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Population Explosion And Social Problems Economics Essay

The geometric extension of a organic population, especially the unrestricted growth in human population resulting from a decrease in newborn mortality and an increase in prolonged existence.
(Sociology) a fast increase in the size of a population caused by such factors as a unexpected decline in infant mortality or an increase in life expectancy
A population bang occurs when a species has a birth (or hatching) rate that is significantly larger than its fatality rate.
This can occur with nonhuman animals, generally as a result of a phase of weather conducive to development of food and to reproduction.
Among people, the population bang of the last hundred years or so has been the result of improved sanitation and medical care, improvements in food production, storage and supply and reductions in the rate of food. The improvement of antibiotics, pesticides, synthetic fertilizers, and the application of mechanization to the farm have all contributed to this.
POPULATION EXPLOSION AND SOCIAL PROBLEMS: Population explosion is also known as over population. Overpopulation is a usually unwanted condition where an organism’s numbers surpass the carrying capacity of its habitat. The term often refers to the relationship between the human population and its environment, the Earth, or smaller geographical areas such as countries. Overpopulation can outcome from an increase in births, a decline in mortality rates, an increase in immigration, or an unsustainable biome and depletion of resources. It is likely for very meagerly populated areas to be overpopulated if the area has a meager or non-existent potential to maintain life.
The population has been rising constantly since the end of the Black Death, around the year 1400, although the most considerable increase has been in the last 50 years, mainly due to medical advancements and increases in agricultural yield. Although the rate of population expansion has been declining since the 1980s, the United Nations has uttered alarm on continued excessive population growth in sub-Saharan Africa. As of December 12, 2012 the world human population is projected to be 7.058 billion by the United States Census Bureau, and over 7 billion by the United Nations. Most estimates for the carrying power of the Earth are between 4 billion and 16 billion. Depending on which guesstimate is used, human overpopulation may or may not have before now occurred. Nevertheless, the fast recent increase in human population is causing some concern. The population is expected to attain between 8 and 10.5 billion between the year 2040 and 2050. In May 2011, the United Nations increased the average variant projections to 9.3 billion for 2050 and 10.1 billion for 2100.
Restrictive birth rates through legal system, educating people about family planning, increasing right of entry to birth control and contraception, and extraterrestrial conclusion have been recommended as ways to mitigate overpopulation in the future. China and other nations already have regulations limiting the birth rate, with China using a “one child per family” policy. Contraception is a reaction to the fact that nearly 40% of pregnancies are unintended and that in the poorest regions mothers often lack information and the means to control the size of their families.
History: Concern about overpopulation is very old.Throughout history, populations have developed slowly in spite of high birth rates, due to the population-reducing effects of war, plagues and high infant mortality. Throughout the 750 years before the Industrial Revolution, the world’s population enlarged very slowly, remaining under 250 million. By the start of the 19th century, the world population had developed to a billion individuals, and intellectuals such as Thomas Malthus and physiocratic economists predicted that mankind would outgrow its available resources, since a finite amount of land was incapable of supporting an continuously increasing population. Mercantillists argued that a large population was a form of assets, which made it possible to create bigger markets and armies.
During the 19th century, Malthus’s work was often interpreted in a way that responsible the poor alone for their condition, and serving them was regarded to worsen situation in the long run. This resulted, for example, in the English poor laws of 1834 and in a hesitating response to the Irish Great Famine of 1845-52.
A figure of eminent scientists contend that overpopulation is not a concern for the Earth. The UN Population Assessment Report of 2003 states that the world population will plateau by 2050 and will hang about that way until 2300. Dr Alex Berezow states that overpopulation is not a Western world trouble and people often cite China and India as main population contributors; however he observe that with rising wealth in those countries, population will start to slow, as population growth is sturdily linked to the economic permanence of a country.
Projections of population growth: According to projections, the world population will keep on to grow until at least 2050, with the population reaching 9 billion in 2040, and some predictions putting the population in 2050 as high as 11 billion
According to the United Nations’ World Population Prospects report: The world population is currently growing by approximately 74 million people per year. Current United Nations predictions estimate that the world population will reach 9.0 billion around 2050, assuming a decrease in average fertility rate from 2.5 down to 2.0.
Almost all growth will take place in the less developed regions, where today’s 5.3 billion population of underdeveloped countries is expected to increase to 7.8 billion in 2050. By contrast, the population of the more developed regions will remain mostly unchanged, at 1.2 billion. An exception is the United States population, which is expected to increase by 44% from 2008 to 2050.
In 2000-2005, the average world fertility was 2.65 children per woman, about half the level in 1950-1955 (5 children per woman). In the average variant, global productiveness is projected to decline further to 2.05 children per woman.
During 2005-2050, nine countries are expected to account for half of the world’s projected population increase: India, Pakistan, Nigeria, Democratic Republic of the Congo, Bangladesh, Uganda, United States, Ethiopia, and China, listed according to the size of their contribution to population enlargement. China would be top still in this list were it not for its one-child policy.
Global life expectancy at birth is expected to prolong rising from 65 years in 2000-2005 to 75 years in 2045-2050. In the more urbanized regions, the outcrop is to 82 years by 2050. Among the least developed countries, where life expectancy today is just under 50 years, it is predictable to increase to 66 years by 2045-2050.
The population of 51 countries or areas is likely to be lower in 2050 than in 2005.
During 2005-2050, the net figure of international migrants to extra developed regions is projected to be 98 million. Because deaths are projected to exceed births in the more developed regions by 73 million during 2005-2050, population increase in those regions will mainly be due to international migration.
In 2000-2005, net migration in 28 countries either banned population decline or doubled at least the contribution of usual increase (births minus deaths) to population growth.
Birth rates are now declining in a small proportion of developing countries, while the real populations in many developed countries would drop without immigration.
Urban growth: In 1800 only 3% of the world’s population lived in cities. By the 20th century’s close, 47% did so. In 1950, there were 83 cities with populations above one million; but by 2007, this had risen to 468 agglomerations of more than one million. If the development continues, the world’s urban population will twice every 38 years, according to researchers. The UN forecasts that today’s urban inhabitants of 3.2 billion will rise to nearly 5 billion by 2030, when three out of five people will breathe in cities.
The raise will be most dramatic in the poorest and least-urbanised continents, Asia and Africa. Projections point out that most urban growth over the next 25 years will be in developing countries. One billion people, one-sixth of the world’s population, or one-third of city population, now live in shanty towns, which are seen as “reproduction grounds” for social troubles such as crime, drug addiction, alcoholism, poverty and joblessness. In many poor countries, slums demonstrate high rates of disease due to unsanitary conditions, malnutrition, and lack of fundamental health care.
In 2000, there were 18 megacities-conurbations such as Tokyo, Seoul, Mexico City, Mumbai, São Paulo and New York City – that have populations in excess of 10 million inhabitants. Greater Tokyo before now has 35 million, more than the whole population of Canada (at 34.1 million).
By 2025, according to the Far Eastern Economic Review, Asia alone will have at least 10 hypercities, those with more than 19 million, together with Jakarta (24.9 million people), Dhaka (25 million),Karachi (26.5 million), Shanghai (27 million) and Mumbai (33 million). Lagos has developed from 300,000 in 1950 to an estimated 15 million today, and the Nigerian government estimates that city will have prolonged to 25 million residents by 2015. Chinese experts predict that Chinese cities will contain 800 million people by 2020.
Causes: This unstable growth came about because death rate fell quicker than birth rate. The avability of antibiotics, immunization, clean water, increased rate of food production yielded tremendous improvements in newborn and child ethics. A rise in normal life expectancy has also contributed to the surge in the human numbers.
Some problems associated with or exacerbated by human overpopulation are: Reduction of natural resources, mainly fossil fuels.
Improved levels of air pollution, water pollution, soil contamination and noise pollution. Once a country has industrialized and become wealthy, a mishmash of government regulation and technological improvement causes pollution to turn down substantially, even as the population continues to raise.
Deforestation and failure of ecosystems that sustain global atmospheric oxygen and carbon dioxide equilibrium; about eight million hectares of forest are lost each year.
Changes in atmospheric composition and consequent global warming.
Insufficient fresh water for drinking as well as sewage treatment and effluent ejection. Some countries, like Saudi Arabia, use energy-expensive desalination to resolve the problem of water shortages.
Irreversible loss of arable land and increases in desertification. Deforestation and desertification can be overturned by adopting assets rights, and this strategy is successful even while the human population continues to raise.
High newborn and child humanity. High rates of newborn mortality are related with poverty. Rich countries with high population densities have small rates of newborn mortality.
Intensive factory farming to hold large populations. It results in human pressure including the evolution and extend of antibiotic resistant bacteria diseases, extreme air and water pollution, and new viruses that contaminate humans.
Increased possibility of the emergence of new epidemics and pandemics. For many environmental and social reasons, plus overloaded living situation, malnutrition and inadequate, inaccessible, or non-existent health care, the poor are more likely to be uncovered to infectious diseases.
Starvation, malnutrition or poor diet with ill health and diet-deficiency diseases (e.g. rickets). However, rich countries with sky-scraping population densities do not have starvation.
Poverty coupled with inflation in some regions and a resulting low level of capital formation. Poverty and inflations are aggravated by terrible government and bad economic policies. Many countries with high population densities have eliminated total poverty and keep their inflation charge very low.
Mass species extinctions from reduced habitat in tropical forests due to slash-and-burn techniques that occasionally are experienced by shifting cultivators, especially in countries with speedily expanding rural populations; current extinction rates may be as high as 140,000 species lost per year. As of February 2011, the IUCN Red List lists a total of 801 animal species having gone extinct during recorded human documentation.
Small life expectancy in countries with highest growing populations.
Unsanitary living circumstances for many based upon water reserve depletion, release of raw droppings and solid waste dumping. However, this problem can be reduced with the approval of sewers. For example, after Karachi, Pakistan installed sewers, its newborn mortality rate drop substantially.
High crime rate due to drug cartels and enlarged theft by people robbery resources to stay alive.
Disagreement over scarce assets and crowding, leading to increased levels of warfare.
Less personal liberty and more limiting laws. Laws control interactions between humans. Law “serves as a primary social mediator of relations between people”. The higher the population concentration, the more frequent such connections become, and thus there develops a require for more laws and/or more preventive laws to regulate these communications. It was even speculated by Aldous Huxley in 1958 that democracy is in danger due to overpopulation, and could give rise to totalitarian style governments.
ENVOIRNMENT: Overpopulation has considerably negatively impacted the environment of Earth starting at least as early as the 20th century. There are also economic consequences of this environmental degradation in the form of ecosystem services attrition. Afar the scientifically verifiable damage to the environment, some assert the moral right of other species to simply exist rather than become wiped out.
Environmental author Jeremy Rifkin has said that “our burgeoning population and city way of life have been purchased at the cost of huge ecosystems and habitats. … It’s no accident that as we celebrate the urbanization of the world, we are rapidly forthcoming another historic watershed: the vanishing of the wild. Further, even in countries which have both huge population growth and main ecological problems, it is not necessarily true that curbing the population expansion will make a major contribution towards resolving all environmental problems. However, as developing countries with sky-scraping populations become more industrzed, pollution and consumption will invariably raise.The Worldwatch Institute said the flourishing economies of China and India are terrestrial powers that are influential the global biosphere.
MITIGATION MEASURES: There are some mitigation actions that have been or can be practice to shrink the poor impacts of overpopulation. All of these mitigations are ways to apply social norms. Overpopulation is an subject that threatens the condition of the environment in the above-mentioned ways and therefore societies must make a change in order to reverse some of the environmental effects brought on by present social norms. In societies like China, the government has put policies in place that control the number of children allowed to a couple. Other societies have already begun to apply social marketing strategies in order to teach the public on overpopulation effects. “The intervention can be extensive and done at a low rate. A range of print materials (flyers, brochures, fact sheets, stickers) needs to be produced and distributed all over the communities such as at local places of worships, sporting events, local food markets, schools and at car parks (taxis / bus stands).” Such prompts work to bring in the problem so that social norms are easier to apply. Certain government policies are making it easier and more socially satisfactory to use contraception and abortion methods.
Birth regulation: Overpopulation is linked to the subject matter of birth control; some nations, like the People’s Republic of China, use authoritarian measures to shrink birth rates. Religious and ideological hostility to birth control has been cited as a factor contributing to overpopulation and poverty. Some leaders and environmentalists (such as Ted Turner) have recommended that there is an critical need to firmly implement a China-like one-child policy globally by the United Nations, because this would help control and cut population slowly.
Indira Gandhi, late Prime Minister of India, implemented a strained sterilization programme in the 1970s. Formally, men with two children or more had to suggest to sterilization, but many unmarried young men, political opponents and bad-mannered men were also believed to have been sterilized. This program is still remembered and criticized in India, and is responsible for creating a public dislike to family planning, which hampered Government programmes for decades.
Urban designer Michael E. Arth has proposed a “choice-based, profitable birth license plan” he calls “birth credits.” Birth credits would permit any woman to have as many children as she wants, as long as she buys a license for any children further than an average allotment that would result in zero population growth (ZPG). If that allowance was firm to be one child, for example, then the first child would be free, and the market would conclude what the license fee for each added child would cost. Extra credits would run out after a certain time, so these credits could not be hoarded by speculators. The real cost of the credits would only be a portion of the real cost of having and raising a child, so the credits would serve more as a wake-up call to women who might otherwise generate children without seriously considering the long term consequences to themselves or society.
ISLAMIC VIEW ABOUT BIRTH: The Qur’an does not make any open statements about the ethics of contraception(the use of) any of various methods intended to stop a woman becoming pregnant ), but contains statements encourage procreation. The prophet Muhammad also is reported to have said “get married and produce offspring”.
Coitus interruptus, a primitive form of birth control, was a known perform at the time of Muhammad, and his companions occupied in it. Muhammad knew about this, but did not forbid it. Umarand Ali, the second and fourth of the Rashidun caliphs, respectively, protected the practice. Muslims scholars have extand the example of coitus interruptus, by analogy, to declaring allowable other forms of contraception, subject to three situations:
As children are the right of equally the husband and the wife, the birth control technique should be used with both parties’ consent.
The process should not source everlasting sterility.
The process should not otherwise hurt the body.
Education and empowerment: One alternative is to focal point on education about overpopulation, family planning, and birth control methods, and to make birth-control plans like male/female condoms, pills and intrauterine devices easily available. Worldwide, nearly 40% of pregnancies are unintended (some 80 million unintended pregnancies each year). An estimated 350 million women in the poorest countries of the world moreover did not want their last child, do not want another child or want to gap their pregnancies, but they lack of information, reasonable means and services to conclude the size and spacing of their families. In the developing world, some 514,000 women die yearly of complications from pregnancy and abortion, with 86% of these deaths happening in the sub-Saharan Africa region and South Asia. Additionally, 8 million new-born die, many for the reason that of malnutrition or preventable diseases, particularly from lack of access to clean drinking water. In the United States, in 2001, almost half of pregnancies were unintended.
Egypt announced a plan to shrink its overpopulation by family planning education and putting women in the workforce. It was announced in June 2008 by the Minister of Health and PopulationHatem el-Gabali. The government has set sideways 480 million Egyptian pounds (about 90 million U.S. dollars) for the plan.
CONCLUSION: “Do not forget birthdays. This is no way a propaganda for a larger population.”

Audit On International Business Opportunities In Cuba

Cuba, with its beaches, colonial architecture, favorable climate and a rich cultural history is located at a point Gulf of Mexico, Atlantic Ocean and the Caribbean Sea. It was discovered by Christopher Columbus in the 15th century and was under the Spanish control until the late 19th century and became independent in 1902. Cuba has been continuously in the media’ attention, be it for the strained relationship with the United States, the Guantanamo Bay detention center holding prisoners of war or the Fidel Castro’s regime. Cuba is one of the major players in sugar and nickel based industries and there would be very less people who are ignorant of the Cuban Cigars! The word CUBA by itself means “the land of fertile soil”. The official language is Spanish while the main religion is Christianity.
POLITICAL BACKGROUND: Cuba is a totalitarian Communist state and Raul Castro is the head of the state. The principal organ of the state security and control is the Ministry of Interiors. This regime with its bureaucracy and state security control most aspects of the Cuban life. The US has imposed various bans on the Cuban government due to its political policies, which Cuba endured for almost 40 years time. The United Nations keeps trying to soften the embargoed relationships.
Castro led his rebel army in 1959 proving to topple the US-led dictator Batista. The Castro brothers along with Che Guevera, an argentine revolutionary led the infamous Cuban Revolution and succeeded to power in 1959. In 1976, Cuba published the socialist constitution, which proclaimed the adhesion of the country to the Marxist-Leninist ideology and international proletarian’s power movement.
Cuban Communist party is the fundamental source of political power and not ironically it is the only recognized political party in Cuba though there have been other political parties that have legally existed from 1992 but without the right to gather or publicize or field any candidates in the election. There was no legislative branch from 1959 to 1992. Fidel Castro was the first Prime Minister or the President of the Council of Ministers. Fidel Castro wielded the power for almost 5 decades before Raul bore his yoke, in 2008. The government has been struggling for long to stabilize the country, which has been deeply infested with illegal-black market, curtained private ownership, lack of basic human rights and absolutely very little democracy and not to mention the highly strained relationship with Uncle Sam!
ECONOMIC STRUCTURE: The Cuban economy has been significantly swaying with lots of ups and downs over the past few decades. The major cause was due to on and off trade embargo imposed by the US. Cuba follows a similar economy pattern of the Soviet Union just as North Korea does. In the period after the revolution, U.S. citizens owned approximately two-thirds of the businesses in Cuba, and almost the entire trading was done with the US. When Castro regime took over the government after the revolution it confiscated the private holdings. Towards the middle of 1962, US imposed the trade embargo and snapped all its trade ties with Cuba. The embargo prevails and is not lifted till date. It is a good sign for Cuban economy that the Obama administration has softened some of the bans. It doesn’t mean Cuba is totally dependent on the trade with US, but can have a better market owing to the geographical proximity.
Cuba turned to the Soviet Union for business after the 1962 embargo. Postponing debt payment schedules, creating new credit lines, paying high prices for Cuban exports, and offering military assistance subsidized the Cuban economy. Due to this attitude of the Soviet, Cuban economy did not suffer much until after the lapse of the Soviet Economy in 1989. Consequently, Cuba lost almost 85% of its trade. Cuba was forced to recuperate from its failing economy. The 1990s was a period of economic hardship. There was a 35% decrease in the business in the period between 1990-93, causing the nation to fall into what Castro called “The Special Period in a Time of Peace.”
The Cuban economy ran into a bleak period with no ration, transportation, electricity, or even food. Then came, the much-awaited respite to this struggle in the form of the tourism, which was the only booming sector in the 1990s, even though it was highly discouraged when Castro first took reins in 1959. Other major contributors to the Cuban economy are agriculture- sugar, coffee, tobacco (the Cuban cigars) and nickel. The Cuban economy suffers every time the sugar prices go down on the global market as it depends mainly on the export of sugar.
Cuba had a huge debt of almost US$10 billion by the end of the millennium. Though Cuba has tried to refinance this, it failed due to the adverse economic conditions in the late 1990s. Many international loans claimed against plans to import the essentials of the people have been denied due to its poor credit record. But the economy showed some signs of recovery, when Cuba received some foreign aids. Cuba was not approved to claim money from either the IMF or the World Bank. The money got from the UN pales in comparison to the borrowings of other Latin American countries.
The major changes to economy is by Raul Castro who focused on the decentralization of agriculture, leasing of idle state land, losing the hold in retail sector in order to stabilize the economy and to reduce robbery.
CULTURAL BACKGROUND: Cuban culture is a blend of Spanish and African cultures. The richness, diversity and the significance of the Cuban culture is due to the fact that it has passed through historic generations.
Cuban culture enjoys a rich heritage in the field of art, music and literature. Music styles of France, Spain and the Americas have a major influence on the Cuban Music. Jazz, Argentinean Tango, Ghanaian high-life, West African afrobeat, Spanish ‘Nuevo flamenco’ are based on Cuban Music. Cuban music is a symphony of all these forms. Cubans’ dancing is also a major cultural advantage – with Ballet and the Salsa having its roots in Cuba. The Cubans are pious with the main sects being Catholics and Santeria. Also, Cuba is a prestigious nation with four of the UNESCO’s World Heritage Sites.
BUSINESS CULTURE AND GOVERNMENT ATTITUDE: Business culture in Cuba is widely rated as one of the worst cultures, owing to the hostile business environment and unfriendly attitude of the Castro regime. This along with
Unskilled employees without motivation,
Shortages in supply,
Having to pay very high utility bills,
Poor customer services,
High degree of theft and pilferage
make Cuba one of the bad areas for international business. The London based Economist Intelligent Unit ranks Cuba at 80, amongst 82 countries in terms of top business environments. Moreover, socialist nations like China, which does business with almost 46 other countries, find it hard to do business in Cuba. The US trade embargo restricts the US businessmen from triggering business in Cuba, and even those who are permitted to do so, like the Food exporters, find it highly unfavorable.
Only 50 Cuban companies were allowed to participate in free trade until 1987. The lack of potential development in business discourages the companies from participating, as the Cuban government is the only customer. The foreign business is more tolerated than embraced even when the country is suffering a financial black hole. The foreign partnerships fell from 400 in 2000 to 236 last year according to the recent statistics in 2008. The government at present is trying to invite foreign business in terms of oil exploration and mining, large and costly projects and the inclination is more towards China, Venezuela and other fellow communist nations.
Cuba’s government is expanding its own restaurants and store network thereby rejecting the small European companies willing to invest in retail. Even if the companies get approval, the control soon transfers to the centralized government and the company holds only a minor control, in spite of a 100% ownership. Staffing at foreign embassies is also through the government-staffing agency and nepotism is very common. Even the staff salary at foreign establishments should be made through the government agencies, leaving the employees with a meager amount while the government pockets the rest in the name of education, health care and welfare programs.
The import supplies are delayed and due to Cuba’s credit and foreign exchange shortage there is a long queue. Also, the bureaucracy is slowly forcing some businesses to close down. There is almost a constant need to renew the visas and work permit by foreign workers and the judicial system is not as effective as the stringent policies.
On the other hand such tight government regulations and attitude has a bright side too. The Cuban Tourism Ministry has fixed a minimum room rate to the hotels, which ensures that there is no monopoly and squeezing of one operator by a competitor. Also Cuba is the highly literate and low crime-rate country of the Latin America.
Above all this there is an external pressure due to the embargo imposed by the US. This has forced even some banks to close down their financing operations in Cuba. Cuba is not having excessive storage with itself that it suffers lack of customers. Despite, Cuba spends more on transportation of exports and imports that raises the cost and feasibility of product access. All the drawbacks mentioned above pose a challenge to Cuba in creating a potential market for international business.
(Source: Association for the Study of the Cuban Economy; Sun-Sentinel research, Havana Journal, Feb 2007)
Major Exports:
Export Facts:
53% of Cuba’s commodity export market is taken up by sugar and honey, which forms 5.7% of the world’s export sales.
Nickel forms the second most export of Cuba, almost 23%
Fish and tobacco are the other major exports accounting for around 6-7% each.
Medicinal and pharmaceutical products are also exported (3%)
Export Figures:
The countries that buy export commodities from Cuba:
Russia 27%
Canada 18%
Spain 8%
Major Imports:
Import Facts:
Imports include petroleum, food, machinery, chemicals and electrical goods.
Import Figures: The countries that Cuba imports from:
Spain 17%
France 9%
Canada 9%
Cuba and have a trade protocol agreement that in exchange for Cuba’s sugar, Russia provides petroleum, while Venezuela supplies oil to get professional medical help from Cuba since the late 2000s. 40% of Cuba’s trade is with Americas while 50% is with European countries.
Franchising, licensing and management contracts are the other forms of international business, which is yet to be adopted in Cuba. Being a communist nation, the government holds the centralized power. With tight control and slow bureaucracy, these business models are yet to gain popularity. There is only one Mc Donald’s in the whole of Cuba.
There are various theories that explain the current position of international trade in a country. The basic reason of why countries need to trade has been explained by the ABSOLUTE ADVANTAGE theory. Adam Smith in 1776 proposed in this theory that countries should shift their available resources to those industries that can produce efficient and specialized products, which in turn can be used to buy other imports. This type of advantage can be either NATURAL or ACQUIRED. Natural advantage means that the resources are available naturally in the form of climate, skilled labor force. This determines the type of agricultural products produced. The country enjoys an advantage due to naturally available resources.
NATURE OF ADVANTAGE in the international trade theory is classified in to the following categories and defined by Daniels, Radebaugh and Sullivan as:
Natural advantage by means of climate, soil.
Acquired advantage through the processing of one of the basic factors of land, labour.
Comparative advantage against another nation’s endowment of assets.
Country size as a proxy for the range of natural factors such as climate, soil, minerals and etc, size of population that provides opportunities to process materials and create markets – Country Similarity theory
Factor proportions that suggest their optimum utilisation in production.
I. NATURAL ADVANTAGE THEORY Sugar, Nickel and Tourism Cuba has a natural advantage in the production of Sugar and its products. The climate and the soil are best suited to sugarcane production from which sugar is obtained. The available labor force is skilled to produce sugarcane, which is why almost 6% of the entire world’s sugar comes from Cuba.
Another natural advantage that Cuba boasts of is the production of Nickel and its mattes as Nickel ore is naturally available in the island. This ore is mined and processed and exported. Almost 23% export of Cuba consists of Nickel products.
One of the major sources of income to the economy is the tourism sector. Cuba with its beautiful beaches, tropical climate and colonial architecture attracts a lot of tourists, which has invited a number of foreign investors in the tourism industry. Due to its naturally strategic location in the Caribbean, tourism flourishes round the year, so this too can be considered as a natural advantage. A huge contribution is made to the economy from the tourism industry and its growing steadily because of the slight relaxation in government rules in this industry.
II.COMPARATIVE ADVANTAGE THEORY: Sugar with petroleum and Medical Services with Oil David Ricardo in 1817 proposed this theory. This theory proposes that a country can gain more by producing a highly efficient product rather than a low efficient product, even though the country enjoys an absolute advantage in both. A country can benefit more if it concentrates its resources on a product that can be produced more efficiently.
The following two cases form a classical example to the above theory:
Cuba has a trade protocol agreement with Russia to supply sugar in exchange for petroleum. So instead of trying to focus the resources on petroleum, Cuba concentrates the resources on the production of Sugar.
Also Cuba has a trade agreement with Venezuela to supply them with Medical help in the form of medicine as well as professional help in exchange for Oil from Venezuela. In exchange for 100,000 barrels per day of petroleum products from Venezuela; services of some 30,000 Cuban medical professionals are provided. Cuba also imports food and machinery in exchange for sugar and nickel.
III. COUNTRY SIMILARITY THEORY: Country similarity theory states that countries with similar characteristics will trade among themselves, especially in the industrial and manufactured products. A direct application of this theory can be observed in the trade between Cuba and Russia, Venezuela, China and Vietnam (Refer to the table) especially after 2005.
This is attributed to the fact that all of these countries have a communist framework of governance with the government holding most power and control. And all these countries trade with manufactured goods.
PORTER’S DIAMOND OF NATIONAL COMPETITIVENESS: Michael Porter proposed a model for a nation’s competitive advantage. There are 4 main attributes to superior competitive advantage of a country that includes advanced factors apart from the natural resources, land, labor and climate of the country. Combined effects of these attributes form the diamond of national advantage. They are:
Demand Conditions:
A country should produce a product that has a local demand which in turn will eventually create a foreign market. Local sugar industries produce sugar so that it can be exported out of Cuba, which means a national advantage. So is tourism. Cuba attracts a lot of tourists for its serene beauty and rich heritage.
Factor Conditions:
Highly skilled labor, technology, capital and equipments that support a particular product are factor conditions. Sugarcane is processed into sugar through a series of steps, which is able to meet the global standards, making it remain a national advantage.
The beaches, music, dance, architecture and rich cultural heritage are the factors that promote tourism and in turn contribute to national advantage.
Related and supporting industries:
Those industries that support the existing industry and are directly related to it can also contribute to national advantage. In the case of Cuba, Nickel exports can generate the required revenue for the flourishing of Sugar industry. Also this revenue can help achieve more innovative and effective methods of producing Sugar. The revenue from Sugar and Nickel export can be used to further promote a thriving industry to self-stain the economy, under the veils of the communistic policies.
Firm’s Strategy, Structure and Rivalry:
The demand for produce, various factors like climate, land, labor along with the various industries that are related to company, enables it to develop a sustainable competitive advantage, which can provide favorable circumstances for firm strategy, structure and rivalry. Rivalry can also lead to innovative methods of production and advancements in technology.
Thus all these 4 factors combined together can provide a superior competitive national advantage, in the case of Cuba, Sugar and Tourism being the major players in the national advantage category.
As we have analyzed the international business scenario in Cuba in detail, there are some factors, which the country can improve to prove itself in the international arena of business. Some of the recommendations are:
Foreign Trade Policy of the State:
With respect to the foreign trade policy, the Cubans are conservative in monetary circulations. They are very narrow in spending with other nations and retain a large sum, discouraging foreign investors from investing in Cuba, as expressed earlier. The government has to refine its policy extending fraternity to foreign investments regardless of capitalistic nations or communistic nations.
Doing away with delays:
There have been lots of complaints from foreign firms with respect to queuing in claiming import supplies as well as shortage of supplies and utilities. Also the state agencies are responsible for importing supplies. To get a competitive advantage in the international business, these delays should be avoided by sharing the import orders with other agencies
Prevention of robbery and improved customer service:
Cuba suffers a high degree of loot, low productivity and a weak customer service. This can be avoided by imparting the essence of customer focus from the laborers to the top level manages for an improved customer service and also set international standards for the same.
Subsidies to transportation and utility costs:
The government can encourage international business by providing subsidies in transportation and utility costs, as these are the major costs incurred by the companies.
Reformation of Judicial System:
Most foreign traders find the judicial system to be incompetent as it is an extended arm of the communist government and this discourages the companies from doing business, as they fear unfair judgment. The judicial system has to be made independent, providing confidence to the companies.
Provide subsidies to local companies and encourage innovation so that processes and technology can be improved which will further enhance the Sugar production levels so that more exports can be done.
Encourage joint ventures between local and foreign firms, but make sure that sharing of power and control is justified. The local firms might prefer to have an upper hand, but do not lose the foreign investment to a rival by being too parsimonious.
Tourism industry in Cuba has been a major contributor to economy, so further investment and innovation in that area can boost international attraction.
Private property ownership is not being encouraged unlike the appeasement in recent times than before. so relax such unwanted and control-minded policies.
Skilled laborers are an asset, so make sure that those involved in Sugar and Tourism industries are competent enough so that national advantage can be maintained.
Trade embargo with the US is a major hindrance; try to reach an amiable solution to the problem. There is no use in being iron fisted when the economy is bleak
Self-sustained economy cannot rule out International trade with globalization acclamations of the day. This is high time for Cuba to realize the need for its apparent socialistic rule to be a really sociable one with respect to the International scenario. As discussed earlier, Sugar and Tourism are the major promising and resourceful industries of Cuba, which when properly guided and carried out, can prove to be the stepping-stone to a strong economy in the coming decade.