Economics

A complete analysis of the Indian economy has been done within this document. The analysis of the various factors contributing to poverty in India has been discussed with the main focus on the effects of poverty alleviation mechanisms on education systems in India. The survey compares the economic development and the expansion of the various sectors of the economy to the education systems within the country. The major issues affecting poverty alleviation have been identified as discrimination against women and the minority, poor education standards and distribution, rural poverty among others.

Introduction
Poverty Estimates  historical trend
A third of the poor people in the world live in India according to 2005 estimates by World Bank. 42 percent of the Indian population lives below the international poverty line. The World Bank (2006) estimates the international poverty line to be 1.25 per day.

The purchasing power parity indicates that the poverty line is Rupees 21.6 per day in the urban centers and Rupees 14.3 in the rural areas according to 2005 estimates. There is a reduction in the poverty level since 1980 whereby the poverty levels were estimated to be 60 percent. Planning Commission of India estimated that 27.5 percent of the Indian population was living below the poverty line in 2004-2005. The commission issued the information that in 1977-1978, the poverty level was 51.3 percent and 36 percent in 1993-1994 (World Bank, 2006).

Causes of poverty in India
The high level of poverty in India was caused by several factors. The British era (also called British Raj) which occurred between 1858 and 1947 was a major cause of the poverty in India (Griffiths, 1952). The British colonial rule deindustrialized the country. This was done through privatization of industries, economic regulations, increases in tariffs on commodities made in India, direct seizures and others. Most of the resources were exhausted by the British rule during the colonial period (Griffiths, 1952). The large population in India has created a huge burden to the government. There are low literacy levels in India since a large percentage of the population has not yet accessed formal education especially the women (Mukhopadhyay  Seymour, 1994). Dependency on agriculture has caused the high poverty levels in India. The country has improved and the industrial sector is up coming in the recent years. The Indian caste system has been a cause of the poverty in India. Lower caste Hindus form a large percent of the poor in the country. The Indian caste system defines social stratification which restricts some social groups from doing certain activities. The social stratification describes social classes within the society. The low class people are exploited by the upper class individuals, hence causing a very big gap between the poor and the rich. For example, large portions of land are owned by the high ranking people who exploit the low rank people. The role of women in the Indian society is another cause of poverty. The Purdah restricts women from interacting freely and there are other practices which do not give the women a better position to contribute to the economic success of the country.  It is only a few years ago that women started to fight for their rights and equality. The culture of the Indians has contributed a great extent to the high poverty levels being experienced in the country (Indian Council of World Affairs 2006).

Indias economic policies
Social democratic policies have been practiced in India since 1947 to 1991. The policies promoted government regulation, protectionism and public ownership of property. The policies caused a lot of corruption and slow economic growth. A market based economic system has been adopted since 1991. This has liberalized the economy and the government has reduced its control over many economic activities. The economic policies of the 2000s have increased the rate of economic growth. The reforms have placed the country in the second position of the fastest growing economies in the world. The economic meltdown of the 2008-2009 caused a great threat to the economy of India. The growth rate of the Gross Domestic Product reduced to 6.1 in 2009. The fiscal deficit increased to 10.3 of the GDP in the same year. The service industry is growing at a very high rate. It contributes to 62.6 of the GDP of the country. Agriculture still remains the main economic practice of the country and accounts for 52 of the employment (Mukhopadhyay  Seymour, 1994).

Neo-liberal policies and their effects
The neo-liberal policies established in India in the 1990s have caused the reduction in economic performance. The government introduced the policy of growing cash crops instead of traditional food crops. This has led to a sharp increase in the costs of farm input. The international market dictates the prices for cash crops. The food crops are better than the cash crops since a fall in the prices for food crops does not affect the availability of food in the country. Neo-liberal policies have promoted inequality in the country and this has reduced the agricultural productivity. During the period 2003-2007, the country experienced agrarian crisis. On the other hand, the country attained the second position in the number of dollar billionaires. The policies have caused inequality, hunger, and collapse of the rural economies. Farm suicides have increased since the establishment of the policies. Employment in the agricultural sector has declined while non-farm employment has not progressed. Rural urban migration has been on the increase since the introduction of the neo-liberal system. Many rural households have become landless. The policies have worsened the poverty crisis instated of improving the lives of the Indians (Sharma, 2002).

Analysis
Efforts to alleviate poverty - Outlook for poverty alleviation
India has established long-term goals to eradicate poverty in the country. The increase in the number of the people in the middle class will alleviate poverty in the next 50 years. The government has emphasized on education to increase the literacy levels of the people as a strategy to alleviate poverty. Other strategies to eradicate poverty are empowering women and the poor in the society. The government has introduced the policy of reserving seats for women in government jobs as a measure to improve the participation of women in the economy. The poverty alleviation programmmes have been very successful and this has been indicated by the rising number of middle class individuals in the economy. Income distribution has not been even and major efforts should be made to create income equality. The strategy of establishing the capitalist system of government has led to the rise in the middle class individuals. Approximately, 390 million Indians are in the middle class. A third of these people belonged to the low class some few years back. By the year 2030, a big number of the people in India will be middle class. 65 percent of the people have become literate an increase from 52 percent during the last decade (Sen  Drze, 2008).

Controversy over extent of poverty alleviation
There have been several controversies over the poverty alleviation success in India. UN World Food Programme has questioned the definition of poverty by the Indian government. There has been an increase in the calorie deprivation despite the reduction in poverty. The increase in economic performance has not reduced rural-urban migration and this has made urban poverty more persistent. Despite the fact that poverty has decreased, other dimensions such as the education levels, health, and crime remain to be questioned. While poverty levels have remained constant since 1994, the UN Human Development Index (HDI) has given a very low economic rank about the country. The 2007-2008 UN HDI placed India in the 132 position which is the lowest rank for the last decade. The lowest ever achieved index was position 122 in 1992. The low ranking has resulted from factors such as the malnourishment of the people of Indian, rural urban migration, increase in crime, low literacy levels among other negative indicators. 230 million of the Indians are malnourished while 43 percent of the children under the age of 5 years are underweight (Sen  Drze, 2008).

Several economists have supported the statistics about the reduction in poverty in India. The Finance Minister of India has confirmed that poverty has reduced to a great extent despite the large number of criticisms leveled against the success of the country in poverty alleviation. The vice president of the World Bank has supported the validity of the statistics about the success of India in poverty alleviation. India has shown tremendous progress in globalization and increase in the per-capita income (Baviskar  Attwood, 2003).
 
Contrary to the success stories given by several individuals and organizations, National Commission for Enterprises in the Unorganized Sector (NCEUS) indicate that more than half the Indian population live on less than 20 rupees a day. Many people work in the informal sector and have no jobs. They have no social security and live in abject poverty (Baviskar  Attwood, 2003).

Persistence of malnutrition among children
Malnutrition in India among the children has been persistent. Approximately 42.5 percent of the children are malnourished. It has been estimated that India has 49 percent of the underweight children the world. 46 percent of the wasted children in the world live in India. India also contributes to 34 percent of the stunted children in the world. Poverty and low education standards have contributed to the high levels of malnourishment of children in India (Baviskar  Attwood, 2003).

Rural living standards
Rothermund and Kulke (2004) estimated that 75 percent of the poor people in India live in the rural areas. The rural poor are the landless, self-employed, and daily wagers. The growth in the economy has been uneven between the urban and the rural population. Poverty rates are 43 in Orissa and 41 in Bihar. The rural poor have little access to education and literacy levels are low compared to the urban people. Schools in the rural areas have poor infrastructure and the teachers are not adequate to teach in these schools. The distribution of resources in the country is not balanced and the rural areas receive inadequate resources (Sen  Drze, 2008).

Growing bridge between the rich and the poor
The economic progress in India has reduced the gap between the rich and the poor. The people in the middle class are increasing. The number of the low class (the poor) is reducing as incomes increase. However, the gap between the rich and the poor is still big despite the efforts to improve the incomes of the poor. The rich are able to access education facilities and acquire skills which enable them get better opportunities. Most of the poor people live in the rural areas where there is little access to education facilities (Baviskar  Attwood, 2003).

Corrupt politicians
The Indian politics is characterized by corruption. Most of the political leaders are illiterate and have no sound economic ideas. This has resulted into poor policies that are being made by the politicians in the country. The politicians are the policy makers and they do not involve the professionals in decision making. This has caused the country a lot of economic loss. Poor management and lack of focus on the elite society has created the poverty levels in the country. India has the highest levels of corruption and this has affected the growth of many states in the country. Corruption in India has been criticized by the international community since this is creating hindrances to poverty alleviation in the country (Sen  Drze, 2008).

Economic boom in India and its effects on poverty alleviation
The economic boom in India has not improved the living standards of the Indians to a great extent. The rate of decline in poverty levels is lower than expected. Despite the fact that India may attain the third position in the world economy by 2020 due to the high rate of economic growth, the poverty levels are stagnant. However, the poorest states have received a great progress in poverty reduction in the recent years. For example, Assam has a 4 percent decline in poverty within a period of five years. Jharkhand has experienced a 2.51 percent decline in poverty levels while Chhattisgarh and Bihar have 1.69 percent decline. The urban areas have experienced a slower growth rate compared to the rural areas. This could be caused by the increase in rural urban migration. Poverty alleviation remains a major challenge to the Indian government despite the economic boom being experienced by the country (Sen  Drze, 2008).

Rapidly expanding population  lack of awareness
The rapidly expanding population has worsened the problem of poverty in India. The population of India is still high at 1.17 billion people as per 2009 census. The urban centers have a 29 population density. The annual growth rate is still high at 1.55. The population density is 324 people per square kilometer. Literacy level is 61 of the total population. There are no compulsory years for education. The large population has created stress on the available education resources and educating the people has become a major challenge to the government. The government has not established adequate measures to reduce the high population growth rate. This will create crisis in the near future due to inadequate resources to sustain the large population (Sen  Drze, 2008).

Education - Overview, national literacy, attainment
The Union Government and the states control the education system in India. The constitution for India stipulates that education is a fundamental right to all people. Many universities are controlled by Union or the Sate Government. The country has made tremendous progress in promoting primary education and expansion of literacy levels. Almost two thirds of the population is literate now. The improvement in the education system in India is one of the contributing factors to the rapid economic growth that has been experienced in the country. Illiteracy levels in India have been high despite efforts to promote private and public education by the government. 40 percent of the Indian population is illiterate. Approximately 15 percent of the primary school students reach high school. The post secondary high schools can offer 7 percent of the students from high schools. A survey done in 2008 indicates that there are 25 percent vacancies in the teaching career. More than half of the tutors in the college have no qualifications in masters or PhD degree. There has been a lot of international concern about the quality of education in India since most of the academic institutions lack facilities. However, in 2006, three universities in India were recorded in the top 200 universities in the world. Six Institutes of Technology were listed in the top 20. Several academic institutions have received global recognition due to their good performance (Guha, 2005).

Private education, womens education, rural education
The private sector has invested in the education industries and has contributed a lot in the promotion of literacy levels in the country. According to the research conducted in 2008 the private education market has attained a value of 40 billion. By the year 2012 the private education market is estimated to expand to 68 billion. Major transformations are being made in the education system to promote education for the marginalized and women in the country. The reservation system was introduced such that certain percent of the seats in the institutions of higher education are reserved for the marginalized people. Minority groups are allowed by the constitution to set up their own academic institutions. Certain institutions are being developed to offer education to women only. Under the current constitution women are reserved certain percent of seats in the educational institutions. Democracy in higher education in India has increased with establishment of distance learning programmmes as well as open learning systems of the universities (Guha, 2005).

Lack of higher education spending
Despite the economic expansion in India there has been inadequate funding on the higher education. Compared to other countries in the region India has low budget allocation on the higher education. The public universities and colleges face shortage of resources and professors. The private colleges and universities have improved in the provision of education (Grant  Lei, 2009).

Poor quality
Some of the education institutions have been challenged by the international community due to the poor quality of the education offered in these institutions. Inadequate government funding has resulted into poor infrastructure especially in the public education systems. There are not enough professors to teach in the public colleges and universities. Some of the professors in the institutions of higher education do have a masters degree or a PhD degree. This has reduced the quality of education offered in the education institutions especially the public universities and colleges (Grant  Lei, 2009).

Budget
The government established the five year plan of 2002 to 2007 to increase expenditure on education budget. The government had a 65.6 percent budget allocation of Rs. 438250 on elementary education. Secondary education was allocated 9.9 percent of the total education budget. Adult educated had an allocation of 2.9 percent. Technical education was apportioned 10.7 percent while 1.4 percent was allocated to miscellaneous education schemes (Guha, 2005).

In 2009 the government of India increased its budget allocation on higher education from 2.22 billion to 2.79 billion. The government has intentions to establish 12 new institutions of higher education within five years. The country has approximately 400 universities and 18,000 colleges which serve the 1.1 billion people. This has been a great challenge to the government and the Prime Minister has announced the creation of new universities and colleges (Grant  Lei, 2009).

Public expenditure on education in India
The government has announced a progressive increase in expenditure on education by 6 of the gross domestic product. Education cess on taxes would be imposed to support the programme of improving the quality of education the increased expenses on education. The government also announced that people should be allowed to access education despite their economic status. Education was made a fundamental right to children aged between 6 and 14. Some programmes have been established to universalize the education system. Such programmes include Sarva Siksha Abhiyan and Mid Day meal. These announcements were made to develop the poor education status in India (Grant  Lei, 2009).

Public expenditure on education in India is the lowest compared to any other developing or developed nation. The government announced a 150 percent increase in public expenditure on higher education in the financial year 2007-2008. Despite the efforts to increase public expenditure, India still remains behind compared to other Asian countries. Currently the public expenditure per student is US 400. The government has proposed to improve the expenditure to around US 1,000. United Nations Educational Scientific and Cultural Organization (UNESCO) has suggested that the public expenditure of US 400 per student on higher education is the lowest among developed and developing nations (Guha, 2005).

Legislative framework
Article 45 of the constitution of India indicated that the state should provide free and compulsory education to all children up to the age of 14 years. The article provided that the government could not be held accountable if the clauses were not adhered to. The Supreme Court of India amended the article in the 1990s. The 93rd bill provided made three amendments to the article that the state should provide free and compulsory education to children aged 6-14 according to the provisions of the law. The Article 45 was replaced by the article which stated that the state should ensure it provides early childhood care and education to all children up to the age of 16. Article 51A provided that parentsguardians should educate their children between 6 and 14 years of age. In November 28, 2001 the bill was passed by a large number of the members of Lok Sabha. The upper house latter passed the bill on May 14, 2002. The president signed the bill and it was affected into the constitution of India. Article 46 of the Indian constitution provides that the state should provide education to the poor especially the Scheduled Castes and Scheduled Tribes. The article also indicates that the state should prevent social injustices and exploitation against these groups of people (Guha, 2005).

Conclusion
India has experienced a great expansion in the growth of the national economy. Education is one of the factors that can be used to reduce poverty in India. Lack of focus on education has caused the high poverty levels in India. The education to women is low and their position in the society is negligible. The gap between the rich and the poor is decreasing and there has been an emergence of middle class people.

Recommendation
More emphasis should be placed on the education and empowerment of women and the minority in the Indian society. The government of India should focus on increasing the public expenditure on higher education per student. The government should develop the agricultural sector since it provides employment to a large population of people.

There is a growth within the global markets, with countries ever becoming interdependent worldwide, thanks to an increase in the variety and volume of over the border transactions of both goods and services, international flow of capital and also the ever changing and diversification of technology. This interaction of economies also known as globalization is one of the major factors that influence the oil and petroleum industry worldwide, producing the oil shocks that have now become so common. These changes are being propelled by factors such as technological innovations, which are stretching the oil reserves by creating an overwhelming demand for the commodity. There is also the effect that economic forces have on the oil industry due to the mobile nature of capital and labour, meaning that this creates the need to offer competitive salaries globally and a finance system that is global. Other factors that affect or bring about the oils shock include location, political factors and the fall of communism. It is important to note that the introduction of price subsidies has aided in the mitigation of these price shocks, though some states are more keen on banning these fuel subsidies with an aim of increasing their fuel sales, especially in the case of oil producing states. These fuel subsidies laws that have been imposed on some countries have forced some oil companies to have their companies in other countries giving rise to multinational oil companies (Clifford 2008).

Currently the amount of oil that the world is consuming exceeds the amount that is being produced. This is concurrent with the current statistics that show that in a day about 84 million barrels of oil are mined and about the same amount is consumed within the same day. The inventory space is limited and its expansion is impossible, even by the use of production in excess or even drawing on excess demand (Ron 2008). This can partly or wholly be blamed on the global economic trend. It is projected that the global demand for oil is expected to rise over the next few years.

The demand and supply for oil are highly elastic and thus the oil market is highly unusual. Irrespective of the cost of fuel, it is hard for the consumers especially motorists to switch to an alternative fuel for their cars. Equally, if the price of fuel was to fall by half or more than that, it would not mean that motorists could go twice as far. This means that even if the price of fuel was to be hiked even more, it would not translate to a reduction in the consumption of fuel. The supply of oil is also inelastic (Ron 2008). Some of these theories of oil supply demand and supply are affected by the factors mentioned below.

These multinational companies have been disadvantaged by a move to some of these regions for instance different economic conditions in these new countries as well as difficult policies. The difference in the political regime other than their own means that the taxes implemented on them and their products could be punishing and thus force them to increase the price of their petroleum products to compensate for the exorbitant taxes. Another disadvantage that these multinational corporations have to face is the different cultures and languages that are found in these countries where they establish their base of operations in. The volatile nature of currencies across boarders is also a disadvantage that these multinational companies have to cope with, considering that currencies tend to lose their value everyday owing to a number of economic factors. This means that the multinational companies have to constantly adjust their oil prices in connection to the United States Dollar. These corporations also face major competition, especially in the case where a corporation establishes its base in a foreign oil producing company. Competition will arise as a result of the influx of supply of oil from the state owned companies as well as other privately owned local oil producing companies. It is important to note though that these multinationals are able to get cheap labour whenever they are based in developing countries that are oil producing (Ron 2008). Another advantage is that these multinationals get to maximize on the profits they get through maximizing on production based on the location of different bases in different locations, meaning that if one of the subsidiary companies is faced with a certain problem, other companies can continue with operations and thus minimize on the organization as a whole recording marginal loss (Menzie 2007).

The South African market is no different from the global market. These factors that affect the global market are the same factors that affect the South African oil market. For example, the economic shocks that affected the world during the recession, affected the price of oil in the South African market as well. The political climate in South Africa has also been a factor that determines the prices of oil within this country. The OPEC which stands for Organisation of Petroleum Exporting Countries of which South Africa is not a member, has been involved in trying to ensure that the interests of their cartel are not violated. Furthermore, the quantities that South Africa produce in terms of export has been too insignificant to enable it to make an impact in the global oil market, according to the World Bank (OPEC organisation 2009).

Such macro economic market forces have had its effect on the South African oil industry, with stakeholders being the worst hit following recent oil shocks. This means that the South African oil companies will have to adopt to the new economic and technological trends and be prepared to deal with economic issues that may arise both locally and internationally.

An economic system can be defined as a set of principles employed in the process of deciding, organizing and allocating economic resources in the society. It encompasses various processes like organizing labor, producing, distributing goods and services in return for surplus or profits which are then reinvested or circulated among the producers and controllers of the system. Types of economic systems include capitalism, feudalism, and slavery among others. These economic systems mainly differ in their approach to economic ownership, control and distribution of resources in the community.

Capitalism involves a free market economy with the market acting as a medium for determining flow and distribution of resource. Feudalism as an economic system is marked with a hierarchical system in which economy and services are in reciprocation of agreements among the various parties involved. On the other hand, slavery economic system involves the ownership of people by others like their own property. This paper defines capitalistic economic system and identifies the ways it differs from other economic systems namely slavery and feudalism.

Capitalism is a social-economic system in which capital, land, labor, production and distribution is privately owned. This type of economic system has three major defining characteristics. First is wage labor which entails the compensation for human labor force employed in the production process from the surplus gained after marketing goods and services. Second is privately owned capital goods which factor in ensuring the production resource capability of the investment. Such increased but not limited to land, production equipment and sustainable source of raw materials. The last defining characteristic of a capitalistic economic system is commodity production which comprise of goods andor serves which are produced and distributed by an enterprise in exchange for profits.

Capitalism economic system is different from other economic systems like feudalism, and slavery. First is its classes and class relationship structure. Every economic system comprises of producers and controllers both of whom must benefit from the production. In a capitalistic economy, producers are compensated for their production services through wages. Survival, the producers in this economic system purchase goods and services from the market using the wages earned. However, feudalism and slavery economic systems are different in that the producer (slaves and serfs) working both for themselves and for the controllers. Slaves and serfs were given small pieces of land for producing their own food for survival while still working to produce for their lords.

Still on classes and class relationship is the difference of producer ownership level by the controllers. In a capitalistic economy there is a mutual connection between the producers and the controllers. The contrary is however true for slavery economic system in which labor force is seen as a property of the investor. This economic system does not involve any mutual agreement for sharing benefits between the owner and the labor force. Still, just like slavery, in feudalism, the lords benefited from surplus serfs through imposed taxes and customary obligations owed for by the serfs.

Another different is in the process of making decisions. Each economic system has its own distinctive set of rules governing the way classes interact in deciding the production and sharing of surplus. Slavery and feudalism systems on the other side are marked with absolute government control. Enterprise owners have therefore limited or no rights over their properties. Slavery in particular does not even recognize the enslaved as independent producers but are rather considered property themselves. They are thus considered insignificant in the decision making process. However, a capitalistic economy is government by rules and regulations which dictate for employee rights to express their grievances to controllers for better employment conditions.

A capitalistic economic is structured on the principles of free market. This means that enterprises must engage the market competition for sustainable development. This is however, different from feudalism economic system where those low in the hierarchy just produce and are neither involved in the marketing process nor entailed of benefiting from surplus. Slavery on the other side involves forced labor based on political or even military interventions. Just as a difference is that in a capitalistic economy, the ultimate determiner of sustainable survival of an enterprise is innovation. This is nevertheless different from slavery and feudalism economies where production is neither a measure for compensation nor a measure for gained competitive advantage.

Capitalism is structured to maximize profits and is thus mainly practices non-discrimination marketing of goods and services. Commodity production is a major defining characteristic of capitalistic economy. Just to be stated is that products have no economic value to the enterprise unless there is a market. This makes marketing non-discriminatively a crucial requirement in capitalism economies. However, in feudalism and slavery economies production are mainly for lords or slaveholders. The producers are rarely entailed to any surplus benefits but rather have to produce for their upkeep products.

In conclusion, capitalism differs from feudalism and slavery economic systems in that it is based private ownership, production and distribution of goods and services in a free market. The system practices wage labor unlike feudalism and slavery which engage in forced production and service provision to lords andor slaveholders.

It is conceptually possible for a majority of rational individuals to vote for a political outcome that few of them prefer. Suppose that there is an economy composed of individuals A, B, C deciding the best political outcomes, X, Y, and Z. A prefers X to Y to Z B prefers Y to X to Z individual C prefers Z to X to Y. If C has a higher expressive preference than A and B, then he can brive either A or B to vote for Z (compensation for the opportuntity cost). There is another way for distorting the societal preference. Now, suppose that individual A prefers X to Y to Z B prefers Y to Z to X and C prefers Z to X to Y. Let us say that the first choice is between Y and Z, the societal choice would be Y. Now, if the second choice is between X and Z, the societal choice would be Z. Via transitivity, Y is preferred over Z. Note that this is a distorted form of transitivity because choices are ordered (majority of the voters do not prefer Y over Z if the election is not multi-staged).

From the perspective of rational choice theory, the decision is irrational. Note that the only means for the individual to maximize utility is to sign up (to get a kidney transplant as soon as possible). Note that the parent has a capability to pull the strings. Evaluating benefits over costs, it is also clear that this decision is also logical. The parent has a high chance of securing a kidney transplant for his child. Now, this high probability of securing a kidney transplant is synonymous with benefit, potential benefit. As such, it would be logical for the parent to sign up on the list. However, the parents decision to sign at the bottom of the list is influenced by social, legal, and moral norms. Socially, urgency is the determining factor of signing in the list. In short, Olivias parent is not only the concerned parent, as far as kidney transplant is concerned. Legally, signing up on the list may be forbidden by law because it violates individual justice (equal opportunity to means). Morally, Olivias parents action does not respect the principle of equal play.

Classical and Keynesian Traditions remain the primary constituents of the mainstream macro-economic thought in the United Kingdom and the world at large. Considered the first school of economic thought, classical theory is built upon the premise that purely free markets can regulate themselves independent of any human intervention. It affirms that there is a tendency of markets to move towards a natural equilibrium without any intervention. The paper analyses the two school of economic thought critically reviewing the theoretical foundations and implications with special emphasis on the post world war II period.

Policy Issues
Classical economic theory can be presented in variant formal models inclusive of the value and the monetary theories. The value theory affirms that although market and natural prices are related and subjective concepts, market prices fluctuate and are jostled by several transient influences that are abstract and difficult to theorize, (Ajuzie, Edoho, Wensheng, Uwakonye, and Keleta, 2008, p. 125). It further identifies cost of production and profits as the key determinants of natural prices with the neo classists noting that tastes, technology and endowments also determine value. In defining the money policy, monetarism and the theory of endogenous money forms the UK classical interpretation between banking and the currency school. Monetarists affirm that it is the responsibility of banks to control the supply of money noting that inflation is caused by excessive money supply. The theory of endogenous money however noted that money automatically adjusted to demands hence the key function of banks were to control its supply based on the terms of demand.  

Fundamentally, the Keynesian economics focuses on the central issue of determining the levels of national income and employment in industrial economics and the primary causes of economic fluctuations, (Barber 1967, p. 227). Citing periodic errors in the decisions made by the private sector that often lead to inefficient macroeconomic outcome, the theory advocates for active policy response by the public sector. The theorys key recommendations include monetary policy and fiscal policy actions by both the Central bank and the public sector respectively hence the government plays a central role in stabilizing output over the business cycle, (Cukierman, 2005, p. 698). The theory also advocates for a mixed economy dominated by the private sector but controlled by the government and the public sector. The theory affirm that there exist certain micro-level economic actions of individuals and firms that may aggregately lead to macroeconomic results making the economy operate below its potential out and growth.

Theory Implications and the Says Law
Critical to the understanding of the way markets operate is the Says law attributed to French economist and businessman, Jean-Baptiste Say which affirms that in a free market economy, goods and services are produced for the primary purpose of exchanging them with other goods and services. The law therefore affirms that the total supply of goods and services in a purely free market economy should attract in equal terms the total demands of goods and services within specified time periods. It therefore implies that in cases where means of production applied to one product exceeds that of another, then a surplus can take place, (Pasinetti, and Schefold, 1999, P. 4).

Recession and unemployment are two critical factors that were explained by the Says law. On monetary policy, the law noted that in cases where people did not have enough money, business suffered making the economy to perform below its potential hence there was needed to print more money. However, although more money could be printed, individuals power to purchase could only be increased by more production. It is imperative to note that the Keynesian economic model refutes the classical economics claim that says law holds noting that for the cost of output to always be covered in aggregate by the returns from demand, an individuals savings must exactly equal the aggregate investment, (Ajuzie, Edoho, Wensheng, Uwakonye, and Keleta, 2008, p. 129).  Furthermore, interpreted classically, Says law defines unemployment as arising from insufficient demand for labor. Additionally, it notes that recession is not caused by lack of money but rather an imbalance between supply and demand hence in agreement with the classical school of economic thought.

Quantity Theory of Money
Challenged by the Keynesian economics but updated by the monetarist school of economics, the Quantity theory of money affirms that money supply is directly and positively related with the price level. Barber (1967, p. 234) notes that the theory has evolved over the centuries and was revived by the monetary school of thoughts.  Classical understanding was somewhat misleading with proponents such as John Law affirming that since trade was dependent upon money, more money in the economy would lead to full employment.

Law therefore suggested that in periods of less than full employment, the monetary authority could inject more money into circulation thereby inducing full employment, (Barber 1967, p. 232). Keynes however challenged the theory affirming that money supply lead to a decrease in the velocity of circulation and therefore on real income which dependent upon the flow of money to the factors of production. In modern terms however, the definitional relationship MVT  PTQ where M refers to the total amount of money in circulation in an economy over a specified time period, and VT the transactions velocity of money i.e. the average frequency within all transactions involving the spending of a unit of money while PT and Q refers to the Vectors of the price and quantity of the i-th transaction, (Ajuzie, Edoho, Wensheng, Uwakonye, and Keleta, 2008, p. 127).

Keynes versus the classics
Classical economics states that prices of everything, whether labor, commodities or land must be both downwardly and upwardly mobile. In reality however, prices appear not to be as readily flexible downwards as they are upwards due to imperfections or rather external interferences. In contrast, Keynesian economists suppose that prices are rigid or inflexible, they affirm that while wage hike is easier to take, wage falls are often met by some resistance, (Barber 1967, p. 237). Similarly, a producer can easily allow upward price mobility while is resistant to any reductions hence prices are not as easily flexible as stated by the classical economic school of thought, (Ajuzie, Edoho, Wensheng, Uwakonye, and Keleta, 2008, p. 131).

Classical economists consider in the theory of invisible hand in which any imperfections in the economy automatically corrects itself, a claim strongly refuted by the Keynesian theories who affirm that Government intervention in the forms of monetary and fiscal policies must be absolute for any macro-economy to run smoothly, (Sloman and Wride 2009). Furthermore, the classical economists assertion that focus should be put in the long term hence provided long run solutions at the expense of short term loses, Keynes affirmed that it is the short run that should form the primary target, (Cukierman, 2005, p. 702).
 EMBED PowerPoint.Slide.8

Courtesy of Goodacre, 2005, p. 25
Within the commodity market, classical economics is defined by Says law (supply creates its own demand) wile the Keynesian model affirms the importance of effective demand. It affirms that effective demand is derived from household disposable incomes rather than from the disposable income gained at full employment as stated by the classical theory. It further stresses that only a fraction of the disposable income will be used for consumption expenditure purposes, (Cukierman, 2005, p. 715). Actual observations in majority of economies today, supports the Keynesian rather than the Says law affirming that the latter may not hold since goods production is demand driven and is not based on production or supply.

Classical theory also strengthens the savings-investment equality, an assumption that requires the household savings to be equal to the capital investment expenditure. However with the observed flexible interest rates, savings do not always equal investment. In contrast, Keynesian economics believes that savings and investments are not triggered by the prevailing interest rates, but that household savings and investments are based on disposable incomes and the desire for both commercial capital investment and to save for the future.

Classical economics also states that unemployment in an economy is usually a temporary disequilibrium caused by excess labor available at the current wage rate. It therefore states that when wages are high, more people will be willing to work at the ongoing rate leading to unemployment while in an unregulated classical economy in which wages are flexible, the wage rates fall thereby eliminating excess labor available and reducing unemployment. Although employment can eventually be linked to changes in income, (Barber 1967, p. 247), affirms that the classical economists definition was rudimentary relative to the Keynesian wage units.

Keynesian Demand Management and the post-War boom
The Keynesian demand management that focused on demand noted was favored following the WWII. It affirmed that business cycle fluctuations could be reduced through fiscal and monetary policies. The policys goal was to attain stabilization over cycle with its stance being interventionist. The economic model was favored by both industrial and developing countries with the idea of promoting development, (Goodacre, 2005, p. 4).
EMBED PowerPoint.Slide.8                     Courtesy of Goodacre, 2005, p. 4

The classical  monetarist counter-attack against Keynesianism
The Keynesianism which gained dominance following WWII was counter attacked by the monetarism with monetary policy as a stimulus to growth and employment becoming increasingly popular in the course of the past decade. ASDFA notes that critics of Keynesianism (which was particularly dominant in UK) claimed that the UK had performed poorly relative to other industrialized countries, (Pasinetti, and Schefold, 1999, P. 12). Exemplifying the Philips curve, they noted that there was instability in economic growth indicated by amplitude of fluctuations. They also argued that newly independent countries were losing force in the mid 80s hence classical proponents advocated for the minimization of the role of government on taxes and also to eliminate free flow of capital. They also advocated for the liberalization of trade and the privatization of state owned enterprises, (Goodacre, 2005, p. 6).
 EMBED PowerPoint.Slide.8
Courtesy of Goodacre, 2005, p. 7
EMBED PowerPoint.Slide.8
Courtesy of Goodacre, 2005, p. 28
Summary

Comparative analyses indicate variations in how the two models describe and predict economic situations, although it is noteworthy to state that all theories are applicable under different economic assumptions or may be interpreted differently. The two schools of economic thought however believes that future economic expectations affect the economy hence although Keynes is supportive of corrective Government intervention, in classical theories corrective measures are determined by the motives of players within the system.

Investment is the most situational of events that face an individual. The environmental factors deemed unfavorable could actually present the best opportunity for establishing a strong portfolio. The only necessity is a magnificent amount of information and sufficient funds to finance the venture.

Summary
The reprieve from the economic crisis that affected the availability of credit presents the best scenario of investors who are willing to reap huge benefits from investing in the high-valued stock. As a result, the contemporary mutual funds that have always accrued favorable returns are sill lagging behind. For the willing investor, the time is ripe for investment in individual stocks as opposed to a multiplicity.

Investing in individual stocks enables the prospective investor to choose those stocks with favorable characteristics. According to Brush (2010), the highly volatile prices that demarcate the risk levels have actually bee trimmed down and thus the stocks are bound to move up. The choice of stock will depend on the characteristics of capital and revenue gains. Investors are however advised to choose a portfolio through which they can spread the risk.Opinion

The ideas presented in the article are on point owing to the fact that mutual funds are characterized by investment in an infinite number of stocks whose returns may not match the level of returns from a favorable stock. The need to spread risk when investing in mutual funds spreads the returns too and thus erodes the earning power of the investment. As outlined by Brush (2010), it is imperative to seek expert advice from a trustworthy stockbroker in addition to the due diligence. 3. Economic Principle

The demand and supply of shares is based on the pricing in most instances. As a result, high prices will stimulate supply of the stock assuming that all factors remain constant. However, the economic climate is bound to affect the prices at which supply levels exists, thus leading to availability of the stocks at lower prices. Brush (2010) outlines that a rational investor should jump at this opportunity and buy when the prices are low. As a result, investors are always watchful of the price at which they are wiling to buy the tocks. Since with mutual funds the units are sold at prices that are not indicative of movements in stock prices, then an investor is better of buying stocks that he or she has ample information on.

Conclusion
During boom periods, revenue gains are high and on the other hand, investing during recessionary times ensures capital gains when the prices pick up. Thus for an investor, any time is the best time to invest, the only consideration to make is the qualities of the targeted stock.

The new Apple iPhone contains technological locks which tie the iPhone to the mobile telephony services of a particular third-party mobile carrier, a new development in technological tying, and much more likely to be unlawful in Australia. Clapperton  Corones (2007).

Why should the American economy be concerned with this new development in technological tying What is tying and what are the effects of tying If such new tying is on the verge of being considered unlawful in Australia should it be unlawful in the states This paper will provide an explanation of tying in its various forms and how it affects the purchase and distribution of the Apple iPhone.

Tying can cause real issues economically. For the companies involved the results of tying could be positive by increasing their sales or detrimental. Sales can initially take flight but, later, if a product is popular, tying could even limit their growth or even the consumers opportunity to buy the product.
The purpose of this paper is to define tying and to explain and enlighten the reader to the economic effects tying of Apples iPhone to a particular service andor provider has on the companies involved and the effects tying has on the consumer. First, what is tying

Commerce (Tying)
Tying or product bundling occurs when a consumer purchases one product or good. Once the good is purchased another product is accessible to the buyer. This can be anti-competitive. Buyers may feel forced into buying a product that they do not want in order to gain access to a good they do desire. There are two main types of tying. The two main types of tying are horizontal tying and vertical tying.

Horizontal Tying
Horizontal tying defines the most standard form of tying. Horizontal tying is the practice of companies selling a particular product with an unrelated or unwanted good. A company can also use the method of horizontal tying for promotion. Instead of making the consumer purchase two unrelated products the company may instead provide the unrelated product free in an effort to sell an item. (D.C. Cir. 2001)

Vertical Tying
Vertical tying is used among most major electronics companies today. Vertical tying is where a customer who purchases an item must then use that item with other products andor services strictly from that same company.

Economic Affects
A good example of what is discussed in this paper on the economic affects of tying is noted in the article Limitation of Sales Warranties as an Alternative to Intellectual Property Rights an Empirical Analysis of iPhone Warranties Deterrent Impact on Consumers (2009)

Apples success with the Apple iPhone has brought with it certain problems. Its success has revealed a community of hackers that have attempted to circumvent the exclusive arrangement that Apple shares with ATT for cellular telephone service. Unfortunately for Apple (and similarly situated manufacturers), intellectual property doctrines and laws do not prevent consumers from altering their products so as to circumvent relationships that manufacturers may have with others. Manufacturers inevitably lose capacity to control the product as a result of the sale of specific units. Roark, M.L. (2009).

Consumers Issues
Horizontal tying and vertical tying is used for the Apple iPhone.  First, when a consumer purchases the iPhone they soon realize that the capability offered of cellular service is restricted to one unique provider. Clapperton  Corones (2007). This poses a problem to the buyer if they do not want or do not have the particular cellular provider. They must now purchase cellular service from the unique provider. The product and cellular service become a packaged deal or horizontal tying.

Vertical tying comes into effect when the consumer brings home the iPhone and realizes that the necessary features they want are not available unless the company has vertical tying with the Apple Company related to the iPhone.  An example would be a particular game, music player or work program that the customer would like to use via their iPhone. If the program is not vertically tied with Apple then it makes it difficult for the consumer. This could be a reason for the buyer to decide not to purchase the iPhone.

Tying for consumers can be beneficial and pro-competitive if the bundled products provide financial savings for the buyer. Lower prices on bundled products benefit a customer. When tying becomes anti-competitive consumers are harmed (Clapperton  Corones 2007, pg. 351).

In the past, tying was conducted through contract conditions and user or license agreements. The new form of tying mentioned previously involves the use of tying items together using technology. One example of this is the Digital Rights Management (DRM) technology. This technology restricts buyers from purchasing from all venders that they wish via electronic venues such as downloads of music and movies. This is true of Apples DRM system Fair-play. Apple product owner can only download and purchase music from Fair-play. (Clapperton  Corones (2007), p.352)

Many customers who cannot or do not wish to use the products involved in tying use an illegal or frowned upon way to gain access to their own results. (Roark, M.L., 2009).

For Apple iPhone users tying or bundling of this in traditional and in technological ways sets several problems for them. First, the buyer can only use the unique provider that Apple has signed an agreement with. The buyer has limitations on the use of their product set by Apple. Now, the cellular service provider has their own terms and conditions that are set on the customer too. (Clapperton  Corones (2007), p.354) In order to unlock the iPhone, the buyer needs to sign up with the cellular service provider for a minimum of two years. The technology used to lock the phone also blocks the buyer from several applications such as the iPod features. (Pgs. 354-355)

There are other requirements that need to be met such as the user must be at least eighteen years of age and allow the provider to complete a credit check. This is a potential problem to many buyers and could affect the results of a sale.

As noted above, many who could not or did not wish to use the cellular provider but wanted access to the software applications of the iPhone began to develop or use illegal or frowned upon ways to gain access to software programs. One example is of a seventeen year old named George Hotz. He was able to create a way of unlocking the iPhone for consumers (p. 357). Many other methods have been created to date. What does this mean for Apple, the companies tying with Apple and the unique provider

Apple and the Providers Issues
Many who cannot or do not wish to use the cellular provider manipulate Apples DRM system as a way to gain access to their software programs. This is something that Apple could fight and take to court. Instead, they have restructured heir DRM systems. One way they have done this is by updating their software programs. If an updated software program is uploaded to an illegally unlocked phone it will shut the phone down permanently (Clapperton  Corones (2007), (p.357).  Another way they have worked to correct this issue is in the contract and terms section of the warranty. Apple states that unlocking the phone in any other way than by set in the contract terms would void the phones warranty.

 Although Apple is tied to the unique provider they have been extremely successful. Apple launched on June 29, 2007 and reported sales were over 270,000 in just two days. Apple went on to sell over 1,000,000,000 phones in the next seventy-four days. Apple receives payment for the iPhone regardless of whether the unique providers cellular service is gained. (Clapperton  Corones (2007), (pgs. 355-356). With this knowledge, why would inappropriate unlocking concern Apple
According to the contract between Apple and the unique provider the provider must pay Apple 18.00 per every month of cellular phone service provided on each Apple iPhone. Financially, Apple makes more from the cellular service per year than the actual product (Clapperton  Corones (2007), (p.355).

Typically, being tied exclusively to a provider hinders sales. Apples case is an exception to the rule but for how long The route Apple is taking with tying is controlled by technological locks and DRM systems that could potential harm the sale of the product in the long run. One example is the new promotion other cellular service providers have signed.

Several providers, rumors include Apples unique provider as a future contender, have contracted with Liberty International, a ten year, debt-free marketing company, in the effort to promote free lifetime cellular service that includes unlimited calls in the United states and Puerto Rico, unlimited e-mail, texting, internet and tethering, to any person who signs up and can refer three additional persons within thirty days.  The promotion also advertises a phone that is very similar to the iPhone. (WOW Mobile)

This promotion poses many financial setbacks for Apple. First, if this promotion does well tying with multiple providers, what happens to the sale of the iPhone Will consumers opt to buy the touch screen phone offered with many of the same features held by the iPhone What happens to Apples 18.00 per month on cellular service if their unique provider is a part of a lifetime free cellular service program What happens to the customers that the unique provider currently holds (WOW Mobile)

Tying to Benefit Consumer and Market
An article written by Russell Pittman Tying without Exclusive Dealing (1985) explained tying in its simplest terms. He quoted Justice Frankfurter who said that tying was serving hardly any purpose beyond the suppression of competition, (Russell Pitman, 1985).

Although Apple and its unique provider are questionable in their use of market power, they have been financially successful giants in the technological world. At this point, the tying between Apple and the unique provider is within the law requirements. The law states that tying becomes illegal when The seller holds substantial market power in the tying good (2) the tying goods are fully distinguishable as separate products and (3) there is a substantial adverse effect in the market for the tied good. (Russell Pitman, (1985) Tying Without Exclusive Dealing p. 279)

Even with their success, Apples approach to tying is at a disadvantage to the average consumer who cannot meet the lengthy requirements of their tying rules. Most companies who take this anti-competitive approach do not maintain the success rate for long and realize they place many limitations on the customer and on themselves.

A better route to take would be to follow the advice of one economist,
rather than attempting to categorize the conduct (as in tying or not) or looking at cost standards, a better approach would be to ask why are you doing this what are the efficiencies are there other ways to achieve the efficiencies do you expect it to block competition  (Justice Gov.)

The problem with tying is that, while it can work successfully, the company such as Apple, in the long run, will need to restructure their system in order to continuing making high sales. Is tying altogether wrong Not necessarily. When the above advice from the economist is followed companies can benefit themselves and the consumer.

A better option for consumers and sellers would be to follow the Liberty Internationals marketing plan. When dealing with tying, Liberty International combines products, service providers and bundles them in a cost effective plan that benefits the consumer. This gives Liberty International the marketing pull by offering free cell phone service if the buyer refers three additional customers. How do the cellular providers and Liberty International gain as well For a small or large fee (depending on the package the buyer accepts) can become a part of the marketing plan (as a dealer) making a percentage on each dealer package that they sell. The Providers gain a larger financial portion of the dealer package and the cellular service of those who do not refer three new customers.

Even with this incentive and the compilation of many providers working together, this form of tying will only be successful for a period of time but it, in the short term sense, is financially appeasing to both the consumer and supplier.

Tying grows and changes on a regular basis. If tying moves forward to better benefit both the consumer and supplier then the economy would flourish. More options and bundling with economically sound pricing would help increase purchasing among consumers thus increasing the sales of many suppliers.  

Money spent on education and training can be described as investment in human capital similar to investment in physical capital. Just like physical capital, human capital produces a rate of return inform of higher earning. In America, the rate of enrolment in school has been increasing continuously such that in 1970, the percentage of high school dropout in the labor force was 36 while in 2006, the rate reduced to 12. College attendance increased during the 1980s as the premium in the college-high increased. The society reaps the social benefits that emanates from education. Research has shown that educated people are less likely to be unemployed while education improves the quality of involvement in political activities

Capital is mostly viewed as an asset that is invested with the view of making profit over a given period of time. However, this is just an example of tangible capital that yields income. Scholars say that expenditures that relate to education, health care, and training is a form of investment in human capital. The reason they are referred to as human capital is because its impossible to separate a person from his skills, abilities, health, knowledge, or values just like you can distinguish him from his finances and physical assets. In addition, human capital can be compared to a means of production whereby additional investment in that sector leads to increased output.

Theodore W. Schultz, a Nobel Laureate, introduced the concept of human capital, arguing that people acquire knowledge and learn new skills in order to raise their value and competitiveness in labor markets. Major ways of acquiring human capital is through education, training and experience, whereby education is viewed as the primary level to many people. Education acts as a stepping stone of acquiring skills that increase productivity which in turn lead to creation of modern technologies, wealth and new businesses. Moreover, it eventually leads to high economic growth (Joel, 2005). Education is thus a public good whereby both the society and the individual benefit from increased education.
Research has found that in America, college and high school education increases individuals earnings with a big margin even after removing both direct and indirect costs of education. Educated people have a higher level of IQ and tend to earn more income than the less educated. Studies in 1960 concluded that college graduates were paid forty five percent more, compared to their high school counterparts. Analyzing education as a form of human capital investment enables us to know the reason why the percentage of graduates going through college fluctuates every now and then. The benefits of going to college as well as the cost of schooling increased between 1980 and 1990. Tuition fees rose by close to 39, a figure calculated by considering the effects of inflation (Joel, 2005).
However, tuition fess is not the major cost that students face while in college. Three fourths of the cost parents incur when paying college fees is the income that students forego for not working. The concept of opportunity cost comes into play since we are able to measure the income a college graduate could earn by entering full time employment. Formal education has to be supplemented with training so that a college student can fit into the job market.

The continuous increase in per capita income in several countries between the nineteenth and the twentieth centuries can be attributed to the spread of scientific knowledge and technical expertise. This increased the productivity of labor and other factors of production. Industries have continued to rely on sophisticated knowledge which in turn raises the value and importance of formal education, technical abilities, job training, and other forms of human capital. Economic growth is highly dependent on the relationship between the quantity of new information and human capital and is the reason why increase in education and modern technology stimulates economic growth (Joel, 2005). In conclusion, chinas economy has developed rapidly by depending on its abundant, well trained and ambitious population.

The economy is experiencing a sharp rise in the inflation rate. What change in the Federal funds rate would you recommend How would your recommended change get accomplished What impact would the actions have on the lending ability of the banking system

Any economic model under a monetary system is susceptible to inflationary pressure. A rise in inflation rate has dire consequences economic variables such as investment spending, consumption and income. This paper intends to discuss the impact of the federal funds rate on rising inflation, the lending ability of the financial institutions, investment spending, aggregate demand and the real interest rate.

The Federal funds rate is the rate of interest that commercial banks and other financial institutions levy on each other on overnight loans derived from their surplus reserves. The Federal Reserve usually uses the federal funds rate to maintain equilibrium between the supply and demand of reserves in the Federal funds market. For instance, to curb a rising inflation rate, the Federal Reserve must adopt a restrictive monetary policy by increasing the Federal funds rate to curtail borrowing and spending. An increase in the Federal funds rate in effect will reduce aggregate demand, investment spending and consequently inflation rate. The open- market operation is the most viable option to increase the Federal funds rate. The Federal bank will offer bonds for sale to financial institutions (commercial banks  thrifts) and the public to mop up excess reserves in the market. The impact of such a move is that fewer funds will be available for borrowing hence the ability of financial institution to lend will be limited (economic).

Conclusion
As observed above, the open- market operation is the best option to be used in raising the federal funds rates which absorbs excess reserves in the financial market. In addition, a rise in federal funds rate reduces inflation rate and increases the real interest rates and aggregate demand. Investment spending is also severely compromised (Economics).

U.S. Marine Corps Reserve Toys for Tots Program
For the purpose of this paper the charitable organization chosen is the U.S Marine Corps Reserve Toys for Tots Foundation. A charitable organization is taken to be a not-for-profit organization that normally provides or gives its services, at no cost to the beneficiary, to a particular group of people or in some occasions to the general public. Charitable institutions do not normally offer their services for a profit but they may record surplus revenue over cost.

The Mission of the U.S Marine Corps Reserve Toys for Tots program is to collect new, unwrapped toys during October, November and December each year, and distribute those toys as Christmas gifts to needy children in the community in which the campaign is conducted as outlined by U.S Marine Corps Reserve Toys for Tots Program. The goal is to deliver a message of hope to less fortunate youngsters that will assist them in becoming responsible, productive patriotic citizens. The main objective of Toys and Tots is to help less fortunate children throughout the United States experience the joy of Christmas.

The principal Toys for Tots activity which takes place each year are the collection and distribution of toys in the community in which a Marine Corps Reserve Unit is located. Local Toys for Tots Campaign Coordinators conduct an array of activities throughout the year, which include golf tournaments, foot races, bicycle races and other voluntary events designed to increase interest in Toys for Tots, and concurrently generate toys and monetary donations.

Cost minimization that help businesses maximization of surplus (revenue minus cost) Use of labor to improve efficiency.

As stated by Stackpole, labor is among the drivers of the economy through which the supplier earn income to satisfy both their needs and utilities and the parameters that define these needs or desires, including material gain ( money to buy goods and services) and emotional gain (recognition, power and influence).

In the case of charitable contributions, continues Stackpole, in which people provide pro bono time, money and labor, peoples returns for services are typically limited to the emotional rewards of their conscience. And it is their conscience that will often determine their contribution.

Like all organizations labor is used in the operations of the U.S Marine Corps Reserve Toys for Tots program in the implementation of its programs. To minimize its costs that help it maximize revenue over cost, the U.S Marine Corps Reserve Toys for Tots program conducts an array of activities throughout the year where they use volunteer services of the local Marine Corps League Detachment or group of men and women, generally veteran Marines. These people are authorized by Marine Toys for Tots Foundation to conduct local Toys for Tots campaign. These men and women organize golf tournaments, foot races, bicycle races and other voluntary events designed to increase interest in Toys for Tots that concurrently generate toys and monetary donations.

A look at Marine Toys for Tots Foundation financial statement for the year ending December 31, 2008 shows that the net contribution was 233 million. The funds expended for programs and contribution to change in assets was 226 million that is 97 and fundraising, management and general expenses was 7 million that is 3.  In effect the Foundation achieved a 9703 ration of programs to support services, expenses during the financial year 2008.   According to the Foundation, this means that 97 cents of every dollar expended in 2008 went to program services and only 03 cents was dedicated to fundraising and operating the Foundation.  This is an indication that most of the U.S Marine Corps Reserve Toys for Tots program is mainly done on a voluntary basis. It is hence evident that in carrying out its activities the founders of U.S Marine Corps Reserve Toys for Tots realized that they could tap the services from the local Marine Corps League Detachment or group of men and women, generally veteran Marines thereby making huge savings in terms of labor costs. According Foundations annual report for the year 2008, there are only ten people working as support staff while the local coordinators, who are volunteers, are 657. The Foundation is thus maximizing its revenue surplus by heavily utilizing free labor services from the volunteers.

There are a number of reasons as to why individuals volunteer services. According to Hernandez-Murillo et al individuals often volunteer time to charitable activities as this gives them a higher degree of satisfaction compared to working elsewhere and donating the proceeds to charities. In addition, Hernandez-Murillo et al adds, charities value free labor offered by volunteers since they could have paid these volunteers at the market wages, had they hired them. Presumably, the opportunity cost of volunteers is higher than this imputed wage as those who volunteer normally do work for which they are fully qualified and hence can comfortably perform.

Conclusion
It is therefore evident that one of the methods used by non-profit businesses to minimize cost is through the use of volunteer labor that will otherwise hire at market rates. The non-profit institutions take advantages of the willingness by individuals to volunteer their time and the dominant motivation, according to Hernandez-Murillo et al, is their internal satisfaction.

International trade has become indispensable to all countries in the world.   This trade involves trade between two or more countries. Many countries in the world have opened up their economies and employed specialization strategy in trade so as to gain from trade where they have a comparative advantage. International trade has become a sure way of ensuring economic growth and consequently economic development. The classical economists postulation that a country can gain from international trade is achievable if at all there a comparative advantage exists.

Kenya is one the countries in the world which have been involved in international trade.
According to US Department of State in the Bureau of Africa Affairs, most of exports from this country mainly come from agricultural sector. This includes coffee, tea, sisal, and horticultural products. Kenya also exports soda ash, fluorspar, hides and skins. Her major export markets are United Kingdom, Uganda, Tanzania, Pakistan and United States. The major imports include vehicle, machinery, crude petroleum, resins and plastic materials, iron and steel, phamacuteuticals, refined petroleum products, paper and paper products and wheat and fertilizers. Her major suppliers are Japan, United States, United Arab Emirates, India, China and South Africa. The report state that Kenyas total imports and exports in the year 2008 were 9.9billion and 4.4billion depicting unfavorable balance of trade since total imports value exceed total exports value.

Kenya terms of trade have not been favorable. Her imports include capital goods whose world prices are high and with less price variations. On the other hand, Kenyas imports mainly consist of agricultural products whose prices are usually low accompanied with great price variations. The terms of trade have been unfavorable for some years according to U.N. in  HYPERLINK httpunstats.un.orgunsdtradeWS20AddisAbaba04Country20powerpoint20presentationsCountrypresentationKenyaCustoms.pdf Processing of Kenyas External Trade Statistics work. Kenya trade balance in 1999,2000,2001,2002 and 2003 were (1,182.5), (1473.4), (1812.7), (1,137.5), and (1,298.6) respectively where data is given in million US . This shows that the country has been experiencing unfavorable balance of trade.
 
The Ministry of Trade of Kenya in its Kenya Bilateral Trade Statistics presentation show that Kenya balance of trade was 1,6667,467,244 and (2,059,531,469) in year 2006 and 2007 respectively data given in Kenya shillings. Another source of the data comes from World Trade Organization in Rank in World Trade. Kenya total exports both the merchandise and commercial services was 7,492 while imports were 12,737all this measured in million US .

Another work that gives more information about Kenya trade situation is the Kenya Central Bank review statement reported in (East African Standard   26). The report postulates that current account deficit increased by 38.5 in the year 2010.

All these shows that Kenyas terms of trade are unfavorable. She is importing more than what she is exporting.

The countrys budget deficits which had occurred in previous years have been funded through borrowing. The country is a borrower and for many years budget deficit been occurring and it has been mainly funded through borrowing from external and internal sources. Kenya is rated as a less developed country and has been experiencing deficit in her current account.

Data used includes
1. U.N.  HYPERLINK httpunstats.un.orgunsdtradeWS20AddisAbaba04Country20powerpoint20presentationsCountrypresentationKenyaCustoms.pdf Processing Of Kenyas External Trade Statistics.
Year Exports importsTrade balance19991728.62911.2(1182.5)20001749.83227.3(1473.71)20011877.33690.0(1812.5)20022177.63315.0(117.5)20032409.93708.5(1298.6)
2. Data from world trade organization (WTO)
Merchandise tradeValue 2008Merchandise exports ( million US)4972Merchandise imports ( million US)11074Commercial services( million US)valueCommercial services exports( million US)2520Commercial services imports( million US)1663

Trade pattern
Most of the coffee exports go to European Union. Horticulture and tea is also are also
exported to European countries. Tea and coffee is exported to Asian countries. COMESA
provide market for tea and processed products.  Most vehicles are imported from Japan while
capital goods imports are imported from US, European Union and China.

Kenya also imports rice from Pakistan. Phamacuteuticals are mostly imported from India. Libya
has also joined Asian countries in supplying petroleum to Kenya.

Since Kenya has a comparative advantage in producing tea and coffee as compared to
various countries  she has specialized in production of this trade to increase the chances of
gaining from international trade. As postulated in classical theory of comparative advantage
Kenya has opted to produce much of tea, export it to countries with less comparative advantage
in exchange of goods which are highly costly for her to produce.

Kenya trade prospects
Kenya is one of the countries in the world whose effort to promote trade been intensified
by the government. Export promotion strategy has been embraced by the government.  Import
substitution strategy has little space in this country. The government has been encouraging
exports through various ways. Tax on exports has been reduced substantially andor totally
scrapped off for some products. The setting of the Export Processing Zone (EPZ) was an effort
by Kenya government to promote exports. However given fluctuations in demand of agricultural
goods, the prospects in trade cannot be predicted with certainty. The fact that her exports consists
mostly agricultural products then various factors are likely to hinder the success of production of
such goods. Kenya has experienced several dry periods since 2000. This has highly affected
agriculture and consequently its share in international trade.

On the other hand, the opening up of the world in terms of trade globally will contribute to expansion of trade since market for Kenya goods will be large.  Kenya is also a member of various trading blocs. These blocs are meant to ease the trade among members. These organizations include Common Market for East and Southern Africa (COMESA) and Common Wealth. Africa Growth and Opportunity Act (AGOA) is also a great opportunity for trade to Kenya. Kenya is facing different problems that have hindered its growth in terms of international trade.

These problems include
Prolonged drought periods.
The country has been experiencing prolonged periods of drought which has adversely affected agricultural sector. The agricultural production has consequently reduced and this has led to reduction in exports from agricultural sector.

Political instability and corruption
Kenya political environment has note been calm. The conflict between the two ruling parties (Orange Democratic Party and Party of Nation Union) in coalition government has undermined decision making and proper governance. This has increased cases of corruption and the resultant conditions have not been friendly to trade.

Fluctuations of world market prices and high competition
The country usually exports goods derived mainly from agriculture. In the recent years the prices of these products have been fluctuating adversely. Low prices have acted as disincentive to farmers consequently reducing production. Coffee production has greatly reduced due to this reason. High competition from countries producing same product has also been faced. Coffee from Kenya has faced great competition from Brazilian coffee.

The way forward
Government should intensify its effort to increase irrigation schemes projects. The
current schemes should be expanded and be improved. As far political instability is concerned the ruling principles should campaign for unity between their followers. The national values should be emphasized. Strict laws to fight corruption should be enacted. Institutions that fight corruption should also be empowered.

Kenya should give incentives to farmers when prices are low due to world price
fluctuations. This may include subsidized inputs and low rates loans. Quality of products
should be improved to overcome world competition.

The classical trade model
According to (William 10-15), classical trade theory state that, a country may have absolute advantage in producing one commodity compared to another country. Absolute advantage means that a country can produce a certain product more efficiently.

Classical economists also state that a country may also have a comparative advantage in production of two commodities as compared to another country. A country will choose to produce a product which it have more comparative advantage and import the one which it has less comparative advantage.

Assuming that A represents Kenya and B represents U.S.A. Given that two goods, flowers and machinery can be produced in both countries.  Then using the below diagram, neoclassical model can be explained

CountryflowersMachineryUSA46Kenya21
Given that one unit labor is used to produce one unit of flower or machinery then the   following conclusion can be made. U.S.A has a comparative advantage in production of both commodities. One unit of labor can produces 4 units of flowers as compared to 2 units of flowers produced in Kenya. U.S.A also has a comparative advantage in production of machinery. One unit of labor will produce 6 units of machineries as compared to 1 unit of machinery produced in Kenya. U.S.A has comparative advantage in production of both commodities but greatest comparative advantage is in production of machinery (the ratio 61 is greater than 42). The trade between two countries is feasible and both countries will gain U.S.A will produce machinery and import flowers from Kenya. On the other hand Kenya will produce flowers export this to USA in exchange of machineries
 
In the graph below OII represent U.S.A offer curve. OI represents Kenyas offer curve. At X terms of trade are determined. Ray OX shows the rate at which flowers will be exchanged with
machinery. Machinery and flowers are represented by A and B respectively.

Conclusion
International trade should be emphasized in goods where not only absolute advantage exist but also even where comparative advantage exists. Since international trade leads to mutual gains the practices of protectionism that hinder trade should be eradicated. Liberalization of trade should be emphasized.

Economic development is often described as improvement in living standard of a countrys citizen as a result of increased economic growth of the economy. For economic development to be considered to have taken place there must be sustained growth to a high income economy from a simple low income economy. The United State of America is a good example of a developed economy while the economy of the Republic of China is an example of a developing economy. As more countries struggle to attain economic development, there is a claim that economic development and growth is essentially a process of economic exploitation and domination by major economies over less developed economies. This paper critically explores this statement with particular reference to USA as an advanced economy and China as a developing economy.

The economic development witnessed in China can be explained through the principle of unequal exchange. This is because though the profit realized by industries in China has been internationally equalized, the wage levels are not. Industries in China have taken advantage of the high population in that country to obtain cheap labor and hence make abnormal profits due to low costs of production. In ecological economics, the economic development in China can be considered to be a certain form of hidden exploitation where foreign companies reap high take advantage of the ready, cheap and available human resource to increase production output and pay low wages in order to reap high profits.

However, those who support this form of development have argued that it cannot be termed as unequal exchange because the people who provide cheap labour have a choice to sell their labour at a price that is either below or above the real value and cannot therefore blame any one for getting a bad deal. There are also claims that labor just like other commodities should be controlled by the forces of demand and supply and therefore if Chinas high population contributes to a higher labor supply and hence lowering the wage levels the high profit the industrial owners earn is justified.

Through monopoly, oligopoly and monopsony market structures countries like USA have been able to achieve economic development by domination of the economies of less developed countries. USA based companies like Coca Cola and General Motors have dominated and still continue to dominate many developing economies especially in Africa and China where the local companies are not able to compete with the foreign companies due to low capital investment. USA is able to outdo the developing economies by marketing their products at a lower price than that of the local companies because of low cost of production.

The US based multinationals companies also reap high profits when they increase their market share through blocking the local industries and disadvantaging their market position. This type of economic development can however be justified by the fact that when US invests in the developing economies it only reaches the unexploited markets and the local industries should be able to compete with US companies given that they also have some domestic advantages over the foreign companies such as knowledge of the local markets. From laymans language, business is about competition and therefore companies in less developed economies should not complain when outdone in market competition and should instead develop tactics to attract more customers.

A country such as USA buy raw materials from developing economies at low price and then sells finished products at very high price. This is a direct exploitation of the developing economies such as China because there is a very big difference between the value added to the product and the price (Lewis, 2003 pp 1-2). The trade effect of this trading activity is that USA industries make extraordinary high profits as a result of exploiting the less developed economies when they buy the raw materials from them and later sell the finished products at relatively higher prices.  But this has been justified on the basis that though unequal exchange may be said to have occurred, it is better than if no trade took place at all. This is because when trade occurs each of the trading parties gain even though some gain more than the others. Besides if such trade is as a result of an agreement between both parties, it cannot be said to be exclusively unequal as claimed by the opponents of economic development gained through such trade. Furthermore, traders aim at selling their products at the most competitive prices in order to make profits which can keep their operations running.

It is worth noting that developing economies lack the capacity to process raw materials into finished goods which is one of the most important resources in any industrial country. Hence, a country such as USA exploits other developing economies by making use of its expertise and capital advantage to buy raw materials at relatively cheaper prices and selling finished goods at higher prices. In the long run, the developed economies such as USA remain at a more advantageous position because they are able to reap back and cover the costs with which they bought raw materials by selling their finished goods at higher prices.

Another type of exploitation that has been witnessed is that USA has been making foreign investment in China and agitating for punitive measures to be undertaken to make the countrys economy more open. However, USA itself has policies that do not favor foreign investments in by outside developing economies and therefore it is said to be achieving economic development through unfair trade. But this has been criticized in that fair trade is subjective as it is not possible to achieve total equality when one country is more industrialized than the other.

Furthermore, the pricing policies applied by USA and China are quite different. For example, the domestically manufactured goods are low priced in USA as compared to USA. This is because USA offers subsidies to local manufacturers and the trickle down effects are that local goods remain cheaper than imported goods and services. As a result, local manufacturers in USA are more advantaged because they have a ready market for their goods and services. In China, the pricing policies are such that locally manufactured goods are expensive than imported goods from developed economies such as USA and thus imported products dominate a major segment of the Chinese market. Graphically, this can be explained in a demand curve as follows

                     USA and     6       China demand curve
                     China prices (steep demands curve)
                                         4
USA demand curve
                                          2 (less steep demand)
                                                    Q1 q2 Quantity demanded

From the above graph, the Chinese goods are high priced and hence the quantity demanded is low (q1) as compared to the  goods from developing economies such as USA which are low priced and thus the quantity demanded is higher (q2).

Thus the pricing polices applied in the two economies have contributed significantly in economic exploitation of China by USA because even in the Chinese market, goods from America are highly demanded due to their low prices.
 
The above forms of exploitations advanced by the developed economies on developing economies can better be described by Marxist theory which states that the world is hungry but lacks funds for food buying and in the developing countries where a majority of people are hungry, possible methods that can be used to expand production of food are met with strict opposition in order to ensure that people in the developing countries continue to buy food at exorbitant prices from the developed economies.  

This statement describes the form of exploitation where developed economies ensure that developing economies do not access vital capital investments which can be used to expand production. Since, the developed economies are majorly ahead in terms of technological expertise, technological transfer to developing economies is also made very expensive in order to ensure that developing economies remain vital markets for the goods and services produced in the developed economies. Hence, in Marxian theory, exploitation is taken to mean the subjection of proletariat or producers to work for bourgeoisie or passive owners who pay the producers insignificant amount of compensation which is not measurable to the work done by the producers.

Applying the Marxian theory it is quite evident that the form of exploitation used by USA in China can be referred to as the normal form of exploitation where USA businessmen in China own the important production means. In the same perspective, the proletarians or the workers or the non-property owners who make a majority of population in China survive by working in factories set up by foreign businessmen from USA and hence such owners take the advantage by paying the workers low wages. Hence, workers have no choice at all but to facilitate the progression of the foreign factories in terms of profits earned in order to get employment opportunities that can aid in their survival. The earned profits are then channelled back to mother companies in developed economies where they contribute significantly towards the economic development of such economies.

In addition to the above form of economic exploitation which facilitates the economic development and growth of developed economies at the expense of developing nations, it is also imperative to note that foreign companies from developed economies resort to human exploitation through the use of child labour. This is done in order to ensure that the amount of wages paid to the children is marginally lower than that paid in the home country. In addition to the low wages, such workers are also exposed to poor working conditions such as long working hours and unhealthy working environments which ensure that foreign companies reap high profits by incurring the minimum costs of production.

Globalization which is defined as the process through which regional societies, economies and cultures get integrated through globe trade and communication can also be used to explain the reasons why economic development and growth in developed economies is essentially a process of economic domination and exploitation by major economies over the less developed economies. Specifically, economic globalization has resulted into international trade, capital flows, foreign direct investment and migration. This has resulted into the emergence of free markets where goods and services from developed economies are dumped in large quantities and at cheaper prices thus killing the local manufacturers and producers.

As mentioned above, developed economies ensure that local production capacities are killed in order to get ready markets for their goods and services. In the same regard, the free markets brought about by globalization are also used as ready markets for expensive but harmful substances such as drugs which are sold by businessmen and companies from developed economies. In this regard, it is quite true that developed economies have largely taken advantage of globalization to dump, sell and kill domestic industries in developing economies by selling cheap products. This ensures that developed economies continue to enjoy ready markets for their manufactured goods at the expense of goods manufactured by local industries in developing economies.

Another form of economic exploitation which has been fuelled by globalization is brain drain. From an economic point of view, workers are attracted by high wages. Developing countries such as China which are characterised by low wage rates and poor working conditions have continued to lose key expertise and skills to developed economies due to the differences in wage levels offered in the two economies. For example, USA continues to attract numerous immigrants from less developed economies who move into developed countries in anticipation of getting higher wages in foreign economies than in their own economies. Brain drain affects the development and growth of less developed economies by slowing down the economic activities. In addition to the high wage rates found in developed economies such as USA, such economies have gone further to facilitate more immigrants into their economies through such policies such issuance of green card.

In this connection, the developing economies have continued to lose vital skills and expertise to developed economies. Hence, the continued domination of the developed economies in terms of favourable wage rates offered to the workers is one form of economic exploitation over the developing economies that lose numerous numbers of workers to such economies in anticipation of getting high wage rates.  Thus the weak polices that governments and firms in developing economies have had concerning the wage rates offered to the workers by factory owners are key contributory factors which has led to their persistent exploitation by the developed economies.

However, it is important to understand that a countrys economic policies are formulated by its own people and it is therefore not justifiable to blame the developed economies for the economic woes experienced by the developing economies. Poor economic policies results into poor economic development and growth experienced by developing economies. Developing economies have also been associated with rampart corruption where resources are used to benefit individuals rather than the key sectors of the economies. In this connection, developing economies have continued to lag behind not only because of the economic dominance by the developed economies but also due to increased levels of corruption.    
                
From the above discussion, a conclusion can be made that to some extent economic development can be justified, but to a given extent it can be said to be as a result of unequal exchange or exploitation of developing economies. It is also imperative to note that even though developing economies are endowed with a wide variety of raw materials, the pace of industrialization in such countries is still very low and hence the raw materials are under-utilized. In this respect, developed economies such as USA have taken advantage of their expansive capital outlay to buy raw materials from developing economies at cheaper prices and selling back finished goods at relatively higher prices. The discussion above has shown that even though developed economies can be said to be exploiting the developing economies, it is necessary to some extent because of the major gap that exists in the industrialization sectors of the two types of economies.