Freedom of Speech and Liberty free essay sample

Quotations about Freedom Related Quotes Censorship Human Rights USA Patriotism The fact, in short, is that freedom, to be meaningful in an organized society must consist of an amalgam of hierarchy of freedoms and restraints. †Samuel Hendel He that would make his own liberty secure, must guard even his enemy from opposition; for if he violates this duty he establishes a precedent that will reach himself. †Thomas Paine History does not teach fatalism. There are moments when the will ofa handful of free men breaks through determinism and opens up new roads. †Charles de Gaulle Freedom has its life in the hearts, the actions, the spirit of men and so it must be daily earned and refreshed else like a flower cut from its life-giving roots, it will wither and die. †Dwight D. Eisenhower Liberty is the possibility of doubting, of making a mistake, of searching and experimenting, of saying No to any authority literary, artistic, philosophical, religious, social, and even political. We will write a custom essay sample on Freedom of Speech and Liberty or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page †Ignazio Silone, The God That Failed, 1950 Liberty: One of Imaginations most precious possessions. †Ambrose Bierce, The Devils Dictionary The patriots blood is the seed of Freedoms tree. Ђâ€ Thomas Campbell Nothing is more difficult, and therefore more precious, than to be able to decide. †Napoleon Bonaparte Here is my advice as we begin the century that will lead to 2081. First, guard the freedom of ideas at all costs. Be alert that dictators have always played on the natural human tendency to blame others and to oversimplify. And dont regard yourself as a guardian of freedom unless you respect and preserve the rights of people you disagree with to free, public, unhampered expression. 2081 Those who deny freedom to others deserve it not for themselves. I wish that every human life might be pure transparent freedom. Beauvoir Ђâ€ Gerard K. ONeill, †Abraham Lincoln †Simone de Stevenson, speech, Detroit, 1952 It is easy to take liberty for granted, when you have never had it taken from you. †Author unknown, sometimes attributed to M. Grundler We on this continent should never forget that men first crossed the Atlantic not to find soil for their ploughs but to secure liberty for their souls. †Robert]. McCracken You have freedom when youre easy in your harness. †Robert Frost For what avail the plough or sail, or land or life, if freedom fail? Ђâ€ Ralph Waldo Emerson Those who expect to reap the blessings of freedom, must, like men, undergo the atigue of supporting it. †Thomas Paine In the truest sense, freedom cannot be bestowed; it must be achieved. †Franklin D. Roosevelt We have to call it freedom: whod want to die for a lesser tyranny? †Mignon McLaughlin, The Neurotics No tebook, 1960 Freedom is the oxygen of the soul. †Moshe Dayan There are two freedoms the false, where a man is free to do what he likes; the true, where he is free to do what he ought. Ђâ€ Charles Kingsley No one is free when others are oppressed. †Author Unknown Nations grown corrupt Love bondage more than liberty; Bondage with ease than strenuous liberty. †John Milton Just, harmonious, temperate as is the spirit of liberty, there is in the name and mere notion of it a vagueness so opposite to the definite clearness of the moral law. †Augustus William Hare and Julius Charles Hare, Guesses at Truth, by Two Brothers, 1827 Freedom means choosing your burden. †Hephzibah Menuhin Most people want security in this world, not liberty. †H. L. Mencken, Minority Report, 1956 †Eric Hoffer Men fght for freedom, then they begin to accumulate laws to take it away from themselves. †Author Unknown Freedom is that instant between when someone tells you to do something and when ou decide how to respond. †Jeffrey Borenstein Liberty is always dangerous, but it is the safest thing we have. †Harry Emerson Fosdick Freedom is not enough. †Lyndon B. Johnson Liberty has never come from the government. Liberty has always come from the subjects of it. The history of liberty is a history of resistance. Ђâ€ Woodrow Wilson The sound of tireless voices is the price we pay for the right to hear the music of our own opinions. †Adlai Stevenson, speech, New York City, 28 August 1952 We must be free not because we claim freedom, but because we practice it. †William Faulkner They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety. †Benjami n Franklin, Historical Review of Pennsylvania, 1759 Everywhere the human soul stands between a hemisphere of light and another of darkness on the confines of two everlasting hostile empires, Necessity and Free Will. Ђâ€ Thomas Carlyle, Essays, The Opera We have enjoyed so much freedom for so long that we are perhaps in danger of forgetting how much blood it cost to establish the Bill of Rights. †Felix Frankfurter O Liberty! is it well To leave the gates unguarded? Ђâ€ Thomas Bailey Aldrich No man can put a chain about the ankle of his fellow man without at last finding the other end fastened about his own neck. Mass Meeting, Washington, D. C. , 1883 Let freedom never perish in your hands. †Frederick Douglass, speech, Civil Rights †Joseph Addison Liberty, when it begins to take root, is a plant of rapid growth. Ђâ€ George Washington I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroa chments of those in power than by violent and sudden usurpations. †James Madison, speech, Virginia Convention, 1788 Liberty doesnt work as well in practice as it does in speeches. †Will Rogers Freedom is not worth having if it does not connote freedom to err. †Mahatma Gandhi Order without liberty and liberty without order are equally destructive. †Theodore We cannot defend freedom abroad by deserting it at home. †Edward R. Murrow Freedom has a thousand charms to show, That slaves, however contented, never know. †William Cowper Most men, after a little freedom, have preferred authority with the consoling assurances and the economy of effort which it brings. †Walter Lippmann, A Preface to Morals, 1929 The contest for ages has been to rescue liberty from the grasp of executive power. †Daniel Webster Freedom is nothing else but a chance to be better. †Albert Camus Men fght for liberty and win it with hard knocks. Their children, brought up easy, let it slip away again, poor fools. And their grandchildren are once more slaves. †D. H. Lawrence, Classical American Literature, 1922 I prefer liberty with danger to peace with slavery. †Author Unknown Freedom is the will to be responsible to ourselves. †Nietzsche, Twilight of the Idols, 1888 The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well- eaning but without understanding. †Louis D. Brandeis When the People contend for their liberty, they seldom get anything for their Victory but new Masters. †George Savile A nation may lose its liberties in a day and not miss them in a century. Ђâ€ Baron de Montesquieu Liberty means responsibility. That is why most men dread it. †George Bernard Shaw, Man and Superman, Maxims: Liberty and Equality, 1905 The people never give up their liberties but under some delusion. †Edmund Burke We anarchists do not want to emancipate the people; we want the people to emancipate themselves. Ђâ€ Errico Mal atesta, lAgitazione, 18 June 1897 Freedom is never free. †Author Unknown We are free, truly free, when we dont need to rent our arms to anybody in order to be able to lift a piece of bread to our mouths. Ђâ€ Ricardo Flores Magon, speech, 31 May 1914 Many politicians are in the habit of laying it down as a self-evident proposition that no people ought to be free till they are fit to use their freedom. The maxim is worthy of the fool in the old story who resolved not to go into the water till he had learned to swim. †Thomas Macaulay My definition ofa free society is a society where it is safe o be unpopular. Adlai E. Stevenson Jr. (1900- 1965), Speech in Detroit, 7 Oct. 1952 Freedom is Just Chaos, with better lighting.

How successful was Lord Liverpool in responding to radical challenge from 1812-1822 Essays

How successful was Lord Liverpool in responding to radical challenge from 1812-1822 Essays How successful was Lord Liverpool in responding to radical challenge from 1812-1822 Paper How successful was Lord Liverpool in responding to radical challenge from 1812-1822 Paper To look at how successful Lord Liverpool was in responding to radical challenge, you have to look at what were the radical challenges in this period, what was causing the unrest thought the country. Then you have to look at what Lord Liverpool did to resolve the unrest and stop the challenges. 1815-1820 was a time of unrest; however unrest was not generally revolutionary. Even if Liverpools actions were seen as repressive he had to nip revolution in the bud. For example with the spa fields Meetings. This was a series of mass meetings (mainly in London) and it was aimed to inspire people and to intimidate the authorities. As a result, parliament sanctioned the suspension of Habeas Corpus and passed A Seditious Meeting Act, which meant that people could be held without evidence or a trial for as long as the government needed and it meant that no groups larger than 50 people could gather or have a meeting and talk about politics or revolution. However some critics say that this does not prove he was successful because the suspension of Habeas Corpus only lasted a couple of years. This is just one way in which the government responded to radical challenges during this period. Some historians say that this was very successful and radical challenge drooped as a result, however some say that this forced these radical groups underground and just inspired more people. The government had to nip revolution in the bud because at the time the government had to many weaknesses that revolutionary groups could take advantage of like the fact that Britain was in national debt had risen by  £64 million from 1739 to 1816, the government had to rely on yeomanry which was a small armed forced and if a riot got out of control then they would not be able to stop them and most importantly Liverpool did not have the benefit of hindsight. He did not know that there wasnt going to be a revolution so he had to respond quickly and decisively to stop radical challenges/challenges growing. Unrest in the country was due to many reasons such as: the Corn Laws, the abolition of income ta x, war time contracts had ended and the demobilisation meant that there was high unemployment. Some historians say that Lord Liverpool did not address unrest, but he made it worse by introducing silly little policies like the Corn Laws. The Corn Law guaranteed protection for wheat prices for the agricultural or landowner interest from foreign imports of grain. The concept was not new. A similar law had been introduced in 1804 but to guarantee 80 shillings a quarter ( £4. 00) per quarter tonne or  £16 per tonne for producers before foreign grain was permitted to enter the British market seemed to government critics a little excessive. The whole point of the bill, as far as the government was concerned, was to guarantee landowners profits at a level to which they had become accustomed during the war. Most people saw it as apiece of class legislation in that it saved the landowners from cheaper foreign grain, established prices and made it more expensive for the consumer. This did not help the situation at all, in actual fact this just manifested more unrest thought the country and revolutionary groups took advantage of this. It is fair to say that the country was at a time of unrest; however some say that the government did not do anything constructive but just made the situation worse. the corn laws proves this but also the abolition of income tax in 1816 was a measure which benefited the rich but, because it led to a large increase in indirect taxes on tea, sugar, tobacco, beer and salt, which was harmful to the poor. War time contracts had ended and farmers and manufactures found themselves over producing because there was not enough demand for products. This meant that people had to be fired and business went into liquidation. With the demobilisation there was huge unemployment and this did not help as more and more people got tired of not having money and people were starting to starve. With all of these reasons causing unrest thought the country people stated to want change within the government. The government saw this as a problem and thought that there was going to be a revolution so their actions were to nip revolution in the bud. They felt they had to do whatever necessary to stop revolution. The historians that say the country was close to a revolution in the period 1815-1822 tend to emphasise the sheer volume of radical activity during this period. However those historians say that they threat of revolution was just a huge exaggeration point to the lack of coordination between the individual instances of protest and the states continued ability to respond decisively to it. Most historians say that the popular protest which characterised the immediate post-war periods was essentially traditional a not political but were related to the economic distress at the time. Most historians agree that the activity was economically motivated. During the period from 1816-1821 there was a series of mass meetings which were organise by radical groups. These were called the Spa Field Meetings. Most historians agree that the meetings were aimed at both inspiring the public and intimidating the authorities. The Spenceans were the organiser of the first few meetings. The Spenceans supported revolution but it is not clear as to whether plans were being made for revolution at the time of the Spa Fields Meetings. The first meeting saw a massive 20,000 people attend and was peaceful, however there were a few who after walked through Westminster and started smashing windows at high prices. In the second meeting around 200 people marched towards the tower of London, looting a gun shop on the way. The March of the Blanketeers was a march organised by William Benbow in March 1817. The marchers aims were to present a petition to the Prince Regent, asking him to relieve distress in the northern textile districts. Around 4,500 Blanketeers gathered in Manchester to protest in London. The Peterloo Massacre was when a crowd of around 60,000 gathered at St Peters Field on 16 August 1819 to demonstrate. Magistrates sent in the Manchester yeomanry at arrest the leader Hunt just after the meeting had begun. Because of the amount of people the yeomanry found it very hard to get to Hunt so the magistrates called in the regular forces to hep the engulfed yeomanry and in the panic a stampede followed and 11 people were killed and 400-600 were injured. All of these incidences were seen as a starting point for a revolution. We are now going to look at what the government did in response to these actions. It is commonly alleged that Liverpools government pursued repressive policies between 1815 and 1820. It acted in an unnecessarily harsh manner in crushing popular protest by, for example, suspending Habeas Corpus, passing the Seditious Meetings Act and breaking up the march of the Blanketeers in 1817, massacring those at Peterloo and passing the Six Acts in 1819. Much disorder was actually provoked by the government either indirectly through policies which placed intolerable burdens upon the poor or directly through the practice of employing agents provocateurs who encouraged lawbreaking so that they could collect a reward by informing on the law breakers. Following the Spa Fields meetings in December 1816, the government reacted by suspending Habeas Corpus. This meant that the government could hold someone suspected of radical or anti-government behaviour without trial for an indefinite period. Only 44 were arrested on suspicion of treason, of which 37 were detained when Habeas Corpus was partially suspended in February 1817. One of these was released soon after, whilst a second was discharged on compassionate grounds and a third died in custody. The remaining 34 had all been released by the time Habeas Corpus was fully restored in January 1818. As Norman Gash said It was not exactly a reign of terror. The government did have good right to suspend Habeas Corpus and introduce the Seditious Meetings Act because at the first Spa Fields Meeting Act there were over 20,000 people who attended and went rioting around London. On the second meeting 200 people marched to the Tower of London and Looted a gun shop on the way. The government saw this as a wake up call and had to introduce these policies or a revolution would take place they had to nip revolution in the bud. As a direct result of the Seditious Meeting Act, in the same month there where large scale gatherings for political purposes were banned. A small group of disorganised workers planned a march from St Peters field in Manchester to London to present their grievances to the Prince Regent in person. The protest was mainly peaceful and carried out in a legal fashioned in defiance of the government legislation. One marcher was killed in a heavy handed and needless display of brutality by the authorities in Stockport Cheshire. Local Magistrates declared that the initial gathering was seditious and dispersed it. This just created more unrest and most people saw this as going to far, however other historians say that he had to nip revolution in the bud. How was Lord Liverpool to know that there was not gong to revolution? Lord Liverpool saw a large group of people marching at a time of unrest this was the only action he could take because he could not afford to do nothing. The Peterloo Massacre has been called a symbol of repression by some historians, however some people have said that this was not a decision made by Lord Liverpool but by magistrates and they did not set our to stop the demonstration but just to get Hunt. Some historians say that the radical challenges in this period were such a threat that the government needed to take immediate action to deal with the threat and could not take any chances so repressive measures needed to be taken to nip revolution in the bud. However some historians say that these radical groups were regionally divided, had no weaponry and had poor organisation and end goals to be a serious threat. Looking at how successful Lord Liverpool was in dealing to radical challenges you have to remember how pitifully small Liverpools resources were for keeping the peace. Lacking a sizeable standing army or an effective police force, Liverpools government was obliged to rely upon spies and informers. The government at the time did not have any really power so they had to nip revolution in the bud. There was huge unrest thought the country due to various reasons and this led to radical protests. All of the protests were seen by the government as a starting point for a revolution and so the government had to deal with them through repressive policies. Liverpool had to stamp any possible radical challenges and he did this successfully.

The Differences between Financial and Management Accounting Assignment

The Differences between Financial and Management Accounting - Assignment Example Management and managerial accounting are used by the management to make decisions with regards to the daily operation of the business. It is based on the past performance of the business. It relies majorly on the forecasting of market trends and markets. Management accounting is internally presented while financial accounting is meant for the external stakeholders. Financial management is important to the current potential investors while management accounting is used by managers in making current and future financial decisions. Finally,  financial accounting is succinct and adheres to the Generally Accepted Accounting Principles (GAAP) while management accounting is usually a guess or estimate given that a myriad of managers rarely have time for exact numbers when they need to make decisions.      Some of the key financial statements include;   Income statement (profit and loss account), Balance sheet, Cash flow.   Income statement tells the users about the earnings and the profitability of the business. The statement is for a specific period of time. The periodic statements are important given that the owners can know the periodic performance of the company. It shows the sales first then cost of sales, the differences of which gives the gross profit. Then it explains the operating expenses which are subtracted from the gross margin to show Earnings Before interests and Taxes (EBIT). It then subtracts expenses and taxes to get the net profit. The balance sheet shows the financial position of the business. It tells the investors whether the company is able to pay its bills on time and the flexibility in the acquisition of capital and the distribution of cash distribution in terms of dividends. The key items are assets, liabilities, and equity.

Rhetorical analysis of an argument Essay Example | Topics and Well Written Essays - 750 words

Rhetorical analysis of an argument - Essay Example Blake is a Londoner himself and this basic knowledge of his origin establishes the chief nature of logos linked to the ethos so that both may be set in equilibrium with the pathos as readers yield to spontaneous involvement of feeling and making sense of the narrative based on a similar experience. As Blake opens his poem â€Å"London† with â€Å"I wander thro’ each charter’d street; Near where the charter'd Thames does flow†, he means to reflect the state of misery which the city of London was confronted with in the 18th century. Blake lived in the time when tumultuous political affairs of the unscrupulous English authorities prevailed in the period coinciding the French Revolution and under such settings, the structure of law possessed rigidity which resulted to oppression and other unpleasant forms of injustice. Blake gives illustration to this by the repetition of the modifier term â€Å"charter’d† which seems to have gone overboard as th e ruling designates even the river Thames to unnecessary restrictions. Through his literary endeavor in â€Å"London†, Blake laments about the appalling conditions of the capital city which are depicted by the disconcerting sights as viewed from the atmosphere and external appearances of the general public. In his wandering, the speaker in â€Å"London† takes into account how largely keen his physical encounter is of the ailing situation that he becomes drawn to concretize with â€Å"In every cry of every Man; In every Infant's cry of fear; In every voice, in every ban†. These lamentations exhibit the worst extent of London’s depressed scenario which, according to the historical context the poet is looking at, is brought about by the wrongful or inhumane administration of law or political regulations at the time. Blake makes no mention of authorities or governmental body responsible for the complaints delivered in the poem, nevertheless, he implicitly dem onstrates the presence of unseen yet brutish socio-political force behind what may well be imagined as harsh occurrences causing people of 18th century London to suffer. This is widely evident in the third and fourth lines of the first stanza indicating â€Å"marks† which assumes both literal and symbolic meanings. The wandering speaker does not only pass along the streets as an ordinary traveller but as a critical observer who could not help empathizing for every picture he catches sight of particularly when he manages to perceive the outer countenance and feel the â€Å"marks of weakness† and the â€Å"marks of woe.† Though the poet observed London merely as he could in his capacity and limits of time, the scope of his piece spans into the society of the present where its essence proves relevant to some point. â€Å"London† may be considered as a classical work, however, since there are certain political aspects that remain true in application and value in today’s political system, the poem is able to convey relevance in manifesting how the government relates to people and addresses their needs. State corruption still occurs thereby impoverishing communities whose people are heavily or unreasonably taxed yet do not obtain proper returns in exchange of completed duties or who continue to receive minimum wages despite

Positive Effects Of Globalization Economics Essay

Positive Effects Of Globalization Economics Essay To date, the concept of globalization still sparks mixed reactions in the public domain. Skeptics of globalization believe that globalization is bad for economies, and that should be controlled. However, others maintain that it is a great thing to have happened to the worlds nations as thus should be seen as a positive move in the right direction. This essay acknowledges that although there are costs associated with globalization, the resultant benefits clearly outweigh the costs to society. Therefore, this paper contends that efforts to increase globalization should be promoted. Globalization, according to Schmidt and Weitzel, results from increased international integration (Schmidt and and Weitzel). According to them, globalization results from a host of factors, amongst them technological advancement, political changes, and choice of economic policies. Technological advancement makes production, communication, and logistics and transport much cheaper and faster than before. Economic policies encouraging liberalization and open economies to FDIs also encourages globalization (Schmidt and and Weitzel). Political changes expose economies that were previously isolated into the international market, promote regional blocs, and support reforms that support the rule of law thus, encouraging investments in infrastructural sector. Globalization brings with it both positive and negative effects. Positive effects of globalization The gains from globalization are as a result of its effect on the flow of ideas, information, technologies, capital, finances, goods, services and people. The gains are normally triggered by cross border integrations resulting from globalization, which have several dimensions-economic, social, cultural and political (Nistor). Thus, in the analysis of the benefits from globalization, there are three channels through which the benefits accrue. The channels include (a) movement of capital; (b) trade in goods and services and (c) financial flows. Besides, there is also a channel through movement of people. Movement of capital Technological advancement and the resultant infrastructural development, globalization has opened up nations to carry out international trade. The net effect of the economic integration and liberalization has enhanced capital flows between different nations. The capital flows across these countries has served the important role of enhancing the capital base. This was very much evident in the 19th and the 20th centuries. With capital flows, it is possible to distribute the total world savings among countries with high investment potential. The ease of capital flows ensures that growth and development of a country is not constrained by its own domestic savings. For instance, most of the East Asian countries are beneficiaries of foreign capital inflow. Capital flow can take either the form of foreign direct investments (FDI) or portfolio investments. For developing countries, they benefit more from the FDIs than from portfolio investments and thus, most of them will place restriction to portfolio investments due to their volatile nature. Capital flows increases the rate of growth of countries beyond their domestic potential, a condition that would not otherwise be achieved, except with globalization. Increased trade in goods and services Globalization opens up economies to international trade in goods and services, which results in the allocation of resources consistent with their respective comparative advantages. Globalization therefore, promotes specialization thus, enhancing the countries productivity. Globalization facilitates the removal of restrictive trade that impedes growth. Technological advancements from globalization allows countries to produce what they are best endowed, in terms of resources, technology and labor. In turn, these countries will benefit from what they cannot produce from elsewhere. Specialization enhances productivity, efficiency and promotes good relations across borders. Financial flows One of the major characteristics of the globalization process is a rapidly growing capital market. The growth in both foreign exchange and capital market facilitates the transfer of resources across countries. The most significant outcome of the growth in the flows of capital and foreign exchange markets is the gross turnover in the foreign exchange markets. According to Frankel, the gross turnover is estimated to be about $ 1.5 trillion worldwide, per day (Frankel). The turnover is in the order of 100 times greater than the volume of goods and services traded. Therefore, currency trade has become an end in itself. However, an expansion of the capital markets and foreign exchange markets is a vital prerequisite for effective capital transfer. Negative effects of globalization Concerning the impacts of globalization, two major concerns arise on the mention of the phenomena (Nistor). This are often described as fears of globalization. The first and major concern of globalization is that it leads to unequal distribution of income and other resources amongst countries. Secondly, is that globalization infringes on the sovereignty. That globalization makes it difficult for countries to follow their domestic policies (Centre for Economic Policy Research). Most of the explanations given for these concerns are genuine while others are farfetched. Iniquitous income distribution This argument is premised on the fact that since globalization places more emphasis on efficiency, the phenomena will in most cases benefit countries that are favorably endowed. Skeptics, though justified to some extent, globalization benefits, as much as they accrue on the most endowed countries as claimed, these countries have had their own fair share of benefits. Developed countries have a head start in terms of technological base, natural as well human resources as compared with the developing nations. The skewed advantage relatively eats away the benefits of developing countries from trade, capital flows, and financial flows as well as specialization benefits. While the benefits from trade benefits all countries, much of the gains accrue to the advanced economies. This is perhaps one of the reasons while provisions for preferential treatment are catered for in todays trade agreements. The loss of state autonomy in pursuit of economic policies is another concern raised in regard to globalization. With the increased degree of economic integration, it is true that one country cannot pursue autonomously, policies which are not in consonance with the general worldwide trends. With globalization, some level of sacrifice with regards to national sovereignty becomes inevitable. Hus, with regard to globalization issues, constraints to pursuing domestic policies should be acknowledged. Further concerns over increased globalization, involve the fear of deteriorating national and international security, cultural erosion, drug trafficking, and other social evils. There is loss of craftsmanship as a result of increased use of technology. Globalization has served to increase dependence of states on other states over essential products that enhancing the economic vulnerability. Conclusion The contributions of globalization to the developments witnessed today cannot be ignored. Globalization has led to increased development of the world economies, diffused technological advancements and improved people lives. Its role, in enhancing production, productivity and efficiency as well lowering production costs of economies is well clear. These developments, besides having greater benefits, they have their own negatives. However, a succinct review of the benefits against the costs, it is without a doubt that globalization has made the world a better place. With the relevant measures being put in place to mitigate the costs arising from globalization, this essay concludes that, although there are costs to Globalization, the benefits clearly outweigh the Costs to Society. Therefore, efforts to increase Globalization should be promoted.

Management Process and Organizational Behavior Essay

Q.1 â€Å"Today managers need to perform various functions†: Elaborate the statement Managers create and maintain an internal environment, commonly called the organization, sothat others can work efficiently in it. A manager’s job consists of planning, organizing, directing,and controlling the resources of the organization. These resources include people, jobs or positions, technology, facilities and equipment, materials and supplies, information, and money.Managers work in a dynamic environment and must anticipate and adapt to challenges.The manager looks after more than one function. Therefore, managerial practices usedsuccessfully in big firms cannot be blindly used in small-scale units. Basic managerial functionsin large and small business are the same. But the manner in which these functions should becarried out can be different.Managing starts with planning. A manager with a definite and well defined plan has morechances of success than another who tries to start an enterprise without planning. According toKillen† planning is the process of deciding in advance what is to be done‚who is to do it‚how it isto be done and when it is to be done’’. Planning involves thinking and decision and is, therefore,called a logical process. Planning is a continuous process as changes in plans have to be madefrom time to time to take care of changing environment. Many a times, a vague approach isadapted to planning in a small firm. There is a false impression that small firms areuncomplicated and do not require planning. The small-scale manager does not want to engagehis employees in the planning process due to the desire to keep the secrets with him. Personalaccountability for results, lack of expert staff and not having planning skills are other major obstacles to planning in small firms. The owner or manager of a small enterprise is too involvedin day-to-day operation to try planning before commencing actual operation. But they need pre-planning most because small firms have limited resources to conquer their upcoming problemand cannot afford to finance losses that can take place while adjusting to unanticipatedhappenings/changes.An manager needs an enterprise which can achieve the business objectives. During thefunction of organizing he leads human resources to successful completion of the project,arranging the functions and activities into different levels in the organization structure, thusfacilitating the assignments of personnel according to their capabilities, skills and motivation.According to Peter F. Drucker the process of organizing consists of three steps – activitiesanalysis, decisions analysis and relation analysis.(i). Activities Analysis: It consists of the following:a) Determining the main functions for achieving the objectives of the firm.b) Various sub-functions in each major function.c) Amount of work in each major function and its sub-function.d) The position required to perform the activities.(ii) Decisions Analysis: It consists of the following:a) Choosing the basis of departmentalization so that functions could be grouped intospecialized units. Generally, functional departmentation is appropriate for small-scaleunits. Customers, Products and territorie s are other important base of departmentalization.b) Choosing the type of organization structure so that departments are incorporated into aformal structure. MBA Sem-IManagement Process and Organizational Behavior Subject code MB0022 (iii) Relations Analysis: The authority, responsibility and accountability of every position and itsrelationship with other positions are clearly defined. Various positions are manned with personshaving the necessary education, training, experience and other qualifications.To obtain best possible benefit from each employee it is necessary to delegate functions as far-down in the organization as possible. Owners of small firms are often reluctant to delegatingauthority to their employees even though they expect them to do all functions allocated to themthat require authority. For effective completion of tasks, it is necessary that responsibilityaccompanies the necessary authority. In directing a manager has to supervise, guide, lead and motivate people so that they canachieve set targets of performance. In the process of directing his subordinates, a manager ensures that the employees fulfill their tasks according to the set plans. Directing is theexecutive function of management because it is concerned with the execution of plan andpolicies. Directing commences organized action and sets the whole organizational machineryinto action. It is, therefore, the life giving function of an organization. This is the area where themastery of the art and science of management is put to test. An manager’s leadership styledetermines the work atmosphere and culture of the organization. Above all, he must motivateemployees by setting a good example, setting practical targets of performance and providingsatisfactory monetary and non- monetary benefits.In directing a manager has to perform the following tasks:(a) Issuing orders and instructions(b) Supervising workers(c) Motivating i.e. inspiring to work efficiently for set objectives(d) Communicating with employees regarding plans and their implementation.(e) Leadership or influencing the actions or employees. Controlling is the process of ensuring that the organization is moving in the desired directionand that progress is being made to wards the achievement of goals.The answer to a profitable organization is the skill of the owner or manager to controloperations. He has to establish standards of performance, procedures, goals and budgets. Withthese guides, he supervises job progress, workers performance and the financial condition of the business. The controlling function of the owner manager includes:Setting of standards: – Control presumes the existence of standards against which actual resultsare to be evaluated. Standards can not control on their own but they are the targets againstwhich actual performance can be measured. Therefore they should be set clearly andaccurately. They should be precise, adequate, and feasible.Measurement of actual performance: – The actual performance is measured and evaluated incomparison with the set standards. Preferably measurement should be such that variation maybe identified in advance of occurrence and prevented by suitable action. Where work involved isof quantitative nature measurement of performance is not difficult. But when the work is notquantifiable measurement becomes difficult. Periodical reports test checks and audits arehelpful in precise measurement of performance. MBA Sem-IManagement Process and Organizational Behavior Subject code MB0022 Analysis of variances: – Comparison of actual performance with standards will reveal variation.Variations are analysed to identify their cause and their impact on the organization. Correctiveaction can be possible only where the causes of the problem spots have been identified.Clarification may be called for sudden variation.Taking corrective action: – Control means action on the basis of measurement and evaluation of results. Wherever possible self- determining device should be used for bringing back actualresults in line with the standards. Standards should be revised wherever necessary. Other stepsto prevent deviations can be re-organization, improvements in staffing and directions etc. Thereal meaning of control lies in the commencement and follow-up of remedial action. At thisstages control unites with planning.

The Determinant of Economics Growth in the Emerging Markets

MSc BUSINESS ECONOMIC AND FINANCE Title of Project The determinant of economic growth in emerging markets: A case study of China. Tarik TOUAT Student ID: 10034757 August 2011 Project Supervisor: Dr. Helen Solomon. Abstract China has enjoyed a very rapid economic growth over the past decades. The impressive growth was driven by several factors. This study aims to determine those factors which contributed to unprecedented economic growth of China and show the relationship with the economic growth by an empirically investigation.The Ordinary Least Squares (OLS) method is applied in order to estimate a growth model using a time series data from 1984 to 2009. The results shows that trade openness, government size and inflation have a significant effect on economic growth. On the other hand, foreign direct investments, the level of human capital and return on investment have minor impact on economic growth in China. The relationship is established though the vector error correction model ( VECM), the finding is that trade openness, government size and inflation had a positive impact on gross domestic product of China in the long-run. Similar essay: Why Nations Fail Summary Chapter 5Word account: 13. 112 words. Acknowledgements Allow me to pay tribute to my supervisor, Dr. Solomon for kindly supervising this study and giving her time and her knowledge to the success of this project. I take this opportunity to thanks my elder brother Arezki TOUAT who was a model of success and constant source of motivation; I’m here to express my sincere gratitude and I wish him all the best for his wedding day. Dedication I dedicated this work to my parents Mouloud and Saliha TOUAT, who have contributed in an extraordinary way to my studies.To my younger sister Louiza TOUAT who is very special for me. Table of Contents 1INTRODUCTION6 1. 1Main objective7 1. 2Organization of the study7 2OVERVIEW OF THE CHINESE ECONOMY8 2. 1Geopolitical characteristics of China9 2. 1. 1Population9 2. 2Economic reforms in China10 3REVIEW OF LITERATURE12 3. 1Growth models12 3. 1. 1Basic Economic Growth Model12 3. 1. 2The Harrod-Domar model13 3. 1. 3Exogenous growth Solow model14 3. 1. 4The augmented Solow-MRW15 3. 1. 5The growth accounting model16 3. 2The determinants of growth17 3. 2. 1Foreign direct investment17 3. 2. Trade Openness19 3. 2. 3Human capital20 3. 2. 4Government size21 3. 2. 5Inflation22 3. 2. 6Infrastructure23 3. 2. 7Return on investment (Portfolio investment)24 4DATA AND METHODOLOGY25 4. 1Presentation of the data and statistical analysis25 4. 2Description of the variable26 4. 2. 1GDP per Capita26 4. 2. 2Foreign Direct Investment Net Inflows (% of GDP)27 4. 2. 3Trade openness28 4. 2. 4School enrolment, tertiary29 4. 2. 5General government final consumption expenditure30 4. 2. 6Inflation31 4. 2. 7Portfolio investment, bonds32 4. 2. 8Electric power consumption33 4. Descriptive Statistics34 4. 4Methodology35 4. 4. 1Estimation of the general model35 4. 4. 2The hypothesized relationships between GDP and its determinant36 5MODEL ESTIMATION AND FINDING37 5. 1Testing For Stationary using the Augmented Dickey Fuller Test37 5. 1. 1Results of the stationarity test. 39 5. 2Estimation of a Short-Run Growth Model for China41 5. 3Results of Robustness Tests44 5. 3. 1Testing for autocorrelation:44 5. 3. 2Testing for hetereoskedasticity:45 5. 3. 3Testing for non-linear functional form46 5. 4Estimating a long-run growth model for China47 5. 4. Testing for Co-integration: Engle-Granger Approach47 5. 4. 2Results using Engle and Granger Approach49 5. 4. 3Result of Johansen co-integration test. 52 5. 4. 4Vector correction model:55 6CONCLUSION59 LIST OF TABLES AND FIGURES TABLES Table 1: Literature review on foreign direct investment. 18 Table 2: Literature review on inflation. 22 Table 3: Literature review on return on investment24 Table 4: Descriptive statistic. 34 Table 5: ADF Test Statistics in levels39 Table 6: ADF Test Statistics in 1st difference40 Table 7: Estimation of the general growth model by OLS41Table 8: Estimation of the parsimonious model43 Table 9: Summary of the results from test for auto correlation44 Table 10: Summary of the results from test for hetereoskedasticity45 Table 11: Summary of the results from test for non-linear functional form46 Table 12: Testing the residuals from stationarity. 49 Table 13: Estimation of the Error Correction model 549 Table 14: Selecting the Appropriate Lag Length52 Table 15: Determining the number of co-integration vector with the Trace test53 Table 16: Determining the number of co-integration vector with the Maximum Eigenvalue test53Table 17: Unrestricted Johansen54 Table 18: Vector Error Correction Estimates56 FIGURES Figure 1: China nominal GDP per capita26 Figure 2: China- Foreign direct investment27 Figure 3: China -Trade openness. 28 Figure 4:China- School enrolment, tertiary29 Figure 5: China government final consumption expenditure. 30 Figure 6: Inflation in China31 Figure 7: Portfolio investment32 Figure 8: Infrastructure33 Figure 9: Graphs for stationarity in level. 62 Figure 10: Graphs for stationarity in first difference . 63 LIST OF ACCRONYMS GDP: Gross Domestic Product.GNP: Gross National Product. FDI: Foreign Direct Investment. ROI: Return On Investment. BRIC: Brazil, Russia, India and China. WTO: World trade Organization. OECD: Organisation for Economic Co-operation and Development US$: United State Dollar CIA : Central Intelligence Agency ADF: Augmented Dickey-Fuller. OLS: Ordinary Least Square. VAR: Vector Autoregression Model VECM: Vector Error Correction Model. NLLS: Non-linear least squares AR: Auto Regressive Models H0: Null hypothesis H1: The alternative hypothesis I (0): Integrated of order 0 (stationary).I (1): Integrated of order 1 (stationary). TFP: Total Factor Productivity. CHAPTER 1 INTRODUCTION In last decades, we have seen new economic power emerge from low level economic development to relatively high level of economic growth. Among these emerging economies are Brazil, Russia, India and China (the BRIC). Over the past two decades, developing countries have posted high rates of e conomic growth. This has transformed them into emerging economies. There are many factors that acted as determinants of this high GDP growth rate of the erstwhile slow growing developing countries.Chinese economy is the largest of the emerging economies. Actually, China passed Japan and become the second largest economy in the world after United States of America. Subhash Chandra Jain (2006) defines emerging economy as nations with social or business activity in the process of rapid growth and industrialization. Based on data from Dow Jones classification (2010) there are around 35 emerging markets in the world with the economies of China and India considered to be the largest. China is leading the pack of emerging economies. Their economic growth has been propelled by many factors.The economic importance of China and its continued success in posting high economic growth rates makes it an ideal case for studying the determinants of economic growth in emerging economies. China has al l the characteristics of an emerging economy. It faces the many challenges that all the emerging economies continuously face and which act as the biggest barriers to their economic growth. It is in this spirit we have undertaken this study to determine whether there is evidence of relationship between some factors and economic growth in china.This dissertation presents the knowledge gap to be filled, research questions and objectives alongside the hypotheses of the study. Furthermore, it also shows to what extend the study is relevant for China, highlights the scope and the organization of the study. More specifically, the study aims to: – Review the literature on the theoretical foundation of growth: examining the different model of economic growth. – Review and describing some previous studies on some determinants and the relationship with economic growth. Main objectiveThe key objective of the research is to assess the impact of different factors that contributed to the unprecedented economic growth of China over the past few decades and determine whether those factors can be viewed as a determinant of economic growth. Organization of the study This study is organized as follows: Chapter two will give an overview of the Chinese economic and list of the major waves of reforms. The third chapter will be in two sections, the first section deals with the definition of growth and provides a review of the growth theories by illustrating patterns of some leading economists on the issue of growth.Among the models studied, we have those Harrod-Domar, Solow, and Mankin. The second section of chapter tree deals with selected reviews on some indicators that have likely slowed or promoted growth. In chapter four presents the data and describes the method of analysis adopted to estimate the determinants of growth in China. The presentation and interpretation of the results are presented in Chapter five. This is followed by Chapter six, the conclusion. CHAPT ER 2 OVERVIEW OF THE CHINESE ECONOMY According to central Intelligence agency (CIA), China is the second largest economy after the United States.The country has experienced a particularly strong economic growth since the 1980s. However, the population remains relatively poor: in purchasing power parity, an estimated per capita GDP IN 2010 TO 7,400 $ per capita. Led by the Communist Party since 1949, China has led since the late 1970s the power to call a â€Å"socialist market economy†. The public sector continues to hold an important place in economic life but private companies are playing an increasing role and the country is highly integrated into the global economic system. Since 2001, China is a member of the World Trade Organization.While agriculture still occupies much of the labor force (in 2010, 39. 5% of Chinese labor), it contributed only 9. 6% of GDP in 2010. Industry, however, takes a prominent place, employing about 27% of the working population and is the area's most prolific in China with a production of almost half of national GDP, According to the state administration of foreign exchanges, nearly 47% of GDP come from a huge surplus caused by industrial exports. This has allowed the country to build up foreign exchange reserves that reached approximately 2,450 officially billion in June 2010.According to some analysts, China will by 2020 be the second largest industrial and commercial in the world, just behind the United States, ahead of Japan and the richest states in Europe. Geopolitical characteristics of China China is located in eastern Asia, west of the East China Sea, Korea Bay, Yellow Sea, and South China Sea. The country is bordered by fourteen other nations. With a total area of about 9,596,960 square kilometers (3,705,407 square miles), the country is slightly smaller than the United States. China is administratively divided into twenty-three provinces, five autonomous (self-governing) regions, and four municipalities.Populati on Since the proclamation of the People's Republic, the country experienced three censuses of population and there were 582. 6 million people in 1953, 1 billion in 1982 and 1. 14 billion in 1990. According to China demographics web site (2001), in 2005, estimated population is 1. 31 billion people (about 21 % of the world population). Since the early 1970s, the Chinese authorities launched a policy of birth control, with the aim of stabilizing the population at 1. 2 billion people in 2000. Since the 1982 census, the rate of population growth has decreased dramatically.The Chinese population reached in July 2011, 1. 4 Billion. According to China's official statistics, the rate of growth increase of about 2 to 3% per year during the first phase of demographic transition (2. 6% in 1969), fell to 1. 1% per year between 1990 and 1995. It is estimated at 1. 02% for 1995-2000 and 0. 7% for the period 2002-2020. The birth rate fell from 45% o in 1953 to 21% o in 1990, reaching 13. 10% o in 2005. At the same time, the mortality rate was reduced from 22. 5% to 6. 90%. This low mortality is due to the current youth population. In 2005, 25. % of China's populations were under 15 years, 67. 6% between 15 and 65 and 7. 6% (2005), alone, more than 65 years. The male population is 51. 50%. Economic reforms in China The economic reform called â€Å"Socialism with Chinese characteristics† started in 1978 by reformists within the Communist Party of China led by Deng Xiaoping. 1978-1984 The reform has started with the improvement of the micro-economic management (agriculture and urban industry), these reforms were implanted by Deng Xiaoping. The main objective was to encourage farmers, business leaders and employees to increase economic productivity.Effective action has been taken, by allowing farmers to keep the land's output after paying a share to the state. This move increased agricultural production, increased the living standards of hundreds of millions of farmers (B randt 2008). In rural areas, the system of collective ownership has been replaced by the household responsibility. In cities, the main objective of the reform was to increase the autonomy of enterprises. To this end, a number of experiments to improve the management system were conducted. Some of them, after the initial demonstration of their success, have extended to the whole country.The creation of joint enterprises with foreign capital is now possible. Deng Xiaoping launched the reform of the so-called â€Å"open door†, opening China to the outside. Foreign investment is now desired, and their home is concentrated to a set of areas open to foreign trade. Five special economic zones are for foreign companies from 1979 (including the cities of Guangzhou and Shanghai as well as the zone of Shenzhen, near Hong Kong), and free zones. These special economic zones were experimental laboratories for China, allowing it to gradually open up to foreign trade techniques. 1984-1991The key point of the second period was the decentralization of state control also impended by Deng Xiaoping, leaving local provincial leaders to experiment with ways to increase economic growth and privatize the state sector (Brandt 2008). The reform has created favorable conditions for enterprise with a partial autonomy of management, which had the effect of creating a supply and demand of resources of goods and services. That have achieved positive results such as foreign trade and the financing system were introduced to create favorable conditions for enterprise reform. 1993- 2005After the death of Deng Xiaoping in 1997, the radical reforms were continued by the Prime Minister Zhu Ronji who came to power in 1998. He had a goal to integrate his country in the World trade Organization (WTO), hence the importance that preceded the entry into WTO. Zhu Ronji has introduced a new program, including the reform of state enterprises, privatization of public housing, the legitimation and expa nsion of the private sector, reform of relations with foreign investors, reducing by half the bureaucracy, the acceleration of the fight against corruption and the creation of a viable unemployment insurance scheme and pension.The reform of state enterprises is central to these policies whose characteristic is to be highly interdependent. Indeed, the Chinese government has helped them to escape their social welfare function, to observe the principles of the market, to increase the competitiveness by upgrading their management system After accession to the WTO, China has continued this wave of reforms to modernize its economy and metamorphosed with the rules of the WTO. CHAPTER 3 REVIEW OF LITERATURE Growth models Explanatory theories of growth are relatively recent in the history of economic thought.These theories have led to highlight the role of technical progress in growth. In the long run, only the technical progress leads to a more productive economy. However, each of these gro wth theories have weaknesses because they are able to fully explain the determinants of growth in any given economy. With this in mind that many economists have given their vision of growth. Basic Economic Growth Model The main factors of production under a basic economic growth model are the stock of capital and labor force. The output is a function of capital and labor. At national level, an aggregate production function can be represented by the formula:Y=F(K,L)†¦. (1) Where Y is output, K is capital and L is labor. Increased production (Y) depends on the increase in capital stock (K) through investment and depreciation, and increased labor supply (L) by the population growth. The amount of capital investment depends on savings and is calculated by multiplying the average savings rate in a country by domestic production. Labor supply is based on demographics. The Harrod-Domar model The Harrod-Domar model is the first formal economic model of growth. This model has opened the way for modern models of growth, particularly in the Solow model.The Harrod-Domar model is intended to extend over a long period of Keynes' General Theory, which covered only the short term. As the General Theory, the Harrod-Domar model aims to highlight the unstable nature of economic growth and the need for state intervention. In the Harrod-Domar model, there is no guarantee that an economy is on a stable growth path. This model was presented by Roy Forbes Harrod (1939) in the book â€Å"Toward a dynamic economics† and Evsey Domar in 1947 in an article entitled â€Å"Expansion and Employment† published in American Economic Review.The model focuses on two critical aspects of the growth process: saving and the efficiency with which capital is used in investment. This model can provide accurate short term predictions of growth and has been used extensively in developing countries to determine the â€Å"required† investment rate or â€Å"financing gap† to be covered in order to achieve a target growth rate. The Harrod-Domar model is simple with relatively small data requirements and the equation is easy to use. However, the model only remains in equilibrium with full employment of both labor force and capital tock causing inaccurate longer term economic predictions and fails to account for technological change and productivity gains considered essential for long-term growth and development. The equation in the Harrod-Domar model is: Y = K/v (2) Where v is a constant found by dividing capital (K) by investment (Y), v is the capital-output ratio. This ratio is primarily a measure of the productivity of capital or investment. Exogenous growth Solow model The Solow model is one of the main models of the theory of economic growth.Developed by Robert Solow (1956), it is a model of neoclassical economics. The model is based on a production function with two factors: labor and capital. Production thus results solely from the combination of s etting a certain amount of capital (means of production) and work (labor). The Solow model is based on the assumption that production function with the property of diminishing returns where each additional increment in capital per worker results in less output. It is also assumed that the factors of production are used effectively by all countries.By assuming that the population has a growth rate that Solow called â€Å"natural† (not influenced by the economy), the model derived three predictions: 1. Increase the amount of capital (i. e. investing) increases growth: with more capital, labor productivity increases (Called apparent). 2. Poor countries have a growth rate higher than rich countries. Indeed, they have accumulated less capital, and therefore they knew of diminishing returns lower. 3. Due to diminishing returns of inputs, economies will reach a point where any increase in factors of production no longer results in increased production. This corresponds to the steady state.Solow noted, however, that this third prediction is unrealistic: in fact, the savings never reach this stage because of technical progress which increases the productivity of factors. In other words, long-term growth comes from technological progress. However, this technological progress is exogenous to the model. The model implies â€Å"that the growth of income per capita cannot be sustained without continued technological progress. Whereas, Harrod-Domar model have identified capital accumulation as major source of development. Clearly the difference stems from different assumptions of the production function.In the Solow model, over time poor and rich countries incomes should converge. The Solow growth model takes the rate of saving; population growth and technological e. g, improved machinery, computers etc progresses are exogenous. There are two inputs capital and labor, which are paid their marginal products. By assuming a Cobb-Douglas production functional which is ge nerally used to represent the relationship of an output to inputs, the model is as follow: Y (t) = K (t) ? [A(t)L(t)] 1- ? (3) 0 < ? < 1 Y is output, K is capital, L is labor, and A is a parameter which might influence growth.The augmented Solow-MRW This model was introduced by Mankiw et al (1992), in their article â€Å"A Contribution to the Empiric of Economic Growth†, Mankiw, Romer, and Weil (1992), have augmented the standard Solow model by adding Human capital to the production function. Therefore, the inputs of the model would include a function of stocks of capital, labour, human capital and productivity. According to Cobb-Douglas production function in (4), production at time t in country i is given by Yi (t) = Ki (t) ? Hi (t) ? [Ai (t)Li (t)] 1- ? – ? (4) Where ? , ? ? [O,1] ? + ? ? [O,1],and t denotes time.This implies that the production function exhibits constant returns to scale in its three factors: physical capital (K), human capital (H), and productivit y-augmented labor (AL). Specifically, it is a Cobb-Douglas production function. All markets (both input and output markets) are assumed to be perfectly competitive. All firms are assumed to be identical. The economy can then be described by a representative agent. The growth accounting model The theoretical framework of the Solow growth model describes the sources of economic growth, and the consequences for long-run growth of changes in the economic environment and in economic policy.However, some economists have built up an alternative framework which examines economic growth in freer framework without necessarily being bound to adopt in advance the conclusions of our economic theories. This framework is called growth accounting which gives us a different perspective on the sources of economic growth. The model starts wilt a production function which shows that output Y is as a some particular time t as a function of the economy’s stock of capital Kt, its labour force Lt, a nd the economy’s total factor productivity At. The Cobb-Douglas form of the production function is: Y = F (A, K, L) (5)Since A captures not only efficiency gains but also the net effect of errors and omissions from economic data, the residual A is sometimes referred to as a measure of our ignorance about the growth process. The determinants of growth To study the impact of determinants on economic growth in China, it is necessary to present the theoretical foundations underlying the role of each determinant is expected to play in an economy, especially in the early stages of growth. We can distinguish several types of determinants for growth: natural resources, external environment, population, innovation, investment, knowledge, consistency of development.In this section, we will see a wide range of studies done to investigate the relationship between the different determinant and growth. Foreign direct investment According to the IMF and OECD definitions, direct investment r eflects the aim of obtaining a lasting interest by a resident entity of one economy (direct investor) in an enterprise that is resident in another economy (the direct investment enterprise). The â€Å"lasting interest† implies the existence of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence on the management of the latter.Direct investment involves both the initial transaction establishing the relationship between the investor and the enterprise and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated. It should be noted that capital transactions which do not give rise to any settlement, e. g. an interchange of shares. FDI is expected to increase employment, enhancing labor productivity, exports, lowers rental rate of capital and thus be a source of growth and productivity gains.It is also a vehicle for technology transfer, which i s crucial for take-off and recovery pathways to production to more high-tech. In contrast, it can also discourage competition and even corrupt the development path of a country. Numerous empirical studies have analyzed the impact of FDI on economic growth with divergent results. While some studies argue that FDI has a positive effects on economic growth in host countries, others against thinking that FDI is not a necessary condition or sufficient for growth. The following table provides some empirical studies on the impact of FDI on economic growth.Attention will be drawn to the latest studies. Table 1: Literature review on foreign direct investment Author| Sample Size andTime Period| EconometricMethod and Tests| Empirical Evidences| Basu & Guariglia(2007). | 119 developingcountries1970 – 1999. | GeneralizedMethods ofMoments (GMM)| FDI enhances both educational inequalities and economic growth in developing countries. However, itreduces the share of agriculture sector in GDP. | Johnson(2006). | 90 developed anddevelopingcountries1980 – 2002. | OLS regression| FDI inflows accelerate economic growth in developing countries. But it is not valid for developed countries. Hyun(2006). | 59 developingcountries1984 – 1995. | OLS regression| FDI has positive effect on economic growth but lagged FDI values have no positive effects on current economic growth. | Durham(2004). | 80 countries1979 – 1998. | Extreme BoundAnalysis(SensitivityAnalysis)| There is no direct positive effect of current and lagged values of FDI and portfolio investment on economicgrowth. | Carkovic & Levine(2002). | 72 developed anddevelopingcountries1960 – 1995. | OLS regression and GMM| FDI alone has no statistically significant affect on economic growth. | Obwona(2001)| Uganda1975 – 1991. 2 Stage LeastSquares| FDI has a positive effect on economic growth in Uganda. | Berthelemy & Demurger(2000). | 24 Chineseprovinces1985 – 1996. | GMM| FDI plays an important role in the economic growth of Chinese provinces. | Source: Endogenous Determination of FDI Growth and Economic Growth: The OECD Case (2008). The latest empirical literature has provided more-or-less consistent findings affirming a significant positive link between FDI and GDP. Trade Openness Another major determinant of growth is trades openness; it has been used in the empirical literature to investigate the relationship between openness and growth.First, the most basic measure of openness is the simple trade shares, which is exports plus imports divided by GDP. A large number of studies used trade shares in GDP and have provided that open economies increased their GDP faster than closed economies. This has led to the conclusion that trade openness has a positive relationship with Growth as reviewed in Dollar (1992), Sachs and Warner (1995), Edwards, (1998), Dollar and Kraay (2000). On the other hand, Levine and Renelt (1992); Rodriguez and Rodrik (1999); Vamvakidis (200 2) have criticized the robustness of these findings especially on methodological and measurement grounds.Openness affects economic growth through several channels such as exploitation of comparative advantage, technology transfer and diffusion of knowledge, increasing scale economies and exposure to competition. However, a recent study from Halit Yanikkaya (2002) in his paper â€Å"Trade openness and economic growth a cross-country empirical investigation†, have investigates the relationship between a wide variety of trade openness measures and growth. He used two types of openness measures. The first group was various measures of trade volumes (except population densities).Trade shares, export shares, and import shares in GDP were found to be significantly and positively correlated with growth. Another key finding in his study was that the growth effects of trade with developed countries are not considerably different from trade with developing countries. Furthermore, popula tion densities also positively affect growth through increasing trade volumes. Hence, the regression results for trade volumes provide substantial support for the hypothesis that trade promotes growth through channels such as technology transfers, scale economies. Human capitalThe role of Human capital for economic growth has been well documented in the economic literature which has long recognized that the quality of labor factor plays an essential role in the growth process. Indeed, the classical economist Adam Smith has highlighted the importance of the quality of the workforce in the competitiveness and economic growth in the long term. Adam Smith (1776) also showed that the wealth of individuals and nations depends on the skills levels of workers. The specialization of labor implies that there are different types of tasks that each individual does what he is alcified. The notion of â€Å"division of labor† also highlights the growth potential of the product linked to the improvement of the organization or production method. This improvement is made possible by dynamic entrepreneurs and skilled workers and the ability or qualification to perform specific tasks. The major recent contributions to the empirical, show that the growth of human capital was an important component of economic growth, therefore, it had a legitimate place in the aggregate production function Solow (1956) et Swan (1956), Mankiw, Romer & Weil(1 992).Furthermore, a large number of other studies have found evidence suggesting that educated population is key determinant of economic growth (see Barro, 1991; Mankiw et al, 1992; Barro and Sala-i-Marin, 1995; Brunetti et al, 1998, Hanushek and Kimko, 2000). Government size The size of the government can affect the economic growth through many channels, such as expenditure, the efficiency of resource allocation, taxation and the budget balance on several economic issues.The recent economic literature seems to point a negative relation ship between government size (General government final consumption expenditure) and economic growth (Guseh, 1997; Dalagamas, 2000). In the empirical study of Yesim (2005), relatively small sizes of government are detrimental to economic growth, while medium sized government affects it positively. According to Barro (1991), government size may have a negative impact on economic growth due to government inefficiencies, excess burden of taxation and distortion of the incentives systems.However, according to Ghali (1998), it may also have positive effects on growth due to beneficial externalities such as the development of a legal, administrative and economic infrastructure and interventions to offset market failures. Inflation Mankiw (2002) defined inflation as â€Å"a rise in the general level of prices of goods and services in an economy over a period of time†. Inflation reflects an erosion in the purchasing power of money. A chief measure of price inflation is the inflation r ate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.A number of empirical studies have been devoted to the link between economic growth and inflation. These studies have objective to determine the empirical relationship between growth and inflation, the following table provide some empirical studies on the impact of Inflation on economic growth. Attention will be drawn to the latest studies. Table 2: Literature review on inflation Author| Sample Size andTime Period| EconometricMethod and Tests| Empirical Evidences| Khan & Senhadji (2001). | 140 developed anddeveloping countriesduring the period 1960-98. Non-linear least squares (NLLS). | Inflation has a negative effect on growth. The threshold is lower for industrialized countries than it is for developing countries. | Atish & Phillips (1998). | 145 countries during the period 1960-96. | Multivariate regression analysis. | Negative relationshipbetween inflation and growth that is statistically significant. | Michael Sarel (1995)| 87 countries, during the period 1970 – 90. | OLS regression| A specific numerical target for policy: keep inflation below the structural break. | Joao Ricardo Faria and Francisco Galrao Carneiro (2001). Monthly inflation rateof Brazil and real output for the period 1980 -95. | The Blanchard and Quay (1989) decomposition. | The results indicated that in the short-run, there is a negative impact of inflation on output. | Robert J. Barro (1995). | 100 countries from 1960 to 1990| Based on an extended view of the neoclassical growth model. | The impact effects from an increase in average inflation by 10 percentage pointsper year are a reduction of the growth rate of real per capita GDP by 0. 2-0. 3% points per year. | Ghosh and phillips(1998). | 145 countries, over the 1960-96 period. Panel regression. | At very low ratesof inflation (around 2 -3 percent a year or lower), inflation and growth arepositively correlated. | From the table 2, we can conclude that most of the findings of the empirical studies have provided an evidence of a negative relationship between inflation and growth. However, Tobin (1972) suggests that inflation can have a positive relationship to economic growth. This is because inflation can cause individuals to substitute out of money and into interest earning assets, which leads to greater capital intensity and promotes economic growth.In other words, an increase in inflation can result in higher output; this effect is known as the Tobin effect. Infrastructure In a broad sense, the concept of infrastructure services closely associated with roads, highways, railways, ports and airports, telecommunications networks, the national distribution networks of gas, electricity and water, i. e. all investments that develop and facilitate the movement of people, goods and production (Barro, 1990). A large empirical literature to examine the effects of public infrastructure on the growth of na tions but also on local growth, especially scale of American States.Beyond the pioneering work of Ratner (1983) on the productive infrastructure, has been the work of Ashauer (1989) which showed a positive effect of public capital on output or productivity companies. Although recently confirmed by Munnell (1990), this proposal continues to generate various methodological criticisms mainly because many economists believe that the marginal productivity of infrastructure implied by the estimates is excessively high. Return on investment (Portfolio investment)The definition of portfolio investment is the acquisition of financial assets (which includes stock, bonds, deposits, and currencies) from one country in another country. In contrast to foreign direct investment, which is the acquisition of controlling interest in foreign firms and businesses, portfolio investment is foreign investment into the stock markets. Most economists consider foreign direct investment more useful than portf olio investment since this last one is generally regarded as temporal and can leave the foreign country at the first sign of troubleThe table below shows some empirical studies on the impact of portfolio investment on Economic Growth in Developing and Developed Economies and their findings. Table 3: Literature review on return on investment Author| Sample Size andTime Period| Empirical Evidences| Butkiewicz and Yanikkaya (2008). | 114 developed and developing countries over the period going from 1970 to 1997. | The study reveals that the countries which receive important volumes of direct investment flowing and portfolio investment will carry out a rapid growth. | Rodrik (1998) and Klein and Olivei (2008). 100 developed and developing countries 1975-89 and 1986-95. | The study reveals that country which does not impose a restriction on capital flows is lucky more to carry out a rapid growth than that closed. | Chambet and Gibson (2008). | 25 emerging markets from 1995 to 2004. | Por tfolio equity flows have positive effects on output growth. | The literature contains a large number of variables, other than the variables we have listed in this chapter, which might have a significant impact on economic growth. CHAPTER 4 DATA AND METHODOLOGYPresentation of the data and statistical analysis Measuring the impact of several aggregates on economic growth in China will be done using an econometric model estimated in the section methodology. It will also test the veracity of the assumptions made in the literature review. The general idea is that from the data on the various activities in China over a short and a long period, it is highlighted, through statistical and econometric techniques the relationship between economic performances achieved in the last decades and performance the overall economy in China.Before evaluating the regression results, the the variables will be used in the econometric model to determine the sources of economic growth in China will be expla ined. The variable used to measure economic performance is Gross Domestic Product (GDP) per capita. GDP per capita it represents all the wealth created in an economy during a year. It gives the best measure of activity level. Therefore, the dependent variables used in the model is GDP per capita (current US $). There are seven independent variables used in the model: * Foreign direct investment, net inflows (% of GDP). * Trade openness (% of GDP). School enrollment, tertiary (% gross). * General government final consumption expenditure (% of GDP). * Inflation, GDP deflator (annual %). * Portfolio investment, bonds (PPG + PNG) (NFL, current US$). The data used for this study is annual data from 1984 to 2009 and was obtained from the World Bank. This relatively long period has the advantage of lending itself to a range of econometric tests yielding robust results. It also allows us to show the effects of new reforms to the Chinese economy that have introduced a new management system t o help increase the productivity in the 80’s.The raw data table is presented in Annex 1 and the Log form in Annex 2, more detailed description of these data will be done in the next section 4. 2. Description of the variable The explanatory variables were selected from theory outlined in literature review. We grouped the variables that are likely to have a material effect on the endogenous variable. GDP per Capita: The World Bank national accounts data (2011)† define the gross domestic product as the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products†.GDP per capita is gross domestic product divided by midyear population. 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 84 86 88 90 92 94 96 98 00 02 04 06 08 Figure 1: China nominal GDP per capita Since the introduction of the economic reforms, the GDP has experienced significant growth since the 1980s, it has hit a record almost USD 4000 Trillion in the year 2009, providing further evidence of the growth potential of the Chinese market. This growth continued despite the many attempts by the central government to cool down the economy after pressure from the international community.Foreign Direct Investment Net Inflows (% of GDP) According to the World Bank, â€Å"foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments† Figure 2: China- Foreign direct investment The Foreign direct investment; net inflows (% of GDP) in China was reported at 3. 42 in 2008.This series shows net inflows (new investment inflows less disinvestment) in the reporting economy from foreign investors, and is divided by GDP. China's economy is the second largest in the world after that of the United States. Trade openness 20 30 40 50 60 70 80 84 86 88 90 92 94 96 98 00 02 04 06 08 Figure 3: China -Trade openness. As can be seen in the graph, the trade openness in China is more open than it was 20 years ago, and that was due to the economic openness which increases in trade (as part of the reforms). The trade openness (% of GDP) in China was reported at 59. 0 in 2008, according to the World Bank† Merchandise trade as a share of GDP is the sum of merchandise exports and imports divided by the value of GDP, all in current U. S. dollars. China's economy is the second largest in the world after that of the United States†. School enrolment, tertiary 0 5 10 15 20 25 84 86 88 90 92 94 96 98 00 02 04 06 08 Figure 4: China- School enrolment, tertiary The school enrolment, tertiary, have known an import increase since the reform, Between 1996 and 2009, enrollment in higher education increased from approximate 5% to almost 25% of GDP per capita.Chinese universities form more and more engineers and scientists each year. This shows that China is on the road to a knowledge-based economy. The Gross enrolment ratio is the ratio of total enrolment, regardless of age, to the population of the age group that officially corresponds to the level of education shown. Tertiary education, whether or not to an advanced research qualification, normally requires, as a minimum condition of admission, the successful completion of education at the secondary level. General government final consumption expenditure 13. 0 13. 5 14. 0 14. 5 15. 0 15. 5 16. 0 84 86 88 90 92 94 96 8 00 02 04 06 08 Figure 5: China government final consumption expenditure. The General government final consumption expenditure (% of GDP) in China was reported at 13. 5 % in 2007, it has hit almost 16% in the year 2001. According to the World Bank. General government final consumption expenditure (formerly general government consumption) includes all government current expenditures for purchases of goods and services (including compensation of employees). It also includes most expenditure on national defense and security, but excludes government military expenditures that are part of government capital formation.Inflation Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. -4 0 4 8 12 16 20 24 84 86 88 90 92 94 96 98 00 02 04 06 08 Figure 6: Inflation in China China’s average inflation rate of 2% over the past ten years has been unusually low for a developing country   The inflation rate in China was last reported at 5. 5 % in 2011 and its highest historical rate of 22% in 1994 and a low record of -2. 0 % in 1999. Portfolio investment, bonds -3,000,000,000 -2,000,000,000 -1 ,000,000,000 0 1,000,000,000 2,000,000,000 3,000,000,000 4,000,000,000 5,000,000,000 84 86 88 90 92 94 96 98 00 02 04 06 08 Figure 7: Portfolio investment The Portfolio investment; bonds (PPG + PNG) (NFL; US dollar) in China was reported at approximate -2 billion in 2008, its highest hit was reported almost 5 billion in the years 2005 According to the World Bank, bonds are securities issued with a fixed rate of interest for a period of more than one year.They include net flows through cross-border public and publicly guaranteed and private nonguaranteed bond issues. Data are in current U. S. dollars. Electric power consumption 0 400 800 1,200 1,600 2,000 2,400 2,800 84 86 88 90 92 94 96 98 00 02 04 06 08 Figure 8: Infrastructure China has been spending heavily in physical Infrastructure since the 90’s and that due to economic policy to improve the economic growth owing to its economic expansion. Figure 8 shows that the consumption of electricity has increased during the last 20 years. In 2009, it has hit a record of electric power consumption of 2400 kWh per capita.We measure infrastructure by looking at the Electric power consumption (kWh per capita) which measures the production of power plants and combined heat and power plants less transmission, distribution, and transformation losses and own use by heat and power plants. Descriptive Statistics The table below shows a summary statistic for the dataset used, the means differ significantly across the variable. The skewness coefficient is close to 0 for most values. The null hypothesis of the Jarque Bera normality test is that the residuals are normally distributed.The decision rule is to accept this hypothesis if the statistic of Jarque Bera (JB) is less than 5. 99. Here, the JB statistic is less than 5. 99 for all the series which means we cannot reject the null; there is no evidence of non-normally distributed residuals, except for Foreign direct investment which shows JB higher that 5. 99. Table 4: Descriptive statistic | ForeignDirectInvestmentNet inflows| GrowthDomesticProduct| Government Final Consumption | The level of human capital| Inflation| Infrastructure| Trade openness| Return on investment| Mean| 0. 020258| 0. 047137| -0. 0028| 0. 04396| -0. 01937| 0. 03529| 0. 1491| -0. 62059| Median| -0. 0042| 0. 041494| -0. 00224| 0. 037303| -0. 0022| 0. 033887| 0. 01207| 0. 108995| Maximum| 0. 374106| 0. 109831| 0. 037975| 0. 108951| 0. 650219| 0. 065986| 0. 108611| 18. 08911| Minimum| -0. 31887| -0. 04897| -0. 04678| -0. 01321| -0. 68278| 0. 00866| -0. 10326| -18. 5564| Std. Dev. | 0. 138935| 0. 038244| 0. 019386| 0. 038065| 0. 338516| 0. 014811| 0. 045317| 10. 35226| Skewness| 0. 67502| -0. 30828| -0. 19908| 0. 194607| -0. 13538| 0. 431179| -0. 24933| -0. 07282| Kurtosis| 5. 047| 3. 28519| 2. 723548| 1. 917252| 2. 50906| 2. 477846| 3. 399615| 2. 832023| Jarque-Bera| 6. 63353| 0. 480719| 0. 244745| 1. 378992| 0. 327435| 1. 058651| 0. 425367| 0. 051484| Probability| 0. 043645| 0. 786345| 0. 884819| 0. 501829| 0. 848982| 0. 589002| 0. 808412| 0. 974587| Sum| 0. 506443| 1. 17842| -0. 06988| 1. 098993| -0. 4842| 0. 882238| 0. 372743| -15. 5147| Sum Sq. Dev. | 0. 463268| 0. 035102| 0. 00902| 0. 034775| 2. 750233| 0. 005265| 0. 049286| 2572. 062| Observations| 25| 25| 25| 25| 25| 25| 25| 25| Methodology The objective of this study is to determine the impact of different factors that contributed to the unprecedented economic growth of China over the past few decades.In order to control for the problems of misspecification caused by the application of classical linear regression methods, recent developments in time series econometrics will be used such as the Error Correction Models and Johansen co-integration test. In this section, we explain the methodology that is the basis for estimating the appropriate model for the Chinese economy. The impact of different factors that contributed to the unprecedented economic growth of China over the past few decades and d etermine whether those factors can be viewed as a determinant of economic growth.Estimation of the general model The literature review has identified some models and we chose a variant of the model presented by Robert Solow (1957). Indeed, the standard growth accounting approach seems appropriate which is decomposed into stocks of capital, labor, human capital and productivity. The model that we suggest to use is based on a functional form of Cobb Douglas: GDP=F( FDI, OPEN, HUMCAP , GOVSIZE, INFL, ROI) †¦(5) The dependent variable is the growth rate of real gross domestic product per capita.All the independents variables are derived from the neoclassical theory of growth mentioned in the literature reviews in chapter tree. The empirical model used to examine the determinants of growth in China is shown in equation (6) below: ? LGDP=? + ? 1 ? LFDI + ? 2 ? LOPEN + ? 3 ? LHUMCAP + ? 5 ? LGOVSIZE + ? 7 ? LINFL + ? 4 ? LROI +?. †¦ (6) Where: The ? is the intercept and ? the err or term. The variables used for the construction of the models are: LGDP = Log of real gross domestic product per capita. LFDI = Log of foreign direct investment, net inflows (% of GDP). LOPEN = Log of trade openness (% of GDP).LHUMCAP = Log of the level of human capital (School enrolment, tertiary (% gross). LGOVSIZE = Log of general government final consumption expenditure (% of GDP). LINFL = Log of inflation, GDP deflator (annual %). LROI = Log of return on investment (long-term US interest rate): Portfolio investment, bonds). We have taken the logs of the variables in order to linearise the model. Furthermore the variables are tested for unit roots and are differenced accordingly to achieve stationarity. The results showed that most of the variables were I (1). The hypothesized relationships between GDP and its determinant:In the following table, we present the relationship between GDP and some of its determinant according to the literature reviews. Determinant of growth | Relat ion with Growth Domestic Product| Foreign direct investment| +| Trade openness| +| The level of human capital| +| General government final consumption| +/-| Inflation| -| Return on investment| +| CHAPTER 5 MODEL ESTIMATION AND FINDING This chapter presents the methods and estimation techniques used to determine the long-run and short-run growth for China. The empirical testing of this estimation will be done by following these tests: Determine whether the series are stationary or not by using the ADF test. * Estimating the OLS model with general equation. * Testing for Co integration using Engle and Granger technique and the Johansen cointegration test to see if the determinants of growth apply in the long run. * Estimating a VECM to examine the dynamics in the short-run and the adjustment of co-integration error term. 1. 1 Testing For Stationary using the Augmented Dickey Fuller Test: To avoid spurious regressions, it is necessary to study the characteristics of the series to see i f they are stationary or not.Equation tests for unit roots using the Simple Dickey-Fuller test. Yt=pYt-1 + ut (7) Yt will be stationary of the estimated value of p is less than 1. Yt will not be stationary of the estimated value of p is more or equal to 1. Therefore, we check for H0: p= 1 (Yt is not stationary) H1: p < 1 (Yt is stationary) A more convenient version of this test is to transform the model (by subtracting Yt-1 on both sides) and obtain the following: Yt=pYt-1 + ut (7) Where ? = p- 1. We can hence estimate equation (7) and test for ? as follows: H0: ? = 0 (Yt is not stationary) H1: ? lt; 0 (Yt is stationary) In equation (7) which is derived from equation (6), we are assuming that there are no constant and time trend (deterministic trend). There are 2 more versions of the Dickey-Fuller tests for unit roots shown in equations (8) and (9): In testing for unit roots, equation (8) includes a constant and equation (9) includes both a constant and a time trend. ?Yt=? 1 + ? Yt- 1 + ut †¦ (8) ?Yt=? 1 + ? 2t+ ? Yt-1 + ut †¦ (9) In equations (8) and (9), the DF test is still testing whether ? = 0. Generally, we look at the plot of the variable and decide which of equations to use.However, equations (7), (8) and (9) may suffer from autocorrelation and the test-statistics may be invalid. To solve the autocorrelation problem, we keep adding lags of the dependent variables (? Yt) until the problem disappears. The optimal number of lags are given by the SIC or AIC, but EViews will determine that automatically. This is called the Augmented Dickey Fuller (ADF) test. Using model (4), for example, the ADF model: ?Yt=? 1 + ? 2t+ ? Yt-1 + ? Yt-1 + ? Yt-2 + †¦ + ut†¦ (10) If the variables are found to be non-stationary, we transform them by differencing the variables to make them stationaryFor instance, let denote ? Yt = Dt . If Yt is not stationary, we take the first difference of Yt (? Yt ), and if we find that ? Yt is stationary, we say that Yt is integrated of order 1. However, if it’s not the case, we take the first difference of Dt (? Dt ), , If ? Dt is stationary, we say that Yt is integrated or order 2 or I(2). First all, before we undertake the test for stationary it’s useful to visualize the variables on a graph to see whether we need a constant or time trend or both in the ADF test. (See groupe figures 9. ). We have found that all the variables need a constant.Results of the stationarity test. The decision is made by comparing â€Å"ADF† to â€Å"critical value: If ADF> CV, then we accept the null hypothesis of non-stationarity of the variable and whether ADF [? 2(p)] one rejects the null hypothesis of no autocorrelation of order p. If LMA(p) < [? 2(p)] one cannot reject the null hypothesis of no autocorrelation of order p. Or equivalently, H0 = 0 there is no autocorrelation. H1 = different from 0, then the autocorrelation The statistic is distributed chi-squared, with p degrees of freedom. Acce pt H0 if the p-value of the Breusch-Godfrey statistic is greater than 0. 05.Table 9: Summary of the results from test for autocorrelation Models| Obs. * R-squared| Prob. Chi-Squared| Observation| Model 2| 0. 189117| | 0. 9098| | Autocorrelation is insignificant at the 5% level. | Model 3| 0. 267317| | 0. 8749| | Autocorrelation is insignificant at the 5% level. | Model 4| 0. 308434| | 0. 8571| | Autocorrelation is insignificant at the 5% level. | Model 5| 2. 285405| | 0. 3190| | Autocorrelation is insignifican