Limitations of Wacc as a Method of Investment Appraisal Essay

Limitations of Wacc as a Method of Investment Appraisal - Essay Example The present paper has identified that, despite its use in investment appraisal, there are various assumptions that are made when using WACC, hence, limiting its use in appraising investment. The first restrictive assumption that has to be met is that the investment project should be small compared to the investing organization. This, therefore, limits the use of WACC in appraising small investment but cannot be used when a small organization wants to acquire a large organization. The second limitation in the use of WACC is that the business activities of the investment project should be similar to those presently being undertaken by the investing organization. In the light of this, a company cannot use WACC when appraising an investment to diversify its business activities. Student Account describes that when using the weighted average cost of the capital method in appraising an investment, the financing mix adopted to undertake the investment project must be similar to the present c apital structure being used in the investment company. This, therefore, means that if a company uses shareholders money to finance its capital investment, it cannot rely on borrowed capital to make an investment. This, therefore, limits those companies that do not have adequate resources from using this method to appraise investments. Student Account further describes that when using a WACC, the existing providers of finance to the investing company will not change their required rates of return following the investment project that is being undertaken. This is, however, not possible since the rates keep changing following changes in the rates of inflation. In addition, the rates of return on borrowed capital from banks change from time to time due to changes in the rate of interest. This also limits companies that may agree to reduce the number of dividends paid to shareholders from what is paid during the previous years to use these resources in an investment.

Court Report Personal Statement Example | Topics and Well Written Essays - 1000 words

Court Report - Personal Statement Example Excessive formality involving security checks etc makes the proceedings look serious, but this is a necessary security precaution. The silence is important too as everybody needs to hear all proceedings clearly. Modern techniques of using multimedia display screens and air conditioning makes the proceedings easier for the judge(s), jury and others. Waites observes that flat-panel monitors are more conducive to the courtroom environment. They allow the judge and attorneys to review information together before displaying it to the jury (Waites, 384). Such systems have the option of delaying display on the large screen through 'delay switches'. This allows the judge to review information before presenting it to the jury. Moreover enhanced video and sound playback devices such as the ELMO, as acknowledged in the Litigant's report, improves the quality of information processing inside the courtroom (Webb). The courtroom looked well secured. All entrants are thoroughly examined through security devices such as metal detectors. The judge's bench is elevated about three steps above the floor, so that his/ her vision covers the whole courtroom, and he/she is equipped with security alarm as well. The hallways and the courtroom comes under surveillance of security cameras, moreover a docket box may be used to control for large number of arrestees, who wait there with the defendants before appearing in front of the judge in the courtroom. On a whole the courtroom looked well secured from any miscreant activity. Court Personnel Barristers: Barristers are specialist legal advisers found in many common law jurisdictions that employ a split profession in legal representation. They are court room advocates trained to advise clients on the strengths and weaknesses of their case. Barristers become involved in a case when advocacy before the court is required by the client. It is the solicitor who is in a direct relation with the client. As put in the UK bar council website a barrister could be compared to a specialist in medicine, who is consulted by a client's personal doctor when the case is complex and beyond the personal doctor's knowledge. Here the personal doctor or a general practitioner is taken to be the solicitor (What Barristers Do). The comparison is not entirely accurate though. There is no difference in the level of complexity in the practice of law by the different branches of the profession, though barristers tend to be instructed in complex litigation and in certain other specialist fields. Stenographer: He or she is an individual who records court proceedings either in shorthand or through the use of a paper-punching device. A court stenographer is an officer of the court whose appointment is largely governed by statute. She is an official under the control of the court and is, therefore, generally subject to its direction. The stenographer has the duty to attend court throughout the trial and record all proceedings. She must take notes of what occurs before the court and these notes must certify that all the evidence, and charges levied against the defendant were fully and accurately taken at the trial and that the transcript represents an accurate translation of the notes. In addition to preparing and protecting the legal record, the Bureau of Labor Statistics website informs that many stenos

Syria Revolution Research Paper Example | Topics and Well Written Essays - 750 words

Syria Revolution - Research Paper Example The Syrian uprising compared to the Tunisian and Egyptian revolutions was grounded on the revolt of peasants, a Sunni periphery protest against the regime of Baath that turned its back on the Syrian local population, (Hinnebusch 12). Later on, the uprising took on diverse dimensions with Muslim Brotherhoods – Jihadists – entering into the conflict because of the heretical aspects of the regime and due to its alliance with Iran Shiites and Hezbollah. Consequently, because of Jihad, various demonstrators from across the Arabic and Islamic world have emerged in Syria, although, the slogan of Jihad did not trigger Syrians to enter into the uprising. Another dimension that emerged during the uprising is revenge, basing from the extreme violent efforts from the regime to halt the protest waves. According to experts, the brutality of the reign acted to extend the circle of the protestors involved in the uprising, (Starr 41). A number of people who later joined the protest were encouraged by the desire to avenge their family member, friends, and relatives’ bloodshed, and destruction of their properties, cities, and settlements by the forces of the regime during the uprising. ... Similarly, the regime appeared to have neglected the periphery and the local populations. In the start of 2006, the Syrians faced a tremendous and acute drought and the Jazira location in the south and northeastern part of the nation experienced such as Hawran and Dara experienced the extreme destruction. This is because such regions were extremely affected the new economic policies of the government that sought to alter the Syrian economy character from a socialist to a social market oriented economy, (Phares 74). These policies intended to open the nation to the global economy, foster foreign investment and create activity in the local and private spheres to promote growth of economy and allow the regime to bear the economic and domestic limitations. The policies too enabled economic growth to allow the nation to overcome other challenges such as rapid population growth, infrastructural underdevelopment, overdependence of agriculture, and lack of technological industry. Assad suppo rted the new policy and overlooked the significance of the socialist party ideology of Baath, its networking and institutions in the local region. Assad response and effects of the uprising Assad responded to the revolution and protest by providing reforms and ordering the military to calm the uprisings. Various clashed have occurred in Hama, Homs and other places, however, bombings and demonstrations have started occurring in Aleppo and Damascus. Syrian protests have proved their staying power irrespective of the various deaths and substantial joint efforts to suppress the protest, daily demonstrations have continued. Similarly, the longer the

Is the Body Beautiful a guarantee for Happiness Essay

Is the Body Beautiful a guarantee for Happiness - Essay Example This ‘ideal’ image is usually defined as someone of a mid-20ish age, slender, with specific measurements and a certain good-looking charm. This limited view of the ideal automatically eliminates anyone who might have been born with a larger bone structure or other ‘defect’ that defies the reshaping of the scalpel from the ranks of the socially acceptable. Through the reality shows, though, those lucky few who are able to fit the ideal in any way, to attain the ‘body beautiful’, much is made of their subsequent happiness and success as a result of their ‘improved’ appearance. ASPS president Rod Rohrich pointed to the various individuals taking part in plastic surgery reality television indicating that many of them have unrealistic and unhealthy expectations for the results.1 It is perceived through these types of presentations that the only way to find happiness and fulfillment is through the construction of the ‘body beautiful ’, causing an extreme focus on the outward appearance many times to the detriment of the inner being. However, the question that must be asked in this scenario is: Does the body beautiful actually guarantee an individual the happiness they seek? From our earliest history, it has been through our outward appearances that we project who and what we are to other people. Studies have continuously shown that people dress a certain way and acquire certain things to try to evince an attitude of belonging to a particular subset of individuals who embody their ideals.2 With these outward appearances in hand, we can walk up to the ‘in crowd’ and proclaim ourselves a member. â€Å"Indeed Smith (1990) believes that women view their bodies as ‘objects of work’ requiring attention and upkeep in order to operate well and promote the desired effect.†3 Yet being a part of this crowd does not necessarily guarantee happiness as is evidenced by the lives of those people who help to set the standards, the movie stars

First Grade Curriculum Guide for Mentally Retarded Students Essay Example for Free

First Grade Curriculum Guide for Mentally Retarded Students Essay Various models of language, which are rich and are in various forms of literature, including, poetry, songs and fiction are to be introduced. The five major ideas in reading are some of the basis of the curriculum and the instructions. They inspire the various assessments that to be used. Phonemic Awareness: It involves the ability to and be able to manipulate sounds in words. It also involves the ability to isolate letters and sounds and also to blend sound and segment sounds. Alphabetic Principle: This refers to the capability of associating sounds with letters and uses these sounds to form new words. Fluency with text: Is the effortless and the ability of the reader to read words in connected text automatically. Vocabulary: Being able to effectively understand and use words so as to acquire and convey meaning. Comprehension: This process involves the intentional communication that takes place between the reader and the text to be able to convey meaning. Literacy Centers Each day a child will be expected to participate in centers. This will allow the children to be able to explore various materials, try to reinforce concepts already taught and direct their own learning. The centers are likely to change weekly. They include: Word wall centre, Art centre, Listening centre, poetry centre, spelling centre and Reading centre. Writing, Spelling and Phonics The children will be given the courage to apply their knowledge of letter sounds as temporal spelling. After the child knowing how to say words slowly as well as listening to the sounds, this should help him record the message and think of himself as a writer. As the child progresses, he will be expected to move toward a more convectional spelling and therefore will be held increasingly accountable. Words and spelling of high frequency are taught when working with words block of time. In each week, there will be an introduction of word wall words which will be seen by the child always during the time of reading and therefore he will need to spell frequently while writing. To add on that, through these words, the child will be taught letter sounds and some spelling patterns of the words that are well known such as â€Å"at† so that they are able to spell words like â€Å"fat†, â€Å"sat†, â€Å"mat† and even â€Å"cat†. The goal is to enable the child recognize the spelling patterns and then consistently use them while writing. The writers’ workshops will consist of ample time for writing, mini lessons and during guided writing sessions, there will be sharing of time. Grammar will be taught to children including the use of punctuation marks. There will be the use of modern manuscript as a form of handwriting. There will be no extra time being spent on teaching formal handwriting, but rather there will be incorporation of the teaching of proper letter formation into some other daily lessons. Reading Curriculum The development of literacy will form the primary focus of the first grade year. There will be a well balanced literacy program which will include a wide range of language experiences which involve reading, writing, listening and speaking (American Association and School Administrators, 2006) Reading aloud to children This will be a guided reading where by the teacher will be required to read allowed for the children to pay extra attention to be able to hear what is being read. The children listen carefully. The children will then read with the teachers help. This is achieved when the teacher reads then the children repeat what is being reading. Shared Reading This is also referred to as Independent reading. There are two forms of independent reading: †¢ Children read in group together †¢ Children read alone First, there will be grouping of children to enable them read as a group. In this they will be able to assist each other catch up. Those who are fast in mastering the words are likely to play important roles. After doing this the children will be allowed to read on their own (individually). This is the best time to determine whether a child has got something from the session.

Impact of international law on trade

Impact of international law on trade BUSINESS LAW A business has to be built within a defined set of framework regardless of its nature and where it is conducted. This structural framework has to be structured on law which provides the various options for the proprietors of the business to choose the best suited to their particular needs. The particular needs of the business proprietors relates to issues such as the business flexibility, the confidentiality of the business data, taxation and the source of finances. Today, the conduct of the business must be within the legal structure which acts as the vehicle for the business conduct. The term company is used in the civil law countries with a meaning of partnership and limited companies. The international business law originated from the customs, multilateral trities, international conventions and aggreements which came together to form a common framework for world trading and market. Trade and business transactions have enhanced the market globalization with the introduction of div erse business and trade laws. This has further contributed to the developing and growth of the regional trade promoting the business transactions in the international trade. The GATT , NAFTA treaties and the European Union are the main sources of the international law. These international organizational develops and reveiews the international stardards and the legal codes of conduct that binds the member nations. The law mainly addresses the ethical issues that affect the business operations in the global business environment. This involves the stardards set for the protection of the rules for international sales and other difficult issues between the individual nations on agreement. The international law also adreeses the processes involvedin the business disputes resolution in the international business transactions The international law of business determines the rights and the responsibilities of the parties in the business transaction. The US government has globally used its economic and political influences in forcing other nations to remove non-tariff barriers to the US import of goods and services. The spirit of free and fair trade has become widely contagious globally thus there was need for the laws and business guidelines to be conducted between the business partners. With the growth of the global economic integration, many nations have joined the business organizations such as the World trade organization to enjoy the world trade. This has led to the globalization of the global economy and opening up the world market for exports and imports of goods and services enabling the business prospects to the developing nations. The international business laws are the measures and rules followed by the business proprietors conducting the international business. This creates a conducive international business environment with flexibility in the law of international trade and investment. The international law gives the strategic plans in the basic market entry of many firms, protection policies of the intellectual property and licenses as well as the foreign investments. The law puts the emphasis to both the private and the puplic sectors in business environment. The private law which is widely apllied in the international business transactionsincludes the law of the international sales, business agreements and other governing laws. The public business international law includes the convections, business trities and the agreements among the countries that entails the legal frame work within the international business jurisdiction. Many countries has created customs and tarrif laws that open up the market to the international investors. The public international business law provides the foundation for the gorvernments regulation of the international business. Careful business planning and legal practices avoid and reduce the risks involved with the international law a s they affect the public and the private sectors of the business. A private law is considered when the rule of law affects the commercial transactions between two parties whereas the public law is considered in the determination of the rights and the responsibilities of the countries to one another. Management of the International business transactions needs well entailed strategies and better implementation mechanisms due to increase in the trade risks. Today world of business has many challenges in dealing with the illegal business which do not exist. Many business firms are trying to conduct international business illegally in avoiding the taxation in various levels of the business. Handling of the foreign mergers and dealing with the illegal markets goods has been a challenge to many nations in conducting the world trade. The international law faces challenge in dealing with the unexpected differences in foreign corporate law and the evaluation of the political stability in the less stable nations. Political indifference has been an affecting the international business laws with the government giving an outline on business conduct to their respective nations. This has led to the poor economic growth internationally with the international law stressing the strategic decision making processes. Cultural, economic, political and social factors have a great impact on the international business laws as they gives the variations in attitudes towards the law. They influence the way we do business internationally and impacts on the trade relations between the nations. There is difficulty in the Separation of the politics, foreign policies and the country trade evidently seen in the exports controls and trade sanction obligatory to foreign policy or the national security. Trade and the investment issues has also been a challenge in the international business with the occurrence of the nations investment policies. The legal environment on which the international business is conducted has become so intense with the social economic and political forces influencing the development of the business law making processes and legal institutions. The economic environment of conducting business has greatly improved in the developing countries especially China. This is due to the increase in the multinational businesses in world developments as many countries trade with each other. The custom and the tariffs laws enhance the business operation from the international levels allowing the firms to locate the overseseas market and facilitators in expansion of the business globally. Human rights and the international criminal law have been global issues which has affected the international business as many violators being locked out from the common trade organizations. In the developing countries trade and business are incorporated with governmental and regional laws with the development agenda of the fast economic growth. International business has more ethical issues and social responsibilities with outlined corporate codes of conduct in trade transactions. The principles of international business has been affected by the intergovernmental organizations with the laws such as codes of conduct, child labor, workers rights, protection of environment and wildlife, human rights There are a lot of added risks in the international business which includes the risk of the language and cultural differences, international hostility and political influences. The foreign legal actions and practices, trade controls and the restriction of the investment has also been an area of concern in the management of the international business laws. The major forms of the international business the importing and exporting trade, the transfer licensing agreement s and the legal protection of the patents, copyrights and other intellectual property. Active foreign investments have been developed through business mergers, acquitions and the joint ventures. The international business, trade and international licensing of the intellectual property provide the legal relationship between the international parties in conducting the international business transactions. These legal frameworks provide them with important means of foreign market entry with different level of commitment and involvement in the foreign market lifetime. The managerial challenges experienced expose the business entities to different set of legal business risks with long term economical implications. Economic Interdependence Todays world economy has led to the realization of the international business as many countries have realized that they cant rely on the domestic business due to the global competition. This has enabled the interdependency of the world economically enhancing the globalization of products, services and capital markets. The economic interdependence in the world economy has been contributed by the availability of the precious natural raw resources and the technological advances increasingly opening up the free trade and available markets for imports and exports between different sovereignty. The development of the free trade and the steady movement towards economic integration among nations has led to the increased foreign investments and the industrialization promoting the international business. The interdependence has attributed to the common international laws in the business environment with the interrelated financial markets, the world wide flow of capital and the coordination of the economic policies to create a globally competitive economy. The international law has a created comparative advantage to the economic concepts in many nations. Exporting in international business provides the business firms to reach wide range of market which requires modest capital investment and internationally recognized business laws. In the recent past the word was experiencing the legal barriers to the importing and exporting of the nations products. The international law creates the custom regulations identifying the legal controls on the exports and imports of products between countries. Many countries engage in exporting of goods in regular basis complying with the international business law in making of the exporting marketing decisions. Trade relations between nations create the dependence, influence affecting the power position of the nation and strengthening the economic coexistence of the country. Every sovereign nation can at any time influence or interrupt its own export and import trade affairs affecting the international tra de environment as the other countries relying on it must then get another markets and sources of supply or make economic adjustments . The power to interrupt the business relations with any country is a determinant of a countrys global power position. Sovereign nations have increasingly interrupted the trade processes with the increase in competition levels denying the importation and the export processes. Settlement of such business power disputes are fully engaged through the international business law on which a common ground is used in the crisis settlement. In the currency issues a foreign currency transactions requires the exchange rates on which the gain or loss results from the gradual changes on the exchange rates. The policies of securing the international foreign trade secure the controls over the oceanic trade routes increasing the trade partners benefits and trading with nations with mobility of the resources. Many countries have tried to create their own trade laws redirecting their international businesses to their politically friendly nations or the neighbors. The international business policy relies on the influence of the foreign trade between the sovereign nations. Resource mobility between the countries plays a major role in the relocation of the resources with the manufacturing and the trading countries having a major advantage. The international laws in business allow the countries to interpret and detect the relevant mechanisms to put in place to ensure that the rules and the laws dont influence the core business of the nation. Merge dealing policies is currently widely used by the businesses worldwide in order to make an extra revenue. This is achieved as the trade seeks for help in dealing with their distribution and sales of their goods on which they start with the merger plan. This policy allows the trade owner to fully regulate and monitors the business globally opening up to a wider market. International business acquisitions to foreign markets accessibility is a vital entity in business enterprises of all kinds and sizes. This is a major provision of the foreign production or marketing capacity in the global business transactions. Over the past decades businesses has faced difficulties in obtaining harmonizing product or service lines. Many of them run the services with high market risk and high costs. The law governing the global business provides business with methods to obtain regulatory and legal business approvals. legal practitioners and other experts involved in the international business law making need a user-friendly source of information covering the most important jurisdictions of the world trade. International Business Acquisitions has positively affected the business and trade issues due to the great value of the legal business issues. The policies and the business strategies encompass the basic international elements of trade, the licensing and the inves tment policies. The business prospects entering to foreign market depend on the host countries considerations and the sophistication of the firm internationally. With the gradual political changes in many countries the world economy has increased with the rise of the international trade. Many countries are moving towards greater political freedom and good governance. This democratic advance has led to creation of international business law that protects the world business. With this freedom foreign investors are freely integrating themselves in various global businesses creating a market oriented world economies. The greatest challenges facing the international business is the entrenched poverty level and the declining natural resources as excess resource exploitation is experienced in many regions. The environmental degradation, global warming international terrorism and the widespread of infectious disease has also been an area of concern in the international laws. The overlap occurs in business transactions with many countries creating their business plan that complies with the international standards. Ownership of the foreign business by the investors has to comply with the obligations of the corporate citizenship in the invested country. The international trade market has enhanced the investment of the foreigner in various countries enhancing the world economy.

The availability of International Business opportunities in Uzbekistan

The availability of International Business opportunities in Uzbekistan International trade is exchange of goods, services and capital across the borders of different nations. No country in the world has all the natural resources present in sufficient quantity to sustain continuous development. So the countries trade with each other by exporting those goods or products which they have in abundance while importing those which they are deficient in. International trade tends to be generally more costlier than domestic as most countries imposes additional tariffs or duties on the goods travelling through their borders. International trade between two countries comprises both the trade between 2 companies present in different country and trade between the government of a country and the business firm present in other country. The main objective of this audit is to analyze the availability of International Business opportunities present in the Uzbekistan. The report starts with examining the countrys attitude to international trade. Then a brief analysis of the countrys Cultural, Political and Economic Environments is done. After that the countrys business environment is analysed using some of the proposed theories of international trade and also Porters diamond model of national competitiveness. Finally recommendations based on the above analysis are offered. An Overview of Uzbekistan Uzbekistan or Republic of Uzbekistan (Ozbekiston Respublikasi) is a country which is part of Central Asia having largest population within the region. Uzbekistan became an independent state on September 1, 1991, from former Soviet Union. Uzbekistan elected Islom Karimov as its president who continues his office till date. Uzbekistan is a land locked country surrounded by Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan and Turkmenistan. Uzbekistan Essential Facts: Government Republic; Authoritarian Presidential Rule Capital Tashkent Geographic Area 447,400 sq km Population 27,865,738 Literacy Rate 99.3% Labour Division Agriculture: 44%, Industry: 20%, Services: 36% Budget Revenue: 10.54 Billion, Expenditure: 10.48 Billion (2009 estimates) GDP (GDP Growth) $77.55 Billion (6.7%) GDP Per Capita $2,800 Inflation 14.1% Industries Textiles, Food Processing, Machine Building, Metallurgy, Gold, Petroleum, Natural Gas, Chemicals Source: CIA World Fact Book (https://www.cia.gov/library/publications/the-world-factbook/geos/uz.html) Uzbekistan attitude to International Trade Uzbekistan joined United Nations in 1992 as fully fledged member and cooperates with 8 UN agencies including The World Bank which supports Uzbekistan in its national reform efforts (United Nations, n.d.). Currently Uzbekistan has foreign diplomatic relations with about 124 countries of the world (Ministry of Foreign Affairs Uzbekistan, n.d.). Uzbekistan has membership in numerous, more than 33, International Organizations including Asian Development Bank (ADB), Commonwealth of Independent States (CIS), International Finance Corporation, International Monetary Fund, Islamic Development Bank, Shanghai Cooperation Organization and World Trade Organization (observer status) (Library of Congress, 2007). The main purpose of these organizations is to promote and facilitate international trade among various countries. Commonwealth of Independent States (CIS) countries are the biggest trade partners of Uzbekistan. Russian secures first place as foreign trade partner of Uzbekistan. Other countries like Ukraine, Kazakhstan and Afghanistan etc. are also heavy trade partners. Uzbekistan has very active trade relations with European Union. Bilateral trade between Germany and Uzbekistan amounted to 470 million USD in 2008. France, UK and Spain are other major trade partners (Ministry of Foreign Affairs Uzbekistan, n.d.). Figure 1: Major Trade Partners of Uzbekistan (2009) Source: http://www.buyusainfo.net/docs/x_6613529.pdf Business Environment of Uzbekistan Culture of Uzbekistan Figure 2: Ethnic Group Composition Source: https://www.cia.gov/library/publications/the-world-factbook/geos/uz.html Figure 3: Major Religions Source: https://www.cia.gov/library/publications/the-world-factbook/geos/uz.html Figure 4: Spoken Languages Source: https://www.cia.gov/library/publications/the-world-factbook/geos/uz.html Uzbekistan since ancient time was the home of Arab Muslims and Turks. And then in Mid-Nineteenth century, Russia seeing the regions potential captured Uzbekistan. That is why there are traces of Russian language and ethnicity can be found in the country dominated by Uzbeks. Islam being the major religion (about 88%) the culture of country is bit conservative. For both Men and Women conservative business suits are expected, casual clothes like jeans, t-shirts etc are considered inappropriate. While greeting someone it is common for handshake between same sexes but simple hello is done between opposite sex. During a meeting it is important to go and speak to the most important person in the room first. These local customs must be observed in order to forge good business relationship in the country (Culture Crossings, n.d.). Political Civil Environment of Uzbekistan When Soviet Union broke in 1991, Uzbekistan gained its independence and appointed Islom Karimov as the Presidential head (Angus Reid Public Opinion, 2008). Since then Karimov have led an autocratic rule by extending his term of office in 2000 and 2007 in a series of democratic election that has come into fierce criticism from the international community (Harding, 2007). Next elections are scheduled to be held in 2014. In almost all international political and civil parameters Uzbekistan has shown downward trends indicating its worsening of the situation overtime. Figure 5: Uzbekistan Political Indicators. Source: Author Uzbekistan also has extremely high level of corruption. According to recent Transparency Internationals Corruption Perception Index (CPI), Uzbekistan ranks among the bottom of the 180 countries at rank 174. It has extremely poor confidence range of 1.5 1.8 (Transperency International, 2009). Figure 6: CPI Index 2009 Source: http://www.transparency.org/policy_research/surveys_indices/cpi/2009 Due to this firms frequently have to pay informal payments (bribes) to government to get the things done. About 67% percent of the firms are expected to make these payments to get things done (Enterprise Surveys, 2009). Figure 7: Informal Payments Statistics Source: http://www.enterprisesurveys.org/documents/CountryNotes/Uzbekistan_09.pdf Economic Structure of Uzbekistan Uzbekistan when it got freedom had relatively slow economic growth rate for first 12 years. Uzbekistan GDP, between 1994 to 2003, grew at average rate of 3.9% per year. But from 2005 onwards the country witnessed average growth of 8.2% (Asian Development Bank, 2010). Although the official data is doubtful as it probably overstates the level of economic growth. The U.S. Department of State Background Note for Uzbekistan states that many observers believe that employment growth and real wage growth have been stagnant (U.S. Department of State Background Notes, 2009). The poverty is quite prevalent in the country with 76.7% of population living below $2 a day (United Nations Development Programme, 2009). Although government is taking some positive steps to ramp up the economy. Policies like Anti-Crisis Program for 2009-2012 that government adopted in 2008 to combat the global recession had quite beneficial impact on Uzbekistan economy. Part of the policy was to promote foreign investment, for which government established free industrial economic zones in 2008, which provided foreign investors with tax and custom preferential facilities. Due to this government was able to tie up with 37 foreign investors for $500 million investment. This resulted in huge increase of 80% in foreign investment in 2009. Uzbekistan also observed very high import growth rate of 25.8% in 2009, mainly in infrastructure development, indicates governments acceptance to allow foreign investment in the country (Asian Development Bank, 2010). Figure 8: Uzbekistan Import/Export Indicators Source: http://www.adb.org/Documents/Books/ADO/2010/UZB.pdf Petroleum, Gold, Natural Gas and Cotton are the main 4 exports products of the Uzbekistan. According to the IMF estimations, energy products (Petroleum and Natural Gas) comprised about 26.3% of total exports in 2008 followed by gold at 15.7% and cotton at 13.1% (International Monetary Fund, 2008). International Trade of Uzbekistan International Trade Theory Framework is all about analysing from a countrys perspective about with whom they should trade and what products to trade. According to Daniels, Radebaugh and Sullivan (2010), there are five theories which try to explain a countrys advantage in International Trade. Figure 9: Theories of International Trade The advantage in international trade of Uzbekistan will be explained using two theories Natural Advantage and Factor Proportion Theory. Natural Advantage in case of Uzbekistan According to this theory a country produces those goods in which it has some natural advantage by way of its climate, people, resources etc. Uzbekistan has substantial advantage over most of the countries in the world in production of cotton due to favourable climatic conditions and availability of low cost labour. Climate in Uzbekistan is generally hot which is suitable for cotton growth. Hence Uzbekistan is the worlds 6th largest Cotton producer and 3rd largest Cotton exporter (National Cotton Council of America, 2010). Figure 10: World Cotton Export Rankings (2009) Source: Author Also the country has abundant energy resources. Uzbekistan is a major producer and exporter of Natural gas. Natural gas production was 2,387 billion cubic feet in 2008 ranking it at 14th place in the world. Out of this Uzbekistan exported about 22.20%, i.e. 530 bcf of natural gas (US Energy Information Administration, 2010). Factor Proportion Theory According to this theory different countries have different level of endowment of land, labour and capital. And the factor which is in more abundance will have lower costs than other factors. So the country tends to take advantage of this in the international trade by exporting those products that utilize the abundant factor and importing products that requires utilization of deficient factor. Uzbekistan has the advantage of low cost and skilled labour. It also has relatively low land. The country has very high literacy rate of 99.3% in 2003. There is lack of substantial capital or high level technology present in the country. Therefore Uzbekistans export mainly comprises of agricultural products, mined natural resources, services or low tech industrial products like chemical, plastic etc. Figure 11: Percentage Distribution of Total Exports Source: http://www.statistics.uz/data_finder/128/ On the other hand the country is severely lacking in the modern infrastructure and necessary technology or capital required to develop it. Therefore the bulk of its import, almost 50% comprised mainly of machinery and equipments. Figure 12: Percentage Distribution of Total Imports Source: http://www.statistics.uz/data_finder/128/ Porters Diamond of National Competitiveness Figure 13: Extended Porters Diamond Model of National Competitiveness Source: Porter (1990) Michael Porter introduced a diamond shaped model to analyze the areas of strength or weakness that gives a country a competitive advantage or disadvantage. This model includes four interconnected key elements: Figure 14: Key elements of Porters Diamond Factor Conditions: Uzbekistan has inconsistent infrastructure development. Main roads in the capital Tashkent and other major cities are relatively maintained outside the cities their conditions are poor. Suppliers have trouble in transporting goods from one place to another. The country has extensive rail network but only 17% is electrified. Although government recently announced big plans to improve both its national highway and rail network. Literacy in the country is very high at 99.3% for 15 years and up. The country also has abundant energy resources. The country is able to almost meet its coal requirement and produces enough natural gas that it manages to export 22% of it. Firm Strategy or Rivalry: Almost all the Industrial firms in the Uzbekistan are government owned and as such there is little to no competition among them. There are only few industries like energy, gold, foodstuff etc. present in the country which have some foreign investment. Most foreign investing companies are only allowed to invest by creating joint venture with state owned company in which the government owns majority stakes. Related and Supporting Industries: One of the most important supporting industry to establish a firm is financial sector which is seriously underdeveloped in Uzbekistan. It is dominated by state-owned banks and lacks competition. The government banks give loans to state owned companies at subsidized rate and for all else the interest rate is very high. Due to this private investors rarely take loans from local credit market. The whole country has access to electricity but the infrastructure is quite old and need modernizations. And as such there are frequent power outages. Demand Conditions: Due to widespread poverty of 76.7% there is not much demand of products apart from basic need like food, clothes, energy needs etc. And in these basic need the country is self-sufficient hence demand never exceeds supply. The government of Uzbekistan is the major importer of goods and services. Most of the imports comprises of equipments in energy, telecommunication and Information Technology hardware and software. Role of Government The government did not liberalise the economy sufficiently enough since freedom. It owns all major companies, strictly regulates foreign trade and follows the policy of import substitution. Monopolistic environment created by state-owned companies stifle the development of private sector. Recommendations for Uzbekistan The following are the recommendations the Uzbekistan government should implement for sustained growth of the country: Improving Business Climate: Government should stop pursuing the policy of import substitution and make it easier for foreign investment to invest in the country. Sustaining Macroeconomic Stability: Need improved macroeconomic policies to control inflation, eliminate restrictions on currency conversion, better regulation of financial sector would help in maintaining high economic growth rates. Boosting Agriculture Productivity: Better agricultural reforms, abolition of state dictated crop production, more power to farmers and investment in modern machinery would raise per capita income and reduce poverty. Improve Accountability and Transparency: The country ranks very poor in Transparency International Index at 174 of 180 nations. Corruption is rampant and Firms are frequently subjected to pay bribes. The government must put efforts in improving transparency for the firms to have any confidence in doing business in the country. Promote Open Competition: Government should end the policy of controlling all industries and creating monopolistic environment. Government should allow free control of industries by private sector. This will create more competition, promote innovation and would improve overall efficiency of the industries and boost economy.