Investigative Article Brief – Panama and Morocco

Article Brief #4 Syllabus Section Macro/Development Word Count:  1027 Written: August 26, 2015

Sources:

“Morocco’s Cereal Harvest Reaches Record 11 Million Tons.” Morocco World News RSS. N.p., 12 May 2015. Web. 18 May 2015.

<http://www.moroccoworldnews.com/2015/05/158283/moroccos-cereal-harvest-reaches-record-11-million-tons/>.

“Comment: Climate Change Is Hitting African Farmers the Hardest of All.”SBS. SBS, n.d. Web. 18 May 2015.
<http%3A%2F%2Fwww.sbs.com.au%2Fnews%2Farticle%2F2015%2F05%2F12%2Fcomment-climate-change-hitting-african-farmers-hardest-all>.

“El Nino Drought Spurs New Cargo Limits in Panama Canal.” CBC News. N.p., n.d. Web. <http%3A%2F%2Fwww.cbc.ca%2Fnews%2Fworld%2Fel-nino-drought-spurs-new-cargo-limits-in-panama-canal-1.3184328>.

Concepts: Aggregate Demand and Economic Growth

Diagrams: AD/AS Model and Lorenz Curve

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Investigative Article Brief

Brief Summary of Issue: Panama and Morocco, two countries on the verge on developing, have experienced certain drawbacks in the year of 2015. Despite experiencing issues in different sectors, Panama in service and Morocco in agriculture, the causes of these economic problems intersect at a point – Climate change. This year, both countries have suffered, and are still economically suffering from capricious climate. The El Niño phenomenon has caused devastated weather patterns in coast of Peru; rainfall has been so infrequent that the lakes dried up, causing the government to set weight limit restrictions for cargo ships passing through the Panama Canal. The infrequent rainfall has also made growing crops very difficult for Moroccans, which account for 15% of GDP. With agriculture accounting an average of 32% of GDP, other African countries have surpassed Morocco in this sector.

 

Economic Linkages: The economics concepts connected to this issue are Aggregate Demand, Economic Growth, and Injection.

Aggregate Demand (AD) is the total demand for the goods and services of a nation at a given price level and at a given period of time. There are four components that make a country’s aggregate demand: Consumption (C), Investment (I), Government Spending (G), and Net Exports (X – M). Therefore, this can be expressed as follows: AD = C + I + G + (X – M).

As Aggregate Demand and Economic Growth are directly proportional, as AD increases, Economic Growth increases as well. Economic growth resembles increase in real output; thus, increase in GDP.

Injection is comprised of three areas: government spending, investment and export. These three areas bring money into the circular flow, which could also be interpreted as GDP. Export is area that is affected in the issue for Panama and Morocco.

 

Application of Concepts: The AD/AS diagram shows the relationship between average price level and real output. Depending on the changing factors in the economy, the aggregate demand and aggregate supply curve will shift. It is important to note that there are no figures on the diagram because both Panama’s and Morocco’s numbers and figures are very different. However, this diagram is still accurate to illustrate the essential concept of both economies.

 

Diagram:

P and Y show the average price level and real output of Panama and Morocco. The aggregate demand curve shifting to the right is a result of one of the components – net export (X – M) in this case – increasing. The net exports are the measure of foreigners spending on a nation’s good or services minus the amount spent by domestic firms on imports. Around 50% of the country’s land is already used for agriculture; therefore, exports to other countries are great. Cargo ships and yachts paying the government to use the Panama Canal account for net exports for Panama. The shift from AD to AD2 is the potential aggregate demand, or in other words is the point the government was hoping to reach if there were no drawbacks due to climate. This would make P2 and Y2 the expected average price level and output. However, because both countries faced issues due to climate, the net exports could only increase by so much, shifting the AD curve to AD1. Furthermore, P1 and Y1 show the actual average price level and real output. In addition to this, the increase from P to P1 illustrates the inflation and the Y to Y1 illustrates the economic growth.

 

Diagram 2: A Lorenz curve illustrates the income distribution and income equality in both countries. The climate’s impact on both economies will be presented through this diagram.

Panama has a GINI coefficient of 51.9; therefore its curve is further away from the perfect equality line in comparison to that of Morocco. Morocco’s 40.9 GINI coefficient enables its curve to be closer to the perfect equality curve. In reality, there is no country that has a perfect distribution of its income; therefore, the close the curve, the better it is. Also, generally the closer the curve is to the perfect equality line, the more developed the country is. The Lorenz curve suggests that Morocco is more developed; however, some other development indicators illustrate Panama as more developed.

 

Evaluation:

Panama and Morocco are very much affected by climate this year; it has hindered economic growth and development a lot. Although both countries were affected negatively, it could have been worse. The situation for Moroccans could have also been worse too. Despite dedicating more than 50% of land on agriculture, it accounts for only 14.6% of GDP. Some actions are already being taken for this. For example, 400,000 crops have been supplied with drip irrigation systems and around 20 million fruit trees have been planted. Although costly and requires time, this project will bring Morocco’s agriculture economy back up again. The irrigation systems may be used if such situations repeat, and this time it will not be as devastating.

 

For Panama it has been slightly worse because the GDP component that is directly affected is services, which account for 78.3% of GDP. Although the authorities say that six of the 26 daily passing ships will be affected, this could add up to some big economic loss. An average full cargo ship contains 3,800 full containers and each full container is charged 82 dollars – that’s already 320,000 dollars. Tugboats and ground assistants also account for another 30,000 dollars. In 6 months, if 6 boats were to change their route per day, that would sum up to a 400 million dollar loss. However, the restrictions set by the government are the most appropriate action to take. If a cargo ship were to be stuck there, this would be catastrophic. Also, if the government had just decided to temporarily close the Panama Canal route until lakes fill up again, this would create an immense economic loss. In short, the government is dealing with the unfortunate situation very well. If the scarcity of water continues, a greater restriction could be applied, but the canal should not be closed to access unless absolutely needed. To end on another positive not, it is good that the services sector in Panama does not only depend on income from the Panama Canal but other areas too.

 

 

 

 


Data Collection 2: Panama

Data Collection 2: Panama

GDP per Capita PPP: GDP (Gross Domestic Product) is an important indicator when measuring development in a country. The data presented for this indicator is a sum of the total expenditures for all good and services in a given period of time, adjusted by purchasing power parity, and then divided by the total population. PPP GDP is the GDP converted into international dollars using purchasing power parity rates.

 

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Starting from an all time low of 7462.66 USD in 1990, the figures have reached an all time high of 19637.09 USD in 2015. (Trading Economics 2014) In only two decades, the GDP per capita has almost tripled in Panama, signifying great development. Over the years, a gradual increase is evident and in 2007, the figures strike up quite rapidly. It is also important to note that in the time span of 20 years, the figures never decreased from previous years except in 2002. This downfall seems to be an anomaly as it was only a slight drop and did not repeat once again.

 

Demographic data is important to analyze in measuring development in a country. The population pyramid visually presents the total male and female population and divides them into age groups.

Panama1991

panama-population-pyramid-2014

The population pyramid has slightly changed from 1991 to 2014. One of the primary changes evident is that it has moved from an DMT stage 2 population to a DMT stage 3 population and remains in an expansive shape. This change shows some development; however, Panama still need some time to be classified as developed and move to a stage 4 or 5. Over the 20 years, the birth rates still remain high as seen from the wide bottom. However, it has slightly changed from a completely youthful population to an older one. Also, the female and male ratio seems to be stable. The top of the pyramid is tapering still; however, it can be observed that the life expectancy has certainly increased. These points above show some development for Panama, but more is needed to classify the country as a developed one.

 

HDI (Human Development Index): The HDI values are an important factor to take into account when measuring development. The measure takes into account life expectancy, education and GNI per capita and converts it into one figure and ranks the country.

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Above, the contribution of each component to the Human Development Index is seen. As seen, the components aren’t very stable in terms of contribution. Education always seems to be the weakest contributor while life expectancy seems to be the highest. The difference between the two is massive as seen above. Taking into account these two factors and GNI per capita, in 2013, he recorded HDI for Panama was 0.765, which ranked the country 65th. Although Panama is not yet among the highest HDI countries, it has very much developed since 1990, when the HDI value was 0.651.

 

GINI Index values are also essential. A value of 0 represents equality and an index value of 100 represents perfect inequality.

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Here it is seen that the GINI index value for Panama is just above half way – 51.9. Values from years earlier than 2000 were not recorded. From 2000 to 2013 though, it is seen that the values have not fluctuated, in fact nearly stayed constant.

 

Population living under poverty line: Percentage of total population living under $1.25 per day.

 

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Although 26% living under the poverty line may not seem like a huge deal, it actually is. Although it may not compare to Sierra Leone for example, with 70.2%, one fourth of the population is quite a lot. It is also to note that Panama does have an enormous population, 3.8 million, but still has a high percentage of population living under the poverty line.

 

When comparing the HDI rank of Panama with its GDP per capita rank, one can see that both are close. The HDI of Panama is recorded to be 0.765 and ranks 65th in the world. On the other hand, the GDP per capita value is 19637.09 and ranks 57th in the world. It would be appropriate to conclude that if it matters only slightly, Panama seems to be scoring higher in relation to other countries in the measure of GDP per capita.

 

Primary school drop out rates (%): It is important to see how much percent of the students receiving education drop out in primary years.

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Looking at this measurement, 8.39% of students drop out of school in primary years. This percentage is actually quite high in comparison to a developed country; a developed country would not have a drop out ratio close 1:10; therefore, it is seen that Panama still has some time in order to develop in the area of education.

 

Adult Literacy Rate (% of population 15 and older): It is important to take this measurement into analysis to see how much of the population are educated. This is a very important measurement that should be quite high for any country that is in the progress of developing and/or aims to develop in the near future.

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When looking at the values for this measurement, 94.1% in 2015 seems quite high. However this value can always go higher. This measurement seems be to be closest to that of a developed country’s value.

 

Unemployment Rate:

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Unemployment rate is an important measure because it represents the ratio of people working and not working. Recently, in 2015, Panama reached an all time high employment percentage: The unemployed decreased to 2.50 percent. In 1988, the unemployed percentage was recorded to be 16.30, which is very high.

CO2 Emissions (Metric tons per capita):

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Carbon dioxide emissions are those that result from burning fossil fuels and manufacture of cement. The earliest data starts from 2005, with 2.0 metric tons and increases to 2.6 in 2011. We can’t expect the measurement to decrease because population and manufacturing increases by time. 2.6 metric tons at the moment doesn’t seem to be too much at the moment, but it is important to disable it form increasing. The values of Panama seem to be very similar to those of developing Latin American and Caribbean countries.

 

Life Expectancy at Birth

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The measurement indicates the number of years a newborn baby is expected to live if patterns continue. From 2005, the life expectancy has increased by 1.6 years: 76.0 to 77.6. These values are relatively higher than those in developing Latin American and Caribbean countries.

 


Blog Post 2

El Nino Impacts Panama Canal Too!

Despite being a passionately cultured country, Panama is also located in a very special area for trade. One of the first images that come to mind is the Panama Canal, which was built in 1994. As this canal connects the Atlantic Ocean to the Pacific, it serves a very important role for international trade. This 50 mile long canal saves very much fuel and a great amount of time to reach its destination. This canal route is preferred by almost everyone to avoid having to travel around South America, which is an extra 8,000 nautical miles. With the slow speed cargo ships travel in, this distance can be extremely time consuming, especially in a rough climate. Everyday, an average of 36 large cargo ships and 70 private owned yachts use this route.

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Although this may sounds life saving, it has its consequences too. Every few years, an El Nino’s impact is dealt with. Some years are more severe than others, for example, this year. Recently, on August, the government was obliged to impose new restrictions on how much cargo ships can carry. For a developing country like Panama, these small factors matter immensely. They hinder development and economic gain for the country. The restriction is that the maximum draught length can be 11.89 meters. The issue arose from limited rainfall in Gatun and Alajuela lakes. Rainfall is vital because the canal operates with water: as it consists of three different sections/locks, each section raises the ship to a higher level by compressing water under it. To raise such heavy ships to a higher water level, one can only imagine how much water and force is needed and for the moment, Panama lacks this quantity.

*Draught: the vertical distance between the ship’s hull and the water line.

An El Nino is a natural phenomenon that occurs every few years. This event affects many individuals in coastal areas all the way from floods and droughts to low fish catches. In other words, this phenomenon affects climate change immensely. During an El Nino atmospheric pressure switches (Southern Oscillation) and trade winds reverse, carrying warm water to the west coast of South America. The increase in surface water temperatures alters rainfall patterns.

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Although the authorities note that only six of the 36 daily passing ships will be affected, in the long run this could be economically harmful for Panama. Additionally, firms will not be able to export goods to their full extent; therefore, big ships will be futile for a period of time. Customers will be affected too: if they need large quantities of a good, so much that it exceeds restricted cargo weight, two ships will be needed, which will be economically disadvantageous for the buyer. If this problem affects more ships, this will be a problem for Panama. An average full cargo ship contains 3,800 full containers, each full container is charged 82 dollars; so, that’s 320,000 dollars already. Tugboats and ground assistant also account for another 30,000 dollars. In 6 months, if six ships were to change their route per day, this would sum up to 400 million dollars solely from cargo ships passing through the canal. In the long run, these numbers will become greater and result in great loss for Panama, especially when they are on the verge of economically developing. Also, Services account for 78.3% of GDP for the country; therefore, an economic loss in the area could be consequential.

Although the Panama government seems to be aware and has started to take some precautions by setting restrictions, the worry continues. Unfortunately rainfall cannot be regulated by the locals; therefore, circumstances for Panama may even get worse with need of further restrictions. After this issue, the locals should question whether the third lane for the canal, which has been in the process of building for the past few years, is appropriate or not.Without having the chance to use the third lane, the government may decide to drop to one lane use only if rainfall is limited.

 

Work Cited:

http://www.cbc.ca/news/world/el-nino-drought-spurs-new-cargo-limits-in-panama-canal-1.3184328

http://www.ctvnews.ca/business/panama-canal-to-temporarily-limit-cargo-on-bigger-ships-1.2507909

http://www.cheapestdestinationsblog.com/2013/07/19/how-much-does-it-cost-to-go-through-the-panama-canal/

http://oceanservice.noaa.gov/facts/ninonina.html


Article Brief 4 – Morocco’s Struggle in Agriculture

Morocco’s Struggle in Agriculture

The majority of African countries, including Morocco, depend heavily on agriculture as a source of income. Through statistics of over 20 years, it is also seen that the weight of agriculture on GDP for Morocco is higher than that of other European or Asian countries. In fact, 65% of Africa’s labor force is employed in the agriculture sector and for these countries agriculture accounts for 32% of their GDP.

Climate is undoubtedly Africa’s biggest enemy in terms of its negative affect on agriculture. Over the years, harsh climate has caused Morocco to float between 15% of GDP in comparison to an average of 32% for other African countries. The severity of climate change is illustrated with Egypt’s projected 15% loss in wheat production by only a 2 degrees Celsius change. Though more than half of the GDP depends on services, Morocco’s agriculture is in danger. Lahouari Bounoua claims that the agricultural performance has improved, but the recorded amount is still not enough to satisfy demand. The issue with agriculture most definitely does not reduce hunger and prevents maintaining a sustainable level of food security.

Expected rich rainfall has launched a massive agricultural project in Morocco. Arguably suffering and unable to reach its potential gain from agriculture, Morocco aims to hit a record of 11 million tons of cereal harvest this year.gdp-composition-breakdown

morocco_econ_1973

The display above shows how much of the country’s land is solely dedicated to agriculture; yet, still the potential gain is not met. Now why is that and what is has to be done? As briefly mentioned earlier, the climate and more specifically little rainfall and temperature change has really disabled crops to grow. Weather, I think we can all agree, cannot be controlled to favor and benefit a certain area. Agriculture Minister Aziz Akhannouch has however, supplied more than 250,000 crops with drip irrigation systems and is planting 13 million fruit trees. Though these numbers may not be great ones at the moment, if the project may continue, it may result in great positive changes for the Moroccan economy.

By 2030, the projected figures for Morocco’s agriculture sector is not very bright. The climate is to go worse and temperatures are to increase as they have never before. It is absolutely crucial to make this project successful because otherwise, Morocco will also lose their 15% agriculture portion on GDP. World Hunger is also affecting Africa the most. Africa has the greatest number of malnourished people and also has a very fast growing population along with very few resources. It is absolutely crucial that the country copes with this.

Works Cited:

“Morocco’s Cereal Harvest Reaches Record 11 Million Tons.” Morocco World News RSS. N.p., 12 May 2015. Web. 18 May 2015. <http://www.moroccoworldnews.com/2015/05/158283/moroccos-cereal-harvest-reaches-record-11-million-tons/>.
“Comment: Climate Change Is Hitting African Farmers the Hardest of All.”SBS. SBS, n.d. Web. 18 May 2015. <http%3A%2F%2Fwww.sbs.com.au%2Fnews%2Farticle%2F2015%2F05%2F12%2Fcomment-climate-change-hitting-african-farmers-hardest-all>.

Data Collection 1 – Morocco

Data Collection – Morocco

GDP (Gross Domestic Product): GDP is a very important indicator when measuring and analysing the development in a country. The data presented for this indicator is a sum of the total expenditures for all good and services in a given period of time.

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Looking at a time span of 20 years, it is seen the there is an increasing trend in Morocco’s GDP. Starting from 34 billion U.S dollars in 1996, the GDP increased all the way to 104.37 billion U.S dollars in 2013 (Trading Economics 2014). This great increase in only two decades illustrates the economic development in the country. Although there are some slight decreases in some years, they are not great downfalls; therefore, taking them into consideration is not necessary. It is noteworthy to point out that until 2008, Morocco’s GDP had been growing a very high rate; however, the global economic crisis put an end to it. Although until 2011 the value did not change too much, it is important to note that Moroccans dealt with it well and the GDP growth is resumed.

Composition by Sector:

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Morocco_GDP_Sector

 

This indicator shows the distribution of Morocco’s GDP into three sectors: services, industry and agriculture. As presented in both displays, services account for more than half – 55.8% – of the country’s GDP. Industry also accounts for a large portion of GDP: 29.6%. Lastly, Morocco’s GDP depends least on agriculture. In graph 2, it seen that in 1980, as opposed to today, Morocco used to be less dependent on services and a little bit more dependent on agriculture. Over the years, the dependency switch is seen between the two: Services increasing from 51 to 55.6% and Agriculture decreasing from 19 to 14.6% and even 11% in 2000 (IEU). The dependency range for industry has not changed much; over the past 35 years, the percentage has only ranged between 29 and 31%.

Population:

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Since 1995, Morocco’s population has been increasing at a steady rate, having reached 33.3 million people in 2014 (Trading Economics 2014). Statistics regarding population are necessary for assessing many factors of development, unemployment rate for example. As this indicator is in a rate form rather than number of unemployed people, the figures presented take into account the population as well. The increase in population will be beneficial for Morocco’s economy. Although over the years a large portion of the total population has been a youthful population, this will benefit Morocco’s economy in the coming years: as this population grows, they will fit in the economically active population.

Unemployment Rate: This indicator is the measure calculated with the number of people actively looking for a job as a percentage of the labor force.

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As seen in the data above, the unemployment rate in 2013 was 9.9%. This value is fairly high. As explained earlier for the population indicator, the youthful population affects this indicator too. As the youthful population is a large portion of the total population, the unemployed youths increase the unemployment percentage.

Inflation Rate: Inflation rate is the measure of general prices for goods rising, and therefore the purchasing power falling. Central Banks undoubtedly try to stop too much inflation, but at the same time want to prevent deflation. Inflation can be caused by a country printing more money than is justified by the countries wealth. This will result in the value of the currency to decrease.

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As seen in the graph above, the inflation rate during the past 6 years has fluctuated greatly. The rate ranged all the way from -1.8 to 5.1% and now is reaching an ideal rate of 1.7%. According to investopedia, most countries’ central banks will try to keep their inflation rate between 2-3%. During 2008 and 2010, due to the global economic crisis, Morocco’s inflation rate dropped to -1.8%. The general price was much lower than usual; thus, affected expenditure immensely.

Government Debt to GDP:Screen Shot 2015-05-21 at 12.05.05 AM

This indicator is the percentage of total GDP owed. The ratio for Morocco is relatively high as opposed to developing and developed countries. Although the numbers have been decreasing, they are still relatively high. Also, after 2010, the ratio increased once again to 61.70%.

 


Passenger Pigeons SEE

Passenger Pigeons SEE

The extinction of passenger pigeons is an ideal example of Garret Hardin’s theory, Tragedy of the Commons. The theory that individuals act independently and rationally according to self-interest, and these behaviors are contrary to the best interest of the whole group is presented with this case. Not only individual hunters, but also passenger pigeon companies (commercial hunting) led to the extinction of 4 billion passenger pigeons within only a few decades. Because this meat was cheap, it was a popular choice in slavery. Another crucial reason was deforestation; in the early 1800’s when Europeans settled into North America, in order to build infrastructure, habitats were destroyed. This case is considered a market failure because the demand for the common resource, passenger pigeons, was higher than that of its supply. Moreover, this factor led to the depletion of this resource.

Statement 1: One of the primary negative externalities of the extinction of passenger pigeons is the environment.

Evidence: The extinction of nearly any animal always impacts the food chain to a certain extent, and passenger pigeons are a great example of this. These birds were vital in the feeding of numerous carnivores such as foxes, raccoons, marten and mink, and lynx. Also for several raptors, which include falcons and hawks. As the pigeons are secondary consumers, their extinction would create difficulty for Tertiary consumers as well, for example snakes. (Bagheel.com)

Evidence 2: The cause of the extinction, as mentioned earlier, was also because of deforestation. In the 1800’s the enormous deforestation, which was well over thousands of hectares, had consequences in the environment. Although trees are vital for our lives millions of them were cut down – though maybe it was not as a big as a problem then; however, the results are the important part. This great deforestation disabled biodiversity. It ruined habitats for numerous species and caused many, if alive, to migrate to other areas.

Statement 2: The depletion of this common resource has also had an externality on the economy.

Evidence: After the 1870’s as the passenger pigeons were nearly extinct, it could not be consumed anymore. Because slavery had ended around the 1860’s this did not significantly impact it; however, it did impact individual consumers. More importantly, it impacted the demand for other food resources. Although passenger pigeons did not have any perfect substitutes, some resources were favored in the replacement: these include rice and bread. Simply due to the depletion of a food resource hunger was not an option; therefore, individuals specifically consumed the ones listed above. As the demand of these resources increased, so did the price and therefore the company revenues increased. This was economically beneficial for rice and bread companies but also was catastrophic for those who depended on passenger pigeons.

Although no actions could be taken to solve the problem with passenger pigeons because it already extinct; however, this case should be scrutinized and precautions should be taken to prevent the extinction of other species. A few decades after the extinction in 1870, some laws and rules were set. These included hunting seasons, catch size, and catch quantity. It is possible to see this in the fishing industry. Several economies are dependent on their fishing revenue; therefore abuse the supply. There are many species near extinction and these include Blue fin tuna and Cod. There are universal laws that catch per year should not exceed a certain ton. The ICCAT set this number to be 13 tons in 2014. Also, hunting/catch seasons enable the species to reproduce during the times when hunting/catching is not allowed.

For example, in 1992 when Cod was nearly extinct, the Canadian government declared a cod moratorium. Although the shorts term impacts severely impacted people economically, in the long run it was a very successful project. Fisherman lost their jobs for a certain period of time; however, the specie reproduced and was abundant as before. In addition to this, some areas around the world are being treated with care. For example cutting down trees in some areas are not permitted. Construction of infrastructure is not allowed and this will help sustain the species and even be beneficial for reproduction. (WWF)


Article Brief 3

Article Brief #3       Syllabus Section 1           Word Count: 516 Written: March 20, 2014

Source: “Montana Says No to Cyanide Poison in Mining – The Progress Report.” The Progress Report. N.p., 13 Jan. 2002. Web. 19 Mar. 2015.

http://www.progress.org/tpr/montana-says-no-to-cyanide-poison-in-mining/

Concepts:   Market Failure, Negative Externalities

Diagrams:   Negative Externalities of Production

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Brief Summary of Issue: Helping extract and process more than 90% of the gold around the world, cyanide is poisoning people – even killing some. Making the process faster and cheaper, this chemical is used all around the world and is creating extreme health concerns for the third party, locals that take no part in the transaction.

Economic Linkages: This issue illustrated the negative externalities of production by showing the health consequences on people.

Production externality is costs of production that a party other than the producer or service has to pay for. They are usually unintended and can have social, economic and environmental effects. Gold, a mineral which 78% of it is consumed for jewelry purposes requires great processing and is very expensive. The article also states that 90% of gold is processed using Cyanide. Firms have been using Cyanide to ease processing the gold; however, this chemical has poisoned countless workers and locals.

Application of Concepts: A negative externalities of production diagram that shows the market failure in processing gold. The diagram illustrates the market failure by the socially optimal being lower than the market.

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As this is an externalities of production diagram, the marginal social cost (MSC) and the marginal private cost (MPC) will not be equal. The processing of gold causes more cost to society.

Due to the external cost, the marginal social cost is higher than the marginal private cost. Here, the market failure is illustrated as the difference between socially optimal (Qso) and the market (Qm). Qso < Qm à Market failure.

The equilibrium point of MSC and MSB is the socially optimal, the best allocation of resources. The blue area is the welfare loss.

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With regulation as a solution, the marginal private cost will shift to the left. This shift represents the cost of production increasing.

The shift equates the marginal private cost to the marginal social cost. Then, the equilibrium points meets the socially optimum; therefore, as the difference between socially optimum and market is eliminated, there is no more market failure.

Evaluation: Market failure teaches us about the failure in allocative efficiency and externalities teach us about the costs the third party is obliged to pay for. Understanding this crucial concept is important for countless real life situations. By looking at the equilibrium of both, it is possible to make conclusion such as, goods whose production creates a negative externality are overproduced and are sold at low prices. Also, because marginal costs are not equal to marginal benefits, resources are being misallocated.

Solutions regarding this issue are controversial. Taxes may potentially reduce the demand, but not enough to reduce the negative externalities. The problem is not with the high demand to supply raito, but is with the production. A possible solution is regulation; the government could take a step in and prohibit the use of the chemical Cyanide. This use of this chemical is not a must, but certainly eases the process. Using other, non toxic chemicals will perhaps cost more and perhaps take longer to process, but will certainly not be as harmful as Cyanide – people will not be poisoned. This potential solution will be effective because this will increase the cost of production, equating the marginal private cost to the marginal social cost. Having equated these two, the equilibrium will meet the socially optimum, eliminating market failure.

Already such actions are being taken; however not all around the world. It is a general tendency that more economically developed countries seek this mineral in less economically developed countries due to regulations. MEDC’s already seem to have some regulations regarding the use of poisonous chemicals; therefore, LEDC’s such as Mali and Niger are targeted to process with Cyanide.


Article Brief 2

Article Brief #2       Syllabus Section 1           Word Count: 552 Written: Jan 26, 2015

Source: http://www.bbc.com/news/business-29643612

Concepts:   Scarcity, Opportunity Cost

Diagrams: PED

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Brief Summary of Issue: Arguably the most striking news nowadays is the decrease in oil prices and the impact it has had on the Russian economy. After Ukraine and Russia entered the war, the Russian economy has not had very bright days: due to the extreme decrease in their main income, energy sources, the worth of rubel has decreased by 100% in the a few months. Every 1 dollar decrease in oil prices per barrel, Russia loses 2 billion dollars form its revenue!

Economic Linkages: This issue clearly illustrates the concepts of scarcity and opportunity cost which are central to economics.

One of the most scarce resources, oil, has had massive impacts on economies. As it is scarce, the demand and of course the price is very high. This creates a massive income for such countries such as Russian, but when the prices go down, it creates a massive crisis. After the decreasing prices, the Russian economy lost great amounts in revenue, which led to the massive decrease in the worth of rubels. Globally, buyers aren’t in the best economic shape; therefore, do not buy the resource at the same prices they bought previously anyways. In addition to this, the U.S refusing to buy oil has lowered prices even more. The opportunity cost here is the income and the supply. As producers cant stock this resource, they are obliged to sell it at very low prices.

Application of Concepts:   This is a PED graph, which show the responsiveness of demand to the change in price. We see a near vertical demand curve, which suggests the demand is inelastic; or, in other words, not responsiveness to the price change.
Screen Shot 2015-05-20 at 11.33.27 PM

The demand curve is not perfectly inelastic, but has a demand curve close to vertical. As this good is inelastic, the change in price percentage is certainly greater that that of quantity demanded.

Russia here for example, as they depend heavily on energy such as gas and oil, no matter how low the buyers are willing to pay, they have to sell it. Oil is a resource that cannot be stocked; therefore, they are obliged to sell it at very low values. The oil prices have decreased from 110 dollars per barrel to below 48 dollars. It is also important to note that this is a great impact on the Russian economy because for every one dollar decrease per barrel, 2 billion dollars is cut from revenue.

P is the initial price at 100 dollars per barrel a few months ago and P1 is the price today at 48 dollars. There is a very small change in the demand due to price. By calculating the revenue by price x quantity, we can calculate the impact it has on revenue.

Evaluation:   It is extremely important to understand why oil prices are decreasing and the consequences it has on economies. As it has impacted the Russian economy immensely, the rubel value has decreased a lot. As most companies have their income in rubels and pay the producers in another currency such as euros, the consequences are great. Due to this reason, many companies have gone bankrupt due to debt. Understanding how prices work can help countries take important measures – such as the production of oil.

It is also important for the individuals to understand this trend and what factors affect what. Russian companies in Russia could keep their production at low rates until the time of the crisis. Or else, large investments can result in bankruptcy. Understanding opportunity cost and making appropriate decisions are vital too. Cutting oil prices to sell their already produced oil has had great impacts on revenue. This is the reason for why rubel has decreased by more than 100% in the past few months.


Article Brief 1 – World Cup Host

Article Brief #1       Syllabus Section 1           Word Count: 433       Written: Nov 20, 2014

Source: “Qatar Cleared but England Criticised.” BBC Sport. N.p., n.d. Web. 20 Nov. 2014. <http://www.bbc.com/sport/0/football/30031405>.

Concepts:   Scarcity, Trade-off, Opportunity Cost, Resource Allocation

Diagrams:   Production Possibilities Model

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Brief Summary of Issue: Recently there were the 2022 World Cup elections, which Qatar was elected to host. Shortly after it, there were rumors regarding bribery to FIFA officials for favoring the country to host with the number of votes. Within a weeks time, the claims were confirmed to be true and the article analyses the aftermath for FIFA officials and Qatar. Shocking however, the bans and fines don’t seem too be extreme at all. The elections of the 2022 World Cup will effect the economy of both Qatar and the countries that were not selected.

Economic Linkages: This article clearly shows the concepts of scarcity and trade-off which are central to economics. It also illustrates opportunity cost with the money Qatar has accepted to bribe with. In return for this, they won the elections. However, they may face serious consequences now.

Money is scarce; although not as scare as a natural resource like oil, the world population works for it. The trade-off and opportunity cost in the issue are presented with the money Qatar has bribed with – 3 million pounds. They have accepted this by assuring them winning the elections. The 3 million pounds seem to be worth it to host this massive event in 2022.

Application of Concepts:   A Production Possibilities Model, which shows the resource allocation of Money between money for Public transportation, and Money for Sports Facilities. For such as large event, these two are vital to have.

Screen Shot 2015-05-20 at 11.24.38 PM

Point A and point B on the diagram illustrate alternatives that could be considered “best” alternatives. The range and meet the maximum resource. They neither exceed nor are short.

Point B for example seems to be a very appropriate point because it divides the money between the two variables almost equally. 20 million ¥ to 20 million ¥

Points C and D however are certainly not the “best” choices. Point C shows how all of the resources are not being used and taken advantage of to their full extent; which is crucial in economics. Point D is using more than the available resource.

Evaluation: Choices and resource allocation is crucial in understanding and working with economics. This matter of choice and allocation meets in a common point known as opportunity cost, where sacrifices are made to get hold of another. It is the choice of the “best” or “next best” alternative. It is when society splits the resource in two or more different areas; this resource can range between grain to oil to money. As seen with the 2022 World Cup elections, Qatar was willing to give up 3 million pounds to host the event. Now however, with the bans and fines they will receive, the opportunity cost can be much different than they initially planned. Economics can help us see the consequences of our “best” alternatives as well as other ones, similarly to the bribery cost for Qatar.


My Surreal Self-Portrait Reflection

My Surreal Self-Portrait

My Surreal Self-Portrait 

Surrealism is a type of art, which includes fantastic imagery expressing it with the three main aspects; Size and Scale, Transformation and un-natural setting.  The central interest of surrealist artists was dreams and the subconscious. These three techniques make the artwork surreal and make it different from other types of art. The surrealist movement was a change in art, which was simply based on randomness, the unexpected, and comparison between two or more things that wouldn’t usually be compared. Although these were the basics of the movement, artists related their work to philosophical subjects. The Surrealist movement started in Europe in the 1920s after World War I. This movement stemmed from the Dada movement being a movement where artists portrayed their disgust.  The Surrealist movement was founded in Paris influenced by Sigmund Freud and Karl Marx. It was officially founded in 1924, whenAndre Brenton wrote Le Manifeste du Surrealisme. Figures such as Salvador Dali and Man Ray enhanced a large amount of audience with fashion photography, advertising and film as well. There were many surrealist artists with many surrealist artworks that still remain extraordinary for many. Man Ray, Salvador Dali, Hans Bellmer, Victor Bauner, Giorgio de Chrico, Pierre Roy, Jindrich Styrsky and many more were associated with the surrealist movement and have many inspiring artworks left from them.

As mentioned above, the earlier Dada movement inspired the Surrealist art movement. During the Dada movement, artist created “non-art” pieces portraying their disgust and how European culture had lost meaning to them. After this movement art became violent and after it ending it 1922, two years later the Surrealist movement officially started. The difference between the movements was that the Surrealist was less violent and more artistically based. Brenton wrote the Surrealist Manifesto to describe how the combination of the conscious and subconscious would be his wish and as he opened exhibitions, it became influential over young artists in he United States and Mexico.

My surreal self-portrait met all three elements of Surrealism; size and scale, transformation and un-natural setting. My head was drawn fairly large covering up three quarters of the piece and had my shoulders visible a little bit coming out from the clouds. I also used all three techniques for value. I used pointillism for the majority of the artwork especially for my background being the clouds. For clouds behind other clouds I used pointillism however made the points very close to each other giving it a darker value and showing that it is at the very back. I also had rain all over my piece dropping from the clouds and used pointillism for each raindrop as well. I used hatching for the values on my face and shoulders and small amount of cross-hatching. To go in more deep about the surreal elements, I used transformation twice with my body coming out between the clouds and my left eye transformed into space with a planes and the moon. I had an un-natural setting with several clouds behind me, some large some small and in different shapes. I also played around with size and scale making my face as well as body fairly larger than the clouds in the background.

I did not have any special meaning to my piece however since I like travelling as well as rain. I tried combining the two and portrayed it in my setting. I connected travelling to plane and flying in the sky between clouds and then related that to outer space transforming one of my eyes.  Besides this I did not have much of a meaning in my artwork however I think I was successful at meeting what I was trying to portray in the setting. I tiered connecting a rainy day to travelling and I strongly believe that I did and it gave the piece a different and surreal effect.

During the surreal self-portrait project for medium, mainly pen and ink was used. First, the piece was neatly but lightly drawn of thin card with dimensions larger that A4 paper but also smaller than A3 paper. After we finalized the artwork with pan and ink with thick lines or thin lines according to out preference. We also had a preference with either a thin nib, which the majority used, or thicker nibs. Using this medium I used thicker lines to give a rounder and 3 dimensional effect and used hatching, cross hatching and pointillism for value. I think I was successful with my surreal self-portrait because I really used all the surreal elements as well as used the value techniques in as many places possible. I also think it was successful because I portrayed the meaning I planned in my head on to the artwork and think that the piece I drew actually does look like me. I had proportions accurate as well. The area I thought I was most successful at was with the pointillism in my clouds, it took quite some time however realized it was worth it once it was done. I think pointillism was the key element to the success in my surreal self-portrait. I think I could improve my being more careful with pointillism because at some areas of my drawing my hand moved and the point formed into more of a line which if there were too may, it would defeat the whole purpose of pointillism. Another aspect where I think I could’ve improved was with my lines, especially with the outline of the face, I did not have smooth lines and hand lines overlapping each other being mostly wavy.

Using pen and ink really gives a different effect to the piece and I think it is a very nice medium however it needs patience and care. If for example, the nib has not been drawn with after dipping into the ink, there is a high chance of extra ink still remaining on the nib and as soon as you start drawing it may either make the line quite think or in the worse case might drop and smudge and eventually ruin your drawing. This happened to me twice during my surreal self-portrait and in order to hide it and make it less obvious as possible, I covered it up with rain and clouds. But overall I think pen and ink is a great medium and really gives the artwork a nice effect.

Sources used:

http://www.arthistoryarchive.com/arthistory/surrealism/Origins-of-Surrealism.html

“The Origins of Surrealism.” The Origins of Surrealism. N.p., n.d. Web. 27 Mar. 2013. <http://www.arthistoryarchive.com/arthistory/surrealism/Origins-of-Surrealism.html>.

http://www.theartstory.org/movement-surrealism.htm

“The Art Story.org – Your Guide to Modern Art.” Surrealism Movement, Artists and Major Works. N.p., n.d. Web. 27 Mar. 2013. <http://www.theartstory.org/movement-surrealism.htm>.

 

 

 


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