The Threat of an Arab Spring - Assignment Example

With the threat of an Arab Spring looming, what steps should King Abdullah II take to improve Jordan’s economy and restore peace in his country? The most important thing that he should would be relinquishing some of the enormous powers that the monarch holds over the country. The country is governed through a parliamentary system that is headed by an absolute monarch which defeats any meaningful democratic processes in the country. For instance, there should be free and fair elections in which the citizens are allowed to participate and choose their own leaders. This can only be achieved when the monarch allows political reforms that are essential in democratized nations. The Arab spring threat is largely due to dictatorial form of leaderships that are highly prevalent in the Arabic nations. What are some additional economic and political consequences that may occur with the removal of government subsidies? The removal of subsidies leads to an increase in the cost of living which in the long run may become unsustainable. This impact is much felt by the large poor population and especially in economies that are not highly diversified. Take for example Middle East economies that are highly depended on oil exports where even the cost of the oil shoots up even though it is produced there. High cost of living is followed immediately by lowered standards of living because the purchasing power has been eroded. In the end, the political elite or ruling class has to intervene in order to prevent collapse of the economy. 3. How will the political crisis between King Abdullah II and the Brotherhood’s Islamic Action Front (IAF) party affect Jordan’s economic future? The political crises currently being witnessed in Jordan are a necessary evil which is meant to turn around the fortune of the country. In this regards, the necessary political and economical reforms will be brought into the national landscape for a better future. In short, this crisis is the birth of a revolution which is geared to transfer power from the monarch to the parliamentary form of government which currently exists in the country. However, the turnaround of Jordan’s economy is much pegged on political goodwill of the government in place. Much is not expected if the current monarchy headed by King Abdullah II will still continue holding to enormous powers and exercise them in a draconian way. Work Cited Is Jordan Headed for an Arab Spring?" Bloomberg Businessweek, November 25, 2012, Global Economics Section, online edition. Indonesia What is the economic reasoning behind the new law imposed by the Indonesian government? This rule was geared towards improving and putting in place prudent practices and measures with regards to lending Indonesia. In essence, the booming business of automotive sales in Indonesia is one of the key indicators of economic growth. Putting this law in place, it was largely geared towards clamping and slowing down auto sales which are largely financed through bank loans. The booming economy therefore arose fears of credit bubble which would ostensibly lead to a credit crunch within the Indonesian banks bearing in mind that the automobile industry is very versatile. Moreover, the law would also stabilize automobile market and prevent the inevitable deceleration of sales after the Ramadan festival. Why is it beneficial for Indonesia to foster imports of foreign cars, instead of using its large population to promote domestic car production? The dynamics of international trade dictates products that are capital intensive like manufacture of cars are best produced by highly industrialized countries with firm bases. On the other hand, labor intensive commodities are best produced by countries that have adequate labor resources. From this perspective, Indonesia is a labor intensive producing countries that specializes on the production of such things like clothing and shoes. Owing to the large population of the country, Indonesia is more suited to produce labor intensive goods which it would export and in return import capital intensive products such as cars. What are the key foreign and domestic policies that Indonesia needs to focus on in order to continue its economic growth trend? Key policies that should be focused on in Indonesia to foster continued economic growth include; increased sustainable investment into the country’s infrastructure and elimination of fuel subsidies. Investment into infrastructure enhances the stimulation of the local economic activities by increasing consumption. On its part, elimination of energy subsidies is best done carried out in the medium to long term goals and replaces them with transferable cash to the poor. It has been noted that these subsidies do not necessarily protect the poor or intended people. On the foreign policies, it should put in place measures to make the country open for outside flow of cash from investors. Works Cited The Economist. “Stuck in fifth Gear.” September 1st 2012 http://www.economist.com/node/21561907 JAPAN Japan’s downturn temporary or is it headed toward a recession like the U.S. and Europe? The downturn of Japan’s economy might be here for sometime owing to the events that have triggered it. Although, underlying problems have not reached the crisis levels witnessed in the recession of both the US and Europe, nonetheless they have long term effects. The country is still recovering from the aftermath of the Tsunami last year which affected its production and hence exports to trading partners. Japan being an export oriented economy with a large base of consumers located in China, the recent row with China over islands has cost Japan’s economy a lot. This may take awhile for the economy to fully recover. How might Japan’s economic downturn affect the global economy? Japan’s economy downturn is expected to have both positive and negative effects on the global economy depending on one’s perspective. The recently experienced nuclear crisis caused by the enormous earthquake led to increased pressure on the global economy, thinned supply of computer chips and automobile parts besides heightening fears of increase in interest rates. However, the ripples in the global economy are expected to be short-lived. This would see an ease in prices of commodities globally since Japan is a net importer of raw materials and other consumption materials. On the negative side, it would dent the global economic growth by 0.1% What can the Japanese government and businesses do to bolster the economy? Like all other governments facing global economic recession, Japan’s government is faced with a task of turning around its fortunes through support of the key economic sectors. One thing it has to do is to institute measures to mitigate against unemployment and provide subsidies. This is usually geared towards preventing the collapse if industrial sector. It should also consider investing in other regions which in turn would provide a haven for its exports. In addition, it can also consider amending its tax system to encourage growth of small and medium enterprises. Works Cited Nakamichi Takashi. “Japan’s Economy Contracts in Third Quarter” Wall Street Journal, November 12, 2012, page A12 US & Oil If the United States meets its energy needs in twenty years, do you think the price of gas will stay the same, increase, or decrease? Explain. When the US meets its energy needs in the future, the oil prices would remain almost the same. This means that there would be not much change and if anything it would lead to a status quo. The global oil prices are influenced by many factors within globe and despite the fact that US is a major consumer of petroleum products, it has almost insignificant influence on the prices. Much of the influences of global oil pricing come from geopolitical conflicts and the ever rising demand in the Asia region. In what way would this help the US balance of trade? Explain. By US becoming an oil exporter, the patterns of international oil trade would be disrupted. In essence, there would be an acceleration of global oil shift towards Asia particularly China which is a heavy exporter of oil. This in turn would raise the trade alliances between Asian consumers and producers from the Middle East. Since the country has become a net exporter of oil, then it means it would have more money to import other essential goods and reduce the foreign debt which is threatening the survival of future generations. Finally, would this affect the OPEC? If yes, in what ways? The net shift of US becoming an oil exporter from importer would have profound effects on OPEC. The first effect would be to create a slot for US in the body which would come with instabilities in prices. In turn, the unstable prices in the global oil prices would force other OPEC members to devise strategies that could sustain the current high global prices. There are two tenable undertakings that would be done by OPEC members. On the one hand, they would reduce their production in order to prevent oversupply of oil in the global market thereby living US to supply oil. On the other hand, they could also sabotage the global market by oversupplying oil which would lower prices. The second strategy is less likely to be taken because it distorts global oil prices. Works Cited Rosenthal Elisabeth. "U.S. to Be World's Top Oil Producer in 5 Years," The New York Times, November 12, 2012 Read More