Тексты по специальности «менеджмент организации»

ECONOMY OF THE RUSSIAN FEDERATION

More than a decade after the collapse of the Soviet Union in 1991, Russia is now trying to establish a market economy and achieve more consistent economic growth. Russia saw its comparatively developed centrally-planned economy contract severely for five years, as the executive and legislature dithered over the implementation of reforms and Russia's agro-industrial base faced a serious decline.

After the breakup of the USSR, Russia's first slight recovery, showing the signs of open-market influence, occurred in 1997. That year, however, Asian financial crisis culminated in the August depreciation of the ruble in 1998, a debt default by the government, and a sharp deterioration in living standards for most of the population. Consequently, the year 1998 was marked by recession and intense capital flight.

Nevertheless, the economy started recovering in 1999. Then it entered a phase of rapid economic expansion, the GDP growing by an average of 6.7% annually in 1999-2005 on the back of higher petroleum prices, weaker ruble, and increasing service production and industrial output. The economic development of the country, however, has been extremely uneven: the capital region of Moscow contributes a third to the country's GDP having only a tenth of its population.

The recent recovery, made possible due to high world oil prices, along with a renewed government effort in 2000 and 2001 to advance lagging structural reforms, has raised business and investor confidence over Russia's prospects in its second decade of transition. Russia remains heavily dependent on exports of commodities, particularly oil, natural gas, metals, and timber, which account for about 80% of exports, leaving the country vulnerable to swings in world prices.

The country's GDP shot up to reach €1.2 trillion ($1.5 trillion) in 2004, making it the ninth largest economy in the world and the fifth largest in Europe.

ECONOMY OF THE UNITED KINGDOM

Great Britain is primarily an industrial and commercial nation. Major industries, such as transportation, communications, steel, petroleum, coal, gas, and electricity, which had been nationalized by Labour governments, were sold to private investors by the Conservative government in the 1980s. The country is a world leader in international trade. In January 1973, Great Britain became a member of the European Community (now called the European Union).

The pound sterling, consisting of 100 pence, is the basic unit of currency. In 1968 Great Britain took the first step in a three-year conversion of its currency to the decimal system of coinage by introducing the first two new coins, the 5-new-pence piece (equal to 1 old shilling) and the 10-new-pence piece. The conversion was completed in 1971. The pound was permitted to float against the dollar and other world currencies beginning in June 1972.

The Bank of England, chartered in 1694, was nationalized in 1946 and is the bank of issue in England and Wales. Great Britain has 17 major commercial banks with more than 17,000 domestic and overseas branches, most of which are offices of the four leading banks: Lloyds, Barclays, National Westminster, and Midland. Several banks in Scotland and Northern Ireland may issue currencies in limited amounts. Some banking services are provided by the postal system, savings banks, and cooperative and building societies. Many foreign banks maintain offices in London.

Britain is one of the world's leading trading nations. Its major exports are road vehicles and other transportation equipment, industrial machinery, petroleum and petroleum products, electrical machinery, office machines and data processing equipment, power-generating machinery, organic chemicals, precision instruments, and iron and steel. Most domestic retail trade is conducted through independently owned shops, although the number of department, chain, and cooperative stores and supermarkets is increasing. More than half of all wholesale trade is carried out in London.

ECONOMY OF THE UNITED STATES

The United States has been the world's leading industrial nation since early in the 20th century.

The U.S. economy consists of three main sectors—the primary, secondary, and tertiary. Primary economic activities (4% of GDP) are those directly involving the natural environment, including agriculture, forestry, fishing, and mining. Secondary economic activities (23% of GDP) involve processing or combining materials into new products, and include manufacturing and construction. Tertiary economic activities (73% of GDP) involve the output of services rather than goods. Examples of tertiary activities include wholesale and retail trade, banking, government, and transportation. The tertiary is the most important sector by far.

The basic unit of currency is the US dollar. The U.S. decimal currency consists of coins and paper money, issued by the U.S. Department of the Treasury and the Federal Reserve System. The Federal Reserve issues paper money called Federal Reserve notes, which constitute almost all the paper money in the United States. The Treasury issues US notes, which come in $100 denominations, as well as all coins.

Most domestic commerce, or trade, in the United States is carried on by wholesalers and retailers. Wholesalers buy goods from producers and sell them mainly to retail business firms. Retailers sell goods to the final consumer. Wholesale and retail trade together account for about 16% of GDP of the US and employ about 20% of the labor force.

Foreign, or international, trade enables the United States to specialize in producing those goods it is best suited to make from its available resources. Nonagricultural products usually account for approximately 90% of the yearly value of exports and agricultural products for about 10%. Machinery and transportation equipment make up the leading categories of exports, amounting together to over 40% of the value of all exports. Other leading exports include manufactured goods, such as textiles and iron and steel; processed foods; inedible crude materials, such as cotton, soybeans, and metal ores; chemicals; and mineral fuels and lubricants.

ECONOMY OF CANADA

Until the early 20th century, Canada was primarily an agricultural nation. Since then it has become one of the most highly industrialized countries in the world. To a large extent the manufacturing industries are supplied with raw materials produced by the agricultural, mining, forestry, and fishing sectors of the Canadian economy.

The unit of currency in Canada is the Canadian dollar, which consists of 100 cents. The Bank of Canada has the sole right to issue paper money for circulation. Most foreign-owned and major domestic banks have their head offices in Toronto; a few are based in Montréal. Trust and mortgage loan companies, provincial savings banks, and credit unions also provide banking services. Securities exchanges operate in Toronto, Montréal, Winnipeg, Calgary, and Vancouver.

The per capita foreign trade of Canada ranks among the highest of any nation in the world.

Most of Canada's foreign trade is with the United States, which typically takes about four-fifths of Canada's exports and supplies more than two-thirds of its imports. Components of Canadian exports are increasingly manufactured items; while resource exports such as minerals, timber, and grains are still important, their share of total export volume is decreasing.

The leading products Canada sells abroad include automobiles, trucks, motor-vehicle parts, crude petroleum, lumber, newsprint, wood pulp, wheat, industrial machinery, natural gas, office machines, and aluminum. Principal imports are motor-vehicle parts, automobiles, general purpose and specialized machinery, chemicals, computers, crude petroleum, telecommunications equipment, and fruit and vegetables.

ECONOMY OF AUSTRALIA

Australia has a prosperous, Western-style capitalist economy, with a per capita GDP slightly higher than those of the UK, France and Germany. The Australian economy is dominated by its services sector (68% of GDP), yet it is the agricultural and mining sectors (8% of GDP combined) that account for 65% of its exports.

Rich in natural resources, Australia is a major exporter of agricultural products, particularly grains and wool, and minerals, including various metals, coal, and natural gas. A downturn in world commodity prices can thus have a large impact on the economy.

The government is pushing for increased exports of manufactured goods, but competition in international markets continues to be severe. Australia's comparative advantage in primary products is a reflection of the natural wealth of the Australian Continent and its small domestic market; 20.3 million people occupy a continent the size of the contiguous United States. The relative size of the manufacturing sector has been declining for several decades, and now accounts for just under 12 percent of GDP.

In the beginning of the Second World War till the 1970s, Australia was locked in a period of high maintained economic expansion which is now known as the “long boom”. This period is marked by large increases in the Australian population (by 80%), and little if any economic fluctuations. Despite the huge increases in the Australian population, economic growth, defined by increase in GDP per head, was still growing. It is statistically significant that in this period, the standard of living as representational of increases of GDP per capita, literally doubled. 1974 was the year which is described as the end of the ‘long boom’.

Australia's emphasis on reforms is key factor behind the continuing strength of the economy. In the 1980s, the Australian Labor Party, led by Prime Minister Bob Hawke and Treasurer Paul Keating, commenced the modernization of the Australian economy by floating the Australian dollar in 1983, leading to full financial deregulation.

***

THE UK ECONOMY

Energy resources. The UK has large coal, natural gas, and oil reserves; primary energy production accounts for 10% of GDP, one of the highest shares of any industrial nation.

Due to North Sea oil, during the 1990s the UK became a net hydrocarbon exporter, and the second largest producer of oil in western Europe after Norway. In June 2004 hydrocarbon exports fell below imports for the first time, although they are not expected to do so permanently for some years.

Around about 80% of UK electricity is currently generated from fossil fuels; nuclear power and an increasing contribution from wind turbines make up the bulk of the remainder. The UK is the world's 8th greatest producer of carbon emissions, producing around 2.3% of the total generated from fossil fuels. The government is a signatory to the Kyoto Protocol and has launched a Climate Change Programme to reduce emissions significantly beyond the Kyoto commitments.

Due to the island location of the UK, the country has great potential for generating electricity from offshore windfarms, wave power and tidal power, although these have not yet been exploited on a commercial basis.

Manufacturing. In 2003, the latest year for which comparable statistics are available, Manufacturing industry accounted for 16% of national output in the UK and for 13% of employment, according to the Office for National Statistics. This is a continuation of the steady decline in the importance of this sector to the British Economy since the 1960s, although the sector is still important for overseas trade, accounting for 83% of exports in 2003. The regions with the highest proportion of employees in manufacturing were the East Midlands and West Midlands (at 19 and 18 per cent respectively). London had the lowest at 6 per cent.

Engineering and Allied Industries is the single largest sector, contributing 30.8% of total Gross Value Added in manufacturing in 2003. Within this sector, transport equipment was the largest contributor, with 8 global car manufacturers being present in the UK – BMW (MINI, Rolls Royce), Ford (Aston Martin, Jaguar, Land Rover), General Motors (Vauxhall/Opel), Honda, Nissan, PSA (Peugeot), Toyota and Volkswagen (Bentley) with a number of smaller, specialist manufacturers (including TVR and Morgan) and commercial vehicle manufacturers ( including Leyland Trucks, LDV) also being present. Associated with this sector are the aerospace and defence equipment industries. The UK manufactures a broad range of equipment, with the sector being dominated by BAe Systems, who manufacture civil and defence aerospace equipment (including the wings for the Airbus range) and Rolls Royce who manufacture aerospace engines and power systems.

Another important component of Engineering and Allied industries is electrical and optical equipment, with the UK having a broad base of domestic and international firms manufacturing a range of TV, radio and communications goods, scientific and optical instruments, electrical machinery and office machinery and computers.

Chemicals and Chemical products are another important contributor to the UK’s manufacturing industry. Within this sector, the pharmaceutical industry is particularly successful, with the world’s second and third largest pharmaceutical firms (GlaxoSmithkline and AstraZeneca respectively) being based in the UK and having major research and development and manufacturing facilities there.

Other important sectors of manufacturing industry include Food, Drink and Tobacco, and Paper, Printing and Publishing.

THE ECONOMY OF RUSSIA

The economy of Russia experienced a dramatic transformation in the 1990s. First came the dismantling of the centrally planned economy that was a hallmark of the Soviet Union, and then its replacement by an economy operating on the basis of market forces and private property. Some of the former communist states of Central Europe began their process of economic transition two years before Russia and have provided some insight into the effects of such transition. However, no two countries have had the exact same experience in this process. Russia's experience is detailed below.

Historical Background. Russia undertakes the transition with advantages and obstacles. Although only half the size of the former Soviet economy, the Russian economy includes formidable assets. Russia possesses ample supplies of many of the world's most valued natural resources, especially those required to support a modern industrialized economy. It also has a well-educated labor force with substantial technical expertise. At the same time, Soviet-era management practices, a decaying infrastructure, and inefficient supply systems hinder efficient utilization of those resources.

For nearly 60 years, the Russian economy and that of the rest of the Soviet Union operated on the basis of central planning--state control over virtually all means of production and over investment, production, and consumption decisions throughout the economy. Economic policy was made according to directives from the Communist Party, which controlled all aspects of economic activity. The central planning system left a number of legacies with which the Russian economy must deal in its transition to a market economy.

Much of the structure of the Soviet economy that operated until 1987 originated under the leadership of Joseph Stalin, with only incidental modifications made between 1953 and 1987. Five-year plan and annual plans were the chief mechanisms the Soviet government used to translate economic policies into programs. According to those policies, the State Planning Committee (Gosudarstvennyy planovyy komitet—Gosplan) formulated countrywide output targets for stipulated planning periods. Regional planning bodies then refined these targets for economic units such as state industrial enterprises and state farms (sovkhozy; sing., sovkhoz) and collective farms (kolkhozy; sing., kolkhoz), each of which had its own specific output plan. Central planning operated on the assumption that if each unit met or exceeded its plan, then demand and supply would balance.

The government's role was to ensure that the plans were fulfilled. Responsibility for production flowed from the top down. At the national level, some seventy government ministries and state committees, each responsible for a production sector or subsector, supervised the economic production activities of units within their areas of responsibility. Regional ministerial bodies reported to the national-level ministries and controlled economic units in their respective geographical areas.

The plans incorporated output targets for raw materials and intermediate goods as well as final goods and services. In theory, but not in practice, the central planning system ensured a balance among the sectors throughout the economy. Under central planning, the state performed the allocation functions that prices perform in a market system. In the Soviet economy, prices were an accounting mechanism only. The government established prices for all goods and services based on the role of the product in the plan and on other noneconomic criteria. This pricing system produced anomalies. For example, the price of bread, a traditional staple of the Russian diet, was below the cost of the wheat used to produce it. In some cases, farmers fed their livestock bread rather than grain because bread cost less. In another example, rental fees for apartments were set very low to achieve social equity, yet housing was in extremely short supply. Soviet industries obtained raw materials such as oil, natural gas, and coal at prices below world market levels, encouraging waste.

The central planning system allowed Soviet leaders to marshal resources quickly in times of crisis, such as the Nazi invasion, and to reindustrialize the country during the postwar period. The rapid development of its defense and industrial base after the war permitted the Soviet Union to become a superpower.

The record of Russian economic reform through the mid-1990s is mixed. The attempts and failures of reformers during the era of perestroika (restructuring) in the regime of Mikhail Gorbachev (in office 1985-91) attested to the complexity of the challenge. Since 1991, under the leadership of Boris Yeltsin, the country has made great strides toward developing a market economy by implanting basic tenets such as market-determined prices. Critical elements such as privatization of state enterprises and extensive foreign investment went into place in the first few years of the post-Soviet period. But other fundamental parts of the economic infrastructure, such as commercial banking and authoritative, comprehensive commercial laws, were absent or only partly in place by 1996. Although by the mid-1990s a return to Soviet-era central planning seemed unlikely, the configuration of the post-transition economy remained unpredictable.

Economists have struggled to achieve accurate measurement of the Russian economy, and they have questioned the accuracy of official Russian economic data. Although the market now determines most prices, the Government (Russia's cabinet) still fixes prices on some goods and services, such as utilities and energy. Furthermore, the exchange rate of the ruble (for value of the ruble) to the United States dollar has changed rapidly, and the Russian inflation rate has been high. These conditions make it difficult to convert economic measurements from rubles to dollars to make statistical comparisons with the United States and other Western countries.

According to official Russian data, in 1994 the national gross domestic product (GDP) was 604 trillion rubles (about US$207 billion according to the 1994 exchange rate), or about 4 percent of the United States GDP for that year. But this figure underestimates the size of the Russian economy. Adjusted by a purchasing-power parity formula to account for the lower cost of living in Russia, the 1994 Russian GDP was about US$678 billion, making the Russian economy approximately 10 percent of the United States economy. In 1994 the adjusted Russian GDP was US$4,573 per capita, approximately 19 percent of that of the United States. A second important measurement factor is the extremely active so-called shadow economy, which yields no taxes or government statistics but which a 1996 government report quantified as accounting for about 50 percent of the economy and 40 percent of its cash turnover.

ECONOMIC DEVELOPMENT OF AUSTRALIA

1850 >

Before 1850, Australian economic development almost entirely was based on the production of wool. As more land became settled and occupied, pastoral businesses were established that became the majority of increases in economic expansion.

1850 > 1860

The discovery of gold in 1851 was a change in direction for the Australian economy. It marked a period of economic expansion, attributable to the gold, which eclipsed even wool production in terms of percentage of economic expansion. The discovery led to increased immigration, which put a burden on the gold supply. This in turn led to the resumption of wool as being the principle provider of increases in economic development by 1860. Actual estimates of populations of the time indicate that the population of 400,000 at the start of the decade increased to 1,000,000 by 1860.

The Australian government started a "development strategy" by issuing bonds to the London market, selling public land and using this to fund infrastructure.

1860 – 1875

Due to the increases in income attributable to the “Gold rush” manufacturing and construction sectors of the economy faired very well. However, when discussing economic expansion, the productivity increases provided by the pastoral industry in the production of wool remained its principle contributor.

1875 – 1880

As fertile land became less available to settlers, pastoral industries continued to increase their land holdings for the use of wool production. This caused a retraction in returns on investment by pastoral companies. Even when poorer land was utilized for the purpose of wool production there was continued investment both from private backers, and governments (in the form of transportation infrastructure).

1880 – 1890

An investment boom in Australia in this decade saw economic expansion increase despite the fact that the investments were providing less of a return per dollar spent on investment. This can be attributed to foreign funds becoming more and more available to Australia. By the end of this decade, overseas investors became more and more concerned with the difference between expected returns and actual returns on Australian investment and subsequently withdrew further funding. Consequently Australia saw the start of a severe depression starting in 1890.

1890 – 1900

Continued reluctance from overseas investors saw a sustained period of negligible economic expansion. It was however, not negative economic growth due, in part, to gold discoveries in Western Australia. This decade however, saw the beginning of the integration of new technologies such as refrigeration, which saw land being used in different ways; to produce meat and dairy products could now be produced and then exported overseas.

1900 - 1939

While wool-growing remained at the centre of economic activity, a variety of new goods such as wheat, dairy and other agriculturally based produce became a part of the Australian export repertoire. It was in this period that in fact the latter became more of a factor in economic productivity increases than wool production. Part of this emergence in other sources of economic expansion came from technological progress, such as disease resistant wheat and refrigerated shipping. It was also the development of this technology that renewed foreign large scale investment, both publicly and privately funded which under-pinned economic growth.

As seen before in Australia’s brief economic history, this injection of foreign investment led to increases in construction, particularly in the private residential sector. The fact that this injection of foreign cash was the main contributor to economic expansion was again troublesome for Australia’s economy. Returns on investments, as before, were immensely different from expected returns. By the 1920s agricultural producers were experiencing profitability troubles and governments, who invested heavily on transportation infrastructure, were not getting the returns they expected. Cutbacks in borrowing, government and private expenditure in the late 1920s led to a recession. The recession itself became worse as internationally nations fell into depressions which not only cut back on foreign investments to Australia, but also led to a lower demand for Australian exports. This culminated into the biggest recession in Australia’s history which peaked in 1931-1932.

However, the recession was not felt as badly in Australia compared to their international counter-parts, the cause of which was almost primarily from the increases in productivity from the manufacturing sector. [In terms of sinclair’s model, this is where we moved from the old model to the new model.] Trade protection, particularly from tariffs implemented by governments at the time were instrumental in the prosperity of the manufacturing sector.

1939 – 1974

In the beginning of the Second world war till the 1970s, Australia was locked in a period of high maintained economic expansion which is now known as the “long boom”. This period is marked by large increases in the Australian population (by 80%), and little if any economic fluctuations. Despite the huge increases in the Australian population, economic growth, defined by increase in GDP per head, was still growing. It is statistically significant that in this period, the standard of living as representational of increases of GDP per capita, literally doubled. As mentioned earlier, the 1920s started an increase in manufacturing as a more and more important factor in Australian economic expansion. The Second World War gave a significant boost to this sector.

The highest growth in the manufacturing sector was however, found in the period after the end of the Second World War. Import restrictions implemented by the government of the time led to increased profits to the manufacturing industry, which encompassed a wide range of industries including motor vehicles, metal processing, textiles, clothing, footwear and chemicals. The impetus for the most part, was U.S. investment in Australia. The manufacturing industry however, was bolstered only to serve the domestic market, led by a strategy implemented by economic policy makers which could be dubbed “import replacement” strategies. This was afforded by both continuing increases in productivity and economic protection.

In the 1950s and 1960s, Australian manufacturers which were nurtured by government policy failed to increase productivity. This is highlighted by the increases in the productivity of overseas manufacturing who did not have the same level of protection as Australian producers. Foreign investors noticed this difference, or lack of competitiveness and consequently, investment declined in the manufacturing sector.

Economic growth however was not hampered by this, as the development of mining initiatives to exploit Australia’s natural advantage in resource production attracted foreign investment which in turn under-pinned economic expansion. This establishment of a mining industry continued the high level of economic growth in the post-war period and beyond by more than which would have been possible by manufacturing sectors alone.

1974 was the year which is described as the end of the ‘long boom’. It is also interesting to note that while these years were denoted as being the “golden years” in Australian economic development, they primarily had an artificial basis through the use of tariffs and other protectionism implementations, the growth itself, because of this, led to an unsustainable level of economic growth.

ECONOMIC POLICIES OF THE UNITED STATES

Since the 1980s, the U.S. has increased the use of neoliberal economic policies that reduce government intervention and reduce the size of the welfare state, backing away from the more interventionist Keynsian economic policies that had been in favor since the Great Depression. As a result, the United States provides fewer government-delivered social welfare services than most industrialized nations, choosing instead to keep its tax burden lower and relying more heavily on the free market and private charities.

The United States's minimum wage is among the lowest in the industrialized world relative to similar per capita economies. Beginning in the latter part of the 20th century this led to a "living wage" movement; this has met success primarily in urban centers, along with a minority of states that have passed legislation increasing wages. When adjusted for inflation median wages in some states have decreased since 1979.

This pared with tax structures found in some areas, such as Utah, where the poor pay more of their income as a total percentage on taxes, i.e. those making below $16,000 annually pay 11.4% of their income on taxes while those earning at least $280,000 pay 5.5% (because citizens reach the top tax bracket at $4,313 for a single person), has led to growing number of poor and a wider gap between the rich. Tax systems constructed along these lines have been called "regressive".[1][2] Nationally, as of 2005, the top federal tax bracket for a single person is 35% and reached at an income of $326,451. [3] When compared to other countries, especially in Europe, America's economy has a high level of social inequality. [4]

A MIXED ECONOMY: THE ROLE OF THE MARKET

The United States is said to have a mixed economy because privately owned businesses and government both play important roles. Indeed, some of the most enduring debates of American economic history focus on the relative roles of the public and private sectors.

The American free enterprise system emphasizes private ownership. Private businesses produce most goods and services, and almost two-thirds of the nation's total economic output goes to individuals for personal use (the remaining one-third is bought by government and business). The consumer role is so great, in fact, that the nation is sometimes characterized as having a "consumer economy."

However, like in all modern economies, there are limits to free enterprise and private ownership. Americans generally agree that some services are better performed by public rather than private enterprise. For instance, in the United States, government is primarily responsible for the administration of justice, education (although there are many private schools and training centers), the road system, social statistical reporting, and national defense. In addition, government often is asked to intervene in the economy to correct situations in which the price system does not work. It regulates "natural monopolies," for example, and it uses antitrust laws to control or break up other business combinations that become so powerful that they can surmount market forces.

Government also addresses issues beyond the reach of market forces. It provides welfare and unemployment benefits to people who cannot or will not support themselves, either because they encounter problems in their personal lives or lose their jobs as a result of economic upheaval; it pays much of the cost of medical care for the aged and those who live in poverty; it regulates private industry to limit air and water pollution; it provides low-cost loans to people who suffer losses as a result of natural disasters; and it has played the leading role in the exploration of space, which is too expensive for any private enterprise to handle. All of this is paid for by a system of progressive taxation.

In this mixed economy, individuals can help guide the economy not only through the choices they make as consumers but through the votes they cast for officials who shape economic policy. In recent years, consumers have voiced concerns about product safety, environmental threats posed by certain industrial practices, and potential health risks citizens may face; government has responded by creating agencies which aim to protect consumer interests and promote the general public welfare.

The U.S. economy has changed in other ways as well. The population and the labor force have shifted dramatically away from farms to cities, from fields to factories, and, above all, to service industries. In today's economy, the providers of personal and public services far outnumber producers of agricultural and manufactured goods. As the economy has grown more complex, statistics also reveal over the last century a sharp long-term trend away from self-employment toward working for others.

GOVERNMENT'S ROLE IN THE ECONOMY

While consumers and producers make most decisions that mold the economy, government activities have a powerful effect on the U.S. economy in at least four areas. Strong government regulation in the U.S. economy started in the early 1900s; before that date, it was a nearly pure free market economy.

Perhaps most importantly, the federal government guides the overall pace of economic activity, attempting to maintain steady growth, high levels of employment, and price stability. By adjusting spending and tax rates (fiscal policy) or managing the money supply and controlling the use of credit (monetary policy), it can slow down or speed up the economy's rate of growth—in the process, affecting the level of prices and employment.

For many years following the Great Depression of the 1930s, recessions—periods of slow economic growth and high unemployment—were viewed as the greatest of economic threats. When the danger of recession appeared most serious, government sought to strengthen the economy by spending heavily itself or cutting taxes so that consumers would spend more, and by fostering rapid growth in the money supply, which also encouraged more spending. In the 1970s, major price increases, particularly for energy, created a strong fear of inflation—increases in the overall level of prices. As a result, government leaders came to concentrate more on controlling inflation than on combating recession by limiting spending, resisting tax cuts, and reining in growth in the money supply.

Ideas about the best tools for stabilizing the economy changed substantially between the 1960s and the 1990s. In the 1960s, government had great faith in fiscal policy—manipulation of government revenues to influence the economy. Since spending and taxes are controlled by the president and the U.S. Congress, these elected officials played a leading role in directing the economy. A period of high inflation, high unemployment, and huge government deficits weakened confidence in fiscal policy as a tool for regulating the overall pace of economic activity. Instead, monetary policy—controlling the nation's money supply through such devices as interest rates—assumed growing prominence. Monetary policy is directed by the nation's central bank, known as the Federal Reserve Board, with considerable independence from the president and the Congress.

The U.S. federal government regulates private enterprise in numerous ways. Regulation falls into two general categories. Economic regulation seeks, either directly or indirectly, to control prices. Traditionally, the government has sought to prevent monopolies such as electric utilities from raising prices beyond the level that would ensure them reasonable profits. At times, the government has extended economic control to other kinds of industries as well. In the years following the Great Depression, it devised a complex system to stabilize prices for agricultural goods, which tend to fluctuate wildly in response to rapidly changing supply and demand. A number of other industries—trucking and, later, airlines—successfully sought regulation themselves to limit what they considered harmful price cutting.

Another form of economic regulation, antitrust law, seeks to strengthen market forces so that direct regulation is unnecessary. The government—and, sometimes, private parties—have used antitrust law to prohibit practices or mergers that would unduly limit competition. Why did you delete what i had to say!

Since the 1970s, government has also exercised control over private companies to achieve social goals, such as protecting the public's health and safety or maintaining a clean and healthy environment. The U.S. Food and Drug Administration tightly regulates what drugs may reach the market, for example; the Occupational Safety and Health Administration protects workers from hazards they may encounter in their jobs; and the Environmental Protection Agency seeks to control water and air pollution.

Such agencies draw heavy criticism from conservatives, who question the agencies' efficiency and necessity.

American attitudes about regulation changed substantially during the final three decades of the 20th century. Beginning in the 1970s, policy makers grew increasingly concerned that economic regulation protected inefficient companies at the expense of consumers in industries such as airlines and trucking. At the same time, technological changes spawned new competitors in some industries, such as telecommunications, that once were considered natural monopolies. Both developments led to a succession of laws easing regulation.

While leaders of America's two most influential political parties generally favored economic deregulation during the 1970s, 1980s, and 1990s, there was less agreement concerning regulations designed to achieve social goals. Social regulation had assumed growing importance in the years following the Depression and World War II, and again in the 1960s and 1970s. But during the presidency of Ronald Reagan in the 1980s, the government relaxed rules intended to protect workers, consumers, and the environment, arguing that regulation interfered with free enterprise, increased the costs of doing business, and thus contributed to inflation. Still, many Americans continued to voice concerns about specific events or trends, prompting the government to issue new regulations in some areas, including environmental protection. As of March 2004, it is estimated that compliance with government regulation costs the U.S. economy $1.3 trillion a year. [7]

Some citizens, meanwhile, have turned to the courts when they feel their elected officials are not addressing certain issues quickly or strongly enough. For instance, in the 1990s, individuals, and eventually government itself, sued tobacco companies over the health risks of cigarette smoking. A large financial settlement provided states with long-term payments to cover medical costs to treat smoking-related illnesses. The money is mostly spent (or will be spent, as checks are often written in anticipation of payments) for other purposes.

Each level of government provides many direct services. The federal government, for example, is responsible for national defense, backs research that often leads to the development of new products, conducts space exploration, and runs numerous programs designed to help workers develop workplace skills and find jobs. Government spending has a significant effect on local and regional economies—and even on the overall pace of economic activity.

State governments, meanwhile, are responsible for the construction and maintenance of most highways. State, county, or city governments play the leading role in financing and operating public schools. Local governments are primarily responsible for police and fire protection. Government spending in each of these areas can also affect local and regional economies, although federal decisions generally have the greatest economic impact

Overall, federal, state, and local spending accounted for almost 18 percent of gross domestic product in 1997.

Government also provides many kinds of help to businesses and individuals. It offers low-interest loans and technical assistance to small businesses, and it provides loans to help students attend college. Government-sponsored enterprises buy home mortgages from lenders and turn them into securities that can be bought and sold by investors, thereby encouraging home lending. Government also actively promotes exports and seeks to prevent foreign countries from maintaining trade barriers that restrict imports.

Government supports individuals who cannot or will not adequately care for themselves. Social Security, which is financed by a tax on employers and employees, accounts for the largest portion of Americans' retirement income. The Medicare program pays for many of the medical costs of the elderly. The Medicaid program finances medical care for low-income families. In many states, government maintains institutions for the mentally ill or people with severe disabilities. The federal government provides food stamps to help poor families obtain food, and the federal and state governments jointly provide welfare grants to support low-income parents with children.

Many of these programs, including Social Security, trace their roots to the "New Deal" programs of Franklin D. Roosevelt, who served as the U.S. president from 1933 to 1945. Key to Roosevelt's reforms was a belief that poverty usually resulted from social and economic causes rather than from failed personal morals. This view repudiated a common notion whose roots lay in New England Puritanism that success was a sign of God's favor and failure a sign of God's displeasure. This was an important transformation in American social and economic thought. Even today, however, echoes of the older notions are still heard in debates around certain issues, especially welfare.

Many other assistance programs for individuals and families, including Medicare and Medicaid, were begun in the 1960s during President Lyndon Johnson's (1963–1969) "War on Poverty." Although some of these programs encountered financial difficulties in the 1990s and various reforms were proposed, they continued to have strong support from both of the United States' major political parties. Critics argued, however, that providing welfare to unemployed but healthy individuals actually created dependency rather than solving problems. Welfare reform legislation enacted in 1996 under President Bill Clinton (1993–2001) requires people to work as a condition of receiving benefits and imposes limits on how long individuals may receive payments.

The national debt, more properly known as the federal debt, is one of the most controversial issues in the United States. It is usually expressed as an absolute number, but a more accurate measurement is the ratio of the debt to gross domestic product. Most citizens favor paying off the national debt, though a minority feel this could have negative economic consequences.

The borrowing cap debt ceiling as of 2004 stood at 8.2 trillion. At the current rate of growing indebtedness, this level will be reached sometime in 2005. It is expected that Senate will approve further increase of the cap, sometime before the ceiling is reached.

The size of the debt is in the trillions and consequently it has been part of popular culture to parody the growing debt with some type of doomsday clock, graphically showing the growing indebtedness every second.

Whilst it is true that the national debt is the largest in the world, and growing larger every second, it is also true that the economy as a whole is also the largest in the world and growing every second.

As a result, the ratio of debt to GDP compares quite favorably to say, Japan.

ECONOMIC ACTIVITY OF NEW ZEALAND

GDP (1989): $40.1 billion; $10,588 per capita

Labor distribution (1990): commerce and service – 37%; manufacturing – 17%; agriculture and fishing – 11%; construction – 6%; government and public authorities – 28%

Foreign trade (1990 est.): imports – $9.4 billion; export – $9.1 billion; principal trade partners – Australia, Japan, United States, United Kingdom

Currency: 1 New Zealand dollar = 100 cents

New Zealand is an advanced industrial state with an economy dependent on trade. Commodities were traditionally exported to Great Britain. These exports decreased once Great Britain joined the European Economic Community in 1971, causing great economic upheaval in New Zealand. A second jolt forcing New Zealand to reexamine its traditional economic ties was the oil crisis of the early 1970s, which increased the nation’s oil bill by 123%. Today New Zealand is attempting to build new markets, particularly in the Pacific region, to increase economic self-reliance, and to restructure the economy to make it more responsive to world market forces.

Mining, Manufacturing, and Services. In addition to the processing of agricultural products, goods manufactured in New Zealand include light engineering products, electronic equipment, textiles, lather goods, carpets, rubber and plastic products, glassware, and pottery. About 30% of New Zealand’s exports are manufactured goods, and that percentage is increasing. The mining industry is relatively small. Construction materials (sand, gravel, and rock), limestone, and coal are mined; coal is exported to Japan and Korea. New technologies are being used to convert volcanic black sands to iron and other minerals. A significant portion of labor is employed in public and private service industries, including tourism.

Fishing and Forestry. New Zealand’s rivers and lakes support more than 50 species of freshwater fish, and sport fishing is a popular tourist attraction. The country also has an important coastal fishing industry. Forestry products are another important source of income. The Monterey pine grows exceptionally well in New Zealand and is a major source of timber.

Trade. New Zealand must export to live. The primary exports are agricultural commodities. More-sophisticated processes for refrigeration and improved transportation services have led to a tremendous expansion of trade. Automobiles and other manufactured goods and petroleum are the leading imports. Japan, Australia, and the United States purchase about 40% of New Zealand’s exports and provide a substantial percentage of its imports. The country’s longstanding trade deficit improved in the late 1980s and early 1990s.