Pierre's blog Wednesday night class

Indonesia Labor Migration

2012-11-13T13:58:00.000-08:00

Indonesia Labor migration

One of the consequences of globalization is the interdependence of nations upon each other. Capital and labor moves freely across borders just like goods and services. The migration of workers from Mexico to the United States is well documented, but the migration of Indonesian to Malaysia and Saudi Arabia is more problematic. Indonesia is the fourth most populous nation on the planet with 251 million people as of 2012 according to their census. Indonesia is the largest Muslim country in the world. With a Gross Domestic Product that averages 5.4% from 2000 thru 2012, the country is well position for growth in the future. Indonesia has the largest economy in Southeast Asia and is considered an emerging market economy of the world.

Underneath this growth lie some contradictions that put Indonesia at risk for future advancement. Indonesia has several lamenting issues such as poor infrastructures, government accountability, and large migration workforce. In the last few years, the government has taken steps to address the infrastructure issues and the accountability issues but the migration issue remains a problem that neither the receiving country nor sending country can solve alone.

According to the Indonesian Census Bureau, there are about 2 million new entrants to the Indonesian workforce every year. A large number of unskilled workers that cannot find work migrate legally or illegally to other countries mostly to Malaysia and Saudi Arabia, and the vast majority is women. They do unskilled work, such as domestic labor, and are not protected under the labor laws of the receiving country. In several cases, they are exploited, harassed, victim of human trafficking, and/or abused physically and psychologically. These women do the jobs that Saudi Arabian or Malaysian citizens refuse to do. The governments involved have taken steps to remediate the problem but sometimes one cannot help to wonder if they are doing enough. The U. S. Department of States’ Bureau for Population, Refugees, and Migration (PRM), in conjunction with Indonesian government, have taken steps to put in place clear labor policy for countries sending and receiving immigrants. Indonesian migrants remit close to $6 billion annually to Indonesia’s economy (World Bank, 2009).

According to the U.S. Department of State, there are an estimated 225,000 women and children who have been trafficked in Southeast Asia. This is not an issue that relates to Indonesia alone, as the world is becoming a larger backyard; steps need to be taken to protect the most vulnerable in our society. There are those always willing to take advantage of the weak whether thru modern slavery or human trafficking. Labor migration will be greater in the future and this is not an issue that relates to Indonesia only. Indonesia is poised to be a world leader and the migration issue is one that needs to be resolved sooner rather than later. A country cannot be at peace if it cannot protect its own citizens.

References

Carbaugh, R. J. (2010). Global economics (13th Ed.). Mason, Ohio: South-Western

http://www.tradingeconomics.com/indonesia/gdp-growth-annual

Hugo, Graeme. 2005. Migration in the Asia-Pacific Region. Geneva: Global Commission on International Migration.

WTO-Indonesia-The World Trade Organization efforts-wto.com. (n.d.). WTO-The World Trade Organization efforts-wto.com. Retrieved November 3, 2012, from http://wto.com

US Elections, Swing States and my 2 cents

2012-11-13T10:29:00.000-08:00

US Elections, Swing States and my 2 cents

The 2012 US Presidential Elections will be the costliest in history. The New York Times estimates that when it is all said and done, Barack Obama would have raised $934 million and spent $853 million while Mitt Romney would have raised $882 million while spending $752 million. Those figures also take into account Super Political Action Committee or Super Pac money raised. For the record, it breaks my heart to see how elections have become money making machines, meaning if you don’t have any money, you can’t possibly win an election. Whether you vote Democrat or Republican, the influence of Unions, multi-millionaires, corporations, and billionaires, in our election, are sickening.

All the money being raised made me ask who is really benefiting from all this money besides our politicians and their cause? Does the money spent in swing states reach regular folks like you and me? I live in Rhode Island, so my state will definitely go blue or Democrat. Rhode Island is not what is called a Battleground State, because of that most of the money collected will not be spent here. But if you live in Ohio, Florida, Virginia, Wisconsin, Iowa, Colorado, New Hampshire, North Carolina, or Nevada, which are Battleground States or Swing States, do you benefit from the spending that was done by the candidates?

It made me wonder, where did all that money go? I did some research and I could not find an official study as to the economical impact of campaign dollars on local economies, but I am going to try to use my educated guess as to who got paid. I am guessing that the bulk of the money went to campaign staffers, organizers, local media for advertising, writers, and video and print producers. We should also not forget restaurants, hotels, caterers, bus companies, Rental business, sound engineers, graphic designers, security guards, editors, production crews, and the transport industry. Not a bad list at all, but I still think that all this money could be use differently. My state Rhode Island, unfortunately, will see very little of the campaign dollars, with unemployment rate at 10.7%, we could use some of that money. I guess it pays to be a swing state.

		Whether the money trickles down or not, as a citizen, I feel like our elections are bought. Power in this country has become a marketplace, those that are willing to pay for it, will get it. What is left for citizens like me that can only afford to contribute no more than $25.00 to my candidate? I do believe that Americans are clever enough to see past the buyers. By that I mean, those contributing over $1 million to their candidate. What are they buying and what do they expect in return? All I am saying is that I cannot wait for the election to be over, I will do my patriotic duty by voting, but for heaven sake, I need my TV back. To be continued.

East African Community ( EAC ) Customs Union.

2012-10-31T14:28:00.000-07:00

East African Community (EAC) Customs Union

The East African Community (EAC) is comprised of 5 countries: Burundi, Kenya, Rwanda, Tanzania, and Uganda. The EAC is an intergovernmental organization which was established in 1967 and then reestablished in 2000. The goals of the organization is to create one single customs territory in order for its partners to enjoy an economy of scale and a Common valuation method for goods traded for tax purposes. The EAC also wants to include some laws and policies in the countries under the regional area, facilitate customs clearance for importers and exporters; grow their market with cheaper input, and a systematic control on the exchange rate.

The EAC is a major partner of the African Economic Community (AEC). The population of the EAC countries averages 30 million people and a GDP of about 10 billion. On their own, the countries that are part of the of the EAC are too small to be of great importance to major investors, but being part of the EAC, put them in a unique situation to attract investors which in return can take advantage of cheaper labor and vast resources.

The organization has enjoyed many successes, but there are some conflicts that still exist between the nations. In fact, because of the level of non-transparency between the governments, and conflicting interest amongst the nations, the organization does not have an independent authority that can settle their disputes. I believe that regional trades can boost a country’s growth. For example, let’s take Kenya which is part of the EAC; since their participation in the regional trades, they have increased their exports from 650 million in 2002 to about 1 billion in 2005 and close to 1.5 billion in 2011. Their main exports are tobacco, coffee, apparel, and tea. Their principal problem has been to deal with the rise in imports along with taxes.

The question now is what does the future hold for the EAC? Since 2005 the per capita income in the EAC nations have been increasing 3.7% on a yearly basis when compared to other African nations which only increased 3.1%. Inflation has been kept under control with just 4% in the last 8 years compared to 8% in other African nations. In 2012, the International Monetary Fund or IMF rated the EAC nations as one of the best places to do business and there is evidence that the growth experience by the EAC nations are enjoyed by the majority of the population.

In conclusion, the EAC is really doing a phenomenal job in being an integral part of the African Economic Community. Regional trades can benefit developing countries because it simplify the customs procedures, increase the pool of customers, and attract foreign investments. The EAC countries are a young regional trade organization. They have room to grow. They can go only go up from there; I wish them the best of luck in their future endeavors.

References

· Carbaugh, Robert J. Global Economics. Mason, OH: South-Western, 2010. Print.

"East African Community 2012 - Doing Business - World Bank Group." East African Community 2012-Doing Business - World Bank Group. N.p., n.d. Web. 21 Oct. 2012. <http://www.doingbusiness.org/reports/regional-reports/east-african-community

Why it is important for developing nations to be inolved in trade and free trade movement

2012-10-25T18:13:00.001-07:00

Why is it so important for developing nations to be involved in trade, and what institutions and policies exist to help developing nations?

Countries get involved in trades because by themselves they cannot satisfy all their needs and wants. Generally, a country will produce a surplus of certain products and will trade for the product they need. Free trade is vital for developing countries because it gives them access to new technology and resources that they do not have. Trades give access to all the parties involved to the markets in which they seek to do business. Nowadays, the countries that are more open to trades are the ones that are more developed and that have a higher standard of living.

There are several organizations that aim to assist developing nations in reaching their goals such as the International Monetary Fund (IMF), The World Bank, and the Organization for Economic Cooperation and Development (OECD).

Let’s take, for example, the OECD; their mission is to improve the economic and social well-being of people around the globe. They provide an opportunity for governments to work together to share experiences and seek solutions to common problems. The OECD is able to recommend policies to help improve a country’s economy thus making improvement in people’s lives. The OECD uses its wealth of information on a broad range of topics to help government’s foster prosperity and fight poverty through economic growth and financial stability.

Now let’s talk about the Fair Trade movement which is a social organized movement that began in the 1950’s as an agreement between retailers, non-profit importers, and small producers as a way to curb the influence of the middleman in developing nations. The fair trade movement focused on exports between countries and aim to improve the life of farmers in poor nations. The goods that the organizations mostly focused on are coffee, sugar, cocoa, and bananas. Their goal is to help producers find financial footing and get paid a fair share for their product. The organization claims to assure a safe working environment for their workers, and ensure the consumers that their products are safe. The organization aims to give producers independence, and to help them market their products. They create opportunities for the producers by helping them gain access to capital and by getting paid a fair price for their product. Fair trade organizations are mostly popular in Europe and have been making steady inroads into the United States.

The Fair Trade movement is not without its critics, which believe that the organization only benefits the companies not the producers. Critics also hammer fair trade by believing that the company’s product are fairly expensive and that it does not benefit the same people it claims to help.

In my opinion, the Fair Trade movement does help farmers, but it also goes against the very essence of the free market. If farmers in poor countries cannot compete, then they should find another occupation. I believe that the organization’s rise is due to poverty in the world and humanity’s willingness to help those that are in need. The Fair Trade movement is a direct response to aggressive capitalist. The Fair Trade movement is a win for developing nations and an asset for their continued success. As much as I believe in free trade, I am not naïve enough to believe that every nation possess the infrastructure to compete. Countries like Brazil and Argentina that have the infrastructure to compete will do well but those of the third world like Haiti that does not possess the vision, the infrastructure will perish.

Reference

Carbaugh, Robert J. Global Economics. Mason, OH: South-Western, 2010. Print.

USA and China Trade Tensions

2012-09-30T14:45:00.000-07:00

First of all let’s be clear about one thing; imposing a tariff as part of a protectionist measure never works. A protectionist policy from one country always triggers a reaction from the other country.

In early2009 President Obama imposed a tariff for the import of Chinese tires of about 35 percent. The tariff’s ultimate goal was to even the playing field for American producers of tires because at the time it was perceived that China was disrupting the 1.7 $ billion market. The tire industry was dead set against the measure arguing that tire-producing companies in China will just move their companies to lower-wage-paying countries. As a response, China began imposing their own tariff on chicken feet of 43 percent to 105 percent. China argued that the United States was dumping their chicken feet in the Chinese market and that chicken feet were selling for less in China that what they worth in the United States. It goes without saying that the tariff imposed by the United States did not produce the results expected. In the end, American companies producing chicken feet stood to lose revenue because there was no other market for their product.

If China and the United States continue this way they will end up hurting each other. The political season in the United States is in full swing; both Romney and Obama are trying to be perceived as being the tough guy on China. Unfortunately, more than ever, the United States and China need each other to survive. China needs the United States to buy its products and the United States needs China to lend them money. Although China bashing is very popular in Washington and in the media, we should never forget that the Great Depression of the 1930s was created because of trade wars. Going down that path is very dangerous for both countries and for the rest of the world.

Both China and the United States need to come to a fair conclusion of who they are and where they stand. Both countries need to play by the rules. China needs to let its currency appreciate; which in their defense has been appreciating in the last seven years; and the United States needs to stop blaming China for everything that is wrong with the economy.

Works Cited

Ramzy, Austin, and Beijing. "Chicken Feet: A Symbol of U.S.-China Tension." Time. Time, 08 Feb. 2010. Web. 30 Sept. 2012.

http://www.time.com/time/world/article/0,8599,1960825,00.html.

Andrews, Edmund L. "U.S. Will Add Tariffs on Tires Made in China." The New York Times. The New York Times, 12 Sept. 2009. Web. 30 Sept. 2012. <http://www.nytimes.com/2009/09/12/business/global/12tires.html>.

The war on terror has become an unintended trade barrier.

2012-09-23T13:42:00.000-07:00

I remember the days when all you needed to go to Canada was a driver’s license and a smile, but 9/11 changed all that. Since September 2011 the war on terror has drastically altered the trade system in the United States. Before 9/11 U.S Customs and Border Patrol was more of an enforcement agency, but because of the war on terror the agency has become part of homeland security and is considered one of the first lines of defense in the country.

Trade barriers come in many forms like tariffs, quotas and embargo. A trade barrier can be defined as restrictions on movement of goods between countries. For each action there is a reaction; the war on terror is America’s reaction to 9/11. Directly or indirectly 9/11 has changed the lives of more than half of the planet’s population.

The benefits of trading are many, and trade barriers are a detriment to investing and production efficiency. The consequences of the war on terror as a trade barrier are invisible and unintended and will be felt for years to come. The emotional impact, the decision making impact and the security impact that the war on terror has on trade is incalculable. This invisible barrier has put the United States at a comparative disadvantage in the world market because it adds to the cost of doing business in all areas, from the production of goods, to the flow of goods between countries to the consumption process. Consumers are losing because of these unintended trade barriers; as investing has become more expensive because companies seek to protect their workers and their bottom lines. Today the war on terror is one of the greatest obstacles to trade, and it is tougher to resolve because it is unintended and we are not addressing it properly. It is not out of pure coincidence that most industrialized nations have been in some form of recession in the last five years. Our very life fabric is changing in front of us and we are watching it happening powerlessly. I follow the news somewhat closely and to my knowledge our elected officials address the situation or offer possible solutions. Perhaps the bigger question we should be asking ourselves is how the war has on terror has changed trade among countries and what is the real nominal impact of 9/11 on trade?

Reference

Carbaugh, Robert J. Global Economics. Mason, OH: South-Western, 2010. Print.

GM and Chrysler management's blew it

2012-09-16T11:35:00.000-07:00

Once upon a time Ford, GM and Chrysler were the only automobile companies in the United States. With no other competitor they made thoughtless business decisions that led them to file for bankruptcy. Eventually new players Japanese and European car manufacturers got into the game; the big three were rigged with high the cost of employment and legacy costs that were negotiated with the UAW (United Auto Workers). Health benefits and other negotiated benefits were over one thousand dollars greater per car than they were for their competitor (Newsweek April 2008).

After securing the bailout of over 17 billion in 2008 from the US Government, Chrysler and GM were ordered to trim costs and debt. With virtually no big concession from the worker’s unions, GM and Chrysler filed for bankruptcy.

I blame management for the mess, but that does not mean I am giving a free pass to the Unions. You see, management’s job is to think for the future; workers will always want more, but it is management that has the final say. These leaders made weak decisions that led their companies to file for bankruptcy. While negotiating with the Unions, GM and Chrysler made moment-in-time decisions with no regard for new models such as economies of scale and comparative advantage. If managers of GM and Chrysler were visionaries they would have been proactive in using economies of scale for cheaper labor and they would have increased their international presence prior to the arrival of foreign competition in the U.S market.

Week 1 Openness

2012-09-09T20:02:00.000-07:00

Openness refers to the degree to which a country is receptive to economic trade, import, export and investment. Openness is the way of the future, but a country must also be careful not to lose its culture. A small trading partner can be treated unfairly because it has less bargaining power than large trading partners. Large trading countries like the United States and China tend to dictate their will in the international market.

Openness started in the late 1800 with the invention of railways, which facilitated interstate commerce and has been taken to a whole new level in the last three decades thanks to technology. Openness is here to stay whether we like it or not. No country is completely open or completely closed. How economically open a country is depends on the policy the political leaders choose to institute. Just like everything in life, openness has its benefits and its problems. The benefits include increased access to customers, cheaper goods, and global investment opportunities. The problems of openness include fear of job loss and loss of self-identification for a country. Any society that is not open economically is destined to fail. The Soviet Union and China both failed because they were closed economies; today, they both are pursuing some form of capitalism. It is not a coincidence that the richest countries in the world are those that are more open to trade with one another.

The world is quickly becoming an open forum where all points of view are welcome, and this very thought scares politicians and religious leaders. The seven billion people living on this planet are starting to get a better understanding of each other thanks to openness. In the end, openness should create a place where there is less war and more competition, tolerance and acceptance. Wait! Someone pinch me; maybe I am dreaming, like John Lennon said “You may say I am a dreamer, but I am not the only one”.