Imperialism Dbq

Imperialism DBQ Before the late nineteenth century the join States had not fatten outed outside of the Americas this changed when wealth, population and industrial production increased. The demand for resources led to an era of imperialism. During this era expansionism in the joined States unbroken the akin principle scarcely, it departed from previous expansions regarding to geography, politics and the economy. Americans kept the same principle, that God had given the U. S divine right to expand.The bracing Manifest want was a continuation to the previous Manifest Destiny, except it ext finish to far away Islands that would not become states except instead become colonies. Many Americans continued to believe in capital of Mississippi Turners Frontier Thesis. They believed that if the U. S did not expand it would explode. In 1885 Josiah Strong wrote Our Country, he advocated superiority of the Anglo-Saxons and urged Americans to spread their trust to the backward peoples (Do c. B).Americans had felt the need to take control of the Indians after the obliging War and they continued to exert colonial control everyplace aquiline peoples on the Islands. Previously the expansion movement had not gone overseas. The Monroe principle had given the U. S control over the Americas and kept foreign countries from intervening. Germany and the U. S got into a dispute over the Samoan Islands and America kept half. In 1898 Hawaii was annexed. American expansionism also went to the Philippines, Cuba and Puerto Rico. The era of Imperialism differed in politics from expansionism in the Americas.European powers were colonizing the founding and America was being left field-out (Doc. A), by 1900 Europe had taken over 20 percent of the land and 10 percent of the population of the world. The U. S felt the desire to compete with Europe for overseas empires. Before the join States had felt the need to expand and become a strong country, but now it was a competition of world dominance. In The Influence of sea Power upon History Alfred Mahan said that control of the sea was the key to world dominance and empire. Americans felt strong sea power was necessary to treasure themselves from other countries ( Doc.C). When the Cubans rebelled against Spain the U. S became involved. Yellow journalism fueled the start of the Spanish-American War. The United States won the war when Spain signed the treaty of Paris as a result Cuba became a free country, the U. S received Guam and also gained Puerto Rico. During the Russo- Nipponese War Theodore Roosevelt did not want either side to gain a monopoly in Asia, but also did not want to start a war. After Japan secretly asked him to help sponsor peace negotiations, Theodore ended the war with the Treaty of Portsmouth. Economically U.S expansionism was a departure because, foreign conduct had become an important part of the American economy. When the McKinley Tariff raised Hawaiian sugar prices, American sugar plante rs wanted Hawaii to be annexed so the tariffs would be eliminated. Cleveland refused to annex Hawaii, but later changed his mind when it was needed as a coaling and provisioning way station so supplies could be sent to Dewey in Manila Harbor. The U. S bought the Philippines from Spain but didnt set them free because they were a way to China, businessmen clamoured for the new Philippine market and it had desirable bare resources (Doc.E). The Chinese market was huge and American manufacturers feared that it would become monopolized by Europeans. So America issued the Open Door Policy so every estate would have fair competition (Doc. G). During the Era of Imperialism the United States went from being a strong nation to becoming a world power. It keep the same principle, that it was the superior race and God had given them the right to colonize, but left behind its old was relating to politics, economy and geography.

Our Babies, Ourselves Essay

Dependence during infancy is unique amongst hominids compared to opposite beings. However, different cultures in the world differ on how they cater to this dependency. For example, the American culture is influenced by psycheism, therefore they tend to rear their children in such a manner that they will grow up as an independent individual. On the other hand, Japanese are likely to be more affectionate in their child upbringing culture.And on both instances, childs who were reared up the American or Japanese way, their anticipated adult traits remain to be visible. As the expression Our Babies, Ourselves suggests, the care given to an infant during his most dependent stage is reflected when the infant grows up and he develops his own sense of independence and survival skills. The genteelness up process, whether an individual is being given over adequate assistance or being least assisted during infancy is reflected by his developed reflexes and skills in his grown up stage.Fo r the Gusii child- rearing practices, infants were held closer to their parents compared to other cultures. Here, infants develop a closer bond to their mothers, and later on towards other children to develop their interpersonal skills better. Moreover, apart from the physical and emotional aspects of development, neurological and genetic developments of infants are alike being attributed to their rearing up practices.Thus, the uniqueness developed by an individual regarding his skills, competencies and survival instincts is defined by infant care that was rendered to him by his parents. However, the rearing up process is highly shaped and influenced by traditions within a culture, thus creating cross-cultural differences when it comes to child development across different nations and races.

Nagel’s Negative Good vs Negative Evil

?Chapter 9 short writing assignmentShannon Prendergast Nagel explains banish unattackable. as the absence of something severe and he describes a forbid evil as the absence of something safe(p). He is analyze these as they apply to death in this chapter. Assuming that death without anything is both level-headed or bad to the person who dies. . He describes death as being either a negative evil or negative practiced. It can be described as a negative good because it can lack something bad.If someone is dying from a anguishful ailment on that point death will result in the lack of the bad trouble they were feeling. It can also be described as a negative evil because they will miss out on the bulky experiences of life (sun shining, flowers blooming, laughing. ) But for these to be true we must think we take up ont exist later death. If we believe otherwise it could be these things gaint change for us. If you were a bad person you may pertain to suffer, or maybe the sun and flowers are more beautiful after death if you were a good person.An example of a negative good in my life is the death of my brother-in-law. He suffered from depression (unknown to family) He was in a dark place and felt much turmoil and pain within. He committed suicide and this could be considered a negative good for him because his pain was ended. It can also be considered to be a negative evil because he will never see his childrens smile, distinguish there laughter or watch them grow. He was young and there was much life to live.I hope that there is existence after death and that people are at peace with there pain after death and can watch over there love ones. A nonher example in life of a negative good is I had to leave a job I loved, but it happened to spread out the door for me to go back and finish my degree. The losing of the job was in romp not a bad thing because it produced something that otherwise would not have happened. There is also a negative evil in this power and that is that I was unable to sign up for the class I valued to take.It was not necessarily bad it just lacked a something good. In negligee up the difference between negative good and negative evil, I would like to believe that every negative has a positive and when a bad happens to us it is because a good is on its way. As utmost as death goes I believe we go on to a wonderful, place. whether it be as ourselves or not. After all did we ever not exist, or do we live forever just changing forms. maybe are cells evolve into different thing and everyone lives forever somehow.

Character Analysis of Armand Aubigny

I think Armand Aubigny is nonp beil of major character in the story. Because if there are no Armand in the story, thence the conflict allow not be until the climax, or peradventure there would be no conflict at all. In the story, Armand had a conflict with his wife, Desiree. Before we get to the main conflict, yes, I think when Armand had a quarrel with Desiree about Desirees baby is the main conflict, first, I will lead you to the characterization of Armand Aubigny. It was no wonder, when she stood one day against the stone tug in whose shadow she had lain asleep, eighteen years forrader, that Armand Aubigny riding by and sightedness her there, had fallen in love with her. Armand is a man who fell in love with Desiree. He has a light skin and handsome moreover his mother having black skin. His mother died when he was eight. He didnt withdraw her mother have a black skin, maybe because his light skin. I can say that Armand is a racist, because he has strict rules to his slav es. And his slaves are Negrillon. Armand has cognize Desiree since he is a boy. But on that time, Armand not loved her.It is correspond in the sentence The wonder was that he had not loved her before for he had known her since his father brought him home from Paris, a boy of eight, subsequently his mother died there. and so, Armand didnt care about Desirees origin. He authentically fell in love with her. He believed that he can excrete Desiree the best, the oldest and the proudest in Louisiana as is evidenced under the sentence in which he didnt care with her nameless What did it matter about a name when he could give her one of the oldest and proudest in Louisiana? Then they were married. Armand is the man who is arrogant.He cannot discuss a problem using his brain plainly he uses his emotion. Armand and Desiree live their lives as a family as did other family. Until Desiree gave a birth to a baby and Armand knew that baby has a dark skin. Armand who one time loved Desire e is now turned into a fierce Armand. Armand blames Desiree for what happened to his child. He tell that Desiree is a descendant from a black people . We can interpret at the scene when Desiree tried to talk to Armand about the child spread abroad me what it means she cried despairingly. It means, he answered lightly, that the child is not white it means that you are not white. As white as La Blanches, he returned cruelly and went away leaving her alone with their child. He didnt care when Desiree immovable to leave the house. Please, look at this conversation Do you want me to go? Yes, I want you to go. Armand blamed beau ideal too. He thought that God has unfair to him because formerly he loved Desiree very much and then Desiree gave him badness into his house and his family. Finally, Armand read a part of a garner from his mother to his father and he knew that he is a descendant of the bunk that is cursed with the brand of slavery.

Personal Statement For University Essay

My intended major is Economics. My main wager in Economics lies in the field of macropolitical economy and the principles that are involved. Macroeconomics has a demeanor of showing how different policies are intertwined such has policies in Healthcare regarding seclusion benefits to how the worlds interest rate plays a role in our daily banking activities. When I graduated from kindergarten, I lived in Shanghai for a while because of my fathers job.At that time, of course I could non speak Chinese so I faced language barrier. However, I had such as experience so I rush been enkindle in Chinese and other countries culture from my parents influence. I started to learn English, french (when I was junior richly school student) and Chinese (when I was high school student) and I went to classroom which is for studying Japanese for foreigner rude minorren to assist.To be enkindle in learning foreign languages lead me to be interested in foreign countries culture and also I matt e up strongly interested in economics such as what my region economy is, how economic growth is going on in the world, if the States economics situation changed, how it influenced to the world and so on with age. From that I started to be interested in activities of international authorization and it led me to be interested in the United Nations. On 12 May, 2008 Sichuan earthquake made me tension on world economics more than before. The earthquake killed many children. I had strong impact when I watched on TV.Some parents said My child died because of school building is an old Children who are rich could go dangerous quality building school so they could survive This is not a Natural disaster This is Man-made disaster . Some of children I extremity to say thank you to my school to save my life sentence history. It told the severance amid rich people and poor people. I had very big fracture thinking that in Chinas economy is growing up very much so I thought the gap amid ri ch and poor is going to disappear. I want to remove this gap so I want to study about world economics and I want to work for United Nation. I am not a greedy or selfish person.I am driven, guileless and ambitious. I know what I want to be in life and I know how to get what I want. I too brook come to love consumerist America and all the creature comforts that it promises to those who shadow afford them. While I befool no intention of proper a Donald Trump, I do wish for a comfortable life for myself and my family. To be able to provide for my family and to ensure that my children will also have the same opportunities to succeed in life as I have by getting a good education at not only the college level but a Masters degree as well in their chosen professions.

Business, Government & Society – Notes on Relevant Journals

Berend (2000) From forge to Market, From goernance Change to Sustained Growth in Central and east europium * After the suppose socalism dis hold backd in Central and east europium in the primordial 1990s, the Washington consensus of 1989 (a broadly accepted stigmatise of criteria for a disentangle chopine) was adopt as a blueprint for the process of charge. * Central elements * Macro- sparing stabilisation (for countries with signifi enkindlet inflation and indebtedness) * New institutions Legislation * Price and aggregated ease * Radical privatization * Most of the transformatology literature is based on the assumption that the exclusion of deformed non- trade bulge economies, a restoration of securities industry, and underground ownership, paired with a laissez faire free market body would automatically solve all major stintingal/ neighborly problems of the transforming countries. The scotch crisis within the Central and eastern europium ara start ed overmuch sooner in the mid- recent 1970s when addition slowed keyly and the terms of trade for the offer heartyist countries began to deteriorate (1973 first rock oil infract 20% disdain, for some even 26-32%) Schumpeters speculation of geomorphological crisis advancements in technology lead to lower of the of age(predicate) leading spheres and trade forkes based on experienced technology, generating wide-ranging slow-down and decline and ca using an stinting crisis even in rich, advanced countries.However, although rising pee conduct technology direct to the emergence of new industries, new leading export spheres and an impressive new boom in the US and other advanced countries, the Central and Eastern Europe countries experience a fringy geomorphological crisis they suffered all the forbid consequences of a the structural crisis tho all overdue to non having sufficient visions for R&D, know-how and m iodinetary offsets, they were non able to ta ke advantage of the technological development.After 1989, when the countries of the sh ar lost the shelterion from Comecons isolation and regional self-sufficiency, they were forced to present the founding market and compete with the advanced countries (already adjusted to new technology) and excessively on their own cave in domestic help market. Consequence the peripheral structural which had pro baded since 1973 continued and worsened during the 1990s. Also contri simplying to the frugal crisis social functionful macro- stinting policy errors e. excessive devaluation of the currency likewise abrupt opening to trade with the West and the failure in disposal trouble of the tell apart field * Foreign trade deficits annexd dramatically and n primordial all countries in the region dropped into an indebtedness trap debt service consumed al roughly 40-75% of the countries hard income and so wizardr a few started to get cut back oer inflation * frugal policy durin g the musical passage Change was too degenerate countries of transformation should non see attempted to jump directly from a primordially be by and by to a laissez-fair sparing and from an entirely secern-owned to a 100% privatized miserliness * evidence regulations and semipolitical science policy were regarded self-regulating mechanisms were non yet developed, market imperfections and non-market friendly behaviour were present * Suggestion (Kolodko) A regulated market, preferably of a self-regulation market, a mixed economy with a reconstituted and efficient evince-owned sector for at least(prenominal) a period of time, and a fine medley between market and stae would take a crap been a much than natural spiritual rebirth from design to market * However, this approach was non adopted and led to a recess of m to each one give away of date companies (lost a bulk of their place and had to be sold for a fraction of their previous value) passel un practice session, sharp decline in living standards ( in particular for vulnerable layers of society) * Outcome Industry healed solo in cardinal countries Poland and Hungary * Some experienced a new crisis Bulgaria and Romania * Russia and Ukraine as well as some(prenominal) other successor states of the Soviet nion had experienced constant decline done with(predicate)out the entire decade * Poland, the Czech Republic, Hungary, Slovakia and Croatia market economies argon functioning, frugalal decline and quick inflation argon over, the annual scotch surrender is impressive * Performance releases * Often explained by the wishing of stopping establish to pursue foot restores author agrees * However, besides pursuing common change, the countries in transformation in any case take a crap to adjust to the structural risis, by restructuring the economy according to the ingestments of modern technology to reach a sustained and lavishlyer than average harvesting techno logical and structural transformation of the economy ar primal elements of the pitch contour * Window of opportunity slowly opened later on 1989 when direct international enthronization became the key factor in technological modernization and restructuring in the bea merely only contend an important role in the iii front formners of transformation Estonia, Latvia and Slovenia * In addition, non all investments contributed to restructuring, some of them served only to enlarge the investors markets. However, key investments were made in the nigh a bunsthaward infrastructural sphere, especially telecommunication that serves as the basis for any kind of technological draw close to date. * Investments had irresponsible effects on Eastern Europe where they generated growth of domestic commercial opening move which led to scotch growth (especially in Poland).Big transnational patronagees were in like manner obliged to reinvest some of its profits and to physical puz zle out domestic products and sub-contractors initiated small topical anaesthetic air activities. * Russia, the successor states of the Soviet aggregate, and nigh(prenominal) of the Balkan countries exhibited minimal progress in restructuring. FDI was minimal in this area and for the most part went into the extracting growes of oil, gas and raw materials transnationals are present but do non develop processing industries and export branches. Consequently, this area was unable to adjust to the late 20th century technological revolution and declined into a continuous peripheral structural crisis. In those Central European countries, where impressive FDI assisted technological-structural adjustment, transformation is paving the mood to sustained growth and catching up with the West. These countries became memers of NATO and are candidates for EU membership. Murrell (1993) What is Shock Therapy? What Did it Do in Poland and Russia? Poland * Shock therapy failed in Poland * The purify program implemented in January 1990 comp bring upd a number of cerebrate measures * fiscal policy was pissedened considerably cipher surplus in Q1 1990 * Real value of the money supply was halved * Tight destines were placed on consultation * craftsmanship loosening removed all restrictions * Anti-inflation lock assess was set at strict take aims Government made a commitment to privatisation on a massive plateful * Solidarity and the Catholic Church were two of the inviolateest social institutions in Eastern Europe helping to master(prenominal)tain the semiconsciousness therapy gravel * authorly it was legitimateised that the shock therapy was non going to produce as umteen benefits as expected, it came under severe coming in stages, many of the elements of the initial program were withdrawn or weakened pecuniary policy was loosened * except movement a mood from the shock program occurred throughout 1991 in the administration of massive and open ohm ic resistance to the regimes policy * mo clamsary and fiscal policy were considerably loosened budget deficit began to rise to the levels of 1989 * Reversal of trade policy tariff rates increased and selective protection was endorsed * Although policy was modified during the two historic period following the declamatory bang, the commitment of the large part of society to change was never in doubt. * Change was inexorable (kohklematu), addicted the collapse of the communist regime that had obturate tidys that had been filled for so long. * Neverthe little, gloss economy started to show first signs of success after policy was rescued from the shock therapists. Russia Stages of the domesticise chronology in Russia are standardised to those in Poland, but without a sure-fire outcome * Less propaedeutic refine during the communist period in Russia * Core group of re former(prenominal)s were radical and ambitious, and much removed from its own society than were the glea m reformers * Radical reforms had but advanced beyond their explicitly destructive first phases onwards they were jilted by society * By 1991 economic reform in the Soviet Union had hardly progressed beyond the stage of decentralisation within the old clay and it was still genuinely equivocal * Price locks and state targets contributed to well-nigh 75% of economic activity * Small undercover sector did not thrive on its own, it was in a symbiotic race with the state sector * Law on contract had not been implemented by the end of USSR * Russias economic and disposalal leaders still did not adepty comprehend the exhausting c at onceptual and institutional issues connect to establishing macroeconomic hear and they had little experience Russia could not match Polands eld of contact with the West, the experience and knowledge of its policy bracers gained in the worldwide academic community, and the years of learning in interactions with the world financial community. * I n 1990 and 1991, the Russian governing had been gradually gained proponent (and this was accelerated by the failed coup). * In late October 1991, Russian President Boris Yeltsin announced his intention to launch a radical attack on the countrys economic problems. He had been given immunity in administrative and policy preferences for one year and he distinct to assign the policymaking duties to a group of theorists, who had a strong preference for rapid change and who had vague idea about how to bring this change about * Murrell argues that shock therapy was the guiding force of policy as Russia began sincere economic reform in January 1992. * The reform (1992) was plasteredly more radical than the Polish loose-bang, including * Freeing of most prices * Removal of the old supply schema * The cease s wishingening of imports * A thoroughgoing change in the tax re mains * Rapid closing of the budget deficit * Stringent tightening of monetary policy * A privatisation progr am with very ambitious goals Preparation for wee convertibility of the ruble together with and immediate relaxation of rules on foreign transpose trading * Renegotiation of the live trading relationships with the other ex-republics * There was coarseer determination in Russia to undermine the existing institutions of presidency the incoming governing viewed its commission as an attack on the old Soviet remains. * In several areas, the floor of shock, the amount of policy implementation, and even actual policy were unreadable * Un veritablety about the nature of policy was present even among those at the apex of governing body * As early as February 1992, literary criticisms about the economic policy started to arise * As 1992 proceeded and the economic crisis became more threatening, some old mechanisms of control began to return * Broad kings to control prices and to use central directives on take * To reduce large scale bankruptcy, the organisation began to vex com mendation available to nterprises in crucial amounts * Due to a threat that pause enterprises were being brought down with the severity ones, directors of enterprises formed an alliance along with strong-minded labour unions to put pressure on the government, which was forced into compromise with these pastime groups * Direct consequence of the policies introduced in January 1992 was that the political forces representing the dominant economic interests of the old Soviet system were much stronger than they had been earlier those policies were introduced * The short burst of shock therapy in Russia had considerable success if destruction is counted as a goal. pass on the destruction of the old was hardly matched by the world of market-oriented institutions of economic control. Blanchard (1994) passing in Poland * First two years * Large decreases in gross domestic product * Even larger decreases in industrial production * Output stabilized in mid-1992 * Employment declined i nitially more slowly than GDP, but has unbroken declining despite the turn in product * Hardening of budget constraints * Subsi take places to state trustys were decreased Tax arrears, interenterprise arrears and bank loans were restrain and littleen * Sources of output decline during the first 2 years * Stabilisation * Price liberalisation * apply of trade between Central and Eastern Europe countries * State firms are controlled by workers with uncertain impales and horizons, and energize limited access to pay state has remained de jure owner of state firms but is not able to exercise its control rights control has reverted to the workers * Led to slow adjustment of employment to decreasing output, appropriation of profits to workers in the form of lucres and low restructuring and investment * Slow privatisationFidrmuc (2003) Economic reform, democracy and growth during post-communist conversion chance upon site There are merits to simultaneous democratisation and lib eralisation democracy reinforces economic liberalisation, which in turn leads to go growth procedure. Democracy is bearly not a incumbent condition for high growth (as the examples of Chile and china illustrate), but as the experience of the post-communist innovation countries shows, democracy results in policies and institutions that hasten economic reforms and create an environs that is favourable for growth. However, democratisation alone is not the key to growth it is through its plus impact on economic liberalisation that it improves growth proceeding. By 1993, barely 3 years into transition, three frontrunners the Czech Republic, Hungary and Slovenia attained a level of political freedom and obliging liberties comparable to the UK, France or Germany. * Most post-communist countries succeeded in sustaining at least a moderate level of democracy, despite very turbulent economic and political developments, military conflicts or coup attempts. * The high fixedness of democratisation reflected not only the desire of these countries citizens to live in democracy, but also the rise or outright pressure from Western governments, international organisations and especially the EU which made democracy and explicit precondition for accession negotiations. Democracy has a positive effect on progress in implementing market-oriented reforms. * Economic liberalisation, in turn, has a positive effect on growth * Therefore, democracy indirectly improves growth performance. * Economic performance during transition and initial conditions affected the progress in democratisation countries that were more developed at the outset of transition and those that grew degenerateer during transition in turn implemented greater degree of democracy. Growth performance during transition * All post-communist countries experienced dramatic muscle contraction of economic activity at the outset of the reforms, but the subsequent transition paths diverged considerably. So me countries reached the bottom of transformational recession after 2-4 years and then recovered * Some, most notably Poland grew at impressive rates subsequently * Others (Bulgaria, the Czech Republic and Romania) experienced a second dip later on * In contrast, most Soviet Union countries experienced deep and lengthy depression with little subsequent recovery for Moldova and Ukraine, transition resulted in a decade of continuous decline * By 2000 only 4 countries tolerate exceeded the 1989 level of output * Berg et al. (1999) found that the initial output overhaul is attributable primarily to initial conditions and macroeconomic inst aptitudeiness, whereas the effect of liberalisation on growth was overwhelmingly positive. When considering separately the effects of liberalisation on state and semi orphic sectors, they conclude that liberalisation contributed to the contraction in the state sector, but this was more than compensated by the expansion in the undercover sector . The further a country lies from Brussels, the more reluctant it was to implement radical economic reforms on that tokenfore, being father a trend from Western Europe is associated with lower growth, although the relationship is often not significant. * Engagement in military conflicts, not surprisingly, lowers growth. * On the other hand, once the war is over, the affected countries tend to grow more rapidly as they make up for the loss of output. * Government ingestion does not chip in a significant impact on growth Democracy and growth * The post-communist countries implemented, at least initially, economic and political reforms simultaneously. In some cases, political reforms even preceded the economic ones.Hellmann (1998) Winners Take All The political science of partial(p) Reform in Postcommunist regeneration Key point A conventional approach suggests that in the short-term, economic reforms are believed to generate high transitional cost before long-term gains are re alised. Therefore, politicians in republican systems are reluctant to undertake radical reforms whose benefits will not be realised before the next elections. For an economic reform to be successful, governments need to focus on restraining the net winners of the reform as they are the ones responsible for setting the highest obstacles for the advancement of the reforms. The partial reform model Explains wherefore some countries maintain maintained partial reform over time, even though the short-term costs are higher and the boilersuit gains are lower than those associated with more comprehensive reforms * Explains why post-communist countries in which the net winners of the reform process place to piss significant political power over economic policy-making nevertheless(prenominal) bewilder remained mired in a partially reformed economy * Provides a possible business relationship for the strong link between democracy and economic reform among the postcommunist transitions th at stresses the advantages of including the very groups that suffer from the transitional costs of reform Conclusion The costs of transition drive home been pregnant in all transition economies to varying degrees, each country has set about some combination of high inflation, high unemployment, declining real incomes, decreasing state services, and increasing uncertainty. * However, the losers of the reforms produce not constituted the main political obstacle to the progress of reform. * In fact, it is these countries in which governments bedevil been most vulnerable to the losers threat of an electoral backlash against reform that have adopted and sustained the most comprehensive reform programs. * In contrast, governments insulated from electoral pressures have made, at better(p), only partial progress in reforming their economies. * moreover, economic reforms, once adopted, have rarely been reversed, even when the reform governments that initiated them have been ousted.In addition, there have been cases in which electoral backlashes were followed by intensification of reform in some areas * Partial reforms were predicted to generate rent- desire opportunities arising from price incompatibleials between the liberalised sectors of the economy and those still coordinated by nonmarket mechanisms * Rapid foreign trade liberalisation without complete price liberalisation managers were able to sell their highly subsidised natural vision inputs (oil/gas) to foreign corrupters at world market prices * Privatisation coupled with the introduction of an impelling somatic government structure reduces asset stripping by enterprise insiders. Actors who enjoyed ludicrous gains from the distortions of a partially reformed economy have fought to prolong those gains by maintaining the imbalances of partial reforms over time the winners from an earlier stage of reform have incentives to block further advances in reform that would compensate the very distortio ns on which their initial gains were based. In effect, they seek to prolong the period of partial reforms to preserve their initial flow of rents, though at a considerable social cost. * Therefore, the challenge posed by the winners is based on a set of assumptions about the costs and benefits of reform that differs from the assumptions of the conventional J-curve pattern upon which most existing models of the political economy of reform are based. J-curve assumes that economic reforms generate arduous costs in the short term and dispersed benefits over the long term, whereas Hellman has demonstrated that in the postcommunist transitions, economic reforms have tended to produce highly concentrated gains to circumstance groups in the short term, duration dispersing the transitional costs of reform throughout the economy. * The partial reform model stresses the need to restrain the winners by increasing contestation with other groups or by restricting their ability to veto refor m measures unilaterally. * In this view, expanding political participation to imply the losers in the policy-making process could place limits on the concentrated political power of the winners and prevent them from sustaining a partial reform equilibrium. * One of the fundamental tenets of the political relation of economic reform has always been to create a constituency of winners with a stake in sustaining and advancing the reform process. This has been a common strategy some(prenominal) for making the reforms irreversible and for building up the necessary political realize for further reforms. * Yet a comparison of the post-communist transitions suggests that the winners can do furthest more wrongfulness to the progress of economic reform than the losers. * Therefore, the success of economic reform depends two on creating winners and constraining them. * Paradoxically, the most effective factor of constraining the winners in the post-communist transitions has been to w arranty the political inclusion of the very constituency that most existing political economy models seek to exclude the short-term losers of reform. make headway in the implementation of market reforms could reduce the cliquish gains to the initial winners over time, spot increasing dexterity gains for the economy as a unit from winners perspective, J-curve is reversed * Countries that adopt more comprehensive reforms at the start have a narrower gap between the income curves of winners and losers. More on PARTIAL revitalize and other information Roland (2002) The Political Economy of Transition Normative political economy focuses on the decision-making problem of reformers Reformers face 2 types of political constraints * Ex stake political constraints feasibility constraints * Ex post political constraints cerebrate to backlash and policy reversal Relaxing political constraints 4 options 1.Building reform packages that give compensating transfers to losers from reform s * Easiest way Buy their acceptance * In the real world and transition economies it is hard to do 2. Making reforms partial to reduce opposition * Partial reform, usually in the framework of a gradualist strategy, has some clear disadvantages. It yields lower efficiency gains than a complete reform. * However, partial reform also has several potential advantages over full reform it is less pricey in terms of compensation payments to losers. * If partial reform is less costly to reverse than full reform, political acceptability can be easier than for full reform because it wills an option of early reversal. If a partial reform is implemented, a continuation toward full reform seems unattractive to a majority then it is always possible to come back to the posture quo (Russia turned back too early? ) * bit-by-bitism thus lowers the cost of experimenting with reform and thus makes a move away from the status quo more easily acceptable to a majority. * Partial reform can also bu ild constituencies for further reform through the use of divide and rule tactics (showing that rejection of a flow reform mean can lead to the adoption of a plan that would hurt them even more, they whitethorn prefer to accept the first one) and the optimum choice of sequencing of reforms (e. g privatisation of those enterprises with replete(p) outcome first) 3.Creating institutions that make a conjectural commitment to compensating transfers * Can offer benefits * However entails economic costs * E. g extending voting franchise- ensuring abjecter segments of population vote 4. Waiting for deterioration of the status quo to make reform more attractive * Sometimes only option is to live * However, decision-making paralysis may occur if political decision making is characterised by different parties trying to push the burden onto the other parties Understanding the difference in transition paths between central European countries like Poland and Russia and the former Soviet Unio n on the other hand * Law and berth rights One argument the extent of state capture and rent seeking was much more important in former Soviet Union countries than in central Europe and this difference goes a long way in explaining differences in output performance (EBRD, 2000 Hellman and Shankerman, 2000) * Geopolitical factors * Quite important, although they have been underestimated since the beginning of the transition in geopolitical terms, the transition represents the shift of central Europe and the Baltic states toward occidental Europe several nations are given the opportunity to have more interaction with western Europe or even join the European Union * first appearance to the EU implies adopting the political and economic system of the west. The potential reward of belonging to the club of western nations makes it more worthwhile to undergo the cost of transition.Moreover, the geopolitical factor increases the perceived cost of reversing transition policies, since suc h reversals would raise the risk of being left out of the western club, an outcome than many in central and eastern Europe would view as disastrious. Geopolitical impact of transition for Russia * Transition represents the loss of the Soviet empire and also of territories (Ukraine or the Baltic States) outrage to Russian nationalist pride * Trauma of the loss of superpower status could be compensated for by economic gains from transition to a certain extent. Unfortunately, such gains have not materialised so far for the majority of Russians. Entry of Russia into the EU is neither expected nor especially desired. * Thus, resistance to transition prove much harder in the former Soviet Union than in central and eastern Europe. Sequencing The sequence of reforms in transition economies are roughly in line with political economy theory, which suggests that reforms expected to be more normal should be adopted first and the less popular reforms tend to be delayed. For example, in both Central and Eastern Europe, democratic reforms preceded economic reforms because prolong for democracy was much stronger than patronize for economic reforms. * Apart from political reforms, certain other institutional changes can be decided at an early stage of reforms. For example, establishment of institutions for competition policy should be among the first reforms to be implemented in transition economies.This reduces the danger of existing monopolies going into backstage hand, which may have enough power to prevent the government from introducing competition policy or any other measures that are opposed to their interests. * other important early step in the sequence of transition reforms is advance the development of a small private sector prior to more comprehensive reforms (in Hungary, small private sector was already producing 10% of industrial output by 1990) * As the Big Bang Price liberalization in Vietnam showed, the prior existence of a viable private sector bu ffered the shocks of economic liberalization and macroeconomic stabilization and facilitated a supply response.In Vietnam, after the implementation of a radical price liberalisation, output initially fell, but an impressive growth in agriculture still led to positive growth in GDP. * In transition economies, the best firms tend to be privatized first as the privatization of more advantageous firms creates political keep and gracility to for further privatization and other reforms. * some other set of sequencing issues arises with regard to mass privatization. band privatization in countries like Russia created a sudden and strong concentration of economic power among insider managers. This is especially dangerous because a sudden shift of economic power to insider managers may make it easier for them to threaten or use graft against politicians and regulators to take advantage of subsidies or favorable legislation.The insider uses the threat of reducing economic activity and d estroying jobs which leads to inequality of wealth which in turn might increase political instability. Trade-off between the rush along of reforms and the size of budgetary transfers * The theory of political economy suggests that faster reforms involve higher compensation costs like unemployment benefits and pensions due to a higher level of restructuring. In addition, there are claims that a faster rate of restructuring in transition economies is associated with a worsening fiscal state. * However, the role of the social safety net in helping overcome political constraints is quite clear.In the case of central European countries like Poland and the Czech Republic, the social safety net has helped to mitigate the electronegative ffects of transition on income inequality, especially for the most vulnerable proportions of the population. Role of political institutions * When it comes to the role of political institutions and the progress of reforms, there are contradicting views. * Empirical compendium by Hellman and EBRD has found that stronger executive branch of government tends to be associated with less progress in reform, whereas there tends to be a positive correlation coefficient between the broadness of coalition and the progress of reforms. * However, empirical findings by Rubini and Sachs, among others, have shown that weak executive branch and broad coalition goverments are obstacles to reforms. fleet progress in reforms due to broader coalition may be explained by the fact that if reforms are accepted by broader coalitions, perhaps there is less chance they can be reversed. * However, broad coalitions tend to paralyze decision making due to the holdup power of some groups and to differing views within the coalition. * Another possible interpretation is that the population is eager to get reforms implemented, whereas the politicians and those holding division are opposed to it. In that case, closer checks on the executive branch and frequent ele ctions are a way to force the politicians to move, whereas politicians with more slightness would choose to block reforms. According to Roland, the most in all likelihood explanation for the positive correlation between progress of reforms and broadness of coalitions and weakness of the executive branch is that it is in all likelihood that the countries where it was the easiest to push for democratic reforms, are also the countries where resistance to economic reforms was relatively smaller. Whereas in countries with less initial support for reforms, it is quite likely that both democratic reform and economic reform are less advanced. Therefore, the differences in initial conditions of reform are what determine the intensity of political constraints, and thus the initial choice of political institutions, and thus the initial choice of policies. Popov (2000) Shock Therapy vs GradualismPrimary issue regarding transition performance strength of institutions utility(prenominal) speed of reforms * By now most economists would probably agree that because liberalisation was carried out without strong market institutions it led to the extraordinary output collapse in CIS states * The worse initial conditions for transformation, the greater the probability of the deep transformational recession, and hence the more likely delays in liberalisation * Gradualists objected to the elimination of old regulations and institutions before the new ones are created, warning that the institutional vacuum may have a devastating impact on output Transformational recession Supply-side phenomenon reallocation of resources (restructuring) due to market imperfections is associated with the temporary loss of output Argument Differences in economic performance in post-communist countries during transition appear to be associated predominantly not with chosen reform paths, but with the magnitude of initial distortions in industrial structure and external trade patterns, and with the initial level of economic development. The higher the distortions (militarisation, over-industrialisation, under-openness of the economy and the deal out of perverted trade flows), the worse is the performance as measured by the GDP change. And the higher was GDP per capita before transition, the greater were distortions embodied in fixed chief city stock, the more difficult it was to overcome these distortions to achieve growth. The impact of speed of liberalisation appears to be limited, if any. Reasons (distortions) * spirited defence expenditure and the need for conversion * Overcoming the effects of the Cold struggle Defence expenditure was abnormally high declines in defence output were not offset by increases in non-defence output * Reallocation of resources from patience to services * External trade distortions the degree of openness of collectivized economies (the voice of external trade in GDP) * In most countries, including the majority of the former Soviet r epublics, trade was relatively underdeveloped * A bit better in Azerbaijan, Hungary and Vietnam * Shift to world market prices in interrepublican trade led to decrease trade prices utilise were completely different (resource commodities underpriced, finished corkings overpriced) insurance policy factors institutions, rule of law and democracy The decline of the institutional capabilities contributed a great deal to Russias and CIS poor economic performance * Regardless of the criticism against galactic governments and too high taxes in former socialist countries, the downsize in the government that occurred in most CIS states during transition went too far drastic reduction of government spending (50% and more in real terms in the class of just several years) cannot lead to anything else but institutional collapse * In addition, in most CIS states the reduction occurred in the way that instead of shutting some programs down completely and concentrating limited resources on others, governments kept all programs half-alive, half-financed and barely working Three major patterns of change in the share of government expenditure 1) Under strong authoritarian regime China Cuts in government expenditure occurred at the expense of defence, subsidies and budgetary financed investment, while expenditure for ordinary government remained for the most part unchanged 2) Under strong democratic regimes Poland * Budgetary expenditure, including ordinary government expenditure declined only in the pre-transition period, but increased during transition itself social safety nets? 3) Under weak democratic regimes Russia * Reduction of the general level of government expenditure led not only to the decline in the financing of defence, investment and subsidies, but to the downsizing of ordinary government which undermined and in many nstances even led to the collapse of the institutional capabilities of the state * Russian pattern of institutional decay proved to be ex tremely deleterious for investment, and for general economic performance To sum up, Gorbachev reforms of 1985-91 failed not because they were gradual, but due to the weakening of the state institutional capacity leading to the inability of the government to control the flow of events. Similarly, Yeltsin reforms in Russia, as well as economic reforms in most other FSU states, were so costly not because of the shock therapy, but due to the collapse of the institutions required to enforce law and order and carry out manageable transition. Therefore, there is enough evidence that differing performance during transition, after factoring in initial conditions and external environment, depends for the most part on the strength of institutions and not so much on the progress in liberalisation per se. Democratisation without strong rule of law usually leads to the collapse of output.After allowing for differing initial conditions, it turns out that the fall of output in transition economi es was associated mostly with poor business environment, resulting from institutional collapse. Liberalisation alone, when it is not complemented with strong institutions, cannot undertake good performance. Ericson (1991) The Classical Soviet-Type Economy Nature of the System and Implications for Reform Characteristics of the Soviet-type economic system * A hierarchical structure of authority * Rigid, highly change planning of production and diffusion * A commitment to maximal resource utilisation * Formal rationing * Exhaustive price control * The omit of any liquidity or flexible response capability * The lack of judicial alternatives to assigned economic relationships * Absolute and arbitrary control by superiors Incentives that are geared to meeting the plans and desires of evaluating superiors Any economic reform must(prenominal) struggle against these characteristics and their natural consequences. One important consequence is that while the administrative superstructure has been subject to instead frequent reform, the physical structure of production and interaction has changed only very slowly. Strengths and weaknesses of the handed-down Soviet-style system Strenghts * Very good at mobilising scarce resources and concentrating on a few clear, well-defined objectives (that can be expressed in measurable, quantitative and communicable terms and that yield large observable outcomes) * Building of major heavy industrial capacities * collectivisation of agriculture * Post-war reconstruction of industry Development of an unprecedented military-industrial complex * nourishment of the worlds last true empire Weaknesses * Central regimen lack the information and physical capability to monitor all important costs * Decisions made in ignorance of opportunity costs lead to a vast range of negative externalities * Damage to the capability of users to produce (especially with needed quality) * Unusable output forced on others in the system * final stage of the resource base due to im suitable exploitation * Collateral damage to agriculture etc * Incentives used lead agents to * Avoid any change or risks * Shun innovation * Ignore information important to others * Work to rules unheeding of the impact on othersThus, while the tralatitious Soviet economic system has been effective in achieving a few centrally definable and achievable objectives, it is also inherently wasteful and inefficient in the pursuit of those objectives. Implications for reform 2 monumental obstacles * Vast resource commitment however, lack of resources presently available in Soviet-style economies is probably not the most serious obstacle, for it might be dealt with through aid from abroad * Primary obstacle characteristics of the Soviet-style system are interconnected and mutually documentation, altering one or a few is merely disruptive of the stable functioning of the system and its effectiveness.Thus, a meaningful reform must eliminate all characteri stics more or less simultaneously. THEREFORE Partial reforms will not suffice The synopsis implies that radical reformers are correct to seek the total replacement of the customal system. Radical marketization and privatisation undercut of destroy each of the nine defining characteristics of the traditional system. Fischer & Gelb (1991) The Process of Socialist Economic Transformation opening move reform * Enterprise reform, which requires the imposition of bottom-line discipline, definition and change of ownership, and reform of management, is the heart of the transformation process. two phases (opinions differ which should come first) * Restructuring * PrivatisationSlow privatisers argue that firms should be sold off gradually after restructuring. They emphasise the danger of severe economic dislocation if too much change is attempted quickly. Fast privatisers argue that the benefits of a rapid and irreversible shift to private production outweigh the costs of reduced state rev enue. They believe that comprehensive and rapid ownership reform is necessary to increase efficiency. * Broad distribution of shares, or vouchers with which shares can be bought, crossways the population The Role of the State * Redefining the previously all-encompassing role of the state is one of the greatest challenges for reform.Institutions and professions taken for granted in market economies have to be re-created and reformed to support markets * Secure legal environment to protect proportion rights and regulate commercial relations * Accounting and scrutinise systems are needed to organise and monitor information * Investments in compassionate outstanding to complement the system reforms in areas such as accounting, credit and market analysis and bank inspection. * Management skills need to be upgraded and modernise (especially in finance and marketing) * In some areas, such as financial markets, reform may require a greater state role than before. * Reforming governmen ts need urgently to * Introduce broad-based taxes and to develop the capacity for tax administration, preferably than continue to depend on profit remittances from state enterprises. * Institute a social safety net, especially for those affected by the new phenomenon of open unemployment * Liberalisation of labour and hood markets is also important.Labour market reform measures to make it easier to hire/fire labour, relaxation of wage regulation, introduction of unemployment insurance, establishment of institutions (inc. employment agencies) to encourage labour mobility. nifty market reform development of financial markets and private sector institutions (inc. banks). However, freeing input markets should not be an early priority. * Enterprise reform is the heart of the transformation process. 2 phases restructuring and privatisation. Slow privatizers vs fast privatizers. Reforming governments will have to introduce broad-based taxes and develop the capacity for tax administratio n, rather than continue to depend on profit remittances from state enterprises. The reforming goverments will also have to develop a social safety net. Sequencing of reforms Reforms need to include macroeconomic stabilisation, price reform, trade reform, small-scale privatisation, new regulations for private investment, the creation of emergency unemployment insurance and the start of work on new tax, legal and restrictive institutions. * For countries with severe internal/external imbalances, priority no. 1 has to be macroeconomic stabilisation (e. g sharp cuts in firm-specific subsidies, tight credit limits, trade liberalisation at a heavily depreciated permutation rate, fixing the nominal exchange rate (in countries with high inflation)). Stabilisation can be breakd only by following consistent macroeconomic policies over periods of years. Shleifer (1997) Government in Transition Key point Russian government is less effective in serving the market economy as well as its peop le than the Polish government. But why? Arguments to the effect hat Russia is historically and culturally incapable of good government (such as low trust and anti-market culture) lack support. More convincing argument Russia has not had as radical a change in its government, in terms of both structure and personnel, as Poland or the Czech Republic. comparing of Poland and Russia * twain were industrial economies at the time reforms began * Both economies faced substantial disruption from the collapse of COMECON and other trade following the dying of the Soviet Union * Both economies were in poor condition when the reforms began, suffering from inflation, goods shortages and declining production. * Both experienced a near-collapse of the state prior to transition. In Poland total demise of the communist party and its military regime * In Russia the Gorbachev government faced a similar crisis, which led to the dissolution of the Soviet Union and the creation of self-sufficient Russia * After communism collapsed, both countries moved to fragmented, rapidly changing party systems and semi-presidential regimes, in which a conflict between president and legislative assembly was present from the start. * Both were led in their transition by charismatic, populist presidents committed first and foremost to the destruction of communism. However, despite these similarities as of 1990, the two countries appeared in 1996 to have very different results of their reforms. I argue that an inbred part of transition to capitalism is the transition of government.Despite similar economic reforms, government in Russia continues to retain substantial political control over economic life, and moreover uses this control to pursue predatory policies toward business. The political transition in Russia has not at peace(p) nearly as far as it has in Poland, and this slowness of political transition disturbs economic growth. Government in transition * Even when the communist pow er collapsed, some remnants of a large government often remained, ready to continue political control. The principal goal of the political transition was to replace these remnants with institutions supportive of capitalism. This entailed two steps * Depoliticisation government control replaced with control by market orces * Price liberalisation eliminates price controls that were used by planners to either stimulate or discourage production of particular goods, or to create shortages that allow planners to maintain their power over resource allocation. * Stabilisation imposes a harder budget constraint on the government, and thus prevents politicians from using subsidies to encourage firms (and regions) to pursue political ends * Privatisation removes direct control over firms from the government * New functions taken on by government provision of laws and regulations that support a market economy. * The state had to be weakened overall, but modify in a few areas. * However, ev en with the three radical measures taken, the government retains much regulatory power which it can use to either support market economy or hurt it. Shock therapy does not guarantee depoliticization (as politicians can still exercise control in other ways) or a transformation of government institution which includes * creation of laws and legal institutions that protect private property, enforce contracts between private parties, but also limit the ability of officials to prey on private property * creation of regulatory institutions that deal with competition, securities markets, banking, trade and so on * Despite shock therapy, politicians in Russia, particularly at local anaesthetic level, retain enormous control over economic life, which they use to pursue political ends and to enrich themselver. * This makes them rather different from politicians in Poland * Russia is also behind in creating the institutions of a new market economy. ALSO Transition of government into one that supports markets from the one that preys on them has gone further in Poland than in Russia regulators of small business exert more power over business in Moscow than in capital of Poland and use this power to enrich themselves. In addition, the Russian government has not yet successfully taken on the basic market supporting functions, including police protection. * Russia is much more of a laggard in the transition of its government than it is in shock therapy. Human capital of politicians Key point Lack of turnover of human capital in Russian political science may well be a serious reason for the poor performance of its government * Many Russian politicians are communist leftovers experiencing significant hardships understanding what is expected from them. Few of these leftover politicians have transformed themselves into capitalistic politicians. In Poland, 75% of local leaders select in Poland in 1990 had no read of government service and 45% of newly elected mayors were unde r the age of 40 in Poland the people have by and large changed and been replaced by a younger crowd, with some experience in both democratic politics and market economy, whereas in Russia, the local leaders are largely the very same people who were there before the reform began. In this respect Solidarity changed Poland Russia would be a very different place politically if it had a similar revolution from below. Incentives of local politicians to support private business * Campaign support * If politicians need to collect campaign contributions to run their elections, they might favour new business as a source of potential campaign donations * Local tax base * If politicians need to domiciliate public goods to attract votes, and must collect taxes to pay for these goods, they would support the growth of new business to lead the tax base * Personal share holdings Local politicians may support private business if they effectively lead shareholders in it and profit privately when it does well Poland vs Russia Elections * Poland had held elections more consistently than Russia and officials at very local level where small business would actually have a political say are all elected. * Because of elections, Polish politicians appear to be much more supportive towards private business than Russian politicians. Tax base * In Poland, the principal source of funds for local governments are local taxes and fees, especially property taxes incentive to the local politicians to broaden the tax base to increase revenue through new business formation and employment * In Russia, over 2/3 of local government evenues comes from their share in taxes collected by central government through negotiation governors have little incentive to broaden their tax bases and instead focus on negotiations with Moscow Personal financial incentives * In Russia, many of the local officials see a rather short and dubious future for themselves in politics. If the private economy grows, th ey are likely to lose power because they will not be acceptable to the new business elites or will be replaced by younger politicians during new elections. absence of political security may prevent the politicians from accessing the future profits of the firms, wherefore many local government officials simply destroy local business through excessive corruption and regulation they take what they can while they can. Initial conditions Poland had been pursuing economic reforms at least since the 1980s (much yearlong than Russia) Polish private sector was well established by 1990 when reforms began (by 1986 1/3 of the Polish labour sector was employed in the private sector) * Poland had a much more substantial legal history and tradition to rely on many of its commercial laws were adopted as currently as reforms began because they were based on Polands own pre World war II laws * National tradition made the implementation of at least some institutional reforms much easier. * Russ ia had been building capitalism for a much shorter time Gorbachevs reforms allowed some quasi-private firms in Russia, but few compared to Poland. Russias history of market institutions is sparse too pre-revolutionary laws were an instrument of autocratic control, not protection against it regulatory agencies have been created from scratch, employees often view their jobs as mandates for personal enrichment rather than efficient regulation. * However, author believes that importance of initial conditions can be overrated many countries in Eastern Europe, such as Slovakia and the Czech Republic, are ontogeny rapidly even though they had as little private business before the reforms as Russia did. Some countries of FSU are also growing despite having a limited history of legal traditions and public institutions. With proper political incentives, initial conditions are often overcome. Suggestions Acceleration of elections at the sub-regional or local level * Fiscal federalism more generally the tax system needs to be reformed as well. * Institutional reforms need to continue legal reforms are most important among those, but creating functional bureaucracies, one at a time, is also crucial. * Russia made the mistake of beginning with economic reforms and delaying the political and institutional reforms (however, author believes that business pressures are likely to make for a life-sustaining role in the political transition of Russia and of course they did not exist before economic reforms) Estrin (1991) Privatisation in Central and Eastern Europe Key points Appropriate mode of privatisation depends on the development of capital market institutions and the availability of foreign or domestic private capital * Transition must be rapid to be effective, so reforming governments have been faced with the tasks of selling assets whose value is far in excess of domestic resources. Privatisation * Objective to improve enterprise performance and national economic efficiency and to help public finances (Vickers and Yarrow, 1988) * Definition (Milanovic) transfer from the public to the private sector of ownership in such a way that private individuals become the identifiable ultimate owners Seven central areas in which property rights and the mechanism of resource allocation must be altered in order to build a functioning market sytem 1) Ownership and control 2) Means of allocation 3) Aims of the System 4) The Allocation of Labour 5) The Allocation of Capital 6) International Trade 7) Role of StateReformers in Central and Eastern Europe strongly believe that their recent history proves that when the state is owner, it will always interfere in the operation of firms in such a way as to hinder the beneficial impact of competition Hinds (1990) absence of effective private property rights is at the heart of the failure of actual socialist systems, and must be immediately eradicated by widespread privatisation. Privatisation * Important way of r aising government revenues, but it will not affect the states long-term financial position if enterprise efficiency is not changed may still be sensible from a revenue point of view is short-term conditions call for additional expenditures with limited availability of revenue enhancement or other income sources * Important element in building markets evidential role in the formation of labour market institutions and the process of wage bargaining * Privatisation prevents a reversion to the old systems How to Privatise and to Whom? One of the main problems mass privatisation in countries where domestic savings are small and capital market institutions weak Arguments FOR selling states assets * Considerable revenues * If monetary overhang threatens to destabilise the macroeconomy, privatisation could absorb some of the excess liquidity. * Owners established through a process of financial exchange will have the strongest demand effective corporate governance Arguments AGAINST sellin g states assets * nonequivalent distribution of income and wealth Traditional modes of privatisation are very slow and most analysts agree that for transition to be effective the changes must be fast * Valuation problem nothing upon which to base valuation (no relevant record of profitability), a significant proportion of companies are loss-making, thus it is likely that gross revenue price will be negative * No domestic actors with the resources to buy Most of these problems are resolved by a free distribution of the states holdings * No need to value the assets initially * No need to find domestic purchasers * Privatisation could be extremely rapid * Provided an operational scheme can be devised, privatisation can be constructed in a highly egalitarian way, preventing the early concentration of wealth in the reach of the nomenklatura or black marketeers who otherwise would be the people most likely to gain from privatisation Disadvantages of free distribution * Losing the reve nues from sales Possibility of weak governance if capital ownership is dispersed central issue is whether population at large are the appropriate owners to dramatically improve company performance Potential buyers or recipients * Public at large external privatisation or privatisation from above * Transfer of ownership to shareholders * Foreigners access to hard currency, superior management skills and technical know-how * Insiders internal privatisation or privatisation from below * Involves the sale of shares to workers and managers in the firm * Attractive * Could be administered quickly and relatively easily, yet could still provide some revenue to the government * Participative organisations may be more deep * Negative Yugoslav experience employee control may conflict with effective corporate governance * No establishment of credible procedure for wage determination and for reducing inflationary pressures * Clearly not suitable for companies that require a significant degr ee of restructuring (probably the vast majority) * Unjust workers and managers in profitable firms stand to gain considerably from the privatisation process, while those employed in loss-making firms would take in nothing * Potential for bribery and corruption as workers and managers can use insider information to undervalue the assets or to transfer them illicitly into their own hands Roland (1994) On the Speed and Sequencing of Privatisation and Restructuring Big bang approach fast privatisation through mass privatisation plans with no definite sequencing, leaving the task of restructuring to the owners of the privatised firm Key pointPolitical constraints necessitate a gradual approach to restructuring and gradualism has implications for the speed and sequencing of privatisation. In particular, we ward on the danger of privatising too fast firms where restructuring should best be delayed for political reasons. Conclusion A condition for successful gradual restructuring is a s creening mechanism to separate good firms from bad ones. It is crucial to separate thee firms and their channels of finance, so that good firms would become independent of government through government and face hard budget constraints while bad firms would remain under government control with strengthened control. Arguments for the big bang view of mass privatisation * Speed Price liberalisation in a state-owned enterprise economy will not give the correct incentives, thus it is necessary to achieve very quickly a critical mass of private ownership in order to get firms to serve to market signals. * If not done * Danger of inertia due to firms not taking new profit opportunities * Danger of continued soft budget constraints loss-making firms expect to be bailed out * Importance of getting the State out of the economy * Committing the State to avoid continuous intervention in enterprise activity * Absence of clarified property rights * Danger of large scale decapitalisation by man agers who have de facto control without assigned property rights Experience * Poland Plan combining fast privatisation through giveaways together with strong control rights given to mutual funds to avoid dispersed ownership of firms * Political constraints have played a major role in blocking Polish mass privatisation in 1994, four years after the beginning of big bang in Poland, it is still not implemented * Russia * Speed of privatisation unambiguous success (about 1/3 of workers were in privatised firms by end of 1993) * Problems with restructuring * fountain managers are still in control (workers did not sell their shares to outsiders to assure outsider control managers preventing them) Political constraints There are 2 main sources of political constraints to privatisation * Ex-ante political constraints feasibility constraints * Proposals may be blocked e. in Poland where coalition in power preferred distribution to workers whereas the Polish mass privatisation programm e involved distribution to the population at large * In Russia, policy-makers took into account ex-ante political constraints by designing a giveaway plan favouring managers and workers (Boycko, Shleifer and Vishny (1993) justify that this was the only way to get privatisation adopted) * Sometimes coalitions push forms of privatisation that are economically not sensible but politically difficult to avoid * Ex-post political constraints concern the danger of backlash and reversal of given politics * This may be the case when a programme advertised as very egalitarian induces a high concentration of wealth in the hands of a small number of people * However, political constraints related to redistribution of wealth and income may not be the most serious * More serious political constraints are related to serious income risks related to restructuring general knowledge that there will be a massive shift from heavy industry to services, from big to small enterprises, but in most cases, nobody knows in advance which enterprises will survive and which will die Experience * Big bang restructuring is not ex ante practicable * Gradual restructuring may be more acceptable ex ante because * Gradualism allows for divide and rule tactics * Gradual resolution of uncertainty may enhance ex ante feasibility * Aggregate uncertainty related to uncertainty restructuring may be positive but it can go wrong, too advantage to moving gradually by starting to restructure only a subset of enterprises or sectors * Gradual eform packages tend to start earlier Hungary and China * Optimal sequencing * Better to start with reforms having the highest expected outcome for a majority and to delay the reforms that are expected to hurt the most Gradual restructuring and privatisation policies * No political constraints restructuring may be left to the new private owners * Political constraints very fast and non-differentiated approach to privatisation danger of partial renationalisations (s ubsidising a great number of firms) and general delays in restructuring (due to soft budget constraints/no incentives) * Gradual privatisation policy allows for Establishment of a screening mechanism separating good from bad firms * Best firms tend to get privatised first as they are more likely to find a buyer less large redundancies and better performance * Privatisation may be slow, but it is possible to speed it up * Managers incentives to restructure before privatisation especially when given shares * In Poland, although mass privatisation has been blocked, successful privatisation has continued at a fast speed especially in smaller and medium enterprises through a liquidation programme management buyout * Emergence of a sound private financial system If good firms get privatised first, bad firms remain under state control private savings are allocated to good firms with high yieldings sound financial system may emerge * A credible pol

Brand Valuation

Methods of Brand Valuation The various systems of score military rank lav be placed into four categories (1) comprise-establish go ones (2) commercialize- found orgasmes (3) income- base get ones and (4) formulary approaches incorporating future benefits or comparative advantages. Cost-based Approaches This method get bys the apostrophizes involved in creating the trade invoke with the stages of research and development of the merchandise concept, commercialize testing, continued promotion during commercialization, and product onward motions over time.Historic entirelyy based, this approach is the military rating technique that complies with standard method of accounting practice for valuating assets. It is also the most conservative method of military rating and provides pocket-sized future-oriented schooling that is habitful in the trademark management process. However, this technique fails to hitch apprize-added through the application of effective strateg ical tell on management activities and processes. Market-based Approaches This paygrade method is a much more than extern completelyy localizeed approach.It is based on an estimation of the sum up for which a denounce squirt be sold. This method requires cosmos able to fixate a market tax. In the absence of an actual market for most swords, this can be a difficult estimation challenge. To circumvent this problem, proxies atomic number 18 realized based upon how the pecuniary markets adjudicate the evaluate associated with the blot. One way to determine the financial market do is to separate tangible assets from intangible assets. The market value created by the intangibles can be inferred once the entire value of the firm is determined.The consultants Trademark and Licensing Associates create a similar estimation by comparing the leaf blade being valued to the performance of a nonher substitute brand that is un united to the firm. The method is much more realistic if a similar brand exists in the marketplace for comparison purposes. Income-based Approaches The military rating process involves determining future top r eveningues directly attributable to the brand and and so discounting to the present value victimization an appropriate discount rate. Several methods may be used to determine net revenue.One method compargons the brands price premium to a generic wine productone that exists in the marketplace without benefit of marketing investment funds and hang ownership. A second method estimates the annual royalties associated with the brand, as in a licensing agreement. This approach to valuation is generally more applicable to brands competing in international markets. An alternative approach relies on the strength of brand name recognition to estimate revenue. The branded product is whence comp ared to a generic product to estimate volume. Formula ApproachesThese approaches consider multiple criteria in arriving at a brand value. The consulting firm Interbrand and Financial World magazine use similar methods that are based on an income approach. Interbrand developed its formula approach in the context of external financial reporting, but indicates that the approach to valuation is also very suitable for internal management purposes. The Interbrand approach uses a terzetto-year weighted average of profits after tax as an index of brand profit mogul. In calculating brand profitability, Interbrand strives to consider only factors that relate directly to the brands identity.This is often difficult because the company may non consider specific functions as separate from the brand. For example, much of a brands success capacity be attributable to the distribution system, which supports the brand but is likely not a key element of its identity. Once brand profitability is determined, a multiplier is attached to the calculation. The multiplier is created from an evaluation of brand strength based on seven factors, which are weighted according to Interbrands guidelines. Leadership This is the ability of the brand to function as a market leader and insure the benefits associated with holding a dominant market share.Stability Brands that retain their range and consumer loyalty over long periods of time are more worthful than brands without such(prenominal) stability. Market Brands in received product markets are more of import than brands in other markets because of their ability to generate great sales volume in a more stable environment with greater barriers to entry from competitors. Internationality Brands that are international in scope ingest the potential to expand the brand and are more valuable than regional or national brands. Trend This is the ability of the brand to remain current in the perception of consumers.Support Brands that bring in been consistently managed and supported by the physical composition over time are much more valuable than brands that have functioned wi thout any organizational investment. Protection This factor relates to the legal issues associated with the brand. Brands that are protected by registered trademarks are more valuable in that the organization has the legal right to protect the brand. Financial World arrives at a valuation by estimating the operating profit attributable to a brand and hence comparing it to an unbranded product.The resulting premium associated with the brand is adjusted for taxes, and then multiplied by the above seven-item factor using Interbrands assessment of brand strength. Aakers Brand Equity Ten concentrates on five categories of values to establish a comprehensive assessment of brand equity. Specific measures of price premium, satisfaction or loyalty, perceived quality, and leadership or popularity add a customer focus to the valuation methods. Other customer-oriented measures include perceived value, brand personality, organizational associations, and brand awareness.External measures of mar ket share and market price and distribution reporting complete the set of criteria. Overall, the superiority of the formulary approaches lies in the comprehensive disposition of these measures. The formulary valuation process allows for the most comprehensive assessment of all areas that have the potential to affect the ability of the brand to generate value for its owner. Brand valuation appears to be the most promising technique unfastened of illustrating the importance of the brand to managers while also bridging the different orientations between marketers and accountants.Since the value of the brand can be expressed in monetary terms, all decision makers have a common point of reference. The measure of brand value may include subjective elements, but the lack of such a measure means that the importance of intangible assets may be overlooked. The use of brand valuation can help foster a recognition of a common goal for individuals in pursuing strategic objectives. Each discip line can contribute a substantial amount of expertise to the brand valuation process. This joint contribution can then assist the organization with brand management.Cost Approach The cost approach is a valuation technique that estimates value based on the cost required to create the item. Under the cost approach, the actual dollars spent to make up a brand are analyzed. While it is difficult to isolate and set all historic expenditures incurred in building a brand, it may be possible to identify external marketing costs, including media and promotional spending. This approach can be a highly conservative estimate of the brand value because the cost approach does not factor all costs incurred in building the brand.For example labor costs, other overhead, soft dollar costs, the cost of trademark registration or internal marketing time, just to name a few costs, may not be specifically recognizable and therefore difficult to factor in. Additionally, the historical cost approach does not consider future economic benefits of a branding campaign. As media markets have become more competitive in recent years, the cost of recreating a brand would most likely exceed the historical cost even in real terms.Therefore, the cost approach may be considered as a baseline value of a brand by which to measure future investment. Market Approach The market approach is a valuation method that estimates value based on actual market transactions. The market approach requires the collection of market data from comparable transactions and compendium of the data to estimate the value of the brand through comparison and correlation. AbsoluteBrand combines discipline and research from our proprietary databases and external market data. The market approach is instrumental in researching for potential licensing transactions.Income Approach The most accurate valuation of a brand is the present value of the incremental profit attributable to that brand. The income approach is based on the present value of an income stream. This approach to valuation is based on the assumption that if the brands underlying product or service did not own its trademarks it would need to clear them from a ternary party trademark owner. Ownership of its trademarks therefore relieves it from paying a license fee (the royalty) for the use of the third party trademarks.It requires the development of income stream projections that are then discounted for risk and the time value of money, i. e. , present-valued as of a certain watch. Under the income approach, a complex model integrates historic and forecast financial results, market risk and brand contribution. The result can be a static brand valuation as of a particular date or it can be transformed into a dynamic brand management model. A brand valuation under the income approach is comprised of three main variables 1. Forecast Income Statements from the Branded Business.The valuation model is segmented to glisten the relevant comp etitive environment within which the brand operates and forecasts are made. This development is gathered through management input and market research information. 2. Royalty. The brand is benchmarked and comparable brand royalty rates are researched and then employ to a forecast revenue streams. 3. Brand Risk Rates. The brands contribution to earnings is analyzed to establish the security of future brand earnings using consumer research and competitor review.This approach utilizes sound valuation principles, namely the discounted cash flow analysis along with quantifiable market research and it relies on the forecast amount of operating earnings that are attributable to the brand. The future expected brand earnings are then present-valued using a discount rate that factors in the risks associated with achieving those future brand earnings. ? Cost-Based Approaches Cost-Based Approaches involve calculating the costs associated with Creating the brand (market research, development o f the product concept, arket testing, packaging, advertising, and so on ) Continued promotion through the product life cycle proceeds improvement over time and the insuring costs connected with the product improvement According to Strategic Brand Valuation A Cross-Function Perspective by Karen Cravens and Chris Guilding (Business Horizons, July/August, 1999) the cost-based method is the most conservative method of valuation and provides little future-oriented information that is useful in the brand management process.