Well, the holidays are over. My week of not having to worry about school is over. It’s back to the daily grind. I absolutely enjoyed my time off. In previous holiday seasons, I was usually chomping at the bit to get back to school. I missed the daily challenges that school provided me. This time was different.
Every day that passed where I had no school obligations showed me how much of my life school actually consumes. I didn’t have that need to get back to school in such a hurry this time. I just compared the free time I had during the Christmas holiday to the complete lack of free time and was amazed at the workload. Anyway … onward and upward.
Today marks the start of week four in
International Business.
The previous assignments introduced how international trade was a central component of international business; this chapter presents the financial counterpart of trade. The world has suffered severe financial crises and speculative attacks on currencies, especially when we had fixed exchange rate regimes. Developed countries replaced these regimes by floating currency systems during the 70’s, which have functioned relatively well and dodged several crises successfully In the last two decades many large developing countries suffered severe financial crises and also switched to float currency systems, but still some of them have not done so.
The process of structural change and macroeconomic stabilization programs during the end of the last century was quite widespread throughout the world, especially in developing nations. It adopted different forms of currency anchors, currency boards, and dollar pegs, to struggle inflation. The inflation was effectively controlled. The insertion of the economies into the global markets, resulting in more perfect competition, lower cost inputs, and economies of scale, modernization and technology transfer also contributed to such inflation control.
This week we will analyze the impact of the financial system on the real economy, how interest rates and exchange rates are inter-related with economic activity, how can a country export its internal recession or inflation, and why these factors are so central for business.
Looking forward to future weeks, this doesn’t seem to be getting any easier. I love it.