Category Archives: Economy

WTO (World Trade Organization)

Association of Certified Chartered Accountants (ACCA) is a worldwide body providing the chartered certified accountant qualification. Students are supposed to complete up to 14 ACCA examinations after which they undergo three years of supervised practice so as to become members of the association. The use of the term Chartered Certified Accountants is legally restricted to those who have fully satisfied the set requirements. All members of the association are required to abide by all set accounting guidelines as determined by the association.


ACCA online study is informative and will be vital in helping students understand how the World Trade Organization (WTO) works. Since this organization requires all its members to sign a treaty on world trade it is important to understand the implications of the treaty, and in this case the USA. ACCA syllabus incorporates a wholesome approach to business and accounting. The law provides an enabling environment for business. The American constitution provides that any international treaty signed is above any other legislation in force over the land. This means that since the USA in a member of the WTO any agreements therein cannot be overruled by any law made in the US.


By studying CIMA online, you will note that since the WTO does not regulate world trade efficiently, the US economy has lost millions of jobs as businesses move their operations to countries where production costs are cheaper. This creates a situation where resources are taken from their source and exported to countries that process them then exported back to their source countries and sold at exorbitant prices.


CIMA (Chartered Institute of Management Accountants) which is closely related to ACCA also has units carefully set up to allow students understand how by manipulating their currency value China is able to subsidize their exports. The Chinese Yuan is undervalued thus making Chinese exports cheaper than other exports in the world market; this essentially increases the demand for these exports. For instance, you can easily see this by looking up US imports from China whose value has risen from a lowly 84 billion to over 270 billion in the period between 2001 and 2010. Since businesses know that by producing in China their products will be relatively cheaper in the world market, more jobs will continue to be lost in the US.


Further lessons on how the WTO is inefficient in creating a fair global market can be learnt through CIMA online study. There is no regulation from the WTO on things such as child labor, labor rights and even environmental protection; all of which are relevant to business and more so world trade.


It is easy to understand through studying ACCA online how the WTO has let a greedy corporate agenda takeover and has led to the continued reaping of resources from developing countries while providing little in return.

World Bank

Chartered Institute of Management Accountants (CIMA) is a professional body which offers training and qualification in management accounting. Initially created to develop techniques in enhancing internal control of businesses; today CIMA has grown with over 200000 members all over the word and even more students. This global institute specializes in developing and publicizing new techniques through research and publications.


CIMA and Understanding the World Bank


The World Bank is a global institution created to establish and support global markets. CIMA online study equips students with the necessary knowledge to understand the importance of the World Bank in the global market. The World Bank was established to provide financial support to free countries with similar development goals. It was supposed to match resources internationally to promote a balanced world economy.


As you will learn while studying CIMA online, over the last decade there has been an apparent shift in the world economy as developing countries take a more vital role in directing the world economic performance. Since most systems developed in the past by the World Bank are not structured for such a global set-up, it is vital for major restructuring of these systems. This must be done to prevent this institution from becoming obsolete.


Over the last few years, the World Bank has embarked on restructuring its operations to focus more on providing a wholesome baking experience rather than just offering financial aid. Units in CIMA online study will reveal how developing economies need a firmer and more innovative World Bank keen on implementing development-oriented strategies. Anticorruption efforts need to be improved to make sure that the financial support offered by the institution goes to achieve the intended purpose. Since developing countries are emerging as capable donors, the World Bank has expanded its capital base and moved to tailor its financial products in response to the needs of developing economies.


In recent years, the developed world has had stuttering economic growth; developing economies constitute the larger share in the total world economic growth, with a share of over 66% over the last five years. This shift in the economic performance all over the world necessitates a revamping of the World Bank. You will learn in ACCA (Association of Certified Chartered Accountants), which is closely related to CIMA, that new long lasting markets and institutions have to be established to enhance the economic capacity of these countries. This will provide support to sustain the economic growth of developing economies and thus maintain the growth of the world economy.


Lessons in ACCA online study will help you understand the various financing instruments used in enabling business growth such as equity, loans, grants and guarantees. By creating better services aimed at addressing issues facing businesses and the business environment as a whole in developing countries, the institution can cement the progress these economies have made. Through studying ACCA online, you will appreciate that reviewing the representation and operations of the World Bank while enhancing transparency to increase the influence and obligations of developing countries is a welcome step, but more has to be done to enhance the situation.

Understanding Transition Economies

Many countries are transitioning from command economies to social economies. There are many factors that led to this transition, and one of those factors is the debt crisis. This can be understood well with CIMA online study.


Let’s consider China and Vietnam. These countries are said to have the same concepts of transition economies with Vietnam following China’s footsteps. Vietnam is currently transitioning to a social economy from a command economy. Central planning economy has been in effect for over three decades now. Even though it transitions, the Communist party is still ruling in this Asian country.


The state enterprises in Vietnam are the role players in its emerging debt crisis. These enterprises have also led China to debt crisis and hit-hard on the banking system. In an attempt to solve its debt crisis caused by state-owned enterprises, Vietnam launched asset management companies this year. The same applied to China in the year 1999 where it had launched asset management companies in an attempt to solve its debt crisis.


The flow of stock from state enterprises of these countries contributes significantly to their bad debts. China has made efforts in the 90’s to reduce its state-owned enterprises in order to manage its debts. It had reduced a significantly large number of its enterprises from millions to less than half a million in a period of 10 years. However, these thousands are still regarded as a large number of enterprises that are state-owned. Nevertheless, the main focus of China was on preventing the debt crisis that it faces because of state-owned enterprises. It has achieved that through privatization of some big state-owned corporations and financial institutions.


In an effort to follow the footsteps of China, Vietnam also considered to restructure its enterprises in order to prevent the bad debts. However, it is still a progress that grows in a slow pace. Its constant transition of the economy was likened to China. They both strive to shift from a command economy most of their debts stem from state-owned firms.


Vietnam is also a large country as China is. It has a population of more than 100 million people and is ranked 13th among the largest countries in the world. In transitioning economies, China and Vietnam follow the model used by the Soviet Union in the 90’s when it shifted from a command economy. They, Vietnam and China, allow private enterprises to also operate largely while the transition is done slowly with state-owned enterprises.


China and Vietnam avoid a rapid transformation of their economies because they have seen the negative consequences that were suffered by other European countries including Russia. They have suffered from the recession, which took place about a decade to be solved. This recession was a result of rapid transition of their economies. Now these Asian countries are taking it slowly.


The ACCA endorses a clear understanding of protectionism due to the fact that trade restrictions are a growing part of how global politics function. Wan Jifei, Chinese official and outspoken critic of the policy, believes that this impact is largely negative.


He argues, “Trade protectionism is shortsighted and narrow-minded, and it cannot fundamentally address the problems of unemployment and economic growth worldwide. Free trade is the engine of national economic growth.” Other Chinese representatives, including President Hu Jintao, have supported these claims against protectionism.


CIMA online has often found that Beijing ironically engages in exactly this sort of protectionist behavior.


China has also been the target of recent scrutiny by US Pres. Barack Obama for illegal trade practices involving cars and car parts.


Republican presidential candidate Mitt Romney has pledged to constituents that he will treat China as a “currency manipulator” after his election. ACCA online reports that many Americans have expressed outrage over the fact that Chinese exporters are using the low value of the Yuan to gain an arguably unfair advantage in the market.


China however believes that protectionist policies have had a negative effect on their economy. To counter this, it will attempt to mediate a free-trade pact involving South Korea and Japan.

Some believe that US critics have little credit on the issue because they have recently had so many international trade issues of their own.


President Obama is already committed to delivering 20 percent tax credit for firms that bring overseas jobs to the US.


On the other hand, as CIMA points out, the US has opened up trade liberalization as a result of new negotiations with Colombia.


In spite of all of these developments, the US and China continue to find new trade issues on which to dispute.


Anti-dumping tariffs on Chinese solar panels have sparked an EU investigation into China’s trade affairs.

Porter’s Diamond

In order to better demonstrate what factors contribute to a country’s national advantage, Michael E Porter created a diagram known as the Porter Diamond. First published in Porter’s own book The Competitive Advantage of Nations, he used the shape of a diamond to illustrate his concepts. The book itself offers academic insights, as is credited by CIMA, into how the diamond analogy functions and how it can be used in formulating corporate strategy.


The set of factors, both created and inherited, which give one independent state an economic edge over another is referred to as its national advantage. ACCA claims that by implementing the Porter Diamond into a nationwide corporate strategy, one can expect to drastically improve revenue and innovation.


Porter’s Diamond diagram is made up of four points which are as follows: firm strategy, demand conditions, factory conditions, and related and supporting industries. These factors are each symbiotic in its relationship to the other three, resulting in a mutually supported structure that is symbolized by a diamond.


Government oversight, natural resources and skilled labor are just a few of the factor conditions that comprise a company’s total set of geographical advantages and disadvantages. As described by ACCA online, in order to compete with companies that have a resource advantage within their own country, some companies have to creatively manage their employees and materials to stay afloat.


Consider an oil company in the Middle East. By being able to perform all of its operations such as drilling and refining while also being able to sell to the local market, it stands an enormous advantage over similar companies with limited access to oil. In order to stay competitive, those similar companies may look to other alternative fuels to better accommodate the types of resources that are immediately available.


The related and supporting industries described by the Porter Diamond encompass all companies related to the primary business. Depending on their use of their competitive advantages, they can have a positive or negative effect on the primary corporation. CIMA online assures that a country’s national advantage can be increased by having strong supporting industries.


In fact, outsourcing is the issuing out of a contract of a certain process of business to a third party. Sometimes, it involves the transfer of assets and employees from one given firm to another. Outsourcing is sometimes a very important part of any given business. In some institutions, both the employees are encouraged to have learnt about this particular subject, which can come by attaining certification from courses which include the ACCA and CIMA.

ACCA and CIMA online study

Most of the time, business individuals prefer the study of ACCA online, as well as the CIMA online study. This is specifically due to the flexibility of participating in the online courses. There is no limit at all for the location of your study as long as you are interested.
ACCA, CIMA and outsourcing

In the process of learning of these specific courses, a lot of knowledge is given on the question of outsourcing. They indicate that almost all the tasks in a business establishment have a potential of being outsourced but it does not mean that it should always be a solution.
Jim Lanzalotto, a principal at the marketing and strategic company known as Scanlon Louis, indicates that you should not outsource just because you do not want to do a certain task, and he further states that there are some things that are very important to the core of your business and yet you do not want to do.
In the ACCA online study as well as the CIMA online course, business professionals are urged that before choosing the tasks that they can outsource, there is the need to take a keen look at the business and find out their values and strengths.
Marc Resnic, a Ph.D. holder who is a consultant of small businesses and is also the director of the eminent Institute of Technology Innovation at the Florida International University, mentioned that small businesses ought to recognize their core aptitudes and capabilities and fully focus on their talent, R & D, resources, and management on becoming the best in their trade. He also added that outsourcing any of the core capabilities of a small business might cost it its main customer attraction as the customers will be able to get it from any other establishment.
CMA and ACCA options of outsourcing

After the study of CMA and ACCA whether online or in a traditional classroom, a business professional will realize that the following are the main tasks that are best to be outsourced in an institution:

  • A professional with great expertise that is only needed at specific times in an establishment. For instance, a CFO can be hired to come in only a selected number of times in a month for analysis of the finances and ensure the bookkeeper is precise in his tasks
  • Tasks, which are highly repetitive, for example, data entry and the shipping of inventory.
  • Expert knowledge: a good instance is the IT support specifically for your system of accounting since it might be difficult to afford an IT individual for full time basis, but he or she is needed as your IT needs to be dynamic with time.

Gregg Landers, a director of management of growth at the country’s eighth major accounts and business service provider CBIZ MHIM, is also in concurrence with the mentioned tasks that are best to be outsourced.
A very good point to start finding best outsource providers is from your colleagues other vital professionals; for instance, bankers or lawyers and searching for online networks using Twitter and Facebook. It is important to get the best recommendations before handing any task over to an outsource provider as the selection process is very crucial.


Often confused with the similar term outsourcing, offshoring is moving jobs from one country to another in order to save costs on employee wages. As CIMA online puts it, service sector offshoring is a relatively new phenomenon that has been growing quickly since the early 2000’s.

In the US, the average accountant will earn about $63,000 per year while in India an accountant with the same qualifications will only make about $5000. It is easy to see why most firms would prefer the Indian accountant. One of the leading technology firm’s CEO stated, “If you can find high quality talent at a third of the price, it’s not too hard to see why you do this [send jobs offshore].” This is an easy way for firms to gain a business advantage over the competition.

According to ACCA online, government intervention and market fluctuation are the two main factors that influence offshoring. Another advantage of using foreign workers is that they know the tastes of local customers, which make them ideal for sales in their native land. In China and India, the consumer class is rapidly growing which makes it highly appealing for overseas companies looking for cheap labor in a large market. Governments also offer tax incentives to companies who offshore US and European jobs. Some countries also place restrictions on technology and wage to ensure that their workers receive fair treatment and are not taken advantage of by foreign companies looking to minimize costs.

Immigration and tax reform in the US is accelerating offshoring rates. Tax breaks are given to US multinational corporations that participate in offshoring. According to ACCA, some firms use of US immigration policy to their advantage by using visa restrictions to facilitate overseas work.

The structure of society and technology has also contributed to the rise in offshoring. Costs for remote business have decreased due to improvements in software, telecommunications and Internet.

CIMA states that recently instituted employment norms and policies have enabled businesses that once were heavily reliant on foreign workers to bring back to their US counterparts.

Monetary Policy

The Federal Reserve is concluding its policy known as quantitative easing by gradually reducing its bond purchases and the accumulation of unused bank reserves. This has aided in bank lending. The likelihood of additional progressive normalization of Fed policy should boost economic appreciation higher than the current sluggish GDP growth and lack of jobs that have been a challenge since 2008. Those pursuing ACCA certification would be greatly interested in this topic.

The Fed had one clear objective with QE, which was to bring down long-term interest rates and not to heighten credit or bank lending. Ever since the 2008 economic downturn, the intention was to lower bank risks and prevent the increase in comprehensive credit. This move comes amidst Fed’s facilitated increased credit to improve the bond.

Jan 1 is the date when Fed officially launched plans to scrap Quantitative Easing program leading to an upsurge in commercial and industrial lending. This category of bank lending is essential and a typical origin of credit for SME’s and new businesses. In 2009-2013, there was no substantial growth but as soon as the taper was initiated, the 16% yearly rate became a reality in the first quarter. This is a typical economic evaluation topic that can be useful to CIMA students to evaluate Fed’s decision to make changes to its monetary policy.

It is anticipated that when Fed ceases acquiring bonds, the IOUs (bank reserves); the Fed payments made to banks in return for purchased bonds will hit an estimate of $3 trillion in late 2014. Previously, bank reserves were regarded to be instruments for regulating the monetary base and therefore variations had an impact on bank lending. Banks were expected to have in their possession substantial reserves to support their depositors. High bank reserves would have lowered the bank’s system aptness to take in further deposits or create more loans.

U.S. regulators in recent times have switched to direct banks regulation as opposed to supervising bank leading using bank reserves. In an Apr. 3 media briefing, Mario Draghi, the President of European Central Bank disassociated monetary policy from bank reserves and stressed the importance of gauging monetary policy using the euro exchange rate.  This news can be found on the ACCA online and CIMA online for those who would be interested to read further.

Apart from buying bonds, the Fed has anticipated some motivation because of the near-zero interest rates. Borrowers have been inspired when interest rates are reduced. The Fed has been insisting on near-zero rates. However, such a level only makes sense in case of a financial crisis because it is way lower than the standard rate used on the market. This sounds more of a price restriction on credit as opposed to a stimulus policy. According to CIMA online study, one of the strongest principles of economics is that price controls destabilize markets and lower supply, a move unfair to new entrants. On the other hand, eliminating price controls fixes the harm.

Subsequent steps in recovery of policy will become a reality if genuine GDP growth for two-quarters remains past 3.5% as expected. This, in turn, should compel Fed to backtrack on its near-zero rate policy. This will not be good news for Wall Street. However, marginal growths in interest rates will facilitate interbank markets to reconstitute and small and middle-class businesses benefitting thanks to slow reassertion of market-driven credit allocation. This is a typical example of an ACCA online study of how governments have used monetary policies to control lending.

What is Free Trade?

Trading system between partner nations includes exchange of goods, capital, and labor. Free trade allows the system to occur without any hindrance on the process. There are a number of nations who practice free trade agreements. There are several international organizations created that promote and suggest free trade among their member nations. However, free trade opened conflict and arguments to those who are against this system, some economists, politicians, growing industries, and a few social scientists. ACCA and CIMA are online courses that let you know that full details about free trade.


Any kind of barrier that hinders trade is broken upon applying a free trade agreement. This result to lesser export fee which includes taxes, tariffs, and import quota along with subsidies, tax breaks and other fees, because all these things are eliminated during trade to support domestic producers. Currency flows continuously without any barrier to follow the free trade regulations. Overall, trading system allows other nations to trade with all the benefits that domestic producers are given. ACCA online study lets their student get informed of what these fees cover.


Free trade promotes competition between foreign and local goods and services by lowering its prices. The government will no longer provide subsidies and other forms of assistance to domestic producers. Other forms of assistance include quotas that force citizens to purchase products mostly or only from domestic producers. Foreign nations can introduce their business in the local markets upon free trade agreement. Prices are not the primary concern of free trade; it is established to enhance innovation because competition gets bigger, and producers need to engage their clients with new and innovative products and solutions. CIMA online further explains the industry of marketing for local and foreign companies.


An out-country benefit of free trade is that it fosters international cooperation among partnering nations. There is free exchange of goods and citizens. Moreover, free trade promotes educational advantages between trading nations. Some examples are sending skilled and professional workers like engineers to train those people studying engineering in the other nation, or allowing people in rural areas to learn farming techniques and food safety practices from agricultural experts. Get more examples of labor trade from ACCA online.


Those against free trade argue that this practice hurts domestic producers because of too much competition from companies that strictly reinforce less stringent labor laws. One good example is the European Union that has specific rules on working hours, pay rates, working conditions, etc. which essentially increase the cost of production for companies in that nation. In contrast, Honduras and other developing countries are not strict on such rules that allow production to occur at low cost because of the low pay rates. You can know about the progress of other developing countries in CIMA online study.


Free trade also created some issues on product safety among consumers. Some series scandals involve large nations like China that distributed tainted food products. This opened concerns on the safety of purchasing from companies with incomplete, inefficient regulatory systems. Some suggest that free trade gives domestic companies the idea of relocating overseas to gain the benefits of cheap labor costs, inexpensive supplies, and not strict regulatory systems.

Fiscal Policy

Fiscal policy refers to the mechanisms a government puts in place to regulate its expenditure and monitor tax rates to achieve national economic impacts. It is a close associate to monetary policy utilized by the central bank to regulate supply of money in a country. These two policies are used varied contexts to shape a nation’s economic objective. ACCA and CIMA certifications exhaustively cover how fiscal policy is applied, regulated and the impacts of rolling out this policy on a nation’s population.

Prior to the Great Depression, which happened between September 4, 1929 and the late 1930s or beginning of 1940s, the government’s strategy towards the economy was non-interventional. After the World War II, the government made a decision to become actively engaged in economic issues to tame the unemployment, business, inflation and value of money. By combining both monetary and fiscal policies (depending on the political backgrounds and beliefs of those who were ruling then, one policy could outdo the other), governments managed to get jurisdiction over the economy. The relationship between the two policies and how it affects the economy is covered in CIMA online syllabus.

For those studying ACCA online courses, you need to understand that the key is to balance between adjusting tax rates and public spending. For instance, motivating a sluggish economy by allowing more spending or reducing taxes threatens a rise in inflation. This is because when the amount of money in circulation and demand for it increases, it can lead to a drop in the value of money. The result of this is it becomes expensive to buy an item whose value is still the same.

If the economy is slow; Joblessness is on the increase, customer spending power is low, and businesses do not realize meaningful profits. The government can step in and drive the economic engine by lowering taxation that results into consumers using more money while raising government spending by purchasing services from the market through infrastructure projects (setting up roads and schools). When the government spends on these projects, it opens up job opportunities and increases wages that are absorbed into the economy. “Pump priming” takes place when taxation is lowered by pumping more funds into the economy and up-scaling spending by the government. When this is done, with time more jobs are created.

With enough money circulating in the market and fewer taxes, the public’s demand for goods and services goes higher. Subsequently, businesses transform from dormancy to become active. Comprehensive ACCA online study courses adequately explain inflation.

However, if this process is not regulated, an overactive economy can lead to saturation of money in the market. This oversupply reduces the worth of money and increases prices because there’s a higher demand for products. When this happens, inflation goes beyond the acceptable levels.

Regulating the economy using fiscal policies alone is not an easy task. Not providing enough oversight, keeping the balance between an active economy, and inflation can be easily lost. Enrolling for a CIMA online study course helps you to have a better understanding of how fiscal policy works.