The global sovereign debt crisis has impacted our world economically almost like a 3rd world war. And because money was thrown out with rabid fury, it is boomeranging back with a vengeance. In his quintessential narrative-style nonfiction book, Boomerang, Michael Lewis presents to the reader four case studies: Iceland, Greece, Ireland, and Germany. Lewis travels the world examining how each of these countries dealt with the collective problem of debt and how their cultural characteristics impacted the citizens.
globalEDGE Blog Archive March 2013
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In 2002, Daniel Kahneman won the Nobel Prize in Economics, which isn’t all that unusual until one realizes that Kahneman isn’t an economist at all, but rather a psychologist. The reason that Kahneman won the Nobel is because he has dedicated his life (along with his partner Amos Tversky) to attempting to disprove the rational agent model that is a major underlying assumption of modern economics. The rational agent assumption assumes that all people are entirely rational and make the decisions that maximize utility for them (the people in this case are popularly called Homo Economis). Kahnemen thinks this isn’t true due to innate biases inside people and lays out why in Thinking Fast and Slow, which is an overview of his life’s work.
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Charlie LeDuff’s Detroit: An American Autopsy is brutally honest. In a story filled with corruption, anger, and even laughter, LeDuff goes into detail about the crumbling of an American city, and what is left of it. After leaving a job with the New York Times, LeDuff comes to find what was once a city that represented the American Dream, now rotting and broken.
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Business schools have continuously taken steps to prepare students for today’s increasingly international business world through study abroad programs, leadership programs, and international enrollment. NAFSA: Association of International Educators was originally founded to help foreign students become familiarized with the United States’ college communities. Now the association assists in opportunities for American students to study abroad, participate in exchange programs, and study foreign areas and languages. NAFSA now has close to 10,000 members who are international educators.
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Is it wrong to pay children for getting good grades? Should there be a market for jumping the queue and cutting in line? Is it ethical to buy and sell human organs? It is quite apparent that in today’s society there are markets for many goods and services that have not historically been for sale, such as the right to pollute the atmosphere, auctioning citizenship and many other topics. Michael Sandel attempts to answer one of the biggest ethical questions of our time in What Money Can’t Buy: is there something wrong with a world in which everything is for sale?
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What leads to the prosperity of nations? It is an interesting question that many have tried to answer throughout time. It puzzles many that a small island off the northern edge continental Europe can come to dominate the globe for a period of time. There surely is not one answer to this question and, in fact, there are many more that can be written. Niall Ferguson takes on this question through the effect that financial institutions have on the prosperity of nations in his financial history of the world in The Ascent of Money.
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Learning the business environment of other countries is an important task for those looking to export their products to new markets. Foreign countries provide vast opportunities for growth and allow companies of all sizes to reach new customers. However, each market filled with opportunities also presents challenges for businesses. There are many resources for small companies that make the transition into a foreign market much easier. Doug Barry recently sat down with Mike McGee, Senior U.S. Commercial Service Officer, to discuss the business environment of Burma (now known as Myanmar). To watch this interesting video on doing business in Burma, please see the posted video below!
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According to research, multilingualism can improve communication, intercultural sensitivity, cognitive abilities, and more. For these reasons, linguistics Professor Antonella Sorace of the University of Edinburgh suggests that businesses should hire more multilingual employees. For large multinational companies, multilingual employees are valuable assets and are increasingly being sought after.
Sorace is adamant about the many advantages that are derived from knowing more than one language and as a result is concerned about the widespread failure of education systems to promote foreign language learning. She believes that countries that are neglecting foreign language education are missing out on a more cognitively efficient and better communicating workforce.
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The theory of a steady state economy and the end of economic growth as we know it has been discussed more frequently today as the world struggles to climb its way out of a recession. Whether or not this theory will become reality is up for debate. However, one specific aspect of this theory is certain. If economic growth continues to diminish and GDP growth rests motionless, the impact on international business will be profound. We will now look at some of the implications this reality would hold for international business, and we will also discuss possible solutions to the problems created by growth in our finite world.
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The European Union gave a €10 billion rescue to Cyprus, a small island country in the European Union. It is the fourth of seventeen Eurozone states to receive a bailout by the European Union and the International Monetary Fund. In order to gain more time to convince parliament to back a new tax on deposits, Cyprus said that they would not open up their banks until Thursday the 21st of March. This controversial tax is on bank deposits and in order for it to come into effect they must have the support of parliament. Investors reacted poorly to the news as shares fell, and there was a run on cash machines over the past couple days.
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In 2010, Emirates ordered 32 new A380 macrojets from Airbus, which opened the door for the airline market in India. Shortly after this, Airbus announced Monday that it had a received an order for $24 billion worth of new single-aisle jets from the Indonesian budget airline Lion Air. While the world is expecting growth of the airline industry in developing countries, the global air traffic industry is actually shrinking. Let’s examine the global air traffic industry and analyze the various factors affecting the business environment of the industry.
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Imagine a company that cares profoundly about the well-being of its customers, treats its suppliers as part of the family, with the same care and love as it shows to its own employees and customers. Imagine a business where those who are lucky enough to be employed, rarely, if ever, leave and every employee is committed and passionate about their work.
If you’re saying to yourself, “not possible, unreal,” you're part of the majority. But, the management paradigm shift is catching on and it could turn the classic management style upside down.
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Despite looming budget cuts that sequestration has promised for the United States, investors seem unconcerned, considering the record-breaking levels the Dow reached just last week. With help from the Chairman of the Federal Reserve, Ben Bernanke, propping up the market, the Dow reached 14,286.37 last Tuesday to break the previous record of 14,198.10 from October of 2007. Although this is exciting news for investors and publicly traded companies, there are several concerns resounding with this new, record-breaking high.
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Out of the millions of businesses in the United States, only about 1.5 percent of these companies sell their products internationally. Furthermore, over half of these businesses exported to only one foreign market. So what can be done to increase U.S. exports? Doug Barry of the U.S. Commercial Service has the answer. In his book, Exporters! The Wit and Wisdom of Small Business Owners Who Sell Globally, Doug Barry shares 26 success stories from small companies in the United States who made the leap of faith in selling their products abroad. These companies started from small beginnings and now make products for customers throughout the world.
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The shale-gas industry is flourishing in the United States and West African crude oil exporters are being negatively impacted. Because of the “U.S. shale-gas revolution”, crude oil exports from Angola, Algeria, and Nigeria to the United States have fallen by over 40%. Thus far, this has led to a decrease in overall crude oil exports from these three countries; however, the increase in supply of sweet crude oil has led existing buyers to increase their purchases and allowed new buyers to enter the market.
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One of the major events taking place right now in the Western Hemisphere is the death of Venezuelan President Hugo Chávez and the subsequent transition to a new leader. The leader died March 5th due to complications from cancer that he had been battling the past few years. His death left behind a bitterly divided nation on the brink of a political crisis, with doubts of the economic future of his socialist revolution.
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What seemed unthinkable just a half decade ago is now reality. The United States has surpassed Saudi Arabia as the world’s biggest fuel producer. Crude output in the U.S. has hit a 20 year high and has produced the most fuel in the world for the first time since 2002. The United States is producing 11.65 million barrels of liquid fuel a day (which includes crude, refined petroleum products, and biofuels) surpassing the Saudi Arabian output of 11.25 million barrels a day.
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United Kingdom, the financial center in Europe, has always been an attractive investment place. Because large amount of foreign buyers rushed into London’s real-estate industry, it has produced highest profits in the United Kingdom since 2011. It seems like British home sellers are never satisfied by the status quo as they raised asking prices to their highest levels in five years this month. However, the increasing price on the real-estate property did not stop foreigners from buying British homes. Instead, they invested more since they foresaw the huge potential of growing profits in the British real-estate industry.
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Germany’s economy holds a critical significance in the European Union, especially in regards to the ongoing debt crisis. Its industrialized economy has held steady despite a slump in the global economy. It might be surprising to hear that Germany, one of the most industrialized countries in the world, is undertaking an energy revolution that will dramatically transform its economy’s energy sector. The newly re-engineered economy will no longer receive its energy from nuclear powered stations as all nuclear power plants in Germany are being closed down. Renewable energy sources, including wind and solar power, will instead fill Germany’s energy gap. Will this move jeopardize Germany’s economy and how does this energy revolution affect Germany’s relationship with other countries?
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After last year’s scare in China with the manufacturing industry taking a step backwards with a year of contraction, it has rebounded and returned to positive growth for four straight months. However, February was China’s lowest month of positive growth since November after posting record growth in January. February’s growth was 50.4, while in January it was 52.3. On the scale, readings above 50 indicate expansion, while below 50 indicates contraction.
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As the U.S. has just released that its GDP has grown only 0.1% in the 4th quarter of 2012 and that trend of low growth is persistent in every economic headline for seemingly every country, the question of whether this is a temporary phenomenon or the new reality is very relevant. Personally, I am of the opinion that this zero growth environment may be unavoidable.