Economics

The straight-line method of depreciation of assets is the most commonly used method mostly because it is not overly complicated. This method considers the salvage value of an asset and estimates the useful life of it and spreads over the assets benefit across that timeline. The idea is the company is utilizing the assets equally in that time frame. At the end of its useful life, it would be sold or donated. The major criticism about this kind of depreciation is that, this model assumes that assets provide the same amount of benefit across time. Usually they are efficient in the first few years but later on, they will slump, causing operational delays.

Another depreciation method is total units-of-activity method (Manko, 2009). It computes depreciation based on units produced. However, this does not account for idle time. When the equipment is not being used, it still depreciates in value because it is a machine and it dies with old age or it becomes irrelevant as new technologies get introduced.

Other methods companies use are accelerated depreciation techniques. Amongst the most common in this area is the double-declining method. This method allows the company to depreciate its assets (incur more depreciation expenses) in the early years of the assets life. This allows company to get more tax savings in the first few years of investment because depreciation do not actually involve cash outlay (Manko, 2009).

Related Party Transactions
These are transactions between two parties who are joined before they enter into the contract by a special relationship (parent-subsidiary, sister companies, major shareholder  corpoaration, etc.) (Investopedia, 2010). Related party disclosures are required by American laws because these transactions may create potential conflicts of interest between the parties (Investopedia, 2010).

Essentially, what must be established is that the parties dealt with each other in an arms-length transaction or, that they have dealt within what is the standard business practicescostsestimated within the industry. No one party should be greatly benefitted by the transaction.

The main automobile manufacturers in the United States car market have flooded the market with so many cars in the last few decades that purchasing new cars is increasingly offered many incentives to a buyer. This effectively lower the cost a buyer would have paid for a new automobile, and the net effect is the increase in rate of depreciation in the automobile industry.

Typically, those who prefer buying used cars put much emphasis on the reduced prices born by an automobile that has been on the road for some time. Within the first year upon the purchase of a new motor vehicle, its market price depreciates on an average of 30 percent. For example, a motor vehicle with a showroom price of 30000 dollars would cost around 20000 dollars after just a few miles on the road. This is making many people prefer buying used cars that new cars while at the same time lowering the price of new cars.

Depreciation should be a consideration while a person is making a decision on whether to buy a new car or a used car. For one, it is important that the buyer decides on how long he or she is going to maintain ownership of the car. If the buying is just for a period of time, then the best decision is to buy a used car since its depreciation will be lower as compared to a new car after the same time or mileage on the road. However, if I was intending to buy a car that I was going to keep for a considerably longer period of time, I would prefer going for the quality and guarantee of a new car at a slightly higher price.

Trade is an activity which has been pursued since the dawn of human civilization and is an indispensable part of the modern day economic system. Being able to play an increased role in the global trade has is one the factors that has changed the fortunes of many under-developed countries and help the substantially reduce the development gap (Catch-up) with the developed world. Inspite of this, trade between African economies remains low and this dissertation seeks to answer this question and look at the possible steps that can be taken in order to rectify the situation. For instance, the dissertation will examine whether or not trade needs to be created (by specialisation and diversification) in order to late create instrument which can boost trade as a tool for achieving regional integration. The dissertation will focus mainly on the dynamics of regional integration and examine whether trade agreements have been effective for African countries in general and SADC (South African Development Corporation) in particular and look at the case of Namibia in SADC as a way of illustrating the key concepts.

Conceptual Foundation of the Research
This study intend to analyse the role of SADC for its countries members by using Namibia as case study and see if its situation are similar or different to others members in order to boost intra-trade among African which is very low. It use the actual situation of Namibia to measure the effect of SADC over its participants and access it effectiveness as a regional organisation and discover the SADC limitation as result of members conditions.The research will examine and use the following main concepts and variables as a means of answering the research question- Concept trade creation and diversion- A set of hypotheses from the theory of regional integration or econometric evaluations - Gains from exchange- Gains from specialisation- Comparative advantages- Pattern of trade - ModelConcepts as the above are paramount importance to accomplish this analysis and arguably explain the emergence of trade cooperation not just in Africa but the world itself.

Background
The very low trade among Africans countries is an endemic situation in the the continent. This lack of trade can be pointed out by some literature as one reason for their prevailing underdevelopment and economic stagnation. Trade, as means of exchange of goods and service, is of paramount important for any country. Trade can be especially beneficial in situations where there isnt an equal distribution of natural resources and can serve as a precursor to the a formation of regional integration as an attempt to further these exchanges. However, the distribution and the gains attained form regional integration is many time questionable (for instance in case of the North American Free Trade Area (NAFTA) it has been argued that gains of the regional cooperation have been tilted heavily in favour of USA).

However, trade creation as one non-monetary effect of regional integration can increase transaction among the participating members as a result of reduction of customs duties. This increase in transaction can have a spiral effect which stimulates countries economies and their growth (arguably in the case of ASEAN).

Foroutan and Pritchett (1993) show in their study that the actual share of Sub Sahara Africa (SSA) imports plus exports was slightly higher than model prediction (model of the determination of trade flows) trade among African countries still undeniably low and hasnt shown signs of growth. Hence, this raises the question of efficacy of trade for the African countries in general and SADC in particular. The inspection into African literature and SADC showed the surprising affirmation that developing countries sees integration under different perception from those of developed ones. While third countries use integration as an instrument to reach economic development (industrialisation), developed nations on the other hand see integration as a way boost relative growth performance by fasting growth on poorer members than richer one. This certainly has led me to question whether the right approach is being use by developing country to implement and see regional integration. This issue is extremely important and lends itself to several questions such as whether regional integration more important than trade itself Or regional integration should result from a need to enlarge an existent pattern of trade According to literature (Distribution of gains...) one of the problems with SADC countries and most Africa is the dependence in raw material exportation to developed countries (to sustain their economies), the lack of industrial diversification or inexistence of industries which redirect their import to developed nations as the only way to fulfil their need for manufacture and industrialised goods. And this can be pointed as the reason for South African huge comparative advantage over others SADC members. Yet with such low level of industrialisation and diversification among SADC is quite justifiable that trade among SADC is so small. For instance South Africa has the traditional trade structure of a developing country in its total trade but in intra-regional trade it is similar to a developed country. As there isnt too much option inside the region for South Africa for industrialised product demand it must follow pattern of others SADC members and import them from developed countries. While due to its advanced industrial level compared to others it can behave as developed country as main source of import for many countries in the region.

Therefore the creation or diversion of trade as long as it leads to increase the term of trade among SADC countries if not for all Africa is of crucial importance for SADC and Africa as direct affect by this conditionals and for the world as all as it also bear the cost of African underdevelopment by high immigration flow, increased welfare cost as in the case of UK. By using then the concept of trade creation and diversion an analyse of SADC will be done in order to see the benefit that to members countries by using Namibia as case study and see if Namibia condition is extended to others SADC countries in order to allow a generalisation of SADC effect of its members and if it has improve their condition. And finally see if the creation of regional is more important than diversification of goods t trade which force country to trade independent existing means of trade or no as infrastructures, institutions, etc. Obviously the importance of infrastructure, sound policies or institution is not in cause but whether there is utility for this instrument if there is no diversification or goods to trade.

Aims of the Research
In the context of the background and aims of research explained previously this research expects to illustrate the role SADC has played as economic regional integration for its members  and examine the following questions (making use of the main concepts mentioned previously)- Why SADC doesnt play the intended role in practical terms.- What benefit has it brought to countries states- By using Namibia as a case study it is intended to see what role SADC as an economic regional integration.- What benefit and drawback has Namibia acquired by join in SADC- Analyse either Namibia conditionals can be extended to others countries members.- Why SADC doesnt play the intended role in practical terms with Namibia.

A number of different research techniques will be employed to answer the research questions.
Methodology The collection of secondary data (either qualitative or quantitative) will serve as the main source of knowledge to about concepts which are relevant for this analyse represent one of the main methodology which will be used along this dissertation. Consequently the consultation of electronic library, the library, internet, etc will be strategic point of collection for secondary data. The use of Namibia as case study will also figure as one of the method use to do this work as well as evaluation of Namibias pattern of trade which guide me to an exploration of graph, table, etc. Additionally the use of SADC work as a sample which cans either be area sampling or size sample which shows a fair representation of the population (Africa) by manifest most of them a low intra-trade reason to lead to this study. Finally as an inexperience research a consult with more experienced person will be of crucial for my project specially an expert in trade, therefore a constant consult it my supervisor is primordial for the accomplishment of this study to understand concept, table and graph.

Conclusions Expected Outcomes
This research aims to produce a useful and practical analyse of SADC under the perspective of gains generation to increase the actual trade and hope that it may a practical use for SADC improvement. It is hoped that the information or conclusion drawn from this analyse can add value to SADC in particular as well as Africa and the world in general as a way to improve theories for economic regional failure of Africa and as externality alleviate burden on countries outside Africa. Lastly, I also hope that this analyse be of particular use for Namibia as a source of my case study and can fulfil the ultimate state in the aims exposed above to carry out this research.

Marginal analysis is an economic concept that facilitates the making of best decisions, by comparing incremental or marginal benefits to incremental or marginal costs. It results from the scarcity of resources.

MARGINAL REVENUE
Marginal revenue refers to the change in the total revenue resulting from an increase in the produced quantity by one unit. This is the revenue from producing one extra unit of a good.

RELATIONSHIP BETWEEN THE MARGINAL REVENUE WITH THE TOTAL REVENUE
In Maths, a marginal revenue function may be expressed as the first derivative of a total revenue (TR) function in respect to the quantity produced, Q. the marginal revenue can change with respect to volume or quantity, and therefore at every output level, our marginal revenue is the next produced units revenue.

MR change in TRchange in Q
MARGINAL COST
Marginal cost refers to the change in total cost arising from an increase in produced quantity by one unit. This is the cost pertaining to the production of one extra unit of a commodity.
RELATIONSHIP BETWEEN MARGINAL COST WITH TOTAL COST

In Maths, a marginal cost (MC) function may be expressed as the first derivative for the total cost (TC) function in respect to the Quantity (Q). The marginal cost can change with respect to the volume or quantity, and hence at every output level, our marginal cost is the next produced units cost.
MC change in TCchange in Q

PROFIT
Profit is the actual gain or benefit from production. Production costs are deducted from the sales figure to get the profit. It refers to the return to the entrepreneur from the input production factors.

THE CONCEPT OF PROFIT MAXIMIZATION
This is the process of determining the price, that is the selling amount and output quantity, which returns the huge or greatest profit. In marginal analysis, profit is said to be maximized at the point where the marginal cost equals the marginal revenue. Production beyond this point leads to a deduction in the total returns and the firm will not be maximizing returns to the factors of production.

HOW A PROFIT MAXIMIZING FIRM DETERMINES ITS OPTIMAL LEVEL OF OUTPUT USING MARGINAL REVENUE AND MARGINAL COST AS A CRITERIA
For every unit of sale, marginal profit will be equal to the marginal cost deducted from the marginal revenue. The optimal level of output will be at the point where marginal revenue is exactly equal to the marginal cost. This is because total profit will increase at the point with a positive marginal profit and it will start decreasing when marginal profit turns negative.

THE ACTIONS A PROFIT MAXIMIZING FIRM TAKES IF MARGINAL REVENUE IS GREATER THAN MARGINAL COST
Incase the marginal revenue is greater than the marginal cost, then marginal profit will be positive. At the point where marginal revenue is exactly equal to the marginal cost, at this stage marginal profit will be zero, by the marginal revenue being greater than the marginal cost, the profit maximizing firm will be incurring a marginal profit that is positive. It should therefore keep on producing extra units because this leads to an increase in the total profits. They however increase production till the marginal revenue equals the marginal cost.

THE ACTION A PROFIT MAXIMIZING FIRM TAKES IF MARGINAL REVENUE IS LESS THAN MARGINAL COST
Incase the marginal revenue is less than the marginal cost, then marginal profit will be negative. The firm will have gained a profit that is positive up to the point where marginal revenue equals the marginal cost. Any more production will be causing a marginal profit that is negative due to the fact that marginal cost is greater than marginal revenue. Any extra production will therefore be causing a reduction in the total profits. The firm should hence lower production up to the point where the marginal revenue equals the marginal cost.
(Sullivan and Steven, 2008 p.89-111).

Elasticity of demand is defined as the percent change in quantity demanded over a percent change in price. It is given by this equation

Elasticity of demand  Q2   Q1  P2   P1
      Q1  Q2    P1  P2

A good is said to be elastic if a change in price causes a change in quantity demanded, inelastic if a change in price causes only a little change in quantity demanded. Numerical elasticity coefficients (or elasticity values) can be negative or positive but the signs are usually dropped, for only the absolute values are of significance. The coefficients for inelastic goods is Ed  1, while for elastic goods, it is Ed  1.

For goods with a coefficient of 1, it is said to be unit-elastic. Take, for example, a look at the graph. Let us say that the price of good A is initially at 80, so the good demanded was only 1 unit. But when the price was dropped to 10, the demand for good A increased to 8 units. Computing for the coefficient of elasticity will result to 1.

Cross-price elasticity shows how responsive the demand for good 1 is to a change in the price of good 2. It is given by the equation

Cross-price elasticity   change quantity demanded of good 1 change in price of good 2

There are two kinds of pairing of goods that can be aptly described by cross-price elasticity. Substitutes are goods which have a positive price elasticity. Substitutes are goods which are interchangeable, thus when the price of a good increases, the demand for it decreases but the demand for its substitute good increases, example of which is butter and margarine. Margarine can be an alternative of butter. If butter increases in price, it is more likely that the demand for butter will increase since it is a cheaper alternative. On the other hand, complements are goods which have demands that behave similarly when a change in price is encountered. An example of complements is keyboard and computer. You would not buy a computer without buying a keyboard. It is evident that the keyboard is a complement of a computer, for an increase in the price of computers lowers the demand in keyboards, thereby resulting to a negative cross-price elasticity.

Income elasticity of demand relates the percent change in the quantity demanded for a percent change in income. It is given by the equation
Income elasticity of demand  Q2   Q1  I2   I1
      Q1  Q2    I1  I2

Commodities that have positive income elasticity are called normal goods negative income elasticity are inferior goods. Normal goods pertain to most commodities though they have varying income elasticity. Necessities (food, clothing, electricity, to name a few) are normal goods with low income elasticity ( i  1) while luxuries (cars, gadgets, travels, etc.) have an income elasticity greater than 1. All these goods experience an increase in demand if income is increased. On the other hand, inferior goods are products that undergo a decline in their quantity demanded if the income has increased, an example of which is subway rides. A person prefers to ride the subway, a cheaper means to commute, but if he gets an income increase, he can now afford to ride a cab.

Elasticity of demand, cross-price of elasticity and income elasticity of demand should not be confused with one another. Elasticity of demand examines the effect of the product s price change with its own demand. Cross-price elasticity is the elasticity of demand of a product relative to the price changes of its substitute or complement. Lastly, income elasticity of demand relates the elasticity of demand of the product with respect to the income of the consumer   necessities and luxuries are a priority when an increase in income is experienced. 

There are three determinants of elasticity demand, namely, availability of substitutes, share of consumer s income devoted to a good, and consumer s time horizon. Demand is elastic when there is a wide array of available substitutes. It is obvious when the price of a good increases, but there is a viable alternative which happens to be cheaper, there will be an increase in the demand for the substitute. However, this will not be the case if there are no other good choices present   the demand for the product will be inelastic. For example, ballpens had an increase in price and a good substitute of ballpen is pencil. Therefore, demand for pencils will go up due to the price hike of ballpens.

The second determinant is the share of consumer income devoted to a good. If the income allotted to a product is small, the demand for the product remains inelastic. An example is toothpick. It is a good which eats up only a tiny fraction of a consumer s budget. An upsurge in the price of toothpicks will not do any significant dent on the budget.

Lastly, the consumer s time horizon affects also the elasticity of demand. It is best described by the two laws of demand as stated in the following text

The first law of demand says that buyers will respond predictably to a price change, purchasing more when the price is lower than when the price is higher., if other things remain the same. The second law of demand says that the response of buyers will be greater after they have had time to adjust more fully to a price change  (Gwartney et al., 2006, pp.432).

To illustrate this third determinant, examine the demand for fuel. Fuel price hikes lead to instantaneous response of decrease in demand. However, given several months, people will find alternatives such as increase in the use of public transportation or use of eco-friendly cars thereby affecting a more substantial fall in the demand for fuel.

Business decision making makes use of the determinants in setting prices that will maximize revenues and yield. If there are available substitutes, it is not logical to raise prices because it will translate to a loss of customers which leads to a decrease in revenue. Unavailability of substitutes, in cases of monopolies or oligopolies, equates to an inelastic demand. Raising prices simply leads to increase in revenue and of course, profit maximization. The same is true to goods which only have a little share in the consumer s budget. A sharp increase in price will not affect the budget as a whole   the consumer will not resort to looking for substitutes and will simply purchase the good thereby increasing the company s revenues. Consumer s time horizon, on the other hand, gives the company some leeway. Initial increase of the price may decrease demand but will enable the company to generate profits. However, when the consumer has recovered from the price hike and had identified alternate means, the company should brace itself to the further decrease in demand (Gwartney et al., 2006). 

Elasticity demand also has two extreme cases perfectly elastic demand and perfectly inelastic demand. For perfectly elastic demand, any change in the price of the good (be it increase or decrease) leads to an instant zero demand of the product. The elasticity coefficient equals infinity. The graph for this type of good is characterized by a horizontal line as shown in the figure below.

EMBED Microsoft Excel 97-Tabelle 
But for the perfectly inelastic demand, the quantity demanded remains the same regardless of the price change. Its elasticity coefficient is zero and can be described by the graph below.

EMBED Microsoft Excel 97-Tabelle
For the given graph above, the price elasticity coefficient of demand only applies to the downward sloping portion of the graph. The upper part corresponds to an elastic range, the middle to a unit-elastic range, while the lower portion of the curve gives an inelastic range. Note that the upper part relates to few quantities but of very high price. A large percentage change can be seen if the quantity demanded changes by only 1 unit. The converse is true for the lower part high quantity demanded at lower prices. A change in the quantity demanded does not greatly affect the revenue. Therefore, for businesses, it is advisable to be within the inelastic range.

The Agricultural and industrial sectors in Venezuela are the main contributors to development. Agriculture in Venezuela contributes about 4 of the total GDP. It covers about a quarter of the land and uses 10 of the labor force. Most of the exports are manufactured goods. Others include fruits, cigarettes, sorghum, rice and cocoa. In 2005 for example, the major markets for the exports included Mexico (4.5), U.S. (57.5) and Colombia (4.5)(Food and Agricultural Organization, 2010). The agricultural sector in Venezuela is not sufficient enough to cater for the population. As a result, most of the food sources are imported (two-thirds). In 2008, it was one of the largest markets for the US with imports being worth  1.6 billion. These were mainly agricultural goods such as cotton, soybean, wheat, vegetables and other equipments. Food imports from the US are about one-quarter (Food and Agricultural Organization, 2010).

The major crops in Venezuela include rice, sorghum, corn and Sugar cane. Fruits such as oranges, mangoes, bananas and coconuts are also produced. Coffee, sisal and tobacco are grown in most parts (Food and Agricultural Organization, 2010).

Most of the lands (about 35 million hectares) in Venezuela are suitable for agriculture. About 7.3 million hectares are used for arable farming while livestock grazing uses 18.4 million hectares. In some parts of the country, there is mixed farming which combines both arable and livestock farming (9.3 million hectares). The arable lands however, are not used to their full potential (Food and Agricultural Organization, 2010).

Cattle keeping in Venezuela contribute about half to the incomes which the country gets from farming. Therefore, most of the lands have been set aside for grazing. Production is both large scale and small scale. Most of the large producers use a larger percentage of the available lands (about 58) for farming. Small scale farmers are left with poor pieces of land for farming. Most of these lands have been degraded and located in flood prone areas (Food and Agricultural Organization, 2010).

In order to enhance an increase in production, the government in collaboration with Food and Agriculture Organization has established a program to enhance food security. This programme is known as Program for Food Security and Rural Development. Its main objective is to manage lands and natural resources. The program establishes irrigation schemes in the rural areas. There is also the distribution of improved seeds to small scale farmers. With the help of FAO, the agricultural sector has also received technical support to improve on production (Food and Agricultural Organization, 2010).

The United States is one of the countries in the world that has dominated many the world   aspects for many years. The country dominance in the world stage is due the strength of its many superior structures and institutions it has than any other nation in the world. The main pillars of superiority are its economic endowment, its human capital, abundant natural resources, its military potential as well asa tradition of the liberal politics and economic traditions. TheUnited States over the years has enjoyed a vibrant economy which accounts for about third of the gross domestic product in the world. The economy is also one of the most competitive, adaptable and innovative in the world (The Bullet, 2009). The United States boastsgood demographic trends with a relatively young population andhas the highest spending in military accounting for about half of the world spending inmilitary that no other nationcan match itsspending in military. TheUnited States also has the bestuniversity and research institutions in the world and which has made it to lead and dominate many technology sectors such as medicine and engineering.

The geopolitical hegemony of the United States for over a century in the world can be attributed to its economic mighty which has outclassed any other economy in the world through the years that no other nationhas arisen to challenge theeconomic dominance of the United States. This economic might has been used by the United States to advance the cause of international multilateral agreements such as those of the World Trade Organisation. The hegemony of the US currency is another factor that has contributed to its dominance of the world. There has been a policy by many governments in the world to stage andmaintain the dollar asthe key currency in the world (Layne, 2009). This has made the United States to be flexible in funding their foreign and international policies due to lesser foreign exchangeand fiscal limitationsit encounters in trade than any other nation in the world. The hegemony has also been attributed to the way the government has existed over half of the century as an almost uniform alliance of states and other factors such as the influence of the American popular culture and the strength of the media. These have all been factors that havebeen used to project the power of the United States to the world. There is a notion among many analytics of politics that the global dominance and thehegemony of theUnited States are under decline due to thecurrent financial crisis and the economic status of the nation.

For over half a century, the United States has not encountered a challenge to its hegemony in the world stage even with the expansion and growth of the economies o other countries in European Union and the Asianeconomies like china, India and Russia. Hegemony of the United States in the world just began to be thrown into question with the start of the global financial crisis that affected theeconomy of the Unites States adversely and the world as awhole which made doubts to be cast about the continued domination of the world by the United States. The crisis has adversely affected the hegemony of the United Statesto cease (Dorman, 2009). The crisis which originated from the reckless lending practices by the US banks and mortgagefirms and the losses due to sub prime lending all led to thenear collapse of the real estate, a fall in property prices in the United States and the fall of loss of commercial banks which resulted into the government initiating massive government assistance to the troubledbank and mortgages amounting to billion dollars (Philippon, Ariell, 2008). This global recession in the United States, the housing crisis and the government plans for assistance was against the policies of the US governmentwhich allowed free markets to thrive and was seen as a policy of adopting socialist measures which threw the doubts about the continued hegemony of the United States. The financial crisis hascreateda downturn in the financial crisis and a fall in capital investments in the United States which has resulted in a fall in domestic demand. The crisis also led to fall in trade and industrial production, rising in unemployment numbers as well asa fall in small business lending in the United States which is a risk to small businesses.

The global financial crisis has made Americans to lose substantial part of their net worth. Theloses that have been incurred as a total are estimated to be about eight trillion dollars with thereal estate banking andmortgagee sectors being themost adversely affected sectors. The global financial crisis promoted theUnitedStates government to enact legislation that heightened the regulation of the financial sector and this will impact on the financial sectors. This will have an effect on the raeganism in the sector which has been identified by lower taxes deregulation. The regulation will have an impact on the reign of free markets in the United States which have made them to lead inthe world (Obstfeld, Kenneth, 2009). The effects of the global financial crisis on the finance sector and the downturn in the economy will greatly affect the global hegemony of the United statesbecause the financial crisis struck at time when there were other forces that were affecting the reputation of the United States as a global leader such as thewar in the Afghanistan and Iraq
The shrinking of the United States economy will give a chance for other economies such as China and India to rise andovertake or grow to equal that of the US. Even before the beginning of the global crisis in 2008, many projections by economist were indicating that other economies such as those of China, India and Russia were experiencing phenomenal growth and were to surpass that of the United Statein the future. The effects of the crisiswill impact on the speed at which these economies will surpass that of the United States because   they were not adversely affected by the crisis as the United States and this will makethese economies to rise and operate in the same platform as that of theUnited States (Watson, 2010). The decision by the Federal Reserve to bail out the banks at the heart of the crisis amounting to7 billion dollarshas caused a major deficit in trade and budget which have been deemed to be unsustainable. The United States government will have to meet deficits through higher taxes in order to cover the deficit. The possibility of rise in taxes is a major political consequences and predictions indicate that the country will default which will cause a depreciation in the currency of the United States .The depreciation of the dollar will have an impact on its continued use as a foreign exchange reserve currency. The diminishing use of the dollar as the ultimate foreign exchange currency will end the hegemony of the US currency across the world (Reinhart, Kenneth, 2008).

Many countries of the world have become aware of therisk of the depreciation of the United States dollar and have started to use other currencies such as the euro as the ultimate foreign exchange reserve currency. The risk of the dollarceasing both be the ultimateworld reserve currency will continue to impact the deficits and thetrade ties with other countries which will impact on the US economy adversely.

The geopolitical influence of the United States over time willcontinue to decline due to the rise of other economic powers in the world such as China and India, the increased integration in the European Union and the rebirth of Russia. The rapid rise of these major economic powers will impact on thegeopoliticaladvantage of the United Statesand in future, the United States will be playing in the globaleconomy filled among a team of equal countries that will have the same hegemony and influence in the world as it. The effects of the global financial crisis have indicated that the United States has been making poor financialdecisions which have led to the double deficits in the budget and the trade (Hutton, 2009). These poor economic decisions are attributed to thefact that the United States acts largely as a recipient of international investment rather than an investor. This makes its current accountto gain surpluses. The financiers of these trade deficits are the countries that are considered to be rivals to the United States such as Russia, China and the Gulf States such as Saudi Arabia. Thesecountriesalso control most of the imports into the United States which makes them to interfere with the balanceof trade because they control the imports and finance the budget deficits in the United States. This process is known as vendor financing and it puts the United States at risk in case ofpulling out of these investments which can affect the United States economy significantly and can lead to the collapse of the economy (The Bullet, 2009).

Recently, there has been a clash between the United States and theChina over devaluation of the Yuan currency by China in order to maintain a competitive edge in global trade. This highlights the vulnerability of the United States over its policy of allowing its rivals to finance its trade deficits. For over 10 years, the trade deficits in the United States have been financed by foreigners and this puts thethe country in the risk of the use of finance  as a bludgeon  through the disposing  off the assets in the United States  or cutting the rate of financing to  the United States (Feldman, 2009). The global financial crisis has revealed the flaws in the economic policies and structures in the United States. The over reliance of the United States in foreign investments to fund trade deficits will have indiscriminate effects in the short term on the trade deficits but the continued  imbalance will eventually lead to situation  in future where the United States government will have to cut and tighten its monetary policies on other priority areas such as thespending in military andinternational developments projects which willlead to reduction in its hegemony and the dominationininternational matters (Ye, 2009).

The rise of other economic powers in the world like China, India, Japan and Russia does not impact on thehegemony of the US in economic terms only. The rise of these superpowers is also threatening the domination of theUnited States in other sectors as well such as technology, education, innovation, infrastructure and development. The lead in the United States  in these sectors have been lessened by the rise of other world class training and research centers in Asia and the European union and which have education institutions that equal those of the United States. There have been problems in the education system in the United States due to the rise of the number of uneducated youthwhile other nations in Asia and the European Union areachieving better numbers than the United States (Cohen, Bradford, 2010). The education systems of the United Statues have become outdated and have problems in their funding. In terms ofmilitary clout, the United States has beena global leader. The Septembereleventh attackshighlighted that America is still vulnerable even with the solid army. The military response to the attacks in Afghanistan and the Iraq have all highlighted that hegemony in the united states as a guard of  human rights is declining due to their failures in thefield  and the human rights record of the military (Ferguson, 2003).

Asa general rule, it has been observed that most hegemonic powersonly thrive in periods of rapid economic growth but all wither away when growth ceasesas was evidenced in the collapse of the Greta Britainhegemony in the 19th century. Focusing on the problems the United States is experiencing as a result off the financial crisis such as trade deficits, unemployment and problems in education andtechnology, it is likely that the hegemony will follow the same route. Although all indications point towards the decline in thehegemony of the United States in the global stage, the United States economy may show elasticity and might withstand the problems both of the financial crisis (Haldane, Piergiorpio, 2009). The economy still enjoys theresources and the political will to tackle the financial crisis since it is well endowed to wither away the storm of the financial crisis. The US currency in the near future will still continue to be the foreign exchange currency of choice since the currency of other countries such as theEuro are not yet adaptable to play the role of a global reserve in foreign currency.

In the immediate future, the United States shall continue to dominate the world economic and monetary affairs. Nevertheless, the rise of other economic powers such as Russia, India, Japan and the European Union and the effects of the credit crisis will make the United States to lose itshegemony in the world affairs. In future, the United States will be operating in the world affairs among other equal players.This shows that in the future, the governance of the world will be in a multilateral approach where the economic political and military power will be more fluid and not very effective and there will be no clearly defined leaders of the world stage (Baker, Eva, 2009). The factors that are fuelling the trend of decrease in the hegemony of the United States all relate to the over reliance on foreign investment and spendthrift spending by America which does not equal its power.

The disparity in the level of international investment and trade were putting a stress in the financial system which became apparent in the financial crisis in 2008 which necessitated the US to initiate economic measures such as the stimulus package and the bail out of the banks that were affected by the crisis. These measures prompted the deficits in the budget levels as well as increasing the pressure on the exchange rates and currency which will limit the access of foreign capital to the United States This will impact on its key institution that characterizes its hegemony its economic clout and the effects will spill over to other areas of hegemony as well such as military (Caraley, 2009). Decline in financial capability of the US will lead to the United States becoming less affluent, volatile and unstable in the world stage which will lead to the rise of other superpowers in the world. However, even with a recovery from the financial  crisis by the United States, in the long run, all projections indicate that  in future, the rise of other economies such as  India and china will eventuality overtake that of the United States which will greatly reduce the impact of the  hegemony of the US  in the global standing.