT

0.001123

0.003823

0.293811

0.7717

LFDIT_1

-0.003232

0.004046

-0.798710

0.4330

LDIT

0.250335

0.051932

4.820457

0.0001

LDIT_1

-0.156964

0.056338

-2.786108

0.0108

INFT

-0.001963

0.000666

-2.946612

0.0075

INFT_1

0.000493

0.000667

0.738533

0.4680

LGDPT_1

0.719464

0.110128

6.532978

0.0000

R-squared

0.997893

Mean dependent var

27.57356

Adjusted R-squared

0.997031

S.D. dependent var

0.211029

S.E. of regression

0.011498

Akaike info criterion

-5.842928

Sum squared resid

0.002909

Schwarz criterion

-5.384885

Log likelihood

103.4868

F-statistic

1157.767

Durbin-Watson stat

2.026241

Prob(F-statistic)

0.000000

Dependent Variable: LGDPT

Method: Least Squares

Date: 04/17/08   Time: 14:40

Sample: 1971 2002

Included observations: 32

Variable

Coefficient

Std. Error

t-Statistic

Prob.

C

2.322694

1.339033

1.734605

0.0956

LXT

0.137682

0.076493

1.799921

0.0845

LXT_1

-0.054333

0.082150

-0.661392

0.5147

LFDIT

-0.002289

0.004104

-0.557712

0.5822

LFDIT_1

-0.004492

0.004350

-1.032660

0.3121

LDIT

0.278083

0.052720

5.274759

0.0000

LDIT_1

-0.185637

0.062068

-2.990870

0.0063

LGDPT_1

0.750794

0.123053

6.101389

0.0000

R-squared

0.997034

Mean dependent var

27.57356

Adjusted R-squared

0.996169

S.D. dependent var

0.211029

S.E. of regression

0.013062

Akaike info criterion

-5.625897

Sum squared resid

0.004095

Schwarz criterion

-5.259463

Log likelihood

98.01435

F-statistic

1152.491

Durbin-Watson stat

1.959273

Prob(F-statistic)

0.000000



Source by John Warren

Economic and Financial Crisis

Bailout is only temporary solutions to cover what lost by financial or other industrial sectors. Bailout money is public money used to please rich sectors. This adjustment to relieve them is may be by pruning necessary social projects or overburdening its citizens with direct or indirect taxes. More taxes mean lesser expenditure is best way to worsen economic growth. Bailout does not mean better future of these sectors due to low financial demand from loss making or reduced output of industries.
1. Growing competition in banking and housing sectors to attract more and more consumers without evaluating personal capacity and uncertain economic condition of consumers rendered heavy losses to lenders and builders. Cheaper interest rates during enticed customers without realizing the consequences of economic depression.
2. Tough competition and soaring running unit cost or failure to achieve expected to meet target rendered axing work force as cost cutting measure.
3. Heavy bull and bear investments on escalated valued of stocks during boom time began busting during demand crisis led to heavy losses to both categories.
4. Tough economic conditions of families rendered by high fuel, food, day to day use, education and prices of others made more and more consumers defaulters.
5. Job losses and uncertain future is major factor to render demand crisis resulted to ax work force.

Final decision of moving economy is by the final customers who already have lost to high living cost. Improving citizens buying power would yield the result. Many factors are involved for the present banking and industrial crisis among them major reason is defaulting final customer. Think about:

• Present artificially escalated cost essential commodities through over speculative futures trading. Lacks of productive resources for investment, most investments are done in speculative unproductive sectors like housing, stock or other markets. These tend to create artificial demand and artificial price hike in hope more profitable business. Finally lack of demand from real needy customers dooms the market.

• Change economic pattern, both rural and urban economics be developed in same priority. Major Asian economies have gone into crisis as they relied on exports of basic commodities and manpower to developed countries resulting failures as have no demand in their own countries due to extensive poverty level.

• Generating employment in both rural and urban sectors is must for any economy to grow as a boost to generate demand. Countries pumping funds into economy to build confidence among citizen by way of concession in direct and indirect taxes. Promoting small and medium sectors to consume and generate more employment. These neglected sectors are ways to help consuming part or full time employees.

• Finally any economic crisis or promotion is determined by the individuals of a country who buy and sell commodities or services. Country’s growth is based on the power of its individuals. Simply scaling down of inflation index or GDP growth on paper does not help real evaluation of actual growth of any economy. Inflation indexed increase or decrease is only to satisfy regulators themselves but for normal citizen it is the price of vegetable, cereal or any essential commodity that matters which practically rose by 200-300% whereas the inflation index indicates opposite to it or minor increase. (WPI) there is also variation of wholesale price and final price what a citizen pays for commodity, to get correct inflation figure retail price of the commodity that matters (CPI). Normal human has nothing to do with any high valued industrial commodities so inflation index need to classify essential and non essential commodity. Similarly, GDP growth indication too fails in countries where 50% of rural citizens are unemployed or semi-employed. Actual GDP grows when major portion of working population is engaged in production present industrial growth is beneficial to only limited nearly 5 to 10% of total population. A present economic indication criterion is totally baseless for a country which has among the largest poorest living population in the world.



Source by Sadashivan

The Role of Baby Boomers in Society

Today, there are countries which are considered as overpopulated. This is due to the increasing birth rates in different places, despite the measures of controlling birth. Babies born after World War II, when economic prosperity was at its highest, are called Baby Boomers. The exact years covered are from 1946 to 1964.

You might be wondering what caused this boom. After the war, all the cities and places affected were all provided with an increase in goods as well as services. The US also helped other economies by supplying them with goods in order to rebuild their economies. This resulted to an unprecedented economic growth which lasted for many years and only slowed down by the year 1958.

Aside from that, many individuals were also given the opportunity to attend college. And with the increase in college degree holders, the opportunity for getting high paying jobs increased. Many families benefited from this economic growth, and with higher incomes, they can provide for many children. And so many babies were born in this particular time frame.

What most parents didn’t know is that these babies will soon grow up as domineering and rebellious individuals. But this doesn’t mean that baby boomers are all bad. It’s just that majority of the group comprise these kind of individuals but there also those who are peace loving and observes the social norms of the society.

What exactly is a baby boomer? There are many definitions and almost every definition is acceptable. In most cases, the baby boomer is identified because of his/her characteristics; but most of the time, it is based on the year that they were born.

Baby boomers are further divided into boomers and shadow boomers. Boomers are babies born from 1945 to 1957 while the shadow boomers or the echo boomers were born from 1958 to 1963.

During those years, about 79 million of the baby boomers were born. Babies born during this significant time have different cultural and political patterns. There are still many arguments as to the exact years, and this has something to do with another generation, the so-called generation ‘x’.

Baby boomers are often hard to understand; and that is why baby boomers and their parents have a generation gap. There is a gap because boomers and parents differ in experiences, habits, opinions, and behavior.

In the 1960s, a great cultural difference between the generation of baby boomers and their parents included musical tastes, drug use, fashion, and politics. The baby boomers had great power because of their large number and so they gained influence, and power. They were also not afraid to rebel against established social norms.

Baby boomers were able to make a generational identity, and they were even recognized by Time magazine as ‘man of the year’ in 1966. They were famous for the catchphrase ‘don’t trust anyone over 30’; and this is probably because of the gap created between them and the older people.

This particular generation was not afraid to rebel against the society. They loved rock music, young males grew their hair long, young activists dominate during protests, increased in drug usage, and sexual revolution was only a few of the things that baby boomers love doing. Many elders detest this kind of acts but because of the large number of youth baby boomers, they can’t do anything about it.

Then there is the so-called culture war between the boomers and the generation ‘x’. They were constantly accusing one another of moral crackdown, sold-out ideas, undisciplined behavior, and wild outbursts. But both generations were able to make a mark in history.

Baby boomers will grow old. And soon enough, they will realize the value of life that their parents have been trying to teach them. Baby boomers are not really bad. Sometimes it has something to do with the society that they lived in. As youths, it’s but natural that they want to be recognized and to gain acceptance. They are assertive and do whatever they like.

This may be due to the fact that they were able to enjoy a prosperous life, with fewer worries because of the widespread economic growth. Baby boomers are part of the history, and they are here to stay.



Source by Jonathan Rojas

What Is Quantitative Easing and Does It Work?

The British government is currently embarking on a programme of quantitative easing. In 2009, they announced that they would inject £75bn into the economy, increasing this to £200bn later in the year. In October 2011, a further £75bn was used for quantitative easing and in February 2012, another £50bn. So what is quantitative easing and how does it work?

The Bank of England electronically creates money out of thin air and credits their balance (the modern method of printing money). This money is then used to purchase government bonds, also known as gilts, from various financial institutions. With improved asset sheets, these institutions are supposed to invest in the economy through lending to small and medium sized businesses, and areas to create much needed jobs. Quantitative easing is in effect, an indirect method for investing in certain areas of the economy, with the aims of job creation and economic growth.

 This method tends to be used after lowering interest rates to stimulate private investment and general spending. However, when interest rates are at their lowest and the economy continues to struggle, governments can decide to publicly invest. Quantitative easing is a form of public investment into the economy. It is also intended to improve economic confidence leading to increased private investment, although this doesn’t appear to be the case in Britain.

The main problem with this method is the lack of accountability for the money as soon as it enters financial institutions. They have no responsibility to lend this money to small and medium businesses and may choose to either sit on the money or use it for alternative and more profitable ventures. Therefore, the government investment may never end up in the desired areas for job creation and infrastructure programmes. This raises serious questions as to whether quantitative easing really works.

Another issue is that of inflation, ‘printing’ more money leads to a depreciation of the currency and the rate of inflation is likely to increase. The depreciation would help if there was strong demand from foreign countries but as everyone is suffering from the global recession, this has little effect on economic growth.

It is evident that with struggling economies suffering from little private investment, governments need to take action through public investment. However, if they don’t ensure that it reaches the necessary areas to create much needed jobs, it will not have the desired effect of economic growth. As with any investment, great care must be taken to guarantee that it is used in the correct manner.



Source by Jim Benaud

Growth of Enterpreneurship Opportunity

The country growth depends on the Economic growth, which can be meet by the expansion of business and development. “Thus rightly said the Entrepreneur fuel the country growth”

This can be definitely visualized if you look that liberalization and ease of conduction of business have lead to the growth of the enterpuneurs growth and even the ease of availability of funds by the Venture Capatilist for the Projects which will provide higher return in long term, had made the expansion of business and growth of new models and business.

The Venture Capatilist access the projects definately before investing thus viability and other aspects are really important for the accepability of such projects.

The Entreprenurs and small scale indusry are in real sense backbone for the bigger corporate and organization as they act as feeder by providing parts or a small portion of what is actually used in the final assembly of the product and services.

Thus it is really essential for growth to develope the small scale industry and entreprenure.



Source by Ela Gaur

The Economic Strategy of World Bank

There is no denying the fact that Motivation is a process in which effective work force environment among the organisations is possible to be developed in a systematic manner. There are so many methods of motivation out of which face to face interview, open ended question, creating awareness by providing proper incentives, facilities provided essential for them to work, congenial atmosphere, equipments as required for producing goods and services are main. According to A.H Masloo, a famous economist, there is a specific need pyramid with which the people can be motivated to achieve economy, efficiency and effective ness. These are: Physiology, safety, security, egoistic and self actualisation need. Under the auspices of such needs, the targeted goals can be achieved virtually. The embryonic countries constantly demonstrate a predisposition to bring in the policy pronouncement of highly developed countries in their delicate resources despite the shifting of overall socio-economic procedure virtually. In bona fide world state of affairs aspects that next to influence the strategy decisions of budding countries are found fictional in progressive countries. It is evident that reserve constraints and technical non-progressive phenomena are two focal setting that formulate the budding countries reliant upon the advanced countries. The highly developed countries make available financial assistance for the economic development of the developing countries through unusual multilateral and bilateral donor agencies, which are officially termed as

Despite continued financial assistance, the alarming poverty rate persuaded the Bank to think about the effectiveness of its financial assistance. Presently the Bank as policy shift has declared its overarching mission in Bangladesh is the ‘Poverty Alleviation’. Five themes underpin the Bank’s strategy to help reduce poverty in Bangladesh:
q helping to improve macroeconomic management essential for rapid and sustainable economic growth which is a precondition for poverty reduction
q promoting a competitive private sector as the engine of growth
q promoting better public-sector management and better public services accessibility by the poor
q accelerating agricultural growth and rural development where the vast majority of the poor live, and
promoting faster and fairer human development to reduce malnutrition and the burden of ill health and enhance access to education (The World Bank, 1998)



Source by Kh. Atiar Rahman