Economic Analyses †Netherlands Free Essays

Netherlands National Economy: 2008-2012 Compulsory Assignment April 24 2012 Spur: MM 2nd Sem. Subject: Descriptive Economics Table of contents _ Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. We will write a custom essay sample on Economic Analyses – Netherlands or any similar topic only for you Order Now . †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦2 GDP†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 3 Unemployment Rate†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦ 6 Inflation Rate†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦9 Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. 12 Bibliography†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦13 Introduction _ This report is written for the purpose of the completion of a compulsory assignment that was allotted to the second semester students of the Marketing and Management spur. The theory and data that is described herein is related to the subject of descriptive of economics which is a branch of macroeconomic studies. The specifics of the assignment are, according to my understanding, to find a national economy of our choice; analyze the nation’s recent economic growth rate known as GDP (Gross Domestic Product); analyze the inflation rate; analyze the unemployment rate; present visual data to support the written information; explain in advance what GDP, inflation and unemployment is from the definitive perspective. The national economy that I have chosen to analyze is that of the Netherlands. The reason that I have specifically chosen this economy is twofold. Firstly, the Dutch economy it is one of many economies within the European Union that is having difficulties recovering from the global financial crisis of 2008/9 and the current crisis that is further evolving in the European Union, more specific insight to this developing may prove beneficial in the post-graduation period when exploring possible job opportunities. Secondly, the NGO Spark that is channeling capital into International Business College Mitrovica is located in Amsterdam, Netherlands; therefore it is interesting to know what economic environment the organization is surrounded by. Dutch Economy The Netherlands have a long history of trading with other countries in the world and have throughout time become very dependent on trade. The Dutch economy is based on a free market economy system with the government’s main purpose being to set regulations and taxations in the economy. Furthermore, the Netherlands are part of the European Union and have closely bound their economy to the EU by joining the European Monetary Union, that is to say the euro. The Dutch are advocators of free international trade and the reduction and removal of tariffs since it is obvious that they would benefit from more free trade. Past expansions of the Dutch economy were mainly due to an emphasis being put on increasing foreign trade, consumer spending and investment. When compare to other economies the Netherlands rank as the fifth largest economy in Europe with relatively stable industrial relations. When it comes to industrial activities, Netherlands are primarily occupied with food processing. The country is highly technologically advanced when it comes to agricultural development and uses a relatively small labor force to regulate agricultural cultivation. Currently it holds an estimated population of 17 million people. Average unemployment rate in the country is 4. 77 percent; average inflation rate is 2. 08 percent; average GDP growth rate is 0. 61 percent per quarter. Gross Domestic Product (GDP) GDP is the sum in market value of all goods and services (products) that a country has produced in a given span of time, i. e. a year or a quarter of a year multiplied by four. It is a statistical measurement expressed in monetary value. In order to get a comprehensive value of goods and services the prices of those products are added together to get the GDP value. This is only relative to final products and not intermediates such as components that are used to produce the final good or service with the exception of those products that are produced and then stored in inventory; those have momentary or short GDP value. The term â€Å"all goods and services† applies only to the country’s output that is legitimate and legal excluding all products derived from illegal activity and those products that are produced and consumed in a household, i. e. homegrown vegetables used only for personal consumption. Other products that are not included into the GDP are those that are not newly produced and sold, this applies to used goods such as cars or machinery. GDP is not concerned with nationality, e. g. if an individual of American nationality opens a company in the Netherlands producing a particular product and sells it in the Netherlands, that is also counted into Netherlands GDP. There is a clear line between GDP and a GDP growth rate. The GDP growth rate is expressed as a percentage and it uses the Real GDP (GDP or Nominal GDP minus inflation or increases in price). It shows by what rate (percentage) the economy as a whole has expanded or contracted from one period to another period (Mankiw 2008). GDP Netherlands: January 2008 – January 2012 When analyzing the Dutch economy at the peak of the global financial crisis (2009) it is apparent that the Netherlands were affected very deeply (illustrated in the graph above and on the next page). The economy was in a heavy recessive state meaning that the national economy was experiencing a contraction in economic growth or simply put, the national economy was shrinking. The recession or negative growth started in 2008 for the Netherlands dropping from a positive economic growth rate of 0. 5 percent in the first quarter to -0. 4 percent in the second quarter of the year. This recession was by far the worse that the Dutch economy has ever experienced reaching a record low of -2. 2 percent at the end of the first quarter in 2009. The recession was in effect up to mid-2009 with the economy starting to experience positive growth again in the third quarter (0. 8 percent) of the same year. From that point Netherlands GDP was subject to fluctuation in growth rate, however staying well on the positive side of growth all the way up to mid-2011 where the economy experienced another plunge and fell to -0. 4 and -0. 6 percent in the third and fourth quarter of the year. The reasons for the recession in 2008 and 2009 are not of an ambiguous nature. The world as a whole had entered a recession primarily driven by the financial disaster created by the banks in the United States. People all over the world had stopped spending money which led to companies reducing trade and production. These developments had a negative impact on the Dutch economy which receives a large portion of its GDP from trading with other national economies. In addition to the negative turn in trade during the recession the Netherlands also experienced a reduction in traffic in its harbors which serve as a center for European transport and contraction to internal spending form companies and households. When examining the more recent recession beginning in 2011 a number of factors were uncovered in relation to the cause of contraction in economic growth. Again the external environment has had a tremendous effect on the Dutch economy this time sparked by the financial crisis that has been unfolding in the European Union. Starting with ongoing financial and economic breakdown of Greece and more recently Spain and Ireland, the Netherlands have been greatly affected by those countries inability to pay off their debts. This has led to a reduction in trade again for the Dutch primarily because the risk that is now associated with the European Union and its lack in competency in regulating the financial crisis. Further on, internal demand and expenditure has again decreased from households and companies. As to why households have stop spending money there is no single answer. One reason can be the rise of unemployment which will be discussed later. Another reason may be people’s uncertainty as to the future value of their currency because of the financial crisis making them unwilling to spend and more eager to save thus withdrawing their money from the circular flow of the economy. In regards to why companies have stopped spending in the Netherlands it can be explained by emphasizing the interconnectedness between households and companies in a nation’s economy. Figure 1 illustrates the relationship between households and companies. If there is austerity in spending form households there is a negative effect on the companies’ willingness to produce goods and services, thus aggregate supply is reduced which also reduces the companies’ expenditure on factors for production. Lastly, the Dutch government has also cut back its spending from 2011 and made adjustments to the national budget which means that there was reduction of injections into the economy. Overall it can be deducted that the four primary factors which drive the GDP growth rate (investment, government expenditure, consumption, exports) have taken a beating due to the ongoing financial crisis and the physiological effect that it had on Dutch citizens causing the negative impact on the circular flow between households and firms in the national economy (Kaidusch, P. Ott, C. 2012). Unemployment Rate When speaking about the unemployment rate of a nation it is important to understand how such a rate is derived. There are two essential components needed to calculate the unemployment rate, the first being the number of people that comprise the labor force. Labor force is the number of those people in the country that are employed, either in someone else’s business or their own business, plus the number of those people that are unemployed excluding fulltime students, retirees, homemakers and those incapable of working due to disability or health issues. The labor force is divided by the number of those unemployed and then converted into percentage equaling the unemployment rate (Mankiw 2008). Netherlands Unemployment Rate: January 2008 – January 2012 When looking above at unemployment chart for the Netherlands covering the same period as the GDP it appears that following the start of the recession in 2008 the unemployment rate went upwards (negative increase) starting to slowly rise in the second half of 2008 and shooting up from 3. 6 percent in January 2009 up to 4. in the first quarter of the same year. If we refer back to the GDP chart we can see that exactly at this point of time the Dutch economy experienced its first serious plunge in the GDP rate going from 0 percent down to 1. 1 percent. When further following the trend of the unemployment rate it is relatively easy to spot that it is closely related to the GDP rate in 2009. Basically, with the contraction in the GDP it is the natural order of things that unemployment rises since as explained before companies are spending less for factors of production, i. . less workers are needed. However, if we compare the general unemployment rates for the entire euro area (see chart on the next page) we can see that the Netherlands are actually a lot better off than a large portion of the other European countries that share the same currency with general unemployment rate being above 7. 2 percent since 2008 and reaching 10. 4 percent at the end of 2011. Through this we can deduct that the rises in the unemployment rate in the Dutch economy have been of slighter significance if compared on a larger scale. The question maybe posted as to why the Netherlands employment rate suffered much less than other euro area countries. There are a number of answers but only a few deemed essential will be stated in this report. First, when the financial crisis reached the Dutch economy in 2008 a lot of companies collected and kept their workforce fearing a future shortage; however this was only possible at the price of productivity due to the law of diminishing returns on factors of production. This means that the companies were overstaffed leading to a lot of workers being less productive yet still employed. Second, government expenditure was relatively large with high employment in the public sector up to 2011, when the Dutch austerity measure came into effect. Third, in 2009 the government took certain measures to extenuate the damage of the financial crisis on the unemployment rate by introducing relief programs and subsidies. Lastly, what contributed to the unemployment rate stabilizing sooner than expected in the first recession is that there was and still is a rising number of self-employed individuals in professional services, arts, and creative industries. These people adjusted their prices to the fall in demand easier than large scale businesses and managed to stay in business proving how important SME (Small-medium enterprises) are to the economy. However, now it can be observed that the unemployment rate is rising again due to a new recession that started in 2011. Companies in the Netherlands are adjusting their workforce to the demand in the economy leading to higher unemployment supporting the economic theory all factors of production are variable in the long-run. Government expenditure has decreased cutting jobs in the public sector also causing higher unemployment. It would appear that exactly those things that have contributed to the Dutch economy staying under the general euro area unemployment rate have been cut and reduced in the pursuit of creating a more efficient and effective economy (Janssen 2011). Inflation Rate _ Inflation in macroeconomic terms is the general rise in price of good and services in a given economy and is closely related to the value of money. Inflation occurs when there is an access of money being pumped into the economy usually causing a rise in demand and subsequently a rise in price. The inflation rate in a country is the percentage of monetary value by which prices have risen in general. It is measured from one year to the next. Inflation causes the purchasing power of money to decrease meaning that that consumers can purchase less goods and services with the same particular sum of money then before inflation has happened, in simple terms inflation causes money to lose it value (Mankiw 2008). The main reason as to why inflation is negative for the economy is because it can have the effect of frightening people from spending money and herd their saving in banks and even worse out of banks causing a complete withdraw of their capital from the economy. Netherlands Inflation Rates: January 2008 – January 2012 When examining the inflation chart for the Netherlands for the period between 2008 to the start of 2012 it can be observed that the inflation rate decreased just about when the global recession hit the Dutch economy. Throughout the recessive period the inflation rate continued to decrease with very little fluctuation up to the point in 2009 when the economy was recovering from the recession. From that point there was a steady rise again in the inflation rate until the new recession took place in mid-2011 with a declining trend passing over into 2012. Reasons as to why the Netherlands were experiencing a decrease in the inflation rate can be explained as follows. A very base explanation is that there was less money circulating in the Dutch economy which brought about the increase of value in the available oney supply, however there is more to the story. Since the Netherlands are part of the European Union it is not the responsibility of the Dutch Central Bank to regulate policies regarding inflation but that of The European Central Bank. Following the global meltdown of the financial system on a global scale in 2008, the European Central Bank under the presidency of Jean-Claude Trichet did not fol low the action of the Federal Reserve in the United States and the Bank of England in the UK by cutting its interest rates which have a definitive impact on inflation. What happens is that when interest rates are cut people tend to borrow more money which results in more money circulating in the economy. â€Å"Inflation is an autonomous occurrence that is impacted by money supply in an economy. Central governments use the interest rate to control money supply and, consequently, the inflation rate. When interest rates are high, it becomes more expensive to borrow money and savings become attractive. When interest rates are low, banks are able to lend more, resulting in an increased supply of money. –Economy Watch 2010 This is a viable explanation as to why Inflation rates started to decrease during the recession in the Netherlands who followed a very similar inflation rate trend as all the countries in the euro area during that period, as illustrated in the chart below. As the Dutch government took measures to reduce the damage to the unemployment rate by giving subsidies and relief programs the money supply in the economy started going up a gain, people started spending more and the inflation rate began to steadily rise again as shown on the chart for the Netherlands inflation rate, see previous page. By following this logic it is easy to deduce why inflation rates are now rising again, due to the austerity program that the government brought into effect in 2011 cuts have been made to the spending budget once omre reducing the money supply in the economy. The Relation between Unemployment and Inflation Up to this point in the report we have observed that there is a connection between GDP and the unemployment rate. When GDP is down overall productivity and demand is down in the economy which causes less demand for work force that is a direct factor of production. Thus we could follow what was happening in the Dutch economy when the recession (negative GDP for two quarters of a year) took effect and why unemployment did rise. Further on, the relation between unemployment and inflation will be examined. In the long-run it can be observed that unemployment and inflation are not connected since they have different determents in the long-run. For the unemployment rate some long-run determinants are minimum wage laws, power of labor unions, and how effective job searching is. The main factor that determines the inflation rate in the long-run is the growth in the money supply (Mankiw 2008). However, in the short-run the two are relevant to each other and to policy makers in the government. In the short-run there is an economic trade-off between inflation and unemployment putting governments in difficult positions. Do they pump subsidies and other monetary aid into the economy and through this increase the aggregate demand in the economy subsequently increasing inflation and decreasing the unemployment rate, or, do they make cuts in spending contracting aggregate demand and thus contribute to the increase to the unemployment rate yet keeping the inflation rate down. The best way to illustrate this trade of is through the Philips curve shown below. A lot could be said on the topic of the Philips curve and its application in macroeconomic theory on the relationship between unemployment and inflation and for this it is recommended that the works of George Akerlof and the research done by Samuelson and Solow should be further referred to. Getting back to the Netherlands it is obvious that Dutch policy makers were faced with exactly this dilemma even more so during the recession of 2008 and 2009. As the government subsidized and lend aid in the economy the unemployment rate seemed to stay at a reasonable unemployment level further aided by the European Central Bank’s inaction in decreasing the interest rates as mentioned earlier in the report. However, as the government starting making cuts and companies readjusted their work force inflation rates contracted unemployment rates rose for the year of 2011. Conclusion When it comes to the GDP growth of the Netherlands it can be concluded that it’s going to take some extensive time for the economy to recover from the damage done by the financial crisis. Of course there is much more that could have been said on the topic of GDP however those issues will be left as the topic of another report of a deeper analytical nature. As to the unemployment rates in the Netherlands even though they have been relatively low in comparison to other countries they are on the rise and forecasts by the Dutch treasury agency have been negative describing that the Dutch government has a hefty challenge ahead of itself in the next couple of years stabilizing the lasting effects of the recession, past and present. In regards to the inflation rates they are currently on the decline and may very well stay that way for the upcoming year since another shallow recession is forecasted for the first two quarters of 2012. In the course of this report it was made evident to me as to how interrelated GDP, unemployment, and inflation are in reality. Furthermore, now there is a clear understanding of what kind of difficult issues policymakers are faced with in the process of regulating this phenomenon called economy. Bibliography 1. Business Dictionary. com (2012), Law of diminishing returns, available at: http://www. businessdictionary. com/definition/law-of-diminishing-returns. html (accessed on April 29, 2012) 2. Countries of the World (2012), Netherlands Economy 2012, available at: http://www. theodora. com/wfbcurrent/netherlands/netherlands_economy. html (accessed on April 28, 2012) 3. Dutch State Treasury (2011) Ministry of finance: Outlook, available at: http://www. dsta. nl/dsresource? objectid=7528type=org (accessed on April 29, 2012) 4. Economy watch (2010) Inflation And Interest Rate, available at: http://www. economywatch. com/inflation/economy/interest-rates. html (accessed on April 29, 2012) 5. Encyclopedia of Nations (2012), The Netherlands – Overview of economy, available at: http://www. nationsencyclopedia. com/economies/Europe/The-Netherlands-OVERVIEW-OF-ECONOMY. html (accessed on April 28, 2012) 6. Kaidusch, P. Ott, C. (2012), Recession in the Netherlands: is the core turning to periphery? , available at: http://cib. natixis. com/flushdoc. aspx? id=62676 (accessed on April 28, 2012) 7. Mankiw, G. (2008), Principles of Macroeconomics, 6th edition, Ohio: SW Cengage Learning 8. Mike Moffatt How to cite Economic Analyses – Netherlands, Essay examples

Economic Analyses †Netherlands Free Essays

Netherlands National Economy: 2008-2012 Compulsory Assignment April 24 2012 Spur: MM 2nd Sem. Subject: Descriptive Economics Table of contents _ Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. We will write a custom essay sample on Economic Analyses – Netherlands or any similar topic only for you Order Now . †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦2 GDP†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 3 Unemployment Rate†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦ 6 Inflation Rate†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦9 Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. 12 Bibliography†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦13 Introduction _ This report is written for the purpose of the completion of a compulsory assignment that was allotted to the second semester students of the Marketing and Management spur. The theory and data that is described herein is related to the subject of descriptive of economics which is a branch of macroeconomic studies. The specifics of the assignment are, according to my understanding, to find a national economy of our choice; analyze the nation’s recent economic growth rate known as GDP (Gross Domestic Product); analyze the inflation rate; analyze the unemployment rate; present visual data to support the written information; explain in advance what GDP, inflation and unemployment is from the definitive perspective. The national economy that I have chosen to analyze is that of the Netherlands. The reason that I have specifically chosen this economy is twofold. Firstly, the Dutch economy it is one of many economies within the European Union that is having difficulties recovering from the global financial crisis of 2008/9 and the current crisis that is further evolving in the European Union, more specific insight to this developing may prove beneficial in the post-graduation period when exploring possible job opportunities. Secondly, the NGO Spark that is channeling capital into International Business College Mitrovica is located in Amsterdam, Netherlands; therefore it is interesting to know what economic environment the organization is surrounded by. Dutch Economy The Netherlands have a long history of trading with other countries in the world and have throughout time become very dependent on trade. The Dutch economy is based on a free market economy system with the government’s main purpose being to set regulations and taxations in the economy. Furthermore, the Netherlands are part of the European Union and have closely bound their economy to the EU by joining the European Monetary Union, that is to say the euro. The Dutch are advocators of free international trade and the reduction and removal of tariffs since it is obvious that they would benefit from more free trade. Past expansions of the Dutch economy were mainly due to an emphasis being put on increasing foreign trade, consumer spending and investment. When compare to other economies the Netherlands rank as the fifth largest economy in Europe with relatively stable industrial relations. When it comes to industrial activities, Netherlands are primarily occupied with food processing. The country is highly technologically advanced when it comes to agricultural development and uses a relatively small labor force to regulate agricultural cultivation. Currently it holds an estimated population of 17 million people. Average unemployment rate in the country is 4. 77 percent; average inflation rate is 2. 08 percent; average GDP growth rate is 0. 61 percent per quarter. Gross Domestic Product (GDP) GDP is the sum in market value of all goods and services (products) that a country has produced in a given span of time, i. e. a year or a quarter of a year multiplied by four. It is a statistical measurement expressed in monetary value. In order to get a comprehensive value of goods and services the prices of those products are added together to get the GDP value. This is only relative to final products and not intermediates such as components that are used to produce the final good or service with the exception of those products that are produced and then stored in inventory; those have momentary or short GDP value. The term â€Å"all goods and services† applies only to the country’s output that is legitimate and legal excluding all products derived from illegal activity and those products that are produced and consumed in a household, i. e. homegrown vegetables used only for personal consumption. Other products that are not included into the GDP are those that are not newly produced and sold, this applies to used goods such as cars or machinery. GDP is not concerned with nationality, e. g. if an individual of American nationality opens a company in the Netherlands producing a particular product and sells it in the Netherlands, that is also counted into Netherlands GDP. There is a clear line between GDP and a GDP growth rate. The GDP growth rate is expressed as a percentage and it uses the Real GDP (GDP or Nominal GDP minus inflation or increases in price). It shows by what rate (percentage) the economy as a whole has expanded or contracted from one period to another period (Mankiw 2008). GDP Netherlands: January 2008 – January 2012 When analyzing the Dutch economy at the peak of the global financial crisis (2009) it is apparent that the Netherlands were affected very deeply (illustrated in the graph above and on the next page). The economy was in a heavy recessive state meaning that the national economy was experiencing a contraction in economic growth or simply put, the national economy was shrinking. The recession or negative growth started in 2008 for the Netherlands dropping from a positive economic growth rate of 0. 5 percent in the first quarter to -0. 4 percent in the second quarter of the year. This recession was by far the worse that the Dutch economy has ever experienced reaching a record low of -2. 2 percent at the end of the first quarter in 2009. The recession was in effect up to mid-2009 with the economy starting to experience positive growth again in the third quarter (0. 8 percent) of the same year. From that point Netherlands GDP was subject to fluctuation in growth rate, however staying well on the positive side of growth all the way up to mid-2011 where the economy experienced another plunge and fell to -0. 4 and -0. 6 percent in the third and fourth quarter of the year. The reasons for the recession in 2008 and 2009 are not of an ambiguous nature. The world as a whole had entered a recession primarily driven by the financial disaster created by the banks in the United States. People all over the world had stopped spending money which led to companies reducing trade and production. These developments had a negative impact on the Dutch economy which receives a large portion of its GDP from trading with other national economies. In addition to the negative turn in trade during the recession the Netherlands also experienced a reduction in traffic in its harbors which serve as a center for European transport and contraction to internal spending form companies and households. When examining the more recent recession beginning in 2011 a number of factors were uncovered in relation to the cause of contraction in economic growth. Again the external environment has had a tremendous effect on the Dutch economy this time sparked by the financial crisis that has been unfolding in the European Union. Starting with ongoing financial and economic breakdown of Greece and more recently Spain and Ireland, the Netherlands have been greatly affected by those countries inability to pay off their debts. This has led to a reduction in trade again for the Dutch primarily because the risk that is now associated with the European Union and its lack in competency in regulating the financial crisis. Further on, internal demand and expenditure has again decreased from households and companies. As to why households have stop spending money there is no single answer. One reason can be the rise of unemployment which will be discussed later. Another reason may be people’s uncertainty as to the future value of their currency because of the financial crisis making them unwilling to spend and more eager to save thus withdrawing their money from the circular flow of the economy. In regards to why companies have stopped spending in the Netherlands it can be explained by emphasizing the interconnectedness between households and companies in a nation’s economy. Figure 1 illustrates the relationship between households and companies. If there is austerity in spending form households there is a negative effect on the companies’ willingness to produce goods and services, thus aggregate supply is reduced which also reduces the companies’ expenditure on factors for production. Lastly, the Dutch government has also cut back its spending from 2011 and made adjustments to the national budget which means that there was reduction of injections into the economy. Overall it can be deducted that the four primary factors which drive the GDP growth rate (investment, government expenditure, consumption, exports) have taken a beating due to the ongoing financial crisis and the physiological effect that it had on Dutch citizens causing the negative impact on the circular flow between households and firms in the national economy (Kaidusch, P. Ott, C. 2012). Unemployment Rate When speaking about the unemployment rate of a nation it is important to understand how such a rate is derived. There are two essential components needed to calculate the unemployment rate, the first being the number of people that comprise the labor force. Labor force is the number of those people in the country that are employed, either in someone else’s business or their own business, plus the number of those people that are unemployed excluding fulltime students, retirees, homemakers and those incapable of working due to disability or health issues. The labor force is divided by the number of those unemployed and then converted into percentage equaling the unemployment rate (Mankiw 2008). Netherlands Unemployment Rate: January 2008 – January 2012 When looking above at unemployment chart for the Netherlands covering the same period as the GDP it appears that following the start of the recession in 2008 the unemployment rate went upwards (negative increase) starting to slowly rise in the second half of 2008 and shooting up from 3. 6 percent in January 2009 up to 4. in the first quarter of the same year. If we refer back to the GDP chart we can see that exactly at this point of time the Dutch economy experienced its first serious plunge in the GDP rate going from 0 percent down to 1. 1 percent. When further following the trend of the unemployment rate it is relatively easy to spot that it is closely related to the GDP rate in 2009. Basically, with the contraction in the GDP it is the natural order of things that unemployment rises since as explained before companies are spending less for factors of production, i. . less workers are needed. However, if we compare the general unemployment rates for the entire euro area (see chart on the next page) we can see that the Netherlands are actually a lot better off than a large portion of the other European countries that share the same currency with general unemployment rate being above 7. 2 percent since 2008 and reaching 10. 4 percent at the end of 2011. Through this we can deduct that the rises in the unemployment rate in the Dutch economy have been of slighter significance if compared on a larger scale. The question maybe posted as to why the Netherlands employment rate suffered much less than other euro area countries. There are a number of answers but only a few deemed essential will be stated in this report. First, when the financial crisis reached the Dutch economy in 2008 a lot of companies collected and kept their workforce fearing a future shortage; however this was only possible at the price of productivity due to the law of diminishing returns on factors of production. This means that the companies were overstaffed leading to a lot of workers being less productive yet still employed. Second, government expenditure was relatively large with high employment in the public sector up to 2011, when the Dutch austerity measure came into effect. Third, in 2009 the government took certain measures to extenuate the damage of the financial crisis on the unemployment rate by introducing relief programs and subsidies. Lastly, what contributed to the unemployment rate stabilizing sooner than expected in the first recession is that there was and still is a rising number of self-employed individuals in professional services, arts, and creative industries. These people adjusted their prices to the fall in demand easier than large scale businesses and managed to stay in business proving how important SME (Small-medium enterprises) are to the economy. However, now it can be observed that the unemployment rate is rising again due to a new recession that started in 2011. Companies in the Netherlands are adjusting their workforce to the demand in the economy leading to higher unemployment supporting the economic theory all factors of production are variable in the long-run. Government expenditure has decreased cutting jobs in the public sector also causing higher unemployment. It would appear that exactly those things that have contributed to the Dutch economy staying under the general euro area unemployment rate have been cut and reduced in the pursuit of creating a more efficient and effective economy (Janssen 2011). Inflation Rate _ Inflation in macroeconomic terms is the general rise in price of good and services in a given economy and is closely related to the value of money. Inflation occurs when there is an access of money being pumped into the economy usually causing a rise in demand and subsequently a rise in price. The inflation rate in a country is the percentage of monetary value by which prices have risen in general. It is measured from one year to the next. Inflation causes the purchasing power of money to decrease meaning that that consumers can purchase less goods and services with the same particular sum of money then before inflation has happened, in simple terms inflation causes money to lose it value (Mankiw 2008). The main reason as to why inflation is negative for the economy is because it can have the effect of frightening people from spending money and herd their saving in banks and even worse out of banks causing a complete withdraw of their capital from the economy. Netherlands Inflation Rates: January 2008 – January 2012 When examining the inflation chart for the Netherlands for the period between 2008 to the start of 2012 it can be observed that the inflation rate decreased just about when the global recession hit the Dutch economy. Throughout the recessive period the inflation rate continued to decrease with very little fluctuation up to the point in 2009 when the economy was recovering from the recession. From that point there was a steady rise again in the inflation rate until the new recession took place in mid-2011 with a declining trend passing over into 2012. Reasons as to why the Netherlands were experiencing a decrease in the inflation rate can be explained as follows. A very base explanation is that there was less money circulating in the Dutch economy which brought about the increase of value in the available oney supply, however there is more to the story. Since the Netherlands are part of the European Union it is not the responsibility of the Dutch Central Bank to regulate policies regarding inflation but that of The European Central Bank. Following the global meltdown of the financial system on a global scale in 2008, the European Central Bank under the presidency of Jean-Claude Trichet did not fol low the action of the Federal Reserve in the United States and the Bank of England in the UK by cutting its interest rates which have a definitive impact on inflation. What happens is that when interest rates are cut people tend to borrow more money which results in more money circulating in the economy. â€Å"Inflation is an autonomous occurrence that is impacted by money supply in an economy. Central governments use the interest rate to control money supply and, consequently, the inflation rate. When interest rates are high, it becomes more expensive to borrow money and savings become attractive. When interest rates are low, banks are able to lend more, resulting in an increased supply of money. –Economy Watch 2010 This is a viable explanation as to why Inflation rates started to decrease during the recession in the Netherlands who followed a very similar inflation rate trend as all the countries in the euro area during that period, as illustrated in the chart below. As the Dutch government took measures to reduce the damage to the unemployment rate by giving subsidies and relief programs the money supply in the economy started going up a gain, people started spending more and the inflation rate began to steadily rise again as shown on the chart for the Netherlands inflation rate, see previous page. By following this logic it is easy to deduce why inflation rates are now rising again, due to the austerity program that the government brought into effect in 2011 cuts have been made to the spending budget once omre reducing the money supply in the economy. The Relation between Unemployment and Inflation Up to this point in the report we have observed that there is a connection between GDP and the unemployment rate. When GDP is down overall productivity and demand is down in the economy which causes less demand for work force that is a direct factor of production. Thus we could follow what was happening in the Dutch economy when the recession (negative GDP for two quarters of a year) took effect and why unemployment did rise. Further on, the relation between unemployment and inflation will be examined. In the long-run it can be observed that unemployment and inflation are not connected since they have different determents in the long-run. For the unemployment rate some long-run determinants are minimum wage laws, power of labor unions, and how effective job searching is. The main factor that determines the inflation rate in the long-run is the growth in the money supply (Mankiw 2008). However, in the short-run the two are relevant to each other and to policy makers in the government. In the short-run there is an economic trade-off between inflation and unemployment putting governments in difficult positions. Do they pump subsidies and other monetary aid into the economy and through this increase the aggregate demand in the economy subsequently increasing inflation and decreasing the unemployment rate, or, do they make cuts in spending contracting aggregate demand and thus contribute to the increase to the unemployment rate yet keeping the inflation rate down. The best way to illustrate this trade of is through the Philips curve shown below. A lot could be said on the topic of the Philips curve and its application in macroeconomic theory on the relationship between unemployment and inflation and for this it is recommended that the works of George Akerlof and the research done by Samuelson and Solow should be further referred to. Getting back to the Netherlands it is obvious that Dutch policy makers were faced with exactly this dilemma even more so during the recession of 2008 and 2009. As the government subsidized and lend aid in the economy the unemployment rate seemed to stay at a reasonable unemployment level further aided by the European Central Bank’s inaction in decreasing the interest rates as mentioned earlier in the report. However, as the government starting making cuts and companies readjusted their work force inflation rates contracted unemployment rates rose for the year of 2011. Conclusion When it comes to the GDP growth of the Netherlands it can be concluded that it’s going to take some extensive time for the economy to recover from the damage done by the financial crisis. Of course there is much more that could have been said on the topic of GDP however those issues will be left as the topic of another report of a deeper analytical nature. As to the unemployment rates in the Netherlands even though they have been relatively low in comparison to other countries they are on the rise and forecasts by the Dutch treasury agency have been negative describing that the Dutch government has a hefty challenge ahead of itself in the next couple of years stabilizing the lasting effects of the recession, past and present. In regards to the inflation rates they are currently on the decline and may very well stay that way for the upcoming year since another shallow recession is forecasted for the first two quarters of 2012. In the course of this report it was made evident to me as to how interrelated GDP, unemployment, and inflation are in reality. Furthermore, now there is a clear understanding of what kind of difficult issues policymakers are faced with in the process of regulating this phenomenon called economy. Bibliography 1. Business Dictionary. com (2012), Law of diminishing returns, available at: http://www. businessdictionary. com/definition/law-of-diminishing-returns. html (accessed on April 29, 2012) 2. Countries of the World (2012), Netherlands Economy 2012, available at: http://www. theodora. com/wfbcurrent/netherlands/netherlands_economy. html (accessed on April 28, 2012) 3. Dutch State Treasury (2011) Ministry of finance: Outlook, available at: http://www. dsta. nl/dsresource? objectid=7528type=org (accessed on April 29, 2012) 4. Economy watch (2010) Inflation And Interest Rate, available at: http://www. economywatch. com/inflation/economy/interest-rates. html (accessed on April 29, 2012) 5. Encyclopedia of Nations (2012), The Netherlands – Overview of economy, available at: http://www. nationsencyclopedia. com/economies/Europe/The-Netherlands-OVERVIEW-OF-ECONOMY. html (accessed on April 28, 2012) 6. Kaidusch, P. Ott, C. (2012), Recession in the Netherlands: is the core turning to periphery? , available at: http://cib. natixis. com/flushdoc. aspx? id=62676 (accessed on April 28, 2012) 7. Mankiw, G. (2008), Principles of Macroeconomics, 6th edition, Ohio: SW Cengage Learning 8. Mike Moffatt How to cite Economic Analyses – Netherlands, Essay examples

Trends Affecting Carmakers in the US

Question: Discuss about theTrends Affecting Carmakers in the US. Answer: The Trends Affecting the United States Carmakers The robust growth in technology has differently affected the users behavior as well as market trends across the globe. Customers are striving to remain digital and have preferred consuming or using products that make them stay fashionable. On the other hand, most companies through research and developments, they have unearthed the essentiality of total embrasure of technology to ensure they remain relevant. However, this analysis is based on the manufacturing industry and particularly focus on the carmakers in the US (Ann Arbor, 2010). The ever-changing internal and external environment has posed a threat to a smooth operation of Ford, General Motors, and more companies that manufacturers their products in the US. In this assignment, the PEST analysis tool has explored the political, economic, social and technological metrics as follows: PEST Analysis Political Factors Usually, political factors significantly affect the performance of most business. It is a broad subject that constitutes the government policies, politically stability, taxation, and others. However, these factors do not always hinder the performance of the company, but their effects are determined by two primary aspects. It is either the political environment is favorable or unfavorable. If it is favorable, businesses will flourish and take advantage of the opportunities offered by the government (Housing Industry Association, 2011). The US carmakers have been influenced in various ways based on the political environment. Firstly, the government supports for innovation and created have significantly assisted Ford, GM, and other companies to manufacture up to date cars such as the electric vehicles, automotive vehicles that have extended their usefulness by boosting upcoming companies like Uber (Sean and Debbie, 2008). Also, the increased government efforts in developing infrastructu re, for instance, the construction of railway lines to enhance the shipment of vehicles from the River Rock to the local dealers in the United States (Sean, et al. 2008). However, the industry is going to be affected by the new speculation that President Donald Trump is going to charge a tax of 35% to companies that manufacture vehicles outside the US and sells them in the US. If such tax rate is approved, then it will be a great challenge to companies like Ford which had opened a manufacturing plant in Mexico where the cost of inputs is relatively small. Economic Factors Apparently, the US has a real history of economic stability that is not enough to enhance the performance of these companies. It is apparent that some of the vehicles are sold globally. With the increasing strength of the dollars, the profit margin for carmakers is negatively affected. The attractiveness of US vehicles and products will be relatively low because of the power of the dollar. However, this aspect will not be a challenge for the products sold in the US markets and other economies that use dollars. Also, the market in the US has been stagnant because of reasons like the introduction of smartphones which has attracted the attention of most youth. With the fact that the middle-income earners are striving to make the end meet, most people are not interested in acquiring more vehicles (Kim and Debbie, 2008). Technological Factors It is a critical element that most companies in all industries have immensely focused on in sharpening their competitive edge. The US is a developed country and most processes in the companies are automated to create efficiency and further reduce the cost of production (Mechler, 2007). However, the changing customers needs, increased rivalry in firms are just some of the reasons why most companies have considered innovation as the only way to go to remain relevant. This industry has passed various stages of innovativeness and customers are always expecting better products from the manufacturers (The Wall Street Journal, 2010). For instance, some manufacturers have applied the technology to manufacture driverless cars and flying cars. It has thus been a challenge for the industry to keep up with the pace of development (Wang, 2009). Furthermore, technological advances have necessitated for the productions of cars to suit new transport business that has emerged as the case of Uber. Social Factors The industry is subject to the influence of social factors. With the introduction of automobile cars, the entire society in the US has been revolutionized. At the first time, such vehicles were perceived to be meant for the wealthy. However, the acquisition of these cars by most people including the low-income earners in the US has demystified the belief. As a result, the market demand for cars steadily increased. It led to significant sales in 2015 which almost equaled the 2000 sales record that is still unbroken. Other social effects include the congestion of vehicles in the main towns are also major blocks to this industry. Furthermore, lives of people have positively impacted the ease in transport has facilitated translocation from one place to the other. Therefore, the manufacturers of products in the automobile industry have to succinctly understand all these factors to aid them to establish strategic measures to handle the challenges. Most importantly, these companies should capitalize the opportunities and strengths to assist in thwarting adverse effects caused by these difficulties. Lastly, the analysis of the industry using PEST will significantly help the manufacturers totally embrace technology enhance the safety of the vehicles and further meet users demands (Gillespie, 2007). Discussions Regarding US Carmakers Concluding that the Trends in the US will Extend to Overseas Markets. Apparently, it is poisonous to assume that the trends happening in one country will be applied to another country. That can be blatant lies. However, some factors that are beyond human control can occur globally, and others that are caused by people's characters cannot be applied to other countries (Joel, et al. 2015). For instance, a state that experiences serial cases of political instability, the companies that operate on such land will be adversely affected. This factor relates to the nature of political leadership and does not imply that all leaders across the world are that good. Therefore, I strongly disagree with the option of concluding that factors influencing carmakers in the US will uniformly affect them in other countries. Some of the justification includes differences in leadership, differences in business policies, differences in consumers purchasing powers, differences in infrastructural setup, differences in the distribution of wealth, differences in technological kn ow-how, and others (Mazur, 2006). It is, therefore, dangerous to make a conclusion based on the trends experienced in the US. Competitive Stance that Should be Adopted by a Traditional US Carmakers Concerning new developments occurring in the transport industry in the United States, it is apparent that carmakers are imperatively required to provide cars and vehicles that can outfit some of the challenges faced. Most of the changes are posed by the technological developments that have catalyzed the manufacturing of cars and vehicles that are efficient, self-driven, consume less fuel, uses electric current to move and more. The increased innovation has however created another kind of competition where carmakers are required to attract and convince customers that their models are the best. For a competitor like who has innovated a new product to survive in the US transport market has to embrace various strategies (U.S. Department of Commerce, 2015). Firstly, the differentiation strategy should be utilized to create uniqueness in the products (De Wit Meyer, 2010). This strategic model can assist companies like General Motors, Ford, and others to provide different vehicles that can suit customers preferences. This seasonality focus is a disadvantage to the consumers because they sometimes feel neglected by the producers. Carmakers should further stay in contact with users will enhance good reputation and consumers can know how to use the new models developed by the company (Mechler, 2007). Secondly, the competitor should utilize the premium strategic aspect. Through this technique, the focused differentiation should target a particular segment of customers and provide products that customers specifically require. Selling differentiated products at a relatively lower price is the most important strategy that carmakers should apply to cope up with stiff competition in the markets. The US has different varieties of customers (Michael, et al. 2016). It is indeed clear that a traditional company has a good reputation and consumers like its products because of the brand name. Therefore, introducing a new product and selling it at a fair price to a particular group creates a competitive edge. Additionally, the competitor should on maximize the economies of scale. Though the US market is concentrated, still carmakers manage to sell a large number of the cars if produced in large amount and sold at fair price (World Economic Forum, 2009). The economies of scale will therefore, allow the manufacturers reduce production costs and offer the products at affordable price. References Ann Arbor, MI, (2010) Automotive Communities Program Book of Deals: Center for Automotive Research, De Wit, B. Meyer, R. (2010) Strategy: Process, Content, Context. 4th ed. Hampshire, United Kingdom: Cengage Learning EMEA. Housing Industry Association (2011). An Introduction to PESTLE Analysis: HIA Ltd. Gillespie, A. (2007). PESTEL analysis of the macro-environment:Foundations of Economics, Oxford University Press, USA. Joel ,C.G., Dan, B., Martin, M. (2015). "The Decline and Resurgence of the U.S. Auto Industry". Economic Policy Institute. Kim, H and Debbie M. (2008) Contribution of a Vehicle Infrastructure System to the Economy of Michigan: Economic and Industrial Impacts Update and Benefit-Cost Analysis. Center for Automotive Research. Michael, R., Steffen, G., Christian, W. (2016) How Automakers Can Survive the Self-Driving Era: Retrieved Feb 7, 2017 from https://www.atkearney.com/documents/10192/8591837/How+Automakers+Can+Survive+the+Self-Driving+Era+(2).pdf/1674f48b-9da0-45e8-a970-0dfbd744cc2f Mazur, E. (2006). World of Cars 2006/2007: Worldwide Car Catalogue. Warsaw: Media Connection Mechler, K. (2007) General Motors: Innovations in American Social Class Structure Sean, M and Debbie, M. (2008) Country of Origin: Is this Vehicle Domestic or Import? The U.S. Domestic Content Measurement Programs: Center for Automotive Research. Sean, P., McAlinden, K. D and Debbie, M.M. (2008) CAR Research Memorandum: The Impact on the U.S. Economy of a Major Contraction of the Detroit Three Automakers. Center for Automotive Research The Wall Street Journal (2010) Technology Levels Playing Field in Race to Market Electric Car. Retrieved from https://online.wsj.com/article/SB123172034731572313.html U.S. Department of Commerce (2015). The Automotive Industry in the United States. Wang, H. (2009) Betting on Chinese Electronic Cars: Analyzing BYD ?s Innovation Capability. 17th Gerpisa International Colloqium Sustainable development in the automobile industry: changing landscapes and actors, Paris 17-19 June. World Economic Forum (2009) Global Competitiveness Report 2009-2010, World Economic Forum. SRO-Kundig: Geneva, Switzerland.

Dien Bien Phu Essay Example For Students

Dien Bien Phu Essay The Battle of Dien Bien PhuThe Battle of Dien Bien Phu was fought between Vietnamese Communists, called Vietminh, and France in 1954. It was one of the most important battle in the War. The French were defeated, and they gave up their colonies in Indochina. In November 1953, France began building an army base around the village of Dien Bien Phu, in what is now northwestern Vietnam. The base was intended to disrupt Vietminh army movements. The Vietminh had other plans for the French. The underestimated Vietminh climbed the terrain, forcing their artillery up the hills. On March 13, 1954, about 50,000 Vietminh soldiers began attacking the French force of more than 10,000 troops at the base. They quickly destroyed the bases airfield, leaving the French without supplies. The French were cut off from all supply lines. The outnumbered French resisted the Vietminh attack for 56 days, but were forced to surrender on May 7, 1954. The fighting ended early the next day. Directly after the fighting was done, there was the Geneva Conference of 1954, where the North and South Vietnam came into being.

Sample Essay With Brief Description of the IPIP Neo

Sample Essay With Brief Description of the IPIP NeoIf you are thinking about taking an international business course, you may want to consider taking a sample essay with a brief description of the IPIP Neo. This essay can help you decide if the IPIP Neo is the right program for you.This type of essay will give you some idea of what the IPIP Neo can offer. It is basically like taking an online class, but it is not a traditional classroom style class. You will not have to sign up for anything in order to attend the course. In addition, there will be no strict grades for any essay.In order to get started, you will need to gather some basic information. The following information should be listed on the cover page of your sample essay with a brief description of the IPIP Neo. This should include the first name of the student and his or her last name.The first name should be the student's first initial and the last name is his or her middle initial. You will also need to list the student's full name, the address, and telephone number. In addition, you will need to include a brief explanation of how the student met you. This could be a phone number, a message left, or a number of other details.In this section, you will need to describe why you wish to take the course. You will need to include a few key points as well as a few tips for succeeding in the course. This will help you be prepared to give a review of your essay.After this section, you will need to give a brief explanation of the goals of the course. It should include information on the course you will take, the name of the class you are taking, and the date of the class. It should also include the number of credit hours you will need to earn. This is the total of the credits needed for the course.In this section, you will also need to give a brief explanation of how you will be grading the sample essay. You will need to list the types of essays you will be graded and how you will be graded.Finally, you will need to complete a short review of your college and program. You will need to give the name of the school and the university, and the number of credit hours you have earned. You will also need to give the address of the school and the address of the university.

The Hour by Michael Cunningham

Journal response Essays - Cinema Of The United States, Literature

Journal response Essays - Cinema Of The United States, Literature Journal response Changes in Jem: Jeremy Atticus Finch, also known as Jem, is the older and more mature brother of Scout (the book narrator). The book shows him beginning the journey of reaching his adolescence. As Jem still remembers and grieves his deceased mother, he can sometimes have days where he sits alone and is deep in thought forgetting the world around him. On these days, he is best left alone. Jem talks a lot about people and has a very active imagination. An example of this, is when Dill arrives, he describe s Boo Radley as a monster He dined on raw squirrels and any cats he could catch, that's why his hands were blood-stainedif you ate an animal raw, you could never wash the blood off. There was a long-jagged scar that ran across his face; what teeth he had were yellow and rotten; his eyes popped, and he drooled most of the time". O f course Dill and Scout beli e ve d everything he said , as he is the oldest, and knows everything'. As Jem gets older, he want s t o be more mature and to be treated like a man, not a child. He is less imaginative and doesn't want to be associated with children. He begins to see what is happening around him, and grows worried for his father, Atticus, and sees that life isn't fair. He states himself as a grown up, saying " it's different with grown-ups , we". This shows that he is starting to see himself as a grown up as well. He also changes by beginning to understand other people. "Scout I' m beginning to u nderstand something . I think I'm beginning to understand why Boo Radley stayed shut up in his house all the time it's because he wants to stay inside". Jem starts understanding that people have a choice in what they want , and realises that Boo can do what he pleases. Jem's maturity grow even mor e during and after the Tom Robinson trial. He was very angry that Tom was accused guilty and he thought that there wasn't enough evidence to charge an innocent man (Jem wanted to become a lawyer one day). The trial made him realised that life can be cruel. Changes in Scout: Jean Louise Finch, also known as Scout, has always been the outgoing and inquisitive child of the two. She is a tomboy and would prefer to wear overalls, than wear a dress and be lady. Scout is very quick tempered and starts fights for the simplest reasons. The book begins with her starting school and her learning the hardships of school. She is told that she has been wrongly taught to read and write , which deeply upsets her and make s her want to drop school. She is also told off for sticking up for other children in her year . Because Scout has a high temper, she picks fights not only in her street but a t school. For example, she beats up Walter Cunningham for not having his lunch, without any worthy reason to beat him up, and finds joy i n doing so. I think she picks these fights, as she is very proud and doesn't like it when people speak ill of her or he r family, Atticus in particular . " C atching Walter C unningham i n the school yard gav e me some pleasure, but when I was rubbing his nose in the dirt, Jem came by and told me to stop" . Atticus highly disapproves of Scout doing such things, saying that she is "too old and too big for such a childish thing" , but Scout can't help it sometimes. As her schooling goes on, she gets constantly more frustrated in class as the curriculum moves far to slow for her liking. At Christmas, the finches go to Atticus's sisters place, finch landing. Scout doesn't like her and Jem's Aunt as she wants Scout to be a lady, and is often making poor remarks about Scout and Atticus about how she should act more like a lady. At Christmas, Alexand ers grandson, Francis Hancock, and Scout had a