G-20 in Russia: Currency Wars

The Group of Twenty (G-20), consisting of industrialized and developing nations, has been prominent in dealing with current economic crises.

Talks took place in Russia February 15th and 16th addressing the current currency wars. Brazilian Finance Minister Guido Mantega commented, “The currency war has become more explicit now because trade conflicts have become sharper. Countries are trying to devalue their currencies because of falling global trade.” That way, exports become more competitive while imports will be reduced.

The U.S. along with other developed nations tend to use quantitative easing as one of their main stimulus measures, in which a central bank buys assets such as government bonds using freshly created money. This results in increasing the supply of currencies such as the U.S. dollar and the U.K. pound; thereby, in the long run, lowering their exchange rate.

The G-20 pledged to “refrain from targeting their currency policies to gain a competitive advantage.” All nations agreed to defuse tensions over unstable exchange rates, marking the first time they were in agreement on such an issue. If all were to engage in competitive devaluation, no country would benefit.

These talks prove G-20 members are moving toward more cooperative efforts. This will help lead the path to global economic growth, which in effect, may help increase U.S. exports and its domestic economy.

Source: http://online.wsj.com/article/SB10001424127887324162304578307320045470086.html?user=welcome&mg=id-wsj

Key Dimensions of Freedom in relation to International Business

Another key dimension of freedom is the loosening of restrictions that prevent people from going outside the box. National borders usually create the box where business and government find their limits. Global marketers thrive on understanding how to successfully cross national borders, on coping with the differences once the crossing is done, and one profitably reconciling any conflicts.

Freedom also means not being forced to do something one does not want to do. There are economic migration pressures that force people to move from their rural homes into urban areas or from their emerging economies into more developed ones. The developed nations, in turn, speak about immigration pressures. For both sides, little if any freedom is involved here. Most individuals who do the moving would much rather stay home but cannot afford to do so because of economic realities. The recipient countries feel political and humanitarian pressure to welcome the migrants even if they do not want to. Global marketing may have been part of what triggered some of these migrations, but it also can be instrumental in stemming the tide. It can provide the economic opportunity for individuals at home so that they do not need to migrate. It can help individuals become productive contributors to the global economy, free from pressures to change locations.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 234. 

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