The Asian Development Bank has published a report on gender equality in Nepal with the case studies from here.
ADB says in its website, "this publication is part of the commitment of the South Asia Department of the Asian Development Bank (ADB) to gender equality results in its operations, selected among ADB sectors: urban development, rural infrastructure (including irrigation and other water infrastructure), and agriculture and natural resource management." The report has case studies provide an overview of gender issues in selected sectors, and gender design features and implementation arrangements that contributed to achieving gender-related targets in four ADB projects in Nepal. This report also comprises the recommendations for future actions for gender equality in Nepal. The PDF version of report is available here: http://www.adb.org/documents/reports/gender/case-studies-nep/gender-case-study-nep.pdf
Saturday, December 25, 2010
It's Trade not a Game!
Nepal is facing the high trade deficit since last year. Basically, there are two reasons if we just look at the table for this terrible situation. Who dares to see under the table for the fundamental reasons causing the trade deficit?
The high level of import and the decrease of export in increasing rate are the apparent reasons for trade deficit. But why we are not being able to increase export? (Here, I won't be talking about the regulation on import because I don't believe in that. I believe that we should let the import since only then our domestic industries come to know how to compete with international companies' productions.) I will be talking about the ways of increasing export. The country's export level depends on its supply side capacity, manufacturing capacity of country's industrial sector and cost of transport. To increase the export level, first we have to think how our system is working in terms of production, supply and transport. Diagnosis is the first step to prescribe the medicine for any disease.
Economist say that the country's economy is about to fall down but why can't they tell us what will prevent it to happen. They won't be telling us because the situation is not in anyone's hands rather than politicians. They know that politicians are not going to understand until it falls down. The power game is miraculous and it doesn't ask for hard work. That is why politicians don't understand how fundamentally the economy is different than politics. I do agree that politics and economy are interlinked and shrunk with each other. Still, politicians don't know how economy functions and economists never understand why politicians don't care what's happening in country's economy. Playing game and arranging each bricks to build the house are quite different thing in this planet! Stupid do the later one and smart one does the first one. Confused? No worries. I will explain.
The impacts of political disorders in economy are seen sometimes instantly and sometimes it takes the years. The decade long domestic conflict hit hard the economy after three years of its end. Nepal's economy was stagnating or having the quite slow pace during the insurgency period. But growth rate was started to stagnate and eventually the high trade deficit and decreased the Gross Domestic Production (GDP) growth rate after the end of so-called people's movement in Nepal. The economy should be let free and respected to flourish as like a person's growth and to keep alive the self-esteem. Nepali economy has never got this beauty of freeness and respect (tender touch while changing the orders of economy) in the history. If you dig deep inside the structure and contemplate on the problems it passing through is lack of free- fairness and bully of state on it.
I humbly want to put forward one example here to show the political bully on market. The heart of economy (manufacturing sector) is facing the labor problem. But we never try to solve it as a labor problem but a political issue. It becomes a political issue not only because of the politicians but the feeling of insecurity (for some) and wish for the political backup (for some) industrialists. The 'third world psychology' might be a good phrase to describe the situation of industrialists in Nepal. What they lack is skill and what they have is political backup to run the industry. How terrible!
If you separate the economic problems from politics then it is clear. But I know that sometimes it's hard and sometimes you don't want it to do. But, the truth is that until and unless we don't free the economy from state regulation, we are heading nowhere. The reasons we are told time and again, here and there for this trade deficit and gloomy economy are not the real one. We have to dig deep to diagnosis the disease.
Thursday, December 23, 2010
Why do Firms Exist?
FOR philosophers the great existential question is: “Why is there something rather than nothing?” For management theorists the more mundane equivalent is: “Why do firms exist? Why isn’t everything done by the market?”
Today most people live in a market economy, and central planning is remembered as the greatest economic disaster of the 20th century. Yet most people also spend their working lives in centrally planned bureaucracies called firms. They stick with the same employer for years, rather than regularly returning to the jobs market. They labour to fulfil the “strategic plans” of their corporate commissars. John Jacob Astor’s American Fur Company made him the richest man in America in the 1840s. But it never consisted of more than a handful of people. Today Astor’s company would not register as a blip on the corporate horizon. Firms routinely employ thousands of workers and move billions of dollars-worth of goods and services within their borders.
Why have these “islands of conscious power” survived in the surrounding “ocean of unconscious co-operation”, to borrow a phrase from D.H. Robertson, an economist? Classical economics had little to say about this question. Adam Smith opened “The Wealth of Nations” with a wonderful description of the division of labour in a pin factory, but he said nothing about the bosses who hired the pin-makers or the managers who organised them. Smith’s successors said even less, either ignoring the pin factory entirely or treating it as a tedious black box. They preferred to focus on the sea rather than the islands.
Who knows the secret of the black box?
The man who restored the pin factory to its rightful place at the heart of economic theory celebrates his 100th birthday on December 29th. The economics profession was slow to recognise Ronald Coase’s genius. He first expounded his thinking about the firm in a lecture in Dundee in 1932, when he was just 21 years old. Nobody much listened. He published “The Nature of the Firm” five years later. It went largely unread.
But Mr Coase laboured on regardless: a second seminal article on “The Problem of Social Cost” laid the intellectual foundations of the deregulation revolution of the 1980s. Eventually, Mr Coase acquired an army of followers, such as Oliver Williamson, who fleshed out his ideas. In 1991, aged 80, he was awarded a Nobel prize. Far from resting on his laurels, Mr Coase will publish a new book in 2011, with Ning Wang of Arizona State University, on “How China Became Capitalist”.
His central insight was that firms exist because going to the market all the time can impose heavy transaction costs. You need to hire workers, negotiate prices and enforce contracts, to name but three time-consuming activities. A firm is essentially a device for creating long-term contracts when short-term contracts are too bothersome. But if markets are so inefficient, why don’t firms go on getting bigger for ever? Mr Coase also pointed out that these little planned societies impose transaction costs of their own, which tend to rise as they grow bigger. The proper balance between hierarchies and markets is constantly recalibrated by the forces of competition: entrepreneurs may choose to lower transaction costs by forming firms but giant firms eventually become sluggish and uncompetitive.
How much light does “The Nature of the Firm” throw on today’s corporate landscape? The young Mr Coase first grew interested in the workings of firms when he travelled around America’s industrial heartland on a scholarship in 1931-32. He abandoned his textbooks and asked businessmen why they did what they did. He has long chided his fellow economists for scrawling hieroglyphics on blackboards rather than looking at what it actually takes to run a business. So it seems reasonable to test his ideas by the same empirical standards.
Mr Coase’s theory continues to explain some of the most puzzling problems in modern business. Take the rise of vast and highly diversified business groups in the emerging world, such as India’s Tata group and Turkey’s Koc Holding. Many Western observers dismiss these as relics of a primitive form of capitalism. But they make perfect sense when you consider the transaction costs of going to the market. Where trust in established institutions is scarce, it makes sense for companies to stretch their brands over many industries. And where capital and labour markets are inefficient, it makes equal sense for companies to allocate their own capital and train their own loyalists.
But Mr Coase’s narrow focus on transaction costs nevertheless provides only a partial explanation of the power of firms. The rise of the neo-Coasian school of economists has led to a fierce backlash among management theorists who champion the “resource-based theory” of the firm. They argue that activities are conducted within firms not only because markets fail, but also because firms succeed: they can marshal a wide range of resources—particularly nebulous ones such as “corporate culture” and “collective knowledge”—that markets cannot access. Companies can organise production and create knowledge in unique ways. They can also make long-term bets on innovations that will redefine markets rather than merely satisfy demand. Mr Coase’s theory of “market failure” needs to be complemented by a theory of “organisational advantages”.
All this undoubtedly complicates “The Nature of the Firm”. But it also vindicates the twin decisions that Mr Coase made all those years ago as a young student at the London School of Economics: to look inside the black box rather than simply ignoring it, and to examine businesses, not just fiddle with theories. Is it too much to hope that other practitioners of the dismal science will follow his example and study the real world?
(Courtesy: The Economist, http://www.economist.com/node/17730360)
Today most people live in a market economy, and central planning is remembered as the greatest economic disaster of the 20th century. Yet most people also spend their working lives in centrally planned bureaucracies called firms. They stick with the same employer for years, rather than regularly returning to the jobs market. They labour to fulfil the “strategic plans” of their corporate commissars. John Jacob Astor’s American Fur Company made him the richest man in America in the 1840s. But it never consisted of more than a handful of people. Today Astor’s company would not register as a blip on the corporate horizon. Firms routinely employ thousands of workers and move billions of dollars-worth of goods and services within their borders.
Why have these “islands of conscious power” survived in the surrounding “ocean of unconscious co-operation”, to borrow a phrase from D.H. Robertson, an economist? Classical economics had little to say about this question. Adam Smith opened “The Wealth of Nations” with a wonderful description of the division of labour in a pin factory, but he said nothing about the bosses who hired the pin-makers or the managers who organised them. Smith’s successors said even less, either ignoring the pin factory entirely or treating it as a tedious black box. They preferred to focus on the sea rather than the islands.
Who knows the secret of the black box?
The man who restored the pin factory to its rightful place at the heart of economic theory celebrates his 100th birthday on December 29th. The economics profession was slow to recognise Ronald Coase’s genius. He first expounded his thinking about the firm in a lecture in Dundee in 1932, when he was just 21 years old. Nobody much listened. He published “The Nature of the Firm” five years later. It went largely unread.
But Mr Coase laboured on regardless: a second seminal article on “The Problem of Social Cost” laid the intellectual foundations of the deregulation revolution of the 1980s. Eventually, Mr Coase acquired an army of followers, such as Oliver Williamson, who fleshed out his ideas. In 1991, aged 80, he was awarded a Nobel prize. Far from resting on his laurels, Mr Coase will publish a new book in 2011, with Ning Wang of Arizona State University, on “How China Became Capitalist”.
His central insight was that firms exist because going to the market all the time can impose heavy transaction costs. You need to hire workers, negotiate prices and enforce contracts, to name but three time-consuming activities. A firm is essentially a device for creating long-term contracts when short-term contracts are too bothersome. But if markets are so inefficient, why don’t firms go on getting bigger for ever? Mr Coase also pointed out that these little planned societies impose transaction costs of their own, which tend to rise as they grow bigger. The proper balance between hierarchies and markets is constantly recalibrated by the forces of competition: entrepreneurs may choose to lower transaction costs by forming firms but giant firms eventually become sluggish and uncompetitive.
How much light does “The Nature of the Firm” throw on today’s corporate landscape? The young Mr Coase first grew interested in the workings of firms when he travelled around America’s industrial heartland on a scholarship in 1931-32. He abandoned his textbooks and asked businessmen why they did what they did. He has long chided his fellow economists for scrawling hieroglyphics on blackboards rather than looking at what it actually takes to run a business. So it seems reasonable to test his ideas by the same empirical standards.
Mr Coase’s theory continues to explain some of the most puzzling problems in modern business. Take the rise of vast and highly diversified business groups in the emerging world, such as India’s Tata group and Turkey’s Koc Holding. Many Western observers dismiss these as relics of a primitive form of capitalism. But they make perfect sense when you consider the transaction costs of going to the market. Where trust in established institutions is scarce, it makes sense for companies to stretch their brands over many industries. And where capital and labour markets are inefficient, it makes equal sense for companies to allocate their own capital and train their own loyalists.
But Mr Coase’s narrow focus on transaction costs nevertheless provides only a partial explanation of the power of firms. The rise of the neo-Coasian school of economists has led to a fierce backlash among management theorists who champion the “resource-based theory” of the firm. They argue that activities are conducted within firms not only because markets fail, but also because firms succeed: they can marshal a wide range of resources—particularly nebulous ones such as “corporate culture” and “collective knowledge”—that markets cannot access. Companies can organise production and create knowledge in unique ways. They can also make long-term bets on innovations that will redefine markets rather than merely satisfy demand. Mr Coase’s theory of “market failure” needs to be complemented by a theory of “organisational advantages”.
All this undoubtedly complicates “The Nature of the Firm”. But it also vindicates the twin decisions that Mr Coase made all those years ago as a young student at the London School of Economics: to look inside the black box rather than simply ignoring it, and to examine businesses, not just fiddle with theories. Is it too much to hope that other practitioners of the dismal science will follow his example and study the real world?
(Courtesy: The Economist, http://www.economist.com/node/17730360)
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