A Letter to a Friend

Dear Julia, I’m very glad that you are coming to visit my family and me the next month. We haven’t seen each other for ages and I missed you a lot so I hope that you are not going to change your mind about that trip. So I’m writing this letter to let you know something about my plans for your trip. During your stay here we would like to take you sightseeing around Moscow, visiting different places of your interest. It could be museums, parks, exhibitions and anything else you would love to see and take pictures of.The next day after your arrival we are having my dad’s birthday, so it would be great if you agree to celebrate it with us. During the next couple of days it is up to you what we are going to do – we have plenty of activities for you to choose from: having fun at the waterpark, skiing, ice-skating, shopping and many more besides them. We hope that you will love your stay here! Speaking about what you need to bring with you, I want to warn you that winter in Russia is cold and windy.Try to take with you at least a couple of sweaters and warm pants or jeans, as well as socks and winter boots. And don’t forget your hat and a warm jacket. Anyway, if you forget anything – don’t worry, you can buy everything you need here. My dad and I will meet you at the Domodedovo airport on Thursday, February’28 at 4 p. m. near the main entrance. If you have difficulties in finding us – just call me. I can’t wait to see you! Yours,

Book Report on Freedomnomics by John Lott Essay

The effective management of the economic aspect of the country is always valuable and necessary to guarantee the financial stability of the nation and its people. As such, it is empirically significant that the economy is free from any manifestation of restriction for it to efficiently operate. Such condition is the underlying principle and practice behind what is called a free market. Economic freedom is attributed to the flexibility and most importantly, immunity of the economic field from limitations. In carrying-out such ideal situation, the reality that free economy works most to the advantages of both the people and nation is established. With such clear indications, it is therefore essential that the concept of free market is supported because it definitely works best for the population and the country in general. The said main thesis concerning the principle and practices of free market was what efficiently exemplified by the book â€Å"Freedomnomics† written by Economist and acclaimed author John Lott. In the said book, Lott (2007) opened the minds and hearts of the public about the necessity of a free market condition due to its many relevant advantages both for the people and societies. In doing so, the book not only provided its readers with a glimpse about the nature and components of free market but also allowed the public to realize its benefits. To support the book’s thesis, Lott based his premise from several case studies which all pointed to the significance of free market thus he called for and emphasized the need for economic freedom (Lott, 2007). In supporting his main theory on free market, Lott stressed major points that showed how free market or liberated economy paved the way for the eventual successful handling of the other aspects of the society such as the political system and the structure of the criminal justice as well as even the ethical or moral features of a country like the United States. It is in this position therefore that the book ultimately succeeded because it was able to make way for the public’s recognition that free market encompassed not only the economic aspect of the country but its other social components as well. Hence, there is indeed a need to adhere to and uphold the free market principle in order to achieve the nation’s improvement. The Free Market Premise In â€Å"Freedomnomics,† Lott effectively explored on the premise of free market-its nature, components, practices and most of all, its significance to people and the society. Citing the notion imparted by Adam Smith, the author outrightly presented that from such principle, where a nation’s economy just like the U. S. is free from any form of restriction, â€Å"the free market works† (Lott, 2007, p. 1). Taking into consideration the results of a number of economic-related case studies which he did on his whole career, the relevance of the principle of free market was highlighted by the author through the book. Additionally, the book’s point of view evolved around and was analyzed according to the philosophy that a restricted kind of economy, such as the one manifested by communism, is undeniably harmful. This is supposedly because of the fact that economic restrictions also result to portrayals of limitation that detriment other aspects of the society (Lott, 2007). As a support to his free market theory, Lott gave the public major points that all signified the benefits of such concept. In doing so, it became apparent for the book to prove the harms when the economy is subjected to any kind of restriction. The points that supported the free market perspective were bravely presented by the book like its opposition to the book â€Å"Freakonomics† by Steve Levitt and Stephen Dubner. The Lott book stressed the advantages to be derived from free market or economic freedom when it challenged its counterpart’s philosophy that the American economy is a swindling business because both the corporations and their people are cheating the public (Lott, 2007). In correcting the wrong notion brought about by â€Å"Freakonomics,† Lott’s â€Å"Freedomnomics,† in turn, clarified that the American economy, due to its free market principle, truly operates according to rules. This is because the field, as represented by many corporations, exerts earnest efforts â€Å"to make a profit by supplying people with something they want† (Lott, 2007, p. 3). It is in this condition that the effective operation of free market is exhibited due to its remarkable advantage of encouraging the economy and people behind it to act honestly and accordingly (Lott, 2007). The book further perceived that treating the public honestly made the free economy maintain its good reputation. Notwithstanding the supposed penalties and legal liabilities, the best motivation for the economy and corporations is to preserve their honesty and honor. Most importantly, it is not only the economy which benefited from free market as such principle likewise paved the way for proper operation of the other aspects of the society or the the sincere actions of other members of the society such as political leaders, professionals, members of the criminal justice system, all of which ensured adherence to moral standards. As a proof, Lott cited his experiences which confirmed that economy, politics and religion were connected. This was recorded by his opinion-editorial materials in the July 13, 1986 issues of the Great Falls Tribune and the Montana Standard (Lott, 2007, p. 7). Conclusion Regardless of the disputes against the free market principle, â€Å"Freedomnomics† effectively justified such and even emphasized its undisputed benefits which made the book commendable. Ultimately, it is only through continued observance of free market or liberated economy that Lott prescribed the country to become better and stable. Reference Lott, J. R. (2007). Freedomnomics: why the free market works and other half-baked theories don’t. Washington, DC: Regnery Publishing.

Twin Turbo Engine Repair Research Paper Example | Topics and Well Written Essays - 500 words

Twin Turbo Engine Repair - Research Paper Example A twin turbo engine is that type of engine which has two such turbo chargers installed at its intake manifold. Twin turbo chargers can be used for in parallel (to increase the amount of charge) or sequential (to increase the pressure of charge) operation. Examples of cars using such engines are Toyota Supra and BMW N54 etc. The current paper addresses one of the major repair problems for a twin turbo engine. Overhauling a Turbocharger: Most of the turbocharger users prefer to replace the whole turbocharger assembly in case of a fault. This is because of the complexities that arise during the repair of the assembly. The most important challenge during a turbocharger repair arises due to the small size of the components. This makes the vital parts such as bearings, turbine and compressor blades, seals etc. inaccessible for the repairer. Specialized tooling is required to perform most of the operations which is not readily available. All the operations from checking bearing play to misa lignment of the components require special expertise. However, we shall discuss here the challenges that arise while cleaning the insides of a turbocharger in a twin turbo engine. In a normal engine overhaul, engine degreasers are used to clean the insides of the engine and make it spot free.

Organizational communication analysis paper Essay

Organizational communication analysis paper - Essay Example This is also to achieve uniformity and consistency in production and to make quality and output predictable. Scientific Management is an engineering approach to achieve efficiency in the workplace where the organization can be likened to a machine which is composed of several parts that should work together to achieve optimum efficiency. This principle can be applied the Metropolitan Medical Group case to improve their service rating and arrest their declining revenues. In MMG, the administration and staff already the desired performance which is â€Å"leeway service† where Mike Taslow, the CEO of MMG elaborated to Betty McDaniel the newly hired director patient care â€Å"Patient should expect the same procedures, the same treatment from our staff, and the same efficiency from all the various departments of the MMG (Turner and Krizek 219). This is the same principle of Taylor’s uniform output albeit the setting is on a health care facility and not on a manufacturing plant. The problem in MMG was obvious. From the patient’s point of view evident with Betty’s interview with patients (Miriam), the appointment procedures was far from the ideal and causes the hospital’s service rating to drop. On the part of the employees, they are blaming the patients for not being educated of their system and has to coordinate with their friends in other department to fix things up. This shows the problem that Taylor identified as a cause of inefficiency which in the case of MMG, staffs are coordinating on a â€Å"personal level† rather than a established procedure causing inefficiency and ultimately, poor service rating. This issue could be solved by using Taylor’s scientific management approach to clearly define and establish systems and procedures, break down work to specific tasks and to quantify every work involved with the end of providing the same quality of

Lean Management Essay Example | Topics and Well Written Essays - 2250 words

Lean Management - Essay Example From the research it can be comprehended that the models and concepts which influence the pricing decisions of a firm are management accounting decisions. The pricing strategy of a firm is influenced by several factors which include the fixed and variable costs of the firm and the environmental factors which include legal analysis and competitor analysis. Some of the specific concepts in cost accounting are lean accounting, resource consumption accounting, transfer pricing etc. Manufacturers need to consider various fields like the supply chain process, the assets risk to low cost etc. while determining an appropriate costing strategy for the firm. The term Lean Management means the principles that are used for lean production. The basic idea of the concept of lean manufacturing is to reduce the wastages incurred in any form in the firm. The wastages of the firm which can be minimized through the use of Lean Management principles are the defects in production as there is no proper ut ility of the product. The overproduction factor in firms usually leads to excess finished stock, inappropriate inventory control and the efficient less production system used. The concept of Lean Management is a derivative of the Toyota Production Systems (TPS). The TPS policy reduces the time gap between the customers’ order and the delivery to the customer. The JIT system of inventory also helps in nil wastage of stocks. Resource consumption accounting is a type of principle based management accounting which provides the managers with a decision sustain system for the organization. Another concept which affects the pricing decision is transfer pricing. Transfer pricing is quite applicable in case of the manufacturing organizations. Transfer pricing helps in reducing the operating costs and also helps in lowering the effective tax cost of global operations. â€Å"Using transfer pricing economics to map all the transactions in which the new plant will participate, with suppl iers and customers as well as with related parties, reveals hidden opportunities† (Transfer Pricing in the Automotive Industry 2006, p. 3). Resource consumption accounting is another model which provides managers with adequate management accounting system in order to support pricing or costing decisions in a firm. This concept was specially developed for advanced manufacturing. The resource based cost accounting involves resources, their costs, the quantity based modeling, the cost behavior. Lean management accounting and Toyota Production System are the most suitable models which can be quickly and beneficially applied in Maniac Plc. The lean management system will be useful in taking pricing decisions of the firm. â€Å"The lean management system is structured around three necessities of lean production: strategic planning, organizational structure and human resource capabilities† (Jackson & Jones 1996, p. 18). 2) Maniac Plc practices both standard costing as well as activity based costing system. Standard costing and variance costing are both costing types which play an important role in management accounting. The standard costing system is the estimation of the costs which are necessary for the procedure of

American Indian Research Paper Example | Topics and Well Written Essays - 2000 words

American Indian - Research Paper Example The American Indians lived in solitude for many years until the coming of the Europeans, who later discovered America, making things less peaceful. Indians experienced forceful eviction from their land leading to war and a lot of bloodshed. The Indians had different views of the Europeans and knew they would use different techniques to attack them, including use of military force (Nichols 3). There are Indians who supported the white men, while others refused completely to surrender even when they were subjected to harsh conditions. The Indian Revolution Act, implemented in 1830, made several tribes migrate to the Western side of the country. With the revolt against the British and formation of US, the idea of civilization was conceived, and the American Indians were prepared for assimilation into United States citizens. It was integral to have a manifested destiny, as that would favour the nationalist movements that were present. Family Structure of the American Indians The family s tructure of the Indians was formed in such a way that it had to be obscure that an extended family existed. An extended family that lived together in one house were enumerated as subfamily members, and all the members were related to the holder of the house. An extended family that resided in several homesteads ensured they were at a close proximity to one another. However, the families were recognised as a single entity with independent households. Both the parents and grandparents resided in a dwelling place that was mobile, and they ensured they were near the children or grandchildren. The cultural conceptions of the Indians recognised an Indian grandmother as the aunt of a child as well as the grandaunt. Extended families were responsible for the formation of kinship networks, formed based on clan memberships and not necessarily by birth, marriage or adoption. Traditional Native families retained their Indian ways and had no influence from the urban ways of life (Lamanna and Rie dman 67). The Indian families relate more to people outside immediate family in a supportive way, and this is evident in the Sioux Families; where family involvement begins in the early stages of life as parents get selected for new born babies. The families strengths are seen in the helping systems present in the community at large, and they have spiritual courage that they obtain from their religion. The Indian families also have respect for one another and this is a basis they use for their later learning. American Indian Culture American Indians enjoyed freedom and contentment in their land, before corruption and other vices brought conflicts to the community (Porter 93). American Indian culture gave rise to many familiar symbols that depict struggle and triumphs, making many modern life aspects adopt them. Tepee and Peace Pipe are some of the symbols the natives used in their culture, as a tapestry of the American Native life. Everything from plants, animals, housing, to climat e conditions defined the Indian culture, with their animals being referred to as spirits; despite the fact that they hunted and killed them. The Indians’ clothes were made of animal skins, and the meat was greatly revered thus it never went to waste. There was a belief that spirits lived, and were present among all the Indian tribes. American Indians participated in agricultural

Human Resource Management Essay Example | Topics and Well Written Essays - 2000 words - 20

Human Resource Management - Essay Example Learning and development strategies are developed to provide continuous improvements to the company and its people. The learning and development process of the company allows the company to build the core competencies and this in turn helps the company keep up the competitive advantage and the flexibility. Hence it is crucial to note that the learning and development strategies of companies are very important aspects and need to be well designed and executed (P.Dwarakanath & M.Mala, n.d). The main features of the effective learning and development strategies mainly include the following. Firstly, effective learning and development strategies are well planned and designed based on the strategic goals of the company. The main reason the employees are trained within an organization is mainly to meet the goals and objectives of the company and to contribute to the growth of the company. Hence the learning and development strategies of the company are also mainly focused on the strategies of the business and focuses on the ways that the business can yield results (Silverman & Casazza, 1999). Hence an effective and efficient training strategy is one which is all rounded and takes into account all the strategies of the company as well as the internal and external environment as well. The second main feature is the Return on investment (ROI). In the modern organizations, a very important element that is always focused on is the return on investment that the company gains from the investment. Hence here in this case, with the learning and development strategies, an effective strategy will be one whose impact can be measured based on the various elements like the productivity, reduction in the defect rates, and many other process related elements (Lawler & King, 2000). The next important element of a successful learning and development plan is the methodology adopted by the company for the training and development needs. This includes various different learning and

KOPI Restaurant Social Media Strategy Research Paper

KOPI Restaurant Social Media Strategy - Research Paper Example In most cases, this group comprises of couples, young adults as well as families residing in this place, whose main interests and hobbies include visiting coffee shops and reading among others. These people were thought to become the first adopters since they are the first to visit restaurants, coffee shops, test new technological gadgets, active on social media among other important features. This paper examines some of the reasons that caused the company to fail in its social media marketing approaches, while recommending some changes to be in done in a bid to achieve the set goals and objectives and position KOPI as the restaurant of choice among the target audience in New York City. In its analysis, the paper will focus on how ineffective the earlier strategies were since they were not quite interactive and engaging making the target audience to fail to respond to it as earlier planned. KOPI’s mission statement has always been to introduce a variety of tastes of Indonesian cuisine as well as coffee to the market in New York. In doing this, the company will be fulfilling its vision statement which is offering varieties of food specialties as well as beverages that are purely a representative of the Indonesian atmosphere and culture. The restaurant has done a lot to get started and achieve success in its marketing and performance; however, all these goals have never been effectively achieved because of reliance on poor approaches to social media marketing (Arline para 4-7). Having a target group that has a high affinity for new technology and are willing to try out new ideas, the restaurant would have managed to attract many of its target audience. However, the approaches used in the past have been in conformity with the set vision and mission statements making it hard for it to achieve success. The failure of the use of tight strategies made the target

Ethics Essay Example | Topics and Well Written Essays - 2500 words - 1

Ethics - Essay Example That notwithstanding, the emphasis of business ethics attracts many potential employees as well as investors to the organisation because such stakeholders always want to be associated with organisations that observes ethical business practices (Mitchell, 2009). Jeremy Bentham was a renowned philosopher, social reformer and jurist who came from England. He lived from1748 to 1832. Through his entire life, he was determined in transforming the English legal system by coming up with more comprehensive legal apparatus that took into consideration all aspects of the fundamental rights of the people. Bentham is a significant figure in philosophical ethics given the enormous contribution that he made, which shaped what is regarded as the modern utilitarianism. Most of his scholarly works were founded from the ideologies of Hume, and it is from that perspective that he came up with the principle of utility that is popular in modern times as utilitarianism. According to Bentham, everything that happens in the world occurs with two motives either to cause pain or happiness. The acts that cause pain are undesirable, and thus people tend to avoid them since they cause discomfort to those involved. On the other hand, acts that cause happiness are regard ed as pleasant, and they result in good for the greatest number of people. Thus, from this analogy the modern principle of utilitarianism that states â€Å"any act that is done should result in goodness for the greatest number of people† came into existence (Cory, 2005). Bakan argues that organisations are designed in a manner that they are bestowed with the privileges of an artificial person but through their power, influence, and great financial ability they these same rights that have been granted to them. The personality of a psychopath can be elaborated from four major points of view. To begin with corporations are irresponsible, they can do whatever it

Cardiac changes Essay Example | Topics and Well Written Essays - 750 words

Cardiac changes - Essay Example This leads to enhanced impedance to left ventricular ejection, an elevated systolic arterial pressure, and consequent interstitial fibrosis and left ventricular hypertrophy. Also, an aging person experiences a decline in the proportion of myocardial relaxation. The left ventricle takes a long time to relax, becomes stiffer, and also takes a longer time to fill in diastole. This enhances the significance of a correctly timed atrial contraction in adding to an ordinary left ventricular end-diastolic size. In addition, getting old is linked to enhanced sinoatrial node conduction duration and a decrease in the intrinsic heart rate. The reaction to postural modifications is different between youthful individuals and elderly people as cardiac productivity is controlled by rising heart rate in the youthful individuals, in contrast to the elderly people who depend on a rise in stroke capacity to balance. Also, for the aged individuals, all through exercise the tachycardic reaction is lessene d. Cardiac production is controlled by a rise in stroke capacity in a number of people, while in other individuals there is no compensation and the capacity of aerobics is lessened. Finally, physiologic aging causes a prolonged isotonic contraction and a diminished velocity of shortening (U.S. Preventive Services Task Force, 2011). The Altered Presentation and Modifications of Therapy Therapies that lessen, prevent, or deal with blood clots have been significant in lessening cardiovascular mortality or morbidity. One, administration of low dose aspirin has prolonged advantage in managing and preventing popular cardiovascular diseases, for example, coronary artery disease. In addition, the administration of aspirin has been significant in the initial prevention of stroke and heart attack in high risk elderly patients. Two, there has been the utilization of anticoagulation with warfarin for avoidance of stroke peripheral venous issues of a tremendous forms of surgical practices in dif ferent clinical attempts. Chronic warfarin therapy diminishes the most dreaded problems of stroke in older patients with chronic atrial fibrillation. Nonetheless, warfarin therapy needs recurrent blood tests for control of the dose (American College of Cardiology/American Heart Association, 2011). Three, older patients may undergo antihypertensive therapy. Antihypertensive therapy in older patients has been utilized for thiazide diuretics solely or together with beta blockers. Beta blockers or Thiazide diuretics have been recommended for therapy for elderly patients suffering from hypertension due to affordable costs and proven longevity advantages. Also, each drug dosage is usually regulated for disease-related and age modifications. Finally, there are therapies that have been modified to restore the sinus rhythm. This is usually taken into account in older patients with unusual cardiovascular function or atrial arrhythmias which is not easy to manage, or which is not of long-stand ing. Nonetheless, novel therapies are being established for specified signs that could offer better protection and easiness of utilization (American College of Cardiology, 2009). Identify Cardiovascular Diseases and Treatments As elderly individuals exist for long, they may suffer from a number of cardiovascular diseases. In addition, these people may suffer from a health condition that may lead to a different condition or damage if not adequately handled. There are a

The causality of hume and kant Essay Example for Free

The causality of hume and kant Essay Hume believed that mind is a collection of mental perceptions; therefore man cannot have free will. It was this particular pervasive skepticism which Hume has discussed in his book, â€Å"A Treatise of Human Nature†. Hume challenged Kant to investigate the explanation of causality, in the matter of the importance of cause and effect concept. In Hume’s perspective, human can see sequences of events but can never see the necessity that determinism requires. For him ideas are mere copies of impressions; and there is no possibility that human being can create any original ideas; unless they are derived from the senses. Hume felt that it is impossible to bring up impression that a person never felt or experienced before. Thus it is wrong for us to say that one event caused another event or that events are interrelated. The reason that human beings believe in cause and effect is due to the brought up which based on the conjunction of the events or reality. Through â€Å"Critique of Pure Reason†, Kant divined the understanding of knowledge into two; a priori and a posteriori. Knowledge can be independent from experience and all sense impressions (a priori), and can also need to have experience of impressions (a posteriori). Hume’s believed that habit makes human see causality and from constant conjunction of causes and effects, human beings learn to see it as a ‘necessary connection’. Kant agrees that causality is just ‘there’, but it is an a priori concept of understanding the knowledge. The concept of causality is accustomed, and experience derives from such pure concepts, and these concepts and intuitions shape human’s world yet tell nothing about things in them. The concept of causality cannot be performed in an empirical way. Kant declared the transcendental aesthetic is the first stage of mind’s experience. He stated that all sense experience is synthesized through the concepts of time and space. Space stands for itself and does not represent anything in it; however it is perceived in a subjective condition. Human subjectively perceive time as in the reality of time. Kant did not see space and time as world’s properties, but as a general concept given to the human mind. The next step of mind activity is the transcendental analytic, applies categories to the mind, which without the categories human would not be able to think at all. They are; quantity (unity, plurality, totality), quality (reality, negation, limitation), relation (substance and accidents, cause and effect, reciprocity between active and passive), modality (possible-impossible, existence-nonexistence, necessity-contingency). The transcendental dialectic comes last. He mentions that it is mind’s process in understanding matters that lie beyond human’s experiences such as God or super natural elements. The reason is that mind requires detailed information about an object which exists in sensory world; such information about non-material object puts mind at a limitation of understand only the physical world which it can only perceive. Kant mentions that God cannot be proved empirically. Instead faith or belief is necessary to keep the society running (the existence of good or bad, the life after death). For Hume the religion or belief were nothing more than superstitions. Reference: Barry Stroud, Hume. Routledge, 1977. Diane Morgan, Kant Trouble: The Obscurities of the Enlightened . Routledge , 2000.

Treatment of Transgender People in India

Treatment of Transgender People in India Summary Transgender people are people who have a gender identity that is different from the one which is assigned to them by birth. The cultures of India include transgenders as a third gender, referred to as Hijra in Hindi. Ancient Vedic texts referred to transgenders as napumsaka to denote the lack of reproductive ability, and believed them to have the power to confer blessings on people on auspicious occasions. Hijras were highly respected in the Mughal period where they were considered as guardians of the harem, but after the onset of British Raj, they were criminalized and denied civil rights to an extent that long after the Independence of India, local laws still reflect the prejudicial attitudes against them. They are still treated as social outcasts in modern India, and hence the most common livelihoods for a modern-day Hijra mainly includes begging and prostitution besides their ceremonial task of blessing auspicious events. After almost half a century after Independence, the govern ment of India granted Hijras the basic civil rights of every citizen but not yet fully accommodated to vote. Welfare policies were also introduced by the state governments, and transgenders were finally declared as a socially and economically backward class entitled to reservation, and also prohibited discrimination against them. Ironically, homosexual intercourse is still a criminal offence under Section 377 of the Indian Penal Code, 1860. The transgenders are being empowered steadily by the rise of various famous personalities like Kalki Subramanian, the first transgender woman to star in a motion picture; Padmini Prakash, India’s first transgender to anchor a daily national and Manabi Bandyopadhyay, the first transgender to become a college principal, amongst countless others who still struggle to rise from the social stigma society has weighed upon them. 1. Background Transgender, in definition, is a term used to define people who may act, feel, think or look different from the sex they were assigned at birth. Actually, transgender is an umbrella term, since it covers a wide variety of people including from anatomically bisexuals (intersex) to cross-dressers (heterosexual men who occasionally wear clothes, make-up and accessories that are associated with women in that culture). In India, the word transgender has been loosely associated with the hijras a term particularly used to describe people who are born physically male, but live as women, including dressing and socializing as female, and also go by the terms Aravani, Aruvani or Jagappa. According to the 2011 census, in which the third gender was recognized for the first time, the total population of the third gender was reported to be 4.88 lakhs, with Uttar Pradesh having almost 28.1% of them. Fig 1. Statistics of the population of transgenders in various states Often, transgenders and eunuchs are used interchangeably whereas the meaning of both the terms is very different.   2. History In Ancient India, the section of third sex loosely included infertile ladies, eunuchs, impotent men and bisexuals/intersex, which is affirmed by the recorded confirmation in the compositions of ancient India. The expression napumsaka has been instituted by the early Vedic literary works to denote the nonattendance of procreative capability, introduced by implying physical distinction from the masculine and feminine. In the Mughal period, Hijras occupied some of the most acclaimed positions such as generals, administrators, political advisors and also had the additional responsibility of guarding the harems. They were considered trustworthy, quick-witted and fiercely loyal to their rulers, and hence had free access to all spaces and sections of population. Hijras were also the occupants of high positions in the Islamic religious institutes, and were responsible of guarding Mecca and Medina, the holy places of the Muslims. In the start of the British Raj in the Indian subcontinent, Hijras were secured by some Indian provinces and were granted privileges in the form of land, nourishment and a small amount of cash from agricultural households in exact areas. Be that as it may, these benefits were finally eliminated through British legislation since the inheritance of the ancestral land was commanded to the blood relations whereas Hijras were physically unequipped for mating and creating posterity.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The Hijra community was eventually criminalized and denied social equality by the British colonial administration in the latter half of the nineteenth century. The Criminal Tribes Act, 1871 incorporated the Hijras who were involved in hijacking, castrating and mutilating children and dressed like females to dance in public places. They were subject to an abundant amount of scrutinization from the Europeans since records of early European explorers demonstrated that they were repelled by the sight of Hijras and couldnt comprehend as to why they were given such a great amount of regard in the royal courts and other institutions. The Criminal Tribes Act, however was revoked in 1952, a couple of years after India announced autonomy from the British, yet tragically, the legacy of the act proceeded and numerous local laws mirrored the biased states of mind against specific tribes, including against Hijras. 3. Religious background 3.1  Ã‚  Ã‚   Hinduism Transgenders were periodically acknowledged in the ancient sacred texts in Sanskrit and the religious works of the rishis. The erotic sculptures on ancient Hindu temples at Khajuraho and Konarak, and the sacred texts in Sanskrit constitute irrefutable evidence that a whole range of sexual behaviour was not an alien concept for the ancient Hindus. The tradition of representing same-sex desire in literature and art continued in medieval Hinduism. Lord Rama, in the epic Ramayana, was embarking for the forest after being expelled from Ayodhya for fourteen years, addresses to his devotees and asks all men and ladies to retreat to the city. Among his devotees, the hijras alone did not feel bound by this course and choose to remain with him. Inspired with their faithfulness, Rama granted them the ability to confer blessings on individuals on propitious events like child birth and marriage, and furthermore at inaugural functions which, it was supposed to set the phase for the custom of badhai in which hijras sing, dance and bless. Aravan, the progeny of Arjuna and Nagakanya in the epic Mahabharata, offered to renounce his life to Goddess Kali to guarantee the triumph of the Pandavas in the Kurukshetra war, on the sole condition that he was to spend the last night of his life in marriage. Since no lady was ready to wed the one for just one night, Krishna assumes the form of a beautiful lady called Mohini and married him. The Hijras of Tamil Nadu considered Aravan their begetter and call themselves Aravanis. 3.2  Ã‚  Ã‚   Islam The Islamic society fundamentally took for granted that everyone was either male or female, and for occasionally children whose anomalies in sexual physiology made it impossible to determine whether the person was male or female, they were assigned to the sex whichever could explain their sexual physiology better. Jurists believed that the seminal fluid of the dominant sex resulted in the offspring having the dominant sex, and in case of a tie, the child would be a hermaphrodite (khuntha). But the khuntha was still monitored for any signs which would firmly tie it to one of the sexes until puberty was achieved. Finally, if puberty failed to assign khuntha mushkil into the sexes, Islamic jurists had the final call to declare the gender, which was irreversible and permanent. 3.3  Ã‚  Ã‚   Christianity Christianity bundles together a variety of views on transgenderism and issues of gender identity, ranging from considering transgender acts as sinful to seeing it as morally acceptable, and these views are also different for each individual within a denomination. An individual is also not bound to support their church’s views on transgenderism as their own. Although the Old Catholic Church accepts transgender members and the LGBT community in general, but it also considers sex-change procedures as superficial and external in the sense it does not change the personality and the essence of a person’s soul and hence does not change a person’s gender in the eyes of the Church. The New Testament presents eunuchs as acceptable candidates for evangelism, absolution and also eligible to be the members of the clergy but they are not considered valid candidates to marry. 4.  Ã‚  Ã‚  Ã‚  Ã‚   Socio Economic Status Hijras are treated as social outcasts in modern India despite the fact that they formed an ancient social group which has been recognized for roughly four thousand years and depicted in India’s epic literature and temple sculptures due to degradation of the status of the Hijras during the colonial period, when several laws criminalizing them were enforced. Little has changed since the post-independence era, since the most common livelihoods for a modern-day Hijra include begging, dancing and engaging in prostitution although they still are regarded as harbingers of good luck at auspicious events such as a marriage or the birth of a child. The major foundation of social structure among the Hijras is the relation between a guru and their chelas, which is modeled both on the Hindu joint family and on the relationship of spiritual leader and disciple in Hinduism. The guru is synonymous to both a teacher and an elder in a family, who is expected to take care of the chela’s material needs, whereas the chela is expected to show deference and obedience to the guru and offer the guru her earnings. An effective measure of social control prevalent in the Hijra community over its members is mainly through the rigorous monopoly over the opportunities of work by the Hijra elders. Hijra members are required to pay compensation to the particular guru in whose territory she wants to earn her living in, and they have to forfeit this right to earn when they are thrown out of the particular territory. An outcast Hijra has virtually no source of income since she will neither be able to perform in any auspicious event or ritual, since all Hijra performances are mandated by a guru, nor be able to beg in another guru’s territory. 5.  Ã‚  Ã‚  Ã‚  Ã‚   Politics Hijras have been perceived by the legislatures of both India (1994) and Pakistan (2009) as a new gender section, the third sex. Consequently, the government has conceding them the essential social equality of each native. They can now distinguish themselves as a eunuch on official government documents and passports, but contesting in elections is still an impediment for Hijras since candidates contesting for elections have to clearly identify themselves as either of the two genders accommodated by the redundant governmental laws. The Election Committee of India denied the candidature of three Hijras in the 2009 general elections on the basis of non-identification of the candidates into the binary genders. The first transgender to be elected in public office is Shabnam Mausi Bano, an elected member of the Madhya Pradesh State Legislative Assembly from 1998 to 2003. 6.  Ã‚  Ã‚  Ã‚  Ã‚   Transgender Rights After the official recognition of transgenders as a â€Å"third sex†, welfare policies were introduced first in the states Tamil Nadu and Kerala, where transgender people could access free sex reassignment surgery, free housing, admission in government colleges with full scholarship and alternative sources of livelihood through formation of self-help groups. On 15th April 2014, the Supreme Court of India declared transgender people as a socially and economically backward class entitled to reservations in Education and Job, and also directed union and state governments to frame welfare schemes for them, On 24 April 2015, the Rajya Sabha passed the Rights of Transgender Persons Bill, 2014 guaranteeing rights and entitlements, reservations in education and jobs (2% reservation in government jobs), legal aid, pensions, unemployment allowances and skill development for transgender people. It also contains provisions to prohibit discrimination in employment, prevent abuse, violence and exploitation of transgender people. Sadly, Homosexual intercourse was made a criminal offense under Section 377 of the Indian Penal Code, 1860. This made it an offence for a person to voluntarily have carnal intercourse against the order of nature. The Ministry of Home Affairs also stated its opposition against the decriminalization of homosexual activity, stating that in India, homosexuality is seen as being immoral. 7. Famous Transgender Personalities 7.1  Ã‚  Ã‚   Kalki Subramanian Kalki Subramaniam is a transgender rights activist, artist, actor, writer and entrepreneur from Tamil Nadu. In 2011, she starred in the Tamil film, Narthagi. She is the first transgender woman in India to do a lead role in a motion picture. In 2008, she founded the Sahodari Foundation, an organization that advocates for transgender people in India. She has postgraduate degrees in mass communication and in international relations. Subramaniam founded Sahaj International school in 2017, which is dedicated to serving transgender students ages 25 through 50 who have not been supported in mainstream schools. It is the first school specifically designated for transgender students in India and is located in Kochi, Kerala. 7.2  Ã‚  Ã‚   Padmini Prakash Padmini Prakash is India’s first transgender to anchor a daily television news show, emerging as a prominent voice for the neglected community. She is an avid Bharatanatyam and Kathak dancer and acted in a television serial. She has also been awarded Miss Transgender of India. She has been a vocal activist for transgender rights, and has been protesting against the discrimination, harassment and stigma that the sexual minority faces in India. 7.3  Ã‚  Ã‚   Manabi Bandyopadhyay Manabi Bandyopadhyay is the professor and first transgender person in India who has completed Doctor of Philosophy (PhD). Bandyopadhyay was associate professor in Bengali at Vivekananda Satobarshiki Mahavidyalaya and took charge as principal of Krishnagar Womens College on 7 June 2015. She is Indias first openly transgender college principal, and began work as such in 2015 at the Krishnagar Womens College in Nadia district. Manabi is a devotee of Sarada Devi and she was initiated in spiritual life by Swami Atmasthananda. 8. Conclusion The report analyzes the history and the present situation of the transgenders in India. From being revered and respected in ancient times, they became social outcasts in modern times. In spite of the government implementing numerous welfare programs and declaring reservations in government jobs and services, a huge percentage of the Hijras are still trapped in slums on the margins of the cities, engaging in prostitution and begging, bereft of these benefits. A better implementation of the welfare schemes and strict criminal action against people who exploit, discriminate and alienate transgenders is sorely required for the social and economic upliftment of the Hijras. 9. Bibliography https://simple.wikipedia.org/wiki/Transgenderhttp://www.lawctopus.com/academike/case-studies-statistics-survey-hijras/http://www.census2011.co.in/transgender.phphttps://controversycourse.files.wordpress.com/2013/02/sanders-ungendered.pdfhttp://www.undp.org/content/dam/india/docs/hijras_transgender_in_india_hiv_human_rights_and_social_exclusion.pdfhttp://www.encyclopedia.com/philosophy-and-religion/islam/islam/hijrahttp://www.trp.org.in/wp-content/uploads/2015/10/ARSS-Vol.4-No.1-Jan-June-2015-pp.17-19.pdfhttp://hinduism.stackexchange.com/questions/175/what-does-hinduism-say-about-third-gendered-peoplehttps://thetech.com/2016/08/25/hijra-communityhttps://en.wikipedia.org/wiki/Hijra_(South_Asia)

Effect of Globalization on Business and Profit Making

Effect of Globalization on Business and Profit Making Chapter 1 Throughout history, profit-making entities (among other) have constructed an ever-more-global economy. In the last 15 years or so, unprecedented changes in communications and computer technologies have given the process new momentum. Multinational corporations manufacture products in many countries and sell to consumers around the world. Money, know-how and raw materials move ever more rapidly across national borders. Along with products and finances, ideas and cultures mingle more unreservedly. As globally mobile capital reorganises business firms, it sweeps away regulation and undermines local and national politics. Globalisation creates new spins of old trading ideas (auctions are becoming increasingly prevalent in buying and selling); it starts new markets and it contributes to wealth, even as it causes extensive distress, chaos, and strife. It is both a source of tyranny and a medium for global movements of social integrity and liberation. Undoubtedly, in the first quarter of the 21st century, the profit-making firm functions in an environment full of global opportunities and threats; and in the wake of recent corporate scandals, the firm, simultaneously, is heavily constrained by ethical self-restraining as well as innovative regulations enforced by domestic and global-governance institutions. 1 Globalisation According to A.T. Kearney/Foreign Policy Globalization Index (2003), which is based on indicators such as economic integration, technological connectivity, personal contact, and political engagement (see Table 1 below), from about 1999 to 2003, global foreign direct investment and portfolio capital flows slowed down significantly thus contributing to the weakening of globalisation. Other global trends, especially international tourism, telephone traffic and worldwide access to the internet stayed strong helping to compensate for the weakening of international economic ties, thus deepening global links overall. What are the lessons that the profit-making firm may derive from the globalisation of economic activity? It appears that global markets, as discussed in the remainder of the section, ‘offer to the firm less legal restrictions, induce reduction in excess capacity, cause higher market concentration and contribute to higher profits. Consider 1, which links together two 2-dimensional diagrams: one has its origin in the southwest with global concentration measured on the vertical axis and profits on the horizontal; the other has its origin in the northeast with excess capacity measured on the vertical axis and legal restrictions on the horizontal. As it is discussed below, globalisation enables firms to move ‘northeast from point A to point B. Table 1 A.T. Kearney/Foreign Policy Globalization Index (2003) The 2003 results do not show causation, but they do point to significant correlations; they demonstrate that the most global countries are those where residents live the longest, healthiest lives; women enjoy the strongest social, educational, and economic progress; global integration leads to secularisation. For the third year in a row, in 2003, Ireland ranks as the most global, due to the countrys deep economic links and high levels of personal contact with the rest of the world. Western Europe claimed six out of the ten most globally integrated countries in this years survey. And the USA broke into the top ten, ranking first in the number of secure servers and internet hosts per capita. Countries from Central and Eastern Europe, Australasia, and Southeast Asia also made it into the upper tier (the five most global countries are reported above followed by the top five global firms in Europe and Asia). Ranking indicators  · Economic integration: trade, foreign direct investment, portfolio capital flows, and investment income.  · Technological connectivity: internet users, internet hosts, and secured servers.  · Personal contact: international travel and tourism, international telephone traffic, and remittances and personal transfers (including worker remittances, compensation to employees, and other person-to-person and non-governmental transfers).  · Political engagement: memberships in international organisations, personnel and financial contributions to UN Security Council missions, international treaties ratified, and governmental transfers. 1.1 Legal restrictions As globalisation expands, many firms find themselves (by choice or coincidence) operating in countries that impose less legal business regulations relative to their home countries. Global firms put pressure on local governments to establish more favourable business regulations or refrain from enforcing their regulatory laws (regardless of how minimal or fair they are) or, if such laws do not exist, to avoid applying them. As a result, less regulated or totally unregulated markets reduce barriers on the flow of goods and money across borders, creating a more integrated and profitable global economy. Over regulation: Business firms in developing nations face much larger regulatory constraints than those in developed nations; as reported in Doing Business in 2005 [World Bank, (2004), p.3], â€Å"(a) they face 3 times the administrative costs, and nearly twice as many bureaucratic procedures and delays associated with them. And they have fewer than half the protections of property rights of rich countries. (b) Heavy regulation and weak property rights exclude the poor from doing business. In poor countiers 40% of the economy is informal. Women, young and low-skilled workers are hurt the most.† The lowering of over regulatory constraints is actively pursued because it brings benefits to firms (they spend less money and time on dealing with regulations) and to governments (they spend fewer resources regulating and more providing social services). Moreover, fewer regulations attract foreign firms with all benefits and, of course, costs associated with them. Hence, globalisation enables firms to benefit from the removal of unnecessary regulations and the establishing of trade-encouraging, incentive-loaded laws. At the same time though due to ‘global complexity, the emergence of new innovative technology-driven markets as well as inability of regulatory authorities to enforce the existing legal enactments (reformed or not), some firms, as described below under illicit trade, may avoid compliance with domestic or international laws. Illicit trade: The fact that, globally, unlawful trade in products and services involving intellectual property, money laundering, third shift production and alien smuggling has been on the rise, implies that authorities in various countries experience hard time in dealing with the problem. As Naim (2003) writes, intellectual property illegalities, a modern kind of piracy, involves business software, shampoos, motorbikes, medical drugs, industrial valves, supply of illegally copied copyrighted music, and among other, theft of brand names. In Naims words: â€Å"Governments have attempted to protect intellectual property rights through various means, most notably the World Trade Organizations Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Several other organizations such as the World Intellectual Property Organization, the World Customs Union, and Interpol are also involved. Yet the large and growing volume of this trade, or a simple stroll in the streets of Manhattan or Madrid, show that governments are far from winning this fight.† Additionally, deregulations of financial markets have given rise to rogue global banking, tax havens, and money laundering. All these factors make possible cross-border money transfers, while simultaneously, improvements in electronic technologies make distance less of a barrier and turn money into e-money defined by Naim as â€Å"cards with microchips that can store large amounts of money and thus can be easily transported outside regular channels or simply exchanged among individuals.† Naim states that â€Å"estimates of the volume of global money laundering range between 2 and 5 percent of the worlds annual gross national product, or between $800 billion and $2 trillion. †¦ The sophistication of technology, the complex web of financial institutions that crisscross the globe, and the ease with which â€Å"dirty† funds can be electronically morphed into legitimate assets make the regulation of international flows of money a daunting task† magnified by the introduction of e-money.† Moreover, according to the United Nations, alien smuggling is the fastest growing business of organised crime. According to Naim, this kind of modern enslavement has become a $7 billion a year enterprise and it involves mostly women and children; and contrary to the efforts made by governments to curtail the problem, especially in the UK, Southern Europe and in the USA, the problem is becoming more difficult and complicated over time. Again, Naim puts it graphically: â€Å"A woman can be â€Å"bought† in Timisoara, Romania, for between $50 and $200 and â€Å"resold† in Western Europe for 10 times that price. The United Nations Childrens Fund estimates that cross-border smugglers in Central and Western Africa enslave 200,000 children a year. Traffickers initially tempt victims with job offers or, in the case of children, with offers of adoption in wealthier countries, and then keep the victims in subservience through physical violence, debt bondage, passport confiscation, and threats of arrest, deportation, or violence against their families back home.† And of course, intellectual property, humans, and financial capital are not the only products and/or services traded illegally for big profits by global networks. There are also markets in human organs, endangered species, stolen fine art, and deadly industrial waste. The unlawful worldwide trades in all these merchandise and services share numerous essential characteristics such as high-tech innovations, societal and political transformations and open fresh markets. Fast spreading globalisation causes the regulatory environment to become more complex which serves as a cover for opportunistic profit through illicit trade, networks and markets. At the same time, governments are becoming increasingly ineffective in dealing with the problem. Although the global community attempts to regulate global business activity through entities such as the World Trade Organization (WTO), the International Monetary Fund (IMF) the World Bank (WB), alliances such as the G-7, or the G-20, and treaties such as the Kyoto Protocol, the global business environment, by and large, is becoming gradually freer. 1.2 Global concentration As legal constraints become wobblier, the power of global firms, in terms of concentration, increases. Widespread merger and acquisition (MA) activities between already big industrial and financial firms started during the 1990s. The new gigantic corporations, by and large, control a large global market share in their respective industries. The build up in global concentration has sweeping implications for the 21st century. As reported by Mohamed (2004) â€Å"total global mergers activity grew from over $150 billion in 1992 to over $2000 billion in 1998, when eight of the worlds ten largest mergers took place. By 1999 it was over $330 billion.† The enhanced mass and influence of these new giants has been central to the intuition that globalisation advances at a blazing speed. In general, most of these global activities, such as MA, foreign direct investment and international trade, are between developed nations. Mohamed reports that â€Å"this concentration of economic power and activity is clearly illustrated by the fact that over 95% of the companies on the Fortune 500 (ranked by value of sales) and FT (Financial Times) 500 (ranked by market capitalization) lists are developed-country companies. In addition, only a handful of developing-country companies feature on the list of the top 300 companies ranked by expenditure on research and development (RD). When one considers that developed countries have less than 20% of the worlds population then the magnitude of the disparities in the global economy cannot be more evident.† Escalated global economic concentration was caused by a number of actions. There was a shift towards focusing on core activities that led to unbundling of formerly diversified conglomerates. There were vast investments in knowledge capital, primarily in hardware, software and information technology (IT) services. Much of the RD outlays of multinational corporations has been on IT, which has helped develop coordination of all aspects of their dealings internationally. There has been globalisation of mass media (e.g., CNN and BBC), which has led to the creation of global franchises (e.g., McDonalds and Wal-Mart), global brands (e.g., Nike) and global marketing infrastructure. The global reach, multiplication and liberalisation of financial markets as well as rapid growth of international capital flows since the 1970s contributed to the growth of multinational corporations. Much of the funds for the new giants came from institutional investors, who prefer big companies that sell popular brands, control large market shares, invest significantly on RD and focus on their nucleus activities. Additionally, as reported by Mohamed, â€Å"the process of global concentration that started in the 1990s happens not only in leading companies but also upstream in their suppliers and downstream in companies distributing their products. The leading companies have pressured their suppliers and distributors to work more closely with them and to become global leaders in their own areas by also growing through MAs. This process has further concentrated the global economy.† 1.3 Excess capacity The massiveness of the global market (the market size effect) along with adaptive, flexible and responsive marketing (the marketing effect) enables global firms to sell more. Additionally, they sell at reduced prices because of lower production costs due to outsourcing and insourcing as well as due to new inexpensive technologies such as the internet and the cell phone (the cost effect). Obviously, market and marketing effects induce firms to reduce their excess capacity but cost effects enable firms to add excess capacity. Whether or not the reduction in excess capacity is in absolute value greater than the increase in excess capacity is an empirical question. Undoubtedly, global manufacturing is on the rise enabling firms to become more adaptable, more flexible in production and distribution as well as more responsive to the needs of customers; and since the global economy is on the rebound after the depths it reached in 2008/2009, see Table 2, it is perhaps reasonable to believe that rising global demand will contribute to a reduction in excess capacity which, in absolute value, would exceed the increase in excess capacity leading to more profit and, hopefully, to improved global economic well-being. Finally, as stated by Helpman (2006), in this global economy we have experienced rapid expansion of trade in services and trade in intermediate inputs. With respect to exports [Helpman, (2006), p.590], â€Å"only a small fraction of firms export, they are larger and more productive than firms that serve only the domestic market, and more firms export to larger markets. A small fraction of firms engage in FDI, and these firms are larger and more productive than exporting firms.† And although according to Helpman (2006, p.591), the theory of comparative advantage, as an explanation of intersectoral international trade, and the theory of imperfect competition, as an explanation of intra-industry trade, are still valid, globalisation brings â€Å"to trade theory a new focus: the organizational choices of individual firms. By focusing on the characteristics of individual firms, the theory can address new questions: Which firms serve foreign markets? And how do they serve them, i.e., which choose to export and which choose to serve foreign markets via FDI? Under what circumstances do they outsource in a foreign country rather than at home? And if they choose integration, under what circumstances do they choose to integrate in a foreign country, via FDI, rather than to integrate at home?† Table 2 Real projected gross domestic product (GDP) and growth rates of GDP for regions (in billions of 2005 dollars) 2000-2015 GDP Year 2000 2005 2006 2007 2008 2009 2010 2015 W 39190.56 44828.46 46641.28 48405.39 49297.02 47992.14 49005.27 58114.16 D 29313.46 32197.09 33091.60 33890.60 34017.97 32749.26 33146.61 37232.39 D less US 18220.25 19763.70 20300.67 20825.75 20895.84 19955.19 20032.69 22162.27 DE 8416.01 10729.04 11507.29 12319.63 12977.47 13056.42 13653.30 18126.72 FCP 1461.09 1902.34 2042.39 2195.16 2301.59 2186.46 2205.35 2755.04 EM 5890.55 7647.06 8198.94 8812.17 9278.61 9278.48 9704.73 12953.24 Annual growth rates Year 2001 2005 2006 2007 2008 2009 2010 2015 W 1.71 3.38 4.04 3.78 1.84 -2.65 2.11 3.45 D 1.27 2.31 2.78 2.41 0.38 -3.73 1.21 2.32 D less US 1.59 1.84 2.72 2.59 0.34 -4.50 0.39 2.07 DE 2.78 6.30 7.25 7.06 5.34 0.61 4.57 5.68 FCP 4.50 5.72 7.36 7.48 4.85 -5.00 0.86 4.57 EM 3.55 6.09 7.22 7.48 5.29 0.00 4.59 5.78 Notes: W = World; D = Developed nations; D less US = Developed nations less US; DE = Developing nations; FCP = Former centrally planned nations EM = Emerging market nations. Source: Data found in World Bank World Development Indicators, International Financial Statistics of the IMF, Global Insight, and Oxford Economic Forecasting, as well as estimated and projected values developed by the Economic Research Service all converted to a 2005 base year. Available at http://www.ers.usda.gov/Data/Macroeconomics/Data/ProjectedRealGDPValues.xls. 1.4 Insourcing and urbanisation in developing economies Insourcing (incoming foreign direct investment) and outsourcing (outgoing foreign direct investment) have been contributing to net benefits of formal firms in both developed and developing nations and in turn to the well being of all. Drezner (2004, p.22), in response to rhetoric against outsourcing in the USA, states that â€Å"outsourcing of American jobs to other countries has become a problem of epic proportion. Fortunately, this alarmism is misguided. Outsourcing actually brings far more benefits than costs, both now and in the long run. If its critics succeed in provoking a new wave of American protectionism, the consequences will be disastrous for the U.S. economy and for the American workers they claim to defend.† In developing nations though, insourcing has been transforming local economies in new directions that cause global anxiety. Demographics in China, India and many more economies indicate that populations, in search of jobs and a better life, have been migrating towards urban, industrialised, centres, abandoning their agrarian lands, creating megacities and giving rise to urbanisation-type problems. (See self-explanatory projected population data for China and India in Tables 3 and 4). Table 3 Urban, rural population trends in China Population (000s) 1985 2005 2025 Total 1,070,175 1,321,569 1,480,430 Urban [Proportion (%)] 241,766 [22.6] 507,725 [38.4] 773,155 [52.2] Rural [Proportion (%)] 828,409 [77.4] 813,845 [61.6] 707,275 [47.5] Source: Available at http://ww2.unhabitat.org/habrdd/conditions/eastasia/china.htm. Table 4 Megacity population trends in India Population (000s) 1991 2011 Total 844,272 1,292,506 Delhi 8,723 24,867 Mumbai 12,572 21,780 Calcutta 10,916 16,509 Source: Available at http://www.ifpindia.org/ecrire/upload/press_ifp_website/ indiapolis_articlerelu.pdf. Megacity build-up and abandonment of agrarian lands have been occurring throughout the developing world1. In all these countries, historical data seems to support two stages of development: In Stage I, prior to insourcing, most of the population lives in the agrarian sector on subsistence agriculture and/or on meagre wages from selling their labour. Overpopulation forces people to exist under perpetually poor conditions causing the supply of labour to be perfectly elastic since there is around abundant low-skilled perfectly substitutable agrarian labour. In general, in this stage of development, the agrarian sector may be described by 2, where A = agrarian, e = equilibrium, WA = wage rate, LA = labour, DA = demand of labour, and LA = supply of labour2. Point V corresponds to the amount of available labour in the sector, point T to the amount of labour employed by the informal economy at equilibrium (point e) and (V-T) to the surplus of labour in the agrarian sector. Insourcing gives rise to Stage II. Incoming foreign direct investment takes root in urban centres (in most cases near the coast, e.g., China) and offers higher wages to attract labour from agrarian regions. In this stage, the industrial sector may be described by 3, where I = industrial. It is assumed that at We supply of labour in the industrial sector is equal to zero (workers would have no incentive to migrate if they cannot receive higher wages). Equilibrium initially occurs at eI, where DI is equal to SI, and labourers get paid WeI > We. At this market wage rate, the industrial sector absorbs portion TU of the total surplus labour available in the countryside. In turn, because there is still unused surplus labour in the agrarian sector (portion UV), more insourcing triggers higher demand for labour in the industrial sector (DI ¢) and migration of the remaining surplus labour; additional migration to urban areas causes the labour supply to become more elastic (the supply functi on flattens and rotates out to SI ¢). At the new and final equilibrium of eI ¢, WeI ¢ The above analysis implies many benefits: employment and income improve; know-how spreads through technology transfer; saving, investment, and tax revenue increase greatly contributing to growth; in addition to the above, people may prefer the city because it is more likely to endeavour entrepreneurial opportunities, find formal education for their children, have access to healthcare, enjoy entertainment, live cosmopolitan lives, and take advantage of proximity to major transposition hubs (for travelling to other countries and inside their own). However, the analysis implies costs as well, especially as they relate to urbanisation, such as: pollution (air, water and land); crime (especially in inner city areas); traffic jams; crowded housing; loss of arable land; food shortages (since people abandon their agrarian fields in the country and/or because they turn agrarian fields near the city into suburbs); creation and stagnation of an informal economy; lack of socialising due to isolation from, and alienation of, neighbours; deterioration in education (due to capacity limitations) as well as healthcare, transportation and governmental services (especially in utilities, fire and police protection); and finally, dependency on food importation, foreign direct investment and foreign capital markets. 1.4.1 Development views: ‘romantic, ‘parasite and ‘dual economy In addition to the above, urbanisation in developing nations spawns informal business firms, which, in general, do not pay taxes or abide by laws and regulations. According to some economists, such firms do not contribute to the overall growth of the economy. Development economists agree though that registered, law abiding, efficiently run entities known as formal business firms have to be encouraged to exist through incentives and governmental policy for they are the only capable of boosting economic growth and development. According to the United Nations (2008, p.1), â€Å"four billion people around the world are robbed of the chance to better their lives and climb out of poverty, because they are excluded from the rule of law.† Informal business firms account for up to about half of economic activity in developing nations but researchers disagree about their role. As explained by La Porta and Shleifer (2008, pp.275-276), â€Å"there are three broad views of this role, (referred) to as the romantic view, the parasite view, and the dual economy ‘dual for short view (otherwise known as the) ‘Wal-Mart theory of development.† In the ‘romantic view, associated with de Soto (2000), informal firms, which are similar to formal (for example, they attract equally talented employees), are held back by barriers to official recognition: lack of secure property titles, deeds, securities and contracts that describe the economically significant aspects of assets. The lowering of such barriers would improve the ability of firms to borrow against registered and secured property-based collateral; additionally, it would enable them to more easily acquire, and/or merge with, other firms. In contrast, the ‘parasite view holds that informal firms, led by less-able, mostly uneducated, entrepreneurs, choose to stay small; as such, they lack the needed scale to operate efficiently and, conveniently, they enjoy cost advantages since they do not pay taxes, offer fringe benefits to employees, follow safety requirements in the workplace or abide by other regulations and the rule of law. These firms impair the economys growth: they reduce overall productivity and they take away market share from more productive formal firms because of their cost advantage over them. Hence, governmental initiatives to uproot these ‘parasites (such as enhancing audit capabilities to reduce tax evasion and enforce regulations) would contribute to efficiency, employment, growth and development. Finally, according to the ‘dual view, informal and formal firms may coexist as long as government tax and regulatory policies support the development of formal firms without encouraging or discouraging informal firms. Unlike the romantic view, this view holds that formal firms are different than informal: formal firms attract more skilful employees, their owners are better entrepreneurs, they are officially recognised, they can raise capital and they abide by regulations. Unlike the parasite view, the dual view maintains that informal firms are not a threat to formal firms because, for the same products, they charge higher prices (due to inefficient production and thus high costs) and because they mostly operate in different markets selling to different clients. La Porta and Shleifer (2008, p.278) report that empirical evidence supports the ‘Wal-Mart theory of economic development and they stress that â€Å"the dual view sees the (informal) firms as providers of a livelihood to millions, perhaps billions, of extremely poor people, and it cautions against any policies that would raise the costs of these firms. This view sees the hope of economic development in policies, such as human capital, tax, and regulatory policies, that promote the creation of (formal) firms, letting the (informal) ones die as the economy develops.† 2 The increasing relevance of auctions Firms may participate in auctions as buyers (bidders) or sellers (auctioneers). As buyers, they want to maximise buyer surplus (the difference between what they would be willing to bid at and the bid they actually pay). As sellers, they want to maximise profit (the difference between the bid they would be willing to sell at and the cost of the auctions object). Although any entity may rely on auctions for selling and buying, a few ‘liaison firms have become very famous over their valuable and pioneering business concepts. Such firms are Christies, Sothebys, and eBay.com. Retail, franchise or land acquisition, government procurement, and various services, among many more, rely on auction-type selling and buying. For example, retail stores (such as Filenes Basement in Boston) report a price on an items tag but the actual price paid by the client is lower the more time the item is up for sale on the floor; in turn, unsold items are donated to charitable organisations. Similarly, sellers in fresh produce markets lower prices towards the end of the day prior to disposing off the items. Governments purchase military assets and/or services of engineers for public infrastructure by relying on bids submitted by the sellers of those services and franchise owners bid for the privilege to own a franchise licence. Home developers, often, buy land in multiple lots through auctions and, of course, eBay has turned every single person on the planet into a potential auctioneer and/or a bidder. Auction results depend on many factors such as type of auctions or design, information of bidders valuations (which may be identical or different) and their attitudes towards risk, whether or not bidders bid on many or on a bundle of units and, of course, on whether or not bidders and auctioneers act ethically. For more details and a guide to literature see Klemperer (1999). 2.1 Bidders (or buyers) Table 5 describes five well-known auction types. Bidders in an English auction would have the incentive to bid higher than other bidders but lower than their true valuation. An advantage to English auctions is that, during the auction, bidders may swiftly revise bids upwards (up to but not higher than whatever they are willing to pay) based on information about the valuations of other bidders in the auction. Bidders in Dutch and First-Price Sealed-Bid auctions would have the incentive to bid strategically so that they never lose to someone with a lower valuation of the item under auction. A strategy for the bidder in these auctions would be to shade down the bid to the unknown second highest bid. As explained by Pepall et al. (2005, pp.640-641), each bidder may estimate the second highest bid as follows: assuming that each bidder in the auction believes that her valuation is the highest, if bidders draw from a uniform distribution [0, Ï…] with all N bidders equally spaced on this interval (where Ï… = highest bid), then the average of the highest value in samples of size N drawn from [0, Ï…], or the second highest bid, would be [(N 1) / N]Ï…. (For example, if there are N = 5 bidders and a bidders highest valuation is $100, then the second highest valuation is [(5 1) / 5] $100 = $80; hence, the optimal bid for this bidder would be $80). But, if the bidder is wrong on her beli ef that she is the highest bidder she may lose the auction. Thus, bid shading implies a possible benefit an Effect of Globalization on Business and Profit Making Effect of Globalization on Business and Profit Making Chapter 1 Throughout history, profit-making entities (among other) have constructed an ever-more-global economy. In the last 15 years or so, unprecedented changes in communications and computer technologies have given the process new momentum. Multinational corporations manufacture products in many countries and sell to consumers around the world. Money, know-how and raw materials move ever more rapidly across national borders. Along with products and finances, ideas and cultures mingle more unreservedly. As globally mobile capital reorganises business firms, it sweeps away regulation and undermines local and national politics. Globalisation creates new spins of old trading ideas (auctions are becoming increasingly prevalent in buying and selling); it starts new markets and it contributes to wealth, even as it causes extensive distress, chaos, and strife. It is both a source of tyranny and a medium for global movements of social integrity and liberation. Undoubtedly, in the first quarter of the 21st century, the profit-making firm functions in an environment full of global opportunities and threats; and in the wake of recent corporate scandals, the firm, simultaneously, is heavily constrained by ethical self-restraining as well as innovative regulations enforced by domestic and global-governance institutions. 1 Globalisation According to A.T. Kearney/Foreign Policy Globalization Index (2003), which is based on indicators such as economic integration, technological connectivity, personal contact, and political engagement (see Table 1 below), from about 1999 to 2003, global foreign direct investment and portfolio capital flows slowed down significantly thus contributing to the weakening of globalisation. Other global trends, especially international tourism, telephone traffic and worldwide access to the internet stayed strong helping to compensate for the weakening of international economic ties, thus deepening global links overall. What are the lessons that the profit-making firm may derive from the globalisation of economic activity? It appears that global markets, as discussed in the remainder of the section, ‘offer to the firm less legal restrictions, induce reduction in excess capacity, cause higher market concentration and contribute to higher profits. Consider 1, which links together two 2-dimensional diagrams: one has its origin in the southwest with global concentration measured on the vertical axis and profits on the horizontal; the other has its origin in the northeast with excess capacity measured on the vertical axis and legal restrictions on the horizontal. As it is discussed below, globalisation enables firms to move ‘northeast from point A to point B. Table 1 A.T. Kearney/Foreign Policy Globalization Index (2003) The 2003 results do not show causation, but they do point to significant correlations; they demonstrate that the most global countries are those where residents live the longest, healthiest lives; women enjoy the strongest social, educational, and economic progress; global integration leads to secularisation. For the third year in a row, in 2003, Ireland ranks as the most global, due to the countrys deep economic links and high levels of personal contact with the rest of the world. Western Europe claimed six out of the ten most globally integrated countries in this years survey. And the USA broke into the top ten, ranking first in the number of secure servers and internet hosts per capita. Countries from Central and Eastern Europe, Australasia, and Southeast Asia also made it into the upper tier (the five most global countries are reported above followed by the top five global firms in Europe and Asia). Ranking indicators  · Economic integration: trade, foreign direct investment, portfolio capital flows, and investment income.  · Technological connectivity: internet users, internet hosts, and secured servers.  · Personal contact: international travel and tourism, international telephone traffic, and remittances and personal transfers (including worker remittances, compensation to employees, and other person-to-person and non-governmental transfers).  · Political engagement: memberships in international organisations, personnel and financial contributions to UN Security Council missions, international treaties ratified, and governmental transfers. 1.1 Legal restrictions As globalisation expands, many firms find themselves (by choice or coincidence) operating in countries that impose less legal business regulations relative to their home countries. Global firms put pressure on local governments to establish more favourable business regulations or refrain from enforcing their regulatory laws (regardless of how minimal or fair they are) or, if such laws do not exist, to avoid applying them. As a result, less regulated or totally unregulated markets reduce barriers on the flow of goods and money across borders, creating a more integrated and profitable global economy. Over regulation: Business firms in developing nations face much larger regulatory constraints than those in developed nations; as reported in Doing Business in 2005 [World Bank, (2004), p.3], â€Å"(a) they face 3 times the administrative costs, and nearly twice as many bureaucratic procedures and delays associated with them. And they have fewer than half the protections of property rights of rich countries. (b) Heavy regulation and weak property rights exclude the poor from doing business. In poor countiers 40% of the economy is informal. Women, young and low-skilled workers are hurt the most.† The lowering of over regulatory constraints is actively pursued because it brings benefits to firms (they spend less money and time on dealing with regulations) and to governments (they spend fewer resources regulating and more providing social services). Moreover, fewer regulations attract foreign firms with all benefits and, of course, costs associated with them. Hence, globalisation enables firms to benefit from the removal of unnecessary regulations and the establishing of trade-encouraging, incentive-loaded laws. At the same time though due to ‘global complexity, the emergence of new innovative technology-driven markets as well as inability of regulatory authorities to enforce the existing legal enactments (reformed or not), some firms, as described below under illicit trade, may avoid compliance with domestic or international laws. Illicit trade: The fact that, globally, unlawful trade in products and services involving intellectual property, money laundering, third shift production and alien smuggling has been on the rise, implies that authorities in various countries experience hard time in dealing with the problem. As Naim (2003) writes, intellectual property illegalities, a modern kind of piracy, involves business software, shampoos, motorbikes, medical drugs, industrial valves, supply of illegally copied copyrighted music, and among other, theft of brand names. In Naims words: â€Å"Governments have attempted to protect intellectual property rights through various means, most notably the World Trade Organizations Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Several other organizations such as the World Intellectual Property Organization, the World Customs Union, and Interpol are also involved. Yet the large and growing volume of this trade, or a simple stroll in the streets of Manhattan or Madrid, show that governments are far from winning this fight.† Additionally, deregulations of financial markets have given rise to rogue global banking, tax havens, and money laundering. All these factors make possible cross-border money transfers, while simultaneously, improvements in electronic technologies make distance less of a barrier and turn money into e-money defined by Naim as â€Å"cards with microchips that can store large amounts of money and thus can be easily transported outside regular channels or simply exchanged among individuals.† Naim states that â€Å"estimates of the volume of global money laundering range between 2 and 5 percent of the worlds annual gross national product, or between $800 billion and $2 trillion. †¦ The sophistication of technology, the complex web of financial institutions that crisscross the globe, and the ease with which â€Å"dirty† funds can be electronically morphed into legitimate assets make the regulation of international flows of money a daunting task† magnified by the introduction of e-money.† Moreover, according to the United Nations, alien smuggling is the fastest growing business of organised crime. According to Naim, this kind of modern enslavement has become a $7 billion a year enterprise and it involves mostly women and children; and contrary to the efforts made by governments to curtail the problem, especially in the UK, Southern Europe and in the USA, the problem is becoming more difficult and complicated over time. Again, Naim puts it graphically: â€Å"A woman can be â€Å"bought† in Timisoara, Romania, for between $50 and $200 and â€Å"resold† in Western Europe for 10 times that price. The United Nations Childrens Fund estimates that cross-border smugglers in Central and Western Africa enslave 200,000 children a year. Traffickers initially tempt victims with job offers or, in the case of children, with offers of adoption in wealthier countries, and then keep the victims in subservience through physical violence, debt bondage, passport confiscation, and threats of arrest, deportation, or violence against their families back home.† And of course, intellectual property, humans, and financial capital are not the only products and/or services traded illegally for big profits by global networks. There are also markets in human organs, endangered species, stolen fine art, and deadly industrial waste. The unlawful worldwide trades in all these merchandise and services share numerous essential characteristics such as high-tech innovations, societal and political transformations and open fresh markets. Fast spreading globalisation causes the regulatory environment to become more complex which serves as a cover for opportunistic profit through illicit trade, networks and markets. At the same time, governments are becoming increasingly ineffective in dealing with the problem. Although the global community attempts to regulate global business activity through entities such as the World Trade Organization (WTO), the International Monetary Fund (IMF) the World Bank (WB), alliances such as the G-7, or the G-20, and treaties such as the Kyoto Protocol, the global business environment, by and large, is becoming gradually freer. 1.2 Global concentration As legal constraints become wobblier, the power of global firms, in terms of concentration, increases. Widespread merger and acquisition (MA) activities between already big industrial and financial firms started during the 1990s. The new gigantic corporations, by and large, control a large global market share in their respective industries. The build up in global concentration has sweeping implications for the 21st century. As reported by Mohamed (2004) â€Å"total global mergers activity grew from over $150 billion in 1992 to over $2000 billion in 1998, when eight of the worlds ten largest mergers took place. By 1999 it was over $330 billion.† The enhanced mass and influence of these new giants has been central to the intuition that globalisation advances at a blazing speed. In general, most of these global activities, such as MA, foreign direct investment and international trade, are between developed nations. Mohamed reports that â€Å"this concentration of economic power and activity is clearly illustrated by the fact that over 95% of the companies on the Fortune 500 (ranked by value of sales) and FT (Financial Times) 500 (ranked by market capitalization) lists are developed-country companies. In addition, only a handful of developing-country companies feature on the list of the top 300 companies ranked by expenditure on research and development (RD). When one considers that developed countries have less than 20% of the worlds population then the magnitude of the disparities in the global economy cannot be more evident.† Escalated global economic concentration was caused by a number of actions. There was a shift towards focusing on core activities that led to unbundling of formerly diversified conglomerates. There were vast investments in knowledge capital, primarily in hardware, software and information technology (IT) services. Much of the RD outlays of multinational corporations has been on IT, which has helped develop coordination of all aspects of their dealings internationally. There has been globalisation of mass media (e.g., CNN and BBC), which has led to the creation of global franchises (e.g., McDonalds and Wal-Mart), global brands (e.g., Nike) and global marketing infrastructure. The global reach, multiplication and liberalisation of financial markets as well as rapid growth of international capital flows since the 1970s contributed to the growth of multinational corporations. Much of the funds for the new giants came from institutional investors, who prefer big companies that sell popular brands, control large market shares, invest significantly on RD and focus on their nucleus activities. Additionally, as reported by Mohamed, â€Å"the process of global concentration that started in the 1990s happens not only in leading companies but also upstream in their suppliers and downstream in companies distributing their products. The leading companies have pressured their suppliers and distributors to work more closely with them and to become global leaders in their own areas by also growing through MAs. This process has further concentrated the global economy.† 1.3 Excess capacity The massiveness of the global market (the market size effect) along with adaptive, flexible and responsive marketing (the marketing effect) enables global firms to sell more. Additionally, they sell at reduced prices because of lower production costs due to outsourcing and insourcing as well as due to new inexpensive technologies such as the internet and the cell phone (the cost effect). Obviously, market and marketing effects induce firms to reduce their excess capacity but cost effects enable firms to add excess capacity. Whether or not the reduction in excess capacity is in absolute value greater than the increase in excess capacity is an empirical question. Undoubtedly, global manufacturing is on the rise enabling firms to become more adaptable, more flexible in production and distribution as well as more responsive to the needs of customers; and since the global economy is on the rebound after the depths it reached in 2008/2009, see Table 2, it is perhaps reasonable to believe that rising global demand will contribute to a reduction in excess capacity which, in absolute value, would exceed the increase in excess capacity leading to more profit and, hopefully, to improved global economic well-being. Finally, as stated by Helpman (2006), in this global economy we have experienced rapid expansion of trade in services and trade in intermediate inputs. With respect to exports [Helpman, (2006), p.590], â€Å"only a small fraction of firms export, they are larger and more productive than firms that serve only the domestic market, and more firms export to larger markets. A small fraction of firms engage in FDI, and these firms are larger and more productive than exporting firms.† And although according to Helpman (2006, p.591), the theory of comparative advantage, as an explanation of intersectoral international trade, and the theory of imperfect competition, as an explanation of intra-industry trade, are still valid, globalisation brings â€Å"to trade theory a new focus: the organizational choices of individual firms. By focusing on the characteristics of individual firms, the theory can address new questions: Which firms serve foreign markets? And how do they serve them, i.e., which choose to export and which choose to serve foreign markets via FDI? Under what circumstances do they outsource in a foreign country rather than at home? And if they choose integration, under what circumstances do they choose to integrate in a foreign country, via FDI, rather than to integrate at home?† Table 2 Real projected gross domestic product (GDP) and growth rates of GDP for regions (in billions of 2005 dollars) 2000-2015 GDP Year 2000 2005 2006 2007 2008 2009 2010 2015 W 39190.56 44828.46 46641.28 48405.39 49297.02 47992.14 49005.27 58114.16 D 29313.46 32197.09 33091.60 33890.60 34017.97 32749.26 33146.61 37232.39 D less US 18220.25 19763.70 20300.67 20825.75 20895.84 19955.19 20032.69 22162.27 DE 8416.01 10729.04 11507.29 12319.63 12977.47 13056.42 13653.30 18126.72 FCP 1461.09 1902.34 2042.39 2195.16 2301.59 2186.46 2205.35 2755.04 EM 5890.55 7647.06 8198.94 8812.17 9278.61 9278.48 9704.73 12953.24 Annual growth rates Year 2001 2005 2006 2007 2008 2009 2010 2015 W 1.71 3.38 4.04 3.78 1.84 -2.65 2.11 3.45 D 1.27 2.31 2.78 2.41 0.38 -3.73 1.21 2.32 D less US 1.59 1.84 2.72 2.59 0.34 -4.50 0.39 2.07 DE 2.78 6.30 7.25 7.06 5.34 0.61 4.57 5.68 FCP 4.50 5.72 7.36 7.48 4.85 -5.00 0.86 4.57 EM 3.55 6.09 7.22 7.48 5.29 0.00 4.59 5.78 Notes: W = World; D = Developed nations; D less US = Developed nations less US; DE = Developing nations; FCP = Former centrally planned nations EM = Emerging market nations. Source: Data found in World Bank World Development Indicators, International Financial Statistics of the IMF, Global Insight, and Oxford Economic Forecasting, as well as estimated and projected values developed by the Economic Research Service all converted to a 2005 base year. Available at http://www.ers.usda.gov/Data/Macroeconomics/Data/ProjectedRealGDPValues.xls. 1.4 Insourcing and urbanisation in developing economies Insourcing (incoming foreign direct investment) and outsourcing (outgoing foreign direct investment) have been contributing to net benefits of formal firms in both developed and developing nations and in turn to the well being of all. Drezner (2004, p.22), in response to rhetoric against outsourcing in the USA, states that â€Å"outsourcing of American jobs to other countries has become a problem of epic proportion. Fortunately, this alarmism is misguided. Outsourcing actually brings far more benefits than costs, both now and in the long run. If its critics succeed in provoking a new wave of American protectionism, the consequences will be disastrous for the U.S. economy and for the American workers they claim to defend.† In developing nations though, insourcing has been transforming local economies in new directions that cause global anxiety. Demographics in China, India and many more economies indicate that populations, in search of jobs and a better life, have been migrating towards urban, industrialised, centres, abandoning their agrarian lands, creating megacities and giving rise to urbanisation-type problems. (See self-explanatory projected population data for China and India in Tables 3 and 4). Table 3 Urban, rural population trends in China Population (000s) 1985 2005 2025 Total 1,070,175 1,321,569 1,480,430 Urban [Proportion (%)] 241,766 [22.6] 507,725 [38.4] 773,155 [52.2] Rural [Proportion (%)] 828,409 [77.4] 813,845 [61.6] 707,275 [47.5] Source: Available at http://ww2.unhabitat.org/habrdd/conditions/eastasia/china.htm. Table 4 Megacity population trends in India Population (000s) 1991 2011 Total 844,272 1,292,506 Delhi 8,723 24,867 Mumbai 12,572 21,780 Calcutta 10,916 16,509 Source: Available at http://www.ifpindia.org/ecrire/upload/press_ifp_website/ indiapolis_articlerelu.pdf. Megacity build-up and abandonment of agrarian lands have been occurring throughout the developing world1. In all these countries, historical data seems to support two stages of development: In Stage I, prior to insourcing, most of the population lives in the agrarian sector on subsistence agriculture and/or on meagre wages from selling their labour. Overpopulation forces people to exist under perpetually poor conditions causing the supply of labour to be perfectly elastic since there is around abundant low-skilled perfectly substitutable agrarian labour. In general, in this stage of development, the agrarian sector may be described by 2, where A = agrarian, e = equilibrium, WA = wage rate, LA = labour, DA = demand of labour, and LA = supply of labour2. Point V corresponds to the amount of available labour in the sector, point T to the amount of labour employed by the informal economy at equilibrium (point e) and (V-T) to the surplus of labour in the agrarian sector. Insourcing gives rise to Stage II. Incoming foreign direct investment takes root in urban centres (in most cases near the coast, e.g., China) and offers higher wages to attract labour from agrarian regions. In this stage, the industrial sector may be described by 3, where I = industrial. It is assumed that at We supply of labour in the industrial sector is equal to zero (workers would have no incentive to migrate if they cannot receive higher wages). Equilibrium initially occurs at eI, where DI is equal to SI, and labourers get paid WeI > We. At this market wage rate, the industrial sector absorbs portion TU of the total surplus labour available in the countryside. In turn, because there is still unused surplus labour in the agrarian sector (portion UV), more insourcing triggers higher demand for labour in the industrial sector (DI ¢) and migration of the remaining surplus labour; additional migration to urban areas causes the labour supply to become more elastic (the supply functi on flattens and rotates out to SI ¢). At the new and final equilibrium of eI ¢, WeI ¢ The above analysis implies many benefits: employment and income improve; know-how spreads through technology transfer; saving, investment, and tax revenue increase greatly contributing to growth; in addition to the above, people may prefer the city because it is more likely to endeavour entrepreneurial opportunities, find formal education for their children, have access to healthcare, enjoy entertainment, live cosmopolitan lives, and take advantage of proximity to major transposition hubs (for travelling to other countries and inside their own). However, the analysis implies costs as well, especially as they relate to urbanisation, such as: pollution (air, water and land); crime (especially in inner city areas); traffic jams; crowded housing; loss of arable land; food shortages (since people abandon their agrarian fields in the country and/or because they turn agrarian fields near the city into suburbs); creation and stagnation of an informal economy; lack of socialising due to isolation from, and alienation of, neighbours; deterioration in education (due to capacity limitations) as well as healthcare, transportation and governmental services (especially in utilities, fire and police protection); and finally, dependency on food importation, foreign direct investment and foreign capital markets. 1.4.1 Development views: ‘romantic, ‘parasite and ‘dual economy In addition to the above, urbanisation in developing nations spawns informal business firms, which, in general, do not pay taxes or abide by laws and regulations. According to some economists, such firms do not contribute to the overall growth of the economy. Development economists agree though that registered, law abiding, efficiently run entities known as formal business firms have to be encouraged to exist through incentives and governmental policy for they are the only capable of boosting economic growth and development. According to the United Nations (2008, p.1), â€Å"four billion people around the world are robbed of the chance to better their lives and climb out of poverty, because they are excluded from the rule of law.† Informal business firms account for up to about half of economic activity in developing nations but researchers disagree about their role. As explained by La Porta and Shleifer (2008, pp.275-276), â€Å"there are three broad views of this role, (referred) to as the romantic view, the parasite view, and the dual economy ‘dual for short view (otherwise known as the) ‘Wal-Mart theory of development.† In the ‘romantic view, associated with de Soto (2000), informal firms, which are similar to formal (for example, they attract equally talented employees), are held back by barriers to official recognition: lack of secure property titles, deeds, securities and contracts that describe the economically significant aspects of assets. The lowering of such barriers would improve the ability of firms to borrow against registered and secured property-based collateral; additionally, it would enable them to more easily acquire, and/or merge with, other firms. In contrast, the ‘parasite view holds that informal firms, led by less-able, mostly uneducated, entrepreneurs, choose to stay small; as such, they lack the needed scale to operate efficiently and, conveniently, they enjoy cost advantages since they do not pay taxes, offer fringe benefits to employees, follow safety requirements in the workplace or abide by other regulations and the rule of law. These firms impair the economys growth: they reduce overall productivity and they take away market share from more productive formal firms because of their cost advantage over them. Hence, governmental initiatives to uproot these ‘parasites (such as enhancing audit capabilities to reduce tax evasion and enforce regulations) would contribute to efficiency, employment, growth and development. Finally, according to the ‘dual view, informal and formal firms may coexist as long as government tax and regulatory policies support the development of formal firms without encouraging or discouraging informal firms. Unlike the romantic view, this view holds that formal firms are different than informal: formal firms attract more skilful employees, their owners are better entrepreneurs, they are officially recognised, they can raise capital and they abide by regulations. Unlike the parasite view, the dual view maintains that informal firms are not a threat to formal firms because, for the same products, they charge higher prices (due to inefficient production and thus high costs) and because they mostly operate in different markets selling to different clients. La Porta and Shleifer (2008, p.278) report that empirical evidence supports the ‘Wal-Mart theory of economic development and they stress that â€Å"the dual view sees the (informal) firms as providers of a livelihood to millions, perhaps billions, of extremely poor people, and it cautions against any policies that would raise the costs of these firms. This view sees the hope of economic development in policies, such as human capital, tax, and regulatory policies, that promote the creation of (formal) firms, letting the (informal) ones die as the economy develops.† 2 The increasing relevance of auctions Firms may participate in auctions as buyers (bidders) or sellers (auctioneers). As buyers, they want to maximise buyer surplus (the difference between what they would be willing to bid at and the bid they actually pay). As sellers, they want to maximise profit (the difference between the bid they would be willing to sell at and the cost of the auctions object). Although any entity may rely on auctions for selling and buying, a few ‘liaison firms have become very famous over their valuable and pioneering business concepts. Such firms are Christies, Sothebys, and eBay.com. Retail, franchise or land acquisition, government procurement, and various services, among many more, rely on auction-type selling and buying. For example, retail stores (such as Filenes Basement in Boston) report a price on an items tag but the actual price paid by the client is lower the more time the item is up for sale on the floor; in turn, unsold items are donated to charitable organisations. Similarly, sellers in fresh produce markets lower prices towards the end of the day prior to disposing off the items. Governments purchase military assets and/or services of engineers for public infrastructure by relying on bids submitted by the sellers of those services and franchise owners bid for the privilege to own a franchise licence. Home developers, often, buy land in multiple lots through auctions and, of course, eBay has turned every single person on the planet into a potential auctioneer and/or a bidder. Auction results depend on many factors such as type of auctions or design, information of bidders valuations (which may be identical or different) and their attitudes towards risk, whether or not bidders bid on many or on a bundle of units and, of course, on whether or not bidders and auctioneers act ethically. For more details and a guide to literature see Klemperer (1999). 2.1 Bidders (or buyers) Table 5 describes five well-known auction types. Bidders in an English auction would have the incentive to bid higher than other bidders but lower than their true valuation. An advantage to English auctions is that, during the auction, bidders may swiftly revise bids upwards (up to but not higher than whatever they are willing to pay) based on information about the valuations of other bidders in the auction. Bidders in Dutch and First-Price Sealed-Bid auctions would have the incentive to bid strategically so that they never lose to someone with a lower valuation of the item under auction. A strategy for the bidder in these auctions would be to shade down the bid to the unknown second highest bid. As explained by Pepall et al. (2005, pp.640-641), each bidder may estimate the second highest bid as follows: assuming that each bidder in the auction believes that her valuation is the highest, if bidders draw from a uniform distribution [0, Ï…] with all N bidders equally spaced on this interval (where Ï… = highest bid), then the average of the highest value in samples of size N drawn from [0, Ï…], or the second highest bid, would be [(N 1) / N]Ï…. (For example, if there are N = 5 bidders and a bidders highest valuation is $100, then the second highest valuation is [(5 1) / 5] $100 = $80; hence, the optimal bid for this bidder would be $80). But, if the bidder is wrong on her beli ef that she is the highest bidder she may lose the auction. Thus, bid shading implies a possible benefit an