Bangladesh and Vietnam: Factors of Inflation

Bangladesh and Vietnam: Factors of Inflation Question 2(a) Discuss and analysis the factors of inflation in your selected countries Bangladesh and Vietnam are our selected countries. Inflation is a continuous increase in the general price level of goods and services in the economy. Inflation has three types which are creeping inflation, mild inflation and hyperinflation Bangladesh Inflation in Bangladesh has a lot of factors. There are wages in the major employment, increase in the supply of money, oil price, low production and higher price of imported commodities. Based on the factor for increase in wage rate in the major employment, wages in Bangladesh has been increasing for more than the last two decades due to both strong or moderately strong labor union. Due to political, social and cultural tradition and for a humanitarian reason, the Government cannot make a distinction between productive, unproductive, and moderately productive sector in their attempt to increase the wages. Wages increase without any production increase, easily transferred to higher cost of production and higher prices of consumer goods, allowing for sustained inflation. Under the assumption of little or no improvement of workers’ productivity growth, wage inflation at such high level is an indication of cost escalation over time. Money supply is an important determinat of inflation. Production in agriculture and fisheries sectors in Bangladesh is still subject to the whims of nature to a notable extent. Therefore supply of money in Bangladesh is increasing every year in order to get it. It has been claimed that one of the main causes of the high food inflation throughout the FY05 was poor harvest of aus, aman and wheat crops.6. The yearly production of these three crops went down by 18.12, 14.76 and 22.11 percent respectively in FY05 over the FY04.7. An instance of price hike due to this fall of production is that the price of aman rice rose within the range of BDT 16 to 19 in FY05 from the range of BDT 14 to 16 in FY04. This excessive rise in the total supply of money may contribute to the cause of high inflationary pressure in Bangladesh. Oil price is a factor of inflation in countries include international. Oil is a fundamental input of production, it constitutes a significant portion of production cost in every sector of the economy. Although there are some recent adjustments in the administered price of energy products, much of the increased cost of imported fuel has not been passed on to end users, especially on diesel and kerosene. Iraq has the second largest oil field. Oil production in Iraq has been cut by 5,00,000 barrels per day since the U.S. invasion in Iraq for more than three years. Crude and refined oil is used in all sphere of life including manufacturing and production of consumption and material goods. Once increased oil prices, it have increased the cost of production world-wide. The firms and suppliers have no other choices except to raise the price of goods and materials. Therefore it has caused a cost-push inflation. In Bangladesh the output growth rate is always lower than the population growth rate. This low productions is not only for reason of human resources, weather is also included. As an example, the production of wheat in Bangladesh has declined drastically over the years. Further, except for the Boro, the areas of rice cultivation have declined in recent years. The production of pulses and oilseeds has also declined significantly. Erratic weather in Bangladesh had caused crop failures. Therefore Bangladesh often faced with problem of food shortages. As the net domestic production of food is not sufficient to meet demand such as oil, supply gap of cereals and food items, Bangladesh forced to import these from external markets. Therefore the greater percentage of increase in the populaion has brought about a scarcity of goods. As a result, excess demand occurs that contributes to rise in prices. Bangladesh has to import huge capital goods, necessary consumer goods and even huge quantity of food grain. The most of the essential food items are imported like sugar, rice, wheat, onion and edible oil and also included machineries, intermediate goods and raw materials used in production. Huge import will increase the price of import. The inflation in foreign countries causes a rise in prices in Bangladesh through the importation of commodities from those countries. When the relationships between import price index and non-food inflation in urban and rural are insignificant, the former is found to have economically as well as statistically highly significant association with the categories of food inflation. In a short word, the reasons for increase in import price are twofold which is exchange rate depreciation and increase in international commodity prices. Vietnam Inflation in Vietnam has also a lot of factors. There are excessive service spending and bias allocation in the market, supply and demand mismatch, governement’s increased wages policy, boom of foreign direct investment (FDI) and unbalance money used for economic development and society. The monetary factor is excessive service spending and bias allocation in the market. Inflation can be caused if government doesn’t plan and manage amount of money circulation which include in society and commodity. As an example if government allocates too much money to society like education loan, there will caused a loss of money to contribute to eonomy. Excess cash will happen if the number of commodity production is sustaining and has not increased. It will increase consumer purchasing pressure and leads to hyperinflation. In Vietnam supply and demand mismatch is a problem or cause of inflation pressure in the country. The evident is the signs of overheating the economy such as severe electricity shortage and congested roads and ports, a tight labor market with skilled and semi-skilled labor supply falling far behind demand and a sharp widening of trade and current account deficit. But even year to year core inflation which excludes food and fuel is stimated to have increased by 18% as Benedict Bingham, senior representative of International Monetary Fund (IMF) predicted. Because of the output gap in Vietnam willn’t overcome easily, so he dominant effects of demand effects will persist to the next years. Within this context is important to underline, that persistent excess liquidity in the domestic markets can stoke inflationary expectations over time. In Vietnam, government has been provided an increased wages policy. Analysis of the movements of nominal wage rate inflation generally gives an idea about the labor cost scenario. In Vietnam, government encourages workers’ salary income can be increased if their performance is improved. Due to increase in salary income, workers have higher chance to spend more on consumption. Demand excess supply. If promotion of distributors and manufactures is helding, it will stimulate the market to increase buying power and creates leverage for a result of demand exceeds supply. After that inflation will happen. Booming of foreign direct investment (FDI) in Vietnam will have a high rate due to Vietnam often do FDI projects that can pull up their investors’ population. As an evidence, there were more than 16,300 active FDI projects in Vietnam that have collectively pulled in a total of $238 billion. These investors came from 100 countries and territories, and many of them are some of the world’s leading multinational corporations. In 2013, FDI inflow exceeded $22 billion, an increase of more than 35% from 2012. The figures indicate that Vietnam has become a destination of choice for foreign investors Vietnam often do FDI projects that can pull up their investors’ population. Therefore high influx of foreign exchange will often happens into the economy. It will increase money supply and if too high influx of foreign exchange, it will be a reason of inflation. Demand will also rise due to influx of foreign exchange. When a rise in demand cannot meet same level by import wil l push up the price of product until inflation. In Vietnam, unbalance money used for economic development and society will always be conducted. Because of wars against French-American in the past, government need to spend enormous money to restore the economy. Therefore money which used for economic development such as subsidiares to help suppliers is less and make a situation of demand exceed supply. The product prices will increase and It leads to the inflation. Therefore the government didn’t use monetary effectively means don’t lead consumers to a way nof controling the production and consumption of the society. Then, national budget will be reduced due to the lack of income or money. Government always lived beyond its means they must use government funds either from local or foreign country to compensate for the expenses. In conclusion, Bangladesh and Vietnam are easily face the situation of inflation based on those factors above. Who Should Own Indigenous Lands? Who Should Own Indigenous Lands? Christopher Wood F469950 Evaluate the claim that the governance of indigenous lands is best left to local communities. Due to the expansion of globalisation, concerns over the management of resources has grown from local issues to worldwide issues on how people should engage with the sustainable development and administration of global resource systems or commons. Common resources can be overseen and governed by a mixture of institutional arrangements that can be generally represented as governmental, private or communal. This essay will look at the merits of both private ownership of resources as endorsed by Ronald Coase and common property regimes often employed by communities, a solution advocated by the economist Elinor Ostrom, whilst using further evidence of these two competing ideas, by examining the plight of the indigenous group of people known as the Dongria Khondh in their battle against the powerful private multinational company Vedanta. One of the issues that arise with common resources, is the question of ownership and who has the right to manage and divide these resources, especially as the marketplace expands and the resources of the planet begin to be depleted (Shipman, 2015, p.119).   Ronald Coase investigated this problem of exhaustible resources and suggests a solution to protect resources by arguing that ownership of the commons by assigning property rights would by its action promote a positive outcome. The assignment of exclusive property rights and the potential for bargaining results in behaviour that is changed or altered to account for the negative impact our choices have on others, regardless of which party is initially assigned property rights. Private ownership and the resulting economic benefit for both parties encourages an equitable solution to rights, ensuring resources are used in a way that prevents overuse and preserves sustainability (Shipman, 2015, p125). A clear example of Coases ar guments can be seen by comparing a public communal space surrounding a residential area to that of the grounds surrounding a private residence where the owners have to pay a service charge to maintain the grounds. Public areas tend to be unkempt and abused, private grounds are generally better kept and preserved, this action suggests that individual ownership and financial incentive motivate an innate positive outcome (Shipman, 2015, p.130). Further evidence of the positive outcome of using property rights can be seen in the real-life case study of the collaboration between the Vietnamese government and the World Bank. The Land Administration Project, assigned land rights to citizens, enabling them to grow crops and feed their families, along with having the extra benefits of allowing family members to gain access to education and the owners to leverage this land to get finance, so they could expand and increase their wealth, this, in, turn, would encourage growth within the family unit, regionally and then nationally (The Open University, 2016a). However, assigning property rights doesnt always have a positive outcome, especially when the rights of the smaller landowners clash with the development of large real estate projects. In this case, the same Vietnamese government decided to seize inherited land from citizens, leading to violence and arrests. Free market economic policies of larger private concerns dominating the individual citizens claims and rights to land (The Open University, 2016b). An alternative to managing common resources can be found in the theories of  prominent economist Elinor Ostrom. Ostrom suggests that many issues surrounding  rights, ownership and depletion of resources, are better-taken care of by  cooperation, assigning rights to collectives and not individuals (Shipman, 2015, p.133). This is especially useful when dealing with resources such as the fish rich waters off Alanya in Turkey. Here the Fisherman became aware that unregulated fishing would lead to permanently exhausting stocks of fish. Using principles such as: Rules are well matched to local needs and conditions. Individuals affected by these rules can usually participate in modifying them. A system for self-monitoring members behaviour has been established. A graduated system of sanctions (against rule-breakers) is available. The fishermen devised a plan following these guidelines that provided a flexible arrangement for the community to gain rights and access to fishing stocks, whilst gathering approval from the government in the form of the Aquatic Resources Act, which recognised the communities right to administer their own rules. (Open University, 2016c) Despite this success, Ostrom recognises accomplishing a positive result in the management of common resource pools tends to have more success in smaller communities. Globalisation has presented problems concerning resources that need the varying parties to agree on a specified agency and a set of actions, which on this larger scale may prove to be difficult (The Open University, 2016d). A clear example highlighting the potential problems involving power imbalances between private commercial companies and local communities can be seen by examining the plight of the indigenous people Dongria Khondh and their battle with the mining company Vedanta. The dispute centred around the land surrounding the Lanjigarth region and holy mountain of Niyamgiri. This land held great spiritual importance and familial ties to the Dongria Khondh, being rich in biodiversity and holding a prime place within the local community. On the other hand, the mountain was also known to be rich in the mineral Bauxite, a valuable resource to a company such a Vedanta (Bhagwat, Jones and Mohan, 2015, p.150). Because of the inherent power imbalance between the two competing actors, it was necessary for outside agencies to become involved, to aid mediating in the dispute. These expert groups consisted of namely the Central Empowered Committee (CEC) along with the Ministry of Environment and Forests (MO EF), these two groups visited the area and gathered information from Vedanta and representatives of the local communities (Bhagwat, Jones and Mohan, 2015, p.151). Prior to this Vedanta had established mining facilities, assuming terra nullius or no mans land assuming that this land belonged to no one, the invisible cultural significance to the indigenous people wasnt recognised (Bhagwat, Jones and Mohan, 2015, p.151). Conflicts between homogeneous cultures and private entities are fraught with difficulties, especially in jurisprudential precedents. This issue of jurisprudence concerning governance presents complex problems, despite formal international rights as set out by the UN, there is very little political will to enforce them. Consequently, access to valuable resources where there isnt clear governance, can leave the productive potential of such lands greatly underused and can be a barrier to economic progress, whilst confusion reigns for the indigenous peoples perceived inher ent right to keep resources that are vital for their survival. Using the examples above it is clear to see that governance of common resources can have different outcomes depending on the scale and complexity of the situation. Personal and local situations can be governed quite simply by cooperation and economic incentives based on private property rights. On the other hand interactions between governmental institutions, international private companies and local communities has proven to be difficult. The most important lesson to draw attention to, is that advocating a particular course of action for solving problems relating to the governance of common resources may work in some settings but fail in others. Further, policies also have to be adaptable to recognise the informal cultural setting and arrangements of those who depend on these diverse ecosystems. Cooperation between individuals, communities and governments along with flexible arrangements between the different actors is vital to ensure equitable access to common resources. Word Count: 1201 References Bhangwat, S. Jones, N. and Mohan, G. (2015) Indigenous lands and territories: mapping the commons, in Drake, DH. Morris, A. Shipman, A. and Wheeler, K.(ed.) Investigating The Social World 2, Milton Keynes, The Open University. Shipman, A. (2015) Putting a price on common resources, in Drake, DH. Morris, A. Shipman, A. and Wheeler, K.(ed.) Investigating The Social World 2, Milton Keynes, The Open University. The Open University   (2016a). 5: Vietnam: Securing the Future through the Formalization of Land-Use Rights [Video] DD103 Investigating the social world. Available at: https://learn2.open.ac.uk/mod/oucontent/view.php?id=842096section=5 (Accessed: 2/17/2017) The Open University   (2016b). 5.3: Violence Erupts in Vietnam over Land Seizure [Video] DD103 Investigating the social world. Available at: https://learn2.open.ac.uk/mod/oucontent/view.php?id=842096section=5.3 (Accessed: 2/17/2017) The Open University   (2016c). 6.1: Fisheries in Alanya   DD103 Investigating the social world. Available at: https://learn2.open.ac.uk/mod/oucontent/view.php?id=842096section=6.1 (Accessed: 2/17/2017) The Open University   (2016d). 6.3: Ostrom: Could this Approach be Scaled up to Global Problems?   [Video] DD103 Investigating the social world. Available at: https://learn2.open.ac.uk/mod/oucontent/view.php?id=842096section=6.3 (Accessed: 2/17/2017)