| Economics News Articles: September 2004 |
| Welcome to those of you who are new
to economics and to this monthly set of news articles, and welcome back
to those who have used this site before.
As you will see from the contents, there are many economics topics covered in these articles, which are drawn from several different UK and non-UK newspapers, journals and magazines. The topics range across the chapters of the three textbooks, Economics (5th ed), Essentials of Economics (3rd ed) and Economics for Business (3rd ed) and I have ordered them so that they correspond approximately to the order of the chapters. I have tried to ensure that the links to the articles stay live over several months, or even permanently. This means that I have not been able to use some sources, such as the Financial Times and the Independent, as their free articles go into a subscription-only archive after a few days. However, to keep up to date with what is going on on a regular basis, these are still excellent sites to keep an eye on. As I have mentioned in previous sets of articles, if you're searching for economics news beyond the articles on this site, I would recommend the following two sites: The Guardian World News GuideIn the meantime, I hope you find the articles below useful for your studies and that they help you to see how relevant economics is to what is going on in the world. Tutors might like to use the linked articles as the basis for tutorial/seminar work or to use them as the basis for a problem-based approach to student learning. |
|
Andy Beharrell
|
| Contents |
1. A drought in the Australian horticultural industry
2. A glut of wine?
3. Cigarettes - inelastic in nature?
4. Introducing VAT in India
5. Monopolies and innovation
6. Pokemon - it's all fixed
7. Trading pig excrement
8. 4 x 4 too far?
9. Privatisation around the world
10. The informal economy
11. Measuring inflation and the cost of living
12. How should central banks respond to a change in oil prices?
13. Unemployment drops to a 29 year low
14. Gordon Brown becomes the longest-ever serving Chancellor
15. Is inflation in America really a problem?
16. Sado-monetarism
17. UK consumer debt hits £1 trillion
18. Is free trade fair trade?
19. The shrimp tariff
20. Removing EU protectionism?
21. The Big Mac Index
22. Taming the beast - America's monster trade gap
23. Labour's megaphone aid policy
| Relevant to: |
| Economics (5th edition) Chapter 1 |
| Essentials of Economics (3rd edition) Chapter 1 |
| Economics for Business (3rd edition) Chapter 2 |
| Australia has suffered from four years of drought and this is starting to have knock on effects on various areas of the economy. The latest problems have hit the horticulture industry. It is estimated that around 5,900 jobs have gone in the industry as a result of the drought and more are likely to follow if the drought continues. |
Garden jobs go in Sydney drought BBC News Online (15/6/04)
| Questions | |
| 1. | How do economists classify resources? |
| 2. | Under which of these headings would you classify water (from rainfall)? |
| 3. | Assess the impact that a continuing drought is likely to have on the Australian economy. |
| Relevant to: |
| Economics (5th edition) Chapter 2 |
| Essentials of Economics (3rd edition) Chapters 1, 2 |
| Economics for Business (3rd edition) Chapter 4 |
| A glut of wine - the stuff of dreams! However, there really is one. A glut of US grapes and a US recession led to prices for wine falling significantly and this has hit both the profits and value of Foster's - the Australian brewing group. The premium end of the market where many of Foster's brands are targeted were hit particularly hard. They plan to cut the value of their wine business (in their accounts) by nearly $350 million. So what factors have led to this and how are Foster's reacting? |
US price war hits Foster's wine unit International Herald Tribune (9/6/04)
Foster's slashes wine value New Zealand Herald (9/6/04)
Group is brewing a new winemaking model The Australian (9/6/04)
| Questions | |
| 1. | What are the main determinants of supply and demand for wine? |
| 2. | Using supply and demand analysis, show the changes that have taken place in the wine industry and led to prices "as low as $1.99 a bottle". |
| 3. | What strategies are Foster's adopting to try to restore the profitability of their wine division and how is this likely to affect the supply of and demand for their wine? |
| Relevant to: |
| Economics (5th edition) Chapter 2 |
| Essentials of Economics (3rd edition) Chapters 1, 2 |
| Economics for Business (3rd edition) Chapters 4, 5 |
| To measure the responsiveness of demand for a good or service to changes in price, economists use the measure of elasticity. Goods that are unresponsive to changes in price are described as price inelastic, whereas those where the quantity demanded changes by proportionately more than the change in price are described as price elastic. Cigarettes are generally thought to be price inelastic and the article below gives us a useful indication of whether this is always true. The French government (under severe fiscal pressure) has raised the price of a packet of cigarettes by 30% as part of an anti-smoking campaign. As a result demand has fallen, but by how much? Have a guess and then have a look at the article below to see if you were right. |
Taxes hit French tobacco sales BBC News Online (27/7/04)
| Questions | |
| 1. | What are the main determinants of the price elasticity of demand for a good or service? |
| 2. | With reference to these determinants, explain why you might expect the demand for cigarettes to be price inelastic. |
| 3. | Using the figures from the article, calculate the price elasticity of demand for cigarettes in France. |
| 4. | What other policies could the French government adopt to try to make the demand for cigarettes more responsive to price changes? |
| Relevant to: |
| Economics (5th edition) Chapters 3, 20 |
| Essentials of Economics (3rd edition) Chapters 2, 3, 8 |
| Economics for Business (3rd edition) Chapters 4, 5, 9, 30 |
| VAT or Value Added Tax has been a feature of the UK tax system for many years, but in 2005 it will be introduced in India as well. VAT is classed as an 'indirect tax', as it is a tax on expenditure, and the impact of it will tend to be regressive. However, for many countries which may have problems with the collection of income tax, it can represent an effective way of raising tax revenue as it is simpler to collect and more transparent. With a budget deficit of around 10% of GDP, the new Indian government see this as an important priority. |
India agrees date for VAT launch BBC News Online (18/6/04)
Industry chambers welcome government move on VAT India Infoline News (19/6/04)
Make haste slowly Business Standard (India) (21/6/04)
New deadline for VAT Indian Express (18/6/04)
| Questions | |
| 1. | What is likely to be the impact of the introduction of VAT on the markets of goods and services covered by the tax? (N.B. You could use supply and demand analysis to illustrate your answer.) |
| 2. | Assess the likely impact of the introduction of VAT on the Indian economy. |
| 3. | Evaluate whether it might have been more economically efficient to raise the money required from income tax rather than VAT. |
| Relevant to: |
| Economics (5th edition) Chapters 6, 11 |
| Essentials of Economics (3rd edition) Chapter 4 |
| Economics for Business (3rd edition) Chapters 11, 17, 21 |
| Standard economic theory leads us to believe that a lack of competition in monopoly markets will stifle innovation and creativity. The monopolist does not face any competition and this may lead to x-inefficiency. Government competition policy is often aimed at making markets more competitive to ensure that consumers are not exploited. However, a new paper from Federico Etro, of the University of Milan, argues that the presence of a dominant firm may be an indication of vigorous competition. The article below from The Economist considers his analysis of monopolies and whether monopolies may actually be of benefit to consumers. |
Slackers or pace setters The Economist (20/5/04)
| Questions | |
| 1. | Outline the circumstances in which a monopoly in a market may be beneficial for consumers. |
| 2. | Assess Federico Etro's argument that a monopoly may be an indicator of a competitive market. In what circumstances might his theory break down? |
| 3. | If this theory is correct, what should be the main priorities for government competition policy? |
| Relevant to: |
| Economics (5th edition) Chapter 7 |
| Essentials of Economics (3rd edition) Chapter 4 |
| Economics for Business (3rd edition) Chapters 12, 17 |
| Economic theory tells us that when there is relatively little competition in a market (oligopoly) there may be an incentive for manufacturers to collude to fix prices or market share. This helps them to maximise profits, but acts against the interests of consumers. The distributors of Pokemon cards were recently fined £1.1m for keeping the price of the collectible cards artificially high in the UK. They did this through a series of restrictive agreements with distributors that ensured that cheaper cards from elsewhere in the European Union were prevented from coming into the UK. |
Pokemon game was fixed Guardian (27/5/04)
| Questions | |
| 1. | In what circumstances is collusion most likely in an oligopolistic market? |
| 2. | What policies are available to governments to try to prevent price fixing? |
| 3. | The distribution agreements "led to a fragmentation of the EU's single market ....". What is the purpose of the EU single market? |
|
Relevant to: |
| Economics (5th edition) Chapter 12 |
| Essentials of Economics (2nd edition), Chapter 6 |
| Economics for Business (2nd edition), Chapters 20, 22 |
| Greenhouse emissions are the cause of global warming and governments around the world are trying to find ways to reduce emissions to meet targets set by the Kyoto agreement (though this has yet to be ratified). One solution is to introduce a carbon-emissions trading system where firms are given carbon trading permits. If they produce fewer emissions than their permitted level, then they will be allowed to sell the surplus permits to firms who have exceeded their permitted level. This, it is hoped, will give firms a market incentive to reduce emissions. XL Techgroup believe that farmers can earn money from the methane emitted from pig waste. By placing a plastic membrane over the waste tanks they can collect the methane and then use it as a bio-fuel. No it isn't April 1st - read the article below for more details! |
Where there's muck, there's brass Guardian (5/6/04)
| Questions | |
| 1. | Using diagrams as appropriate, show how methane emissions from pig waste may result in a misallocation of resources. |
| 2. | Using the diagrams from question 1, show the impact of using XL Techgroup's technology to collect the methane and sell it. |
| 3. | Assess the other policies available to governments to lower emissions of greenhouse gases. |
| Relevant to: |
| Economics (5th edition) Chapter 12 |
| Essentials of Economics (3rd edition) Chapter 6 |
| Economics for Business (3rd edition) Chapters 20, 22 |
| 4x4 vehicles have been coming in for a bit of stick lately. The French are set to put a high tax on 4x4s to try to reduce their presence on French streets. They argue that they produce four times more emissions than conventional vehicles and so the tax revenue from a sales tax on 4x4s will be used to subsidise smaller and more fuel-efficient vehicles. London Mayor, Ken Livingstone, has also had a go at them, branding their drivers "complete idiots" and calling the 4x4s "Chelsea tractors". In the Guardian article below George Monbiot argues the case for a tax on 4x4s. |
Driving into the abyss Guardian (6/7/04)
French wrath over four-wheel drives BBC News Online (26/8/04)
| Questions | |
| 1. | What negative externalities are caused by the growth in the use of 4x4 vehicles? |
| 2. | Discuss the equity of the French proposal to tax 4x4 vehicles and use the proceeds to subsidise smaller more fuel-efficient vehicles. |
| 3. | Assess other policies that a government could use to reduce the emissions from 4x4 vehicles. What package of policies would you propose? |
| Relevant to: |
| Economics (5th edition) Chapter 12 |
| Essentials of Economics (3rd edition) Chapter 6 |
| Economics for Business (3rd edition) Chapter 22 |
| Privatisation is often seen as one of Mrs Thatcher's many legacies and its popularity with governments around the world continues to grow. The articles below look at the expansion of privatisation in France (and the opposition that has emerged to the privatisation of the power industry) and Egypt. |
France starts privatisation plan BBC News Online (18/6/04)
Fresh power strikes across France BBC News Online (1/7/04)
Egypt 'to step up privatisations' BBC News Online (24/8/04)
| Questions | |
| 1. | Assess the benefits that France and Egypt hope to gain from stepping up their privatisation programmes. |
| 2. | Discuss the impact that privatisation has had in the UK. |
| 3. | What other areas of government activity in the UK could be passed on to the private sector? Assess the costs and benefits of each of these. |
| Relevant to: |
| Economics (5th edition) Chapter 13 |
| Essentials of Economics (3rd edition) Chapter 7 |
| Economics for Business (3rd edition) Chapter 26 |
| When we measure economic activity, we look at the total of income, output or expenditure. However, we only look at areas that are officially measured and this is described as the formal economy. Outside this is economic activity that is not officially recorded. Work may be done for cash, people may be employed without official documentation or goods may be bought that have been imported without the tax being paid on them. This is known as the 'informal' or 'grey' economy. National income figures will not include this, but how large is it? Is it significant enough to introduce significant errors into our figures? The Economist article below looks at the scale of the informal economy and the impact it may have on the rest of the economy. |
In the shadows The Economist (17/6/04)
| Questions | |
| 1. | What possible approaches does the article identify for measuring the scale of the informal economy? |
| 2. | Analyse the impact of an expansion of informal economic activity on the formal economy. |
| 3. | Assess the policies available to a government to try to minimise the size of the informal economy. |
| 4. | Why might the scale of the informal economy be a greater problem for developing countries than developed ones? |
| Relevant to: |
| Economics (5th edition) Chapters 14, 21 |
| Essentials of Economics (3rd edition) Chapters 9, 10 |
| Economics for Business (3rd edition) Chapter 26 |
| Measuring changes in the cost of living is a complex issue. We all spend our money differently and so no one measure of inflation will be appropriate for us all. To try to allow for this, governments generally publish a number of indicators of inflation and the cost of living, but how appropriate are they? The article below looks at the issues relating to measuring the cost of living and considers how accurate official figures may be. |
Costs of living The Economist (3/6/04)
| Questions | |
| 1. | Does it matter if official inflation figures do not accurately represent the cost of living? |
| 2. | Find out the official measures of inflation calculated for the UK. To what extent do the different measures meet the requirements of different groups in society? |
| 3. | What changes do the statisticians make to their calculation of inflation to try to account for changes in spending patterns of consumers? |
| Relevant to: |
| Economics (5th edition) Chapters 14, 18, 20, 21 |
| Essentials of Economics (3rd edition) Chapters 7, 9, 10 |
| Economics for Business (3rd edition) Chapters 26, 28, 29 |
| With oil prices peaking at over $50 per barrel, central banks around the worlds have been concerned at the impact that higher prices are likely to have on their economies. Higher prices will feed through as higher costs which may well be inflationary. Higher prices may also reduce consumer demand and therefore economic growth. So how should central banks react? The article below from the economist looks at this issue. |
The crude art of policy making The Economist (10/6/04)
| Questions | |
| 1. | What are the main factors causing the oil price to rise? |
| 2. | Assess the case for loosening monetary policy in response to the higher oil prices. |
| 3. | What are the risks to the world economy from higher oil prices? |
| Relevant to: |
| Economics (5th edition) Chapters 14, 21 |
| Essentials of Economics (3rd edition) Chapters 8, 10 |
| Economics for Business (3rd edition) Chapters 26, 29 |
| Unemployment in the UK is now the lowest it has been for nearly three decades. The underlying strength of the economy is clearly indicated by this apparently excellent performance. However, should we be worried about the negative impact this may have elsewhere and what is the nature of the jobs being created? The Bank of England's Monetary Policy Committee will be looking carefully at the unemployment figure to assess the impact this may have on inflationary pressures. With low unemployment, what is likely to happen to wage levels and will this cause further inflation? |
Inflation worries fueled as unemployment falls to 29-year low Guardian (17/6/04)
UK jobless figure still falling BBC News Online 16/6/03)
Unemployment National Statistics
| Questions | |
| 1. | How is unemployment in the UK measured? |
| 2. | What is the nature of the trade-off between unemployment and inflation? Why will the Bank of England be concerned about this latest fall in inflation? |
| 3. | Using aggregate demand and supply diagrams, illustrate the changes that have led to the recent fall in unemployment. How might Keynesian and neo-classical economists differ in their interpretation of the impact of the recent fall in unemployment? |
| Relevant to: |
| Economics (5th edition) Chapters 16, 20, 21, 22 |
| Essentials of Economics (3rd edition) Chapters 7, 8, 10 |
| Economics for Business (3rd edition) Chapters 26, 29, 30 |
| In June 2004 Gordon Brown overtook Lloyd George to become the longest-serving Chancellor of the Exchequer. This remarkable record has seen him preside over one of the longest periods of continuous economic growth that the UK has seen in recent decades. But how much credit can he take for this, or was it, as the conservatives claim, simply that he inherited an economy that was running well anyway? Below is a selection of articles that summarise his achievement and consider his record as Chancellor. To check out how much you know about what he does, you may also like to try the BBC quiz - Budget or bust (linked below). |
Brown becomes longest serving Chancellor The Scotsman (16/6/04)
The UK's longest-serving Chancellor - dour or dashing? BBC News Online (1/8/04)
Budget or bust BBC News Online (quiz) 14/6/04)
Gordon's world Guardian (16/6/03)
Brown sidles past Lloyd George's milestone Guardian (16/6/03)
The measure of Mr. Gordon Brown Guardian (15/6/03)
Brown needs to apply reverse thrust to Reagan theories Guardian (14/6/03)
| Questions | |
| 1. | What have been the key policies that have characterised the Gordon Brown chancellorship? |
| 2. | Summarise the major achievements of Gordon Brown since 1997. |
| 3. | Read the article "Brown needs to apply reverse thrust to Reagan theories". How does Gordon Brown's approach to fiscal policy differ from that of other European Union countries? |
| Relevant to: |
| Economics (5th edition) Chapter 18, 20, 21 |
| Essentials of Economics (3rd edition) Chapters 9, 10 |
| Economics for Business (3rd edition) Chapters 26, 28, 29 |
| Between January 2001 and June 2003 the US Federal Reserve cut interest rates 13 times bringing the base rate to a half-century low of 1%. However, stronger growth in 2004 has meant that interest rates have been increased three times and in September 2004 stand at 1.75%. However, how much further will they need to rise? The article below examines whether inflation will be America's main economic problem. |
Inflated expectations The Economist (1/7/04)
| Questions | |
| 1. | How effective is tightening monetary policy likely to be in containing any inflationary pressures in the USA? |
| 2. | Why does the Federal Reserve also need to look carefully at changes in asset prices when formulating its monetary policy? |
| 3. | Explain the transmission mechanism from interest rates to inflation. |
| Relevant to: |
| Economics (5th edition) Chapters 18, 20 |
| Essentials of Economics (3rd edition) Chapters 9, 10 |
| Economics for Business (3rd edition) Chapters 26, 28, 29 |
| "The word 'sado-monetarism' has been revived by the US commentator of the Financial Times, Gerard Baker, to describe the doctrine of those who were urging rises in US interest rates when the US was widely regarded as suffering from a 'jobless' economic recovery." This is the description of sado-monetarism given by the Guardian article linked below. |
This is no time to flirt with fiscal S&M Guardian (4/4/04)
| Questions | |
| 1. | What is meant by sado-monetarism? |
| 2. | To what extent could the policies of the early 1980s be described as sado-monetarism? |
| 3. | Compare and contrast monetarist and Keynesian policies to maintain economic growth. |
| Relevant to: |
| Economics (5th edition) Chapters 18, 20 |
| Essentials of Economics (3rd edition) Chapters 9, 10 |
| Economics for Business (3rd edition) Chapters 26, 28, 29 |
| The total level of consumer debt outstanding hit a symbolic level of £1 trillion in July 2004. The total outstanding debt was £1,004,290,000,000. Of this, around 80% is in the form of loans secured against property and so booming house prices have meant a rapid rise in consumer debt. This figure seems very significant, but does it matter? The Bank of England's MPC will be concerned at excessive debt levels as this may lead to growth in consumer spending and a corresponding increase in aggregate demand. |
UK consumer debt hits £1 trillion BBC News Online (29/7/04)
Britain's £1 trillion debt mountain The Scotsman (30/7/04)
Britain's borrowing hits £1 trillion Guardian (29/7/04)
£1,000,000,000,000. Household debt breaks the £1 trillion barrier Guardian (30/9/04)
The road to £1 trillion BBC News Online (29/7/04)
| Questions | |
| 1. | What impact will the growth in consumer debt in 2004 have on aggregate demand and economic growth? |
| 2. | If the MPC decides to raise interest rates, what impact is this likely to have on other areas of the economy? |
| 3. | What tools of monetary policy, other than interest rates, may be available to the government to try to reduce the growth of personal debt? |
| Relevant to: |
| Economics (5th edition), Chapters 23, 26 |
| Essentials of Economics (3rd edition) Chapter 11 |
| Economics for Business (3rd edition) Chapter 24 |
| Economic theory argues that free trade can benefit all and thus many economists argue that all constraints on trade should be removed. However, is free trade always fair trade? The articles below look at some of the issues relating to free trade and consider whether less developed countries will benefit from opening up their economies to trade. |
A muddled but interesting UN report The Economist (27/5/04)
UN chief urges fair trade action BBC News Online (14/7/04)
Poor nations plan to boost trade BBC News Online (17/7/04)
| Questions | |
| 1. | What are the main ways in which countries can protect their economies from imports? |
| 2. | Why might developing economies not benefit from opening up their economies to trade? |
| 3. | Many developing economies sell mainly primary products while developed economies sell proportionately more manufactured products. How does the income elasticity for these goods differ and why might this cause developing countries problems? |
| Relevant to: |
| Economics (5th edition) Chapter 23 |
| Essentials of Economics (3rd edition) Chapter 11 |
| Economics for Business (3rd edition) Chapter 24 |
| In July 2004 the US Department of Commerce proposed putting tariffs of up to 112% on shrimps from China and Vietnam as they argued that these countries were dumping their shrimps on the US market. Vietnam was likely to be particularly hard hit by the tariffs as its shrimp industry employs 2 million people and is the country's third largest export item. How can the USA justify this tariff? |
US plans import tariff on China, Vietnam Seattlepi.com (7/7/04)
US slaps duties on shrimp from China, Vietnam Channel News Asia (7/7/04)
US officials propose shrimp tariffs Washington Times (6/7/04)
Tariffs may boost shrimp prices Tampa Tribune (7/7/04)
Vietnam shrimpers slate US tariff BBC News Online (7/7/04)
| Questions | |
| 1. | What is meant by 'dumping'? |
| 2. | What recourse do China and Vietnam have if they want to oppose the imposition of the tariffs?How effective is this likely to be? |
| 3. | What alternative measures could the USA have adopted to protect its shrimp industry? |
| Relevant to: |
| Economics (5th edition) Chapter 23 |
| Essentials of Economics (3rd edition) Chapter 11 |
| Economics for Business (3rd edition) Chapters 23, 24 |
| "Globalisation presents challenges and opportunities
today and in the future. To better understand how the UK can benefit from
global trading the Secretary of State for Trade and Industry, Patricia
Hewitt, has published a White Paper on Trade and Investment called, 'Making
Globalisation a Force for Good'. The White Paper deals with the question
of how we can harness the power of globalisation, not only in the UK but
in every country, especially in the developing world. It addresses the
implications of globalisation nationally and internationally and sets
out a vision of a world trading system which is fair as well as free."
This is the introduction to the publication of a White Paper on trade
and investment from the DTI which argues that protectionist policies in
the EU should be dropped as part of the government's strategy to restart
the stalled Doha trade talks. The articles below look at some of the issues
relating to this and there is also a link to the full text of the White
Paper. |
Hewitt attacks trade barriers Guardian (6/7/04)
Hewitt unveils new vision for trade Guardian (6/7/04)
Trade and Investment White Paper DTI
| Questions | |
| 1. | Why does the EU persist in protecting a range of goods and services? |
| 2. | Assess the extent to which developing countries would benefit from the ending of EU protectionist policies. |
| 3. | Who are the greatest losers from the breakdown of the WTO negotiations – the rich world or the poor world? |
| 4. | What is likely to be the impact on the UK of removing all restrictions on trade? |
| Relevant to: |
| Economics (5th edition), Chapter 24 |
| Essentials of Economics (3rd edition) Chapter 12 |
| Economics for Business (3rd edition) Chapter 27 |
| For many years, The Economist has published an indicator called the "Big Mac Index". Initially this was intended as a light-hearted guide to prices in a range of countries, but it has become a well-established way of measuring purchasing power parity (PPP) and is now published annually by The Economist. The Big Mac is such a widely available and internationally consistent product that it can be used as a way to measure purchasing power parity exchange rates. Though statistically this may not be the best measure (and is not therefore used by statisticians), it is a useful guide to see how well actual exchange rates reflect purchasing power. The article below from The Economist looks at the results from the 2004 Big Mac index. |
Food for thought The Economist (27/5/04)
| Questions | |
| 1. | Why is it important to use purchasing power parity exchange rates when converting economic data to compare countries? |
| 2. | What problems may be inherent in using a single product (the Big Mac) to measure purchasing power parity? |
| 3. | Which country has the best value Big Macs? |
| 4. | Why do exchange rates differ from their long-run purchasing power parity values? |
| Relevant to: |
| Economics (5th edition) Chapter 24 |
| Essentials of Economics (3rd edition) Chapter 12 |
| Economics for Business (3rd edition) Chapter 27 |
| America's trade balance has reached a deficit of nearly £150bn. This represents over 5% of GDP and is certainly not sustainable in the long term. However, with a high marginal propensity to import, the deficit is unlikely to fall significantly as the US economy grows and this may result in growing pressure for protectionist policies. So is the trade deficit a problem and if the US takes action to correct it, how will the rest of the world be affected? |
How to slay America's monster trade gap? The Economist (22/6/04)
| Questions | |
| 1. | What factors may have caused the rapid growth in America's trade gap? |
| 2. | What policies are available to the US government to try to close the trade gap? Assess how viable each of these policies may be in current circumstances. |
| 3. | What would be the implications for the rest of the world economy of the US taking significant action to close their trade gap? |
| Relevant to: |
| Economics (5th edition) Chapter 26 |
| Essentials of Economics (3rd edition) Chapter 11 |
| Economics for Business (3rd edition) Chapter 23 |
| The United Nations has set a target for rich countries to spend 0.7% of their GDP on aid for less developed countries to try to help achieve the Millennium Development Goals they have set. The 2004 public spending review has seen spending on aid rise, but not by nearly enough to meet the target set by the UN. The article below from the Guardian argues for a greater increase and says that it is all very well for Labour to "lecture, admonish and cajole" the rest of the world, but it also needs to get its own house in order. The other link is to the Millennium Development Goals website of the UN. |
Labour's megaphone aid policy needs backing up with some money Guardian (21/6/04)
UN Millennium Development Goals UN Website
| Questions | |
| 1. | What are the UN's Millennium Development Goals? |
| 2. | What are the different types of aid that developed countries offer to the developing world? |
| 3. | Discuss the arguments for and against offering increased levels of foreign aid to the developing world. |