Economics Assignment
Q1. Income from Migrant Workers
a). What might be concluded about Philippine’s economy from the information given?
The Philippines ‘ economy is too reliant in foreign labour. Having 25% of the labour force working in other countries shows the country does not have job opportunities, or the pay is low. Also, having professionals such as doctors and teachers work in jobs that degrade them prove they cannot be absorbed in the job market in their country, or the pay is so little they would trade their knowledge and experience for the money. The economy of the Philippines can be said to be in a decreasing trend. With professionals leaving the country, there are possibilities that, at some point, there will be a shortage of the same professionals in the country. Such a scenario would cause a social crisis due to a lack of essential services such as health care due to a lack of doctors.
b). How far is the information in the fifth paragraph of the article supported by evidence in table 1?
The information in the table does not support the information in the fifth paragraph. There are considerable differences in predictions and data analyzed. In some cases, the difference is twice the information in the paragraph as compared to the table.
The paragraph and the organization producing the chart are different, which makes their information different. However, with the difference in the results of money sent back home, there is a vast difference in the predicted amount and the increased percentage. The paragraph claims the money posted by migrant workers back home is growing by as much as 33% in some cases, but the table gives different results. According to the table, the money sent by immigrants increased by as much as 67% in countries such as India. This is double the prediction made by information in the paragraph.
In 2007, according to the paragraph, Mexico would receive $23.8 billion from abroad. This is different from the table, and it is expected since they analyzed the data from various sources. However, irrespective of data about 2007, the predictions about 2008 are not the same. From the paragraph, it was predicted that in 2008, money sent back to Mexico would fall by almost 8%. According to the table, the money fell by less than 5%, from 26.1 to 25.1 billion.
c). Assess whether it is beneficial for the receiving country to use migrant labour.
There are no benefits to the country receiving the migrant labour. Many employers love foreign labour since it is cheap, but this cost the local population due to their replacement due to foreign labour. Also, foreign labour reduces the wages that were existing before, making the locals compete for the jobs at a lower salary than previously was. This affects the local more, since they may not be able to cater for their daily expenses at the reduced wages. As migrants’ families relocate to the receiving country, the cheap labour increases making it even harder for the locals to get jobs at even the low rates that exist. Also, since the migrants are being paid lower wages, they may have poor living standards and can bring about other social problems in the receiving country, such as slums and an increase in crime rates.
Lack of investment in technology and automation due to cheap labour can cause the companies following such a trend to be left behind and even stop production in the future when the products they are producing makes it mandatory to use automation. With high capital expenditure for automaton, there needs to be long-term plans, and cheap labour makes it not necessary not to plan for changes in production.
d). Discuss the overall effect of the outflow of workers on the economy of their home country.
The workers who leave the country leave at times when the economy is down, such as in recession. With the workers getting jobs in foreign countries and sending back money, such workers help develop their home country, since the families left behind invest the money to sustain their lives and educate the young ones. Since the workers earn more than they would get in their home country for the same jobs, the money they send back is enough to improve their standards of living. Also, the investments made by families can boost the economy through trade. Investments in the education of the young for a family is also an investment in the education system of the country due to contribution through tuition fees. With improved standards of living, the same families will have to use better health services, contributing to the health system in their country. Also, with aid and foreign investment decreasing, the money that the workers send back home will help in bridging the gap if invested well.
Q2. Discuss whether privatization and an increase in competition would hinder or help the achievement of economic efficiency.
Q2. Discuss whether privatization and an increase in competition would hinder or help the achievement of economic efficiency.
Privatization and increased competition help in achieving efficiency in the economy. When the private sector owns organizations and companies, they are usually driven by profit margins. For the companies to have high profits, they need a skilled workforce, which makes them hire the best managers to help the company move forward. Such managers improve efficiency in the company, enhancing the efficiency of the economy.
Also, private companies have less political interference, which increases efficiency. Due to their profit-driven nature, private companies employ only the required labour force. This is in contrast to government organizations that can employ more labour force than required causing a lot of duplication of roles and inefficiencies. It is also hard for a government organization to lay off workers as compared to private entities.
Privatization improves efficiency due to their investments and the use of technology and automation. The use of technology increases labour productivity and improves efficiency. This, in turn, leads to a better economy for the nation. Privatization helps in developing long term goals for the company, which increases efficiency for the company and economy by working hard and efficiently to achieve the long-term goals.
In cases where privatization is accompanied by increased competition, there is a fall in price, with the main beneficiary being the consumer (Estrin & Pelletier, 2018). With lower prices and more competition, companies tend to look for value addition or offer better quality products and services to gain more market share, which leads to more efficiency and better products or services.
Increased competition leads to improved quality for products and services (Estrin & Pelletier, 2018). For companies to maintain or increase their market share in a competitive market, they have to use the most efficient methods to produce quality goods at lower costs. This, in turn, leads to economic efficiency.
Q3. The dominance of large firms in some markets and many small firms in other markets.
a). explain possible reasons why there are many small firms, while in others, the market is dominated by a few large firms.
For a market with few firms, case example being the county with two telecommunication companies, the main reason is due to barriers of entry into the market. For telecommunication companies in the country, it may require substantial capital investments. The consequence of the entry of another firm can be price wars, leading to the new firm making huge losses, with loss of capital. There may be resources that the few companies may be controlling that other companies cannot obtain. Resources such as oil are controlled by a few companies in a country, making it hard for entry of another player in the market. Some large companies can take advantage of economies of scale, satisfying the market. Small firms, on the other hand, can find it hard to enter such a market since they can produce on a large scale, making their production more expensive.
The reasons behind many small firms may be geographic location or product differentiation through different methods. The small firms can be geographically separated, with one firm dominating one region and having a small market share in another region. The second company will be the leader in another region and a follower in a different region. Also, the firms can offer the same products but different them through advertising, giving the image of a different product from the other. Also, the companies can have minimal differences in their product, such as one telecom company having lower prices for voice rates. Another company can offer free internet for social media, with the third having another product at lower prices, making them exist together.
b). discuss who might benefit and who might lose when a market becomes dominated by a few large firms.
The firms are the ones who benefit the most from a few large firms. They benefit from conspiring to set the prices of their products, which makes them have higher margins. A case example is the oil companies, which, after COVID-19, had to meet to reduce their output of oil after the demand fell. The fall in demand had led to a fall in prices, but the organization had to reduce their production for the prices to remain high.
References
Estrin, S. & Pelletier, A. (2018). Privatization in Developing Countries: What Are the Lessons of Recent Experience? The World Bank Research Observer, 33(1), 65-102. https://doi.org/10.1093/wbro/lkx007