English for Economists

Aerospace products are the number one U.S. export after agricultural products. The country has a long and proud tradition of dominating the industry with technological breakthroughs leading to superior products. But this dominance is now being challenged. Boeing executives argue that they cannot compete against the deep pockets of the four European governments that subsidize Airbus.

Traditionally, the United States has maintained a free-market philosophy, which holds that government should not regulate market forces. In this view, better and more efficient production occurs when world markets are open, allowing the forces of competition to work freely. According to Boeing and other executives, this philosophy has been the backbone of American industrial power from the beginning. For the health of the civil aviation industry, the free-trade argument goes, the United States must convince the EC to stop subsidizing Airbus.

However, there is less agreement than there used to be on the issue of government’s role in industry and trade. Some U.S. officials and academics point out that the free-market philosophy no longer suits global economic conditions. Advocates of this emerging view urge the development of a strong industrial policy that would develop and support important U.S. industries. Such a policy could work through such protective measures as tariffs, import quotas or direct subsidies to industry, and through policies that encourage research in certain high-tech industries.

Those in favour of the traditional free trade and open market philosophy reject the notion of an industrial policy. At worst, it sounds like the centralized planning of a socialist system. At best, it sounds like protectionism, a policy that simply uses government money to protect industries that would fail in the market without it. Even the free traders have to admit that U.S. industry is not as competitive in the global economy as it once was and that, increasingly, it must compete against nations that have strong industrial policies and are unlikely to change them.

History

Type of company

Place in the world’s market

Products

Reasons for success

Government subsidies

Predictions for the future

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negative phenomena and to raise the specter of a world controlled by a handful of MNCs.

We are discussing MNCs and globalization together because they are related. An MNC benefits from free movement of goods, services, people, and capital across national borders, just as U.S. companies have benefited from that situation in North America. As a corporation, an MNC has one main objective – to make a profit – and the free movement of goods, services, workers, and capital enhances profitability. It does that by giving management freer access to the factors of production and the ability to make decisions based more purely on cost and revenue considerations.

Also, MNCs promote globalization by their very existence and business practices. When McDonald’s introduces its “customer experience” and its menu, even in modified form, to another culture, it begins to change that culture. When Ford sets up an assembly plant in Brazil, it attracts workers from the countryside and changes their economic aspirations, for better or worse. Similarly, the agenda of the World Bank and the IMF generally favour freer trade – a force for globalization – but many developing nations find free trade to be a mixed blessing.

The key problem in talking about MNCs and globalization, aside from the emotions they stir up, is that they are both creatures of the industrialized world. That is an undeniable fact, whether you oppose or support MNCs and globalization. The poorest nations in the world are not launching MNCs. Given that economically powerful entities rarely aim to benefit the poor, those who oppose MNCs and globalization – regardless of how emotionally they state their case – do have a case.

TRANSLATION

A. Translate from English into Russian.

The Real World

Various nongovernmental organizations (NGOs) organize protests against globalization. NGOs typically state that they represent the interests of poor, working, oppressed, and economically disadvantaged people. Critics view them as uninformed elitists, while supporters see them as fighting exploitation and economic injustice. In truth, some NGOs, such as Amnesty International, and the Red Cross, do much to alleviate misery and aid the suffering. Others indeed amount to radical fringe groups.

People from each type of NGO, as well as unaffiliated protesters, have targeted globalization as evil. They have mounted protests in Washington (against the international Monetary Fund and the World Bank), Seattle

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(against the World Trade Organization), Barcelona (against the European Union), Genoa (against the G-7), and Davos, Switzerland (against the World Economic Forum, which is sponsored by some 1,000 major corporations from across the industrialized world), to name a few.

B. Translate from Russian into English.

Междунаронные кредитные, валютно-финансовые и торговые организации

Из многочисленных организаций занимающихся валютно-финасвыми проблемами можно выделить Всемирный банк, Международный банк реконструкции и развития (МБРР), Международный валютный фонд (МВФ) и другие.

Международный банк реконструкции и развития (МБРР) создан в соответствии с Соглашением, подписанным в Бреттон-Вудсе (США) в 1944г. Целями МБРР являются: оказание помощи в реконструкции и развитии государств путем осуществления капиталовложений для восстановления экономики, конверсии, производственных предприятий; оказание содействия частным иностранным инвестициям путём предоставления гарантий или участия в займах и иных капиталовложениях. Штаб-квартира Банка расположена в Вашингтоне.

Международный валютный фонд (МВФ)- это специализированное учреждение ООН.

МВФ имеет следующие цели: содействовать международному сотрудничеству путём обеспечения механизма для консультации согласованных действий по международным валютным вопросам, способствовать сбалансированному росту международной торговли и тем самым содействовать высоким уровнем занятости и реального дохода.

SPEAKING

A.

You are working in a multinational corporation. You are to export the product of your company. Speak with your manager about the formalities and all necessary papers for transportation. You may use the following dialogue as a model. First, scan the dialogue and write down the names of papers necessary for export of goods.

Earl: I just heard from the freight forwarder (1) that our container is going to be picked up tomorrow. We’d better make sure everything is ready to go.

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Ted: Let’s see … our general export license is current and the destination control statement (2) has been filed.

Earl: … and the shipping container has the proper markings (3). We also have the certificate of inspection (4).

Ted: We already calculated the weight of the shipment and we know the tare weight(5). Now we just need to subtract it from the gross weight to get the correct net weight.

Earl: We inspected the shipment and know that it’s in good condition, so we should receive a clean bill of lading (6) from the shipping line.

Ted: Well, that sounds like everything. As soon as we receive a copy of the dock receipt(7) we can submit our collection papers (8).

Notes:

1.freight forwarder – company which prepares shipping and insurance documents, arranges cargo deliveries

2.destination control statement – required statement, listing the authorized export destination for cargo

3.markings –letters, numbers, symbols for identification

4.certificate of inspection – the document which certifies that merchandise was in acceptable condition before being shipped.

5.tare weight – the entire weight of the cargo including the container

6.bill of lading – declaration indicating that all cargo accepted for transportation was in good condition when received.

7.dock receipt – receipt issued by the ocean carrier to acknowledge arrival of the cargo at the carrier’s warehouse or dock facilities

8.collection papers – documents (including bills of lading, invoices, etc.) to the buyer in order to get paid for the shipment.

B.

Discuss the following issues:

1.What is the responsible role for developed nations to play in the economies of less developed nations?

2.What are moral and ecological implications of using huge earth resources to sustain the levels of production and growth?

3.What constitutes a sustainable growth?

4.How much can and should NIC rely on foreign borrowing?

5.How much money for capital investment can NICs reasonably expect to generate themselves?

6.What is your opinion of the classification of nations into developed, newly developed and developing ones? Can you think of another principle of classification?

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GLOSSARY

·Global Market – When a business, company or industry has the opportunity to go beyond its domestic market to sell in some other country, one speaks of it entering the international market.

·Globalization – Globalization essentially means free movement of goods, services, people, and capital across national borders. This creates global markets for goods, services, labour, and capital. However, the term globalization has also come to mean something more: economic and cultural hegemony on the part of industrial enterprises and industrialized nations, particularly the United States.

·G-7 Group of Seven - the United States, Canada, Japan, Germany, France, the United Kingdom, and Italy (with Germany, France, the United

Kingdom, and Italy comprising Europe’s so-called Big Four). G-8 Group of Eight – The G-8 includes G-7 plus Russia, which may best be described as an economy in transition.

·Industrialized or developed nations - An industrialized economy has a large base of productive capital, sophisticated banking systems and financial markets, a variety of industries producing a broad range of products, and vigorous and varied international trade.

·Newly industrialized countries (NIC) - Newly industrialized nations (NICs) have a rapidly growing base of productive capital and rising incomes. Most of these nations have sound governments and banking and financial systems, although they may occasionally be subject to financial or political dislocation.

·Less developed countries (LDC) - Developing nations range from the poorest in the world to those that have begun to build an industrial base, but have yet to achieve stable growth in production and income. These economies are also called underdeveloped, undeveloped, and, most commonly, less developed countries (LDCs). A number of these nations have large, growing urban populations and serious difficulties with unemployment, crime, and poverty in the cities.

·IMFInternational Monetary Fund - The International Monetary Fund is like a central bank for the world’s central banks. It is headquartered in Washington, D.C., has 184 member nations, and cooperates closely with the World bank. The IMF has a board of governors consisting of one representative from each member nation. The board of governors elects a 20-member executive board to conduct regular operations. The goals of the IMF are to promote world trade, stable exchange rates, and orderly correction of balance of payments problems.

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6. BUSINESS ADMINISTRATION

6.1. COMPANY STRUCTURE

DISCOVERING CONNECTIONS

1.Which types of business are popular in your country?

2.What kind of company would you like to work for: state-owned, private limited company, multinational cooperation, etc.? Why? Give your reasons. Some people compare a small company to a family. In your view, is this analogy valid and useful? What are the benefits and risks of viewing a company as a family?

3.What do you think your fist position will be? What are the qualities of an effective team player? What qualities could you contribute to a company after getting a degree?

READING

Text 1

While reading the text, focus on the forms of business organization and pay attention to their advantages and disadvantages.

Forms of Business Organization

A business organization is frequently referred to as a business entity. A business entity is any business organization that exists as an economic unit. The business entity concept applies to all forms of businesses, single proprietorship, a partnership, and a corporation.

A sole proprietorship is a business owned and usually operated by a single individual. Its major characteristic is that the owner and the business are one and the same. In other words, the revenues, expenses, assets and liabilities of the sole proprietorship are also the revenues, expenses, assets, liabilities of the owner.

Advantages

A sole proprietorship is the easiest form of business to organize. The only legal requirements for starting such a business are a municipal licence to operate a business and a registration licence to ensure that two firms do not use the same name. A sole proprietorship can be dissolved as easily as it can be started. A sole proprietorship offers the owner freedom and flexibility in mak-

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ing decisions. Major policies can be changed according to the owner's wishes because the firm does not operate under a rigid charter.

Disadvantages

The financial condition of the firm is the same as the financial condition of the owner. Because of this situation, the owner is legally liable for all debts of the company. If the assets of the firm cannot cover all the liabilities, the sole proprietor must pay these debts from his or her own pocket. A sole proprietorship, dependent on its size and provision for succession, may have difficulty in obtaining capital because lenders are leery of giving money to only one person who is pledged to repay. A proprietorship has a limited life, being terminated on the death, bankruptcy, insanity, imprisonment, retirement, or whim of the owner.

A partnership is an unincorporated enterprise owned by two or more individuals. A partnership agreement, oral or written, expresses the rights and obligations of each partner. There are three types of partnerships: general partnerships, limited partnerships, and joint ventures. The most common form is the general partnership, often used by lawyers, doctors, dentists, and chartered accountants.

Advantages

Partnerships, like sole proprietorships, are easy to start up. Partners' interests can be protected by formulation of an “Agreement of Partnership”. This agreement specifies all the details of the partnership. Complementary management skills are a major advantage of partnerships. Consequently partnerships are a stronger entity and can attract new employees more easily than proprietorships.

The stronger entity also makes it easier for partnerships to raise additional capital. Lenders are often more willing to advance money to partnerships than to proprietorships because all of the partners are subject to unlimited financial liability.

Disadvantages

The major disadvantage of partnerships is that partners, like sole proprietors, are legally liable for all debts of the firm. In partnerships, the unlimited liability is both joint and personal. This means that the partners together are responsible for all the firm's liabilities. If one of the partners cannot meet his or her share of the debts the other partner(s) must pay all debts.

Partnerships are not as easy to dissolve as sole proprietorships.

Limited companies, unlike proprietorships or partnerships, are created by law and are separate from the people who own and manage them. Limited companies are also referred to as corporations. In limited companies, ownership is represented by shares of stock. The owners, at an annual meeting, elect

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a board of directors which has the responsibility of appointing company officers and setting the enterprise's objectives.

Advantages

Limited companies are the least risky from an owner's point of view. Shareholders of corporations can only lose the amount of money they have invested in company stock. If an incorporated business goes bankrupt, owners do not have to meet the liabilities with their own personal holdings. orporations can raise larger amounts of capital than proprietorships or partnerships through the addition of new investors or through better borrowing power.

Disadvantages

Limited companies are subject to federal and provincial income taxes. Dividends to shareholders are also taxed on an individual basis. Thus, limited companies are taxed twice: on the profits they earn and on the dividends which come out of the profits. In proprietorships and partnerships earnings are only taxed once – as the personal income of the individuals involved.

With diverse ownerships, corporations do not enjoy the secrecy that proprietorships and partnerships have. A company must send each shareholder an annual report detailing the financial condition of the firm.

Vocabulary Focus

Ex. 1. Study the meaning of the following words agency; branch; enterprise; subsidiary, then use them to fill in the gaps:

agency – a business or place of business providing a service branch – a local office belonging to a national firm or organization subsidiary – firm owned by a parent company

enterprise – new commercial activity, often a small one.

1.Coca-Cola has a(n)… in more countries than there are in the United States.

2.A travel… can organize business trips as well as holidays.

3.A(n) … is a company of which more than half the share capital is owned by the holding company.

4.The major banks have at least one… in all large cites.

5.There are plenty of small industrial … .

Ex. 2. Fill in the missing words from the text.

1.A business organization is frequently referred to as a business…

2.A single proprietorship is business … by an individual and often … by the same individual.

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