Sample Economics Essay Paper on Analysis of the American (Domestic) Current Event

MICROECONOMICS

Analysis of the American (Domestic) Current Event

The economy of the U.S can be proved by the proponents of its attributors. Such include the producing factors of the economies such as the fashion industry, labor contribution and welfare growth, and many others. United States proves to be the world’s sixth largest economy. U.S economy has service sector as the largest contributor to the economy. Service sector contributes 75% of the country’ GDP, 10% of its total production and 7% in construction contribution to the economy. However, U.S economy has not proved very smooth. The country experienced a massive recession in 2007 from which it crossed over in 2008. Recovery from the recession agitated drop in unemployment to almost below two million within a six years period down the line from 2014. This paper therefore explains external factors affecting the U.S economy, aggregate U.S Business environment, a relevant case study analysis among other pertinent issues.  

In the last 5 years, U.S Economy has a mixed reaction in its economic growth trends with increases and lapses of downfalls. Trading part has been a major impact in the economy of the nation. This is very evident with increased instances of decentralization and relocation of production firms due to increased market targets, maximization of exports trends and so long. Trading trends in the economy indicates data of aggregate activities of firms that have expanded to sell their proceeds into oversee markets. However, this has been analyzed differently. Some economists believed that relocation of production and marketing by other firms is a sign of stiff competition at home. Factors impacting choice of production and market by a firm depends on the economy performance of the state. There are also firms that have remained opposed to relocation and remain close to their indigenous homes due to historical ties they have with such places.

In the country, the general economy has been experiencing fluctuation in inflation over the past five years. The inflation rate, trading and production growths form the macro environment of the U.S economy. Others include employment rates and investment, which has apparently improved over the five years. Over the duration, the government has done all ways possible to promote household investment in both business and social amenities. This is evident from the growth of health insurance and other social requirements. Politics has also played a big role in the growth of the economy. Politics has been effective in the implementation of policies that have favored economic growth with growth already experienced in fashion industry and media industry.

The country has realized 4% GDP growth on recovery from the recession. This has been progressive from 0.9% in the first quarter, to 3.7% and eventual on 4.0% economic growth realized. There has also been growth realized in respective sectors such as 0.95% in the manufacturing sector, 1.4% in retail and 2.7% for the robust construction sector. Household consumption has grown by 1.9% this, which is still expected to grow to 2.3% to 2015. This in the other sides promotes production and hence growth in the U.S economy since the more people consume the high the production required to meet the demand.

Future decline in inflation as predicted would ease on consumer chest by strengthening on disposable income, which eventually necessitates increase in domestic demand based on flexible purchasing power. There is also suspicion that unemployment may increase come 2015. The economic dispensation of consumption is still under pressure even though technology and multiple productions have led to production of customer-tailored products.

Analysis of the Foreign (Outside Of the U.S.) Current Event

The refugee crises in most parts of Europe are one of the current global events that are happening outside the U.S. With the UN giving an estimate of close to 1 million refugees entering Europe, the problem is consistently escalating. Most of these people claims to be seeking asylum while others are escaping the war in the Middle East. Either way, the unprecedented numbers of refugees and people seeking asylum in most parts of Europe should not be ignored whatsoever. Countries such as Canada, Australia and some parts of Africa are also victim of perennial immigrants. The push and pull factors are further broken down into economic, social, political, and environmental factors.

Besides that, disasters such as famine, drought, fire and disease outbreaks will also lead to immigration, especially if these matters are not addressed. Education is one of the main reasons why people immigrate. Most people move to other countries in search of better education. Parents strive to see their children in oversea universities where the education is much better. They believe it will enable their children get a well-paying job in those countries. Development of technology and telecommunication industry has made it possible for people to communicate easily with their friends and relatives back in their previous home. These encourage immigration as people will move from their homes and can be in constant communication with people who stayed in their country of origin.

The political factor is another reason for immigration. Political stability is the most significant thing people look for before settling in a country. A politically stable country has many positive things. The benefits include high demand for labor, security, corruption-free government, plenty of food and finally many opportunities for both business and education. These aspects will attract more immigrants. In addition, a country in which its citizens are assured of their security will have more immigrants. Civil unrest, insecurity and corruption threaten people lives. Civil wars lead to the destruction of property, which in turn affects the economy of that particular country. Instability in a state will encourage its citizens to migrate to other countries. A government should be able to secure its citizens from both external and internal harmful forces. Most people have fled their countries because of the civil unrest and constant fights. They thus move for safety purposes that allow them to start a new life in more stable countries.

Further, people move into other countries because of religious persecution in their countries of origin. They, therefore, go to country where the freedom of worship exists and the government fully protects it. Persecution has been seen in countries that have Islamic extremists who intimidate other people. As such, the need to migrate goes beyond the need to associate with new people. A country that has a government, which provides the law that protects the rights of all individuals, is more likely to receive immigrants. It is a noble human spectacle of freedom that makes people search for societies where freedom of worship exists.

Lastly, we look at the environmental factors as one of the reasons people immigrate in Europe. Suitable climatic conditions such as moderate annual rainfalls that will not destroy crops, average temperatures and adequate humidity. These will pull many immigrants in a country. This is accompanied by fewer occurrences of natural calamities such as floods, earthquakes, hurricanes and landslides. These natural disasters have become a nightmare in many countries. They scare people making them move away from their countries of origin. Natural calamities come with negative impacts. The effects include the destruction of property, lack of employment and famine. In turn, these lead to poverty and the circle continue.

In conclusion, the immigration happening all over the world. This process increases day by day because of the several reasons from search of better living standards to political strife. Employment opportunities are the ones that spice up immigration in countries with demand for labor. According to statistics, the largest migrating population in the world is searching for better jobs. Other factors contributing to migration include search for better education, wealth, a social class, a financially secured future and a politically stable country. Some involuntary factors may make people leave their country of origin. These factors as discussed above include natural calamities such as floods, earthquakes, hurricanes and landslides. In turn, catastrophes destroy property, homes, etc. leading to unemployment and poverty among individuals. These will force the people to move and seek the refuge in a better place.

Analysis of Case Study one

AT $ T Company

This case analysis aims at giving an explicit analysis of AT & T firm, current market conditions and trends among other pertinent subjects. AT & Tis a corporation specializing in a number of telecommunication services and accessories, for instance, installation of wireless communications and broadband. The firm’s primary area of expertise is on wireless and wireline services with a wide market control and dominance especially in the U.S. The company recently completed its acquisition of a local firm, DIRECTTV becoming one of the biggest pay TV service providers in the U.S. This merger gave the firm’s clients a variety of alternatives in the entertainment industry.     

A number of factors that ranges from the set prices to the supply of the requisite accessories will determine the likely demand of AT & T products. Notably, the set price of an AT & Twireless connectiondevices the possible demand for that particular service will have a reverse relationship. This is because if the price is too high, most of the consumers will look for alternative products that are cheaper. Similarly, if the prices are too low, some customers may doubt the quality of the products. In essence, gaining control of the global and U.S market will not be an easy task as AT & Corporation may assume, as it will involve many challenges and sacrifices.    

Other factors that will affect the demand for AT & Tproducts globally are majorly non-price factors. For example, the ability and willingness of the target population to accept the company’s products and services. In addition, the income capacity of the customer base, the socio-economic trends and the current rates of interest in the world also determines the sales of AT & Tmerchandises. AT & T  further take into consideration the socio-economic conditions of the customer bases before opening a retail chain anywhere in the world. The strategy has enabled the firm to determine and set independent prices of merchandises in the company stores. For example, a retail chain opened in a rich suburb in New York will attract a different brand of customers compared to a middle-class society. The differences in pricing system are attributed to the varied ability and willingness of the specified customer base.                  

The demand for AT & T products is also determined by the size of the target market coupled with various structural alterations in the specified population. For instance, the U.S market comprises mainly of youthful generation implying that the demand for AT & T commodities will increase if effective marketing and promotional teams are. AT & T’s products are considered to be normal goods and, therefore, have higher income elasticity of demand explaining why any increase in everyday personal incomes may initiate a possible increase in demand for better products with unique features. Similarly, socio-economic trends and personal lifestyles may to a large extent influence the effective demand for AT & T products among other accessories from the company. For example, the increased preferences to sophisticated and unique accessories have resulted into an increase in the demand for quality AT & Tproducts among certain clients. The increased production of quality products implies increased sales, hence, massive profitability.

Analysis of a Case Study two

Adidas Company

The purpose of this case analysis entails scrutinizing Adidas’ current strategies that will enable them regain absolute control of the vast U.S market through all means possible. Essentially, Adidas is a renowned German international company that specializes in the planning and engineering of sports materials among other accessories. In the course of its operations, the firm has gained enormous success, a fact attributed to its long history of performance based on quality products. Presently, the company is operating as a leading sportswear manufacturer in most parts of Germany and Eastern Europe. The company did divert its operations to concentrate on other market reducing its influence in North America. The purpose of this case analysis entails scrutinizing Adidas’ current strategies that will enable them regain absolute control of the vast U.S market through all means possible.

Although the company has been operating as a leading sports company in the industry, they have been providing less extensive portfolios of their products especially in the U.S market. The current management of the company subscribes to the fact gaining entry into the U.S market cannot be ignored whatsoever. Although Adidas is branded as an athletic wear company, it also specializes in other fashion apparels attracting clients of diverse tastes and preferences. This establishment has been operating successfully in a market that is so much maligned with market competition and unfair business practices and dealings. As such, the company, which mostly deals with fashionable shoes and clothing both to women and men has stood the test of time and is currently on a positive rise.     

The firm’s average sales in the North American market have decreased by over 8 % since the year 2014 despite recording increased sales of sport wears. In essence, one can describe the Adidas American conditions as economic challenges, a fact attributed to the limited market access and loss of customer trust. To some critics, Adidas lost America because it ‘did not think the country was a priority market’. They started designing products that are not appealing or attractive to the American populace instead of its initial colorful themes for apparels and shoes. There traditional outlook did not resonate well with the American consumer who opted for products from different companies. The result was a massive shift of priorities and preferences given the availability of alternative products from competing firms. Another macroeconomic problem facing Adidas is scarcity or rather, limited production capacity.

Scarcity in this context implies that Adidas has very limited resources at its disposal that they can use in expanding its influence of the U.S market. Scarcity is still one of the most common economic challenge facing most businesses in the U.S and globally. The current society is forced to embrace unlimited resources despite the unconstrained human wants and have to make different choices on the best alternative. The reason behind this is that trade-offs are present especially when making choices on the next best alternative. Per se, without proper market analysis and proficient allocation of these scarce resources, the unlimited demands of Adidas customers may not be met successfully. This is because when Adidas is making certain economic choices, it must sacrifice some of its alternatives. The result of such decisions is the ultimate loss of possible benefits that could have been driven from such programs. For instance, if Adidas decides to shift attention to the U.S market, they will be forced to limit operations in a certain market due to limited resources.

Type of MICROECONOMICS theories applied in South America, India, Poland, and Russia to help stimulate their markets and promote business

In essence, the ‘Agony of Reforms’ is a representation of a fascinating perception of the capitalist cognitions based on microeconomic analyses. The primary aim is to scrutinize various factors that have been influencing the economic well-being of some of these nations. Various microeconomic theories have been advanced explaining the inherent problem of ‘economic dictatorships’ perpetuated by some capitalist systems and bureaucratic leaders. The principal assumptions of the impacts of economic conditions, for instance, recession following a monetary meltdown explained in this reading sums up the idea of ‘capitalist revolution’ in the aforementioned countries. There are various policies and strategies that can be instituted to effectively solve most of these fiscal challenges as stipulated in countries like Poland and Russia.

Most of the microeconomic strategies used in these countries were efficient in controlling and managing recessions among other micro and macro-economic challenges. In South America, for instance, the primary challenge was curbing the problem of foreign exchange outflow. Per se, the region instituted various microeconomic policies that aimed at putting restrictions on its imports. Respective governments focused on the inherent need to encourage local production and ultimately, economic freedom from the global powers. As a result, local products gained prominent given the limited substitutes and alternatives that were available to the customers. By curtailing importation of products and subsidizing local industries, the South American governments were able to achieve massive economic success. Poland, on the other hand, had free market system coupled with other relevant economic policies that were aimed at improving the economy of the country. The nation paid special attention to various economic problems, for example, inflation by establishing appropriate microeconomic measures to curtail them. For instance, Poland devised policies to control their balance of trade deficits to help them control rising cases of inflation.

The result was a drastic increase in the country’s exports and subsequent reduction in imports. The country’s labor market was also transformed making it more flexible and competitive in the global stage. Russia on the other hand established various economic restructurings to effectively and successfully recover from a fiscal menace. This was achieved through instituting a new form of governance based on positive economic reforms. The market became more flexible, and the exchange rate more liberal in terms of prices and trade policies. The country’s central bank also instituted a range of fiscal and monetary policies to avert inflation and other market dynamics. In addition, the Russian government increased its control and regulation of various economic activities in the country. They also availed economic subsidies to corporations operating in Russia, and encouraging speedy privatization of most the state-owned corporations. Most of the Russian private enterprises were put under strict government control and advised on efficient forms of leadership in a market that was full of competition. Similarly, the nation’s military programs, which many nations recognized, were a threat to global peace was a threat to the economic prosperity of Russia. As such, to avoid any economic damage in case a war broke out, Russia agreed to cut their ballistic missiles programs.

India and other nations in most parts of the world, however, placed emphasis on free market systems. These countries relied on government interventions in controlling possible economic problems. The core aim of India was to gain more control of the private sector by eliminating all the bureaucratic red tapes and restraining policies that obstructed the growth of this crucial sector of their economy. The first step was a successful elimination of corruption, encouraging local production to increase the competitiveness of India in the global stage. Incentives were availed to local companies to help accelerate the country’s objective of self-sufficiency. 

India, just many countries, relied on the assertion of dependence theory of economic growth and development to solve most of their economic challenges. The theory is very explicit on the importance of attaining high economic growth and development. For instance, the theory postulated that the achievement of economic growth could only be possible through restricting a country’s imports and controlling the challenge of unfavorable BOT (Balance of Trade).

In essence, most of the nations employed these microeconomic policies to attain growth and development of their respective economies. They improved the efficiencies of their labor markets and reduced the strict regulation of corporations. Trade activities were liberalized, reforms introduced on taxation and a number of state enterprises corporatized to increase market competence.

In conclusion, most of the microeconomic polices from the ‘Agony of Reforms’ proved to be successful in most countries. The need to introduce relevant technological applications in trading in the global markets was emphasized. Most of these countries also agreed that corruption was dominant inhibition to economic growth and development of a nation.              

Work Cited

Campbell, John L., J. Rogers Hollingsworth, and Leon N. Lindberg. Governance of the American economy. Vol. 5. Cambridge University Press, 2001.

Krippner, Greta R. “The financialization of the American economy.” Socio-Economic Review 3.2 (2005): 173-208.

Lebergott, Stanley. The American Economy: Income, Wealth and Want. Princeton University Press, 2015.

Leontief, Wassily W. The structure of American economy, 1919-1939: an empirical application of equilibrium analysis. No. HC106. 3 L3945 2007. 2007.

Lindberg, Leon N., John L. Campbell, and J. Rogers Hollingsworth. “Economic governance and the analysis of structural change in the American economy.” Governance of the American economy 5 (1991): 1.

The ‘Agony of reforms’. Retrieved from: http://www.pbs.org/wgbh/commandingheights/lo/story/ch_menu_02.html