...The comparative advantage of Greece in the era of recession Lampros Gallos National and Kapodistrian University of Athens Athens, Greece lam.gal@hotmail.com Abstract The aim of this paper is to investigate the export behaviour of Greece and to identify its comparative advantage. Moreover, through the conclusions of the analysis, is investigated whether the export activity of the country coincides with its comparative advantage especially in the present circumstances, those of recession. Initially, we define the comparative advantage based on the approaches of Adam Smith, David Ricardo's and Heckscher-Ohlin. Furthermore we analyze the current situation of the country, Greece’s economic structure and its trade performance, mainly the exports. In addition we identify the elements of the Greek competitiveness and the results of the fiscal consolidation that Greece is undergoing. Having analyzed the definition of the comparative advantage and the data concerning Greece’s reforms we proceed in identifying Greece’s comparative advantage mainly in four different sectors. Firstly we identify the key factors making the touristic sector extremely profitable for the Greek economy; secondly we analyze the commercial shipping sector then the strategically position of the country and finally the competitive rates in which Greece seems to gain ground. Keywords: comparative advantage, competitiveness, internationalisation, entrepreneurship, financial crisis. 1 Contents: 1....
Words: 4235 - Pages: 17
...DEBT CRISIS COULD AFECT YOU Reasons for selecting the article The reasons for choosing the article are that firstly, it stated that aggregates for economic consequences, GDP, recession and unemployment have greatly affected Singapore economy. The article also focused on the nation behaviour of the declining economy for US and Greece due to finance crisis which in turn affect other nations, in this case, Singapore. In fact, the article briefly explained how aggregates like national income and output have affected US and Greece economy, which in turn affected Singapore. It will be further discussed whether this mentioned global crisis will affect Singapore inflation, causing a rise in unemployment rate and the slowing of GDP growth for emerging markets. Summary of the article The article comments on how two of Singapore’s trading partners, mainly US and Greece, are hurting themselves with their debt problems and the impact of their problems on Singapore economy. It briefly describes what US debt ceiling is and the heavy borrowing of Greek government which has greatly contributed to the global debt crisis. It also explains on US debt problem and other aftershocks if the debt ceiling is not rise. Moreover, it explains the debts that Greece had incurred and what will happen if Greece defaults on its debts. Lastly, it further highlighted that the Singapore economy is affected by the two countries’ debt problems. Identify and discuss on the economics concepts and...
Words: 1253 - Pages: 6
...| About IMF The International Monetary Fund (IMF) works to bring up International Monetary Cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and to reduce the poverty around the world. IMF was created in 1945 and it’s an organization of 187 countries. Why IMF was created and how it works? The IMF, also known as the “Fund,” was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, United States, in July 1944. The 44 governments represented at that conference sought to build a framework for economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s. Work of IMF The primary mission of the IMF is to provide financial assistance to countries those countries who experience financial and economic difficulties and to sought those difficulties they are given financial help by using funds deposited with the IMF from the institution’s 187 member countries. Member of IMF states with balance of payments problems, which often arise from these difficulties, may request loans from IMF to help fill gaps between what countries earn and/or are able to borrow from other official lenders and what countries must spend to operate, including covering the cost of importing basic goods and services. In return, countries are required to launch certain reforms which have often been dubbed...
Words: 4899 - Pages: 20
...include a 10% cut in government spending. Analysis: In the coast of Southern Europe, more notably Greece, have only a diminutive capacity to propose and implement economic policy due to the ruling government. Series of unfortunate events happen to Greece due to the corresponding amassed economic problem. The said problem is circulating on issues vis-à-vis the civic authorities, past until present. Markets were swayed as Greece’s national debt skyrocketed that caused a worldwide disarray. For the reason that the state is experiencing an economic crisis, the government proposed its plan of action. One of two possible motive for such move is to cut down its deficit and he second being their struggles and helplessness in addressing the problem themselves. To compensate for this, the Greek government broadcasted the assurance to settle the state’s current undertakings. The interest charged between the Greek and its creditors widens because Greece may default. Also, they announced a wider sternness suite, which includes a cut on the government spending by approximately 10%. The effects of this are freeze on public sector pay and higher taxes for low and middle-income households. Due to this announcement, the latter persons involved, protested as threat of a bailout was lingering around the corner. However, creditors such as Germany, refuses to the said quick bailout by Greece. The Germans said that they made the problem, they should tackle the debt by themselves. Fearing the endgame...
Words: 591 - Pages: 3
...banning production as in limiting the numbers of or preventing production as in eliminating the incandescing light bulb and requiring the production and purchase of florescent lights; interference is also noted within national boundary’s such as with oil production, taxing production as in the coal industry which supplies electrical power and overregulation of production such as is used with environmental protections (EPA) or hinder commerce as with the Commerce department. Given some of these influences a nation’s economy tends to flow through various stages of a business cycle: Prosperity, recession, depression, and recovery. Economists believe that the last economic depression experienced in the United States and throughout the world occurred in the 1930s. Though the current international developments’, such as increases in sovereign debt and inability to repay loans as with Greece, Spain and Italy...
Words: 1097 - Pages: 5
...channels. Ordinarily, the role of digital media is to act as a medium of communication. However, in the case that the accuracy of the information is not controlled, it can lead to various impacts to the society. The digital media played a very significant role in the financial crisis through the spread of information. As such, this paper analyses digital media ethics in relation to the global financial crisis and its effects to the society. The World Financial Crisis The global economic crisis has caused many problems nearly to all the sectors of the economy in the world. Many countries have suffered deep in their growth domestic product while recession has a common experience all over the world. The severity of the crisis has persisted to the recent times, but this can be attributed to the debts incurred by some developed economies like Greece even after strong support from other countries. As a result, the world’s financial system experiencing these global economic crisis of severe staggering magnitude, there are those who believe that it will continue to be experienced across all sectors of the economy. The financial crisis is thought to have been caused by the United States mortgage market through its decision to sell sub-prime mortgages to an expanded number of consumers and, which resulted to modest or insufficient...
Words: 2967 - Pages: 12
...Sample Article: The Financial Crisis in Spain Summary Unemployment in Spain has reached 17.4 percent, according to figures released April 24 by the National Statistics Institute. Even without the global recession, Spain's economy likely would be going through a rough patch now due to the country's overheated housing market; with the recession, it is also suffering from a banking crisis and an industrial slump. Analysis Spain's unemployment rate rose from 13.9 percent in the fourth quarter of 2008 to 17.4 percent in the first quarter of 2009, increasing the ranks of the unemployed to more than 4 million, according to National Statistics Institute (INE) figures released on April 24. Spanish Economy Minister Elena Salgado said that the first quarter of 2009 will be the worst in terms of increasing unemployment. The International Monetary Fund (IMF) predicts that unemployment in Spain will reach 17.7 percent in 2009 and 19.3 percent in 2010, but the INE figures seem to indicate that unemployment could exceed 20 percent by the end of 2009. Of all the European countries, Spain has in many ways been one of the most gravely affected by the global economic crisis. Even without the global recession, Spain would most likely be undergoing a correction this year due to its extremely overheated housing market. But it is facing a severe housing market correction, an industrial slump, and a banking crisis caused by the housing correction and the recession's overall effects -- simultaneously...
Words: 2276 - Pages: 10
...In has been almost three years since the global financial crisis that started in the United States which was due to housing subprime lending, meaning that loans were being made to people who had difficulty maintaining the repayments on schedule. According to Bernanke (2009:01), “the proximate cause of the crisis was the turn of the housing cycle in the Untied States and the associated rise in the delinquencies on the subprime mortgages, which imposed substantial losses on many financial institutions and shook investor confidence in the credit market”. What happened was that the housing crisis began because too many people made loans and ended up being unable to pay off their mortgage payments because the banks had trick them into believing they could pay back their mortgage even though they were high rise candidates. “Home loans were created with adjustable rates and promises to hold off payments for two years, giving consumers false hopes that their homes would more affordable in the future. When the future came, those people were unable to make payments and foreclosures spread across the country like a wildfire” writes Munday (2010:01). Meaning that the average US family only owned a small percentage of their home while the banks owned the majority the banks realized they were losing money by selling the houses for less than their mortgage price since house prices were dramatically down, they then foreclosed. What followed was an escalating foreclosure rate panic and many banks...
Words: 1836 - Pages: 8
...Usama Rehan Khan 4650578 | TBS905 ------------------------------------------------- A Comparative Analysis of UAE and France Economies Submitted to: DR. Asima Shiraz Usama Rehan Khan 4650578 | TBS905 ------------------------------------------------- A Comparative Analysis of UAE and France Economies Submitted to: DR. Asima Shiraz Contents Abstract 2 Introduction to UAE Economy 2 Introduction to French Economy 2 GDP (Gross Domestic Product) 3 Components of GDP 4 Consumption 4 Private Investments 4 Government Expenditures 5 Net Exports 6 Unemployment 7 Inflation 8 Exchange Rate 8 Critical Analysis of Economies 10 France 10 United Arab Emirate 11 Abstract This paper is an attempt to give the comparative analysis of the economies of France & UAE. Both economies vary in their structure, size and opportunities. This work tries to elaborate the economies by discussing variable like GDP, Inflation, Exchange Rate and Unemployment. It tries to give a clear picture of the past trends, factors influencing the variations and future predictions. It also involves the critical analysis of both the economies that what current scenario would shape up the future. Introduction to UAE Economy The UAE has an open economy with high sizable annual trade and per capita income. Since the discovery of oil in UAE more than 30 years ago the country has achieved economic diversification and reduced the contribution of oil and gas to GDP to 25 percent...
Words: 2166 - Pages: 9
...Euro Crisis: Greece’s Reform to Uphold the Euro Greece has been a significant trading partner within the EU as well with the global community at large. Public spending has been at its highest since the financial crisis in 2008 and with irrational investing behind banks and the private sectors; it only worsened their economy. The complicated areas of the European economy mostly have been due to countries spending vast amounts of borrowed finances than they have fluctuating within their own nation. Countries deficits are still increasing after the US financial crisis and it has led to continuous austerity agreements and negotiations to prevent these issues from relapsing. Greece is in a classic sovereign debt crisis and while struggling to fix their deficit, (currently the largest in the Eurozone) this turned to controversial debates whether or not to let Greece free of the euro, or continue to keep them in. The problem of the matter relies heavily on the political sector of the union as well as the economic foundation represented in Greece’s past, showing that releasing the nation from the euro will only cause more harm than actually stabilizing them in. The US financial crisis of 2008 grew strongly towards the inefficiency between the banks and investors, who failed to act rational in accordance with the economy (Heath 401). In an efficient market, one person’s gains are another person’s loss but one cannot strategize placement in the market through someone making continuous...
Words: 1483 - Pages: 6
...The Warwick MBA Assignment Cover Sheet Submitted by: 1167899 Date Sent: 21st of May 2012 Module Title: Economics of the Business Environment Module Code: IB827Z Date/Year of Module: May 2012 Submission Deadline: 21st of May Word Count: 1 113 Number of Pages: 9 Question: More on the austerity debate Question 1: Use the AS/AD framework Question 2: Austerity measures and stimulus “This is to certify that the work I am submitting is my own. All external references and sources are clearly acknowledged and identified within the contents. I am aware of the University of Warwick regulation concerning plagiarism and collusion. No substantial part(s) of the work submitted here has also been submitted by me in other assessments for accredited courses of study, and I acknowledge that if this has been done an appropriate reduction in the mark I might otherwise have received will be made.” Economics of the Business Environment Lesson 4 assignment WBS08 1167899 21st of May 2012 IB827Z Question 1 Let’s first focus on the definition of GDP, inflation, and public sector borrowing: GDP: Gross Domestic Product, or how much final goods and services is an economy producing. Inflation: is the money devaluation. This phenomenon may be persistent and then imply a raise in prices. Public sector borrowing: money that a state and especially the government will buy for financing its activities (the ones from the public sector in this case). If we now look at the...
Words: 1488 - Pages: 6
...Preliminary Draft February 20, 2010 THE GLOBAL ECONOMIC CRISIS AND SOUTH ASIA By Dr. Akmal Hussain, Distinguished Professor, Beaconhouse National University INTRODUCTION What began as a financial crisis in 2008 rapidly metastasized into a global economic crisis that pushed the world economy into the deepest recession since the Great Depression of the 1930s. In this paper we will examine the origins and nature of this crisis in the context of the dynamics of world capitalism, indicate the policy challenges in the process of recovery and analyze its impact on South Asia. I. STRUCTURAL CHANGE AND FRAGILITY OF THE FINANCIAL SPHERE In the process of its growth the world economy has undergone a structural change in the post war period in terms of two important features: (i) The dominant form of the production unit of goods and services that emerged in the post war period was the large multinational corporation (MNC) in contrast to the large national corporation in the late 19th century and the small firm in the late 18th century.1 The MNCs were not only able to sell goods and services on a global scale but were able to achieve internationalization in their production processes, such that different components of a particular good could be manufactured in their facilities in different countries to take advantage of country specific resource 1 For a more detailed analysis of Growth and Structural Change in the Global Economy since the Industrial...
Words: 3201 - Pages: 13
...Doing Business in Greece Introduction Greece is an extraordinary country rich in ancient civilization, famous for giving birth to democracy! According to (Business culture, 2014) Greece is an open economy that relies heavily on the service sector, while the remaining national output comes from the industry and agricultural sectors. On top of that Greece is still a significant agricultural and fisheries producer for Europe, but the tourist industry will always be the basis of the Greek economy, which Greece ranks 7th in the most visited countries in EU. It is approximately the same size as New York. It is located in southeastern part of Europe, hanging right down by the beautiful Mediterranean Sea, just east of Italy. Greek culture is rich in dramas, rhetoric, music, and philosophy dating back to Greece’s classical era. It is home to the mythological characters and their popular stories world-wide, The Greek Gods and Goddesses that we’ve watch in multiple movies and cartoon shows growing up, originated from this beautiful country. The most recent highlight from Greece is Sparta, the Hollywood movie 300, which showcases the historical connection between Greece and Persia. Greece finally became an independent nation in the 1800’s, joined the European community in 1981, and became a member of the economic/monetary union at the beginning of 2001 before their economic downfall. Demographics As stated in (Konstandaras, 2013) the total population of Greece is around 11 million...
Words: 1408 - Pages: 6
...the Greek depression)[2][3][4] started in late 2009. It was the first of five sovereign debt crises in the eurozone – later referred to collectively as the European debt crisis. In Greece, triggers included the turmoil of the Great Recession, structural weaknesses in the Greek economy, and a sudden crisis in confidence among lenders. In late 2009 fears developed about Greece's ability to meet its debt obligations, due to revelations that previous data on government debt levels and deficits had been misreported by the Greek government.[5][6][7] This led to a crisis of confidence, indicated by a widening of bond yield spreads and the cost of risk insurance on credit default swaps compared to the other Eurozone countries – Germany in particular.[8][9] In 2012, Greece's government had the largest sovereign debt default in history. On June 30, 2015, Greece became the first developed country to fail to make an IMF loan repayment.[10] At that time, Greece's government had debts of €323bn.[11] The 2001 introduction of the euro as a common currency reduced trade costs among the Eurozone countries, increasing overall trade volume. However, labour costs increased more in peripheral countries such as Greece relative to core countries such as Germany, making Greek exports less competitive. As a result, Greece saw its current account (trade) deficit rise significantly.[12] A trade deficit means that a country is consuming more than it produces, which requires borrowing from other countries...
Words: 557 - Pages: 3
...Greece Should Not Exit The Euro Zone In recent years, there has been an ongoing debate over whether Greece should exit the Eurozone or not. The reasons are the seemingly current inability of Greece to compete within the euro currency, its tremendously high amounts of government debt which is on the verge of default, the inability to pull through with the anticipated austerity measures and the acceleration of the downward spiral of the Greek economy. Up to now, a so-called Grexit has not taken place due to repeated bailouts by the EU, represented by the European Financial Stability Facility (EFSF) and the European Central Bank (ECB) as well as the International Monetary Fund (IMF). The debate whether a Grexit should happen in the future is one of importance, as it would not only have many implications on the country itself, but also on the remaining countries in the EU and on the global economy. Many of these implications would affect Greece as well as a majority of other countries negatively and thus the Grexit should be one to prevent. The key points in this context are that firstly, that Greece would suffer greatly from the reintroduction of the drachma due to an immense depreciation and resulting decreasing value of the currency, which would lead to business closures and essentially an increase in poverty. Secondly, the global economy would be affected negatively by a Grexit due to a potential global credit crunch as well as the debt default. Thirdly, there are still measures...
Words: 2234 - Pages: 9
