"false economy",business classics presentation

False EconomyFalse EconomyA surprising economic history of the A surprising economic history of the

worldworld

ByByAlan BeattieAlan Beattie

Team AppleTeam AppleSneha NimkarSneha Nimkar

Sourangshu SarkarSourangshu SarkarMir Zeeshan AliMir Zeeshan Ali

• Author – Alan Beattie

• Was born in Chester in 1971

• Balliol College under Oxford University - Degree in History

• Master Degree in Economics – Cambridge

• Economist – Bank of England

• Editor – Financial times since 2004

False Economy

Preface

The aim of this book is to explain -

1. how and why countries and societies and economics got to where they are today

2. what made cities the way they are3. why corruption destroyed some

nations but not others4. why the economy that fed the

Roman Empire is now the world’s biggest importer of grain

5. Countries have choices, and those choices have substantially determined whether they succeeded or failed

World tour

Making Choices: Why did Argentina succeed and the US Stall

• Countries do not get rich by accident, they make choices that determine the path their economics takes

• US and Argentina: rivals - young, dynamic, fertile farmlands and confident exporters

• Before great depression of 1930s, Argentina was among the ten richest economies in the world

• A hundred years later there was no choice at all

Making Choices: Why did Argentina succeed and the US Stall

• Colonies of US got independence in 1776 /new nation in 1789

• Argentina independent republic in 1816

• Both faced internal struggle

• US farmland to individuals and families / imported many farming practice from northern Europe, Britain, Germany, and Netherlands

• Argentina delivered it rich landowners / 1860-70 land owners attracted towards rural life and passed their time with literature, music etc

Making Choices: Why did Argentina succeed and the US Stall

• 1880-1914 first golden age of globalization

• US/Argentina's export increased

• Argentina’s income captured by the owners of huge lands

• Argentina needed to import more technology

• Argentine was trying to follow US, but US invested it’s saving in industrialization

• Argentina denied to invest in industrialization initially

• Argentine manufacturing was small-scale – handicraft workshops

Cities

• Cities are shaped by choices made by government and people

• 130-50 BC Rome (capital of Italy)– Military conquered – Unemployment– Bribe & Tax

• Venice and Florence– Trading warehouse – Industrial revolution

• Milan – economic powerhouse of modern Italy

• China - proliferation

• Washington DC

Trade: Why does Egypt import half its staple food?

• Egypt – grain export

• Nile river

• Grain importer

Natural Resources: Why are oil and diamonds more trouble than they are worth?

• Oil – UK, Norway• Giant, high technology drill, offshore

platform• Small no of employee

Dutch Disease

• Exchange rate rose• Other export down• Unemployment

Oil Vs Tulip

Natural Resources: Why are oil and diamonds more trouble than they are worth?

• Diamond – West Africa• Antwerp, Amsterdam, Mumbai

Natural Resources: Why are oil and diamonds more trouble than they are worth?

• Copper – Zambia

• Low price /60 years tax rebate

• Chinese miners

Religion: Why does Islamic countries get rich?

• Does success of economy depends upon religion?

• Islamic countries

• Prohibition on usury

• Restriction to business and commercialization

• Did not allow new technology

• Conquer to other countries

• Struggle to increase productivity

Religion: Why does Islamic countries get rich?

• Arab Empire (ottoman)

• Absorbing new technology

• Exchange of ideas and goods

• Hinduism

Trade route & supply chain: Why doesn’t Africa grow cocaine?

• International trade – good communication, cheap & reliable transport, certainty about staff and customer

• Advance in telecommunication & transport increased trade

• Long distance : less trade• Rich – Poor countries : less trade• 1600 AD – East India Company• Monopoly – Spices / pulse• England to Bombay – 100 to 120 Days• Dutch East India company – modern

Trade – Financial - Logistical• Steam-powered ship

Trade route & supply chain: Why doesn’t Africa grow cocaine?

• Why do Africans not grow coca to make cocaine?

• Like coffee, coca grows in high altitude – Andes

• Large coffee growing regions – Uganda, Ethiopia

• struck doing low-paid supply chain

• As per UNO – poor transport and logistics

• Unstable policies• Coca – not have a quick return

Corruption: Why did Indonesia prosper under a crooker ruler & Tanzania stay poor?

• Corruption• Abuse of position for

personal gain• Indonesia

– Ruled by Suharta– Bribery & cronyism – Orthodox economic policy– Contract to private cronies

• Tanzania– Julius Nyerere– Great personal honesty– Allowed state hold

companies– Swept small holding farmers– Appoint bureaucrats