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A Country is not a Company

A Country is not a Company. No, it is not. Knowledge from the classroom cannot be implemented in a firm Correct! Why?. Two examples. Export creates new jobs FDIs cannot create deficit Is that true No!!!!. Why export does not create employment.

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A Country is not a Company

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  1. A Country is not a Company

  2. No, it is not • Knowledge from the classroom cannot be implemented in a firm • Correct! • Why?

  3. Two examples • Export creates new jobs • FDIs cannot create deficit • Is that true • No!!!!

  4. Why export does not create employment Free trade opens new jobs : the more a county exports – the larger employment, the more we import – we lose jobs • Correct? • No!!!!

  5. Autsorsing • GregMankiw • moreovde • CEA ekonomskisavet • Was he fired?daoostavku • NOpredsednika Buša

  6. Why exports does not increase employment? • Creates jobs in export sector • But destroys other jobs • How • Overheated demand, interest rate rises. • Total is zero • Sectors gain, but the economy does not

  7. Why imports do not lower employment • It really can decrease emp in a sector • Like technical progress • No more typists • Cash machines • “popravka čarapa”, “vunovlačar” • But rises employment in other sectors • Radiologists, voice services • Sectors lose

  8. Mankiw - an anemy • Senator Schumer 27.5% custom tariff on Chiese goods svu robu iz Kine. • But he did not convince them • why?

  9. Why does not anyone see that? • Gains from esxports are visible • We see people • We see products • And we see closed factories • Other effectsw are not visible the same moment

  10. comment: • Statements like this one (exorts do not create new jobs) best represent why people HATE ECONOMISTS! • At the NAFTA meeeting, Krugman

  11. It happens in every country In the US interest rate risesž Growth of r Decrease in employment in construction, for example Also, decrease in employment in worse paid sector

  12. FDIs and balance of payments • Investors bring money. • What happens to BOP? • We get a surplus • But we dont

  13. We must have a deficit • Economists claim • But bysinessman do not trust them, starting from themeselves

  14. If all firms do like his firm, we must have a surplus • Economists know that we will have an opposite situation. • Why?

  15. Mechanism • Inflow on capital account must equal the outflow on current account • That is accounting – and economics will tell you HOW IT HAPPENS • Mechanism: capital inflow – appreciation – import demand grows – export falls – deficit.

  16. But businessman do not believe that • Arguable, they say • Will fdis import really that much? • How do we know that currency is going to appreciate • Is exports really going to fall

  17. it is obligatory • Everyone who knows accounting knows it must happen • Not maybe but certainly • Deficit cannot be escaped

  18. Let us repeat • What was our first fallacy • Exports make new jobs • explanation • Second fallacy • Fdis improve ballance of payments • Why not

  19. What creates these fallacies • No businessman explains his work in his memoirs • Nor they could, since there was no theory • But they implement strategies • Many people say that Warren Buffet does not invest the way he wrote that he did

  20. They cannot transfer their knowledge • Centralized centipode

  21. Important differences between a company and a country • complexity 2. How we run it • indirectly • Firm by firm

  22. “hands-off” role in state management • Syndrom of importance • Thinks he can run every job • But they must learn a new language. • They think it is just a jargon

  23. Closed system • Deponia • Garage • Milan Panić

  24. Feedback in business • Only positiver

  25. Mostly negative in the country • Fall in empl in other sectors • Or the rise in aggregate demand • Rise in inflation • Rise of r • layoffs

  26. Businessman do not realize • Effects of low employment on wages • Growth of investments on the exchange rate

  27. Next time you hear a businessman talking about the economy, ask yourself 1has he studied this subject 2. Does he know what experts think of this

  28. If the answer is – “no”, you should better forget what he said • Because he probably does not know what he is talking abouti

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