Troubles in Asia and Beyond.

Before the 1990s ended skeptics thought what benefits of markets (to exaggerate). Japan economy, after (to grow) rapidly during the second half of the 20^th century, (to stagnate) during the 1990s. Then, towards the end of the decade, a sudden crisis rocked market economies throughout South East Asia. These economies (to grow) rapidly and consistently for decades, and many believed that markets were largely responsible.

Yet in 1997 many Asian countries suddenly devalued their currencies. Prices of imported products soared within the nations, interest rates (to skyrocket), and living standards tumbled. The crisis occurred despite a general absence of obvious economic problems. So why did the growth of Asia’s economies suddenly cease? There is no simple answer, but two causes (to stand) out.

First, many lenders believed that governments throughout the world would guarantee loan repayments if borrowers (to get) in trouble, which promoted reckless (to lend) and borrowing.

Second, Asian banks borrowed money on a short-term basis from global savers and then used it to make long-term loans in their nations. If global investors suddenly demanded repayment of their loans, banks (have) trouble paying them back because those long-term loans would not (to repay) for some time.

In 1997, global investors realized that many Asian governments could not maintain stable exchange rates and near panic set in. Fearful of (to lose) their money or of (to repay) in devalued currency, investors suddenly withdrew funds from Asian nations. Exchange rates tumbled, and economies (to sink). Fortunately, the Asian economies were resilient. By 1999, they were recovering (to expect) to grow more rapidly in the near future.

The 20^th century ended without Asia’s problems (to cause) a worldwide crisis of confidence in market systems. The century and millenium (to begin) with widespread confidence that open markets and free global economy trade (to offer) great opportunity for higher productivity and living standards.

b) look for the English equivalents of: долгосрочный заём; обрушить; обесцененная валюта; мобильная (экономика); погашение, возврат (долга); падать (о ценах);находиться в состоянии застоя; стремительно повышаться (о ценах); кризис доверия.

c) speak about the problems caused by the economic crises in Asia using the words above.

Ex. 8. Read and translate the text. Speak of the importance of the alliance. Can it solve any global problems?

My name is M.G. and I am responsible for Volvo’s communication in France where I am Director of Information and Public Affairs. Volvo is a multinational automotive company active in the transport sector, primarily by our trucks, cars and buses; in the marine sector by Volvo Penta who makes marine and industrial engines; in the aerospace sector through Volvo Flugmotor. We are also present through a 50%- nearly 50% -stake in the health and food sector through a company called Procordia and that is along with Swedish government Volvo is present in 130 markets all over the world with nearly 70,000 employees. Nearly two years ago Volvo and Renault concluded a very important alliance, as a matter of fact the most important industrial alliance that Volvo ever made. We are, together, today the fourth automotive company in the world an d the first truck company in the world and we are, if you compare to other competitors, are leading, together, I mean, the leading automotive company in Europe. That means that it is a very, very important alliance.

We also are complementary. That means Volvo, for instance, is very active on the American markets where Renault is not. We are active in Asia, South America,, to a small degree in Africa, and of course in Europe, our utmost market after the United States. But on all the markets we can help each other because where Volvo is strong Renault is perhaps not that strong and on the contrary, where Renault is very strong. Take an example: in Asia, Volvo is present since a long time and we have producing facilities. Renault is present but not that strongly, so since the alliance, Renault is helped by Volvo because they can use our producing facilities and thus be more present in that important market in the future. On the contrary, Renault will help us on other markets as they do for instance in France.

Ex. 9. Read and translate the text.

a) Speak on the main idea of it.

There have been times when the United States followed an isolationist foreign policy, but in business matters the United States has been strongly internationalist. The American business abroad has been a source of both strength and of controversy for many decades.

American diplomacy has often helped to open doors for American business abroad but the relation between business interests and diplomacy has worked both ways. American political leaders have often encouraged American businesses to invest abroad as a way of strengthening the American diplomatic hand. Early in the 20^th century, or example, the policy known as “Dollar Diplomacy” favoured American investments in parts of the world that had a strategic interest for American policy- makers.

Not surprisingly the American business has received a mixed welcome in the rest of the world. Many people - especially those who are critical of United State foreign policy - see American business activities as an extension of its diplomacy. Critics charge American firms with their economic power to influence foreign governments into adopting policies that serve United States political and economic interests rather than local interests.

On the other hand, many people in other countries have welcomed investments by American firms as a means of raising their own standards of living. Foreign investments, whether by American firms or by companies from other nations, help to spread new technology and promote economic growth on a worldwide scale. By investing abroad, American businesses have provided many new jobs and new products for people who lacked access to the benefits of modern industrial society. They have opened new avenues for advancement and new outlets for the ideas and energies of millions of people.

Certainly, American businesses have had to face mounting competition from producers in the rest of the world in recent years. The competitiveness of the worldwide economy can be expected to intensify in the years ahead. American business people can draw upon their long experience with give-and-take of free market forces to sharpen their competitiveness and help them to make a good showing. But the competition is certain to be rigorous.

b) Answer the questions:

1. How did the American diplomatic hand help the American economy?

2. Why did American business receive a mixed welcome in the rest of the world?

3. What were the reasons to welcome investments of American businessmen?

4. Why is the world competition mounting in recent years?

Ex.11.Questions for economic reasoning and discussion:

1. Develop bulletin board displays on the economic conditions in different countries.

2. Make up research projects on the evolving economies of the former socialist countries? Are they having a success? What aspects of the transition to a market economy have proven most difficult?

3. Investigate the economic problems of a developing country. What recommendations could provide for/or increase the rate of economic growth in the country?

4. Could you compare the plight of a developed country to the economy of a depressed state? Consider the quality of education, availability of adequate health care, sources of investment capital, etc.

Ex.10. Choose the letter of the item that best completes the statement or answers the question.

1. A country where the government owns the steel mills, railroads, and iron mines is probably considered to be

1. Social capitalist.

2. Communist.

3. Socialist.

4. Democratic fascist.

2. The Soviet economic system differed most from a market economy in

a. Its emphasis on investment for individual equipment.

2. The level of spending for military purposes.

3. Its emphasis on production.

4. The role of central planners.

3. In an economy relying on central planning, resources are allocated according to

1. Current production capacity.

2. Consumer demand.

3. The price mechanism.

4. National economic goals and objectives.

4. One reason the Soviet Union faltered and fell was

1. Central planning lacked resources.

2. Central planning lacked a system of incentives to encourage people to use

resources most productively and efficiently.

3. Yeltsin overthrew the government .

4. Gorbachev’s reforms were successful.

5. Which of the following is NOT one of the basic economic questions that people in all economies must answer?

1. What goods and services will be produced?

2. How will resources be used to eliminate scarcity?

3. How will goods and services be produced?

4. Who will receive the goods and services produced?

6. Which of the following is the major economic problem of the former Soviet Union?

1. Too much attention was paid to consumer’s wants.

2. The Soviet government owned too few resources.

3. A lack of information and incentives led to unproductive and inefficient use of resources.

4. The “invisible hand” was given too much leeway in directing production.

7. Which of the following best describes events in the global economy in the 1990s?

1. For the first time in the century, the global economy had no major crises anywhere in the world.

2. There was a world-wide crisis of confidence in market systems.

3. Many less-developed nations began looking toward market systems as the

preferred method of promoting their economic growth.

4. The popularity of economic growth declined.

8. After a country passes through the demographic transition,

1. Its population will probably have a larger proportion of young people.

2. Its birth rate will be lower.

3. Its death rate will be higher.

4. Its population will rise more swiftly.

9. Which of the following does not apply to developing nations?

1. Falling fertility rates.

2. Declining per-capita incomes.

3. Relatively low labor productivity.

4. An interest in expanding global trade.

10. Over time, an economy’s wage level depends largely on

1. Business charity and social responsibility.

2. Government labor standards.

3. Trade barriers.

4. The productivity of workers.

11. If employers in less-developed nations are forced to pay their workers much higher wages,

1. Those workers would be less able to compete with workers in more developed countries.

2. Employment and living standards would rise in those nations.

3. Consumers in those nations would benefit.

4. Workers in those nations would be more likely to specialize where they have

comparative advantages.

12. According to economic thinking, people have been destroying elephant populations because

1. They are greedy and irresponsible.

2. They have lacked adequate information and incentives.

3. They want to annoy environments in wealthy nations.

4. Elephants are usually private property.

13. If poorer, developing nations grow economically and raise their living standards sufficiently, they

1. They will probably be more willing and able to improve the environment.

2. Will probably experience faster population growth.

3. Will probably worsen the global environment.

4. Will probably end up with lower levels of productivity as they use up their

resources.

14. Instead of using commands and controls to reduce environmental problems, government leaders sometimes resort to fees or tradeable permits. They do this because

1. They do not understand economic thinking.

2. Commands and controls pay too much attention to the costs of reducing

environmental harm.

3. Government leaders do not want to offend special interests.

4. Fees and permits are incentive-based methods that minimize the cost of achieving a given environmental goal.

15. Biotechnology has developed a lot of genetically modified food and promises to create many more in the future. Which of the following is true about the genetically modified food?

1. It would probably result in more rain-forests being converted to farmland.

2. It would increase the use of pesticides and chemicals in food production.

3. It would harm human health and natural organisms, according to many reputable tests by scientists in the U.S. and Europe.

4. It would probably help people live a long healthy life.

Use your answers as the basic points while speaking about globalization of economic relations.