Foreign trade is the exchange of goods and services across international boundaries or territories Essay Example

Foreign trade is the exchange of goods and services across international boundaries or territories Essay Latvia, as other countries, can not survive without foreign trade, because something that is produced in Latvia can not be found anywhere else in the world and vice versa, Latvia imports something that can not be produced within the borders of this country. The question of foreign trade is an important one in order to see the place a country takes in the world economy, because the more developed the foreign trade is the more a country benefits from it. Latvia, on average, has a rather big scarcity of the current account. The main cause of the deficit is considered to be the negative trade balance. Almost one third of it is covered by the positive balance of services because the specific influence of transport services is high in the economy. Most of the current account deficit is covered by foreign direct investments and other long-term capital flows, the reserve assets of the Bank of Latvia keep growing. We will write a custom essay sample on Foreign trade is the exchange of goods and services across international boundaries or territories specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Foreign trade is the exchange of goods and services across international boundaries or territories specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Foreign trade is the exchange of goods and services across international boundaries or territories specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The negative current account balance is among the core risks in Latvian economy. Assessment, analysis and forecasting of the trade balance are, therefore, of highest importance in economic studies in Latvia. This course paper discusses important part of Latvian economy foreign trade. The course paper will also look at the statistics of exports and imports in Latvia and will discuss other relevant questions that are connected with foreign trade. The aim of this course paper is to show that Latvia has been developing its foreign trade level and that Latvia has been accepted into world economic alliances. 1. Balance of payments The balance of payments (or BOP) is a measure of the payments that flow into and out from a particular country from and to other countries. It is determined by a countrys exports and imports of goods, services, and financial capital, as well as financial transfers. [1] The balance of payments is a summary of all economic transactions between a country and all other countries for a specific time period, usually a year. The balance of payments account reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits). [1] In theory, the balance of payments of any country is zero (because every unit of currency must come from somewhere)[1] There are some classifications of the balance of payments these are : o Current account * trade account * income account * transfers account o Capital account [4] Current account: records net flow of money into a country resulting from trade in goods and services and transfer payments made from abroad [1] Capital account: records net flow of money from purchases and sales of assets such as stocks, bonds and land [1] The domestic demand in Latvia is bigger than the gross domestic product, creating the deficit in the current account. This means that also foreign savings should be used to finance domestic investment. The level of savings in Latvian economy has not essentially changed and equals to approximately 20%. Investments, in contrast, grow at a more rapid rate.Thus, the lack of balance between savings and investment (deficit of the current account) is a regular phenomenon in the Latvian economy. 2. Latvian foreign trade policy The Ministry of Economics is the main institution which implements Latvias interests in the field of foreign trade policy in the EU, WTO and other international institutions and organizations, carries out export promotion policy, as well as, within the framework of its competence, enforces internal market protection policy and fosters foreign economic cooperation with other countries. Latvias trade relations with other countries are based on multiparty treaties within the WTO, free trade agreements (FTA) and other treaties which provide for the most-favoured nation regime (MFN). Since its accession to the EU on May 1st, 2004, all foreign trade rules and international treaties currently in force within the EU became binding for Latvia. This created new conditions in the economic cooperation with Latvias neighbours and other third countries. Currently, EU internal trade constitutes approximately 80% of the foreign trade of Latvia. Trade with third countries has meanwhile seen some significant changes: * introduction of the common EU external customs tariff, which led to import duty changes; * expansion of the external market due to the many FTAs concluded by the EU; * introduction of quantitative restrictions (quotas) for imports of certain goods; * application of market safeguard measures currently in force in the EU to imports of certain goods starting from May 1st, 2004. Foreign trade is important for Latvia, since the internal market cannot ensure a sufficient growth for Latvian manufacturers. Only stable growth of Latvian exports can ensure the improvement of trade balance and the increase of GDP. Countries of the EU and CIS play the most important role in the foreign trade of Latvia at present, and this is not expected to change in the nearest future. However, in the light of the saturation of EU market and its poor growth rates, the importance of third countries in the foreign trade of Latvia is expected to grow. Latvian entrepreneurs face increasingly more new opportunities in such markets as USA, Russia, Ukraine, China and Japan.

Argumentative Essay on Bioprospecting essays

Argumentative Essay on Bioprospecting essays Way before technology, doctors, hospitals and healthcare there has always been mans idea of using something to further the human race or make it better. Shamans know hundreds and hundreds of plants that have different uses for different things. Certain animals have also been evolving and making certain defense and protective material that helps them survive. With the materials from both plants and animals humans have been able to cure a cough, help cuts and bruises heal, induce hallucinations, protect from the heat and help fight cancer, but all of these have been discovered buy humans and are used to benefit humans. As technology and the whole global economic market have begun there has been a fight over these plants and animals and whether or not they can be patented and sold to the buying public. This issue of patenting a plant or the active ingredient of the plant or the certain material from a living organism is called bioprospecting. Bioprospecting has been widely debated for many years and is still debated on different levels everyday. It is very important because it has the ability to help out millions and millions of people with certain illnesses and other problems that afflict mankind. A variety of different arguments have been put forward about the moral and ethical status of the issue. This essay will consider arguments that bioprospecting is unethical and immoral and point out some of the problems with these views. It will then present the idea that bioprospecting is good for society and how it can help us out in many different ways. It has been argued that bioprospecting is unethical because it is taking something natural, patenting it using it for profit. These natural substances, like a plant or organism, should be in the hands of the county it came from and be used in its natural form as the argument states. If they were to be used, the country would indeed to benefit from it and have most of the say in whether...

Finance Term Paper Example | Topics and Well Written Essays - 1250 words

Finance - Term Paper Example The equity finance is an expensive and exclusive method for raising capital in the business and it comprises of ordinary and preference shareholdings, bonds and floating market shares. It also includes a listing cost and legal paper work, potential shareholders and raises wider opportunity for pool of finance (Slee, 2011). The difference in usage of appropriate financial capital structure is the selection of Leverage the business can be adhered to. It signifies the impact of debt in the company’s capital structure e.g. long-term bonds for 5 to 8 years and their impact on company’s profitability and earning stream (Khan et al., 2005). If the debt ratio is higher in good economic terms than it will also improve the required rate of return and return on equity of the business, similarly, if the debt ratio is higher in terms of recession than it creates a significance risk to the business operations and its sustainable future (Slee, 2011). According to the conventional theory of Modigliani and Miller (1985), in a perfect world the mix of debt and equity does not matter when economic terms and corporate taxes are assumed to be constant. It also suggested that value of the firm is independent of the financial capital structures and overall operating cost (Cox, 2011). It further argued that if the benefit is obtained due to low cost debt then it could be offset against the cost of equity borrowing that will be considerably higher than the debt finance. It also suggested that the cost of capital remains the same irrespective of the appropriate mix between debt and equity. It can be argued that value of the business and cost of capital will remain constant in a tax-free world e.g. United Arab Emirates (Slee, 2011). Debt financing is bind by obligations to pay interest and principal amounts and failure to meet the payment may result in serious risk to the business and in further case negative impact on the value of firm such as Bankruptcy (Khan et al., 2005). It can also be argued that as compared to the conventional theory if the business’s debt structure is higher than the equity portion, it might result in increased risk of higher interest payments and probable bankruptcy as well. It will also increase the cost of capital for the bondholders thus also indicating a highly geared business. It is suggested that to create an optimal mix of debt and equity structure, the margin level of gearing should be equal or does not outwei gh the probability of bankruptcy cost to the business (Ross et al., 2004). There are various debts to equity and debt ratio for industries and their risk level incorporating their business. The volatile industries like steel, cement, energy might adhere to higher debt ratio as compared

The Marijuana Policy in California Essay Example | Topics and Well Written Essays - 2000 words

The Marijuana Policy in California - Essay Example According to the California Health & Safety Code 11018, the definition of marijuana is all the parts of the plant Cannabis sativa L., whether it is grown or not; its seeds, the resin gotten from the plant, and any compound derived or manufactured from the plant. However, it does not include the plant’s mature stalks or any substance manufactured or derived from the stalk. Concentrated cannabis is used to mean the separated resin extracted from marijuana, irrespective of whether it is in purified or crude form. In spite of the fact that the laws for simple possession and the medical marijuana laws in California are among the country’s most progressive, adults who are seemingly responsible are still being arrested or harassed for its possession at an alarming rate. This is for a drug that has been scientifically proved to be safer than both tobacco and alcohol. According to Weintraub & Wood (44), the arrest rates in California for crimes related to marijuana in 2003 stood at 173 for every 100,000 people, and by 2007, the rate had risen to 203 per 100,000. In 2010, preposition 19 received a narrow defeat of 16% to 54%. It was a vote whose aim was to bring to an end the draconian policy of the arrest and prosecution of adults who were caught using marijuana, a substance proven to have less unpleasant effects than alcohol and cigarettes. This was to be achieved through the removal of criminal penalties for offenses related to marijuana as well as allowing local authorities to tax and reg ulate its growth and distribution. Despite its loss, it had the highest percentage of any marijuana legalization initiative that has ever been voted for (Weintraub & Wood 44). California State is ranked number 46 in the country in terms of the total severity of the maximum jail sentences that its residents receive for being in possession of marijuana, this being on a basis of penalties issued for first offenders. When looking at the penalties issued for just less than 1 once of the drug, the state is ranked number 12 together with 10 other states, since due to similarities in the states there are only 12 rankings within this category (McCollum 37).In 2007, arrested related to the possession of marijuana accounted for about 80% of all arrests related to the drug in California. Additionally, arrests related to the drug also accounted for 25% of all arrests related to drugs in the same year (McCollum 37). In recent years, the cultivation of marijuana has been on the increase dramatical ly. DCESP (Domestic Cannabis Eradication suppression Program), a program sponsored by the Drug Enforcement Administration, collects data that does not include all the marijuana plants seized within the state; but these data give an accurate indication of the actual cultivation rates of the drug. As much as getting estimates of how much from the total amounts of the drug cultivated is seized by the authorities, such as the local, state and federal ones is difficult, the overall trend is clear. The total seizures of the pant in California have increased for a period

ER patient intake and hipaa training update Research Paper

ER patient intake and hipaa training update - Research Paper Example Very often ER rooms become crowed with the patient’s family members. Eventually, in such circumstances it becomes extremely tough and stressful for the ER staffs to manage and provide necessary treatment facilities to the patients. ER staff frequently deals directly with the individual in crisis (University of California, 2012). The ER staff members are supposed to work in a charged and stressful atmosphere which is further overloaded with numerous sensory stimuli such as rushing of people, ringing of phones and other related activities. Atmosphere inside the emergency room is something that always demands urgency of work and rush. The ER staffs are always busy in treating patients or in rapid disposition of not so serious or extremely serious patients to other rooms in order to make more space for those patients in more critical condition. Moreover, the ER staff members must be able to distinguish patients who have minored illnesses and who have critical illnesses in order to provide treatment on sequential basis (Phipps, 1988). Contextually, the training will be provided to the staffs associated with the ER department of HIPAA. Moreover, the training will be offered to healthcare providers, business associates, professionals dealing with mental health and people making support team in the healthcare information. Training will be provided by the group of experts in the respective field with the use of latest technologies. The training will aim at developing a less stressful environment for augmenting the efficiencies of the ER staffs. The training should also be provided to ER staffs in matter relating as how and when to access Protected Health Information (PHI) as well as how to maintain confidentiality about the pivotal PHI. Part 2 Organization Analysis HIPAA is responsible for providing training to the employees, agents and volunteers of the organizations that constitute a â€Å"covered entity† under the Act. The training offered in HIPAA incl udes its rules, policies, and manipulation of its information systems, along with privacy protections, violation procedures and many more (Northwest Fire District, 2011). HIPAA educational courses served to the staffs focus on the key areas including confidentiality of the patients’ information and its usage. HIPAA also provide computer training to the different groups of the employees for effective management of the patient’s health information. However, even after such efficient training program, ER staffs are unable to render effective service in patients care and in matters related with PHI confidentiality. Hence, it becomes necessary for the HIPAA to develop its training methods and programs, especially those concerning ER staffs. Task Analysis Essentially, the HIPAA training task is designed to train employees towards ensuring careful utilization of patient’s health information. Hence, it can be affirmed that HIPAA aims to provide training to ER staffs in managing the patients’ information according to the norms established with this concern. HIPAA training program is considered as cost effective for the â€Å"covered entity† employees with regard to privacy and security requirement under the Act. Personal Analysis The training provided by the HIPAA may change the way in which an individual performs his/her job. After completion of the training phase, employees offered with a

Causes and Impacts of Inflation on Developing Countries

Causes and Impacts of Inflation on Developing Countries Introduction Economic development in low developed countries is a contested argument amongst economists, all of which are looking for the best way to enact economic growth. The discussion surrounds whether stable monetary policy will encourage economic development by encouraging foreign direct investment or will currency depreciation and inflation create the right environment for exports growth and thus economic growth? This essay will discuss the causes of inflation and its repercussions for economic growth in developing nations. The argument for monetary stability and its repercussions for economic development will also be discussed. The scenario surrounding the Asian financial crisis will be used at the conclusion of the essay to illustrate the finer points in the argument for monetary stability as a means to economic development. The Causes of Inflation Krugman and Obstfeld define inflation as the increase of prices of goods[1]. There are arguably many causes of inflation; it is a complex combination of many macroeconomic variables that work together to increase the price of consumer goods in a developing economy. Shamsul, Shyam and Kamath discuss, there are two dominant hypotheses regarding the causes of inflation; the monetarist hypothesis and the structuralist hypothesis. The monetarist hypothesis refers to an increase in the money supply which in turn causes an increase in the price of goods and the structuralist hypothesis refers to structural characteristics of a developing economy creating inflation including the nature of the tax system, foreign exchange restraints, the budgetary process, the nature of the labour market and administered prices. All result in a devaluation of domestic currency on a global currency market[2]. The forces that result in an increase in the money supply or a devaluation of domestic currency agains t foreign currency will discussed. Common economic theory states that liberalisation of financial and capital markets in developing countries results in growth and stability in those countries. However Chakraborty discusses how unrestrained opening up of an economy can result in a foreign exchange crisis. That an inflow of foreign currency through investment and fixed exchange rates will result in higher reserves in the central base, which in turn results in more money existing in the economy which causes inflation. Inflation thus can be seen as a cause of the devaluation of a domestic currency on global money markets[3]. Developing countries will often use an export oriented economic strategy to increase growth. Devaluations of a domestic currency will make exports look more attractive on foreign markets; hence governments will try and keep exchange rates down. Chakraborty continues that as prices continue to rise the demand for money similarly rises by domestic residents. It is common for residents to sell foreign b onds in order to buy local currency, which in turn puts pressure on the currency to appreciate. In order to undermine this scenario banks will sell local currency and buy foreign reserves to counteract the appreciation of the exchange rate due to the increased demand. This scenario has a cyclical effect and will in turn increase the money supply and inflation[4]. The situation surrounding a floating exchange rate can be quite different. Chakraborty discusses how liberalising the capital market will attract capital inflows from foreign investors which will increase the money supply, but will however appreciate the exchange rate. This type of policy will usually be accompanied by a contractual monitory policy that will increase demand for money and increase the interest rate. The increased interest rate will further attract capital inflows and further appreciate the exchange rate. An appreciated currency will be less attractive on foreign markets thus export demand will decrease and imports will increase, deteriorating the balance of trade deficit[5]. Large foreign debts result in a higher risk of financial instability. Inflation and currency devaluations have been a common problem in the history of developing nations. Instability in prices and foreign exchange rates discourages lenders in richer countries from investing in poorer markets due to the threat of losing money in a financial crisis or currency devaluation. Krugman et al discuss how richer nations protect themselves against this risk by insisting that poorer countries repay their loans in the lenders currency. A transfer of wealth can be directed towards foreign lenders in the event of currency devaluation as it raises the local currency valuation of the debt. This scenario can lead to developing countries inability to repay foreign debts and sometimes in default[6]. Inflation can be a result of external factors in a global economy including contagion from other trading partners. Cheng and Tan discuss that although domestic factors are important determinants of inflation, they are often not as important as price volatility being transmitted from one country to another. In the case of Malaysia, interactions in the form of trade resulted in a causality of inflation from other ASEAN nations to inflation in Malaysia[7]. This form of contagion can be very influential for a developing country liberalizing its financial and capital markets in a global economy. Instability and inflation can lead to speculation which in turn can lead to financial crisis. Krugman et al discusses contagion as the vulnerability of developing economies to suffer a loss of confidence in their financial markets which can cripple even the healthiest economies. Speculation regarding the devaluation of a local currency can result in investors pulling out of their investments (which now must be paid in the lenders currency), selling all the local currency (which has a further devaluing effect) and leaving the country with a large foreign debt. Speculation can be contagious as was seen in the Asian financial crisis where devaluation of the Thai Baht was followed by similar speculation surrounding other Asian currencies including that of Indonesia and Malaysia and eventually resulted in full financial crisis[8]. Controlling Inflation and Stabilising an Economy Methods used to counteract heavy speculation and financial instability includes information transparency. Ferreira de Mendonca and Filho discuss increasing information transparency as implying a fall in inflation bias and inflation volatility. Anxiety regarding inflationary pressures can be controlled through forecasts being released by the central banks of developing nations making policy and macroeconomic performance more predictable. There is evidence that economic transparency can reduce inflation and lower interest rates thus improving the conduction of monetary policy[9]. Wagner discusses inflation as being regarded as the signal of bad policy and political and economic instability. The variables are the relevant locational factors that determine the attractiveness of economies for investment. A loss in investors and mobile factors of production such as technology transfer and knowledge results in loss of potential production and potential output and hence growth. Local residents suffer through an increase in unemployment and a decrease in productivity[10]. Local economies become more unstable as a consequence. It can now be deduced that managing exchange rates is paramount to controlling inflation in developing countries. Wagner discusses two methods of managing exchange rates in order to control inflation; the ‘hard peg’ option and the floating currency option. The term ‘hard peg’ refers to the currency boards, where monetary policy autonomy is completely given up. Hard peg exchange rate regimes have gathered a lot of interests for developing economies over recent years as currency crises are not possible under the hard peg system. There are certain preconditions for an economy that need to be present in order for a hard peg to be possible. The recipient developing nation must have a developed, well supervised and regulated financial system; the rule of law; fiscal discipline; and wage and price flexibility. Many emerging nations lack these preconditions and hence are unable to sustain a hard peg[11]. Boyd and Smith suggest that low inflation is the central objective of developing economies in their efforts to enact economic growth. Growth is seen as having an inverse relationship to inflation and thus must be kept as low as possible. Developing countries in the Caribbean such as the Bahamas have been successful in lowering inflation and stabilising the exchange rate through using a currency board as part of their institutional structure. The currency board ties the monetary policy of the constituent countries and provides disciplinary controls on monetary and fiscal policy which in turn provides stability in their output. All the countries in the currency union experienced persistence however low rates of inflation and low variability in inflation rates therefore could be considered stable and an acceptable monetary policy performance[12]. Wagner further postulates that a floating exchange rate is similarly effective in controlling high inflation. Despite anxiety that a floating exchange rate will result in an unstable currency, floating exchange rates can be used to attract foreign investment and thus appreciate the value of the currency. Interest rate and intervention policies can be used to influence the behaviour of the exchange rate and reduce the negative effects of speculation[13]. A floating exchange rate can be flexible enough to encourage investment through appreciation however encourage exports through devaluation provided controls are in place to ward off speculative attacks. Maskooki shows Mexcio as having successfully implemented a floating exchange rate in order to control inflation. It reduced the value of the peso by gradual and frequent currency adjustments in reaction to market conditions. The slow depreciation of the peso made exports more attractive overseas and was offset by the liberalization of the capital market which was attractive to foreign investors. The combination of the two had a balancing effect on inflation and exchange rates and thus encouraged stability of prices. This had made the external market less exposed to unexpected shocks[14]. Through economic stabilization Mexico is now less vulnerable to investment reversal and thus less vulnerable to financial crisis. Stable inflation rates and exchanges rates send positive signals to global financial markets of positive financial policy in developing countries. Good corporate governance has the reflexive ability to create the positive economic environment to control inflation and also the positive outcome of successful monetary policy. Arsoy and Crowther comment that mandatory corporate governance can be achieved through the creation of capital markets in which transparency, accountability, responsibility and fairness are understood by both investors and shareholders[15]. Transparency being the proponent for fighting speculative attacks by reducing risks associated with investing in developing countries. Krugman et al discuss that governments of developing countries must create a stable environment through reducing the risk of inflation and protecting property rights in order to encourage economic growth. In protecting property rights they encourage private enterprise, investment, innovation and ultimately economic stability[16]. The conditions for economic stabilization feed off each other – stabilization encourages investment which in turn encourages more stabilization. Nsouli, Rached and Funke discuss the control of inflation as paramount to the success of any domestic economy. Here again price can be seen as a signal of economic health as price liberalization is essential for the efficient allocation of resources within and across sectors of the economy. Without a rational price system, profit and losses alone cannot signal what industries should expand and which ones should shrink. In both transition and developing economies, price liberalization led to a rapid increase in the availability of products for consumer use[17]. The Asian Financial Crisis The countries of the Asian economic boom in the mid 1990’s are a perfect example of how unstable monetary policy can bring even the most impressively growing economy down. Krugman et al tells us the Asian tigers were initially South Korea, Hong Kong, Singapore and Taiwan and then Thailand, Malaysia and Indonesia later joined the group. They had achieved incredible rates of growth through high savings and investment rates, improving education levels amongst the work force and by liberalising trade or at least a high level of openness and integration with global markets. The Asian tigers were gaining popularity as an investment opportunity as restrictions on capital inflows were lifted. However all this investment was leading to large deficits and would eventually result in financial demise[18]. Krugman et al continues that starting with the depreciation of the Thai Baht, a chain reaction of events brought the Asian miracle into financial crisis. A sharp drop in the value of the Baht as it was left to float after being pegged to the American dollar brought about speculative attacks on the currencies of its neighbours Malaysia and Indonesia and eventually South Korea. All countries had large foreign debts mostly in American dollars and as a result were facing increasing values on these debts due to the decreasing exchange rate. Many debts in Asia had the power to push banks and viable companies into bankruptcy as a result of exchange rates spirally out of control[19]. The Asian financial crisis was seen as a self perpetuating scenario based around speculative attacks on currency valuations. Lee argues that as soon as a currency peg is seen as non-defensible market participants expect that the market will move in one direction and in fact it does. Once the expectation sets in collective action takes hold (in this case investors pull out of their investments) and the result can inflict financial ruin on whole economies[20]. The Asian miracle had come to an abrupt end. Krugman further discusses the cause of such violent economic collapse can be seen through bad government policy. In Thailand and Indonesia ‘crony capitalism’ was the source of a lot of poor investment decisions. The sons and daughters of royalty or prominent politicians were the recipients of a lot of investment money regardless of the legitimacy of the project resulting in considerable moral hazard in lending. The regulatory system was ill equipped to deal with companies in danger of bankruptcy or to foster quality investments in the economy that would count towards real growth[21]. As a result the first sign of instability caused foreign investors to pull out of investments and leave the economy in crisis. The act of stabilising an economy is a complex process involving effectively monitoring the potentially volatile variables of an economy. Wagner discusses economic stability as being created through strengthening domestic banking and financial systems; providing better information and policy transparency; strengthening corporate finance, including bankruptcy laws and their implementation; taking precautions against potential capital flow reversals; and last but not least, building packages of sound macroeconomic and exchange rate policies[22]. Although the situation in South East Asia has improved over the years since the financial crisis, Low tells us that many questions still remain in Asia regarding their economic stability for the future, for example, whether effective democratic checks-and-balances in the political system, legal, judicial and institutional processes can help reinforce the moral economy[23]. It is fare to say that controlling inflation is but the tip of the ice b urg when stabilizing a developing nation’s growth. Conclusion Inflation and economic instability are a common problem for low developed countries trying to establish themselves in global markets. Inflation and currency depreciation are fundamental signals to wealthier nations that a local market is too big a risk to invest in thus leaving development and growth stagnant in those countries. Price stability on the other hand can signal to potential investors that a local financial market has strong monetary policy, that exchange rates can be controlled and that the local business environment is encouraging to growth. Countries with unstable monetary policy are vulnerable to speculative attacks from market participants as can be seen in the case of the Asian Financial crisis. Pegging local currencies to stronger currencies such as the United States dollar can result in devastation if markets forecast a currency will be overvalued. Contagion can result in a chain reaction of events that brings trading partners into similar financial crisis. Althoug h devaluing a currency can make exports more attractive on foreign markets it can also discourage foreign direct investment from investing due to the high incidence of default on foreign debt. Mechanisms have been designed to control factors such as inflation and encourage foreign investment by richer nations. A floating currency or a currency board can be used effectively to stabilise exchange rates and thus control the flow of funds in and out of a local market. Good corporate governance including transparency of monetary policy can be used to reduce the risk of speculation and forecast inflationary activity. Political stability also needs to be created through effective regulatory systems on financial and capital markets including bankruptcy laws and laws preventing capital flight in the face of financial crisis. Reference List Arsoy, A.P, Crowther, D (2008) â€Å"Corporate Governance in Turkey: Reform and Convergence,† Social Responsibility Journal, vol.4, iss.3 pp.407-422 Boyd, D Smith, R (2006) â€Å"Monetary Regimes and Inflation in 12 Caribbean Countries,† Journal of Economic Studies, vol.33, iss.2, pp.96-108 Chakraborty, D (1999) â€Å"Macroeconomic conditions and Opening Up – Argentina, Chile and India: A Comparative Study,† International Journal of Social Economics, vol.26, iss.1/2/3, pp.298 -311 Cheng, M.U. Tan, H.B. (2002) â€Å"Inflation In Malaysia,† International Journal of Social Economics, vol.29, iss.5, pp.411-426 Ferreira, H Filho, J.S (2007) â€Å"Economic Transparency and Effectiveness of Monetary Policy† Journal of Economic Studies, vol.34, iss.6, pp.497-515 Krugman, P.R. Obstfeld, M. (2005). International economics: Theory and policy (7th ed.). Boston: Addison-Wesley Longman Lee, J.Y. (2007) â€Å"Foreign Portfolio Investors and Financial Sector Stability in Asia,† Asian Survey, vol.47, iss.6 pp.850-871 Low, L (2006) â€Å"A Putative East Asian Business Model,† International Journal of Social Economics, vol. 33, no.7 pp. 512-528 Maskooki, K (2002) â€Å"Mexico’s 1994 Peso Crisis and its Aftermath,† European Business Review, vol.14, no.3, pp.161-169 Nsouli, S.M Rached, M Funke, N (2005) â€Å"The Speed of Adjustment and the Sequencing of Economic Reforms: Issues and Guidelines for Policy Makers,† International Journal of Social Economics, vol.32, no.9, pp.740 766 Shamsul, A Shyam, A Kamath, J (1986) â€Å"Models and Forecasts of Inflation in a Developing Economy,† Journal of Economic Studies, vol.13, iss.4, pp.3-30 Wagner, H (2005) â€Å"Globalisation and Financial Instability: Challenges for Exchange Rate and Monetary Policy,† International Journal of Social Economics, vol. 32, iss.7, pp.616-639. 1 Footnotes [1] Krugman, P.R. Obstfeld, M. (2005). International economics: Theory and policy (7th ed.). Boston: Addison-Wesley Longman. [2] Shamsul, A Shyam, A Kamath, J (1986) â€Å"Models and Forecasts of Inflation in a Developing Economy,† Journal of Economic Studies, vol.13, iss.4, pp.3-30 [3] Chakraborty, D (1999) â€Å"Macroeconomic conditions and Opening Up – Argentina, Chile and India: A Comparative Study,† International Journal of Social Economics, vol.26, iss.1/2/3, pp.298 -311 [4] Chakraborty (pp.298 – 311) [5] Chakraborty (pp.298 – 311) [6] Krugman et al (pg.615) [7] Cheng, M.U. Tan, H.B. (2002) â€Å"Inflation In Malaysia,† International Journal of Social Economics, vol.29, iss.5, pp.411-426 [8] Krugman et al (pg.623) [9] Ferreira, H Filho, J.S (2007) â€Å"Economic Transparency and Effectiveness of Monetary Policy† Journal of Economic Studies, vol.34, iss.6, pp.497-515 [10] Wagner, H (2005) â€Å"Globalisation and Financial Instability: Challenges for Exchange Rate and Monetary Policy,† International Journal of Social Economics, vol. 32, iss.7, pp.616-639. [11] Wagner (pp.616-639) [12] Boyd, D Smith, R (2006) â€Å"Monetary Regimes and Inflation in 12 Caribbean Countries,† Journal of Economic Studies, vol.33, iss.2, pp.96-108 [13] Wagner (pp.616-639) [14] Maskooki, K (2002) â€Å"Mexico’s 1994 Peso Crisis and its Aftermath,† European Business Review, vol.14, no.3, pp.161-169 [15] Arsoy, A.P, Crowther, D (2008) â€Å"Corporate Governance in Turkey: Reform and Convergence,† Social Responsibility Journal, vol.4, iss.3 pp.407-422 [16] Krugman et al (pg. 634) [17] Nsouli, S.M Rached, M Funke, N (2005) â€Å"The Speed of Adjustment and the Sequencing of Economic Reforms: Issues and Guidelines for Policy Makers,† International Journal of Social Economics, vol.32, no.9, pp.740 766 [18] Krugman et al (pg.620) [19] Krugman et al (pg. 623) [20] Lee, J.Y. (2007) â€Å"Foreign Portfolio Investors and Financial Sector Stability in Asia,† Asian Survey, vol.47, iss.6 pp.850-871 [21] Krugman et al (pg.622) [22] Wagner (pp.616-639) [23] Low, L (2006) â€Å"A Putative East Asian Business Model,† International Journal of Social Economics, vol. 33, no.7 pp. 512-528

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There are many drug cartels in the country of Mexico, but one of the most powerful drug trafficking organization in the world being the Sinaloa Cartel. A drug trafficking, money laundering, and organized crime group that still remains the strongest in the country and has the largest presence nationwide. It was founded in 1989 in the city of Culiacan, Sinaloa. The youngest city just up the northwest of Mexico. Not only is it known as the Sinaloa Cartel, it was also known as La Alianza de Sangre, meaning Blood Alliance. Hector Palma, a drug lord that was in charge of the cartel was arrested in the year of 1995 and passed it on to one of his well known business partner, Joaquin â€Å"El Chapo† Guzman. In that time period, he took leadership and is now currently running it. He is considered to be the second generation of drug smugglers along with many other individuals such as Rafael Quintero, Ernesto Carrillo, and Miguel Gallardo. These second generations were brought to the cartel through connections from family relations, especially Joaquin â€Å"El Chapo† Guzman. The first generation dates b...