What is Euromarket?

Euro is the currency used by the European Union (EU) countries, so, the market the Euro is used for, can be named Euromarket. It has in view all the transactions done by the banks in Euro currencies, Euro notes, Euro commercial papers, Euro bonds. It is a market that has developed itself in Europe. The market deals with US dollars as well and it can be named Euro dollar market.

Currency is borrowed and lent by institutions located in different countries, there is a capital flow which seems to be uncontrolled. Theoretically, it cannot be a national control over this market.… Read the rest

Experience Curve

Experience curve is the systematic reductions in the production costs that occur over life of a product.

There is a relationship between the scale of production and the size of the unit cost of the product, known as the effect of experience. Graphical representation of experience effect (created on the basis of cumulative production and average cost) is called experience curve.

A number of studies show that a product’s production costs decline by some characteristics about each time accumulated output doubles. E.g. in aircraft industry, where each time accumulated output f airframes was doubled, unit costs typically declined to 80 percent of their previous level.… Read the rest

Regional Economic Integration

Regional Economic Integration means agreements between groups of countries in a geographic region to reduce and ultimately remove tariff and non-tariff barriers for the free flow of goods, services and factors of production between each other. GATT and WTO are the biggest association of more than 140 member countries, which strive to reduce the barriers. However, more than regional, WTO has a global perspective. By entering into regional agreements, groups of countries aim to reduce trade barriers more rapidly than can be achieved under WTO. While there have been decreases in the global barriers to trade and investment, the greatest progress had been made on a regional basis.… Read the rest

Drivers of Globalization

The key factors seem to underlie the trend towards the increasing globalization of markets and production are the decline of barriers to trade and investment and the role of technological changes.

1. Decline of Barriers to Trade and Investment Decline in Trade Barriers

Many of the barriers to international trade took the form of high tariffs on imports of manufactured goods. However, this depressed world demand and contributed to the great depression of the 1930’s.

After World War II, the industrialized countries of the West started a process of removing barriers to the free flow of goods, services, and capital between nations.… Read the rest

Faces of Globalization

A fundamental shift is occurring in the world economy. The world is getting closer in terms of cross border trade and investment, by distance, time zones, languages and by national differences in government regulation, culture and business systems and toward a world in which national economies are merging into one huge interdependent global economic system. Globalization is affecting firms that previously operated in a nice, easy, protected national market. It also illustrates the increasing importance of thinking globally. Globalization is the trend toward a more integrated global economic system. Globalization is also termed as the shrinkage of economic space. The rate at which this shift is occurring has been accelerated recently.… Read the rest

Reasons Behind the Financial Crisis of 2008

Financial crisis is a bubble created by excessive investor inclination towards a particular market. It shadows the valuations and when the bubble bursts, the investors want to exit and therefore rapidly start selling their stake.

Too much of capital led to lower interest rates and this in return forced the investors to look for creative investment platforms where the yield was high. This requirement led to an unprecedented growth in the securitization market as the inclination towards such derivative instruments was high. Investors were willing to take higher risks as compared to the returns they would receive for their investments. Greed for higher returns, excessive leverage and low volatility led to the financial crisis of 2008.… Read the rest