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Category Archive for 'economics'

As two of the larger economies in the European Union, France and Germany had the most to gain from the creation of a common currency. The most important factor for a common currency is the reduction of cost in international trade between nations using the currency. The cost of changing currency is removed, thus saving money for both importers and exporters. Similarly, a common currency promotes stability. Since the value of currency no longer fluctuates within the EU, managers no longer need to worry whether they will have the necessary funds to meet obligations if there is a sudden change in an exchange rate. Finally, tying the currency of several nations together creates a larger economy behind that currency. This in turn should make the currency more powerful in international financial markets.

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As our textbook defines it, the international capital market is a “network of individuals, companies, financial institutions, and governments that invest and borrow across national boundaries” (p. 227). In other words, the international capital market is what allows investment to flow across national borders. This is important to US firms as it increases the amount of investment that can flow into the US. Additionally, by giving US borrowers access to a larger range of lenders, US firms are able to drive down the cost of capital. Lower cost of capital means greater access to the funding necessary to drive growth.

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H. Ross Perot, Jr. and AllianceTexas have benefited mightily from NAFTA. According to Forbes in 2013 (Helman), Alliance was the top foreign trade zone in the US with imports of greater than $4 Billion per year. Although this FTZ has benefitted from the lowering of tariffs anywhere, NAFTA is quite possibly the most important agreement thanks to Fort Worth’s proximity to Mexico.

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I think Russia is the most interesting example of an “emerging market.” I am honestly surprised it is not more advanced than it is. At the end of the fourth chapter, there is a lengthy discussion of the perils of doing business in Russia (p. 123-124). I’ll discuss the “political risk” of doing business in Russia for the next answer, but the political situation in Russia coupled with the looseness of the Russian legal system seems to have really stymied economic development. Any progress in this region made by the former Soviet Union seems to have been completely wasted.

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CEO Pay

Over the last 30 years, Chief Executive Officer (CEO) salaries in the United States have grown from 40 times that of the average worker to over 600 times (Jones, 2013). As those salaries have grown, so has opposition to the ever growing levels of executive compensation. Although activists that oppose the current level of executive […]

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