Links Between Investment in Infrastructure and Job Creation

Links Between Investment in Infrastructure and Job Creation Sourav Roy (13060242044) Sourav Das (13060242043) Saptarshi Maiti (13060242036) Devika Kannan (13060242013) Executive summary The effective tool to create jobs is counter-cyclical spending on infrastructure. As the demand for private sector is weak, the government helps the people with jobs and also aggregate demand. Investments of infrastructure are divided into two parts: Economic sectors include increasing efficiency in transportation, including roads, railways and waterways, Social sectors such as education, water and sewage system. Investments in a local scenario and their impact on development strategies lead to creation of more jobs, greater ownership, and can rapidly boost up the local economies. This is particularly applicable in times of crisis. Decentralized public investment should be favored where ever possible. It is very important to assess the resultant labour output of these investments with respect to its impact on direct as well as indirect and employment, not only to assess their productivity in short run, but also to assess the long run impact on growth and other subsidiary effects. There are number of infrastructure projects in low and medium-income countries which are financed fully or partially by IFI. Institutions like these should make an effort to allow for larger labour participation in infrastructure development. Fiscal decentralization can be defined as a two-dimensional policy: 1). Decentralization of tax instrument. 2). Decentralization of expenditure. The relation between decentralization and government efficiency can be divided into two large areas: a) The classical theory: There are three main contribution where this theory can be restricted, those are Tiebout’s model of local public good provision where decentralization coupled with mobile households solve the problem of the efficient provision of public goods. The second most influential contribution is of Oates’(1972) Decentralization Theorem that involves the tradeoff between centralized and decentralized provision of public goods in favour of former if average preferences across citizen of different region are equal. The theorem stresses on to maximize social welfare. And the last is Leviathan hypothesis where it shows the mechanism for constraining the expansionary tendencies of government mechanism. b) The second generation theory: The effect of fiscal decentralization has been modeled to embody the political process and the possibility of asymmetric information across political agents. Description of Policy Challenges According to the paper, on an average major percentage of total stimuli package in infrastructure is spent in emerging economies as compared to developed economies. The policy-brief paper tried to link infrastructure spending to job creation across economies. In this section the paper mentioned the main challenge of gestation period of the infrastructure projects. It viewed the time differential in processing of such projects as a challenge, as it failed to produce the expected outcomes on the stipulated time during a crisis situation. It later pointed out how infrastructures in different areas bear different results. Infrastructural Investment in rural area created more jobs than in urban areas as the jobs in rural areas are more labour intensive. It said, â€Å"The policy challenge is to match the targeting of infrastructure investments with the targeting of employment creation, be it by category or geographic area.† It explained the challenge with the help of examples of policies in three economies: USA, Indonesia and Egypt. The paper said that in USA infrastructure expenses consists only a minor portion of the total fiscal stimulus. According to the paper, expenditures on infrastructure accumulated up to 30 September 2009 amounted to US$4.44 billion or 2.6 per cent of the total fiscal stimulus during the period. However, according to a few articles in Forbes and Bloomberg Obama is planning to spend highly on infrastructure like science research and education and upgrade bridges, ports and roads to create more jobs. (Runningen, 2013) (Lenzner, 2011). The amount spent by USA in infrastructure is huge but, if we consider the share of infrastructure in GDP is only 2.4%. In USA American Recovery and Reinvestment Act was passed in 2009 which was a stimulus package to help recover the country from the Great Recession. The Act followed Keynesian macroeconomics wherein high public expenditure was necessary for improving the unemployment condition and further economic deterioration. USA’s planned stimulus package after revision was 831 billion dollars and according to Paul Krugman it was too less though he was supportive of the law. (Nobel Laureate Paul Krugman: Too Little Stimulus in Stimulus Plan, 2009) Some of the critics for this policy said that it was too slow and had a huge price tag but according to the data the policy had resulted in decrease in unemployment as the unemployment rate is around 6and half percentage points lower. (Blinder Zandi, 2010) The policy paper further gave examples of Indonesian and Egyptian stimulus package. The Indonesian Government spent 7.6 billion dollars to boost aggregate demand and this spending on infrastructure was 17% of the GDP. Estimation of the government to set a job creation target of over one million workers was surpassed. As for the Egyptian government the stimulus package was worth 2.82 billion dollar in the financial year 2008-09. According to various estimates it stated that the complete stimulus package is expected to create between 661,420 and 729,650 new job opportunities. This section of the policy paper concluded by mentioning that some amount of public expenditure (read infrastructure spending) is good as it helps in growth and development of economy through skill development of the labour and promotion of SMEs (Small and Medium Enterprises). It further wrote â€Å"spending cuts in such forms of investment would have a serious negative impact on employment and recovery unless ways could be found to maintain services with reduced costs.† Policy Options to address the challenge The examples illustrated above clearly reflect the issues related to the number of jobs created and the targeting of different sections of labour force. The focus of policy making in this area should shift from the amount of money spent to the number of jobs created relative to the set of employable workers and to the amount of public services provided. A prolonged strategy needs to be developed whose objective would be to provide short term relief from unemployment and long term creation of jobs aiming to meet the structural infrastructure deficits. Measures to guarantee timely implementation Higher public spending in periods of crisis for job creation involves a lag which is inherent in the cycle of identifying, formulating and approving projects. Therefore, objective should be a speedy and timely implementation, as an economy which is already in recession can deteriorate even quickly. The rate at which jobs can be created depends on the type of projects (large construction projects versus small or medium maintenance projects). Another important factor which determines the pace of the projects is the distribution of public tender procedures. A number of countries experience effective execution of public investment at less than 50% of the amount budgeted. Therefore, the short term objective is to achieve full execution of available resources rather than just allocation of additional resources. In order to ensure the timely implementation and to reap benefits from the existing administrational structures, public work schemes can be given additional funds to scale up. Taking up planned infrastructure and improving the efficiency of implementation of works formulated in public investment programmes are few of the features of the fiscal stimulus package. Decentralization of standard administrative procedures and dividing them into small grants at local levels to employ small-scale local contractors, labourers and local resources to efficiently enhance the employment opportunities of the infrastructure component of the packages is often a more effective than centrally planned and executed projects. Targeting Traditionally, the options of targeting were limited in public investment programmes, since majority of the works were generally executed by private enterprises. As objectives of targeting can be influenced to a certain degree through innovations to procurement systems hence, Public Employment Programmes, in which special targeting mechanisms can be applied, play an important complementary role. An important means of targeting constitutes the prioritization of investment projects in areas most affected by crisis. Subcontracting small works to local labourers allows for the targeting of special groups, such as women. In regular maintenance activities, women may take a larger share of job opportunities. Impact of infrastructure spending An investment in infrastructure is the first stepping stone towards the long run development and also takes into account immediate social needs. Generally, investments in infrastructure includes those in economic, such as, improving transportation viz. roads, railways and waterways and social sectors, such as health and education, treatment of water and sewage, and other public sectors. These investments depend mostly on the urgent requirements of the country. A major part of these expenditures can be executed through small-scale or medium-scale enterprises and thereby promoting them. Investments in infrastructure with a focus on the employment have a strong employment multiplier effect, since it leads to job creation both directly and indirectly. Increased usage of local goods and services creates a high indirect employment effect, which in turn leads to higher local incomes and thereby stimulates the local demand and consumption. However, this has to be taken cautiously as the way a job is defined varies from one country to another. There is no valid way to measure the direct employment created because of the fiscal stimulus package, as most countries face problems in gathering reliable data. Therefore, we need a consolidated effort to improving our way of understanding and documentation of the effects, in order to provide better guidance on the measures where the effects of multiplier are most prominent, given the requirements of the particular country. Conclusion Investments in infrastructure should be launched to build up capital for sustainable development and inclusive growth: human capital including skills, employment (including green jobs) and entrepreneurship development, and physical capital such as construction, rehabilitation and maintenance of infrastructure. As told earlier decentralized public investment should be preferred:- First, because decentralized decision-making processes are faster and local population more committed to the projects. It improves targeting and its proper use and maintenance. Secondly, the works undertaken are usually on a smaller scale and involve less expensive tenders, which mean there is less need for heavy machinery. Third, decentralized tenders are more likely to be executed by local firms using workers from the area, thus boosting the local economy as a whole. Because many infrastructure projects in low and medium countries are co- financed by international financial institutions, these institutions should make sure that their regulations allow for an increase in labour content in infrastructure development. Readjusting the design, procurement and contracting modalities of such products could have a major effect on employment. Works Cited Blinder, A. S., Zandi, M. (2010, December). Stimulas Worked. Retrieved from www.imf.org: https://www.imf.org/external/pubs/ft/fandd/2010/12/blinder.htm Council-on-Foreign-Relations. (2014, March 4). Infrastructure. Retrieved from www.cfr.org: http://www.cfr.org/infrastructure/infrastructure/p26178 Lenzner, R. (2011, October 23). A $1.2 Trillion Infrastructure Plan Creates 27 Million Jobs In 5 Years. Retrieved from www.forbes.com: http://www.forbes.com/sites/robertlenzner/2011/10/23/the-u-s-wont-be-able-to-grow-again-until-2016-18/ Nobel Laureate Paul Krugman: Too Little Stimulus in Stimulus Plan. (2009, February 19). Retrieved from http://knowledge.wharton.upenn.edu/article/nobel-laureate-paul-krugman-too-little-stimulus-in-stimulus-plan/ Runningen, R. (2013, November 9). Obama Urges Infrastructure Spending to Spur U.S. Economy. Retrieved from www.bloomberg.com: http://www.bloomberg.com/news/2013-11-09/obama-urges-infrastructure-spending-to-spur-u-s-economy.html Spending on transport infrastructure: Latest Data Released. (2013, July 11). Retrieved from www.internationaltransportforum.org: http://www.internationaltransportforum.org/Press/PDFs/2013-07-11Spending.pdf

Civil Disobedience and Thoreau

Are Thoreau’s Ideas About â€Å"Civil Disobedience† Outdated Today? â€Å"Civil disobedience† is an intentional and non-violent disobedience of law by an individual who believes that a certain law is unjust and who is willing to accept the penalty for breaking that law to bring about change and public awareness. When Henry David Thoreau wrote â€Å"On The Duty of Civil Disobedience† in 1849, he advocated that democracy in America could only be improved by individual activism and civil disobedience to unjust laws.Thoreau’s ideas in â€Å"Civil Disobedience† are outdated for contemporary American Society because the more effective solution for unjust laws today is active participation within the political system and not individual civil disobedience. The American political system allows the minority perspective to prevail, and any citizen can change the law through the courts, through Congress, and through the election of new government leaders . Thoreau’s ideas that American democracy is run by an unresponsive and tyrannical majority and that â€Å"A minority is powerless while it conforms to the majority† (Thoreau 231) are wrong or outdated in today’s society.In the American concept of democracy, individuals can, and do, challenge unjust laws through the court system and through the election process. While civil disobedience by individuals has historically been credited for civil rights reform in America, the government institutions were ultimately responsible for the reform of unjust laws and unjust practices. Civil rights reform began in the court system. Ultimately, unjust laws were overturned by the new laws. The Fourteenth Amendment gave all citizens the right to due process and equal protection under the law. Women have the right to vote because of the Nineteenth Amendment.Thus, Thoreau is incorrect when he states â€Å"Even voting for the right is doing nothing for it† and minimizes the effect that a citizen can have in the election process (Thoreau 226). American’s participation in the Iraq war will end as a result of President Obama’s election. One of President Obama’s significant campaign promises was that he would end the Iraq war begun by President Bush. The demonstrations across from the White House and the marches did not change President Bush’s conviction that military resources should be used in Iraq. Kathy Kelly’s Voices in America which defied economic sanctions against Iraq by taking edicine to Iraq and by being fined $20,000 did not cause any change in policy. Ethan and Vima Vesely-Flad’s purposeful payment of 51% their tax monies to the Quakers rather than the federal government to protest the military involvement in Iraq only resulted in the garnishment of Ethan’s wages. All of these civil disobedience efforts failed, and the change that all these protesters wanted occurred because people participated within the political system by voting for President Obama. The Court system legalized abortion rights and protected the rights of women. In contrast, the anti-abortion movement has marched on Washington, D.C. and engaged in civil disobedience for decades without changing those rights. These protestors of the right created by Roe v. Wade who have illegally blocked patients and health care providers from access to the abortion clinics have only helped those who favor abortion. The pharmacists who refused to provide birth control because they consider it a form of abortion have only lost their jobs and been subject to public disdain. Supporters of the right to choose and of abortion rights for women have devoted their energies to working within the political process with the results being that abortion remains legal.The Tea Party also demonstrates how an organized grassroots minority can influence government by organizing and by working within the political system to bring about chang e. The Tea Party organization began with a handful of citizens who were concerned about government spending and excessive taxation and regulation. The Tea Party created a platform called â€Å"The Contract For America† which caused Republicans to create their own â€Å"Commitment to America† and their â€Å"A Pledge to America. † The Tea Party has been able to influence several elections and is given the credit of having helped Massachusetts Senator Scott Brown be elected.The Tea Party has been predicted to have a significant impact on the coming November elections. If the Tea Party succeeds in electing state and federal legislators, it will affect government spending. The existence of the Tea Party has already influenced the Republican party, which shows that working within the system is more effective than the civil disobedience urged by Thoreau. Modern day civil disobedience is ineffective and will not result in change as Thoreau suggests. The reasons that ci vil disobedience is no longer the most effective mechanism for change is because of its nature.Civil disobedience involves a protest by an individual who breaks a law to change it. Most of those protests are uncoordinated. Individual disobedience without widespread participation or publicity does not create greater awareness of a moral issue. Civil disobedience has worked in the past when the unjust law affects a majority of the citizens and has widespread, albeit silent, support. Certain acts of disobedience like the pharmacist refusing to feel a prescription needed by a women for whatever reason or like blocking access to a medical clinic do not work and alienate the society.Thus, Thoreau’s ideas of â€Å"Civil Disobedience† about civil disobedience have less value today in American Society because the individual is far more likely to bring about change by working within the system as the modern Iraqi war protests, anti-abortion protests, and the Tea Party have shown . Civil disobedience is no longer the most effective agent for an individual to reform the law, and the more effective solution for unjust laws requires active participation in the political process to make the government more responsive to its citizens.

Mixed Economic System Essay

A mixed economy is an economic system in which both the private sector and state direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight and governmental provision of public goods. Some mixed economies also feature a variety of state-run enterprises. A mixed economic system (also known as a Dual Economy) is just like it sounds (a combination of economic systems), but it primarily refers to a mixture of a market and command economy (for obvious reasons, a traditional economy does not typically mix well). As you can imagine, many variations exist, with some mixed economies being primarily free markets and others being strongly controlled by the government. In general the mixed economy is characterized by the private ownership of the means of production, the dominance of markets for economic coordination, with profit-seeking enterprise and the accumulation of capital remaining the fundamental driving force behind economic activity. But unlike a free-market economy, the government would wield indirect macroeconomic influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism’s tendency toward financial crises and unemployment, along with playing a role in interventions that promote social welfare. Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors. Advantages of A Mixed Economy In the most common types of mixed economies, the market is more or less free of government ownership except for a few key areas. These areas are usually not the resources that a command economy controls. Instead, as in America, they are the government programs such as education, transportation, USPS, etc. While all of these industries also exist in the private sector in America, this is not always the case for a mixed economy. Disadvantages of A Mixed Economy While a mixed economy can lead to incredible results (America being the obvious example), it can also suffer from similar downfalls found in other  economies. For example, the last hundred years in America has seen a rise in government power. Not just in imposing laws and regulations, but in actually gaining control, becoming more difficult to access while simultaneously becoming less flexible. This is a common tendency of mixed economies. Introduction to Economic Systems There are four primary types of economic systems in the world: traditional, command, market and mixed. Each economy has its strengths and weaknesses, its sub-economies and tendencies, and, of course, a troubled history. In this project examine each system in turn and give ample attention to the attributes listed above. It’s important to understand how different parts of the world function economically, as the economy is one of the strongest forces when it comes to balancing political power, instigating war and delivering a high (or low) quality of life to the people it serves. An economic system is a system of production and exchange of goods and services as well as allocation of resources in a society. It includes the combination of the various institutions, agencies, entities (or even sectors as described by some authors) and consumers that comprise the economic structure of a given community. A related concept is the mode of production. The study of economic systems includes how these various agencies and institutions are linked to one another, how information flows between them, and the social relations within the system. Among existing economic systems, distinctive methods of analysis have developed, such as socialist economics and Islamic economic jurisprudence. Today the dominant form of economic organization at the global level is based on market-oriented mixed economies.

International Market Expansion - 1770 Words

There are always business risk when it comes to expanding a company, especially from an international standpoint. There are many strategic risk that needs to be evaluated in order to expand the company successfully. Examining the possible risk of foreign currency exposure, basic functions of international banking/financial market, support of long term financing of operations, and assessment of opportunities that can be implemented within the company. There are risk on three dimensions of international finance, economic trends of the country, impact of globalization and monetary system. All of these situations will be discussed in this paper. Bose Corporation continuously look for new opportunities to expand their product portfolio.†¦show more content†¦It is important for investors to consider and understand the changes of influence foreign exchange market have on the stocks. So the investors need to know the currency exposure of the company portfolio. Bose has a strong international presence. The company makes all kind of technological devices for all the major markets in United States (US), Europe, Canada, Australia, Asia, the Central America and South America (Bose Corporation Swat Analysis, 2013). The establishment of Bose company being an internationally market is already there, and currency/transaction exposure can affect the company. Bose Corporation sells automotive systems for vehicle manufacturers, professional audio products for musicians, noise reduction products for pilots, material testing instruments for universities and products for homebuilding and remodeling. The organization is diverse in their products and selling them outside of its home country will cause currency exposure. It is best to prepare a strategic plan for currency exposure of Bose products, due to the transactions risk faced by companies involved in international trade. Completing financial obligations after a trade has been made will decrease the currency and fluctuations of exchange rates. This involves the exposure of assets, stocks and the sensitivity of asset return within the corporation. What will be discussed are additional information on international market.Show MoreRelatedRetailers and International Markets: Motives for Expansion4800 Words   |  20 PagesRetailers and International Markets: Motives for Expansion Nicholas Alexander University of Edinburgh, Edinburgh, UK International retailing is not a new phenomenon. The Woolworths operation, for example, was introduced into the United Kingdom from the United States in the first decade of the twentieth century. Neither is international retailing limited to a few countries; many of Europe s leading retailers have multinational interests. 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