Globalisation , the World Economy and MNEs Essay - 2

Globalisation , the World Economy and MNEs - Essay Example The government of the will be left fighting to retain its power. The monopolizing effect and lack of local industries will eventually draw the economy into a foreign driven system where the country will depend on the decisions made by these foreign MNEs (Dicken 123). The other disadvantageous effect of foreign investments is felt on the country’s Balance of Payment. As the MNE invest on the country’s economy, they bring in initial capital that will boost the country’s economy, but the earnings from these investments always go back to their parent country (Hill 240). Taxation is also mostly done on the parent country level, meaning that the country does not gain anything from these investments. Another effect is on the importation sector, the main offices of these MNEs are on the parent country and the foreign subsidiary receives their goods from the main office (Rojec 204). This means that the host country will end up being importers, which debits their current accounts of the balance of payment. National sovereignty of the host country and its autonomy also faces some challenges. The MNEs will be on the forefront on the decisions affecting the economy, basing that their major interest is to maximize profit, they would not have much concerns with the economy of the host country. They would make decisions on what is best for them leading to uneven development in the country (Saggi 54). The effort of the country’s government to still retain the decision making control on its economy will not help because they have no control over the foreign

Should Japanese Yen be appreciated or depreciated against U.S. Dollar Research Paper

Should Japanese Yen be appreciated or depreciated against U.S. Dollar - Research Paper Example Over the years owing to crisis US has adopted unconvincing monetary policies as a measure for bailout and recovering from the miserable economic situation. This has made dollars almost worthless. Under such circumstances Japan has also adopted the mechanism of quantitative easing leading to appreciation of Japanese Yen. But it has not helped the Japanese economy much. Credit growth has been on the slower side (Zarathustra). Taking this as backdrop the paper intends to trace out the effective exchange rate policy for Japanese economy, whether it should be appreciation or depreciation, and citing various reasons and arguments for it. Japanese Yen is such a powerful currency that it has appreciated even under conditions of quantitative. This phenomenon has continued in Japanese economy for 10 years. In contrast there has been depreciation of Pound Sterling by almost 50 percent of Yen. Depreciation list includes many other important currencies like Euro. Japan has also maintained a low interest rate of 1.092% even in the era of debt crisis. But the ongoing recession has caused economic growth in Japan on the slower side. This has deleveraged private enterprises. This requires Japan to reconsider and frame an effective exchange rate that can lead to economic growth (Zarathustra; Japan Intervenes to Tame Soaring Yen Ahead of G20). New York has suffered a fall in recent times which had raised questions on status of US recovery. But ultimately it has been to recover to 88 yen as per the current Tokyo deals. Tokyo has brought back dollars recently and this had helped United States in overcoming recent downturns (Dollar recovers to 88 yen zone in Tokyo after sharp falls in N.Y. +). Currently Japanese Yen is going at 0.0128086 USD. Data from the months in 2011 gives the lowest value as 0.0122797 USD which was for the month of July and the highest value of 0.0131979 USD was traced for the month of October. Average has remained at 0.0129061