Share
Explore BrainMass

discuss currency, demographics, economic growth, risks, GDP

1. Discuss whether each and every country should have its own currency, stock market and/or domestically owned banking system?
2. What are some of the important financial and economic implications of the changing demographics in the United States over the next several decades?
3. What are some of the things that low income countries do with respect to their financial systems to promote economic growth and development?
4. How should a U.S. firm desiring to expand internationally determine in which countries to expand, what are some of the potential risks it will face, and how might it mitigate them?
5. Discuss different ways one might measure globalization? Also, discuss the major benefits and costs of globalization.
6. Discuss the change in the shares of world GDP, population, financial assets and equity markets in the past 5-10 years accounted for by different countries. What does this say about the change in world economic power? What are the implications of the rise of China and India to global financial markets and U.S. firms?

Total response: approximately 3,000 words

Solution Preview

I put this in word because the formatting is better for reading and studying.

-------------------------

1. Discuss whether each and every country should have its own currency, stock market and/or domestically owned banking system?
It is not important for each and every country to have its own currency and stock markets. A country could adopt the common currency which is there in the financial markets. For example, Euro is used by 27 member states of the European Union and in further 5 European countries. On the other hand, countries can have their own currencies, like the Unites States has US Dollar as its currency. However, whether a country has adopted a central currency or has a currency of its own, what is important is that currency is an essential requirement for any country to have. If the country wants to get involved with a foreign market, currency is a mandate. Currencies are traded in pairs, so to trade in one currency, another currency is required. Same applies for stock markets. If a country does not have its own stock market, it can trade in foreign market. Thus, it is not a mandate for a country to have its own stock market; it is an important part of the economy of a country. The stock market plays a pivotal role in growth of the country and commerce. Stock market is the primary source for any company to raise funds for its business expansion. A rising stock market is the sign of developing industrial sector and a growing economy of the country.
It is imperative for a country to have a domestic banking system as it is the lifeline of any country. Banking system is the engine of an economy as it plays a major role in government's monetary policy. Banks ensure that money supply is maintained in the country by taking deposits and lending out money. Banks are essential for any monetary transaction. Through the several functions a bank performs, it aids the development of the economy of the country.
2. What are some of the important financial and economic implications of the changing demographics in the United States over the next several decades?
There are quite strong demographic changes that are taking place in the United States and these are expected to become even stronger by next few decades. These changes are:
? Growing age of population: Currently 13% of the population in the United States is above 65. This percentage is expected to go up to 20% by 2050.
A rapidly declining population of original Americans could create a society that doesn't have the work force to support the elderly. As a result the government's spending on total social security and health benefits would increase.
? Increasing working population: The population of working population and young people is expected to rise much more rapidly than other advanced nations. This population between 15-64 years is expected to rise to 42% from 2000 to 2050.
Due to this trend, there would be no dearth of working professionals, and hence economy would see a boost; but since most of this work force is composed of immigrants, it is not necessary that the economy of the United States would boom. These immigrants would do financial transactions with their home country and hence their home country would gain from the increasing net income from abroad.
? High fertility rate: America has relatively high fertility rate than most other nations. The number of children born in the country is expected to increase over next few decades.

Over the time, rise in births would produce a generation slightly larger than boomers which would add to the work force, increase consumer spending, and generate new business ideas.

? Increasing immigration: The country has been a destination for most of immigrants from across the world. This has led to increase in population at a much higher rate.
If this trend continues, immigrants will play a leading role in shaping the economy of the country. The US population will become minority as immigrants will lead US companies and would be major business holders in the United States. Again, the economy of the home country of these immigrants would benefit.
3. What are some of the things that low income countries do with respect to their financial systems to promote economic growth and development?
To promote economic growth and development, low income countries focus on reducing the financial fragility and systematic risks. Following are some of the things these nations do:
a. Strengthen financial systems-promote principles and sound practices for financial stability through development of well-functioning financial systems.
b. Role of government- In low income nations, governments work together with private sector provide appropriate financial regulations and infrastructure to help markets perform better. Rules are decided to promote free markets that are more efficient ...

Solution Summary

The expert discusses currency, demographics, economic growth, risk and GDP in global financial markets.

$2.19