Showing posts with label imports. Show all posts
Showing posts with label imports. Show all posts

Friday, October 20, 2017

Puzzle


People are not black boxes; they can explain how they arrived at their conclusions. And, even when they arrive at the same conclusion, they can explain the different approaches they took.

     On the Teaching Channel (teachingchannel.org), kindergarten teacher Donella Oleston showed how she positioned two green squares, two yellow squares, and six white squares in different locations on two boards that each had ten squares. Then, she asked students to tell:
     1. What do you see?
     2. What is the same?
     3. What is different?
In that way, her students learned to explain their answers and to show each other there were different ways to think about a problem.

     I just came across a real life puzzle that older students could discuss in a similar manner.

     When two teams are playing for a championship, in anticipation that either team could win, manufacturers print T-shirts celebrating the victory of both teams. What happens to the T-shirts boasting about the victory of what was the losing team? Often they are bundled up with used clothing and sent to Africa. Now, African countries are trying to develop their own clothing industries which cannot compete with cheap imports. When I began listing the following factors involved in this situation, I realized it would give students a wonderful opportunity to explain what they noticed and what solutions they would suggest, in other words, experience with critical thinking.

Situation

1. For African countries to achieve greater economic growth, they need to diversify beyond producing raw materials (agricultural commodities and minerals for domestic use and export).

2. Both clothing manufacturers and seamstresses offer Africa an avenue for economic diversification into the production of higher-priced goods. Enabling women to provide revenue from sewing also enhances their value to the family and, in cases where men have died from disease and in war, sewing can keep children from dying from starvation.

3. Prices for African-produced clothing are too high to compete with unwanted, used, and Chinese clothing imports.

4. African countries, such as Kenya, Uganda, Rwanda, Burundi, Tanzania, and South Sudan, plan to raise tariffs to make clothing imports more expensive than locally produced clothes.

5. Africans who sell clothing imports protest raising tariffs, because they would lose their livelihoods.

6. The United States, which now gives favorable terms to some African imports, is being urged to retaliate against Africa's higher tariffs on clothing imports by canceling these favorable trade terms.
The U.S. Secondary Materials and Recycled Textiles Association of 40 used clothing exporters claim high African tariffs would put 40,000 sorters and packers out of work and send more clothes to U.S. landfills. Since the U.S. also uses favorable trade deals to pressure African countries to make democratic reforms, it would lose this leverage if African countries were more concerned about fostering local industry than exporting raw materials to the U.S.

7. African leaders see the dignity of their people undermined when their countries are used as a dumping ground, not only for clothing, but also for old cars, buses, airplanes, expired drugs, medical equipment, computers, and electronic equipment.

What solutions can students suggest?

Wednesday, August 12, 2015

Time to Revisit China's and the World's Foreign Currency Exchange Rates

Watching how a change in the amount one country's currency, such as a US dollar, can buy of another country's currency, such as Chinese yuan, illustrates globalization at work. Currency exchange rates certainly demonstrate how countries are interconnected.

     What brings this subject to mind (after it was addressed in the earlier post, "When to Buy/Sell in the World Market") is today's Chinese devaluation of its currency by about 2% against the US dollar. Based on information in the earlier post, kids who have an interest in finance might conclude China was attempting to reduce the price of its exports in order to compete with lower priced goods from other countries. China's imports of luxury goods and electronics from the US would cost more, and US tourists in China would get more for their money.

     In the past, China selected a midpoint currency conversion rate that fluctuated between 2% above or below the US dollar. As a result of China's first devaluation, the US dollar could buy 6.22 yuan compared to 6.11 the day before. The next day the value of the yuan dropped a little over 4%, but that is nothing like the 20% to 40% devaluation that would be needed to compete with much lower priced competitors like Vietnam or Burma. Although China did not want to risk losing investment capital that would exit a country whose currency has this kind of weak buying power, subsequent devaluations have caused capital to flee.

     The truth is, demand is weak within China, as shown by Alibaba's slowed quarterly growth. China's $50 billion canal project in Nicaragua has been put on hold until 2016. While no reason was given, the stock market dip has caused the fortune of Wang Jing, CEO of the HKND Group funding the canal, to fall from $10.2 billion to $1.1 billion. Yet, in December, 2015, President Xi Jinping announced China would be giving Africa emergency food and $60 billion in grants and loans.

     Weak demand throughout the world is hurting all exporters, including South Korea and Taiwan. Countries that depend on their commodity exports to China are especially hard hit as reported in the later post entry, "Falling Commodity Prices Spur Diversification in Emerging Markets." A 2% currency devaluation and even a 20% devaluation will not cure sluggish worldwide industrial and consumer demand.