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МИНИСТЕРСТВО ОБРАЗОВАНИЯ И НАУКИ РОССИЙСКОЙ ФЕДЕРАЦИИ
Федеральное государственное автономное образовательное
учреждение высшего образования
САНКТ-ПЕТЕРБУРГСКИЙ ГОСУДАРСТВЕННЫЙ УНИВЕРСИТЕТ
АЭРОКОСМИЧЕСКОГО ПРИБОРОСТРОЕНИЯ
О. В. Акимова
INTERNATIONAL BUSINESS
ADMINISTRATION
Учебно-методическое пособие
УДК 339.9
ББК 65.5
А39
Рецензенты:
кандидат филологических наук, доцент И. Н. Артемьева;
кандидат филологических наук Е. А. Рудая
Утверждено
редакционно-издательским советом университета
в качестве учебно-методического пособия
А39
Акимова, О. В.
International Business Administration:
О. В. Акимова. – СПб.: ГУАП, 2018. – 91 с.
учеб.-метод.
пособие
/
Основная цель издания заключается в развитии коммуникативных способностей изучающих английский язык. Благодаря его аутентичным текстам
студенты на занятии погружаются в «англоговорящую» среду.
Структурно пособие представлено четырьмя модулями, соответствующими основным вопросам учебной программы по дисциплине «Иностранный язык (профессиональный)». Многообразие заданий в каждом модуле
позволяет сделать отработку и закрепление только что пройденного материала более эффективными: студент прорабатывает новую лексику в текстах,
в грамматических упражнениях, а также в устных заданиях. В конце учебного пособия имеется глоссарий, в котором отражены основные термины по
данной дисциплине.
Пособие «Международное предпринимательство» («International Business
Administration») на английском языке предназначено для студентов,
обучающихся по направлениям «Международные отношения» и «Мировая
экономика».
УДК 339.9
ББК 65.5
© Акимова О. В., 2018
© Санкт-Петербургский государственный
университет аэрокосмического
приборостроения, 2018
UNIT I
«You can’t have the family farm without the family»
(Tales of the long Bow)
BUSINESS & SOCIETY
SOCIAL ISSUES & BUSINESS SUCCESS
More than two centuries ago, Rousseau’s «social contract» helped to seed
the idea among political leaders that they must serve the public good. Business
leaders should not fear their greater advocacy of the contract between business
and society. There is no shortage of big social issues today that directly affect
many big businesses. These include: promoting a more reasonable and effective
approach from both companies and governments to balancing the societal risks
and rewards from new technologies; supporting efforts to resolve regional
conflicts; promoting the development of poor regions to presenting a potential
boon to global markets as well as international security. People retain a belief in
the ability of business to provide a positive contribution to the society.
«b.b.b» & CSR
The great, long-running debate about business’s role in the society is currently
caught between two contrasting ideological positions. On one side of the current
debate are those who argue that the «business of business is business» («b.b.b.»)
(Milton Friedman). This belief is most established in Anglo-Saxon economies.
On this view, social issues are peripheral to the challenges of corporate
management. The sole legitimate purpose of business is to create shareholder
value. However, the language of shareholder value can lead managers to focus
excessively on improving the short-term opportunities and issues: the customers’
loyalty, investments in innovation and other growth prospects. Moreover, billions
of dollars of shareholder value have been put at stake as the result of social
issues that ultimately feed into fundamental drivers of corporate performance.
However «b.b.b.» is limited as an agenda for corporate action because it fails to
capture the potential importance of social issues for corporate strategy.
On the other side, there are the proponents of «Corporate Social Responsibility»
(CSR), a rapidly growing movement enhancing companies which claim to
practice CSR to go further in mitigating their social impacts. Without doubt
social pressures often indicate the existence of unmet social needs or consumer
preferences. Business can give advantage by spotting and supplying these before
their competitors. Moreover, social pressures have reshaped and redefined the
tobacco industry or the oil and mining industries over the decades. In the case of
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the pharmaceutical sector – in the growing market for generic drugs; in the case
of fast-food restaurants – in providing healthier meals; in the energy industry –
in meeting fast-growing demand for cleaner fuels such as natural gas.
As parts of continental and central Europe move towards Anglo-Saxon
shareholder model, debate between both ideological positions – CSR and
«b.b.b.» – about business role in the society has increasingly taken on global
significance because these sides reflect in different ways the interconnection of
social issues and business success. Nevertheless, some limitations of «b.b.b.»
and CSR thinking live in the outlines of a new approach for business. There is
an implicit contract between big business and society, or indeed between whole
economic sectors and society. Detractors have often portrayed the contract as
a one-way bargain that benefits business at society’s expense. Reality is much
more complex.
SUSTAINABLE DEVELOPMENT
From a platform of economic stability, the government is seeking to
raise productivity and sustainable growth – by increasing skills, promoting
enterprise and innovation, creating strong and competitive markets, and
enhancing the legal and regulatory framework for the protection of consumers.
The government is encouraging trade associations and other representative
bodies to develop and implement strategies within at least several business
sectors. A number of initiatives have been introduced to help both business and
consumers to become more environmentally aware. For example, householders
are being encouraged not only to recycle their waste, but also to buy products
that contain recycled material.
The term sustainable development was first introduced in 1987, in the
Brundtland Report «Our Common Future»:
The report of the World Commission on Environment and Development
A widely used international definition is «development that meets the needs
of the present without compromising the ability of future generations to meet
their own needs». At the Rio de Janeiro Earth Summit in 1992 an Agenda for
the 21-st Century (Agenda 21) was adopted by the international community.
It set out a framework of objectives and activities for governments, civil
society and businesses, on sustainable development necessary for the 21-st
century which recognizes the needs of everyone as well as effective protection
of the environment, prudent use of natural resources, and maintenance of
high and stable levels of economic growth and employment. Sustainable
development requires international cooperation especially in Europe by making
it a requirement for environmental protection concerns to be integrated into EU
policies.
4
The Environmental Technology Best Practice Program (ETBPP), launched in
1994, is a 13-year program that promotes the use of better environmental practices
that reduce business costs for industry and commerce. It provides information
and techniques by means of publications, events and free phone help lines.
In 1996 the UK published a set of approximately 120 indicators of
sustainable development, and in the revised sustainable development strategy,
published in May 1999, these were expanded to just 150 indicators. This report
includes a subset of 15 key headline indicators, which are intended to give
a broad overview and to focus attention on what development means. Progress is
reported annually and informs decision-making.
The main indicators, covering economic, social and environmental concerns are:
1. Total output of the economy (GDP).
2. Total and social investment.
3. The proportion of people of working age who are in work.
4. Indicators of success in tackling poverty and social exclusion.
5. The level of recorded crime.
6. Emissions of greenhouse gases.
7. Road traffic.
8. Rivers of good quality.
9. New homes built on previously developed land.
BUSINESS – GOVERNMENT – CONSUMER
The production of goods and services is done either by businesses or by
the government. Businesses produce the bulk of what people consume, but
many goods and services are provided by the government, including public
safety, national defense, and public goods like roads and bridges. Moreover, the
government provides the legal structure in which businesses operate and also
intervenes in the economy in order to do things like regulate pollution, mandate
safety equipment, and redistribute income from the rich to the poor.
Although it’s true that human beings face scarcity (lack) and can’t have
everything they want, it’s also true that they have a lot of options. Productive
technology is now so advanced that people can convert the planet’s limited
supply of resources into an amazing variety of goods and services, including
airplanes, cars, computers, video games, cancer treatments. In fact, thanks to
advanced technologies, people are spoiled for choices. The huge variety of
goods and services that can possibly to convert the planet’s limited resources into
the goods and services that will provide the greatest possible happiness when
consumed. Economists analyze the process by which societies choose exactly
what to produce in order to maximize human happiness. For every society, the
process can be divided into two simple steps:
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1. The society must figure out all the possible combinations of goods and
services that it could produce given its limited resources and the currently
available technology. Society has only a limited amount of land, labor and
capital out of which to make things. Consequently, society must be very
attentive when figuring out how to best convert its limited resources into
the goods and services that people most greatly desire.
2. The society must choose one of these output combinations – presumably,
the combination that maximizes happiness.
Economists view success in each of the two steps in terms of two particular
types of efficiency:
– industrial efficiency means producing any given good or service using the
fewest possible resources.
– allocating efficiency means producing the kinds of goods and services
that will make people most happy, and producing them in the correct amounts.
A society achieves both productive and allocating efficiency – that is, a society
determines what’s possible to produce, as well as what’s best to produce.
Consumers, on the other hand, often need assistance to make environmental
choices in the goods they buy and often rely on the information given on product
labels. Government encourages accurate and relevant environmental labeling, as
part of an integrated approach to reducing the environmental impact of consumer
products.
A MARKET OR A MONOPOLY?
Markets are very good at producing things that people are willing to pay
for. In addition, markets tend to be very efficient if there are many providers of
a good or service. Market production is the term that economists use to capture
what happens when one individual offers to make or sell something to another
individual at a price agreeable to both.
A competitive market is one in which many sellers compete against each
other to attract customers. In such a situation, each seller has an incentive
to sell at the lowest price possible in order to undercut his competitors and
incentive; prices tend to be driven so low that the businesses can just barely
make a profit. A competitive market also tends to guarantee productive
efficiency because the best way for sellers to keep prices low is to make sure
that they’re using all their resources efficiency and that nothing is going to
waste. Because competition is ongoing, the pressure to be efficient is constant.
Sellers also have a big incentive to improve efficiency in order to undersell
their rivals and steal their customers. But because production and distribution
in modern economies aren’t centralized, you don’t need to know the big picture.
In fact, the real magic of market economies is that they are just a collection
6
of millions and billions of small face-to-face transactions between buyers and
sellers.
Economists love competitive free markets – markets in which numerous
buyers freely interact with numerous competitive firms. Indeed, economists
firmly believe that when they work properly, competitive free markets are the
very best way to convert society’s limited resources into the goods and services
that people want to buy. Economists place such great confidence in competitive
free markets. Because the interaction of supply and demand leads to an outcome
in which every unit of output that’s produced satisfies two excellent conditions:
1. It’s produced at the minimum cost possible, meaning that there’s no waste
or inefficiency.
2. Its benefits exceed its costs. That is, only output that makes the world
better.
Economists love competitive free markets because, if they are operating properly, they make sure that resources are allocated optimally. In particular, such
markets assure that resources go toward producing only output for which the
benefits exceed the costs.
The competitive firm produces more than monopolist. This happens because
the competitive firm doesn’t have to worry about reducing its revenue per unit if
it increases output. By contrast, the monopolist faces the market demand curve,
meaning that every additional unit it sells lowers the price per unit it receives on
all units sold. Because the monopoly restricts output compared to the competitive
firm, the monopoly price is also higher than the competitive price. This fact really
irks consumers. Compared to a competitive firm, a monopoly produces too little
at too high a cost and turns around and sells it for too much money. Given these
three bad things, you may simply want to say, «Three strikes – you’re out!» and
get rid of monopoly altogether. But if you did, you’d be acting a bit too hasty.
In some cases, the benefits of monopolies outweigh their costs.
The most obvious place where monopolies do society a lot of good is patents.
Patents give inventors the exclusive right to market their inventions for 20 years,
after which time their inventions become public property. That is, patents give
inventors the right to run a monopoly for 20 years. In a world without patents,
far fewer people would bother to put in the time, effort, and money required
to come up with new inventions. To remedy this situation, nations all over the
world offer patent monopolies to inventors. The result is faster innovation, much
more rapid economic growth, and much faster increases in living standards.
Indeed, it’s hard to think of any more socially beneficial monopoly than patents.
Societies have also stepped in to create monopolies in situations where
competition means annoying redundancies. For example, if ten different cable
TV companies compete for your business, neighborhoods must have ten different
sets of cable TV wires running through them – at much greater expense than
7
running just one set of wires. Thus most cities give a monopoly to one cable TV
company and regulate it, making sure that it doesn’t exploit customers.
Another place where society may decide it’s better to have a monopoly rather
than competition is in the case of what economists refer to as natural monopoly
industries, or natural monopolies. An industry is a natural monopoly if one
large producer can produce output at a lower cost than many small producers.
A good example is electric power generation. To see how this leads to a natural
monopoly, imagine a situation in which a town that needs ten megawatts of power
is initially served by ten of the small, one-megawatt power plants. But then a big
corporation comes along and builds a ten-megawatt power plant. Because it can
produce a lower cost energy than the smaller, less efficient plants, the big plant
offers lower prices and steals all the customers – meaning that the smaller plants
quickly go bankrupt. Such an industry is called a natural monopoly because it
naturally becomes dominated by a single, low-cost producer.
The problem here for policymakers is what to do with a natural monopoly.
On one hand, everyone welcomes the fact that the big plant is much more
efficient: it burns less fuel and causes less environment damage. But because it
has crushed all competition, people now have to worry about the new monopoly
charging high prices and producing less than the socially optimal output level.
These conflicting good and bad points typically mean that governments allow
the natural monopoly to stay in business as the only firm in its industry, but at
the same time they regulate it so that people don’t have to worry about high
prices or low output levels. By doing so, society gets benefits brought by the
most efficient production method without having to worry about the problems
that would otherwise result if the monopoly was left unregulated.
The case for government intervention
Our modern economies are largely a mix of market production and
government intervention. As a rule, what to produce, how much of it to produce,
and who gets it, is decided by voluntary transactions made by individuals and
businesses. But sometimes, the government uses its coercive powers to achieve
outcomes that wouldn’t happen if individuals and businesses were left to their
own devices.
Some goods and services, like cocaine and coal-burning power plants, have
negative consequences. These negative consequences bring forth substantial
pressure for government intervention in the economy because these markets, if
left alone, will produce a lot of these goods and services.
Some people end up consuming a very large proportion of the goods and
services produced, while other end up with very little. Such unequal distribution
also brings forth a great deal of pressure for government intervention in the
economy in order to equalize living standards.
8
Many societies use their governments to intervene and address the problems
that markets create or cannot fix. Government interventions in the economy
usually take one of three forms:
1. Penalties or bans on producing or consuming goods or services considered
dangerous or immoral. For example, governments may ban drugs or
impose «sin taxes» on things like alcohol and tobacco.
2. Subsidies to encourage the production of goods and services considered
desirable. For instance, most governments heavily subsidize the education
of children and the provision of medical care. They do so because of
the fear that insufficient education and inadequate medical care will be
provided without the subsidies.
3. Taxes on the well-off to provide goods and services to the less fortunate
and to reduce inequalities in income and wealth. These taxes are put
toward things like good parks, clean air, and art, as well as goods and
services for the poor. Governments tax individuals and businesses in order
to raise the money to provide such things.
At each of these government interventions causes the economy to produce
and allocate an output combination different from the one that society would
have ended up with if the markets had made all the production and allocation
decisions. Although markets sometimes fail to deliver everything that society
wants, government intervention isn’t a panacea. Moreover, modern economies
are hugely complicated, with literally millions of goods and services produced
using limited supplies of land, and labor, and capital. Markets handle this
complexity easily, but government interventions usually don’t – meaning that
they often risk substantial reductions in productive and allocating efficiency.
The case against government intervention
Government intervention is a powerful force for redirecting economic
activity, but it doesn’t necessarily make the economy better. In fact, there are at
least three good reasons to worry that government interventions in the economy
will make things worse:
1. Government programs are often the result of special interest lobbying that
seeks to help some small group rather than maximize the happiness of the
general population. Special interest lobbying takes resources away from
other users that often benefit numerous people in order to provide benefits
to only a few.
2. Even when pursuing the common good, government programs often
deliver poor service because they have no competition to create incentives
to produce government goods and services efficiently.
9
3. Government interventions usually lack the flexibility of the price
system, which is able to constantly redirect resources to accommodate
people’s changing willingness to pay for one good rather than another.
Government policies take years to pass, and laws are usually written in
a very precise manner that doesn’t allow for changing circumstances
and rapid innovation – things that the price system handles with
ease.
Markets are very good at delivering the vast majority of things that
people want and can usually do so at the lowest possible cost. Consequently,
government intervention should be well thought out lest it makes things
worse rather than better. Depending on the situation, the output combination
produced by a government intervention may be better or worse than
the market combination in terms of productive efficiency, allocating
efficiency, or both. Which combination is, in fact, depends on the specifics
of each case.
THE «SOCIAL CONTRACT»
The economic policies of a government are directed towards the achievement
of high and stable levels of growth and employment, with the aim of increasing
opportunity and enabling everyone to share in rising living standards.
The government is committed, as part of its strategy for sustainable development,
to integrating environmental considerations into its decision-making at all levels,
and in every sphere of its activities.
The activities undertaken by business have clearly brought social benefits
as well as costs. Thus business must acknowledge that in return for ability to
function it is subject to rules and constraints. Therefore, business leaders need
to shape the debates on social issues much more consciously. This means
establishing ever higher standards of integrity and transparency within their own
companies. It also means becoming much more actively involved in external
debates and in the media on social issues that shape their business context.
Moreover, social issues should be discussed at the highest levels as part of
overall strategic planning. This means executive managers must educate and
engage their boards of directors to analyze customer trends today. By the time
business seriously engaged with the issue, however, it is in a defensive posture,
struggling to catch up with the public debate. Companies are required not just
to understand their individual «contracts», but actively to manage them. To do
this they can choose from a range of potential tactics such as: more transparent
reporting, asset reorganization to capture expected future opportunities or to
shed perceived liabilities; changes in regulatory approach; development (at an
industry level) of voluntary standards of behavior.
10
Thus companies need to build social issues into strategy in a way which
reflects their actual business importance. They need to articulate business’s
social contribution and define its ultimate purpose in a way that has more
subtlety than «b.b.b.» world-view and is less defensive than most current CSR
approaches.
We recognize today that there is a «social contract» that binds citizens
together, and with their government. Maintaining that social contract is
particularly important and difficult in the midst of the social upheavals that
so frequently accompany the development transformation. Part of the social
contract entails «fairness», that the poor share in the gains of society as it grows,
and that the rich share in the pains of society in times of crisis. Therefore,
the best way to help the poor is to make the economy grow. Growth occurs
through liberalization, «freeing up» markets. Privatization, liberalization, and
macrostability are supposed to create a climate to attract investment, including
from abroad. This investment creates growth. Foreign business brings with it
access to foreign markets, access to sources of finance, especially important
in those developing countries where local financial institutions are weak.
Thus foreign investment is a key part of the new globalization. It can help
to view the relationship between big business and society in this respect
as an implicit «social contract» Rousseau adapted for the corporate world.
This contract has obligations, opportunities and mutual advantage for both
sides.
READING COMPREHENSION
1. What risks does society face if big businesses reject to support the public good?
2. How do «b.b.b.» and CSR ideologies differ in their approach to the social issues?
3. What makes development sustainable?
4. What are the advantages of competitive free markets? Are there any disadvantages?
5. Why is the monopoly price higher than the competitive one?
6. Is there any obvious advantage of a monopoly?
7. How can government help to improve the balance between business and society?
To what extent should governments be involved into business?
8. For what reasons might government interventions occur?
9. What are the forms of government interventions?
10. How might Rousseau’s «social contract» affect the society?
11
TEXTS FOR
DISCUSSION
Read and translate the text:
Looking the Other Way
A controversial surprise tucked into the energy bill
Building nuclear bombs and curing cancer may seem unconnected pursuits.
But both often start with highly-enriched uranium. Hence the interest in a few
paragraphs hidden in the energy bill that is now being reviewed by the Senate:
an amendment, originally sponsored by Richard Burr of North Carolina, that
would loosen restrictions on the export of highly-enriched bomb-grade uranium.
Uranium is deemed to be «highly enriched» when at least 20% of its mass is
the isotope U-235. At a concentration of 90%, uranium becomes weapons-grade,
and easier to mould into a bomb than plutonium. This explains why 19 years
ago most American civilian reactors were banned from using highly-enriched
uranium.
By contrast, Canada and some European countries let companies use
weapons-grade uranium to make radioactive medicines. Isotopes derived from
this uranium are crucial to the diagnosis of cancers and other illnesses. The
biggest manufacturer of such isotopes, a Canadian firm called MDS Nordion,
estimates that 35,000 patients a day are treated with its medicines, and that they
are used in three-quarters of all nuclear-medicine procedures.
To keep the Nordion plant humming, America’s Department of Energy
sends around 22kg of weapons-grade uranium to Canada annually. It has sent as
much as 500kg over the past 20 years. Nordion’s stuff ends up at a facility near
Ottawa. For 13 years, America has tried to wean foreigners off using highlyenriched uranium in favour of a less enriched substitute. American incentives
and penalties have persuaded manufacturers in Argentina to produce isotopes
using only low-enriched uranium. Mr. Burr’s amendment would change this
policy. America would still promote the use of low-enriched uranium, but with
much less urgency and only where switching to it would push up the producer’s
costs by «less than 10%».
Mr. Burr and other champions of the medical industry noted that American
firms and patients depend on Nordion for isotopes; it would be inconvenient for
Nordion to convert its facilities to the use of low-enriched uranium. Nordion
says the use of low-enriched uranium causes more pollution and is costlier
(though anti-proliferation people dispute that). What is beyond dispute is that,
if the amendment goes through, more bomb-grade uranium will be free to travel
around the world.
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Vocabulary
hence [hens] adv следовательно, в результате
amendment [q’mendmqnt] n поправка, дополнение (к резолюции, законопроекту)
deem [di:m] v книжн. Полагать, думать, считать
mould [mqVld] v формировать, создавать
civilian [sI’vIlIqn] a гражданский, штатский
crucial [‘kru:S(q)l] a ключевой, решающий, критический
humming [‘hAmIN] a деятельный, энергичный
wean [wi:n] v отучать к-либо от привычки, отрывать
incentive [In’sentIv] n побудительная причина, стимул, побуждение
urgency [‘E:dZ(q)nsI] n настойчивость, назойливость, срочность, безотлагательность
proliferation [prq»lIfq’reIS(q)n] n количественный рост, распространение
beyond [bI’jPnd] adv вне, за пределами
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Model: amendment – is a change proposed or made to a rule, regulation or
a draft etc.
highly-enriched uranium; civilian reactor; keep a plant humming; penalty; to
promote.
Ex. 2. Agree or disagree on the statements:
1. Building nuclear bombs and curing cancer are unconnected pursuits.
2. At a concentration of 20%, uranium becomes weapons-grade.
3. Canada and some European countries let companies use weapons-grade
uranium to make radioactive medicines.
4. American incentives and penalties haven’t persuaded manufacturers to
produce isotopes using only low-enriched uranium.
5. America will still promote the use of low-enriched uranium.
6. If the amendment goes through, more bomb-grade uranium will be free to
travel around the world.
Ex. 3. Make up a discussion. Work in pairs.
One of you supports Mr. Burr’s amendment; another one is strong against it.
Exchange your reasons.
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Ex. 4. Deliver your speech:
A. You are a representative of an Anti-proliferation party that tries to prevent
the spread of high-enriched uranium. You speak against Mr. Burr’s amendment.
B. You are Richard Burr of North Carolina and you want to persuade the Senate to loosen restrictions on the export of highly-enriched bomb-grade uranium.
C. You don’t support both of them and have your own vision how to solve the
problem.
Ex. 5. Find word combinations in the text that can be translated in the following
way:
был наложен запрет на использование; поставить диагноз; «кнут
и пряник»; с меньшей/большей настойчивостью; взвинчивать цены; это
явится причиной еще большего загрязнения окружающей среды; это не
подлежит обсуждению; если поправка будет принята, то…
Ex. 6. Translate the following word combinations, taken from the text:
Curing cancer; unconnected pursuit; the interest hidden in the bill is now
being reviewed by the Senate; isotopes derived from uranium are crucial to the
diagnosis of cancer; they estimate that 35000 patients a day are treated with it;
they are used in three-quarters of all nuclear-enriched uranium.
Ex. 7. Translate the sentences from English into Russian, paying special
attention to the words from vocabulary notes.
1. As used originally by the ancient Greeks, the term philosophy meant the
pursuit of knowledge for its own sake.
2. After submitting the budget, the president often finds it necessary to
send budget amendments to Congress. 3. Criminal law governs actions and
relationships that are deemed to harm society as a whole. 4. The most important
goal of the 1946 act was to put the immense power and possibilities of atomic
energy under civilian control, although nuclear materials and facilities
remained in government hands. 5. The type of national economic system plays
a crucial role in determining the nature of the banking system. 6. Punishment
was considered a sign of parental love, as parents sought to wean their children
from their natural tendency toward sin and corruption. 7. In many countries,
family allowances are designed to increase populations by offering financial
incentives to parents who have large families. 8. Roosevelt’s overwhelming
14
victory in the 1932 election, coupled with the urgency of the worst economic
collapse in U.S. history, the urgency to attain complete self-sufficiency had
been greatly reduced by the California gold rush. 9. Most attempts to reduce
gun proliferation have relied on governmental regulation. 10. Air pollution can
expand beyond a regional area to cause global effects.
Ex. 8. Translate the sentences from Russian into English, paying special attention to the words from vocabulary notes.
1. Сельское хозяйство, производство и добыча полезных ископаемых
являются основными экономическими видами деятельности. 2. Поправка к конституции наделила президента дополнительными полномочиями.
3. Комиссия контролирует употребление химических веществ, которые
считаются опасными. 4. Военное и гражданское самолетостроение остается одной из важнейших составляющих промышленности. 5. Эти изменения были ключевыми в экономическом и политическом развитии страны. 6. Успешные методы лечения включают в себя программу по постепенному отучению человека от наркотической зависимости. 7. Компания
пыталась найти наилучшие стимулы для мотивации работников. 8. Эта
работа не срочная, можно сделать ее на следующей неделе. 9. Распространение новых частных телевизионных каналов создало большую конкуренцию на рынке вещания. 10. Некоторые экономические действия правительства выше моего понимания.
Read and translate the text:
Seventy Years of Plenty
«The civilisation of the past 100 years, with its startling industrial changes,
has tended more and more to make life insecure. Young people have come to
wonder what would be their lot when they came to old age. The man with a job
has wondered how long the job would last».
Not the words of a present-day worrier wringing his hands about
globalization, but those of President Franklin D. Roosevelt upon signing the
Social Security Act into law, 70 years ago. The venerable public pension system
famously sought to give some measure of protection against these «hazards and
vicissitudes of life».
It started levying taxes on workers’ wages in January 1937. It collected
a nickel from one Ernest Ackerman on its first day of operation and then paid
him a lump sum of 17 cents on his retirement the next day – man enviable rate
of return never since repeated. From 1940, participants could claim a monthly
benefit from the age of 65 until death.
15
Back then, life expectancy at birth was only 58 for men and 62 for women.
Even after you had survived childhood and started to contribute to the programme
your chances of living to see a benefit cheque were not much better than evens
(54% for men; 61% for women). Today’s retirees, of course, collect far more
cheques. By Social Security’s 90th birthday, the payouts will cost 110% of the
contributions. Unsustainable? No doubt. But reforming Social Security poses its
own «hazards and vicissitudes» for politicians, as George Bush is finding out.
Vocabulary
startling [‘stQ:tlIN] a поразительный, потрясающий
insecure [«InsI’kjVq] a небезопасный, ненадежный, рискованный
lot [lPt] n судьба, жребий, участь
worrier [‘wArIq] n человек, мучимым сомнениями, опасениями
wring [rIN] v (wrung) one’s hands заламывать руки (от отчаяния)
venerable [‘ven(q)rqb(q)l] a почтенный, достойный почитания, уважения
seek [si:k] v (sought) to do smth. пытаться что-то сделать, стремиться
к чему-либо
hazard [‘hxzqd] n опасность, риск
vicissitude [vI’sIsItju:d] n превратность, злоключение
levy [‘levI] v собирать, взимать, облагать (налогом), налагать (штраф)
nickel [‘nIk(q)l] n монета в пять центов
lump sum [‘lAmpsAm] a единовременно выплачиваемая сумма
enviable [‘envIqb(q)l] a завидный
life expectancy [«laIfIk’spekt(q)nsI] вероятная (ожидаемая) продолжительность
жизни
benefit [‘benIfIt] n пенсия, пособие
payout [‘peIaVt] n выплата
pose [pqVz] v зд. излагать, формулировать
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Civilisation; globalisation; social security; a lump sum; retirement; contribution.
Ex. 2. Agree or disagree on the statements:
1. The civilisation of the past 100 years has tended more and more to make
life secure.
2. The public pension system sought to give some measure of protection
against these «hazards and vicissitudes of life».
3. From 1940, participants could claim a monthly benefit from the age of
65 until death.
16
4. Life expectancy nowadays is only 58 for men and 62 for women.
Ex. 3. Translate the following word combinations, taken from the text:
Startling industrial changes; to make life insecure; public pension system;
measure of protection; enviable rate of return; to contribute to the programme.
Ex. 4. Find word combinations in the text that can be translated in the following
way:
Пенсионное пособие; ожидаемая продолжительность жизни; иметь
тенденцию; какая будет у них участь?; длиться; заламывать руки
от отчаяния; человек, мучимый сомнениями; превратности судьбы;
пенсионер.
Ex. 5. You are young people who have come to wonder what will be your lot
when you come to old age. Prepare as many questions as you can to find out
all information about pension plans that are offered by some social security
companies.
Ex. 6. Deliver your speech:
You are a representative of a social security company. You are explaining the
rules of pension plan that your company is advertising.
Ex. 7. Browse the Internet and find information about pension plans of
European countries.
1. Share the information about a pension plan you like best with other
students.
2. Compare pension plans of Russia and another country.
Ex. 8. Translate the sentences from English into Russian, paying special
attention to the words from vocabulary notes.
1. Many of these innovations proved startlingly successful. 2. Two series of
events coincided to change this secure supply of cheap oil into an insecure
supply of expensive oil. 3. Sweden introduced reforms that improved the lot
of the people. 4. In their misery women wept and wrung their hands. 5. The
community is held together by venerable customs and traditions. 6. In Ontario,
remedial action plans have been established to clean up many of the hazards
of industrial pollution in the Great Lakes. 7. Her books tend to deal with the
hardships and hazards of life and the vicissitudes of love. 8. The Assembly is
empowered to approve the budget, make investigations, levy taxes, and approve
17
government programs. 9. There are limits on how much can be invested as
a lump sum or through regular payments in any single year. 10. The average
life expectancy for the Japanese is around 80 years. 11. Civil service employees
enjoy a variety of employment benefits, including a contributory retirement
system, an incentive-awards program that includes cash payouts for useful
suggestions, low-cost group life and health insurance plans, and paid vacations
and sick leave.
Ex. 9. Translate the sentences from Russian into English, paying special
attention to the words from vocabulary notes.
1. Они достигли поразительных результатов благодаря четкому
руководству. 2. Казалось, что нам никогда не найти выхода из этого опасного
положения. 3. Участь заключенных была ненадежна. 4. Этот храм
считается наиболее почитаемым в Корее. 5. Несчастный случай произошел
потому, что не были учтены все возможные опасности производства.
6. Несмотря на недавние превратности в жизни страны, экономика ее
возрождается. 7. Правительства облагают людей различными налогами,
такими как подоходный налог, налог на наследство, сбережения и другие.
8. Было решено сначала выплатить единовременное пособие пенсионерам,
а затем организовать отдельные выплаты по плану. 9. Достижения
медицины позволили увеличить продолжительность жизни во многих
странах.
Ex. 10. Comment on the following quotations:
• Retirement: It’s nice to get out of the rat race, but you have to learn to get
along with less cheese.
(Gene Perret)
• The challenge of retirement is how to spend time without spending money.
(Author Unknown)
• The question isn’t at what age I want to retire, it’s at what income. (George
Foreman)
• Retirement kills more people than hard work ever did.
(Malcolm Forbes)
• The trouble with retirement is that you never get a day off. (Abe Lemons)
18
UNIT II
«Arguing against globalization is like arguing the laws of gravity»
(Kofi Annan)
WORLD ECONOMY
GLOBAL INTERDEPENDENCE
Not only does business rule the roost within national economies, but it also
makes them interdependent. Most of what we eat, drink, wear, drive, smoke,
and watch is the product of firms that are now global in their operations. Many
of the firms now operate in lots of countries on all continents. Increasing
numbers are owned by shareholders in many different countries. Indeed, most
governments around the world have facilitated corporate-led globalization by
pursuing policies that enhance the ability of corporations to move their products,
money and factories around the globe more quickly and with less impediment
from regulations. New and proposed regional and global trade and investment
deals aim to lift even further the remaining economic barriers across borders.
The debates are erupting across college campuses, in labor unions, church
basements, parliaments, and city halls, and at millions of dinner tables around
the world. This is a healthy development because for decades government
policy around the global economy was shaped by a few people, many from the
corporate sector, who were quite insulated from the public. Nowadays we live in
the world where peoples and countries are increasingly intertwined.
The global system is becoming a tightly knit web in which a change in any
part of the web has significant effects on the others. The wealth, security, and
general welfare of almost all nations are interrelated. For example, fluctuating
oil supplies affect economic productivity, trade balances, interest rates, and
employment throughout the world. The growing interdependence of world social,
economic, and ecological systems makes it difficult to predict the consequences
of social decisions. Therefore, there is a growing consensus among the leaders
of most nations that isolationist policies are no longer sustainable and that such
global issues as combating global warming, controlling the spread of nuclear
weapons and protecting the world’s monetary system from wild fluctuations can
be accomplished only by all nations acting in concert.
The world economy is rapidly becoming a single economic unit. Individual
national economies are developing closer linkages through trade, capital,
investments and financial institutions. The interaction of the countries’ national
economies is based on the International Economic Relations (IER). Therefore,
there are three main cross-border flows: goods and services, finance, and
people.
19
Although globalization has occurred for centuries in each of these spheres,
it is going through a period of rapid change. Understanding the dynamics of
today’s global economy requires some knowledge of what came before.
STAGES OF THE GLOBAL ECONOMIC DEVELOPMENT
XV–XVI centuries –
the Age of Exploration.
Great discoveries. World colonial
system. Manufactures. World market.
XVII–XIX centuries – Colonial
division of labor.
Industrial revolution.
XIX–XX centuries – International
Division of Labor (IDL).
Scientific progress. World financial
system. Interdependence of all
countries’ economies.
Economic crises:
1910–1930
World War I.
Socialist revolution.
Great Depression.
1930–1940
World War II.
Reconstruction of World Economy
System.
20
From the Vikings to Marco Polo, people
traveled great distances to reach new worlds,
often bringing home exotic foods, spices,
crafts, and other riches. Beginning in the late
fifteenth century, European powers financed
explorations to what become known as
Africa, Asia, and the Western Hemisphere.
For hundreds of years Chinese and Arab
traders piled routes across Asia, the Middle
East, and Northern Africa.
Within years, explorations turned to
conquest, and colonial authorities directed
movements of goods, capital, and people
into a new colonial division of labor.
During the centuries Spain, England,
France, Portugal, Belgium, the Netherlands,
Germany, Italy and later the USA and Japan
rearranged economic activity in much of
Asia, Africa, and Latin America.
The transformation of most colonies
into exporters of one or two minerals
or agricultural products twisted these
economies into dependence on products
over whose price and marketing they had no
control.
Stock markets around the world collapsed,
banks went under, and trade flows collapsed
as nations erected protectionist barriers.
The architects of the post-World War II
global economic institutions wanted to set
in place barriers against a similar collapse.
The vision was to create public international
institutions to anchor each of the three pillars
of global economic activity:
Production – World Bank.
Finance – International Monetary Fund.
Trade – GATT, succeeded in 1995 by the
WTO
1950–1960
World Colonial Collapse – New
Division of Labor.
1990 – The Modern Stage of the World
Economy
The basic division of labor has changed
radically.
1. Market Leaders. The richer countries
of Europe and North America along
with Japan, Australia, and New
Zealand.
2. Big Markets. China, Korea, Taiwan,
India, Indonesia, South Africa, Turkey,
Brazil, Mexico have become largescale manufacturers of a broad range
of products.
3. Would – Be Big Markets. Greece,
Portugal, Chile, Colombia, Venezuela,
Thailand, Singapore, Philippines,
Malaysia have become electronics,
clothing and service centers.
4. OPEC Nations. These are oilexporting countries. Venezuela and
Indonesia are also OPEC members.
5. Former Soviet bloc Nations. These
have shifted from socialism to
deregulated market economies and
suffered great difficulties in competing
for foreign investment with Asia and
Latin America.
6. Raw Material Exporters. About
40 countries.
7. Least Developed Countries. About
60 countries, mostly all in Africa are
very poor.
The world economy is becoming a single
economic unit with its benefits and costs,
winners and losers.
THE MODERN STAGE OF THE WORLD ECONOMY
GLOBALIZATION
Globalization is the closer integration of the countries and peoples of the
world which has been brought about by the enormous reduction of costs of
transportation and communication, and the breaking down of artificial barriers
to the flows of goods, services, capital, knowledge and people across borders.
Globalization is powerfully driven by international corporations, which move
not only capital and goods across borders but also technology. It has helped
21
hundreds of millions of people attain higher standards of living. However,
globalization has become the most controversial issue of our time, something
debated all over the world. There is discontent with globalization. On the one
hand, globalization can be a force for good – the globalization of the economy
has benefited countries that took advantage of it by seeking new markets for their
exports and by welcoming foreign investment. On the other hand, the countries
that have benefited the most have been those that took charge of their own
destiny and recognized the role government can play in development rather than
relying on the notion of a self-regulated market that would fix its own problems.
Hence, for millions of people globalization has not worked. Many have actually
been made worse off, as they have seen their jobs destroyed and their lives
become more insecure. Today, globalization is being challenged around the
world.
Advantages of globalization
––New foreign firms may hurt protected state-owned enterprises but they
can also lead to the introduction of new technologies, access to new markets,
and the creation of new industries.
––Opening up to international trade has helped many countries grow far
more quickly than they would otherwise have done. International trade helps
economic development when a country’s exports drive its economic growth.
––Foreign aid, another aspect of the global world, for all its faults still has
brought benefits to millions, often in ways that have almost gone unnoticed:
education projects have brought literacy to the rural areas or, for instance,
irrigation projects have more than doubled the incomes of farmers lucky enough
to get water.
––Globalization has reduced the sense of isolation felt in much of the
developing world and has given many people in the developing countries access
to knowledge.
––Because of globalization many people in the world now live longer than
before and their standard of living is far better.
Thus globalization is progress; developing countries must accept it if they
are to grow and to fight poverty effectively.
Disadvantages of globalization
––The critics of globalization accuse Western countries of having pushed
poor countries to eliminate trade barriers, but kept up their own barriers,
preventing developing countries from exporting their agricultural products
and so depriving them of desperately needed export income. The result
22
was that some of the poorest countries in the world were actually made
worse off.
––Western banks benefited from the loosening of capital market controls in
Latin America and Asia, but those regions suffered when inflows of speculative
hot money (money that comes into and out of a country, often overnight).
The abrupt outflow of money left behind collapsed currencies and weakened
banking systems.
––A growing divide between the «haves» and the «have-nots» has left
increasing numbers in the Third World in dire poverty, living on less than a
dollar a day. The actual number of people living in poverty has actually
increased by almost 100 million. This occurred at the same time that total world
income increased by an average of 2.5% annually.
––Africa plunges deeper into misery, as incomes fall and standards of living
decline. Other countries simply cannot attract private investors. Without this
investment, they cannot have sustainable growth.
––If globalization has not succeeded in reducing poverty, neither has it
succeeded in ensuring stability. Crises in Asia and in Latin America in 1997–
1998 threatened the economies and the stability of all developing countries and
appeared to pose a threat to the entire world economy.
––Globalization and the introduction of a market economy have not
produced the promised results in Russia and most of the other economies
making the transition from communism to the market. The contrast
between Russia’s transition (engineered by the international economic
institutions) and that of China (designed by itself) could not be greater: while
in 1990 China’s gross domestic product (GDP) was 60 % that of Russia,
by the end of the decade the numbers had been reversed; while Russia
saw an unprecedented increase in poverty, China saw an unprecedented
decrease.
Finally, the environment has been destroyed, as political processes have been
corrupted, and as the rapid pace of change has not allowed countries time for
cultural adaptation; massive unemployment has been followed by longer-term
problems of social dissolution – from urban violence in Latin America to ethnic
conflicts in other parts of the world, such as Indonesia.
Globalization is power?
Thus globalization has been the most pressing issue of nowadays. «We
cannot go back on globalization; it is here to stay. The issue is how can we
make it work» (Joseph E. Stiglitz, winner of the Nobel Prize in Economics).
If globalization continues in the way that it has been in the past, if we continue
to fail to learn from our mistakes, globalization will not only succeed in
23
promoting development but will continue to create poverty and instability.
Without reform, the backlash will mount and discontent with globalization will
grow.
Globalization is a powerful force that has brought enormous benefits to
some; however, millions have not enjoyed its benefits, because of the way it
has been mismanaged, and millions more have ever been made worse off. The
challenge today is how to reform globalization, to make it work not just for rich
and the more advanced industrial countries but also for the poor and the least
developed countries.
The International Forum on Globalization has developed a broad alternative
vision for global economic rules and institutions which does not reject all
international trade and investment. But rather than being viewed as ends in
themselves, trade and investment should be seen as means for promoting ideals
such as equality, democracy, good jobs, a friendly environment, and healthy
communities. These are ten core principles for sustainable societies:
1. New democracy. The principle of new democracy means creating
governance systems that give those who will bear the costs the vote when
decisions are being made.
2. Subsidiary. Authority of more distant levels of administration is subsidiary
(subordinate) to the authority of more local levels that allow opportunity
for direct citizen engagement.
3. Ecological sustainability. Economic activity has to be ecologically
sustainable.
4. Common heritage. Common heritage resources: natural resources,
culture and knowledge, public services – constitute a collective birthright
to be shared equitably by all.
5. Diversity. Cultural, economic, and biological diversity is essential for
a healthy, sustainable, and viable community.
6. Human rights. Governments should not only focus on civil and political
rights but should also guarantee economic, social, and cultural rights to
their citizens.
7. Jobs, Livelihood, and Employment. Sustainable societies protect the
rights of workers in the formal sector as well as the great number of
people in the informal sector or underemployed.
8. Food security and safety. Nations are stable when their people have
enough food, and can produce and provide their own food.
9. Equity. Social justice among nations, within nations, between classes,
ethnic groups, men and women.
10. The precautionary principle. When a product or practice raises potential
threats to the environment or public health, governments should have the
right to take preventative actions.
24
READING COMPREHENSION
1. What stages of the global economic development might be distinguished?
2. How long did the Age of Exploration last?
3. How has the International Division of Labor in XIX–XX centuries contributed to
the development of the world economy?
4. For what reasons were the public international institutions (World Bank,
International Monetary Fund, GATT) created in 1930–1940?
5. How has the basic division of labor in 1950–1960 changed the world economy
compared to colonial division of labor in the XVII–XIX ?
6. What makes the world economy a single economic unit? How would you describe
the Modern Stage of the World Economy?
7. What are some of the main advantages of globalization?
8. What risks does globalization face?
9. What is the alternative vision for global economic rules and institutions adopted by
the International Forum of Globalization?
10.What 10 principles should be observed to make societies sustainable?
TEXTS FOR
DISCUSSION
Read and translate the text:
Face Value
Trying a New Pitch
Changing the name of America’s biggest, and the world’s fourth-biggest,
advertising agency was a symboliс but necessary measure, insists Bob Jeffrey,
who became JWT’s global head in January 2004. Anyway, he adds, many people
were already referring to the agency by its initials. But it will need more than
symbolic changes for this giant, or its rivals on Madison Avenue, the spiritual
home of America’s advertising industry, to survive and prosper in the marketing
future now unfolding.
The good news is that after a deep slump, advertising spending is growing
again. The global ad market could be some 4.7% bigger, with spending of over
$400 billion, forecasts Zenith Optimedia, a research company. However, less
happily, Zenith says that growth in spending on TV commercials has already
peaked, and may begin to shrink – just as spending on advertising is already
shrinking in other traditional media, such as newspapers and magazines. The
fastest growing part of the advertising market is now the internet, accounting for
25
more than 5% of America’s total ad spending. Internet advertising is forecast to
double in value within a few years.
«There is not one CEO that I have talked to that hasn’t got the message about
how rapidly communications are changing, and the influence of technology,»
says Mr. Jeffrey. But simply rushing to plaster websites with irritating ads that
get in the way of what users are trying to do is hardly the way forward, he
acknowledges. Many people in developed markets consider themselves «time
poor». And that, argues Mr. Jeffrey, means that consumers are increasingly
likely to resist marketing methods that demand significant amounts of their time
and attention.
JWT seems to have the strengths needed to confront these changes: a glorious
141-year history, a worldwide staff of 8,500 and a list of blue-chip clients
including Ford, Unilever and Pfizer. But will any of these really be strengths?
In the future many traditional elements of its craft may no longer work. So Mr.
Jeffrey is launching what he claims is a revolution. «We are basically changing
everybody’s roles and responsibilities.»
Advertising has traditionally been run in a sort of linear way: an agency
would find out what consumers thought about a client’s product, use that as
the basis to develop a campaign to promote the product, and then monitor and
evolve the campaign as it proceeded. Now the process has to become more
«holistic» and account managers need to be «executive producers of ideas»,
says Mr. Jeffrey. Creative ideas can emerge from all sorts of places and be used
in many different ways to engage consumers and persuade them «to spend time
with the brand», he adds. Television can still be part of the process-after all, lots
of people still watch it – but it is no longer at the centre.
The coming launch in America a new Ford Fusion car provides an example of
where advertising is going. Even before the car has gone on sale, the campaign
has begun with the creation of a website. Among other things, the website
promises a series of «flash concerts» by some leading rock bands and hip-hop
artists. These are musical events to be held at secret locations and announced at
the last minute via e-mail and text-messaging. Ford–through JWT-is doing this
because it hopes to win more younger urban buyers for its car.
Partly in anticipation of this more complicated market, many ad agencies
have clustered into four big global groups that bring together a wide range of
resources, from public relations to direct marketing and media buying. They are
America’s Omnicom and Interpublic, France’s Publicis and Britain’s WPP, of
which JWT is a part. In a significant recent development, some big accounts are
now being won by an entire group, rather than by individual agencies. WPP, for
instance, has won global responsibility to the accounts of HCBS and Samsung.
But how strong a trend will be is unclear, as some big advertisers still say they
prefer to deal directly with individual agencies.
26
One of the latest accounts to come up for review is that of British Airways,
which is finding that the internet is now one of the most important ways to stay
in touch with customers and to receive bookings. For over two decades the
airline’s advertising account, now worth £60m ($108m) a year, has been handled
by Maurice and Charles Saatchi, who are sure to fight hard as other bid for it.
JWT, along with the Saatchis’ agency, is on a shortlist of four agencies that will
pitch for the account.
How to get ahead in advertising
JWT was the first agency to develop artwork and copy for its clients, so there
is something to its pioneering boasts. Can it shake things up again? The firm’s
ability to be creative will be more crucial than ever, says Mr. Jeffrey – which
may not be surprising given that he has held a number of creative posts with
other agencies and built his own company before joining JWT in 1998 to run its
flagship New York office. He turned that office around en route to becoming
chief executive last year. Today, he says the advertiser should start with an idea
and then find the people with the talents, capabilities and resources to carry it
out. But those ideas had better be good. Today’s consumers not only have more
choice than ever, both in terms of goods and media, but also seem less tolerant
than ever of the boring or irrelevant.
Vocabulary
pitch [pItS] n зд. план действий, линия, подход
pitch [pItS] v зд. пытаться получить одобрение
refer [rI’fE:] v (обыкн. to) ссылаться на что-либо, кого-либо; относить
к чему-либо; направлять
rival [‘raIv(q)l] n соперник, конкурент
prosper [‘prPspq] v преуспевать, процветать
shrink [SrINk] v (shrank, shrunk; shrunk, shrunken) становиться меньше,
садиться, давать усадку
plaster [‘plQ:stq] v пачкать, намазывать, покрывать (слоем); подмешивать
evolve [I’vPlv] v развивать, развертывать
blue-chip [‘blu:’tSIp] a высшего класса, первосортный
proceed [prq’si:d] v продолжать(ся); развивать(ся), протекать
holistic [hqV’lIstIk] a целостный, глобальный
emerge [I’mE:dZ] v появляться, выходить, выявляться
engage [In’geIdZ] v зд. привлекать
anticipation [xn»tIsI’peIS(q)n] n ожидание, предчувствие
cluster [‘klAstq] v собираться группами
bid [bId] v (bade, bid, bad; bidden, bid) добиваться, вести борьбу за что-либо
27
shortlist [‘SO:tlIst] n окончательный список (после исключения отсеявшихся)
crucial [‘kru:S(q)l] a решающий, ключевой, критический
flagship [‘flxg»SIp] n флагман, наилучший представитель, крупнейшее
учреждение
en route [«Pn’ru:t] фр. В пути, на пути, в дороге
irrelevant [I’relIv(q)nt] a лишний, ненужный, неуместный
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating:
«holistic» process; influence of technology; to plaster websites with irritating
ads; to promote the product,
Ex. 2. Translate the following word combinations, taken from the text:
Spiritual home of advertising industry, «time poor», to resist marketing
methods, blue-chip clients, a worldwide staff, to plaster websites with irritating
ads, «to spend time with the brand», «executive producers of ideas», to engage
consumers; to stay in touch with customers.
Ex. 3. Find word combinations in the text that can be translated in the following
way:
Глубокий спад; это едва ли может считаться продвижением вперед;
противостоять изменениям; развертывать компанию; привлекать клиентов;
городские покупатели; духовная родина рекламы; заполнять веб-сайты
раздражающей рекламой; быть в курсе того, что хочет клиент.
Ex. 4. Agree or disagree on the statements:
1. Changing the name of America’s biggest, and the world’s fourth-biggest,
advertising agency was not necessary measure.
2. After a deep slump, advertising spending is growing again.
3. Internet advertising is forecast to double in value within a few years.
4. To plaster websites with ads is a great the way forward.
5. Television is no longer at the centre.
6. Today’s consumers have more choice than ever, both in terms of goods
and media, and they are less tolerant than ever of the boring or irrelevant.
Ex. 5. Make up a dialogue. Work in pairs.
You discuss strengths and weaknesses of different media in advertising.
A. You support traditional forms of ads.
B. You think traditional forms are no longer at the centre of public’s attention.
Modern forms should be found and used.
28
Ex. 6. Make up an opinion poll. You research people’s attitude to adverts in the
Internet. After interviewing «buyers» prepare a report to your boss.
Ex. 7. Translate the sentences from English into Russian, paying special attention to the words from vocabulary notes.
1. The term balance of power refers to the relatively equal power capabilities
of rival states or alliances. 2. The country prospered, but conflicts over social
and military policy intensified. 3. Households and businesses have less of their
income to spend, they purchase fewer goods, and the economy tends to shrink.
4. Ancient Rome, which evolved from a city-republic to the seat of a world empire, greatly influenced the Western world. 5. Urbanization has proceeded rapidly since the 1920s. 6. The holistic approach of anthropological research can
provide insight into complex contemporary problems. 7. Industrialization began in the 19th century and a significant manufacturing sector emerged, especially after World War II. 8. Housing investment may increase in anticipation of future higher prices. 9. The winner was selected from a shortlist of six.
10. Two interrelated concepts, society and culture, are crucial to understanding
what makes humans unique. 11. In 1968 McDonald’s restaurants began serving
the Big Mac, a two-patty burger that became the company’s flagship product.
12. For a large number of people in modern societies, religion is neither good
nor bad but simply irrelevant.
Ex. 8. Translate the sentences from Russian into English, paying special
attention to the words from vocabulary notes.
1. На эту работу всегда ссылаются. 2. Эти две компании были конкурентами в течение многих лет. 3. Несмотря на политическую нестабильность,
экономика процветала. 4. Компьютеры становятся все меньше по размеру,
работают быстрее и становятся все дешевле. Оперативные системы постоянно развиваются. 5. Социальные реформы продвигаются очень медленно
из-за консерватизма правительства. 6. Только глобальный подход к решению экологических проблем может принести положительный результат.
До настоящего времени не появилось ни одной такой программы. 7. Ожидание будущих проблем изматывает человека иной раз больше, чем сама
проблема. 8. Список финалистов не был очень длинным. 9. Обдуманные
инвестиции и грамотное финансовое руководство – ключевые факторы
успеха фирмы. 10. Вы можете осмотреть ведущую фирму нашей компании. 11. Если он может хорошо выполнять работу, его возраст не имеет
значения.
Ex. 9. Comment on the following quotations:
• «Advertising is the principal reason why the business man has come to
inherit the earth.»
(James Randolph Adams)
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• «The art of publicity is a black art.» (Learned Hand, American jurist)
• «Advertising may be described as the science of arresting the human
intelligence long enough to get money from it.»
(Stephen Butler
Leacock)
• «Advertising is legalized lying.» (H.G. Wells)
• «No agency is better than its account executives.» (Morris Hite)
• «I have learned that trying to guess what the boss or the client wants
is the most debilitating of all influences in the creation of good
advertising.» (Leo Burnett)
• To advertisers: «Do not compete with your agency in the creative area.
Why keep a dog and bark yourself?» (David Ogilvy)
• «People don’t buy from clowns.» (Claude Hopkins)
Read and translate the text:
An alternative to Kyoto
A new plan to combat global warming
Summits of the Association of South-East Asian Nations (ASEAN) are not
known for suspense or surprises. But the regional club’s latest pow-wow, which
is due to conclude in Vientiane, Laos, on July 29th, involved plenty of both.
First, Myanmar’s military regime waited until the last minute to announce
that it would forgo ASEAN’s rotating chairmanship, and so spare the group
an embarrassing boycott. Then, at the ASEAN Regional Forum meeting, where
South-East Asian countries get together with other Asian and Pacific nations,
Australia agreed to sign a non-aggression treaty with the group in exchange for
invitation to yet another summit, where ASEAN hopes to start work on an East
Asian free-trade area. But the biggest bolt from the blue was the announcement,
by America arid five Asia-Pacific countries, that they had devised a new pact to
combat global warming.
The details of this non-binding «Asia Pacific Partnership on Clean
Development and Climate» are fuzzy. But it emphasises technology transfers to
reduce emissions of greenhouse gases, rather than the fixed targets and caps of
the Kyoto protocol, the UN treaty on climate change. Rich countries might help
poorer ones develop devices to cut carbon dioxide emissions from coal-fired
power plants, for example.
Two of the signatories of the new pact, America and Australia, have already
rejected the Kyoto agreement as too rigid. Two others, China and India, are not
bound by the protocol as it applies only to developed nations. Indeed, of the six
signatories to the new pact, only Japan and South Korea have formally ratified
Kyoto. In theory, therefore, the «partnership» could enormously extend efforts
30
to counter climate change. The countries concerned account for almost half the
world’s population, economic output and greenhouse emissions.
Environmentalists dismissed the deal as toothless. Many fear it will stymie
efforts to persuade developing nations to sign up to Kyoto by the target date
of 2012. The new pact’s members insist that it will complement Kyoto, not
supplant it. One Australian official claims that it is designed to reduce emissions
faster than Kyoto would have. His country has devised a copper-bottomed plan
to convince sceptics: another summit, to be held in Adelaide in November.
Vocabulary
suspense [sq’spens] n напряженный интерес, взволнованность, тревога
ожидания
pow-wow [‘paV»waV] n разг. «говорильня», (шумное) совещание, собрание,
конференция, встреча
chairmanship [‘tSeqmqnSIp] n должность (обязанности) председателя
forgo [fO:’gqV] v (forwent, forgone) отказываться, воздерживаться от чеголибо
treaty [‘tri:tI] n договор, соглашение
bolt [bqVlt] n зд. молния, удар грома
arid [‘xrId] a засушливый, бесплодный
devise [dI’vaIz] v изобретать, разрабатывать
binding [‘baIndIN] a обязывающий, обязательный, связующий
fuzzy [‘fAzI] a неопределенный, неясный, расплывчатый
greenhouse [‘gri:nhaVs] n теплица, оранжерея
device [dI’vaIs] n устройство, приспособление, прибор
emission [I’mIS(q)n] n выброс, испускание, излучение
signatory [‘sIgnqt(q)rI] n подписавшаяся сторона
reject [rI’dZekt] v отвергать, отклонять, не принимать, не признавать
counter [‘kaVntq] v противостоять, противодействовать
environmentalist [In»vaI(q)rqn’ment(q)lIst] n сторонник защиты окружающей среды
dismiss [dIs’mIs] v отвергать, отбрасывать, подводить итог
stymie [‘staImI] v загнать в угол, поставить в безвыходное положение
complement [‘kPmplIment] v добавлять
supplant [sq’plQ:nt] v вытеснять, выживать, занимать чье-то место
copper-bottomed [«kPpq’bPtqmd] a надежный, правдивый, платежеспособный
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Summit; military regime; treaty; free-trade area; partnership; global warming.
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Ex. 2. Translate the following word combinations, taken from the text:
not to be known for suspense or surprises; latest pow-wow; fixed targets;
embarrassing boycott; to sign a non-aggression treaty; in exchange for
invitation; arid countries; signatories to the new pact; to combat global
warming; to reduce emissions of greenhouse gases; to devise a copper-bottomed
plan to convince sceptics.
Ex. 3. Find word combinations in the text that can be translated in the following way:
«шапка» протокола; зона свободной торговли; гром среди ясного неба;
разработать новое соглашение; детали неясны; сократить выбросы
углекислого газа; электростанция; быть не связанным протоколом; это
касается только развитых стран; попытки справиться с изменением
климата; намеченная дата; загубить на корню все попытки; проводить
встречу на высшем уровне.
Ex. 4. Answer the following questions. If you don’t know the answers to statistical questions, look them up in the Appendix # 1.
1. What is the Kyoto Protocol?
2. What is climate change?
3. What do greenhouse gases do?
4. How many degrees is global warming expected to raise temperatures?
5. What is the Intergovernmental Panel on Climate Change (IPCC)?
6. Would a temperature increase of several degrees really be significant to
global climate?
7. Do extreme events such as heat waves and floods have anything to do
with global warming?
8. What is the cause of sea level rise?
9. How many inches has the sea level risen so far?
10. How long does carbon dioxide remain in the atmosphere?
11. Where are we heading with atmospheric carbon dioxide?
Ex. 6. Make up a dialogue. Work in pairs.
You are discussing the dangers of global warming.
A. You admit that there is a great problem, but we can’t stop the progress
and everything is inevitable. Or, perhaps, there isn’t any problem at all.
All that fuss is made by mass media to take people’s attention away from
gut issues, such as jobs and housing.
B. You trust everything you have read about global warming and life of
people is at stake. You think that well-organised steps of all countries
can stop the disaster.
32
Ex. 7. Deliver your speech:
Prepare a speech on your personal vision of the problem of global climate for
the round table of a conference.
Ex. 8. Translate the sentences from English into Russian, paying special attention to the words from vocabulary notes.
1. Mass media created little suspense over the selection of a candidate. 2. All
members are formally equal, with chairmanship of the collective body rotating
every six months. 3. In 1991 the signatory nations of the Antarctic Treaty agreed
to a 50-year moratorium on commercial mining activity. 4. Vast areas of Central
and Southwest Asia are arid or semiarid. 5. The economic advisers devised a
plan to stabilize the economy by controlling wages and reducing government
spending. 6 Scientists are trying to reduce emissions of existing vehicles and
are testing a device that uses electrons to nullify the noxious components of
diesel exhaust. 7. Thе agreement was rejected by parliament. 8. The European
parliament holds some budgetary powers; in theory it is able to reject the whole
budget. 9. Critics dismiss the idea of world government as an impractical dream.
10. Their probes were stymied by technical malfunctions.
Ex. 9. Translate the sentences from Russian into English, paying special attention to the words from vocabulary notes.
1. ООН потребовала вывести войска из страны, и после томительного
ожидания, они сделали это. 2. Собрание началось на два часа позже
под председательством вице президента компании. 3. В прошлом году
эти страны подписали соглашение о сотрудничестве. 4. Климат в этом
регионе холодный и ветреный зимой и сухой летом. 5. Модель, которую
он разработал, состояла из пяти частей. 6. Фирма специализируется
на выпуске электронных приборов. 7. США не было среди стран,
которые подписали соглашение об ограничении токсических выбросов.
8. Предложение о проведении повторных выборов было отклонено. 9. Его
идеи были отвергнуты современниками. 10. Переговоры зашли в тупик.
Ex. 10. Comment on the following quotations:
• «If you asked me to name the three scariest threats facing the human race,
I would give the same answer that most people would: nuclear war, global
warming and Windows.» (Dave Barry American Writer and Humorist
best known for his weekly newspaper column)
• We are about half a century away from being ecologically and economically
bankrupt because of global warming (Andrew Simms)
• Absent the rapid mobilization of climate advocates at every level – and
the pooling of all their energy, creativity, and resources into a coordinated,
33
no-holds-barred campaign – we will soon be crossing the threshold into
climate hell. (Ross Gelbspan)
• Everybody talks about the weather, but nobody does anything about it.
(attributed to Mark Twain)
• The world’s got a pretty simple choice here. It’s between President Bush
and our grandchildren. (Australian Senator Bob Brown calling for
a U.S. oil boycott because of President George W.Bush’s refusal to
sign the Kyoto climate change treaty)
• The climate system is being pushed hard enough that change will become
obvious to the man in the street in the next decade. (James E. Hansen,
director of NASA’s Goddard Institute for Space Studies quoted in
Newsweek, 22 Jan 96)
• Global warming ... may be a plaintiff lawyer’s dream. And it’s interesting,
in a perverse way, to imagine how a jury in 2050 might react to some
of the recent industry-backed studies minimizing the dangers of global
warming. I suspect future jurors will not be amused. (David Ignatius of
the Washington Post, 18 Aug 99)
34
UNIT III.
«Where the whole man is involved there is no work.
Work begins with the division of labor»
(Marshall Mcluchan)
THE INTERNATIONAL DIVISION OF LABOUR
INSIGHTS INTO HISTORY
During the early fifteenth century, most economic activity in the world was
highly localized. People ate, drank, worked, and used products that came from
close to home. The civilized nations, according to the history, were those that
dwelt round the coast of the Mediterranean Sea – the greatest inlet that is known in
the world. The Mediterranean Sea had neither tides nor, consequently, any waves
except those that were caused by the wind only. It was extremely favorable to
the infant navigation of the world due to the smoothness of its surface and the
proximity of its neighboring shores, when, from their ignorance of the compass,
men were afraid to quit the view of the coast and plunge into the boisterous waves
of the ocean. To sail out of the Straits of Gibraltar and pass beyond the pillars of
Hercules was considered as a wonderful and dangerous exploit of navigation. For
a long time the Phoenicians and Carthaginians, the most skilful navigators and
shipbuilders of those old times, were the only ones who dared to cross the ocean.
Goods or people from other lands were rare and came from either travelers, or
traders, or armies. A Ming Dynasty Chinese emperor built a vast fleet that sailed
as far as East Africa, returning with zebras, giraffes, and other wild animals.
Armies returned home with plundered goods and slaves from the conquered lands.
However, danger and uncertainty of long trips limited exchanges, and most people
remained untouched by events in other lands.
Of all the countries on the coast of the Mediterranean Sea, Egypt seems to
have been the first in which both agriculture and manufactures were cultivated and
improved to any considerable degree. The Nile carried commerce into different
parts of the country – from the big towns to the distant villages and farmlands.
The extent of this inland navigation was probably one of the main causes of the
early prosperity of Egypt. In Bengal the Ganges and several other great rivers form
a great number of navigable canals in the same manner as the Nile does in Egypt.
The improvements in agriculture and manufactures seem likewise to have
been of very great antiquity in the provinces of Bengal and in the East Indies. In
the Eastern provinces of China too, several great rivers form, by their different
branches, a multitude of canals, and by communicating with one another afford
an inland navigation much more extensive than that either of the Nile or the
Ganges, or perhaps than both of them taken together. It is remarkable that neither
the ancient Egyptians, nor the Indians, nor the Chinese, encouraged foreign
commerce but derived their great wealth from this inland navigation.
35
It was Columbus who in 1492 started the transformation of who does what in
which part of the world by beginning the large-scale extraction of gold and other
riches of the Indies when he sailed into the Western Hemisphere in a mistaken
quest for an eastern route.
During the following four – five centuries the rich states England, France,
Spain, Portugal, Belgium, Germany, the Netherlands, Italy and later the USA and
Japan rearranged economic activity in the world: Persia, India, the Philippines, and
other lands had quite advanced textile centers that were undercut by colonial trade.
Cheaper manufactured products from Europe flooded into the colonies which, in turn,
were pressed to shift more and more land and people to the production of minerals
and agricultural products for export. As industry flourished in Europe, so too did
the demand for copper, tin, and other minerals from Latin America and Africa.
To meet the requirements of England’s textile mills for cotton and other natural
fibers, and the European demand for the luxuries of sugar, coffee, cocoa, tea, and
bananas, plantations growing these commodities were carved from forests around
the world. Sugar was the greatest early destroyer, beginning with the Portuguese
leveling of Brazilian forests in the 1530-s and followed by other colonizers across
the Caribbean. Hence began the destruction of the world’s great tropical rain forests.
Colonial trading companies directed much of this traffic until the nineteenth century,
when the private Japanese, European, and U.S. firms that are the forbears of some of
today’s largest global corporations and banks were incorporated.
When World War II broke out across Europe and Asia, the world economy
reflected a rather uniform division of labor. In the richer countries of Europe and
in the USA, Canada, Japan, and Australia, large corporations sourced the bulk of
the world’s minerals and agricultural commodities from countries and colonies
of Latin America, Africa, and Asia.
Today, this basic division has changed radically. While the richer countries
of Europe and North America still export industrial products, the poorer nations
are suppliers of simple manufactured goods, raw materials, services and tourism.
Besides, despite a relatively high level of industrialization, most of 26 former
Soviet bloc nations are finding it difficult to compete for foreign investment with
the highly developed countries due to the rapid shift from socialism to deregulated
market economies. On top of everything, about sixty countries, mostly all in
Africa, are so poor that their economic contacts with the rest of the world are
pretty much limited to minimal trade and investment and dwindling foreign aid.
THE DIVISION-OF-LABOR PHENOMENON
Individual and national specialization
The phenomenon of the division of labor will be easily understood by
considering how it is revealed in some particular manufactures. To take an
36
example, therefore, from a very trifling manufacture, but one in which the
division of labor has been distinctly noticed – the trade of a pin-maker. A worker,
neither educated to the business nor acquainted with the use of the machinery
employed in it, «could make one pin a day, and certainly could not make
twenty.» But now the whole work is divided into a number of operations. Adam
Smith in «The Wealth of Nations» estimates that ten people, working together in
a factory, could produce 48 000 pins a day.
That would be a lot more than these same ten people could produce while
working alone. Smith describes how pin-making has become specialized: «One
man draws out the wire, another straightens it, a third cuts it, a fourth points it,
a fifth grinds it at the top for receiving the head»; to make the head and put it
on is a separate business; to whiten the pin is another one. It is even a peculiar
trade to pack the ready-made pins. Thus the important business of making a pin
is divided into many distinct operations. There are three obvious advantages to
producing pins in this manner. First, the workmen get good at their jobs; second,
they don’t waste time shifting from one task to another; third, the factories can
buy specialized and expensive equipment since it will be fully utilized.
The separation of different trades and employments from one another is
generally resulted in the highest degree of improvement. The labor which is
necessary to produce any finished good is (almost always) distributed among
a great number of «hands.» The specialization encourages a proportional increase
of the labor productivity. In every other manufacture, the effects of the division
of labor are similar to what they are in this very trifling one; though, in many
of them, the labor can neither be so much subdivided, nor reduced to so great
a simplicity of operation. The nature of agriculture, for example, admits not so
many subdivisions of labor as manufactures do. It is impossible to separate so
entirely the business of the grazer from that of the corn-farmer as the trade of
the carpenter is commonly separated from that of a smith. A country carpenter
works in every sort of job that deals with wood. A country smith is busy with
iron. The first is not only a carpenter, but a carver in wood, as well as a cabinet
(a wheel, a plough, a cart, a wagon) maker. The employments of the smith are
still more various.
This impossibility of making so complete and entire a separation of all the
different stages of labor employed in agriculture is perhaps the reason why the
improvement of the productive powers of labor in this branch does not always
keep pace with the improvement in manufactures.
In agriculture, the labor of the rich country is not always much more
productive as it commonly is in manufactures. The corn of Poland is as cheap as
that of France. Moreover, the corn of the rich country may come even cheaper
to market than that of the poor. The corn of France in the corn provinces is as
good in quality and is nearly of the same price as the corn of England; however,
37
in opulence France is perhaps inferior to England. The corn-lands of England,
however, are better cultivated than those of France, and the corn-lands of France
are said to be much better cultivated than those of Poland. But if the poor
country, despite the inferiority of the cultivation, is able, to some extent, rival the
rich in the quality and value of its corn, it can pretend to no such competition in
manufactures; unless those manufactures are suited a climate, soil and location
of the rich country. The silks of France are better and cheaper than those of
England, because the silk manufacture is not appropriate for the climate of
England as that of France. But the coarse woolens of England are beyond all
comparison superior to those of France and much cheaper too. In Poland there
are said to be scarce any manufactures of any kind, except a few of household
manufactures, without which no country can well subsist.
The division of labor is not originally the effect of any human wisdom,
which foresees and provides the public wealth. Specialization is as necessary
as a certain propensity of a human nature to exchange one thing for another.
Nevertheless, specialization is useful only if there is a demand for your specialty.
If there is a demand for what you make or do, you can trade with someone who
has what you want. This is called barter. Today, of course, we use money to
facilitate exchange. Instead of finding someone to trade with, you can simply
buy what you want and sell what you produce. When you use money, you can
pay for an item and be out of the store in a minute.
Barter, however, can get pretty complicated. You could spend all day trying
to think of something that you have that the storekeeper will accept as payment.
Whoever offers to another a bargain of any kind should observe the rule: «Give
me that which I want, and you will have this which you want.» It is in this manner
that we obtain from one another the far greater part of those goods which we stand
in need of. It is not from the benevolence of the butcher, the brewer, or the baker
that we obtain food, but from our regard to their own interest. We appeal not to
their humanity but to their own interest, and never talk to them about our own
necessities but of their advantages. Although this principle ultimately provides
us with all the necessities of life, it neither does, nor can provide us with the
bulk of human wants which are supplied by treaty, by barter, and by purchase.
Only by treaty, by barter, and by purchase we obtain all the necessary goods
from one another; so it is this same trucking disposition which originally creates
the division of labor. In a tribe of hunters or shepherds a particular person makes
bows and arrows, for example, with more dexterity than any other. He frequently
exchanges them for cattle or for venison with his companions. Above all, he
finds it reasonable. From a regard to his own interest, therefore, the making of
bows and arrows is becoming his chief business.
There are, however, some sorts of industry, even of the lowest kind, which
can be carried on nowhere but in a market town. A porter, for example, can find
38
employment and subsistence in no other place – a village is too little space for
him. When the market is very small, no person can have any encouragement to
dedicate himself entirely to one employment. Only the awareness of being able
to exchange all that surplus part of the production of your own labor, which
is over and above your own consumption, encourages you to apply yourself to
a particular occupation, and to cultivate and bring to perfection whatever talent
or genius you may possess for that particular business. Therefore, just as it
pays for individuals to specialize and trade, it also pays for national basis we
specialize and trade unless there is a big enough market in which to buy and sell
the goods and services we produce. The basis for international trade is national
specialization.
International specialization
Trade markets
We are all traders. For example, as workers we trade our time and skills for
the goods and services our wages buy. If we go from individual specialization
and trade to national and international specialization and trade, we’ll see that
what makes sense on an individual basis also makes sense internationally.
Different nations specialize in the production and services for which their
resources are best suited. Such an allocation of the world’s resources lends
itself to the efficient production of goods and services, – production towards
the satisfaction of human wants. Thus national specialization is the basis for the
international trade.
In studying international trade, remember that what is true about trade is true
about international trade. These truths are:
––Trade is mutually beneficial. Both sides expect profits, or they would not
trade.
––Nations exports goods in order to buy imports. Exports are what you sell
and imports are what you buy.
––The cheaper imports are, the better off a nation is.
––Two nations should trade whenever the before-trade relative prices of
goods are different. Relative price of Good A is the amount of Good B
that has to be given up to get one more unit of Good A:
Relative price of A = P (a) / P (b)
Where P (a) is the price of Good A and P (b), the price of Good B
A nation should compare its relative prices before trade. The nation should
export those goods that it can produce at a lower relative price than other nations
39
and import those goods that it would have to produce at a higher relative price.
This is the law of comparative advantage.1
There are forty-seven countries in Latin America, Africa and Asia that still
gain 30% or more of their export earnings from one or two agricultural or nonoil mineral products:
Latin America &
Caribbean
Bahamas
Belize
Chile
Cuba
Dominica
Guadeloupe
Guyana
Honduras
Jamaica
Nicaragua
Panama
Paraguay
Saint Lucia
Saint Vincent
& the Grenadines
Suriname
Products
Africa &Asia
Products
shellfish
sugar / fruit
copper / metal ores
sugar
fruit / stone
sugar / fruit
gold / sugar
fruit / coffee
metal ores
Coffee / shellfish
fish / fruit
seeds / cotton
fruit
fruit / nuts
Benin
Botswana
Burkina Faso
Burundi
Ivory Coast
Ethiopia
Gambia
Ghana
Guinea
Kenya
Malawi
Mali
Mauritania
Mozambique
Namibia
Niger
Reunion
Rwanda
Senegal
Seychelles
Sierra Leone
Somalia
Sudan
Uganda
Zambia
Zimbabwe
Burma
Fiji
Maldives
Papua New Guinea
Solomon Islands
Tonga
cotton
pearls / stones
cotton
coffee
cocoa / coffee
coffee
seeds
cocoa / gold
metal ores
tea / coffee
tobacco
gold
iron ore
aluminum
pearl / stones
uranium
sugar
coffee
fish/vegetable oil
fish
precious stones
live animals
cotton /vegetables
coffee / fish
copper
tobacco / cotton
wood / natural gas
sugar / gold
fish
metal oils
wood
vegetables
metal ores
* Anderson S. Field Guide to the Global Economy. The New Press. 2005, – P. 10–11
1 This term – comparative advantage – was developed by the English economist David Ricardo in
1817 as a forceful rebuttal against import tariffs known as the Corn Laws, which heavily taxed imports
of foreign-grown grain at the time. These Laws kept the price of grain high, so the nobility that owned
the vast majority of farmland favored keeping them. Naturally, the poor were opposed because the
Laws drove up the price of their basic food supply – bread. The key insight of comparative advantage
is that the proper measure of cost when considering whether you should produce one good or the other
isn’t how many hours of labor input it takes to produce it. Instead, the true cost-efficiency depends on
how much production of one good you have to forgo for the manufacturing a unit of the other good.
Having an absolute advantage means that you can make something at a lower cost as measured
in inputs. However, what matters in life are not inputs but outputs – the things that people actually
want to consume.
40
There are in Africa none of those great inlets, such as the Baltic, Adriatic or
the Mediterranean seas in Europe, and the gulfs of Arabia, Persia, India, Bengal,
and Siam in Asia, to carry maritime commerce into the interior parts of that great
continent. Nevertheless, the European demand for sugar, coffee, tea and other
human wants provides great opportunities for these countries to expand their
trade markets allover the world.
Most countries have lifted barriers to trade in goods and services over the
last several decades. Multinational corporations spread their activities across
the world. Export and import shares of output have increased considerably
in practically all industrial sectors. A growing percentage of world trade is
becoming intra-industry trade and intra-firm trade by transnational firms. New
technologies have made trade increasingly important to the world economy
which is becoming a single economic unit
Labor markets
Trade is the most obvious way in which labor markets are linked across the
borders, since the output of labor in one country enhances its consumption in
some other country. Therefore, the more of the world’s production is traded,
the more interdependent economies become. The more of a nation’s product
is traded, the more national labor market depends on consumption patterns
elsewhere in the world economy, and, therefore, more rapidly should adjust
to international competition through trade. Such adjustment will reconstruct
national patterns of industrial specialization and, as a consequence, international
division of labor wrought through trade. The burden of such adjustment will be
put on the highly developed countries, and it will cause the effect of comparative
advantage and complementary division of labor in which, for example, the USA
buys more Mexican textile products while selling more of its computers to
Mexicans provides more disposable income as a desirable outcome.
However, while running the complementary transaction in the crossborder division of labor, it is difficult to observe high costs and low skills
simultaneously. Therefore, it is the unskilled workers in developed countries
who are most vulnerable to the expansion of international trade.
Thus, in spite of its advantage specialization sometimes results in alienation.
Some factory workers, for example, have become little better than cogs in a huge
industrial wheel. There are workers whose sole function for eight hours a day is
to tighten bolts or place front right fenders on auto bodies. Understandably, these
people grow bored. Some express their unhappiness by frequent absences, while
others actually sabotage some of the products they are assembling.
Specialization leads to higher productivity, but only when not carried too far.
Attempts have been made in Western Europe, particularly in Sweden, and Japan,
41
as well, to involve the worker in making a larger segment of the product. Some
degree of specialization is sacrificed in an effort to bolster employee morale.
Although these new production modes have been successful, American factories
have only a few tentative efforts in this area.
On the other hand, moreover, the rapidly rising quality of the workforce in
many developing countries, together with their relatively low wages and perks
has been an important factor behind the relocation of many jobs from developed
to developing countries.1
This rising quality of labor relates to integrated international production in the
following way: the quality of labor moves much further up the list of all criteria
of location advantage, when the location decisions of the integrated producer
are driven by the specialization of individual added value activities which are
focused on the human capital. With integrated production, the firm transfers
only specific value-adding activities, and the integrated producer’s competitive
advantage relies more on the transfer of best practice, managerial, organizational
and human-resource innovation. If earlier US firms operating in Mexico had to
encounter lower costs alongside with a lower productivity, nowadays’ forwardlooking investors have realized that the still low-cost Mexican environment is
not presented an insurmountable obstacle to achieving word-class productivity
and quality. Thus, the integration of production allows firms to take advantage
of the rising quality of labor in developing countries.
READING COMPREHENSION
1. What were the most civilized nations of the ancient times?
2. Who started the transformation of «who does what in which part of the world»?
3. How would you describe the division-of-labor phenomenon?
4. How might specialization affect the manufacturing?
5. How does agricultural labor differ from the industrial one? Give examples.
6. What do we call barter? How is barter connected with human wants?
7. Why should a nation take into account product’s relative price before the trade?
8. What factors are the most significant in the international trade? How does the law
of comparative advantage work?
9. What benefits do we get from specialization? Is specialization always useful?
10. How important is national specialization in the international division of labor?
What’s the interdependence of trade markets and labor markets?
1 For example, China and Brazil university graduates rank third and fifth in the world among the
science graduates; Brazil, China, Mexico, Republic of Korea and the Philippines all come ahead of
France and the United Kingdom in the number of engineering graduates.
42
TEXTS FOR
DISCUSSION
Read and translate the text:
Boom and bust at sea
How long can the good times last for the shipping industry?
If trade is the lifeblood of the world economy, then the ships that perform
the mundane task of transporting goods and raw materials from where they
are produced to where they are wanted are the red corpuscles. In 2004, the
world’s fleets carried around 90% of total global exports worth $8.9 trillion,
largely unnoticed. Shipping firms are attracting the attention of investors as
never before.
Shipping firms made a total profit of $80 billion in 2004 an all-time high,
according to Martin Stopford, managing director of Clarksons, the world’s
leading shipbroker. The boom is the result of fast-growing world trade, much
of it attributable to China’s rapid economic expansion. This has created a vast
appetite for raw materials in the country, and ever more manufactured goods
to ship back to foreign markets. In 2004 the rate of growth of global trade in
goods – many of them carried by sea at some point – was 9%, compared with
5% in 2003 and 3.5% in 2002.
Not surprisingly, such strong demand prompted a sharp rise in shipping rates.
Rates for transporting oil in very large crude carriers (VLCCS) hit an average
of $86,000 a day in 2004, more than twice their level in 2001-03. The cost of
shipping iron ore and coal also hit a peak in 2004. The Baltic Exchange’s dry
index–covering bulk-cargo rates on the world’s 23 busiest sea routes – hit 6,200
in 2004, up from below 900 in 2001. Container shipping and other cargo rates
also increased.
Investors have noticed bigger profits, and ship owners have been cashing in
with an enthusiasm that suggests they are not entirely convinced that the good
times will last. Peter Shaerf of AMA Capital Partners, an investment bank, points
out that in 2000 publicly traded tanker firms had a market capitalisation of just
$2.5 billion; today the figure is nearer $20 billion. The stock-market value of
firms operating bulk carriers (ships that transport raw materials such as ore, coal
and grain) has soared from almost nothing to $5 billion in the same period.
Most of the recent Initial public offerings (IPOS) have involved bulkcarrier operators. Theirs is a highly fragmented business, consisting of perhaps
1,300 firms around the world. Typically, these share offerings are put together by
a Greek family-shipping concern, which parcels together some assets and sells
43
a minority stake through companies registered in the Marshall Islands. This
small archipelago in the Pacific, equidistant from Hawaii, Japan and Australia,
is much prized among ship-owners for its light regulatory touch.
Stormy weather ahead?
The uninspiring track record of some ship-owners is but a squall compared
with the storms that may be gathering over the horizon. The recent bumper
returns from shipping have prompted a ship-building boom. As a result, an
armada of new ships is joining the world’s fleets just as the rate of growth of
world trade may be slowing. According to the Economist Intelligence Unit,
a sister company of The Economist, the rate of growth of world trade in goods is
set to slow, albeit to a still respectable 6,6% this year and 7.0% in 2006.
Vocabulary
lifeblood [‘laIfblAd] n источник жизненной силы, энергии
mundane [mAn’deIn] a земной, вселенский
red corpuscles [‘kO:pqs(q)ls, kO:’pAs(q)ls] n красные кровяные тельца
all-time [‘O:ltaIm] a небывалый, непревзойденный
attributable [q’trIbjVtqb(q)l] a могущий быть приписанным (отнесенным)
к чему-либо
prompt [prPmpt] v побуждать, толкать, внушать (мысль), подсказывать
crude carrier [kru:d’kxrIq] n нефтяной танкер
ore [O:] n руда
bulk cargo [bAlk ‘kQ:g|qV] насыпной или наливной груз
grain [greIn] n зерно
soar [sO:] v взлетать, стремительно повышаться
asset [‘xset] n имущество, средства, активы (pl.)
minority stake второстепенное участие в капитале, меньшая доля
equidistant [«i:kwI’dIst(q)nt] a равноудаленный
uninspiring [«AnIn’spaI(q)rIN] a не создающий стимула, скучный,
неинтересный
squall [skwO:l] n шквал
bumper [‘bAmpq] n что-то очень большое, крупное
albeit [O:l’bi:It] cj хотя, даже, тем не менее
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Raw materials; a shipbroker; a crude carrier; bulk-cargo; bumper returns; shipbuilding boom.
44
Ex. 2. Answer the following questions:
1. Why is trade called the lifeblood of the world economy?
2. What do they compare ships with in the article? Why?
3.  Why are shipping firms attracting the attention of investors now?
4. What is the reason of the shipping and shipbuilding boom?
5. What figures show best of all that shipping is a highly profitable business?
6. Why are Marshall Islands much prized among shipowners?
Ex. 3. Make up a discussion. Work in pairs.
You are businessmen and discussing ways of investing money.
A. You support the idea to invest money into shipbuilding.
B. You think that IT technology is a better idea.
Ex. 4. Translate the following word combinations, taken from the text:
the world’s leading shipbroker; fast-growing world trade; rapid economic
expansion; a vast appetite for raw materials; busiest sea routes; to soar from
almost nothing; light regulatory touch; an armada of new ships.
Ex. 5. Find word combinations in the text that can be translated in the following
way:
Уровень роста мировой торговли замедляется; обыденная задача; небывало
высокий общий доход; быстрорастущая торговля; готовые изделия;
меньшая доля; огромные прибыли от перевозки грузов.
Ex. 6. Translate the sentences from English into Russian, paying special
attention to the words from vocabulary notes.
1. Buddhism taught that enlightenment would lead the individual to reject
mundane affairs. 2. The number of economic crimes declined about 7 percent,
but it is unclear whether it is attributable to the new law. 3. Before the
advertising industry became well organized, the sharp and unethical practices
of some advertisers prompted the passing of many laws and legal restrictions by
the federal, state, and municipal governments. 4. Airplanes do not carry heavy
bulk cargo such as coal, iron ore, grain, and oil, so air carriers handle only a tiny
percentage of the total weight of worldwide cargo. 5. Unemployment in those
three years soared from 3.2 percent to 24.9 percent, leaving more than 15 million
people out of work. 6. Assets and liabilities together determine the wealth of an
individual, a firm, or a nation. 7. RH ltd. moved into electronic publishing in the
mid-1990s, buying a minority stake in Humongous Entertainment, a software
publisher. 8. Today most authorities agree that the syndrome is real, albeit
unexplained.
45
Ex. 7. Translate the sentences from Russian into English, paying special
attention to the words from vocabulary notes.
1. В современном искусстве художники часто используют обыденные
предметы. 2. Небывалые успехи предприятия можно отнести к тому, что
была проведена большая работа по обучению персонала. 3. Энергетический
кризис продемонстрировал европейским странам, насколько они зависимы
от зарубежной нефти, и побудил их искать другие пути получения энергии.
4. Потребовалось несколько танкеров, чтобы доставить груз заказчику.
5. Доходы сильно повысились, когда компания продала не приносящее
прибыль имущество. 6. Реклама этой компании настолько неинтересна, что,
похоже, что они экономят на ней деньги. Думаю, они понесут огромные
потери в недалеком будущем. 7. Спрос на их услуги взлетел, как шквал,
в прошлом году, хотя причина его не была ясна.
Ex. 8. Deliver your speech:
You are an economic expert who has researched the shipping market and are
trying to forecast its future.
Read and translate the text:
Might the Ruling Party Reform South Africa’s
Rigid Labour Laws?
Five years ago South Africa’s president admitted that his country’s labour
laws might have had «unintended consequences». Last week his party issued
a paper making explicit what those consequences might have been. It suggested
that South Africa’s massive unemployment – over 40%, by one measurer – could
be reduced if the labour market were more flexible.
For the African National Congress (ANC), a movement with close ties to
the trade unions and the South African Communist Party, this is radical stuff.
To South African businesses, which have complained for years about overregulation, it is a no-brainer, firing is such a costly headache that many prefer
not to hire in the first place. Centralised collective bargaining – which allows
large companies and trade unions to agree on pay and working conditions and
then impose their standards on smaller firms in the same industry – straggles
the little guys before they have a chance to grow big. Minimum wages have
been growing faster than workers’ productivity.
Measuring joblessness is both difficult and sensitive. Rigid labour laws push
people out of formal employment, but not necessarily into complete idleness.
Labour brokers, short-term contracts and black-market labour have flourished.
46
According to Andrew Leyy, a labour consultant, between a third and a fifth of
jobs are informal. In sectors such as textiles, the proportion could be as high as
90%. The president argues that if unemployment statistics were correct, «nobody
could possibly have missed the millions that would be in the streets and village
paths actively looking for work».
Nonetheless, even at the lowest estimates, unemployment is a big social
problem. The ANC has floated a few ideas for easing it. It suggests reducing
the «hassle factor» in hiring, though it does not explain how, and allowing
some exemptions from the toughest rules, perhaps for young workers, or for
those working in export-processing zones, small businesses or labour-intensive
industries.
Leftists are livid. The main union body, the Congress of South African
Trade Unions (Cosatu) says joblessness has nothing to do with labour laws.
The problem, it says, is that businesses are not trying hard enough to create
jobs. Zwelinzima Vavi, Cosatu’s general secretary, points out that half of tradeunion members earn less than 2,500 rand ($380) a month. «We have got low
pay, and we’re still not getting the jobs,» he says. The unions also gripe about
trade liberalisation and the strength of the rand. They have launched a campaign
urging clothes shops to stock at least 75% locally-made goods.
Cosatu is already at odds with the ANC and the government over several
issues, such as Zimbabwe. AIDS and the way «black economic empowerment»–
the policy of redistributing wealth into black hands – has enriched only a lucky,
politically connected few. But this issue trumps all others. Cosatu will fight to
defend what it sees as its members’ rights. How far the government dares to
liberalise the labour market will be an indication of how much the South African
left still counts.
Vocabulary
unintended [«AnIn’tendId] a непредусмотренный, непредумышленный,
непреднамеренный
consequence [‘kPnsIkwns] n последствия, результат, вывод, значение
explicit [Ik’splIsIt] a ясный, точный, определенный, детальный
over-regulation [‘qVvq «regjV’leIS(q)n] n то, что перегружено правилами и
законами
no-brainer [nqV breInq] n разг. то, что совершенно не обдумано
bargaining [‘bQ:gInIN] n эк. ведение переговоров
impose [InI’pqVz] v навязывать, возлагать, обманывать
straggle [‘strxg(q)l] v отставать, отрываться от группы
rigid [‘rIdZId] a жесткий, суровый
nonetheless [«nAnDq’les] adv тем не менее, все же
47
hassle [‘hxs(q)l] v разг. затягивать время, тратить усилия на что-либо,
докучать
exemption [Ig’zempS(q)n] n освобождение, льгота, привилегия
leftist [‘leftIst] n полит. член левой партии, левый
livid [‘lIvId] a разг. разозленный, злой; багровый
gripe [graIp] v зд. выражать недовольство, ворчать, жаловаться
urge [E:dZ] v побуждать, заставлять, убеждать
to be at odds with smb. – не ладить, быть в плохих отношениях с кем-либо
empowerment [Im’paVqmqnt] n юр. доверенность, полномочие
trump [trAmp] v превзойти, побить
dare [deq] v отваживаться, иметь наглость, сметь
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Rigid labour law; labour market; collective bargaining; to liberalise the labour
market; formal employment; leftist.
Ex. 2. Translate the following word combinations, taken from the text:
Costly headache; complain about over-regulation; to agree on pay and working
conditions; impose their standards on smaller firms; to straggle before they
have a chance to grow big; minimum wages; workers’ productivity; labour
laws; complete idleness; at the lowest estimates; hassle factor; exemptions from
rules; labour-intensive industry; gripe about trade liberalisation; to liberalize
the labour market.
Ex. 3. Find word combinations in the text that can be translated in the following
way:
Усиление национальной валюты; безработица (2 варианта); быть
в плохих отношениях с кем-либо; экономические полномочия; снимать
ограничения с рынка труда; политика перераспределения; выражать
недовольство чем-либо; навязывать свои нормы другим фирмам; огромная
головная боль; трудовое законодательство; ничего не имеет общего
с чем-то; по самым низким подсчетам; придти к соглашению по поводу
оплаты труда.
Ex. 4. Make up a dialogue. Work in pairs.
A. You are a member of the Government. You support rigid labour laws.
B. You are a member of opposition. You support the idea of liberalization of
labour market.
48
Ex. 5. Deliver your speech:
Make up a speech for African National Congress where you describe the
difficult situation of the labor market in South Africa and propose a scheme
how to improve it.
Ex. 6. Translate the sentences from English into Russian, paying special
attention to the words from vocabulary notes.
1. Economy cannot be reorganized by simple schemes without unintended
consequences. 2. Rising sea levels have catastrophic consequences for coastal
Asian countries. 3. The Employment Act gave the government an explicit
responsibility for promoting maximum employment. 4. In the U.S. the 8-hour
day was achieved primarily not through legislative enactment but through
collective bargaining by labor unions and employers. 5. Traditional Muslim
custom imposes limits on women’s activities outside the home. 6. Vast numbers
of people work rigid schedules for long hours in indoor offices, stores, and
factories. 7. The states’ exemption laws vary widely in their generosity. 8. Leo
Tolstoy urged people to live according to the dictates of conscience, which
meant practicing universal love and living as far as possible by their own
labor.
Ex. 7. Translate the sentences from Russian into English, paying special
attention to the words from vocabulary notes.
1. Суд признал, что действия обвиняемого были непредумышленными.
2. Необдуманные реформы стали причиной ужасных последствий.
3. Группа разработала детальную программу по улучшению
благосостояния людей. 4. Из-за войны дальнейшие переговоры были
приостановлены. 5. Некоторые развитые страны навязывают свою
политику развивающимся странам с помощью экономических рычагов.
6. Многие критиковали жесткую и авторитарную систему управления.
7. Для этой группы населения существуют некоторые привилегии.
8. Он заставил их подписать соглашение.
Ex. 8. Answer the following questions:
1. What is the unemployment rate in our country at the moment?
2. Who does it (unemployment) affect the most? (young people, women,
(non) educated people, immigrants etc.)
3. How big a problem is it considered at the moment?
4. In what ways has it influenced our country?
5. How has it affected the functioning of democracy?
49
6. In what way has the unemployment situation changed during the last few
years?
7. What have been the causes for the changes in unemployment figures?
8. How would you describe the political and social context of our country,
when talking about attitudes toward unemployment?
9. Have there been changes in attitudes during recent years? Has for example
the law concerning unemployment been changed?
10. Is there a change of political culture to be seen, concerning unemployment,
towards a more individual, commercial, democratic or emancipatory direction?
11. What is the attitude towards maintaining the country?
12. What is the importance of the evolution of technology in the
unemployment problem?
13.  Do you know anybody who is (was) unemployed? Tell your groupmates about his/her life.
14. What is unemployed people’s impression about the problem and the
causes of it? How should unemployment be removed and jobs be created?
15. What is the employers’ opinion on unemployment and the causes of it?
16. How have the trade unions reacted towards unemployment? What
suggestions they have made to solve the problem?
17. What kind of opinions is put forward by people you know?
18. Do you sympathize with the unemployed?
19. What are the most important measures in solving the unemployment
dilemma?
20. What kind of advantages do you think these measures can have?
21. What kind of problems or disadvantages could follow from these actions?
Ex. 9. Comment on the following quotations:
• It’s a recession when your neighbor loses his job; it’s a depression when
you lose yours.
(Harry S. Truman, U.S. president)
• The forgotten man at the bottom of the economic pyramid.
(Franklin D. Roosevelt, U.S. president)
• A man willing to work, and unable to find work, is perhaps the saddest
sight that fortune’s in-equality exhibits under the sun. (Thomas Carlyle, Scottish
historian and essayist)
• Work banishes those three great evils, boredom, vice, and poverty. (Voltaire,
French writer and libertarian philosopher.)
50
•  Choose a job you love, and you will never have to work a day in your life.
(Confucius (551 BC–479 BC), Chinese philosopher and moralist)
• It might be said that it is the ideal of the employer to have production
without employees and the ideal of the employee is to have income without
work. (E. F. Schumacher, German-born British economist.)
• When work is a pleasure, life is a joy! When work is a duty, life is slavery.
(Maxim Gorky, Russian novelist, playwright, and short-story writer)
• Work is necessary for man. Man invented the alarm clock. (Pablo Picasso,
Spanish painter and sculptor.)
51
UNIT IV
«If we cannot end now our differences, at least we can help make
the world safe for diversity»
(John F. Kennedy)
DIFFERENTIATION BASE OF THE COUNTRIES
NATIONS DIFFER
The political and economic systems of nations differ in pricing goods and
services; the sources of capital for new ventures; government-regulated limits
on profits; the collecting, spending, and controlling of money; the relationships
of managers and workers to each other and to government. Meanwhile, the
political system of a nation is closely intertwined with its economic system,
referring the economic activity of individuals and groups at every level. Through
politics, governments are elected or appointed, or, in some cases, created by
armed force. Governments have the power to make, interpret, and enforce the
rules and decisions that determine how countries are run, including commerce,
preservation of national resources, civil rights, welfare, education, medical care,
employment, military service, religion, marriage, scientific research, travel,
culture and the exchange of ideas.
The wealth of a nation depends on the efforts and skills of its workers, its
natural resources, and the capital and technology available to it for making the
most of those skills and resources. Yet national wealth depends not only on how
much a nation can produce for itself but also on the balance between how much
its products are sought by other nations and how much of other nations’ products
it seeks.
There are, however, many practical influences that distort the economic
reality of international trade. For instance, such trade may be thwarted by fear of
exploitation by economically or politically more powerful nations, by the desire
to protect special groups of workers who would lose out to foreign economic
competition and by the unwillingness to become dependent on foreign countries
for certain products that could become unavailable in the case of future conflicts.
Worldwide stability might be achieved if international trade agreements were
designed to promote human rights and preserve cultural diversity, instead of just
the accumulation of wealth by a small number of hands.
ECONOMIC LEVEL
Most economies throughout the world today are undergoing change –
some adopting more capitalist policies and practices, and others adopting
52
more socialist ones. However, no nations with economic systems at either the
capitalist or the socialist extreme, rather, the world’s countries have at least some
elements of both. In the real world, few societies opt for an extreme type of
economy, such as one that is totally, market-based, or one that features constant
and pervasive government intervention. Instead, most societies opt for some
mixture of markets, government intervention, and what economists refer to as
traditional production. In their purest forms, these three types of economy can be
defined as follows:
– A market economy* is one in which almost all economic activity happens
in markets with little or no interference by the government. Because of the
lack of government intervention, this system is also often referred to as
laissez faire which is French for «to leave alone».
– A command economy is one in which all economic activity is directed by
the government.
– A traditional economy is one in which production and distribution are
handled along the lines of long-standing cultural traditions. For instance,
until the caste system was abolished in India during the last century,
the production of nearly every good and service could be done only by
someone born into the appropriate caste. Similarly, in medieval Europe,
you couldn’t typically be part of the government or attain high military
rank unless you were born a noble.
Because nearly every modern economy is a mixture of these three pure
forms, most modern economies fall into the very inclusive category called mixed
economies. With the exception of a few isolated traditional societies, however,
the traditional economy part of the mixture has tended to decline in significance
because most production has shifted to markets and because traditional economic
restrictions on things like age and gender have become less important (and more
illegal).
The result is that most mixed economies today are a mixture of the other
two pure types: the command economy and the market economy. The mixture
that you find in most countries typically feature governments that mostly allow
markets to determine what’s produced, but that also mix in limited interventions
in an attempt to make improvements over what the market would do if left to its
own devices.
The precise nature of the mixture depends on the country with the USA
and UK featuring more emphasis on markets while France and Germany, for
instance, feature more emphasis on government intervention. On the other hand,
a few totalitarian states like North Korea still persist in running pure command
economies as part of their all-encompassing authoritarian regimes.
However, no pure laissez faire economy has ever existed or probably could
ever exist. The simple fact is that properly functioning market economies that use
53
price mechanisms to allocate resources require a huge amount of governments
support. Among other things, market economies need governments to:
– enforce property rights so people don’t steal;
– provide legal systems to write and enforce contracts so people can make
purchases and sales of goods and services;
– enforce standardized systems of weights, and measures so people know
they aren’t being cheated;
– provide a stable money supply that’s safe from counterfeiters;
– enforce patents and copyrights to encourage innovation and creativity;
Notice that all these things must be in place in order for markets to function.
Consequently, a more modern version of laissez faire says that government
should provide the institutional framework necessary for market economies to
function, and then it should get out of the way and let people make and sell
whatever is demanded.
However, the vast majority of people want governments to do more than just
set up the institutions necessary for markets to function. They want governments
to stop the production and sale of things that the market economy may not
provide a lot of, like housing for poor. They often also want to tax well-off
citizens to pay for government programs for the poor.
Many government programs are so commonplace that you don’t even think
of them as being government interventions. For instance, free public schools
warning labels on medicine bottles, sin taxes on alcohol and tobacco are all
government interventions in the economy.
The government interventions needed to implement such programs are,
in many cases, not efficient. But many people would argue that there’s quite
a bit more to life than efficiency and that the inefficiencies caused by many
government interventions are well worth the benefits that they produce. For such
people, the government interventions in question increase overall happiness
despite the fact that they are inefficient.
Because pure market economies don’t deliver everything that many people
want, most societies have opted for at least some – and in some cases, quite a lot
of – government intervention in the economy, the result is that most economies
today are mixed economies, with some aspects of direct command and control
of economic activity mixed in with a mostly market economy that uses a price
system to allocate resources.
GDP tracks the economy
In order for economists to study the process of production, distribution, and
consumption with any real understanding, they need to keep track of exactly
how much is being produced, as well as where it all ends up. Consequently,
54
economists have developed a huge accounting apparatus, called National
Income and Product Accounts (NIPA), to measure economic activity. This
system produces numerous useful statistics, including the famous Gross
Domestic Product (GDP), which calculates the value &measures the total
quantity of goods and services, produced in a country in a given period of them.
Countries
Population (mln)
Territory (mln.sq/km)
GDP ($)
Developed
853,0
32,7
24 500
Developing
4750,0
83,6
18 480
Transition economy
412,0
19,0
3600
* Maddison A. The World Economy. Millenial Perspective. OECD, 2001. – P. 493
The system can seem arcane, but knowing the accounting is indispensable
because it’s the basis for all the mathematical models that economists use to
understand and predict things like the inflation, economic growth, business
cycle, and both monetary and fiscal policy.
Business cycle
(the alternating pattern of economic expansion & contraction)
TOTAL
OUTPUT
Peaks
Long-run
average growth
Troughs
TIME
* Sean Masaki Flynn. Economics for Dummies. Wiley Publishing. 2005, – P. 98
Expansions – are the periods of time during which total output increases
(after a trough and before the next peak).
Contractions – are the periods of time during which total output falls (after
a peak and before the next trough).
55
You can measure GDP by totaling up all the expenditures in the economy or
by counting up all the incomes in the economy. If your calculations are correct,
both methods give you the same value for GDP. When thinking about GDP, you
also have to consider the goods and services that are being traded for money.
Economists simplify life by saying that all the resources or factors of production
of a society – land, labor and capital – are owned by households. Households can
be made up of one person or several – think in terms of individuals or families.
Firms buy or rent the factors of production from the households and use them
to produce goods and services, which then are sold back to the households.
The process sets up a circular flow for resources moving from household to
firms, and goods and services moving back the other way.
Circular flow
INCOME
Resources
Households
Firms
Goods &
Services
EXPENDITURES
* Sean Masaki Flynn. Economics for Dummies. Wiley Publishing. 2005, – P. 59
Newly produced output is counted as part of GDP as soon as it’s produced,
even before it gets sold. That makes keeping track of the money associated with
new production a little tricky.
For example, as soon as construction on a new house is completed, its
market value of $ 300 000 is estimated and counted as part of GDP right then,
even though the house may not be sold for months. Suppose construction was
completed on December 29, 2004, adding $ 300 000 to the year 2000’s GDP.
If the house is subsequently sold on February 21, 2005, it doesn’t count in the
year 2005’s GDP because double counting isn’t allowed.
If Sony produces a TV on December 31, 2004, the value of that TV is counted
in the year 2004’s GDP, even though it won’t be sold to a customer until the next
year. A handy way to think about this is to imagine that Sony builds the TV and
then, in effect, sells it to itself when it puts the TV into inventory. This «sale»
56
is what is counted in GDP for the year 2004 when the TV is later sold out of
inventory to a customer it’s just an exchange of assets (trading the TV for cash).
The fact that output is counted when it’s produced rather than when it’s
sold is a red flag when interpreting GDP statistics to gauge the health of the
economy. High GDP means only that a lot of stuff is being produced and
put into inventory. It doesn’t necessarily mean that firms are selling lots of
stuff.
In fact, it’s quite possible that GDP is high but the economy is about to go into
a recession because inventories are piling up and managers will soon cut back
on production in order to get inventories back down to target levels. In the USA,
the Bureau of Economic Analysis at the Department of Commerce computes
this statistic every three months, giving an idea of how much economic activity
took place in the previous quarter or year. Consequently, economists who try to
forecast where the economy is heading hay much more attention to inventory
levels than they do to last quarter’s GDP.
The expenditure equation for totaling up GDP adds together the four traditional
expenditure categories – consumption (C), investment (I), government (G), and
net exports (NX) – the equal the value in dollars (or whatever currency a given
country is using) of all goods and services produced, or the GDP (Y). In terms of
algebra, the equation looks like this:
Y = C + I + G + NX
Although the following sections go into more detail, here’s a quick look at
the four expenditure variables that total up to GDP:
– (C) stands for consumption expenditures made by households on goods
services, whether domestically produced or produced abroad.
– (I) stands for investment expenditures made by firms on new capital goods
including buildings, factories, and equipment. (I) also contains changes in
inventories and are counted as inventory investments.
– (G) stands for government purchases of goods and services (they’ve got to
buy, paper-clips over there). In most countries, a huge portion of GDP is
consumed by government. In the USA it consumes about 35% in most of
Europe – it is nearer to 50%.
– (NX) stands for net exports, which is defined as all a country’s exports
(EX) minus all its imports (IM), or NX = EX – IM, (EX) is the number of
dollars of their output that we’re buying.
When a country sells domestically made goods and services to someone or
some firm in another country, such sales are called exports (EX). When someone
buys something produced abroad, such purchases are called imports (IM).
EX – IM reveals your country’s trade balance. When EX – IM is positive,
you’re exporting more than you are importing; when it’s negative, you’re
57
importing more than you are exporting. Net exports (NX) is simply the total
value of all exports minus total value of all imports during a given period of
time.
These four expenditures give us GDP, because, as a group, they buy up every
last bit of output produced in a country in a given period.
GDP is very important because, other things being equal, richer people
are happier people. A high and quickly growing GDP is preferable because it
reflects lots of economic transactions that provide people with the goods and
services they desire. Because people like to consume, goods and services,
measuring GDP allows economists to quantify, in some sense, how well
a country is doing at maximizing its citizen’s happiness given the country’s
limited resources. A rising GDP indicates that a country is figuring out ways to
provide more of the goods and services that make people happy. In economies
like the USA, GDP is very good at capturing nearly all output that’s produced
because almost everything that’s produced here is subsequently sold. But in
a largely rural and agrarian society of small farmers, most production is for
consumption within the household, meaning that the output never makes it
to the official GDP statistics kept by the country’s economists. As countries
transition from rural agrarian economic structures with lots household
production to market economies where nearly everything produced is sold for
money, the GDP appears to rise because a lot of output is being counted for
the first time. However, this apparent change may not be an actual increase in
output. These limitations can make comparing the GDP’s of various countries
misleading.
Furthermore, the level of economic development of a country should be
distinguished from its economic potential. A small country, for instance, with
rather «modest» economic potential can have a high level of the economic
development. First of all, it depends on the development of the labour forces and
working relationships, closely connected with the strategic industrial objectives.
The level of economic development includes:
– manufacturing of the Gross National Product (GNP), the consumer goods,
the national income per capita;
– the structure of the social production (the share of industry and agriculture
in the national economy);
– the quantitative and qualitative employment rate of population;
– the usage of natural resources (land, fuel-energy resources, minerals);
– the organization and effectiveness of the working process.
Developed nations of the West are distinguished by a very high level of their
economic development. Their GDP is higher than the world average level. This
is a result both of long social-economic and historical development, such factors
as wars, colonial expansion and other peculiarities of the 20-th century. On the
58
other hand, developing countries have a relatively underdeveloped infrastructure,
and a poor economic and human development index when compared to the
global norm.
Generally speaking, higher GDP is better than lower GDP, because more
output produced means higher potential living standards, including better
healthcare for the sick and more to aid the needy. But higher GDP doesn’t
guarantee that happiness is increasing, because GDP often goes up when bad
things happen. For instance, if a hurricane destroys a big section of a city, GDP
goes up as reconstruction kicks into gear and lots of new output is produced to
replace what was destroyed. But wouldn’t it have been better not to have had the
hurricane in the first place?
Similarly higher GDP may be possible in certain situations only if you’re
willing to tolerate more pollution on greater income inequality. Countries
experiencing rapid economic development and quickly rising living standards
often also get dirtier environments and more social unrest because some people
are getting richer much faster than others. The GDP number doesn’t reflect these
negative conditions.
GDP also doesn’t count the value of leisure – when nothing is produced
or consumed – for example: sitting on the beach, climbing a mountain, taking
a walk or working out with friends. Moreover, an increase in GDP often
comes at the price of sacrificing these leisure activities – meaning that when
you see an increase in GDP, overall well-being or happiness hasn’t necessarily
improved. So although policies that raise GDP are generally beneficial for
society, the costs involved in creating the rising output must always be
examined.
Despite GDP is the most widely used measure of the economic progress of
the nation, it is to be complemented by the use of a range of economic, social
and environmental indicators of sustainable development.
Three categories of countries’ development
History reveals a correlation between the economic development of a nation
and the status of its balance of trade. Development entails developing a modern
infrastructure (both physical and institutional), and a move away from low-value
added sectors such as agriculture and natural resources extraction.
Countries are traditionally placed into three categories of development:
– Developed countries – countries with a highly-developed economy.
– Developing countries – countries with an economy consistently and fairly
strongly developing over a longer period.
– Transition economy countries – countries with patchy record of
development.
59
There is one more category of countries – countries with long-term civil war
or large-scale breakdown of rule of law or non-development-oriented dictatorship – «failed states» (Haiti, Somalia, Burma).
Developed countries usually have economic systems based on continuous,
self-sustaining economic growth. The major part of the world-wide demand
for new machinery and equipment that accelerate industrial-technological
development is met by industrially developed countries.
The application of the term «developing country» to all the world’s
least developed countries could be considered inappropriate in the cases of
a number of poor countries, due to the fact that they are not improving their
economic situation as the term implies, but have experienced prolonged periods
of economic decline. Developing nations are generally heavy importers –
especially of machinery, equipment and various types of finished goods. Their
exports consist largely of raw materials from the nation’s natural resources.
A developing nation, lacking aid and investment capital must finance imports
by diverting sufficient quantities of natural resources from domestic to foreign
users. As a country develops and is able to produce more of its own capital and
finished goods, it will have less needs for imports.
However, the term «developing nation» is not a label to assign the specific,
similar type of problem. Designation of these nations depends on the angle at
which one approaches them, and according to the solutions envisioned to solve
their problems. Each one of the following terms has meanings beyond its first
appearance:
– Third World. The term was used for the first time by demographer Alfred
Sauvy and refers to the Third Estate. The Third World includes neither the
nations of the liberal West («First World»), nor the nations of the Soviet Union
(«Second World»).
– Countries of The South and The North. These terms originate from the fact
that most developing countries (including many of the poorest) are in the southern hemisphere, and most developed countries are in the northern hemisphere.
However, the geographic distinction is not perfect. For example, Australia and
New Zealand, both developed, are in the southern hemisphere, but not included
into in «The South».
– Rich and Poor countries. These terms suggest a greater focus on income per
capita, though it reflects the statistical average wealth of a country’s citizens,
when income is distributed very unequally.
– Industrialized and Non-industrialized countries. These terms are focused
on the industrial level of development, and are relevant to widely used terms
«Developed and Developing countries.» Most countries that are currently
being industrialized or are in advanced phases of industrialization, also have
characteristics of a post-industrial economy.
60
SOCIAL STRUCTURE
Living standards
The economic system of a nation is closely intertwined with its political
system, which referees the economic activity of individuals and groups at every
level, that is, the relationships of employers and employees to each other and to
government. Governments have the power to make, interpret, and enforce the
results and decisions that determine how countries are run, including commerce,
preservation of natural resources, education, civil rights, medical care, welfare,
employment, military service, religion, marriage, scientific research, travel,
culture and the exchange of ideas.
At any given moment, there is a fixed amount of wealth that could be
divided equally among all people. But if living standards are to keep rising, you
need to get more by working harder or using up resources faster. Household
consumption spending accounts for about 70% of GDP. Many factors affect
how much of their income households decide to spend on consumption and
how much of it they decide to save for their future. Microeconomists spend
a lot of time studying the various factors that affect such decisions, including
expectations about whether the future looks bright or dark and how high or low
the rates of return are on savings. Macroeconomists, on the other hand, step back
from these factors because when studying the economy as a whole, what matters
is how much total consumption there is rather than why households happen to
choose that particular level.
The only way to have sustained growth is to invent more efficient technologies
that allow people to produce ever more from the limited supply of labor and
physical resources. Therefore, sustained economic growth and higher living
standards are only possibly if you educate your citizens well. Educated people
not only produce more than workers – and hence get paid higher salaries – but,
more importantly, they produce innovative new technologies.
Thus if all you care about is living in a country that has rising living standards,
you should work hard to promote education in the sciences and engineering,
sectors where revolutionary technologies are created.
Stresses on society
It is inevitable that the process of development and rapid change puts
enormous stresses on society. The social and political context cannot be ignored.
For most countries where growth has occurred, the benefits have not been
shared equally (in Mexico, the benefits have accrued largely to the upper 30%,
and have been even more concentrated in the top 10%. Those at the bottom
have gained little; many are even worse off); crises have been mismanaged
(contradictory monetary policies in Argentina or cutting off food subsidies
61
to the poor in Indonesia); the transition from command to a market economy
has been a disappointment (in Russia); negative consequences in a constitutional
democracy – when behind prestige and wealth, lies a great problem – the
growing gap between the very rich and very poor (the current system of
education in the USA prepares only the elite for competition in the global market
economy. Dylan A. Tredrea, an undergraduate student from the University of
Southern Carolina, Los Angeles, points out that the current system of education
in the USA «encourages the increase of the wealth gap, because the quality of
school education is often class dependent. Federal and state involvement both
financially and administratively, is usually kept at a minimum. As a result, the
wealthy either attend private schools or live in the areas where the cost of living
effectively makes the public schools just as exclusive as private alternatives.
The quality of school facilities, teachers training and salaries, are always found
to be in correlation with the level of income and education of the citizens in the
surrounding area».1
In some very poor countries, such as those in Africa it has been difficult
to achieve high enrollment rates, especially for girls. The reason is simple:
poor families have barely enough to survive; they see little direct benefit from
educating their daughters, and the education systems have been oriented to
enhancing opportunities mainly through jobs in the sector considered more
suitable for boys.
Inside the developing world, the questions mentioned above run deep.
In much of Latin America, after a short burst of growth in the early 1990-s,
stagnation and recession have set in. The growth was not sustainable. Moreover,
urban violence in Latin America and civil strife in Africa create environments
that are hostile to investment and growth.
Poverty
The nature of poverty is not that the poor are lazy; they often work harder,
with longer hours, caught in a series of vicious spirals: lack of food leads to ill
health, which limits their earning ability, leading to still poorer health. Barely
surviving, they cannot send their children to school, and without an education,
their children are condemned to a life of poverty. Poverty is passed along from
one generation to another. Poor farmers cannot afford to pay the money for the
fertilizers and high-yielding seeds that would increase their productivity.
This is but one of many vicious cycles facing the poor. The poor countries
like Nepal have no source of energy other than the neighboring forests; but as
they strip the forests for the bare necessities of heating and cooking, the soil
1 Dylan A. Tredrea. Lesson from the 21-st century. United States on the Wealth Gap. – LosAngeles University of Southern Carolina
62
erodes, and as the environment degrades, they are condemned to a life of
ever-increasing poverty. Along with poverty come feelings of powerlessness.
The World Bank interviewed thousands of poor in an exercise that was called
«The Voices of the Poor». The poor feel that they are voiceless, and that they do
not have control over their own destiny. They are buffeted by forces beyond their
control. And the poor feel insecure. Not only is their income uncertain – changes
in economic circumstances beyond their control can lead to lower real wages
and a loss of jobs, dramatically illustrated by the East Asia crisis – but they
face health risks and continual threats of violence, sometimes from other poor
people trying against all odds to meet the needs of their family, sometimes from
police and others in positions of authority. While those in developed countries
fret about the inadequacies of health insurance, those in developing countries
must get by without any form of insurance – no unemployment insurance, no
health insurance, no retirement insurance.
The role of the government
Any government has to provide a safety net for the poor. Firstly, it should
regulate the financial sector and ensure social justice. Secondly, government
should promote modern technology into all spheres of social life. Furthermore,
it has to provide a high-quality education to all and «furnish» much of the
institutional infrastructure, for example, the legal system, which is required
for markets to work effectively. But the advocates of market economy argue
that «the inefficiencies of markets are relatively small and the inefficiencies of
government are relatively large… Unemployment is blamed on government
setting too-high wages, or allowing unions too much power.»1
J. Stiglitz, a winner of the Nobel Prize in Economics, advocates «a balanced
view of the role of government, one which recognizes both the limitations
and failures of markets and government, but which sees the two as working
together, in partnership differing among countries, depending on their stages
of both political and economic development…Weak governments and toointrusive governments have both hurt stability and growth. The Asia financial
crisis was brought on by a lack of adequate regulation of the financial sector,
Mafia capitalism in Russia by a failure to enforce the basics of law and order.
Privatization without the necessary institutional infrastructure in the transition
countries led to asset stripping rather than wealth creation. In other countries,
privatized monopolies, without regulation, were more capable of exploiting
consumers than the state monopolies. By contrast, privatization accompanied
by regulation, corporate restructuring, and strong corporate governance
1 Joseph E. Stiglitz. Globalization and its discontents. – New York London: W.W. Norton &
Company, 2003. P – 219.
63
has led to higher growth.»1 Finally, government should make any society,
any economy function effectively and humanely, that is government should
concern:
– how the economy functions;
– about our environment;
– about the poor to move out of poverty;
– about democracy.
Thus the role of government is to ensure social justice alongside with enhancing
a sustainable economic development.
Pro-poor growth and alternative strategies
The growth-poverty debate centres round development strategies – strategies
that look for policies that reduce poverty as they promote growth. It is true that
countries that have grown faster have done a better job of reducing poverty like
China and East Asia. It is also true that poverty eradication requires resources that
can only be obtained with growth. Thus the existence of a correlation between
growth and poverty reduction should come as no surprise. But this correlation
doesn’t prove that «trickle-down» strategies (Joseph Stiglitz:«Trickle-down»
economics – just a belief that the benefits of the growth trickle down even the
poor) constitute the best way to attack poverty. Because growth alone does not
always improve the lives of all a country’s people. The phrase «trickle-down»
has disappeared from the policy debate. But the idea is still alive. J. Stiglitz
calls the new variant «trickle-down-plus». It holds that growth is necessary and
almost sufficient for reducing poverty – implying that the best strategy is simply
to focus on growth, while mentioning issues like female education & health.
Some policies promote growth but have little effect on poverty; some promote
growth but actually increase poverty. But «lose-lose» policies, policies for which
there is little if any gain in growth but a significant increase in inequality (for
many countries, capital market liberalization represents an example). Some
policies promote growth and reduce poverty at the same time. They are called
pro-poor growth strategies. Sometimes there are policies which are «win-win»,
policies like land reform or better access to education for the poor, policies
which hold out the promise of enhanced growth and greater equality. Land
reform, done properly, peacefully and legally, ensuring that workers get not
only land but access to credit, and the extension services that teach them about
new seeds and planting techniques, could provide an enormous boost to output.
Land reform preceded several of the most successful instances of development,
1 Ibid.
64
P – 219–220.
such as those in Korea and Taiwan. Thus land reform represents a fundamental
change in the structure of society.
Besides, there are alternative strategies – strategies that differ not only in
emphases but even in policies; strategies, for instance, which include land
reform but do not include capital market liberalization, which provide the
competition policies before privatization, which ensure that job creation
accompanies trade liberalization. These alternatives make use of markets,
but recognize that there is an important role for government as well. They
recognize the importance of reforms, but that reforms needed to be paced and
sequenced. Therefore, the success in Poland showed that development and
transition are possible; some countries have met the success cases followed
the alternative strategies (that were markedly different from the Washington
Consensus policies1): the limited success in Africa, for instance, in Uganda,
Ethiopia, and Botswana, and the broader success in East Asia, including
China.
Most economies throughout the world today are undergoing change –
some adopting more capitalist policies and practices, and others adopting
more socialist ones. However, nations with economic systems at either the
capitalist or the socialist extreme have at least some elements of both. Such
a mixture is understandable in practical terms. In a purely capitalist system,
competition is seldom free because for any one resource, product or service,
a few large corporations tend to monopolize the market and charge more than
open competition would allow. And even if the system is efficient, it tends
to make some individuals very rich and some very poor. Thus, the USA, for
example, tries to limit the extreme effects of its basically capitalist economic
system by mean of selective government intervention in the free-market
system.2
On the other hand, a purely socialist economy, even though it may be more
equitable, tends toward inefficiency by neglecting individual initiative and
by trying to plan every detail of the entire national economy. Without some
advantages in benefits to motivate people’s efforts, productivity tends to be
low. And without individuals having the freedom to make decisions on their
own, short-term variations in supply and demand are difficult to predict the
consequences of social decisions.
1 Washington
Consensus policies
intervention includes tax rates that increase with wealth; unemployment insurance; health
insurance; welfare support for the poor; laws that limit the economic power of any one corporation;
regulation of trade among the states, government restrictions on unfair advertising, unsafe products,
and discriminatory employment, and government subsidization of agriculture and industry.
2 This
65
EXTERNAL CONTACTS
International trade
Opening a country to international trade means opening this country to new
ideas and new innovations, that is, to be open-minded. Competition from foreign
competitors causes local businesses to innovate to match the best offerings of
companies from around the world. Quite simply, throughout history, the richest
and most dynamic societies have been the ones open to international trade.
Countries that close themselves off from international trade grow stagnant and are
quickly left behind. Of course, what economists have in mind when they think of
the benefits of international trade is free trade, where companies compete across
borders to provide people with the best goods and services at the lowest prices.
Many total dollars are expended on products made within your own country’s
borders. Most of that expenditure is made by locals, but foreigners can also
expend money on your products. That exactly what happens when they pay you
for the goods that you export to them. International trade is hugely important,
and you should have a good understanding of not only why trade balances can
be positive or negative, but also why you shouldn’t necessarily worry if it’s
negative rather than positive.
Modern countries do a huge amount of trading with other countries – so
huge, in fact, that for many countries imports and exports are equal to more than
50% of their GDP. Understanding how international trade affects the economy
is absolutely essential because politicians are constantly suggesting policies
like tariffs and exchange rates controls that are aimed squarely at international
trade – but whose effects reverberate throughout the domestic economy. If your
exports exceed your imports, you have a trade surplus, whereas if your imports
exceed your exports, you have a trade deficit. Unfortunately, the words surplus
and deficit carry strong connotations that make it sound like surpluses are
necessarily better than deficits. That’s just not true, but you wouldn’t know it
from the rhetoric that politicians throw around. They make it sound as trade
deficits are always bad and always lead to calamity.
Mind the fact that International Trade is voluntary. Thus, as long as it
is voluntary, all the trades enhance benefits. To concentrate on whether a trade
deficit or trade surplus exists is to completely miss the point that international
trade is simply a rearrangement of assets between countries that makes everyone
happier. Even the country running the trade deficit isn’t a loser. Such transfers
of property do happen in real life. During the 1980-s the USA ran huge trade
deficits with Japan. The result was that Japanese corporations and individuals
ended up owing many famous U.S. buildings and companies. All trading in
life – be it with foreigners or fellow citizens – is designed to meet needs in goods
and services.
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The argument that even countries running trade deficits are better off because
they get to consume mix of goods and services they couldn’t get otherwise
rests solely on the benefits of trading things that have already been produced.
But an even better argument for international trade is the argument, known
as comparative advantage that actually increases the total amount of output
produced in the world, meaning that there is more output per person, and overall
living standards rise. More than that, the abolishing restrictions on international
trade would not only help the poor, but actually make specialize in the production
of goods and services that each of them could produce at the lowest possible
cost. Therefore, this process of specialization would increase total worldwide
output and thereby raise living standards.
On large scale, countries should specialize in the production of goods and
services that they can deliver at lower costs than other countries. If countries are
free to do this, everything that’s produced comes from the lowest-cost producer.
Because this arrangement leads to the most efficient possible production, total
output increases, thereby raising living standards. Nevertheless, the argument that
the point of trade is to make you happier doesn’t always fly well. A lot of people
view trade as an antagonistic contest to dominate other countries by constantly
running trade surpluses so that you eventually own all the other country’s assets.
They argue for restrictions on trade designed to rig trade relations so that their own
countries always run surpluses. But such policies inevitably fail because any time
you put up a tariff barrier or an import tax to discourage imports and improve
your trade balance, other countries can do the same. As a result of such «trade
wars» is that all the barriers, restrictions, and taxes imposed by both sides reduce
international trade to a trickle. No one comes out ahead, and no one is happy.
Economists strongly condemn the many government subsidies and trade
restrictions that impede free trade and that try to rig the game in one country’s
favour. By letting comparative advantage guide who makes what, free trade
increases total world output and thereby raises living standards. Under free trade,
each country specializes in its area(s) of comparative advantage and then trades
with other countries to obtain the goods and services it desires to consume. Thus,
for the last 50 years, national governments have increasingly pushed for fewer and
fewer restrictions on international trade. This free trade movement has resulted in
hundreds of millions of new jobs and a vast improvement in living standards and
happiness because people all over the world are free to trade and buy whatever
they want to make them most happy – even if that means buying from a foreigner.
Global web
Nowadays each nation is a part of the global system, which has becoming
a tightly knit web. Changes anywhere in the world can have amplified effects
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elsewhere, with increased benefits to some people and increased costs to
others. There is also the possibility of some changes producing instability and
uncertainty that are to the disadvantage of all.
Nations, like all participants in social systems, sometimes find it to their
advantage to suffer some short-term losses to achieve the longer-term benefits of
a stable world economy. Worldwide stability may depend on nations establishing
more reliable systems of doing business and exchanging information, developing
monitoring mechanisms to warn of global catastrophes, such as famine and
nuclear war, and reducing the large gap in the standard of living between the
richest and the poorest nations.
READING COMPREHENSION
1. How do the nations differ in their economic and political systems?
2. What makes the wealth of a nation?
3. How many types of economy can be defined? Why do most modern economies
fall into mixed economies?
4. To what extent do market economies allow government interventions?
5. How would you describe business relationships between firms and householders?
6. How can the economists measure GDP? What does the expenditure equation for
totaling up GDP look like?
7. What does the level of economic development of a country involve?
8. What is the vexed problem of the poor countries like Nepal?
9. Which of the following pro-poor strategies reduce property and promote growth
at the same time: «win-win» or «lose-lose»?
10. What do we call alternative strategies? How do they affect the society?
TEXTS FOR
DISCUSSION
Read and translate the text:
Australia at a Glance
Australia is one of the most cost competitive countries in the developed
world. The Australian economy has been ranked the most resilient in the world
for the third year in succession. This strong performance is set to continue, with
forecast growth higher than the OECD average. The International Monetary
68
Fund applauds Australia for its strong performance, with six years of budget
surpluses, falling public debt, low inflation, high and rising productivity and
a long period of uninterrupted growth underpinned by a dynamic job market.
Against this impressive backdrop sits South Australia, a dynamic state
economy that offers many cost competitive advantages for foreign direct
investment and is classed as one of the best places in the country to conduct
business.
The facts speak for themselves: Adelaide, the capital of South Australia, was
found to be the most cost competitive of five Australian capital cities surveyed
by KPMG, an the 10th most competitive of the 98 cities surveyed worldwide. Its
low set-up and operating costs are a significant draw card.
Adelaide offers well-developed modern industry, a highly skilled, productive
and flexible workforce, and world-class education and health systems. With the
greatest expenditure on research and development of all regions in Australia,
the city ranks highest in innovation and new product development.
South Australia is also a high-technology centre for much of Australia’s
growing defence industry and has leading-edge capability in other thriving
industries such as automotive, ICT, engineering, bioscience, electronics,
financial services, environmental and renewable energy, and wine and food.
South Australia is also making a mark in developing emerging niche
industries, including new media.
Supported by first-class infrastructure, Adelaide is strategically located at
the junction of Australia’s major north-south and east-west road, rail and air
corridors.
If this isn’t enough, Adelaide is one of the world’s least expensive cities in
which to live, being less costly than many in Asia, Europe and North America.
These features and more have already inspired many forward thinking, wellknown multinational companies to make the move to Adelaide including BAE
Systems, Schefenacker and United Utilities.
Vocabulary
resilient [rI’zIlIqnt] a эластичный, имеющий запас жизненных сил
succession [sqk’seS(q)n] n последовательность, преемственность
forecast growth [‘fO:kQ:st grqVT] прогнозируемый рост
budget surplus [‘bAdZIt ‘sE:plqs] нераспределенный бюджетный капитал
public debt [‘pAblIk det] государственный долг
underpin [«Andq’pIn] v поддерживать
backdrop [‘bxkdrPp] n фон, на котором развертываются события
survey [sq’veI] v обозревать, исследовать, изучать
drawcard [‘drO:kQ:d] n гвоздь программы
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expenditure [Ik’spendItSq] n расходование, статья расхода
thrive [TraIv] v (throve; thriven) процветать, преуспевать
renewable energy [rI’nju:qb(q)l ‘enqdZI] возобновляемый источник энергии
junction [‘dZANkS(q)n] n соединение, пересечение
inspire [In’spaIq] v внушить, вдохновить
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Model: to inspire means to encourage in someone the ability to act, especially
with good result.
Competitive country; developed world; public debt; innovation; infrastructure;
budget surplus.
Ex. 2. Find word combinations in the text that can be translated in the
following way:
Факты говорят сами за себя; образование и здравоохранение мирового
класса; оборонная промышленность; первоклассные возможности;
первоклассная инфраструктура.
Ex. 3. Translate the following word combinations, taken from the text:
Сost competitive countries; job market; direct investment; to conduct business;
flexible workforce; to make a mark; less costly; strategically located; forward
thinking; to make the move to.
Ex. 4. Agree or disagree on the statements:
1. Adelaide ranks highest in innovation and new product development.
2. The Australian Government simplifies to start a business.
3. Australia is one the most cost competitive countries in the developing
world.
4. Conducting business in this country is complicated: increasing public
debt, high inflation and political instability.
5. Adelaide is one of the most expensive cities of Australia.
6. South Australia offers many advantages for foreign direct investment.
Ex. 5. Make up a discussion. Work in pairs.
A. One of you is an investor interested in exploring new opportunities at the
right price.
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B. The second one is a representative of the Australian Government’s
Investment Agency, who wants to inspire A. to invest his money in Australian
business.
Ex. 6. You are a representative of the Adelaide Authority.
1. Make up a plan on the attracting of money, businesses and brains to the country.
2. Make a speech for the businessmen about the advantages of starting business
a) in your city;
b) in South Australia;
c) about the advantages for young capable scientists to work in South Australia.
Ex. 7. Translate the sentences from English into Russian, paying special attention to the words from vocabulary notes.
1. St. Laurent made good use of his talent for making quick and sober decisions,
and he proved to have one of the most forward-looking and resilient minds in
the political history of Canada. 2. Enemy war industries proved far more resilient than strategists expected. 3. Human history consists merely of a succession of energy phases. 4. The chief government and religious official of Saudi Arabia is a king. Succession to the office is not hereditary, and the crown
prince, who succeeds the king, is chosen from among the Saud royal family
by the family in consultation with religious and government leaders. 5. Marketing research involves the use of surveys, tests, and statistical studies to analyze consumer trends and to forecast the quantity and locale of a market favourable to the profitable sale of products or services. 6. Several organizations, however, have developed good systems for gathering data and estimating national
and world food production, and geostationary satellites that monitor croplands
by means of sensors have enormously improved annual forecasts and surveys.
7. The world’s banking system played a key role in the recycling of petrodollars,
arising from the surpluses of the oil-exporting countries and the deficits of the
oil-importing nations. 8. If government revenue is more than government expenditure, a country is said to be running a budget surplus. 9. The depression of
1929 cut deeply into the health of the Australian economy, increasing public and
private debts at a time of massive unemployment. 10. The Constitution did give
Congress wide powers in such matters as taxation, payment of the public debt,
coining of money, and regulation of commerce. 11. Underpinning this myth was
a concept of the nation that blended romantic notions about national history and
character with pseudo-scientific theories of race, genetics, and natural selection. 12. The new shah’s reign began against a backdrop of social and political
disarray, economic problems, and food shortages.
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Ex. 8. Translate the sentences from Russian into English, paying special attention to the words from vocabulary notes.
1. Сорняки имеют огромный запас жизненных сил, и поэтому требуются различные технологии для борьбы с ними. 2. Эластичность этого материала позволяет использовать его для производства различных товаров.
3. Последовательная политика правящих партий позволила создать сильную и жизнеспособную систему социальной защиты граждан. 4. История дает много примеров религиозных конфликтов следующих один за
другим. 5. Его сломила череда неудач. 6. Суперкомпьютеры используются для создания автомобилей, летательных аппаратов, а также для прогнозирования погоды и климатических изменений. 7. К концу прошлого
года нераспределенный бюджетный капитал города составлял несколько миллиардов долларов. 8. Проценты по государственному долгу были
установлены законодательно. 9. Государственный долг – это общая сумма государственных финансовых обязательств, результат займа денег
у населения, у других стран, международных организаций. 10. Фермерские хозяйства сильно поддерживают экономику этой маленькой страны. 11. Его произведения описывают жизнь народа на фоне политических
и социальных событий того времени.
===
Australia, n. A country lying in the South Sea, whose industrial and
commercial development has been unspeakably retarded by an unfortunate
dispute among geographers as to whether it is a continent or an island.
(Ambrose Bierce «The Devil’s Dictionary»)
Read and translate the text:
Honey, I’ll Shrink the State
The DPJ is trying to outdo Junichiro Koizumi on structural reforms.
The Democratic Party of Japan is Japan’s main opposition party. And
although the ruling Liberal Democratic Party (LDP) has dominated politics for
half a century, the chance that some other party might actually win one day was
worth an occasional thought, no matter how often those tentative hopes were
dashed. The DPJ does not need charity anymore, however. With the LDP now
deeply split over Junichiro Koizumi’s failed bid to privatize Japan’s postalsavings system.
The DPJ has thus earned the world’s attention. The new question is: what
would the party do if it won?
72
The short answer, which the DPJ has given consistently since Katsuya Okada
took over in early 2004, is that it would try to shrink the national government,
shake up the bureaucracy, give more power to Japan’s regions, and break free of
the narrow conservative interests that have long held the country hostage. On all
these issues, Mr. Okada and his party are trumpeting change even more eagerly
than Mr. Koizumi, whose passion for budget cuts and «structural reform» has
alienated much of his own party. The DPJ has never held power, so it can keep
internal divisions on these issues out of the public eye.
Not all of the DPJ’s promises involve budget cuts and the economy. There
are to be cuts everywhere. Public investment has fallen from 8% of GDP in
the 1990s to 5% under Mr. Koizumi; but the DPJ wants to slash the central
government’s public-works spending by another half. It also promises to cut the
government’s labor costs by 20%. The LDP will feebly try to match this by
pledging cuts of 10%.
Overall, the DPJ is promising ¥17 trillion ($155 billion) in gross spending
cuts over three years, and ¥10 trillion in net cuts after boosting spending on
education, child care and other programs. It hopes to reduce government
borrowing to less than ¥30 trillion a year. The from 8% of GDP in the 1990s to
5% under Mr. Koizumi; but the DPJ also backs a rise in sales taxes, which will
probably have to be introduced whoever wins.
Since Mr. Koizumi decided to fight a snap election over his failed post-office
privatization plan, the prime minister has enjoyed a clear bounce in the opinion
polls. The DPJ, which does not want to appear weak on Mr. Koizumi’s signature
issue, has put forth its own rival plan to cut Japan Post’s ¥330 trillion of savings
and insurance assets by roughly half. It would eventually lower the individual
limit on postal savings accounts from ¥10m now to ¥5m, it says.
In a close election, the DPJ might need a partner to govern. That might prove
awkward. But, even if it did not, would the economy actually respond to sharp
spending cuts? It is doing better these days, but will take time to recover its old
vigour. Yet, whatever the economic risks, the DPJ’s fiscal samurai, having taken
out their cost-cutting sword in the public square, may feel compelled to use it if
they win.
Vocabulary
outdo [aVt’du:] v (outdid; outdone) превзойти, побить, побороть
tentative [‘tentqtIv] a предполагаемый, предварительный
dash [dxS] v разбивать(ся) , ударять (ся)
to split over smth. – разойтись во мнениях, расколоться
bid [bId] n попытка, предложение, приглашение
consistently [kqn’sIst(q)ntlI] adv твердо, последовательно
73
break free – вырваться на свободу
hostage [‘hPstIdZ] n заложник
trumpet [‘trAmpIt] v разносить (новости), трубить (по миру), возвещать
alienate [‘eIlIqneIt] v отдалять, делать чужим, охлаждать (привязанность и т. п.)
internal [In’tE:nl] a внутренний
slash [slxS] v резко сокращать, урезывать
feebly [‘fi:blI] adv слабо, немощно, неясно
pledge [pledZ] v давать обещание, заверять, ручаться
net [net] a чистый, без вычетов, нетто
boosting [bu:stIN] a поддерживаемый, рекламируемый, способствующий
росту популярности
snap [snxp] a внеочередной, скоропалительный
bounce [baVns] n скачок
eventually [I’ventSV(q)lI] adv в конечном счете, в итоге, в конце концов
vigour [‘vIgq] n сила, мощь, энергия
compel [kqm’pel] v заставлять, подчинять, принуждать
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Reform; opposition party; failed bid;
Ex. 2. Translate the following word combinations, taken from the text:
tentative hopes; hopes were dashed; to earn the world’s attention; to shrink the
government; shake up the bureaucracy; break free of the conservative interests;
to hold hostage; to trumpet change; budget cuts; to hold power; keep smth. out
of the public eye; there are to be cuts everywhere.
Ex. 3. Find word combinations in the text that can be translated in the following
way:
Снижение расходов; расходы на охрану детства; государственный заем;
поддерживать увеличение налогов; ввести налог; внеочередные выборы;
опрос общественного мнения; выдвинуть план; возвратить былую мощь;
«финансовые самураи».
Ex. 4. Answer the following questions:
1. What is privatization? 2. How does it work? 3. Can you give any world examples of privatization? 4. Is private ownership better than government ownership? 5. How does privatization change enterprises? 6.  How does privatization change whole economies?
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7.  Does privatization create or destroy jobs?
8.  What is government’s role after privatization? 9. What are the procedures for privatization? 10.  How can privatization be made transparent? 11. What are the pros and cons of privatization?
12. What sectors of economies shouldn’t be privatized?
Ex. 5. Make up a dialogue. Work in pairs.
Discuss pros and cons of housing privatization in Russia.
A. You believe that there is an increased risk of corruption due to privatization.
It may cause social conflict. Housing is an essential basic need, therefore
the government should subsidize it to ensure that everyone, regardless of
financial circumstances, has adequate housing. If not, poorest members
of society may be deprived of adequate housing.
B. Your opinion is opposite. Condominiums that are organized by owners are
more likely than the government structures to possess sufficient financial
resources to invest and maintain the infrastructure. The private sector has
the technical expertise and aptitude to manage efficiently.
Ex. 6. Deliver your speech:
Methods of privatization, their advantages and disadvantages.
Ex. 7. Comment on the following quotations:
• Architects of privatization have blood on their hands. (Christian Wolmar)
• What is worrying is that the Government’s privatization mania knows no
bounds.
(D. Clark)
• Some see private enterprise as a predatory target to be shot, others as
a cow to be milked, but few are those who see it as a sturdy horse pulling
the wagon.
(Winston Churchill)
• Today the drive for privatization is usually accompanied by deregulation,
for the private sector detests regulatory controls and would employ strong
political lobbying to remove restrains over their commercial activities, and
of course profit making.
Ex. 8. Translate the sentences from English into Russian, paying special attention to the words from vocabulary notes.
1. Brazil has taken some tentative steps in the production of nuclear power.
2. The leader addressed the parliament in a bid for peace. 3. Researchers
have found it necessary to refine advertising techniques consistently. 4. Like
many of his predecessors the writer sought to break free of traditional
75
artistic associations. 5. Rapid Reaction Force was established to support the
UN mission and provide protection against future hostage taking. 6. Many
Americans feel alienated from their own society and government. 7. The rapidly
growing population now forms an important internal market for consumer
goods. 8. In 1998 the Polish government approved a plan to slash the number
of provinces from 49 to 16. 9. The signatories pledged to standardize policies
regarding working conditions and social insurance. 10. No attorney can be
compelled to reveal confidential information related by a client.
Ex. 9. Translate the sentences from Russian into English, paying special
attention to the words from vocabulary notes.
1. На прошлой неделе начались предварительные переговоры об
урегулировании конфликта. 2. За последние годы было несколько
попыток наладить производство. 3. Бороться с безработицей можно
только твердо и последовательно. 4. Не всем заложникам удалось
вырваться на свободу. 5. Успешная карьера Джима отдалила его от семьи
и в конце концов полностью его изменила. 6. Правительство каждой
страны должно быть способно само решать свои внутренние проблемы.
7. Правительство резко сократило денежные субсидии предприятиям,
что привело к их закрытию. 8. Партия обещала покончить с бедностью
в стране. 9. Политическая нестабильность заставила многих людей
эмигрировать в соседние страны.
Read and translate the text:
Mortgage lending reaches a record high
The bank of England issued a warning over the recent surge in consumer
borrowing as new figures showed mortgage lending hit a record high last year.
Britons borrowed £25bn in July – equivalent to £1bn for every working day
and an increase of 12 per cent or £2.7bn since June, the Council of Mortgage
Lenders (CML) said. The figures will add to fears that the Bank’s policy of
cutting interest rates is encouraging householders to take on unsustainable
levels of debt.
The Bank detailed its concerns over the debt mountain in the minutes of
its monetary policy committee meeting. At the meeting it voted unanimously
to keep rates unchanged at 3.5 per cent. «The rapid growth rates of lending
to individuals, which has helped to maintain consumption growth [cannot] be
sustained indefinitely,» it said.
There was a risk that households were banking on large increases in their
income and might also have forgotten that inflation would not erode their debt
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over time as it had done in the 1980s and 1990s. It said the scale of the debt
burden meant they might cut their spending plans if there was an economic
shock such as a house price crash or a global slump. The Bank said the record
levels of lending did not, by themselves, imply that the size of the debt mountain
was «necessarily unsustainable or imprudent».
Loans for house purchases jumped 20 per cent on the month to £11.6bn,
while re-mortgaging – where buyers swap their lender to get a better deal – was
5 per cent higher at £10.7bn. Neither figure was a record, meaning the key factor
behind the record jump was a surge in existing homeowners taking out extra
mortgages on their property.
This type of borrowing – «mortgage equity withdrawal» – worries
economists because it means homeowners are increasingly exposed to a slump
in house prices. But the CML repeated its view that there was not a serious risk
of a crash while interest rates and unemployment were at their lowest levels for
decades.
«We do not anticipate any shocks to the market that would cause serious
problems,» Michael Coogan, director general of the CML, said. «July’s figures
support the picture of a housing market that remains stronger than expected.»
Separate figures showed that lending by the big high street banks rose by
£5.5bn in July, compared with June’s increase of £5bn. Roger Brown, executive
director of the British Bankers’ Association, said: «The major banks’ lending
was buoyant in July.»
Independently, the Building Societies Association released data showing
approvals – loans agreed but not yet made – stood at £4.lbn, compared with
£3.8bn in June.
(by philip thornton Economics Correspondent)
Vocabulary
warning [‘wO:nIN] n предостережение, предупреждение
surge [sE:dZ] n зд. резкий скачок
mortgage [‘mO:gIdZ] n ипотека, залог
unsustainable [An sq’steIn qb(q) l] a без поддержки, неустойчивый
unanimously [ju:’nxnImqslI] adv единодушно, единогласно
sustain [sq’steIn] v поддерживать, защищать
erode [I’rqVd] v разрушать, подрывать
slump [slAmp] n внезапный спад
imply [Im’plaI] v подразумевать, предполагать
imprudent [Im’pru:d(q)nt] a неблагоразумный, опрометчивый
swap [swPp] v менять(ся), обменивать(ся)
77
equity [‘ekwItI] n справедливость, право справедливости, акция
withdrawal [wID’drO:ql] n отзыв, изъятие, отмена, аннулирование
expose [Ik’spqVz] v подвергать (опасности, случайности)
anticipate [xn’tIsIpeIt] v ожидать, предвидеть, предчувствовать
buoyant [‘bOIqnt] a оживленный (экон.), способный держаться на поверхности
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Mortgage; lending; monetary policy; dept burden; economic shock; housing
market.
Ex. 2. Comment on the statements and quotations:
1. The recent surge in consumer borrowing showed mortgage lending hit
a record high last year.
2. Bank’s policy of cutting interest rates is encouraging householders to take on
unsustainable levels of debt.
3. The scale of the debt burden meant they might cut their spending plans.
4. The size of the debt mountain was «necessarily unsustainable or imprudent».
5. There was not a serious risk of a crash while interest rates and unemployment
were at their lowest levels for decades.
6. What we call real estate – the solid ground to build a house on – is
the broad foundation on which nearly all the guilt of this world rests.»
(Nathaniel Hawthorne )
7. «It is a comfortable feeling to know that you stand on your own ground. Land
is about the only thing that can’t fly away.»
(Anthony Trollope)
8. Everyone says buying your first apartment makes you feel like an
adult. What no one mentions is that selling it turns you right back into
a child.
(Anderson Cooper)
Ex. 3. Make up a dialogue. Work in pairs.
One of you is a reporter that contributes for a popular newspaper. You interview
a banker, because your readers want to know how dangerous for their budget
mortgage lending is.
\
Ex. 4. Deliver your speech:
A. You are a banker that expresses his warning over the recent surge in consumer borrowing.
B. You are an expert that tries to tell the audience all the truth about advantages and disadvantages of mortgage lending.
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Ex. 5. Find word combinations in the text that can be translated in the following
way:
Побить все рекорды; побуждать домовладельцев залезать в долги;
стремительный рост; не менять процентную ставку; поменять кредитора;
урезать расходы; улучшить условия жизни; уровень безработицы;
в течение десятилетий.
Ex. 6. Translate the following word combinations, taken from the text:
Surge in consumer borrowing; policy of cutting interest rates; levels of debt;
debt mountain; debt burden; house price crash; a global slump; to cause serious
problems; interest rate; the big high street banks.
Ex. 7. Translate the sentences from English into Russian, paying special attention to the words from vocabulary notes.
1. Hazardous Substances Act, which ban the use of certain dangerous
substances and require warnings and safety information on the labels of
others. 2. During the late 1950s the Brazilian economy surged forward as
heavy industries–iron, steel, and automobiles–and basic infrastructure–roads,
communications, and construction–expanded. 3. How much money will I need
to put aside to pay for fixed or regular periodic expenses, such as rent and
mortgage payments? 4. Forests in Russia are being logged at unsustainable
levels now. 5. The leader of the alliance was unanimously chosen to be prime
minister. 6. Areas of Europe have enough rain to sustain agriculture. 7. The
monopoly status of the company has eroded during the 1990s. 8. By 1994 the
German economy had recovered from its slump. 9. Both science and technology
imply a thinking process. 10. He considered it an imprudent alliance.
11. In the general election the two candidates swapped bitter charges. 12. CocaCola reduced its equity in joint ventures to 40 percent. 13. There is a threat
of withdrawal of business licenses from firms accused of unethical practices.
14. The economies became increasingly exposed to risk from outside. 15. They
conduct surveys to determine what share of the market the new model can
anticipate. 16. Тhe effects of these problems have been greatly eased by the
state’s buoyant economy.
Ex. 8. Translate the sentences from Russian into English, paying special
attention to the words from vocabulary notes.
1. Несмотря на предостережения об опасности курение, количество
заядлых курильщиков возрастает. 2. Правительство пытается принять
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меры для снижения новой волны инфляции. 3. Если не выплачивать
ипотечный кредит, банк имеет право продать собственность, которая
была заложена в счет погашения кредита. 4. Политика этой партии
напоминала карточный домик, неустойчивый при малейшем кризисе.
5. Они все до единого отказались работать при таком руководстве.
6. Охота и рыболовство поддерживают население этой бедной страны.
7. Выступления кандидата подорвали доверие избирателей. 8. Они хорошо
помнят экономический спад 90-х годов. 9. Демократия предполагает,
прежде всего, свободу выбора. 10. Все осудили его опрометчивый
поступок. 11. В этом фильме главные герои обменялись своими телами.
12. Мы уважаем принципы закона и справедливости. 13. Нам пришлось
аннулировать договор. 14. Наша страна всегда подвергалась влиянию,
как со стороны востока, так и запада. 15. Они предполагали получить
большой доход.
Read and translate the text:
Gas Ring
Chile’s search for reliable suppliers
Over the next couple of years Chile is likely to be Latin America’s fastestgrowing economy, as it was for much of the 1990s. But there is one big potential
brake: energy. With little oil or coal of its own, Chile imports two-thirds of its
energy, relying especially on Argentina’s natural gas. Some $4 billion has been
invested in gas pipelines and gas-fired power plants. Until recently, Chile was
importing 20m cubic meters of Argentine gas per day. This provided a quarter of
central Chile’s electricity and almost 60% in the north.
But Argentina’s government has frozen the price of gas at home: consumption
has soared and investment fallen. Since last year it has imposed unilateral cuts
in gas exports to Chile of 20% (and at times 50%). Chile has avoided power
cuts, mainly because heavy winter rains boosted hydroelectric output. But it
urgently needs more reliable suppliers.
One solution might be Bolivia, which has South America’s largest gas
reserves after Venezuela. But Bolivia still smarts at Chile’s annexation of its
mineral-rich coastal territory in a 19th-century war. It refuses to sell gas to Chile.
So Chile is looking elsewhere. First, ENAP, the state oil company, plans to
award a contract in October for the supply of liquefied natural gas (LNG)
and a $400m re-gasification plant near Santiago. A second, more ambitious, plan
is for a single «energy ring» in South America’s southern cone which would
incorporate gas from Peru’s Camisea field. This would use existing pipelines
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across the southern cone. It would add at least one more, along the Pacific coast
from Peru to Chile.
One obstacle is Chile’s quarrel with Peru over their maritime border. But
supply cuts for nationalist reasons would be less likely if they also affected
Argentina and Brazil, and the project would include some form of supply
insurance.
The bigger question is whether the «ring» is the best design for energy
integration. The 1,20okm (750-mile) pipeline from Peru to northern Chile could
cost up to $1 billion. A possible extension to Santiago would increase demand,
but over a distance at which it becomes cheaper to import liquefied gas (indeed
Peru might be a supplier for the ENAP plant). Transport costs would make
Peruvian gas uncompetitive in Argentina. And Camisea may not have enough
gas to supply the southern cone as well as the home market and planned LNG
exports to North America.
The main purpose of the «ring» appears to be to coax Bolivia (an observer
at the talks) into bigger gas exports. «It’s amazing how transforming this into
a multilateral issue has cut through bilateral difficulties,» says Rudolf Araneda,
a manager of a Chilean pipeline. Bolivia has resumed talks on a second pipeline
to Argentina (potentially freeing up more Argentine gas for Chile) which it broke
off earlier because of political turmoil. The «ring» means that Bolivia would no
longer hold all the cards in the southern cone’s power game.
Vocabulary
brake [breIk] n тормоз
pipeline [‘paIplaIn] n трубопровод
soar [sO:] v взлетать, стремительно повышаться
impose [InI’pqVz] v вводить (налог), налагать (штраф)
unilateral [«ju:nI’lxt(q)rql] a односторонний
smart [smQ:t] v страдать
annexation [«xnek’seIS(q)n] n аннексия, присоединение
to award a contract [q’wO:d] заключить контракт (государственное
ведомство с частной фирмой)
liquefied [‘lIkwIfaId] а сжиженный
obstacle [‘Pbstqk(q)l] n препятствие, помеха
maritime [‘mxrItaIm] a морской, приморский
affect [q’fekt] v воздействовать, влиять, наносить ущерб, вредить
extension [Ik’stenS(q)n] n протяженность, удлинение, увеличение
coax [kqVks] v добиваться чего-либо с помощью уговоров
multilateral [‘mAltI ‘lxt(q)rql] n многосторонний
bilateral [baI’lxt(q)rql] а двусторонний
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resume [rI’zju:m] v подводить итог
turmoil [‘tE:mOIl] n беспорядок, суматоха
Ex. 1. Here are some words and word combinations. Give a description of each
of them without translating.
Pipeline; a gas-fired power plant; supplier; South America’s southern cone;
multilateral.
Ex. 2. Find word combinations in the text that can be translated in the following
way:
Freeze the price; consumption has soared and investment fallen; to boost
hydroelectric output; reliable suppliers; liquefied natural gas; maritime border;
supply insurance; to coax smb into bigger gas exports.
Ex. 3. Translate the following word combinations, taken from the text:
Транспортные расходы; внутренний рынок; подвести итог переговоров;
политические беспорядки; иметь все преимущества в игре; повышать
выпуск энергии гидроэлектростанциями; заморозить цены; надежные
поставщики.
Ex. 4. Translate the sentences from English into Russian, paying special
attention to the words from vocabulary notes.
1. In 1977 shipment of oil began through a 1,300-km pipeline designed to carry
2 million barrels of crude oil per day. 2. Тhe unemployment rate soared as
unstable businesses declared bankruptcy. 3. Multilateral economic sanctions,
especially those imposed by an international organization, such as the UN
are generally more effective. 4. Hitler launched his own expansionist drive
with the annexation of Austria in March 1938. 5. There are such practices as
favoritism in the award of contracts for public works or other public purposes
and the expenditure of public funds to the advantage of favored individuals.
6. The development program faced major foreign and domestic obstacles.
7. The automobile industry is one of the most important industries in the
world, affecting not only the economy but also the cultures of the world. 8. The
Internet is an extension of a computer network. 9. The two countries agreed to
resume diplomatic relations immediatelу. 10. Issuing new coins and banknotes
led to economic turmoil in the country.
Ex. 5. Translate the sentences from Russian into English, paying special
attention to the words from vocabulary notes.
1. После окончания второй мировой войны в Европе было построено
много трубопроводов для транспортировки газа и нефтепродуктов.
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2. Количество коммерческих банков в России возросло до 2600 к середине
1995 года. 3. Совет по безопасности ООН может наложить экономические
санкции на страну, которая признана агрессором. 4. Двусторонние и
многосторонние торговые соглашения подписаны между Европейским
Союзом и большинством развитых стран. 5. В результате войны к стране
были присоединены несколько соседних провинций. 6. США получили
большие заказы на производство военной техники во время второй
мировой войны. 7. Существует несколько препятствий для подписания
этого контракта. 8. Рост промышленности сильно влияет на развитие
общества во всех его аспектах. 9. Она уговорила директора дать ей
возможность одной заниматься этим проектом. 10. Через неделю обе
стороны официально подведут итоги переговоров. 11. Политические
беспорядки и неопределенность внутри страны привели ее к кризису.
Ex. 6. Answer the following questions:
1. What are the main sources of energy in the world?
2. What is ‘crude oil’?
3. How is oil/natural gas used?
4. What are alternative sources of energy?
5. What kinds of products are transported through energy pipelines?
6. What is done to keep pipelines safe?
7. How are routes of pipelines determined?
8. Do pipelines affect the environment?
9. What should be the top policy priority on energy?
10.Isn’t it vitally important to reduce energy use?
11.Do free markets ensure adequate supplies of energy at reasonable rates?
12.What are gas wars? What countries are involved into them? What is
behind them?
Ex. 7. Comment on the following quotations:
In politics, nothing happens by accident. If it happens, you can bet it was
planned that way.
(Franklin D. Roosevelt)
The problems that exist in the world today cannot be solved by the level of
thinking that created them.
(Albert Einstein)
Nuclear power, once regarded as petroleum’s natural heir, has become less and
less attractive as its numerous drawbacks come to light. Coal, the other fossil
fuel, is ultimately as exhaustible as oil.
(Lester Brown)
Ours is the most wasteful nation on Earth. We waste more energy than we
import. With about the same standard of living, we use twice as much energy
per person as do other countries like Germany, Japan, and Sweden. (Jimmy
Carter, 39th President of the United States)
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No matter how advanced our economy might be, no matter how sophisticated
our equipment becomes, for the foreseeable future we will still depend on fossil
fuels.
(George W. Bush)
The bottom of the oil barrel is now visible. (Christopher Flavin)
Mixing oil and testosterone can be dangerous. (Myriam Miedzian)
The use of solar energy has not been opened up because the oil industry does
not own the sun.
(Ralph Nader)
Ex. 8. Deliver your speech:
1. Alternative power generations.
2. Ways to avoid energy crises.
Ex. 9. Render the following article into English:
Газовый конфликт между Россией и Украиной
2005–2006 года
Газовый конфликт между Россией и Украиной был вызван
намерением российского концерна «Газпром» (поддержанным российскими
властями) повысить цены на природный газ, поставляемый на Украину.
Этот шаг соответствовал общей направленности действий «Газпрома» по
приведению экспортных цен на газ для постсоветских государств в бо́льшее
соответствие с уровнем цен на европейском газовом рынке.
В марте 2005 года компания «Нафтогаз Украины» предложила
«Газпрому» отказаться от бартерных схем при взаиморасчётах и перейти
к прямым денежным расчётам – в том числе, пересмотреть тарифы на
транзит российского газа в Европу по территории Украины. Украина
предложила повысить с 2006 года тарифы на транзит до $1,75–2 за
1 тыс. куб. м. на 100 км.
В июне 2005 года российский «Газпром» на переговорах с Украиной
о режиме транзита и поставок газа предложил, начиная с 2006 г. поднять
цену за российский газ до среднеевропейского уровня ($160–170 за тыс.
кубометров) с одновременным повышением тарифа за газовый транзит
в Европу, а также перейти к полностью денежной, а не натуральной оплате
транзита и изменить методику расчёта цен на газ.
В июне 2005 года вице-премьер Украины категорически отверг
российское предложение, настаивая на продлении существующего режима
договорённостей по газу с Россией до 2013 года.
Украинская сторона до декабря отказывалась принять российские
требования. Газовый вопрос перешёл с уровня «Газпрома» на
правительственный уровень.
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В связи с не подписанием контрактов на поставку газа в 2006 году,
1 января 2006 подача газа на украинский рынок была прекращена.
Однако, поскольку основные поставки российского газа в Европу
осуществляются через газотранспортную сеть, проходящую по территории
Украины, то, Украина в течение первых дней 2006 года осуществляла
несанкционированный отбор газа из экспортного газопровода для
удовлетворения собственных потребностей.
Конфликт был формально завершён в ночь с 3 на 4 января подписанием
соглашения, которое, судя по первоначальным официальным заявлениям,
удовлетворило обе стороны. Во второй половине января Украина
возобновила сверхплановый отбор российского газа из транзитных
газопроводов, что отразилось на поставках европейским покупателям.
Некоторые страны Центральной и Восточной Европы воспользовались
этой ситуацией для того, чтобы обвинить Россию как ненадёжного
энергопоставщика.
(Материал из Википедии – свободной энциклопедии)
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GLOSSARY OF BUSINESS TERMS
Unit I.
sustainable growth – growth that it is possible without causing economic
problems. Economic growth that it is possible to sustain (make continue)
without causing environmental problems
sustainable development – development that meets the needs of the present
without compromising the ability of future generations to meet their own needs
industrial efficiency – the ability of an industry to produce goods cheaply so
that they can be sold at a low price and still make a profit
allocating efficiency – how well the amount or share of something allocated
(should be used) to a person or organization
market production – something that one individual offers to make or sell to
another individual at a price agreeable to both
competitive market – a market in which many sellers compete against each
other to attract customers.
market economy – an economy in which companies are not controlled by the
government but decide for themselves what to produce and sell, based on what
they believe they can make a profit from
free markets – approving a system of buying and selling that is not under the
control of the government, and where people can buy and sell freely, or an
economy where free markets exist, and most companies and property are not
owned by the state
competitive free markets – markets in which numerous buyers freely interact
with numerous competitive firms
supply and demand – the relationship between the amount of products and
services that are for sale and the amount that people want to buy, especially in
the way this affects prices
output – the amount of goods or services produced by a person, machine,
factory etc.
monopoly – a situation where a business activity is controlled by only one
company or by the government, and other companies do not compete with it
competitive prices – are similar to or less than other companies’ prices for the
same product
patent – a legal document giving a person or company the right to make or sell
a new invention, product, or method of doing something and stating that no
other person or company is allowed to do this
natural monopoly – an industry where there is only one producer because of the
nature of the activity. It leads to socially inefficient outcomes: too little output
and too high a price
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government intervention – the act of becoming involved in a situation in order
to help deal with a problem
penalties – a punishment for breaking a law or rule. An amount of money
someone has to pay if they do not keep to a legal agreement, especially an
agreement with bank
ban(s) – an official order or law that forbids something from being used or done
subsidies – money that is paid by a government or organization to make
something such as a particular food or product cheaper to buy, use, or produce
tax(es) – an amount of money that you must pay to the government according to
your income, property, goods, etc. that is used to pay for public services
social benefits – money provided by the government to people who are old
and no longer work, or to people who are unemployed, ill, or on a low income;
concerning human society and its organization, or the qualities of peoples’ lives
privatization – the act of selling a company or activity controlled by the
government to private investors
liberalization – to make a system, law or moral attitude less strict
Unit II.
globalization – the tendency for the world economy to work as one unit, led
by large international companies doing business all over the world. Some of
the things that have led to globalization are the ending of trade barriers, the
free movement of capital, cheap transport, and the increased use of electronic
systems of communication such as the Internet
global trade – trade (activities) designed to cover the world as a whole
global economy – the economy of the world seen as a whole
financial institution – an organization such as a bank or insurance company
where people, companies, or governments put their money, which it invests to
produce a profit
foreign investment – investment in a country other than your own
trade barrier (barrier to trade) – something that makes trade between two
countries more difficult or expensive, for example, a tax on imports
export income – the total amount of money obtained by a country from export
hot money – money that is moved quickly from place to place in order to be
invested in the most profitable things in different places. Money obtained from
illegal activities that is invested in way which hide its source
viable community – a viable community is making a profit and can continue to
do business
underemployed – not having enough work to do
preventative actions – intended to stop something happening
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Unit III.
colonial trade – a situation when a powerful country establishes its own trade
in a weaker one
global corporation – a corporation that considers the whole world to be its
market
division of labour – a way of organizing work in which each member of a group
has one particular job to do instead of each member doing a share of all the jobs
specialization – a limit of all or most of your business to a particular activity
labour productivity – the rate at which goods produced, and the amount
produced in relation to the time, money and work needed to produce them
household manufactures – a manufacture that is owned by someone. A private
manufacture
barter – a system of exchanging goods or work for other goods or work, rather
than using money
human wants – goods and services you are in need of
treaty – a formal agreement between two people, companies, countries etc.
purchase – the act of buying something
profit(s) – money that you gain from selling something, or from doing business
in a particular period of time, after taking away cost
export(s) – a product or service that is sold to another country
import(s) – something that is made in one country and bought into another,
usually in order to be sold there
relative price – having a particular value when compared with others
comparative advantage – the advantage that one country has over another
because it is better at making a particular product. The idea that countries
should specialize in making the product that they are particularly good at
making, and should import products that other countries are better at making
absolute advantage – the advantage that one country has over another because
it can make a product more cheaply
trade (commodity) market – a market where commodities (goods) are bought
and sold
labour (job) market – the number and type of jobs that are available in
a particular place
disposable income – income that is available for someone to spend or save after
they have paid tax and paid for the things that they need such as accommodation
and food
perk(s) – something in addition to money that you get for doing your job, such
as car
added value – an increase in the value of something that has been worked on,
combined with other things etc. so that it can be sold in a new form
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Unit IV.
command economy – an economy in which the government of a country owns
most of the industry and makes all economic decisions
laissez faire – the principle of allowing people’s activities, especially business
activities, to develop without control
traditional economy – an economy in which production and distribution are
handled along the lines of long-standing cultural traditions.
mixed economies – an economy which is a mixture of the three pure forms
(market, command, traditional)
standardized system – a system in which all the things of one particular type are
made the same as each other
counterfeiter – someone who copies something that it looks like something else,
usually illegally
copyright – a legal right to be the only producer or seller of a book, play, etc. for
a particular length of time
GDP (gross domestic product) – the total value of goods and services produced
in a country’s economy, not including income from abroad
business cycle – a cycle in which business activity increases, decreases then
increases again
fiscal policy – government policy concerned with raising money, especially
through taxation, and how this money is spent
circular flow (flow chart) – a drawing in the form of shapes and lines, showing
the series of stages in a process and how they are connected with each other
consumption expenditures – amounts of money spent by people buying goods
and services in an economy
investment expenditures – the money that a government, organization or person
spends (puts into a business activity) during a particular period of time in order
to make a profit
net exporter – a country that exports more of a particular thing than it imports
trade balance – the difference in the total value of imports and exports between
two countries or areas. The part of a country’s balance of payments that relates
to the value of goods and services imported and exported
GNP (gross national product) – the total value of goods and services produced
in a country’s economy, including income from abroad
underdeveloped infrastructure – poor basic systems and structures that
a country needs to make economic activity possible (transport, power supplies,
communications)
underdeveloped country – a country that is poor and where there is not much
modern industry
developed country – a rich industrial country with a lot of business activity
89
developing country – a country that is changing its economy from one based
mainly on farming to one based on industry
transition economy country – a country that is changing its economy from one
state or form to another
finished goods – goods have been made completely and are ready to be sold
microeconomist – someone who studies a part of the economy, such as the
operations of one company or person
macroeconomist – someone who studies the economy of a whole area, for
example, a whole country or the whole of a particular industry
trickle-down strategies – the belief that additional wealth gained by the richest
people in society will have a good economic effect on the lives of everyone
free trade – a system in which goods can be bought or sold between countries
without any restrictions such as tariffs and quotas
tariff(s) – a tax on goods coming into a country or going out of it
trade surplus – a surplus related to imports and exports, rather than other
payments
trade deficit – the amount by which the money going out of a country to pay for
imports is more than the amount coming in from exports
Longman Business English Dictionary. England, Longman, 2006, 531 p.
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CONTENTS
UNIT I «You can’t have the family farm without the family.».......................................... 3
BUSINESS & SOCIETY.................................................................................................... 3
READING COMPREHENSION................................................................................ 11
TEXTS FOR................................................................................................................ 12
DISCUSSION.............................................................................................................. 12
UNIT II «Arguing against globalization is like arguing the laws of gravity».............. 19
WORLD ECONOMY........................................................................................................ 19
READING COMPREHENSION ............................................................................ 25
TEXTS FOR................................................................................................................ 25
DISCUSSION.............................................................................................................. 25
UNIT III «Where the whole man is involved there is no work.
Work begins with the division of labor»........................................................................... 35
THE INTERNATIONAL DIVISION OF LABOUR................................................. 35
READING COMPREHENSION................................................................................ 42
TEXTS FOR................................................................................................................ 43
DISCUSSION.............................................................................................................. 43
UNIT IV «If we cannot end now our differences,
at least we can help make the world safe for diversity»................................................... 52
DIFFERENTIATION BASE OF THE COUNTRIES............................................... 52
READING COMPREHENSION................................................................................ 68
TEXTS FOR................................................................................................................ 68
DISCUSSION.............................................................................................................. 68
GLOSSARY OF BUSINESS TERMS.............................................................................. 86
91
Учебное издание
Акимова Ольга Владимировна
INTERNATIONAL BUSINESS
ADMINISTRATION.
Учебно-методическое пособие
Публикуется в авторской редакции.
Компьютерная верстка И. Н. Мороз
Сдано в набор 24.05.18. Подписано к печати 18.06.18.
Формат 60×841/16. Усл. печ. л. 5,28.
Уч.-изд. л. 5,68. Тираж 50 экз. Заказ № 282.
Редакционно-издательский центр ГУАП
190000, Санкт-Петербург, Б. Морская ул., 67
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