Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
However, in recent years the country has experience economic growth by changing the old way that it did business and moving to more modern techniques.
Ireland was able to transform its sluggish economy by moving away from the industrial base that it was used to for so many years to high-technology specialization (Garcimartin et al., 2008). This shows that there is truth to Thirlwall statement tying slow growth to a low demand in whatever the country is producing. We live in a world where technology has become necessary. Those that refuse to jump on the wagon will get left behind and this is exactly what was happening to Ireland until they decided to change their base.
Changing from an industrial base to one that specializes in technology wasn't the only thing that saved Ireland's slow economy. Garcimartin et al., state that the economy also experience growth because of the outward-oriented economic policy they adopted; the increase in foreign direct investment; and, by its social partnerships which compensated low wages with income tax cuts (2008, p. 410). Ireland went several steps further in that they not only learned to produce goods that are in high demand (as Thirlwall suggests), but they also were smart enough to gain foreign investors and give income tax breaks as an incentive.
Countries must still pay attention to the balance of payments and the constraint it can have on economic growth. Supply must always keep up with demand in order to achieve equilibrium. For some countries,...
The way to maintain the balance of payments seems to be for countries to do what Ireland did. If demand is high and supply cannot keep up, there must be incentives involved in order entice foreign investment. If wages are low, there should be income tax incentives.
The balance of payments constraint on growth appears to be a difficult macroeconomic concept to understand. Thirlwall and others have been able to break down this concept into digestible parts to make the concept more understandable (at least in theory). The bottom line is that each country must figure out what it needs to do in order to keep the balance of payments constraint from preventing the economic growth that it can experience. Modeling the techniques of successful countries is one way to start.
References List
Baja-Rubio, O. And Diaz-Roldan, C. (2009). Does the balance of payments constrain economic growth? Some evidence for the new EU members. Post-Communist Economies, 21(1), pp. 41-46.
Garcimartin, C., Rivas, L. And de Sarralde, S. (2008). Accounting for Irish growth: A balance-of-payments-constraint approach. Journal of Post Keynesian Economics, 30(3), pp. 409-433.
Thirlwall, a.P. (1979). The balance of payments constraint as an explanation of international growth rate differences. Quarterly Review (Banca nazionale de lavoro), 32(128), pp. 45-53.
Balance Sheet a) Using the 2012 Annual Report, which reflects the fiscal year ended December 31, 2012, Facebook lists short-term liabilities on its balance sheet of $1.052 billion, split between several categories. The largest of these is the accrued expenses, followed by the capital lease obligations. The long-term debt on the company's balance sheet is $1.50 billion with the total long-term liabilities being $2.296 billion. b) The market capitalization of Facebook is
Constraints What is the Theory of Constraints? There has been a continuous development of management from the time it was realized that it can be studied carefully to form a branch of knowledge and the individuals who had studied it generally performed better as managers than others who never spent time on the matter. The Theory of Constraints or TOC is basically a philosophy of management and improvement. The first person
In Germany, the idea that financially conservative Germans might have to contribute to a bailout of a nation that 'cooked its books' has been difficult to sell to the public, and British politicians would have faced even more criticism, had Britons been forced to shed their beloved pound. Great Britain can congratulate itself because it did not throw in its fortunes with the unstable euro, although some Britons protested this
Thus, a region or nation experiencing economic depression will be unable to use the interest rate lever to boost the economy. Similarly a country with high inflation will be unable to independently raise interest rates to contain inflation. Moreover, Islamic countries, which form a large part of the geography, do not believe in interest rates. Political barriers -- Political differences between nations make it extremely difficult for them to adopt
Harrison Company Executive Summary/Background- The Harrison Company, a mid-sized regional retailer with 80 stores in 7 states, is headquartered in State College, PA. At present, despite each store generating approximately $600,000 in revenue per annum, the company faces a time of crisis. Sales and profits have been declining over the past few years, the company's president has retired and broken all contacts with the company, and there is no real strategic
Credit Risk Management Banks are an important part of the economy of any nation. Traditionally, the banks operate as financial intermediaries serving to satisfy the demand of people in need of various forms of financing. Through this, banks enable people to purchase home and businesses to expand. These financial institutions therefore facilitate investment and spending that are responsible for fueling the growth of the economy. In spite of their vital role