I think the main points of this lecture are the followings. Firstly, it is how capitalism in the real world differs from the theoretical one. Capitalism would offer consumers goods of lower price, higher quality and a wider variety, as a free market encourages competition. While investors would use the capital more efficiently in order to lower the cost and make a higher profit. Hong Kong has been ranked the freest market for years by the US Heritage Foundation, yet there are a lot of government subsidies and interference as well as monopolies.
O’Brien (2003. Pp420) proved an empirical generalization that firms having higher emphasis on innovations (R & D investments) possess lower debt to equity ratios. This is because Research & Development creates substantial amount of intangible assets that cannot serve as an effective collateral in debt financing and hence do not support high levels of debt. Their research proved that all listed companies investing heavily in R & D tend to be more equity financed than debt financed. In fact, companies having high initial costs of plant & machineries may also try to avoid debt due to large burden of long term interests.
They also have less risk of negative social events which damage their reputation and cost millions of dollars in information and advertising campaigns. The scandals about child–labour and sweatshops that affect the clothing industry are two examples. Thus, socially responsible businesses should have more stable earnings growth and less downside volatility. Since companies that adopt the CSR principles carry less risk, when valuing those companies, a lower discount rate should be used. In the company valuation, this lower tail risk should be considered (Palmer,
Not only that, competition is also reduced due to the elites having so much wealth and power, the smaller firms will be weeded out by the larger firms and monopolies or oligopolies will form, this will cause barriers of entries and increase in prices of products. Financial and government institutions are very important to sustained economic growth, as it can be seen from the above passages, if abused; these institutions can cause large inefficiencies in the market and economy. However, if these institutions are done correctly and power and wealth can
Political conflicts, inefficiency of local administration, taxation fraudulent, corruption at government levels, cartel of business syndicates are preventing Bangladesh from prospering ahead and achieve development like it’s was supposed to have. Political instability has cost Bangladesh a lot. To measure the political instability is difficult, but the World Bank has come up with a composite index of political stability. There is a strong connection between the crimes and economics. According
One sample of corruption in the realm of money would be a venture supervisor who is really running a misleading plan (Dreher, & Schneider, 2010). Corruption is a perplexing marvel. Its roots lie somewhere down in bureaucratic and political organisations, and its impact on advancement fluctuates with nation conditions. Yet, while expenses may differ and systemic debasement may exist together with solid monetary execution, experience proposes that corruption is awful for improvement. It drives governments to intercede where they require not, and it undermines their capacity to establish and actualise arrangements in regions in which government mediation is plainly required—whether ecological regulation, wellbeing and security regulation, social wellbeing nets, macroeconomic adjustment, or contract implementation (Dreher, Kotsogiannis, & McCorriston, 2009).
One of the macro-economic effects of corruption is ability to disrupt economic stability. For example, there are allegations of bribery being the main determinant of awarding government contracts. The effect of such practices is instability in government operations where there are changes in leadership. For example, due to the greed that accompanies corruption and the desire to have a share of the bribery, new administrations often highlight the failings of past administrations and therefore create instability in procurement. Therefore, the tendering process is prone susceptible to changes in leadership because of corruption.
This is attributed to the optimal allocation of the resources with the saving price that reflects much its scarcity and the unification of the domestic financial system. It has also led to reduced unemployment as the price of the capital increases, and there is substitution of the capital by the labor. That is a better financial credit offer with longer maturity and the entry of the foreign capital. Disadvantages of financial liberation Financial liberation limits the role of the government in managing the economy with the intervention of the financial sector significantly. However, the vulnerability of the economy usually tends to increase and subsequently, the financial crisis are liable to follow the financial liberation program in most countries.
When we talk of corruption, we must understand what corruption really means. The simple and straightforward meaning of corruption is to get work done by means of illegal activity. Mrs Zora, teachers and fellow students. I am here to inform you about corruption in the world, its effects and why we need to end it once and for all. Corruption is destroying us, and this is dangerous to our countries financial well-being.
The private sector lacks transparency and the stakeholders’ not getting enough info. about the enterprises can lead to much harm. It can result in a conflict between management of the buyer company and the interest of the stakeholders. It provides unnecessary support to wrong & illegal/ illegitimate ways of accomplishing licenses, corruption. Privatisation requires a lot of expenditure to train the staff which is less-qualified and to make them abreast with the latest b’ness practices.