The Effects of U.S. Recession on Other Countries Economies - Annotated Bibliography Example

The Effects of U.S. Recession on Other Countries Economies. The purpose of this paper is to address the issue of what effect the U.S. Recession has had on other economies. The format of this paper will first present the introduction where the issue of why this topic is a relevant issue to be researched. Secondly this paper will highlight four separate articles on how the downturn on the American economy has affected other nations both positively and negatively. Lastly this paper will conduct an evaluation where I will highlight my opinion on the matter as well as theorize on how the downturn has affected other economies in general terms. Introduction: It is important to highlight that this paper will be focused on how the downturn in the U.S. Economy has affected other nations although it should be noted that the downturn in is a global phenomenon. At least superficially it is the case that the recession is affecting different nations for reasons other than changes in the U.S. economy specifically. The reasoning behind this topic and why it is relevant for research can be for several issues. Firstly it is the case that this economic downturn is a recent event relatively speaking. As a consequence, there are not many peer reviewed academic articles on the topic. Furthermore it may be the case that the full effect of this recession has not yet been felt and by extension there is a research gap for what is currently transpiring and future consequences. Secondly any information disseminated from the economic downturn can be beneficial for future potential economic downturns. As it is the case that any impact that the downturn may have on a specific economy may yield possible contingency plans. Building on this idea is the principle that any effect that the downturn on the American economy may bring about changes in the foreign policy of both the U.S. and any effected nation. Why this information would be relevant to others is because any information gathered theoretically is of use to subjects as diverse as international commerce and policy, economics, developmental economics as well as sociology. Summary of Reseach. The approach taken in this section will focus on four separate articles however will emphasize positive as well as negative consequences of the (American) economic downturn on other nations. Schwartz, N.D. & Saltmarsh, M: Developing World Seen as Engine for Recovery. (June 2009) The New York Times Online. The article first highlighted that the BRIC nations (Brasil, Russia, India and China) are the most likely candidates for a speedy economic recovery and by extension are poised to help push a global economic recovery whilst the more economically developed nations (Europe, North America and Japan) are expected to lag. How this relates specifically to the United States is that the article specifically sites that American corporations and consumers are presently tamping down the impact of the economic stimulus package by increased saving. What this translates to is an estimated overall shrinking of the American economy of 2.8% in 2009. As a negative consequence of this action it could be predicted that this emerging/developing market growth could theoretically push interest rates in developed economies which in turn would increase the price of oil. Furthermore, increased savings by American corporations and consumers could partly offset the stimulus, tamping down growth in the United States and around the world. However with all of these increased improvements in emerging markets it is the case that specific business entities such as Siemens (Highlighted in the Article) uses its diversified portfolio to capitalize on growth in Emerging economies. By extension it could be argued that as a result of the American economic downturn American companies could utilize internationalization strategies by investing in international markets to capitalize on the increased growth trends. Cummings, D: How Does the Weakening US Dollar Affect Other Countries? (October, 2009) In this article the author had argued that the economic recession has devalued the American dollar relative to foreign currencies. The author had expressed that there are two general effects to this change. Firstly any devaluation makes the purchasing of American goods and traveling to the U.S. more feasible. For some consumers this could translate to an excellent opportunity to purchase American made goods, or to take a vacation. However the negative consequence of this currency devaluation means that the purchasing of international goods by Americans becomes more expensive. One specific example of how this could negatively affect a foreign nation would be for example a nation that relies heavily on exporting to the U.S. It was estimated by Tavia Grant in The Globe and Mail as espoused by Cummings (2009) that any appreciation of the Canadian dollar against the American dollar translates to job losses in domestic (Canadian) manufacturing and decreased commodities exports. Minaya, M: Latin American Countries Worlds Apart in Economic Downturn (March, 2009) PBS; The Online NewsHour In this article it was argued that one negative consequence of the U.S. Economic downturn in Honduras comes in the form of decreased remittances from expatriates living in America. Furthermore with decreased consumer spending in America, Honduras is more negatively affected by decreased consumption of one of its principle exports, textiles. The article also highlighted that some nations such as Brazil took preemptive measures to help shelter themselves from severe negative economic consequences from a downturn in the American Economy. Some examples of this are decreasing some of the administrative costs of owning purchasing an automobile and cutting some middle-class taxes. By pursuing these measures in conjunction with a number of other factors it is the case that the country remained in more fiscally sound position than many of their Latin American neighbors. Wharton Online Publications (2009) Poverty in Latin America: Who Should Deal with the Economic Downturns Haunting Legacy? School of Public Policy and Management Finally in an article published by the Wharton School of Public Policy and Management (2009) the negative consequences of the American Economic Downturn in Latin American as espoused by Karina Olivas, Professor of Economics at the Peruvian University of Applied Sciences can be attributed to a long history of economic dependence on the United States. By being heavy exporters of raw goods to the U.S. a sharp decline in American consumption directly affects producers in not only Latin America but any number of nations. The article also emphasized that the economic depression may prove to be a catalyst of change and bring about a number of policy changes that ultimately may improve the political and economic institutions in developing economies for future generations. Evaluation: In my personal opinion on this topic the result of the economic downturn in the U.S. will impact other nations in different ways. As highlighted earlier, some nations which have economies that depend heavily on direct exports of raw and finished goods to the U.S. have been very negatively affected by this downturn. However it is the case that many nations have experienced growth by having diversified economies and taking proactive approaches to sheltering their economies from wild changes. Much like other economic recessions in the past this economic downturn is likely to cause additional industries and companies in some nations to fail but also cause other business sectors and organizations to prosper. Although nobody is fond of increased levels of unemployment or decreased levels of activity in traditional sectors the downturn is likely to simply cause changes in the economy. Much like any other nation, ours will surely have negative consequences as well as some positive outcomes. Reference List Cummings, D: How Does the Weakening US Dollar Affect Other Countries? (October, 2009) Available online at http://www.findingdulcinea.com/news/Americas/2009/October/How-Does-the-Weakening-US-Dollar-Affect-Other-Countries.html Accessed online November 24th 2009. Minaya, M: Latin American Countries Worlds Apart in Economic Downturn (March, 2009) PBS; The Online NewsHour Available at http://www.pbs.org/newshour/updates/latin_america/jan-june09/economy_03-13.html Accessed on November 24th 2009 Schwartz, N.D. & Saltmarsh, M: Developing World Seen as Engine for Recovery. (June 2009) The New York Times Online. Available at http://www.nytimes.com/2009/06/25/business/global/25oecd.html Accessed on November 24th 2009. Wharton Online Publications (2009) Poverty in Latin America: Who Should Deal with the Economic Downturns Haunting Legacy? School of Public Policy and Management. Available at http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1763&language=english Accessed on November 24th 2009. Read More