Euro Markets are unregulated Money and Capital markets. These markets are spread over Europe, Middle East and Asia. Short-term Euro markets are called as “Euro- currency Markets”. Any currency held outside to home country is referred to as Euro-currency. For example when a Dollar is held as a deposit outside the U.S. is referred to as Euro-Dollar, Similarly a deposit in Marks, outside Germany is called as a Euro-Mark deposit. The Dollar was and still is widely used to settle the international payments. Although there is an increase in European Deposits, denominated in Euro, Pound sterling, Yen etc., by far the U.S. Dollar still remains the most popular Euro-currency. The preference for Dollars can be attributed to the relative political stability and the absence of severe restrictions in the U.S. It thus facilitates high liquidity to Dollar—denominated deposits. There are many reasons which have helped to popularize Euro Dollar deposits. Continue reading
International Economics
Comprehensive Income Taxation
The comprehensive income tax system also known by other synonyms as global income tax, unitary income tax or synthetic income tax is the most used taxation system in western European countries. It has got its name due to the fact that all income types are seen as a one and therefore are added together and taxed as one whole income. It was seen as the ideal tax system in Europe because in its original form it could align fully with the “ability to pay principle” and to both tasks of simplicity and fairness. This method is composed as a system which adds together all the taxpayer’s income (from labor, capital, rent and business) in a single measure and taxes it with a single progressive tax. Labor income is usually defined as income earned from activities as an employed individual. Capital income can take a variety of forms such as dividends, Continue reading
Role of SMEs in Economic Development
All over the world, there is growing evidence that Small and medium-sized enterprises (SMEs) play an important role in the national economic development of any country. SMEs are becoming more and more a subject of high attention in the developing countries, countries in transition but also in the countries with developed economies. In market economies, SMEs are the engine of economic development. Thanks to their private ownership, entrepreneurial spirit, their flexibility and adaptability as well as their potential to react to challenges and changing environments, SMEs contribute to sustainable growth and employment generation in a significant manner. Until latest, the private sectors of many emerging economies were missing the middle level of development. Investors, policymakers, and professionals dedicated most of their efforts to big companies of over 500 employees, larger enterprises or multinationals. Large Enterprises and MNCs were target of TAX incentives and subsidies whereas organizations like World Bank and Continue reading
Economic Policies Affecting Business Environment
The economic environment of business is composed of various set of economic policies, economic system, strategy of economic growth and development, resource endowment, size of market and status of infrastructural facilities in a country. All these economic policies affecting business environment one way or the other. Economic policies include fiscal policy, monetary policy, foreign trade policy, price policy, etc. These policies lay the framework within which every organization has to function. To understand the impact of these policies on business environment, let us discuss each one of these components in detail. 1. Fiscal Policy By fiscal policy we mean, the government’s tax efforts, public expenditure and public borrowing. Through these the government can effectively encourage consumption, investment and savings habits and also restrict them. For example, suppose there is inflation in a country. Inflation implies that the people have high purchasing power and so they demand goods. To curb this, Continue reading
Consumer’s Surplus – Definition, Significance and Criticisms
The concept of consumer’s surplus is one of the most important idea in economic theory especially in demand and welfare economics. This law was first developed by French engineer A.J Dupuit in 1844 to measure the social benefits of public commodities like canals, bridges, national highways, etc. This concept was further refined and popularized by Dr. Alfred Marshall in 1890. The essence of the concept of consumer’s surplus is that people generally get more satisfaction or utility from the consumption of commodities than the actual price they pay for them. It has been found that people are willing to pay more price for the commodity than they actually pay for them. This extra satisfaction which the consumers obtain from buying a commodity has been called consumer’s surplus by Marshall. The amount of money which a person is prepared to pay for a commodity indicates the amount of utility he derives Continue reading
Trends in International Trade and Cross Border Financial Flows
When a firm operates only in the domestic market, both for procuring inputs as well as selling its output, it needs to deal only in the domestic currency. As companies try to increase their international presence, either by undertaking international trade or by establishing operations in foreign countries, they start dealing with people and firms in various nations. Since different countries have different domestic currencies, the question arises as to which currency should the trade be settled in. The settlement currency may either be the domestic currency of one of the parties to the trade, or may be an internationally accepted currency. This gives rise to the problem of dealing with a number of currencies. The mechanism by which the exchange rate between these currencies (i.e., the value of one currency in terms of another) is determined, along with the level and the variability of the exchange rates can have Continue reading