To write a paper assuming we don't know much about the industry, firm, Research

To write a assuming we don't know much about the industry, firm, product, etc - Research Paper Example Generally, economic recessions are a result of a decline in GDP growth, which is itself caused by a slowdown in manufacturing orders, falling housing prices and sales, and a drop-off in business investment. But the fundamental question is- what causes the slowdown in the first place? While few predicted the financial catastrophe, almost everyone has an explanation as to why it happened. Although it is important to note that recessions are a result of different factors as each has its own specific causes, all of them are usually preceded by a period of irrational exuberance. Before we look at the causes of the recent economic recession, it would be logical to first of all look at some of the reasons that led to the Great Depression, if for anything, see if some of the causes recur. Stock Market Crash In the 1920s, the economy was developing at a very high rate due to the birth of many businesses and companies. As a result, there was an increased supply of money and individuals investe d their surplus in the stock market. On September 3, 1929 the stock market peaked, closing at a record of 381.17. Trading volume was 444,000 shares. At the end of the same month, the market closed at 343- a 10% decline. On Monday, October 29, 16.4% shares traded and the markets fell by an 11.5% margin. The markets closed at 230.17 by that time, down 40% from its all time high. Reports indicate that in a single day investors lost 14 billion dollars and by the end of 1929, 40 billion dollars was lost. This crash put a lot of pressure on banks and caused a lot of money to be taken out of the economy. The stock market bubble finally burst on October 24, 1929 as investors began dumping shares en masse. On a day referred to as â€Å"Black Thursday†, a record 12.9 million shares were traded that day and five days later, on "Black Tuesday" 16 million shares were traded. This was after another wave of panic swept Wall Street. Millions of shares were rendered worthless, and those inves tors who had borrowed money to buy stocks were wiped out completely. Federal Reserve’s Role during the Great Depression In most cases, recession is a result of inflation but in this case it was caused by deflation. Cycles of ups and downs in the economy are normal. One of the reasons strongly touted as being the cause of the Great Depression was the increase in interest rates by the government. The rates increased, from 3.5% in 1929 to 5%. Upon increasing the rates, the government failed to act to stabilize or increase the money supply. In fact, between 1929 and 1933, the supply of money fell by 30%. This led to deflation. Bank Failures At the time there was alot of fear that banks would collapse since, there were no guarantees on cash at the bank. As more and more people panicked, there was a massive run to the banks to pull money out and some banks were not able to fulfill the requests for withdrawal and closed their doors. As banks collapsed, very many people lost their mo ney. More panic followed as people lost their money and banks collapsed. This rush to withdraw money created a domino effect. There was no confidence in the banks and people resorted to keeping their money under their matresses. Reports indicate that during that period, over 9,000 banks failed. Insurance policies were not as advanced as to cover deposits and thus as banks failed people simply lost their savings. For the few surviving banks, unsure of the economic

Opportunities and risks of FDI in China Dissertation

Opportunities and risks of FDI in China - Dissertation Example ...........................11 Discussions†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦....................................................15 Conclusions†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..†¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.16 Recommendations†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.17 Bibliography†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.19 Appendices†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚ ¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦Ã¢â‚¬ ¦22 Abstract Over the last twenty years or so, Foreign Direct Investment in China has been successful. It started with a base of approximately nineteen million dollars in 1990 and by 1999; the stock of FDI had risen to three hundred billion dollars. China is the leading country among all developing countries in terms of FDI stock. Its FDI consists of Greenfield investment. Initially, the stock of FDI in China originated from Asia among other parts of the developing world. FDI has varying meanings when it comes to its application in different social and political grounds. For instance, in china, the notion of FDI has positive and negatives impacts depending on geographical locations of individuals, cultural beliefs and area of operation (private or public sector). Since 1980s, China has been gro uped among the countries that have been able to reap the benefits of FDI. For instance, in the past two decades or so, China’s economic growth rate has been increasing as the economy tries to move from the command economy to a market-based economy. This growth rate has been made possible by trade liberalization that has been ongoing across the globe. Introduction China is a Middle East country that has undergone a rapid economic growth rate in the recent past. In the past decade the economy has been experiencing a positive economic growth rate estimated at 12%. In conjunction with the economic growth rate, the government has decided to engage itself in numerous developmental activities for instance, infrastructure building, development of the financial sector, and technological advancement. The rate of growth has so far been stable and it is expected to remain the same in the foreseeable future. China has not been left behind in terms of FDI and it is actually among the count ries in the world that have managed to keep pace with the changes in the global world. However, Foreign Direct Investment (FDI) is a concept and a phenomenon that has gone beyond economies boundaries to encompass socio-cultural and political aspects. According to Fiss and Hirsch (2005), FDI in Chinese context means, â€Å"the emergence of capitalism, democratization, or globalization is marked by discursive struggles over their social and cultural impacts, and the outcome of these struggles may facilitate or impede the transformation’s widespread acceptance† p29. There are several research studies that have been conducted on FDI in china but very little have been done on the opportunities and risks experienced by FDI in the Chinese economy. The research activities have mainly focused on the stocks of FDI in general and have not actually done much in relation to how this is affected by the social and economic stability in