Causes of Inflation in Various Countries and Regions

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Causes of Inflation in Various Countries and Regions Causes of Inflation in Various Countries and Regions By: OpenStaxCollege Policymakers of the high-income economies appear to have learned some lessons about fighting inflation First, whatever happens with aggregate supply and aggregate demand in the short run, monetary policy can be used to prevent inflation from becoming entrenched in the economy in the medium and long term Second, there is no long-run gain to letting inflation become established In fact, allowing inflation to become lasting and persistent poses undesirable risks and tradeoffs When inflation is high, businesses and individuals need to spend time and effort worrying about protecting themselves against inflation, rather than seeking out better ways to serve customers In short, the high-income economies appear to have both a political consensus to hold inflation low and the economic tools to so In a number of middle- and low-income economies around the world, inflation is far from a solved problem In the early 2000s, Turkey experienced inflation of more than 50% per year for several years Belarus had inflation of about 100% per year from 2000 to 2001 From 2008 to 2010, Venezuela and Myanmar had inflation rates of 20% to 30% per year Indonesia, Iran, Nigeria, the Russian Federation, and Ukraine all had doubledigit inflation for most of the years from 2000 to 2010 Zimbabwe had hyperinflation, with inflation rates that went from more than 100% per year in the mid-2000s to a rate of several million percent in 2008 In these countries, the problem of very high inflation generally arises from huge budget deficits, which are financed by the government printing its domestic currency This is a case of “too much money chasing too few goods.” In the case of Zimbabwe, the government covered its widening deficits by printing ever higher currency notes, including a $100 trillion bill By late 2008, the money was nearly worthless, which led Zimbabwe to adopt the U.S dollar, immediately halting their hyperinflation In some countries, the central bank makes loans to politically favored firms, essentially printing money to so, and this too leads to higher inflation 1/3 Causes of Inflation in Various Countries and Regions A number of countries have managed to sustain solid levels of economic growth for sustained periods of time with levels of inflation that would sound high by recent U.S standards, like 10% to 30% per year In such economies, most contracts, wage levels, and interest rates are indexed to inflation Indexing wage contracts and interest rates means that they will increase when inflation increases to retain purchasing power When wages not rise as price levels rise, this leads to a decline in the real wage rate and a decrease in the standard of living Likewise, interest rates that are not indexed mean that the lenders of money will be paid back in devalued currency and will also lose purchasing power on monies that were lent It is clearly possible—and perhaps sometimes necessary—for a converging economy (the economy of a country that demonstrates the ability to catch up to the technology leaders) to live with a degree of uncertainty over inflation that would be politically unacceptable in the high-income economies Concepts and Summary Most high-income economies have learned that their central banks can control inflation in the medium and the long term In addition, they have learned that inflation has no long-term benefits but potentially substantial long-term costs if it distracts businesses from focusing on real productivity gains However, smaller economies around the world may face more volatile inflation because their smaller economies can be unsettled by international movements of capital and goods Self-Check Questions How does indexing wage contracts to inflation help workers? Indexing wage contracts means wages rise when prices rise This means what you can buy with your wages, your standard of living, remains the same When wages are not indexed, or rise with inflation, your standard of living falls Use the AD/AS model to show how increases in government spending can lead to more inflation An increase in government spending shifts the AD curve to the right, raising both income and price levels Show, using the AD/AS model, how monetary policy can be used to decrease the price level A decrease in the money supply will shift the AD curve leftward and reduce income and price levels Banks will have less money to lend Interest rates will increase, affecting consumption and investment, which are both key determinants of aggregate demand 2/3 Causes of Inflation in Various Countries and Regions Review Questions Is inflation likely to be a severe problem for at least some high-income economies in the near future? Is inflation likely to be a problem for at least some low- and middle-income economies in the near future? Critical Thinking Questions Why are inflationary dangers lower in the high-income ...VNUJournalofScience,Econom ics andBusiness27,No.5E(2011)12‐19 12 Corporate governance and its impact on the performance of firms in emerging countries: The evidence from Vietnam Dr. Nguyen Ngoc Thang* Faculty of Business Administration, VNU University of Economics and Business, 144 Xuan Thuy, Hanoi, Vietnam Received 17 August 2011 Abstract. Corporate governance has been become an important issue for both Vietnamese firms and government. This study examines the effects of corporate governance on firm performance in Vietnam using the 2009 Survey of Corporate Governance Practices, which surveyed a sample of 100 large, publicly traded Vietnamese companies on the Hanoi Stock Exchange (HSE) and the Ho Chi Minh Stock Exchange (HOSE) on 1 st January 2009. The research results show that corporate governance has an impact on firm performance. More specifically, corporate governance practices have impacted on firm profitability and market performance. The article concludes with some recommendations for management and directions for future research. Keywords: Corporate governance, firm performance, emerging countries, Vietnam. 1. Introduction * Corporate governance has emerged as an important issue for both scholars and policy makers all over the world. There are many publications on the topic (Rajagopalan and Zhang, 2008; Singh and Gaur 2009; Lattemann et al., 2009; Shen and Lin, 2009; Renders et al., 2010). In Vietnam, after a decade of economic expansion and the growth of large corporations, corporate governance has become an important issue for Vietnamese firms as they increasingly interact with regulators and investors from developed markets. The recent corporate scandals - Bach Tuyet Cotton, Vinashin Group, and Vien Dong Pharmaceutical - reveal that the Vietnamese government needs to improve and promote good corporate governance to ensure ______ * Tel.: 84-946611417 E-mail: thangnn@vnu.edu.vn inflow of capital and the outflow of products. Furthermore, understanding corporate governance standards and issues in Vietnam is also important to both executives of local companies and foreign multinationals doing business in this country. According to the Corporate Governance Regulations, the best practice of corporate governance suitable to the conditions in Vietnam would enhance market stability, increase investor confidence and trust, encourage investment into Vietnam from foreign sources and reduce the cost of capital for companies and, ensure a stable development “Corporate governance wasfirstintroducedinthe Law on Enterprises in 2005 in Vietnam and introduced largely in the Corporate Governance Regulationsin2007.” N.N.Thang/VNU JournalofScience,EconomicsandBusiness27,No.5E(2011)12‐19 13 of the stock market and a transparent economy in Vietnam. In the light of the both domestic and international attention paid to good corporate governance and its impact on firm performance, it is disturbing that the literature on this topic is so limited in the Vietnamese context. In this article, we use the data from the 2009 Survey of Corporate Governance Practices to examine the corporate governance practices in Vietnam and its impact on firm performance. At the end of the article we provide some recommendations for management and future research. 2. Why is corporate governance important With the increasing integration of world economies, good corporate governance practices are essential for the development of a market based economy and a prosperous society. The perceptions of corporate governance have varied across different countries. For VNUJournalofScience,Econom ics andBusiness27,No.5E(2011)12‐19 12 Corporate governance and its impact on the performance of firms in emerging countries: The evidence from Vietnam Dr. Nguyen Ngoc Thang* Faculty of Business Administration, VNU University of Economics and Business, 144 Xuan Thuy, Hanoi, Vietnam Received 17 August 2011 Abstract. Corporate governance has been become an important issue for both Vietnamese firms and government. This study examines the effects of corporate governance on firm performance in Vietnam using the 2009 Survey of Corporate Governance Practices, which surveyed a sample of 100 large, publicly traded Vietnamese companies on the Hanoi Stock Exchange (HSE) and the Ho Chi Minh Stock Exchange (HOSE) on 1 st January 2009. The research results show that corporate governance has an impact on firm performance. More specifically, corporate governance practices have impacted on firm profitability and market performance. The article concludes with some recommendations for management and directions for future research. Keywords: Corporate governance, firm performance, emerging countries, Vietnam. 1. Introduction * Corporate governance has emerged as an important issue for both scholars and policy makers all over the world. There are many publications on the topic (Rajagopalan and Zhang, 2008; Singh and Gaur 2009; Lattemann et al., 2009; Shen and Lin, 2009; Renders et al., 2010). In Vietnam, after a decade of economic expansion and the growth of large corporations, corporate governance has become an important issue for Vietnamese firms as they increasingly interact with regulators and investors from developed markets. The recent corporate scandals - Bach Tuyet Cotton, Vinashin Group, and Vien Dong Pharmaceutical - reveal that the Vietnamese government needs to improve and promote good corporate governance to ensure ______ * Tel.: 84-946611417 E-mail: thangnn@vnu.edu.vn inflow of capital and the outflow of products. Furthermore, understanding corporate governance standards and issues in Vietnam is also important to both executives of local companies and foreign multinationals doing business in this country. According to the Corporate Governance Regulations, the best practice of corporate governance suitable to the conditions in Vietnam would enhance market stability, increase investor confidence and trust, encourage investment into Vietnam from foreign sources and reduce the cost of capital for companies and, ensure a stable development “Corporate governance wasfirstintroducedinthe Law on Enterprises in 2005 in Vietnam and introduced largely in the Corporate Governance Regulationsin2007.” N.N.Thang/VNU JournalofScience,EconomicsandBusiness27,No.5E(2011)12‐19 13 of the stock market and a transparent economy in Vietnam. In the light of the both domestic and international attention paid to good corporate governance and its impact on firm performance, it is disturbing that the literature on this topic is so limited in the Vietnamese context. In this article, we use the data from the 2009 Survey of Corporate Governance Practices to examine the corporate governance practices in Vietnam and its impact on firm performance. At the end of the article we provide some recommendations for management and future research. 2. Why is corporate governance important With the increasing integration of world economies, good corporate governance practices are essential for the development of a market based economy and a prosperous society. The perceptions of corporate governance have varied across different countries. For VNU Journal of Science, Economics and Business 27, No. 5E (2011) 12-19 12 Corporate governance and its impact on the performance of firms in emerging countries: The evidence from Vietnam Dr. Nguyen Ngoc Thang* Faculty of Business Administration, VNU University of Economics and Business, 144 Xuan Thuy, Hanoi, Vietnam Received 17 August 2011 Abstract. Corporate governance has been become an important issue for both Vietnamese firms and government. This study examines the effects of corporate governance on firm performance in Vietnam using the 2009 Survey of Corporate Governance Practices, which surveyed a sample of 100 large, publicly traded Vietnamese companies on the Hanoi Stock Exchange (HSE) and the Ho Chi Minh Stock Exchange (HOSE) on 1 st January 2009. The research results show that corporate governance has an impact on firm performance. More specifically, corporate governance practices have impacted on firm profitability and market performance. The article concludes with some recommendations for management and directions for future research. Keywords: Corporate governance, firm performance, emerging countries, Vietnam. 1. Introduction * Corporate governance has emerged as an important issue for both scholars and policy makers all over the world. There are many publications on the topic (Rajagopalan and Zhang, 2008; Singh and Gaur 2009; Lattemann et al., 2009; Shen and Lin, 2009; Renders et al., 2010). In Vietnam, after a decade of economic expansion and the growth of large corporations, corporate governance has become an important issue for Vietnamese firms as they increasingly interact with regulators and investors from developed markets. The recent corporate scandals - Bach Tuyet Cotton, Vinashin Group, and Vien Dong Pharmaceutical - reveal that the Vietnamese government needs to improve and promote good corporate governance to ensure ______ * Tel.: 84-946611417 E-mail: thangnn@vnu.edu.vn inflow of capital and the outflow of products. Furthermore, understanding corporate governance standards and issues in Vietnam is also important to both executives of local companies and foreign multinationals doing business in this country. According to the Corporate Governance Regulations, the best practice of corporate governance suitable to the conditions in Vietnam would enhance market stability, increase investor confidence and trust, encourage investment into Vietnam from foreign sources and reduce the cost of capital for companies and, ensure a stable development “Corporate governance was first introduced in the Law on Enterprises in 2005 in Vietnam and introduced largely in the Corporate Governance Regulations in 2007.” N.N. Thang / VNU Journal of Science, Economics and Business 27, No. 5E (2011) 12-19 13 of the stock market and a transparent economy in Vietnam. In the light of the both domestic and international attention paid to good corporate governance and its impact on firm performance, it is disturbing that the literature on this topic is so limited in the Vietnamese context. In this article, we use the data from the 2009 Survey of Corporate Governance Practices to examine the corporate governance practices in Vietnam and its impact on firm performance. At the end of the article we provide some recommendations for management and future research. 2. Why is corporate governance important With the increasing integration of world economies, good corporate governance practices are essential for the development of a market based economy and a prosperous society. The perceptions of corporate governance have varied across different countries. For example, in Germany, INTERNATIONAL JOURNAL OF ENERGY AND ENVIRONMENT Volume 5, Issue 4, 2014 pp.403-418 Journal homepage: www.IJEE.IEEFoundation.org A green supply chain network design model for enhancing competitiveness and sustainability of companies in high north arctic regions Hao Yu1, Wei Deng Solvang1, Chen Chen2 Department of Industrial Engineering, Narvik University College, Postboks 385 Lodve gate 2, NO8505 Narvik, Norway. Northern Research Institute Narvik AS.Postboks 250, NO-8504 Narvik, Norway. Abstract To survive in today’s competitive and ever-changing marketplace, companies need not only to engage in their products and/or services, but also to focus on the management of the whole supply chain. Effectively managing and balancing the profitability and interconnection of each player in the supply chain will improve the overall supply chain surplus as well as individual profit. However, it is extremely difficult to simultaneously optimize several objectives in design and planning of a supply chain, i.e., cost-minimization, risk-minimization, responsiveness-maximization, etc., which are somehow conflict with one another. Furthermore, the natural and infrastructural challenges in high north arctic regions make it become much more difficult and complicated to design and develop cost-efficient, highly responsive, environmentally friendly, and sustainable supply chain network. In order to provide companies in high north arctic regions with decision support tool for the design and planning of theirs supply chain networks, a green supply chain network design (GrSCND) model is formulated in this study based on multi-objective mixed integer programming (MIP). The optimal trade-off among several conflicting objectives is the focus of this GrSCND model aiming to enhance both competitive competence and sustainability of companies and supply chains operated in high north regions. In addition, a numerical experiment is also given to present a deep insight of the GrSCND model. Copyright © 2014 International Energy and Environment Foundation - All rights reserved. Keywords: Green supply chain; Network model; Competitiveness; Sustainability; High north Arctic regions. 1. Introduction To survive in today’s competitive and ever-changing marketplace, companies need not only to engage in their products and/or services, but also to focus on the management of the whole supply chain. A typical supply chain includes raw material/component supplier, manufacturer, distributor, retailer, and customer [1]. Effectively managing and balancing the profitability and interconnections of each player in the supply chain will improve the overall supply chain surplus as well as individual profit. Conventionally, the objective of supply chain network design is to maximize the overall profit generated through balancing the total costs and responsiveness to customer needs. A poor responsiveness to meet the customer needs will decrease customer satisfaction, and therefore increase the risk of losing sales. In order to achieve high responsiveness to the rapid-changing market, a more flexible manufacturing system ISSN 2076-2895 (Print), ISSN 2076-2909 (Online) ©2014 International Energy & Environment Foundation. All rights reserved. 404 International Journal of Energy and Environment (IJEE), Volume 5, Issue 4, 2014, pp.403-418 should be applied, which sacrifices economies of scale and results in high production and transportation costs. The break-even point which optimizes the overall supply chain performance in terms of both cost and responsiveness has been extensively addressed in previous studies through bi-objective programming. However, for the companies and supply chains operated in high north arctic regions, more challenges, i.e., inhospitable and extreme climate, absence or poor infrastructure [2], and complicated terrain and environment, make it very difficult to deliver high responsive products and/or services with low costs, and relatively high supply chain .. .Causes of Inflation in Various Countries and Regions A number of countries have managed to sustain solid levels of economic growth for sustained periods of time with levels of inflation. .. when inflation increases to retain purchasing power When wages not rise as price levels rise, this leads to a decline in the real wage rate and a decrease in the standard of living Likewise, interest... income and price levels Banks will have less money to lend Interest rates will increase, affecting consumption and investment, which are both key determinants of aggregate demand 2/3 Causes of Inflation