Nuclear Arms Race

UNIT 9 ARMS RACE AND THE NUCLEAR THREAT Structure Objectives Introduction Background to the Nuclear Arms Race 9. 2. 1 9. 2. 2 9. 2. 3 The Beginning : Birth of the Nuclear Arms Race The Manhatten Project Rationale for the Arms Race in the Post War Period The Nuclear Arms Race : How it is different from all the Previous Arms Races in History 9. 3. 1 9. 3. 2. 9. 3. 3. The Trinity Test Hiroshima and Nagasaki Bombings ‘New York Times' and the Trinity Test Different Phases of the Nuclear Arms Race in the Post-War Period 9. 4. 1 9. 4. 2 9. 4. 3 9. 4. 4 9. 4. 5 9. 4. 6 9. 4. 7 9. 4. 8 Fear of the Soviets and Communism 945 to 1953 : Period of US Monopoly 1957 to 1968 : Period of ‘Missile Crisis' and the ICBM Race 1968 to late 1970s : Period of MIRV and ICBM Race 1981 : Reagan's Strategic Modernization Plan 1983 : Militarization of Space-Reagan's Star War Programme 1984-1991 : Nuclear Arms Race in the Gorbachev Era and the last days of collapsing Soviet Union. 1991 to 1997 : Nuclea r Arms Race after the Collapse of Soviet Union Nuclear Arms Race in the Third World and South Asia 9. 5. 1 9. 5. 2 95. 3 9. 5. 4 Acquisition of Nuclear Capability by China and start of Arms Race in South Asia India, Pakistan and the Nuclear Arms Race Domino Theory' in South Asia General Complexion of Arms Race in South Asia Let Us Sum Up Key Words Some Useful Books Answers to Check Your Progress Exercises 9. 0 OBJECTIVES This unit deals with Arms Race and the Nuclear Threat in the present day world. After studying this unit, you will be in a position to: understand the background to the nuclear arms race; explain how the nuclear arms race is different from all the previous arms races; discuss the different phases of the nuclear arms race in the post-war period; and emarnine the nuclear arms race in the Third World and especially in South Asia. . 1 INTRODUCTION This unit on ‘Arms Race and Nuclear Threat' is part of Block 3 which deals with what is called the ‘Cold War Per iod'; i. e. , after the Second World War and the emergence of what is termed as Superpower Dominance. In Unit &'World War 11: Causes and Consequences (Emergence of Super Powers)' you have read about how the USA and the USSR emerged as Superpowers in international politics after the end of the Second World War.In Unit 7 : ‘Cold War: Meaning, Patterns and Dimensions', you have learnt how the collapse of Germany and its allies in 1945 led to the emergence of what has been termed as ‘Cold War' between the-two main powers of the post-1945 international order * i. e. USA and USSR. The Non-Aligned Movement (NAM) which was dealt with in Unit 8 of this block was a consequence of the cold war power bloc politics. One thing common to the post-1945 international order as well as the pre-1945 world was the arms race. When studying about World War I and 11, you would have surely read about the arms race which was both quantitative and qualitative in character.It would also have been n oticed that the arms race in its qualitative dimension in both the world wars was itself one of the greatest causes of the two wars. From the invention of dynamite by Sir Alfred Nobel of the Novel Industries in the First World War period, to the invention of rockets by Germany in the Second World War, it is the search for the ultimate weapon which could win all wars that constituted the greatest push for the arms race. In this madness scientists, nations, people, soldiers, politicians all fell prey and ended up only killing greater and greater number of civilians.In the present unit, we will concentrate on the arms race in the post-1945 international order. As has been stated before, this quest for a qualitatively more destructive weapon was the greatest motivating factor in bringing the world a step closer to war, be it the First or the Second World War. The key difference in the arms race before 1945 (i. e. in the interwar period) and after 1945 was the nuclear dimension. Prior to 1945, all the arms races in human history never confronted what is now popularly known as the ‘Nuclear Threat'.After 1945, the arms race that humanity got engaged in became the greatest living threat to life itself as known on this planet. The difference lies in one single qualitative step in the arms race, and that step was the creation of the Atomic or Nuclear bomb in 1945. Thus, from 1945 the arms race we discuss in this Unit, remained no longer ‘conventional' but acquired a nuclear character and from then till today, man is engaged in an arms race that puts both parties who engage in it, under a perpetual ‘Nuclear Threat'. 9. B ACKGROUNDTOTHENUCLEARARMSRACE 9. 2. 1 The Beginning : Birth of the Nuclear Arms Race The nuclear arms race between the superpowers began initially in the pre-second world war period between the Germans and the Allied Powers. It was in the context of this conflict prior to the Second World War that in 1938, at the Kaiser William Institut e in Germany, Otto Hann and Dr. Fritz Steersman first split the atom. Lise Meitner and Otto Hann later declared this successful splitting of the atom amounting to a nuclear fission.It was a matter of coincidence that at this juncture in history, the greatest minds working on the ‘atomic problem' were Jews and that too, German. Hitler's rapid anti-Semitism during the period sent most of these great minds in Germany rushing to the USA where they were welcomed. These fleeing scientists informed the American military who were closely monitoring events in Europe. There was widespread apprehension that Germany might be the first to produce the nuclear bomb as the knowledge of splitting the atom was already available to it.Albert Einstein too was one of the refugees and he knew fully the significance of this discovery, for it was he who first unlocked the secret power of the atom to the modern world. He warned the President of the United States about it. 9. 2. 2 The Manhatten Project T he Americans under President Roosevelt were fully aware of the international implications and so began the race to build the bomb first. Roosevelt commissioned what was the top secret ‘Man Hatten Project', the biggest scientific effort ever made costing 2 billion dollars under Maj. Gen.Leslie Groves to construct the atomic bomb in a record time. Robert Oppenheimer, Enrico Fermi, Herbert York, Edward Teller, Hans Beth and a host of other scientific luminaries were involved in the production of the first three nuclear bombs. The interesting aspect of this bomb construction was that though the initial enemy was Germany, slowly the real enemy for whom the bomb was constructed turned out to be the Soviet Union. In fact, Gen. Leslie Groves stated that he had no illusions that Soviets were the real enemy. -This fact is critical to an understanding of the post 1945 world.Arms Race and Nuclear Threat 1 Cold War Period 9. 2. 3 Rationale for the Arms Race in the Post War Period German y, the first nation with whom the US engaged in the N-Arms race surrendered in May 1945 and all its nuclear facilities were destroyed, thus ending the first phase of an incipient nuclear arms race. Despite this the arms race had to continue once the weapons had been built. A new enemy across the horizon was discovered Communist Soviet Union. The fear of communism was ideologically fueling the furious pace of the A-Bomb construction. In that sense the emerging U. S. ilitary-industrial complex was not wrong. Communist USSR was definitely the biggest power confronting USA and its western allies once Germany collapsed. The world was definitely getting divided into two camps, the capitalist and the socialist and Europe including Germany was its first victims. The Allies could not do anything about it. Something had to be found, a new ultimate weapon which could stop and possibly destroy the march of communism. That something designed initially for fascist Germany and used for experimenta tion in Japan was to be probably used later against the Socialist Soviet union.This was the underlying ideological war cry in the American establishment and the subtle reason for continuing the arms race into the post-Second World War world era. The discovery of the split atom gave confidence to the United States that it could fight the ‘cold war' or ‘iron-curtain' that Winston Churchill said had descended over Europe. It was an indication that the new war after 1945 would be fought against the USSR. Check Your Progress 1 Note : i) Use the space given below for your answers. ii) C heck your answer with the model answers given at the end of the unit. 1)Examine the background to the nuclear arms race. 2) What are the rationale for the arms race in the post-war period? †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ s 9. 3 THE NUCLEAR ARMS RACE : HOW IT IS DIFFERENT FROM ALL PREVIOUS ARMS RACES IN HISTORY 9. 3. 1 The ‘Ikinity Test Of the three bombs constructed, the first was tested on July 16, 1945 at Alamagordo, New Mexico. It is known as the Trinity Test. The successful Trinity Test heralded the birth of the Nuclear-Bomb in human history and the dawn of the nuclear age.Neils Bohr, the famous Danish Physicist, prophetically observed the insetting arms race and its qualitative difference. In a letter to Resident Roosevelt on 3 July 1944 he mentioned that a weapon of unparalleled power was being created which would completely change all future conditions of warfare. Some scientists anticipating the arms race between the US and the USSR urged the American Government to share the nuclear secrets with Soviet Union and thus prevent an arms race. However, it is obvious that the scientists were too naive of the game of politics as well as the intensity of international politics.Such advice was never heard, and the race was continued in the hope of victory. To the military desperately looking for a way to deal with the Germans, the Japanese qnd finally the Soviets, the Trinity Test held out hope that they could win. 9. 3. 2 Hiroshima and Nagasaki Bombings Two more historical events, however, finally sealed the destiny of mankind. They were the dropping of the two remaining untested nuclear devices, i. e. , the 5 ton uranium bomb on Hiroshima on August 6 and on Nagasaki on August 8, 1945.Over 250,000 people died in both the cities and the ‘living corpses' who survived bled incessantly and were blackened with their skins hanging in shreds, their hair scorched to the roots. Most were totally naked, their clothes burnt from their bodies. George Bernard Shaw observed in ‘Man and Superman' about the art of killing that man, â€Å"out does nature herself †¦ when he goes out to slay, he carries a marvel of mechanism that lets loose at the touch of his finger all the hidden molecular energies and leaves the javelin, the arrow and blow pipe of his fathers far behind†. Hiroshima and Nagasaki exemplified that. . 3. 3 ‘New York Times' and the ‘Ikinity Test It would be easier to comprehend the qualitative significance of nuclear arms race if we take note of two observations made at the time of the Trinity Test. The ‘New York Times' reporter who witnessed the test observed â€Å"†¦ a light not of this world, the light of many suns in one. It was a surprise such as the world had never seen, a great green super can climbing in a fraction of a second to a height of more than 8,000 ft, rising even higher until it touched the clouds, lighting earth and sky all round with a dazzling {uminosity.Up it went, a great ball ,of fire about a mile in diameter, changing colours, as it kept shooting upward, from d eep purple to orange, expanding, growing bigger, rising as it was expanding, an elemental force freed from its bonds after being chained for billions of years. For a fleeting instant the colour was unearthly green, such as one only sees in the corona of the sun during a total eclipse. It was as though one had been privileged to witness the birth of the world to be present at the moment of creation when the Lord said: â€Å"Let There Be Light†.Robert Oppenheimer perhaps summarized in one line the destiny of modern man's predicament vis-a-vis his own creation, when he quoted the Gita to exclaim â€Å"I have become death, destroyer of worlds†. The roar created by the explosion at Alamagordo could be heard 50 miles afar and the pillar of fire that the New York Times reporter talked about rose 6 miles into the sky. These observations of the Trinity Test and the dropping of the bomb at Hiroshima and Nagasaki sum up why the arms race mankind got caught in after 1945 is totall y different in its complexion from all the previous arms races in human history.The sad part, however, for any idealist scholar of international relations is that despite these evidences of destruction, the arms race continued with greater vigour and vengeance. Arms Race and Nuclear Threat Cold War Period Check Your Progress 2 Note : i) Use the space given below for your answers. ii) Check your answer with the model answer given at the end of the unit. 1) What is the Trinity Test? 9. 4 DIFFERENT PHASES OF THE NUCLEAR ARMS RACE IN THE POST-WAR PERIOD 9. 4. 1 Fear of the Soviets and CommunismIt was the Trinity Test on July 16, 1945 that truly sparked off the nuclear arms race between the US and the Soviet Union. Despite the horror of Hiroshima and Nagasaki the race never stopped. ‘The second fact that fuelled the nuclear arms race was the Soviet Communist enemy. This was, in fact, testified to by Gen. Leslie Groves who said he had no illusions as to whom the bomb was really bein g built for, i. e. , the Soviets. The ideological, political and military threat to capitalism by rising communism had to be dealt with. The discovery of the nuclear bomb was truly the biggest boost to the arms race.United Kingdom followed US-Soviet acquisition of the bomb in 1952, France in 1960 and China in 1964. The nuclear arms race passed through the following phases, they cannot be clearly distinguished from each other. 9. 4. 2 1945 to 1953: Period of US Monopoly During this period, the United States first enjoyed a total monopoly until 1953 and then, nuclear superiority. In this phase, the US territory was regarded as a sanctuary because the Soviets did not have any reciprocal delivery capability to reach the American targets from USSR.The United States, on the other hand, could attack the Soviet targets from American bases in Western Europe. 9. 4. 3 1957 to 1968 : Period of ‘Missile Crisis' and the ICBM Race T he monopoly enjoyed the US during the first phase was broke n when the Soviets successfully tested the ICBM in 1957 creating what has been called the ‘Missile Crisis' in America. The advent of ICBMs shifted the focus of the nuclear arms race to strategic weapons; i. e. Inter-Continental Ballistic Missiles (ICBMs), Sea Launched Ballistic Missiles (SLBMs) and strategic or inter-continental bombers which provided the strategic tripod.In 1967, USSR tested what is called a Fractional Orbital Bombardment System. This accelerated the qualitative dimension of the nuclear arms race further into space. 9. 4. 4 1968 to Late 1970's : Period of MIRV and ICBM Race T he third phase in the nuclear arms race began when the American delivery technology took a gigantic leap by introducitfg what is called the Multiple Independently Targetable Re-entry Vehicle (MIRV) capability in their ICBMs in 1968.This meant that now one single l CBM could carry many small nuclear warhead fitted missiles which on reentering Soviet airspace would go in different directio ns hitting many targets. MIRV marked a tremendous exponential upgradation of the arms race. This sent shivers down the Soviets who, however, mastered the technology by 1974. During this phase, the Soviets deployed two other weapon systems. First, the Anti-Ballistic Missile (ABM) system in 1968 and second, the first Anti-Satellite (ASAT) missile and warhead, thus ensuring that the arms race went on.Check Your Progress 3 Note : i) Use the space given below for your answers. ii) Check your answer with the model answers given at the end of the unit. 1) Briefly examine the period of US Monopoly in the Arms Race. . 2) Describe the efforts made by the erstwhile Soviet Union to break the US Monopoly in armaments. 9. 4. 5 1981 : Regan's Strategic Modernization Plan The next major technological tussle took place between the two Superpowers over the MX-Missile. On October 2, 1981 President Regan announced a strategic modernization plan at an estimated cost of $ 160 billion.The weapons systems planned included : (i) Missile Experimental or MX missle : 100 of these were to be built; (ii) B-IB Bombers : 100 of them to be built; (iii) STEALTH Bombers that are radar resistant by 1990s; (iv) TRIDENT-I1 D-5 missiles-one per year between 1983 and 1987; (v) Command Control and Intelligence system (C,I) to be modernized; (vi) NAVSTAR Satellite global positioning system; (vii) Encapsulated dormant missiles; (viii) TERCOM for precision guided cruise missile; an advanced communication system; (ix) Global Positioning System (GPS) for guidance of the ICBMs during the boost phase; (x) Route encrypted comunications to missiles or launchers; (xi) slackwire buoys radio reception by submarines; (xii) Fuel-Cell propulsion. 9. 4. 6 1983: Militarization of Space-Reagan's Star Wars ProgrammeThe militarization of space began from 1958 and since then, over 2219 satellites-military and civilian have been launched by t'he superpowers and other nations, and 75% of the satellites launched have been f or surveillance and military use, thus clearly violating the Space Treaty of 1967. On March 23, 1983 President Reagan announced the Strategic Defence Initiative (SDI) popularly called ‘Star Wars' Programme costing 1 trillion dollars to raise the militarization of space to a qunlitatively rlcr; high. The aim being to build both a ground based and space based Ballistic Missile Defence (BMD) to protect US territory against Soviet strategic missile attacks.Theoretically, the SDI programme, was supposed to be an alternative to the Mutual Assured Destruction or MAD dogma as it would provide Mutual Assured Survival. It was thought the render nuclear weapons obsolete be relying on three new types of nonnuclear weapon systems. These were : Arms Race and Nuclear Threat Cold War Period i) Kinetic Energy Weapons ii) Directed Energy Weapons and iii) Microwave Energy Weapons All these weapons were based on various types of chemicals, electromaphetic forces. and x-rays and lasers. The SDI pr ogramme did not take off for many reasons. They being: a) It was too expensive. b) It was not a sure technological venture, in the sense that it was far too complicated and thus not feasible. C) T he Soviets could easily render SDI ineffective by building a counter SDI. ) Reagan never consulted his European NATO allies and infact, surprised them by his announcement thus creating opposition to the programme in Europe. e) Reagan by signing the Intermediate Range Nuclear Forces Treaty (INF) completely ended the political rationale of the SDI programme. f) In the USA itself, in the Congress and the Senate Foreign Relations Committee, both the Republicans and the Democrats were of the opinion that they would not allow SDI to pass at any cost and thus, damage the Anti-Ballistic Missile (ABM) Treaty of 1972. Thus, they rejected SDI as otherwise it would have meant that the ABM Treaty alongwith SALT I and I1 would be nullified.Same would be the fate of START negotiations thus destroying the whole edifice of arms control and the start of an unbridled nuclear arms race. Added to this, many important scientists in USA, important people like James Schlesinger, former Secretary of Defense Mc-George Bundy, cold warriors likc George F. Kennan and Robert McNamara, former Secretary of Defence Harold Brown and a host of other people opposed the very fundamental logic of SDI that it would make the world safe of USA by removing the stability provided by the MAD capability of both the superpowers. Later on, the sweeping changes initiated by Michael Gorbachev within the USSR vide ‘Glassnost' and ‘Perestroika' and allowing democracy in Eastern Europe ended the whole logic of SDI. Check Your Progress 4 Note : i)Use the space given below for your answers. ii) Check your answer with the model answers given at the end of the unit. 1) What were the main cornponcnts of US President Ronald Reagan's Strategic Modernisation Plan? †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã ¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 2 ) What were the reasons for the criticism of Regan's S DI P r o g r a ~ r i ; ~ , ~ ! 9. 4. 7 1984-1991: Nuclear Arms Race in the Gorbachev Era and the Last Days of Collapsing Soviet UnionBy January 1985, due to the damage already done by SDI of Ronald Reagan, massive rearmament programmes were on the both the sides, and the future direction of the arms race was dependent upon the two superpowers. The arms race was on at three levels of nuclear weaponary, i. e. ,-space weapons, intercontinental weapons, and intermediate nuclear weapons. The US position on militarization of space through SDI really put the arms negotiation in difficult state. The Soviet Foreign Minister Andrei Gromyko said, â€Å"If there were no advancement on the issues of outer space, it would be superfluous to discuss the possibility of reducing strategic armaments. † The US in 1984 had a massive programme for rearmament of many types of weapon systems.The rearmament programme of USA consisted of more Sea Launched Ballistic Missiles (SLBMs); about 800 more nuclear warheads to be fitted on sea and air delivery systems; MX missile testing; Midgetsman Missiles; the eighth Trident submarine fitted with more accurate SLBMs and 100 B -lB bombs. On the Soviet side, in 1984-1985 the rearmament meant rearmament of all Soviet SS-17s SS-18s and SS-19s into the MIRV ed mode, a new TYPHOON class submarine and testing a new type of more accurate SLBM. There was a reported attempt to make 40% of Soviet ICBMs on the movable mode instead of the existing 25% and all 243 Intermediate Range Ballistic Missiles (IRBMs) were to be deployed. All in all, 1984-85 was a period of massive rearmament of all weapon systems.In 1985-86, the picture as regards arms race was the same. There was no restraint. The only hope that some kind of arms control was possible was generated by the November 1985 summit meeting at Geneva between President Reagan and General Secretary Gorbachev where both in a joint statement stated that, â€Å"The sides †¦. have agreed that a nuclear war cannot be won and must never be fought. † They also agreed to hold summit level meetings in 1987 and 1988. These words were an indirect admission by USA that the SDI was not workable. In other words, it recognised as unfeasible that the MAD doctrine could be replaced and a limited nuclear war waged by militarizi ng space was recognised as unfeasible.Apart from this, there was little progress in the talks on arms reduction in Europe. As regards the nuclear arms race in 1986-87, the situation was still more or less the same except that there was a little movement towards arms control. The US put its first MX ICBM and B-1B bomber on operational position and on a 24 hour alert. Deployment of Pershing I1 missiles and SS-20s continued in Europe. However, certain positive developments took place which definitely halted the arms race in the long run. First, the 27th CPSU Congress in February 1986 decided on Perestroika (Restructuring of Economy), Glasnost ( Openness and Democratization) and reversal of military confi. ontation in Europe and opening up of Eastern Europe.Second, the Raykiajavik summit on 11 and 12 October 1986 declared that a nuclear war could never be won and should never be fougkt. Third, within the USA a tattered Reagan's economy and the Senate's opposition to SDI hit US arms race plans. Fourth, there were differences between USA and its NATO Allies who were never consulted on SDI. Thus, though the arms race went on in 1986-87 it was definitely going to end soon. As regards 1987-88, on December 8, 1987 the Intermediate Range Nuclear Forces Treaty (INF) was signed for the elimination of all intermediate and short range missiles. The agreement required the USA and USSR remove 2695 intermediate range GLBMs with a range of 1 000 to 5500 kms. It also envisaged the removal of GLBMs short range i. e. , 5 00 to 1000 kms.USSR agreed to remove 1836 missiles while USA removed 867 missiles. The INF Treaty saved the ABM Treaty from being neutralised by SDI, because with this treaty the rationale for SDI became even weaker and Reagan found it very difficult to push the matter in the Congress as well as with US public. In this sense, it saved the world from another dangerous dimension of arms race i. e. , the space opening UP. 1988-89 was another significant year as it too had something to show in terms of peace. Arms Race and Nuclear Threat Cold War Period 1988-83 can be characterised as the year of settlement of disputes in Afghanistan, Namibia, Iran-Iraq War, Israel-PLO and South Africa.It was also the year Gorbachev announced at the UN, unilateral reduction of Soviet troops and armaments in Europe amounting to 40% reduction of Soviet tank divisions and 50% of Soviet tanks deployed in GDR, Czechoslovakia and Hungary. This was a very significant political and military move as regards the continuation of conventional and nuclear arms race in Europe. 1989-90 can be characterized as the Year of Europe. By the end of 1989, almost all Soviet Allies in Eastern Europe and Central Europe except Rumania and Albania were free. In August 1989, the first non-communist government got elected in Poland. By November 9, 1989, the Berlin Wall had crashed.Elections also took place in Hungary, GDR and Czechoslovakia. On 29 December 1989 Vaclav Havel took over as the President of Czechoslovakia. At the Malta summit in December 1989, President Gorbachev showed readiness to regulate further and move ahead on the START process. Gewge Bush, the US President, hesitated a bit though he committed US towards a Chemical Weapon Ban and the required agreement in the future. 1990 was a year full of events. While Europe and the two superpowers were moving towards peace the Gulf was in flames with the invasion of Kuwait by Iraq on August 2, 1990. Apart from this, in 1990, the WARSAW Pact was dissolved on 3rd March.On June 1, 1990, US and USSR signed a treaty on the destruction of and non-production of chemical weapons and on multilateral measures to ban chemical weapons. It was decided that by 31 December, 1992, all chemical weapons in the world would be destroyed and' only 5000 tons of agents would be kept. Then, the membership of the Missiles Technology Control Regime (MTCR) expanded. On November 20, 1990 there was the Treaty and a Joint Declaration of Conv entional Armed Forces (CFF) forever reducing the nuclear threat in Europe. Check Your Progress 5 Note : i) Use the space given below for your answers. ii) Check your answer with the model answers given at the end of the unit. 1) What were the salient features of the Nuclear Arms Race in the Gorbachev era? 9. 4. 1991 to 97 : Nuclear Arms Race after the Collapse of Soviet Union 1991-92 was a historic year in the sense that due to the collapse of USSR, the enemy that fueled the arms race for US militarists broke up into 14 new states. Yugoslavia also broke up and in one stroke the enemy in so far as the US was concerned was gone and so, the whole political ideologic'al basis of the nuclear arms race. The Iraqi invasion of Kuwait on 2nd August 1990 led to the launch of US and Allied coalition attack under UN auspices against Iraq on 17th January, 1991. It ended on 28th February, 1991 with the complete defeat of Iraq. Arms trade as a result showed a down-ward trend.In 1991 the total valu e of global arms trade touched $ 22, 114 million. This . was 20% less than in 1990. I In 1992-93 USA, the Russian Federation, France, and Britain all agreed to halt the nuclear arms race totally except vis-a-vis R & D. At the regional level, there was further concretization of Europe's complete demilitarization by the signing of the Helsinkl Document by all Eastern and West European countries. Added to this, there was the world summit on environment at Rio and UN Secretary General's declaration of the ‘Agenda for Peace'. The peripd between 1993 and 1997 saw two other significant events taking place i n~the nuclear arms race.First, in 1995 the NPT review Conference took place for an indefinite extension of the treaty and on 24th September 1996, the Comprehensive Test Ban Traty (CTBT) was up for signature. US and the other nuclear weapons states and 60 other non-nuclear states signed the CTBT. India did not sign either the NPT or CTBT. The government argued that it did so to kee p the nuclear weapons option open. This position taken by India brings us to the question of nuclear arms race in the Third World, dealt with in the following section. .; Check Your Progress 6 L Note : i) Use the space given below for your answer. ii) Check your answer with the model answer given at the end of the unit. I) Examine the nuclear arms race after the collapse of the USSR. 9. 5 NUCLEAR ARMS RACE IN THE THIRD WORLD AND SOUTH ASIA r rT he nuclear arms race that went on in the First World throughout the Cold War definitely had its impact on the Third World. The quest of the German Bomb fueled the American ‘Manhattan Project' initially, and as the Second World War came to a close it was the Soviet ideological and military power manifest in the occupation of Eastern Europe that really put Americans firmly on the track of nuclear bomb making. However, at that time the Allies needed the Soviet Communists to destroy fascist Germany, Italy and Japan. Stalin's intelligence ag encies were well aware of the secret American nuclear programme and at Postdam, his suspicions were confirmed when President Roosevelt informed Stalin of a secret weapon.This knowledge fueled the Soviet desire to build the bomb at a feverish pace to counter the threat form c aptalist west. The bombing on Hiroshima and Nagasaki, though not really necessary were also a veiled threat to Soviets of the American resolve. These events in a way led to the nuclear arms race. After 1949, when Communist China emerged under Mao, it is believed that the Chinese through Soviet help (prior to Sino-Soviet split) too got the nuclear capability and tested in 1964. China was considered a Third World state and one can see how the ideological and political nature of nations deeply affected their decision to develop a nuclear capability.Arms Race and Nuclear Threat Cold War Period 9. 5. 1 Acquisition of Nuclear Capability by China and start of Arms Race in South Asia Thus, the acquisition of nuclear cap ability of China in 1964 signalled the beginning of a nuclear arms race in South Asia. The Indo-Pak conflict was not actually the factor responsible for India's quest for nuclear capability as many scholars claims, though it came in much later. The Kashmir conflict and partition and the three subsequent wars in 1948, 1965 and 1971 did fuel the conventional arms race. 9. 5. 2 India, Pakistan and the Nuclear Arms Race The nuclew arms race in South Asia however was not of India's making.It rather came after the massive defeat India suffered at Chinese hands in 1962, which hit our whole defense and foreign policy. This followed by the news of Chinese exploding the nuclear device in 1964 shook the Indian political and military establishment and they decided to develop India's nuclear capability. The decision was also influenced, perhaps, by the Chinese collusion with Pakistan in the 1950s prior to the 1962 war. It brought home to the Indian strategists the real possibility of Chinese and Pakistanis joining hands against India. After 1962, there was thus no looking back and the nuclear arms race reached South Asia. When India conducted the Peaceful Nuclear Explosion (PNE) in 1974, the Pakistanis too decided to go for a nuclear programme.The onset of the Second Cold War with the Soviet invasion in Afghanistan 1979 put Pakistan on the high priority zone of US in its fight against communism. It signalled deeper military cooperation and aid to Pakistan and some say, the beginning of some help even in fledgling Pakistan nuclear weapons programme. As of now, the South Asian region, is definitely a zone of nuclear competition with India consciously ‘keeping its option open' and not exercising its capability. This is expressed in its refusal to sign both the Nuclear Proliferation Treaty in the 1995 Review Conference ahd the Comprehensive Test Ban Treaty (CTBT) on 24th September, 1996. . 5. 3 ‘Domino Theory' in South Asia The South Asian case amply demonstrates t he ‘Domino Theory' which fuels nuclear arms race or any arms race. First, it was the German threat to Europe which made the US go for the bomb. Then, the Soviet threat made US go in for the bomb again. The bombings in Hiroshima and Nagasaki led Soviets to acquiring the bomb. The common threat to world communism led to Soviets helping the new communist state of China in 1949 with nuclear technology which helped China to conduct a nuclear test in 1964. The Soviets, however, had refused to give nuclear weapon design to China, which became the cause of Sino-Soviet rift.The Indian defeat in 1962 and Pakistan's collusion with the Chines led the Indians to develop the nuclear capability by 1974. The Indian explosion coupled with successive defeats in wars with India led the Pakistanis onto the bomb. The cases of other third world countries acquiring the bomb in similar; e. g. the Iraqi and Iranian nuclear programmes. The South African case too is due to perceived survival threats. Th e other nuclear capable states are Argentina and Brazil-two major States in, Latin America. 9. 5. 4 General Complexion of Arms Race in South Asia Overall one can say that the third world nuclear arms race is definitely a product of the nuclear arms race in the first world and the many conflicts within the Third World sustain it.The cold war military alliance system helped this process. Now, after the collapse of s oviet Union and the massive reduction prior to it and after it in Western nuclear arsenals, nuclear peace has been brought to the world in the sense that we aren't always ‘living on the edge' of a nuclear holocaust. However, the non-resolution of conflicts in the Third World, e. g. Indo-Pak conflicts, Arab-Israeli conflict is a definite reason for the continuance of nuclear arms race in the Third World. – — – Check Your Progress 7 Note : i) F t Use the space given below for your answers. ii) Check your answer with the model answers given at the e nd of the w it. ) What are the factor propelling the arms race in South Asia? 2 ) Briefly comment on India's stand on the nuclear proliferation issue. 9. 6 LET US SUM UP We can conclude this unit by recalling a few pertinent points. Thus: i) The discovery of the. power of the ‘atom' in both its creative and destructive senses was possibly the greatest event in 20th century history. The creation and blasting of the nuclear bomb by the US demonstrated its power with telling effect. ii) The ideological conflict between capitalist West and socialist East was the single biggest factor instigating the nuclear arm race until the collapse of one side i. e. , of the USSR in 1991. iii)However, despite the demise of Socialist Soviet Union nuclear weapons still remain the basis for military power and their quest continues by many third world countries e. g. India, Pakistan, South Africa, Israel, Iran, Iraq and North Korea. iv) The nuclear threat to humanity remains even today and there is very little hope of complete disarmament. The only possible way is probably to reduce the number of warheads and number of nations acquiring this technology for settling their disputes. KEY WORDS ABM-Anti-Ballistic Missile System : It is a weapon system designed to defend against a ballistic attack by intercepting and destroying ballistic missiles and their warheads in flight. Arms Race and Nuclear Threat Cold War PeriodBMD-Ballistic Missile Defense : Systems capable of intercepting and destroying nuclear weapons in flight for defense against a ballistic Missile attack. CFE T naty : The h a t y o n Conventional Armed Forces in Europe : Negotiated in the Conference on Security and Cooperation in Europe (CSCE), a process which began in 1973 and was signed in 1990 by NATO and WTO countries and came into force on 9 November, 1992. NATO-North Atlantic h a t y Organisation : Created by the US and its allies in Western Europe after the Second World War to counter USSR. WTO-Warsaw %sty Org anisation: Created by Soviet Union in 1955 to counter NATO military alliance. Dissolved in 199 1.ICBM-Inter Continental Ballistic Missile: Ground launched Ballistic Missile capable fo delivering a warhead to a target at ranges in excess of 5500 km. INF-Intermediate Range Nuclear forces: are nuclear forces with a range oflfrom 1000 km. upto and including 5500 kms. MIRV-Multiple Independently Targetable Re-entry Vehicles: Re-entry vehicles, carried by a nuclear ballistic missile, which can be directed to separate targets along separte trajectories (as distinct from MRVs). A missile can carry two or more RVs. MRV-Multiple Re-entry Vehicles: Re-entry vehicle, carried by a nuclear missile, directed to the same target as the missile's other RVs.MAD-Mutual Assured Destruction: Concept of reciprocal deterrence which rests on the ability of the nuclear weapon powers to inflict intolerable damage on one another after receiving a nuclear attack. Open Skies h a t y – A Treaty signed by 2 5 CSCE states in 1992, permitting flights by unarmed military or civilian surveillance aircraft over the territory of the signatory states, in the area from Vancouver to Vladivostock. SLBM–Submarine Launched Ballistic Missile: A ballistic Missile launched from a submarine, usually with a range in excess of 5500 kms. START I TREATY : Strategic Arms Reduction lkeaty : Between USA and USSR to reduce strategic nuclear weapons.Strategic Nuclear Weapons : ICBMs, SLBMs and bomber aircraft carrying nuclear weapons of inter-continental range of usually over 5500 kms. Doctriae of Deterrence : It theorically means that the most appropriate way to prevent your enemy employ atomic weapons against you is to put a counter threat by also possessing the atomic bomb. Doctrine of Massive Retaliation: Was a strategy of employing nuclear weapons and outlined by US Secretary of State John Foster Dulles after President Eisenhower took over from President Truman in 1954. The massive retaliation doct rine was founded on responding to any communist inspired aggression, however marginal the confrontation, by means of a massive nuclear strike against major centres in the Soviet Union and China.Doctrine of Limited War : Was propounded by Captain Basil Liddel Hart in the late 1940s. He argued in his book ‘the Revolution in Warfare' in 1946 that â€Å"When both sides possess atomic power ‘total warfare' makes nonsense†¦ Any unlimited war waged with atomic power would be worse than non-sense, it would be mutually suicidal†. He argued that war should, therefore, be a controlled affair and without barbarous excess. However, many US strategies criticized his concept of limited war as practically impossible. Doctrine of Flexible Response : Adapted by NATO in 1967 and based on a flexible and balanced range of appropriate responses, conventional and nuclear, to all levels of aggression or threats.These responses, subject to appropriate political control, are Arms Race and Nuclear Threat designed first to deter aggression and thus preserve peace; but, should aggression unhappily occur, to maintain the security of NATO area within the concept of forward defense. 9. 8 SOME USEFUL BOOKS Lawrence Freedman: The Evolution of Nuclear Strategy. P:M. S. Blackett: Atomic Weapons and East West Relations. Hedly Bull : The Control of the Arms Race. Morton Halperin : Limited War in the Nuclear Age. Freed Ikle : Can Nuclear Deterrence last out the country? Robert Jervis : Perceptions and Misperceptions i n International Politics. Herman Kahn : O n Escalation : Metaphors and Scenarios.Henry Kissinger : Nuclear Weapons and Foreign Policy. Thomas Shelling : Arms and Influence. — – – – – 9. 9 ANSWERS TO CHECK YOUR PROGRESS EXERCISES Check Your Progress 1 1) See Section 9. 2 2) See Section 9. 2 and sub-section 9. 2. 3 Check Your Progress 2 1) S eeSection9. 3 Check Your Progress 3 1) See Section 9. 4 and sub-sections 9. 4. 1 to 9. 4 . 4 2) See Section 9. 4 and sub-section 9. 4. 3 Check Your Progress 4 1) See sub-sections 9. 4. 5 and 9. 4. 6 2) See sub-section 9. 4. 6 Check Your Progress 5 1) See sub-section 9. 4. 7 Check Your Progress 6 1) See sub-section 9. 4. 8 Check Your Progress 7 1) See Section 9. 5 2) See Section 9. 5 and sub-section 9. 5. 2 – –

Beer Economics †Supply and Demand Essay

The laws of Supply and Demand may be a simple concept except when it comes to beer. Two large beer companies have formed an Oligopoly and have taken the power from the people. Income high, or income low, beer will be purchased even if the price is not always right. A social gathering is not social without the presence of beer. Beer has been a growing industry year after year. The craft, or microbrewery industry, has grown tremendously since the early 1980s, and the Brewers’ Association reckons that there are now over 1,500 brewing companies in the country, a level not seen since Prohibition was introduced in 1919 (Krafoff, 1). Pabst Blue Ribbon, in 1890 the most popular beer in the U. S. , has seen its market share drop to 2. 8%, but it has enjoyed a resurgence due to its cheap price, decent taste, and new-found cachet among urban hipsters (Krafoff, 1). The beer market is a completely open market. Anyone with a marketing idea and a recipe can get a contract brewery to make the product (Krafoff, 1). Almost every bar has a dozen taps with independent and local brews, but there are two definite brands you won’t ever have to look hard for: Coors and Budweiser. As recently as 2004, 64 percent of the global beer market ownership was fragmented among ten beer corporations (Anderson, 5). In 2008 the merger of Anheuser-Busch (A-B) and global giant InBev created the world’s largest brewer: Anheuser-Busch InBev (ABI), followed by SABMiller (second-largest) and Molson Coors Brewing Company (fifth-largest) (Anderson, 5). To better compete with ABI’s growing world beer market share, SABMiller and Molson Coors combined their U. S. and Puerto Rico operations to establish their joint venture, MillerCoors LCC (Anderson, 5). With these massive consolidations, the two beer giants (ABI and MillerCoors) now have combined control of more than 40 percent of the world beer market and 80 percent of the United States beer market (Anderson, 5). MolsonCoors operates in the United States, Canada and the United Kingdom. Their products include Coors Light, Coors, Keystone Light, Blue Moon, MGD 64 and many other recognizable beers. Their number one competitor is Anheuser-Busch. Their products include Budweiser, Bud Light, Michelob, Shock Top and many others. The beer market has formed into a classic oligopoly: a market with just a few firms dominating the industry. Both MolsonCoors and Anheuser-Busch have substantial market power and control over beer prices. They are mutually interdependent. MolsonCoors can’t raise the price of Coors Light unless Anheuser-Busch raises the price of Bud Light. Both companies are forced into the game theory. They have to play a guessing game of what the other company is going to do and lower or raise their prices based upon their assumptions. It may seem easy for them to just agree to the same price and share the market. Unfortunately, that is called a cartel, and is illegal in the United States. Their products have few substitutes and complements. A substitute of beer is wine as the cross-price elasticity is . 23. A complement to beer is hard liquor as the cross-price elasticity is -0. 11. Beer is an elastic product because it is not a necessity. Demand is highly affected by price. An example of this is highly popular discount brands such as Keystone Light. MolsonCoors products are equally as elastic as their competitor Anheuser-Busch. They offer discount beers as well as microbrew style beers. Beer is an inferior good. As income falls, quantity of beer demanded falls. Beer has a negative income elasticity of demand of -0. 09. This is because when society becomes richer (income rises); things such as fine wines and spirits are substituted for beer. Beer has a couple factors working in its favor. First, the United States is in a recession, thus income is low, and the quantity demanded of beer is high. Second the marginal utility of beer increases as more is consumed. The utility of one beer is high but increases with every added beer. This is a major advantage to the two beer giants and their profits. There is not an infinite supply of a given beer. This seems unimportant when no one wants said beer, but is important when it is in high demand. Ideally, the amount of beer will meet (or come close to meeting) the desire for it, meeting a market equilibrium. It may not taste like it, but our beer is actually in danger. The popularity of corn-based ethanol has already caused a tight market for malt, one of beer’s three critical ingredients, as farmers increasingly forgo the barley crops used to make it in favor of more profitable corn (Boyer, 1). This has caused a worldwide shortage in hops, thus a large increase in price. Barley has risen from $157. 6 USD per metric ton in March 2007 to $202. 53 USD per metric ton. The other key ingredient in beer (along with water), hops is a flower that gives beer flavor and aroma (Boyer, 1). The shortage comes after a decade-long surplus discouraged farmers from planting the crop, which grows on trestles and can take years to mature (Boyer, 1). Since 1994, the amount of farm acreage planted in hops worldwide has declined by about half (Boyer, 1). Together, the two mean the beer industry now faces a 10 to 15 percent shortage (Boyer, 1). On the upside, water, aluminum and yeast are widely available and have stable prices. According to MolsonCoors financials, their total revenue (p x q) is $3,254,000. We can assume that they sell every beer at about $3 which would make their quantity sold at approximately 1,084,667 cans. That’s billions! This business model seems to be working. Molson Coors is currently earning economic profits. Their current net income is 670 million dollars. The stockholders’ equity is currently 7,779. The current prime rate is 3. 5% so by multiplying that by the stockholders’ equity we can assume the owner’s implicit costs are approximately 272. 7 million dollars. MolsonCoors generates profits of about 397. 03 million dollars per year. Beer is a profitable product because it is widely sold in many markets and, despite rising costs, fairly inexpensive to produce. Since MolsonCoors has been a company for many years, they have low long run average total costs. Over the years they have been able to decrease their operating costs and increase production and in doing so, reaching a point of economies of scale. Below is a fictitious example of how as quantity rises, total costs only rise a little bit.

The Role of Government in the Twentieth Century Essay

The Role of Government in the Twentieth Century - Essay Example Their was a desire for change in the culture of society. There were a lot of reforms and changes occurred in each phase of society and in all sections. The change was not only in the lifestyle of the people but also in the business and service sector. Their working method and environment was also changing according to their business. Some of the reforms and movements were Progressivism, new deal era, first and the second world war. These reforms changed the whole scenario of the 20th century. A detailed knowledge about these reforms will define the role of government and the response of people over these reforms. Progressive movement was started in 1889 but its importance was highlighted in the starting of 20th century. The progressive movement was based on the concepts of social justice, greater efficiency in government and social control. This movement was basically consisting of the middle class people and urban professionals. The people thought that the government should become more active regarding democratic reforms and in protecting laborers. Woodrow Wilson was the governor of New Jersey and became the president of United States in 1912. He started the Federal Reserve Act in 1913. This act provided the control of government over banking. He also introduced Federal Trade Commission Act that regulated the trade by taking commission from these trade corporations. He appointed commissioner to regulate these trades affairs. The appointment of these commissioners was not liked by progressives. The progressivism was exploited mostly by the white men. Women were the victims of progressivism. This resulted in the launch of National Women Party which fought against women suffrage. Black were also the sufferers of progressivism. Rich people were exploiting poor and hampering cultural ethics by making wrong use of progressivism. But above all its drawbacks progressive reform developed the culture, lifestyle, new trade methods and much more advancements. The government became more responsible towards the economic and social welfare. Middle class people became more conscious towards their right in the society. The banking procedure was changed and got under the control of government. Progressivism preserved the capitalist system. Progressivism introduced many democratic ideas from different parts of the society. This was the end of nineteenth century and progressivism was the major reform of this century Cities were the main attraction of progressive movement. The urban population wanted to develop the cities and make a place to live safer and healthier. Different parts of the society were now becoming active towards their common problem. These changes have to be done to civilize the cities without attracting America's economy. This was the main aim of progressive

Operations management Essay Example | Topics and Well Written Essays - 2500 words - 3

Operations management - Essay Example This will increase the revenues from high margin sales of food. The report studies the operations management of a prominent five star hotel. A general analysis of the operations management of the hotel has been undertaken. The report also throws light on the operations management in the kitchens of the hotel and the importance of quality. Features like operations management in the kitchens, the rating of the restaurant by Michelin, the customer survey undertaken etc. were not given in the description provided. They have an important bearing on my analysis. Operations management is as relevant in a service facility like a five-star hotel as they are in a manufacturing facility (Krajewski, L.J., and L.P. Ritzman , 1993 ). The operations management is informed by the strategy of the hotel and plays the most important role in strategic implementation. Facility design: The operations management facility in this case is a five star hotel. The hotel has 250 double-bed rooms. All the rooms have attached toilet and bathroom facilities (en suite facilities) The hotel has no suites. There are two large dining rooms. One of these dining rooms is a restaurant that offers an ‘a la carte’ menu. The other dining room has a capacity of 300 people and serves a standard buffet menu. The other bar is a cocktail bar. It mainly focuses on the guests of the hotel who are staying there. However, members of the general public who are not staying in the hotel are also not prohibited from this bar. There are three â€Å"function rooms† that serve as banquet halls for the arrangement of parties, wedding and conferences. Functions like these are a major and consistent source of revenue for the hotel. The returns on investment in property of the hotel can only be maximized by optimum utilization of each inch of available space. The hotel seems to have succeeded in this. However, the facility design of the hotel could have been better if the hotel had left some more open space in

Importance of Communication Research Paper Example | Topics and Well Written Essays - 1750 words

Importance of Communication - Research Paper Example With respect to Hindustan Lever Limited (HLL), the company provides great example for understanding that how the market scenario had provided decision makers to understand the problems and opportunities and turn them to innovation. Innovation may rake the shape of a unique product, different methods or new approach of performing business. It arrives from inside of a company. Successful innovations take place by different outlooks and concepts. HLL had put great deal of efforts to develop innovative approaches and increase sales in the rural poor market of India. Generally, the products of multinational companies are targeted for developed market and the price is often beyond the purchasing power of rural citizens. Thus, multinational companies always market their products for the top level customers in poorer nations. HLL seeks to take the opportunity of making products available for poor consumers. They seek to reach to the poor customers by research and development approach. HLL ob served that to sell their products in the rural market of India there is need to shift from traditional media. In India, there were differences in using the television media among poor people and thus there was need for more direct and individual approach to communicate their message to the poor consumers. The main problem HLL faced for selling the products was illiteracy among poor Indian people. The decision makers had recognized that customers need to be educated first to understand the benefits they can get by using HLL products (Achtmeyer, â€Å"Hindustan Lever†). There was a great opportunity in front of HLL as the food market was strong in India. Food accounts for almost half of all commercial consumptions in India. India’s market was characterized by overwhelming national and social diversity. The HLL market researchers had studied the market of India and learned that majority of food purchased by poor people are raw in nature. The food products where made as w ell as sold locally. Each food products such as wheat, rice and salt among others have separate supply chain. As salt was the key input of majority of HLL products, the decision makers had selected salt as prospect for market growth (Achtmeyer, â€Å"Hindustan Lever†). HLL entered in the salt market of India by their new product ‘Kissan Annapuna’ in the year 1995. At that time, 10% of total consumer salt was sold branded. The decision makers had recognized the need for improving the customers’ knowledge. Besides the rural market, the consumers of urban market also purchased unbranded salt. In order to expand their business, HLL concentrated on the urban market to demonstrate the practicality of their branded salt. The demand and production of salt was well in India, thus HLL focused on upgrading the quality of their salt and purity in their products. The major issue for HLL was the price of product as their main competitor was local salt which was inexpens ive. The cost of HLL salt was high because it included the shipping expenses, packaging expenses and refinery expenses that were absent in local products.

Parental Invovlement Essay Example | Topics and Well Written Essays - 1250 words

Parental Invovlement - Essay Example This not only assures teachers that the child’s parents are taking responsibility for their growth but also make children develop confidence in themselves and help them to get a positive boost in performing. The survey was divided in three parts i.e. 1) Parental involvement at home, 2) Parental involvement in school and 3) barriers to parent involvement. The number of parents who responded to the questionnaire was fourteen. The total number of questions in all the three sections was twenty one. No question was left unanswered. Following is the analysis of the survey that was taken. The set of questions in this section was created to see what parents think about the importance of their involvement in their children’s school activities at home. All the parents (100%) agreed to the fact that their involvement in the school is important for the healthy development of their children. 92.9% of parents also said that they knew what ‘parental involvement’ means and also agreed that they want to spend more time with their children so that their children perform to the best of their ability and get all the resources available. 100% parents agreed that they are responsible to get their children motivated to complete their home work and their assignments. This shows that parents do understand and agree to the fact that their children’s behaviour and interest in school can be controlled by their involvement with their children’s school activities at home. However when the question turned to the communication between teachers and parents, a drop was seen in the agreement response. Only 85.7% parents said that they communicate with their child’s teacher when necessary. This shows that there is a communication

Forms of Business Organisations Essay Example | Topics and Well Written Essays - 250 words

Forms of Business Organisations - Essay Example Thus, â€Å"every partner in a firm other than an incorporated limited partnership is liable jointly with the partner’s co-partners, and also severally, for everything for which the firm becomes liable under section 10 or 11.†Ã‚  Ã‚   Joint and several liability means, within the partnership context, that the claimant may bring a claim against all of the partners or choose to recover the entire amount of damages from only one or some of the partners, leaving the partner/s whom the claimant has/have successfully recovered from to go after other partners for the latter’s proportionate contribution to the claim. Applying the above principles, it can be concluded that Stacey can go after both Bertha and Sam or either Bertha and Sam for the recovery of damages caused to his spine due to the wrongful practices of the firm, regardless of whether only one of the partners is at fault or both. In a joint and several liability, the partners will be left to determine for the mselves their exact liability and recover from each other the amount of the other’s liability. Therefore, Besa Constructions should seriously consider accepting liability for the injury of Stacey after validating the reports of the insurers. Since the firm is not a separate entity from its owners, this means that Bertha or Sam or both should pay the claim, in accordance to the extent of their individual participation in the wrongful company practices. Moreover, they should initiate a change in its existing working practices to prevent the same problem from occurring again in the future.  

HCM337-0704B-01 Current Legal, Ethical, and Regulatory Issues in H - Essay - 5

HCM337-0704B-01 Current Legal, Ethical, and Regulatory Issues in H - Phase 3 Discussion Board - Essay Example Medical errors are common in the field due to human involvement however the life and death situations pay no respect to human error. A 2006 report by the Institute of Medicine of the National Academies study found that medication errors are among the most common medical mistakes, harming at least 1.5 million people every year [2]. With the current system each day about 125,000 suits are filed against the doctors for mal practice. Although 70 percent of those suits filed are closed without any payment, the rest who don’t, deliver hefty sums to the patients [3]. A 2001 year average payout to the patients was estimated to be $3.9 million according to the Jury Verdict Research of the Insurance Information Institute. With such a change to extract so much money out of a suing, it is any wonder who doesn’t want to win the lottery? With so many suits filed every day, the doctors are taking malpractice insurance to keep them monetarily safe from the patients. However the costs of the insurance have risen since the 1990s. The U.S. Government Accounting Office reported in 2003 that these increases were due increased losses to malpractice insurers in paying malpractice claims, decreases in investment income of insurers, and increased costs of reinsurance, which increased overall costs to insurers. Nearly all states require that physicians have liability insurance. Even in states that don’t, physicians usually have to have insurance coverage in order to get privileges to see patients at a hospital [3] In order to cap the sky rocketing premiums and costs for mal-practice insurance, most of the states have adopted Medical Injury Compensation Reform Act of 1975 (MICRA) which restricts the maximum award of a law suit. One solution to bring the cost of insurance down is by treating the patients correctly. Once the patient has no chance to complain, the law suits will become non-existent and hence this would

Development of an information technology (IT) project Essay

Development of an information technology (IT) project - Essay Example The project seeks to coordinate and maintain the records of the professional development of its employees spread across Colorado, Illinois, Texas and Florida. The project is estimated to cost the organization three hundred thousand dollars. This project charter formally authorizes the existence of the project and the Project Name. It seeks to provide resources to run the activities to the manager of the project. If there is a change in the project scope, the charter will be updated and submitted for re-approval. The development of the project aims to integrate all the four branches of the company allowing the extensive number of 30000 employees to locate and schedule professional development activities that relate to their positions. Most important is to facilitate coordination and manage a record of its employees and their progress. The project aims to build a system that allows location and scheduling of tasks, has an extensive search capability, and enable employees to schedule events (Bolles & Hubbard, 2007). Further, it should allow integration of a social network platform and incorporate a notification module for both the managers and the employees. The project will cover gathering the requirements for the system, building of the system, developing a guide for the user and making a presentation on the system and its functionality in general. However training the individual persons will not be done at this stage. A project manager is required to be ethical since they need to handle people of various calibers, a lot of cash, and most of all lead the staff to deliver the product. In this endeavor, they need to admit to doing wrong, making hard but necessary choices and centralizing blame in case it

Compare a presidential system with a parliamentary system. Choose one Essay

Compare a presidential system with a parliamentary system. Choose one country that represents each system. Explain their legislative, executive and judicial br - Essay Example He stays in office as head of government for six years with no re-election. His functions primarily revolve around the implementation of laws, policies, and, development plans for his country. In the parliamentary system adapted by Great Britain, there is a fusion in the three branches of government. The executive branch of Britain is composed of the Queen who is considered the chief of state and the Prime Minister as head of government. The Prime Minister is elected by the members of the legislative branch. He has no definite term of office as the conduct of elections is decided on by Parliament. The legislative branch of government of Mexico has two chambers-the upper (Senate) and the lower (Chamber of Deputies). They have the power to pass laws, ordinance, impose taxes, declare war, and approve the national budget. Some members of the Senate are voted through direct popular vote, some are voted per state. The members of the lower chamber are voted per district based on proportional representation. The legislative branch of Great Britain, called the House of Parliament, is also bicameral-composed of the House of Lords and the House of Commons. This branch serves as the supreme legislative body of Britain and its territories. The House of Lords is largely made up of appointed members, with a small percentage who are voted by hereditary peerage. The members of the House of Commons are elected via popular vote every four or five years. The distinct feature about British Parliament is that they control the executive branch of the government. As opposed to the Legislative branch of government in the presidential system, the executive and legislative branches of government are independent from each other. The judicial branch of government in Mexico is divided into the federal and state systems. It has a Supreme Court of Justice composed of magistrates and auxiliary judges who

The Us Federal Reserve VS European Central Bank Essay Example for Free

The Us Federal Reserve VS European Central Bank Essay INTRODUCTION This paper will analyze the difference between U.S. Federal Reserve and the European Central Bank.   Provide assumption on which central banking system is able to provide stability on its respective country based on their approved mandates and what are the degrees of independence does Central Bank benefit from both in theory and reality and determine which central bank is able show better results in keeping the overall economy of its respective countries stable. COMPARISON BETWEEN THE US FEDERAL RESERVE AND EUROPEAN CENTRAL BANK The comparison of the Eurosytem and the Federal Reserve System is based on the following: institutional structure, the monetary policy strategy, the monetary policy instruments and the operating procedures of the two central banks as the focal point.    In the study conducted by Karlheinz Ruckriegel and Franz Seitz they concluded that the structure of both institutions has similarities but the main tasks and the legal status are by far different.   The main task of the Eurosytem is price stability while Federal Reserve objective is price stability and full employment achieving both all at the same time. Ruckriegel and Seitz believe in the importance of the independent status of the Eurosytem by international law (EU Treaty) gives an edge of the Federal Reserve System since the status of the Federal Reserve depends on Congress.   The Constitution gives Congress the power to set its value. Therefore, the Federal Reserve’s power is limited to views of the Congress.    They also noted the similarities in the operating procedures of monetary policy of both institutions, similarities in the design of the minimum reserves and the operating target. In both cases the overnight interest rate is the operating target of monetary policy. Apart from required reserves, the instruments of monetary policy are different. The differences can be traced back to historical factors, legal problems of the change of existing arrangements and a different understanding of monetary policy. In this context the Eurosytem has the advantage of introducing all arrangements according to the knowledge of monetary policy and theory. Therefore both writers classified the Eurosytem as the superior system under efficiency viewpoint. Especially, the obvious absence of strategy on the side of the Fed for several years. INFLATION AND UNEMPLOYMENT The difference between the US Federal Reserve and European Central Bank is that the first has a dual mandate which has an objective of prioritizing full employment and price stability at the same time whereas ECB is under the hierarchical mandates which the principal objective is stability other objectives is pursued once the inflation objective is met. The dual mandate of the Federal Reserve helps stabilize the inflation and unemployment situation of the country.   The dual mandate simply states to promote price stability and maximize employment meaning full-employment without pressure on inflation.   The key to dual mandate is to implement both objectives at the same time whereas European Central Bank has hierarchical mandates that prioritize price stability before pursuing other objectives.   ECB will only pursue other objective one’s price stability has been achieved.   Hierarchical mandates set inflation objectives in terms of forecast or as mid-term objectives this allows them to gradually return to their inflation objectives if there are changes in inflation. United States have the largest economy in the world their monetary policy has economic and financial effect on other countries.   The U.S. monetary policy involves influencing short-term interest rates and the supply of money and credit to promote basic goals established by the Congress.   According to Congress price stability normally implies that inflation should be low enough not to play a significant factor in economic decision making while â€Å"Maximum sustainable economic output and employment† goes well together with economic output and employment, it steadily grows consistent with the economy’s long-run ability to develop while strengthening price stability. In Euro the simultaneous decline in inflation and the labor share of income over the past two decades have motivated significant interest in how these phenomena might be connected.   In the summary of Katharine Neiss and Edward Neslon â€Å"Inflation dynamics, marginal cost and output gap:   Evidence from the three countries monetary policy analysis, suggests a different path from what is currently emphasized. They found little support that wage markup movements are an important source of inflation dynamics for a given output gap, and therefore concluded that more detailed modeling of labor market rigidities is not a high priority in analyzing inflation. On the other hand, they find that modeling the dynamic effects of real shocks not only productivity shocks but also preference shocks on potential GDP is crucial for understanding inflation behavior. They explicitly relate potential output dynamics to underlying shocks, hence the importance of optimizing models in monetary policy analysis. CENTRAL BANK’S DEGREE OF INDEPENDENCE For many years many countries has made progress in towards adopting legislative proposals removing their central banks from government control thus making them independent. Based on the empirical and theoretical studies it showed that there is no clear answer was shown that there can be an economic benefit to be gained in having an independent central bank.   In summary, empirical studies provide evidence of a negative correlation between central bank independents and inflation and central bank independence and fiscal deficits. Theoretical studies indicate that independent central bank can increase policy conflicts with the government whenever preferences of the two differ and in so doing worsen the economic performance of the country.   Both studies however do not provide support for the idea that countries should place monetary policy in the hands of the executive or legislative branches of government. Therefore empirical studies put emphasis on price stability and freedom to pursue these goals are primary determinants of independence whereas, theoretical studies equates independence with non-cooperation between the fiscal and monetary authorities in policy implementation. Each central bank representative on the panel brings with them instrument of independence this is used to isolate central bank from political interference.   This interference can be politically motivated.   The purpose of this insulation is not to allow the central bank to pursue policy preference.   The governments are consistent in defining broad goals for central banks, commitment from the government through central bank is to achieve different goals but their main objective is price stability. The Congress structured the Federal Reserve to be independent within the government therefore it is accountable to the Congress and its goals for economic performance are set by law. According to Governor Laurence H. Meyer on his speech At the National Association for Business Economics Seminar on Monetary Policy and the Markets, Washington, D.C. on May 21, 2001 in his speech he said: â€Å"Central bank independence is in part the result of formal institutional arrangements typically incorporated in the legislation defining and creating the central bank. The most important requirement is that the central bank is the final authority on monetary policy decisions. That is, monetary policy decisions should not be subject to the veto of the executive or legislative branches of government. This is further protected if other institutions of the governmenttypically the Treasury Department or the Ministry of Financeare not represented on the monetary policy committee. A lesser protection would be to allow such representation, but only in a non-voting capacity, as is the practice at the Bank of England and the Bank of Japan†. Instrument independence is facilitated by long overlapping membership terms, by limited opportunities for reappointment, and by protecting committee members from removal. Therefore the degree of independence that central bank enjoys is based on imposed mandates.   Though independent it is clear that it has its limitations there is generally an attempt to balance independence and accountability. CONCLUSION In conclusion it is believed that both European Central Bank and Federal Reserve has advantages.   It is predominant that it is the people, culture and society dictates which form is more advantageous.   Therefore applicability is based on culture and racial orientation. REFERENCES Bruha, Jan and Podpiera, Jiri, Inquirers on Dynamics of Transitions Economy Convergence in two Country Model working paper series No. 791August 2007 De Grawe, Paul Is the ECB Handicapped in Stabilizing Output Because of Rigidities? University of Leuven, 3/27/2007 Eurointelligence Some Notes on theReturn of Inflation ECB watch, 3/6/2007 Lawless, Martina and Whelan, Karl Understanding the Dynamics of Labor Shares and Inflation Working paper series No. 784, July 2007 Neiss, Katharine and Nelson, Edward Inflation Dynamics, Marginal Cost and Output Gap: Evidence from Three Countries February 2002 Pollard, Patricia, Central Bank Independence and Economic Performance Ruckriegel, Karlheinz and Seitz, Franz The Eurosystem and the Federal Reserve System Compared Facts and Challenges February 2002 Wyplosz, Charles Wake Up Call For The ECB, Institute of International Studies, 2/7/2007

Love and a Roller Coaster Essay Example for Free

Love and a Roller Coaster Essay Being in love is a lot like being on a roller coaster, it is scary, thrilling, and can sometimes be painful. It’s the feeling of excitement going up the first hill; learning things about each other. Learning what makes them smile, their fears, or what keeps them awake at night. It’s the pain of your first fight, not knowing if you’ll make it through. The same kind of pain you get being whipped around a sharp turn, or the lap bar digging into your gut as you roll down a hill. There’s a distinct difference between the two though, on a roller coaster you can always see what’s ahead. Love is between two people, two brain waves, and two completely separate people. There is no telling where you are going to end, or if the ride will come to a complete stop before you jump. With love there is no set value, no admission, or any right or wrong turns. There is both fear and risk, you may get hurt, and you may not enjoy it but you put yourself on the line for someone else. You chose to put your heart in the hands of something, someone else. In the end the ride was still worth it, you learned something along the way. Whether you feel joy, or pain you learned something. Riding a roller coaster over and over loses its excitement, but with being in love there is always a new hill on the way. There is always something to be excited over, from just seeing them again, to meeting their family and learning where they grew up. When you love somebody you experience a full range of feelings such as anger, calmness and annoyance, jealousy or happiness. You have difficulties of controlling these feelings, because you understand that you are depending on the person you love. You understand that you are not just one person, you are two as a whole.

Microfinance Institutions in Mediterranean Countries

Microfinance Institutions in Mediterranean Countries This paper examines empirically the relation between governance mechanisms and the performance of Euro-Mediterranean microfinance institutions (MFIs) in terms of outreach and sustainability. Specifically, we found that performance-based compensation of managers is not associated with better performance of MFIs. The results identify tradeoffs between MFIs outreach and sustainability depending on larger boards size, and on higher proportion of unaffiliated directors. Moreover, the study shows that the more women there are on a board the better the performance, and reveals that external governance mechanisms help MFIs to achieve better financial performance. This study also allows us to distinguish other factors leading to a better sustainability such as Regulation, the use of individual lending methodology. However, the MFIs active as NGOs seem to be more consistent with their social mission than with their financial performance. 1. Introduction Microfinance is the provision of financial and non financial services to the poor who are excluded from financial/credit markets because they are considered unbankable. Indeed, microfinance institutions has evolved primarily as a consequence of the efforts individuals and assistance agencies committed to the idea of ensuring that the poor people has access to some form of credit. The majority of MFIs claims having a dual mission of reaching poor borrowers (outreach), and being financially sustainable (sustainability). While the social goals of reaching the poorest and poverty alleviation are valid, financial sustainability has emerged as one of the core management and governance issues. The shrinking resources base for donor funds to support the increasing demand for grants and soft loans implies that MFIs will eventually have to support themselves (Ledgerwood, 2000). However, their sustainability will focus on governance structures within the industry. Indeed, as M Labie (2000) observes, in the last decade corporate governance principles have imposed themselves as the basic rules for any well Run Company to follow. The trend has however transcended from traditional business companies but is now part of the globalization process often seen as a tool for standardizing the controlling vision for any major organization in the world. The drive towards Governance has been propelled by a number of factors particularly the collapses of some of the major players in the Industry, the influx of private Equi ty and fall in donor funding. Governance is about achieving corporate goals. The fundamental purpose of MFIs is to contribute to a country development. This involves reaching out to more clients especially the poor (Helms, 2006; Johnson et al., 2006). Not least but now growing in importance especially among donors is the requirement that MFIs achieve financial sustainability. Microfinance practitioners assert that good governance is the key to a successful MFI (Campion, 1998; Rock, Otero Saltzman, 1998; Labie, 2001; CGAP, 2006; Helms, 2006; UN, 2006). In spite of these observations, only few studies have focused on governance and the examination of the linkage of various governance mechanisms and performance (McGuire, 1999). It seems relevant to examine closely the role of various governance mechanisms since MFIs managers control significant resources. Except the study of Hartarska (2005), and those of Mersland, Roy and Strà ¸m, Reidar Øystein (2007), and Cull et al., (2007), no more study attempt to shed light on the link between governance and performance especially in the Euro-Mediterranean countries although it is a very active zone with a microfinance industry quite diverse (NGO, NBFI, Bank) where actors should simultaneously pursue the most effective way of realizing their social objective while achieving superior levels of profitability. While exploiting recently conducted survey by the authors in order to study the efficiency of MFIs in Mediterranean countries, the annual financial reports of the microfinance institutions and other relevant information collected from Microfinance Information Exchange (MIX), this paper aim to investigate the link between governance and Euro-Mediterranean MFIs performance in terms of outreach and sustainability since governance guides an institution in fulfilling its corporate mission and protects the institutions assets over time. As Rock, R, Otero, M Saltzman, S (1998) notes it is a key in guiding management in strategic issues and in carrying out the agreed upon strategic plans. The empirical model explores the joint and individual effect of management compensation, board diversity, and external governance mechanisms on both MFI sustainability, and the depth and breath of outreach while controlling for individual characteristics and, as well as country specific factors. The result s show that performance-based compensation does not improve performance. MFIs with larger boards seem to do better. More independent boards are more effective however. Board diversity (Higher proportion of women) seems to ameliorate outreach. External governance mechanisms especially auditing and regulation improve the financial sustainability. The remainder of this paper is organized as follows. Section 2 deals with the research context. Section 3 briefly reviews the few related studies. Section 4 presents the conceptual framework as well as working hypothesis. Section 5 looks at data description and methodology. Section 6 discusses the empirical findings, and Section 7 draws conclusions emanating from the findings. 2. Microfinance in Mediterranean Experience throughout the world has proven that microfinance help the poor to increase income, built their business, and secure their future by reducing their vulnerability to external shocks. Furthermore, microfinance is often a powerful tool for empowering the poor especially women, to take charge of their economic well-being and those of their families. The Euro-Mediterranean region consists of 21 countries. The microfinance industry in this zone is young with high growth potential. Currently, it is estimated that there are over sixty microfinance institutions (MFIs NGOs), and a potential of numerous other producing credit to poor microentrepreneurs (Ben Soltane, 2008). The majority of these programs are south of the Mediterranean (Egypt, Jordan, Lebanon, Morocco, Palestine, Tunisia, and Syria). Programs also exist in Spain, France, Italy, Kosovo, Albania, Bosnia, and Croatia (Figure 1). Morocco AMSSF, FMBC, KARAMA, AL AMANA, ZAKOURA Turkey MAYA Bosnia Bossel, EKI, MI-Bospo, MIKRA, Women For Women Palestine FATEN, UNRWA Italy FRD, 10 Talenti Fond S.M.Soccorso Fond S.G.Moscati Tunisia ENDA, BTS Spain CODESPA, WWB Spain Egypt ESED, Lead foundation, DBACD, Al Tadamun France CSDL Albania PSHM, USCA Croatia DEMOS Lebanon Al Majmoua, Ameen, CHF-AM Jordan MFW, AMC, JMCC,DEF Kosovo P4, Meshtekna, Grameen Trust Figure1  [1]  : MFIs delivering microcredit in the Mediterranean. Euro-Mediterranean MFIs aim to provide financial services to low income households, even the extremely poor in a participatory and non-paternalistic development approach to the great interest of the donor community, policy makers, development researcher and practitioners. According to the so-called win-win proposition MFIs should combine the socials goals, such as poverty alleviation and reaching poor households (outreach) with operational and financial self-sufficiency (sustainability) based on access to international financial markets independently from international development agencies. Therefore, MFIs should simultaneously pursue the most effective way of realizing their social objective while achieving superior levels of profitability. The regions top MFIs are openly committed to best practice microfinance. In terms of depth of outreach, the sector has generally moved towards serving more and more of the poor clients. According to the FEMIP and Sanabel study, the Mediterranean represents a potential market for the microfinance with nearly 40 million customers, whereas currently only 9 million people profit from the financial assistance of the companies operating in this sector. The number of borrowers increased of more than 43 % per annum between 2004 and 2006, against 20% on a worldwide scale, an indication that the sector as a whole is reaching more of the marginalized in the society. The regions top MFIs have proven also to have excellent leadership abilities, impressive outreach and growth, as well as a commitment to best practice microfinance. Furthermore, it is estimated that around 85% of the regions active clients are served by sustainable MFIs. 3. Literature review Governance in microfinance has been recognized to be an important issue. However, the biggest problem to microfinance practitioners has been balancing the dual mission of outreach and sustainability. The changing of microfinance environment has shown a move towards sustainability ultimately leading to governance issues as donors funds shrink and equity inflows increase in the microfinance sector. Microfinance institutions have therefore embraced boards and adopted principles of corporate governance to ensure their survival. Investigating the link between good governance and the performance of MFIs in terms of outreach and sustainability is crucial since governance guides an institution in fulfilling its corporate mission and protects the institution assets over the time. However, there is a limited academic studies dealing with this subject, partly due to the lack of data. While using three surveys of rated and unrated east European MFIs from three random samples in the period 1998 to 2002, Hartarska (2005), investigates the relation between governance mechanisms and financial performance. Financial performance and outreach constitute dependant variable dimensions and governance mechanisms include board characteristics, managerial compensation, and external governance mechanisms such as rating, financial statements audited, and supervision. The author finds that performance-based compensation of managers is not associated with better performing MFIs; lower wages suggested for mission-driven organization worsen outreach. She identify also that a more independent board has better ROA, but a board with employee directors gives lower financial performance and lower outreach. Finally, the author concludes that external governance mechanism seems to have a limited role in the study region. In a recent study, Mersland, Roy and Strà ¸m, Reidar Øystein (2007), use a self constructed global data set on MFIs spanning 57 countries collected from third-partly rating agencies. The authors study the effect of board characteristics, ownership type, competition and regulation on the MFIs outreach to poor clients and its financial performance. They found that split roles of CEO Chairman, a female CEO, and competition are important explanation. Moreover, the authors found that larger board size decrease the average loan size, while individual guaranteed loan increase it. Finally, they conclude that there is no difference between nonprofits organizations and shareholder firms in financial performance and outreach. A third study conducted by Cull et al., (2007) looking at MFIs financial performance and outreach as well, with a focus on lending methodology  [2]  , controlling for capital and labour cost as well as institutional features. While using data from 124 rated MFIs, the authors found that MFIs that focus on providing loans to individuals perform better in terms of profitability. Yet, the fraction of poor borrowers and female borrowers in the loan portfolio of these MFIs is lower than for MFIs that focus on lending to groups. The study suggests also that individual-based MFIs, especially if they grow larger, focus increasingly on wealthier clients, a phenomenon termed as mission drift. This mission drift does not occur as strongly for the group-based MFIs. However, no governance variables, such as board characteristics or ownership type are taken into consideration. The limited academic investigation into the link between governance mechanisms and performance of MFIs in terms of outreach and sustainability, and the fact that other governance mechanisms such as the proportion of women in the board remain unexplored justify the importance of a similar study in the Euro-Mediterranean zone, characterized by a very active and quite diverse microfinance industry, that complete formers studies. 4. Conceptual framework and working hypothesis While focusing on the microfinance field, the governance can be defined as the process of guiding an institution to achieve its objectives while protecting its assets. It refer to the mechanisms though which donors, equity, investors, and other providers of funds ensure themselves that their funds will be used according to the intended purposes (Hatarska, 2005). The presence of these control mechanisms is crucial either to align the interests of managers and providers of funds since they may have diverting preferences and objectives, or to monitor the performance of managers to insure that they use their delegated power to generate the highest possible returns for the providers of funds. This notion comes from the agency perspective. It found its origins in the work of M. C. Jensen and W. H. Meckling, 1976 who assimilate the firm to a node of contracts. The explanatory model of the structures of financing and shareholding is founded on the assumption of asymmetry of information and c onflicts of interests between managers and providers of funds. According to M. C. Jenson and W. H. Meckling, agency relationship is a contract under which one or more persons (principal) engage another person (agent) to perform some service on their behalf, which involves delegating some decision-making authority to the agent  [3]  . In this case the relation of agency will relate the principal (owner) and his agent (manager), this last being engaged to serve the interest of the first. From these relations emanates the concept of agency costs, costs which result from the potentially opportunist character of the actors (moral hazard) and information asymmetry between the contracting ones (adverse selection). These agency costs represent the loss in value compared to an ideal situation where there is no information asymmetry and conflict of interests. According to the theorist of agency an organisation is considered efficient if it minimise the agency costs. This purpose can be in tended though an effective governance mechanism. According to Keasey et al., 1997, the most important features of an effective governance framework are ownership structure (including institutional and managerial ownership), CEO (manager) and director (board member) remuneration, board structure (size and composition), auditing, information disclosure, and the market for corporate control. Usually, research literature related to this field use partial measures. In other words, governance studies treat separately the impact of each variable such as compensation, board size, independence and diversity, and external market forces on firm performance. However, since latest studies (Hermalin Weisbach, 2003) identify the complementarities, and the correlation between these mechanisms, this study will investigate the impact of the majority of these mechanisms excluding ownership due to lack of data on ownership structure. The most important attribute that distinguishes microfinance institutions from other is what has come to be called its dual mission of balancing a social agenda or social impact with its financial objectives. The MFI combine a social development mission (provision of financial services to the lowest income population possible), with a financial objectives that drives the institution to achieve self-sufficiency and thereby accomplish sustained service delivery without dependence on subsidies. These dual objectives (social: outreach, and financial: sustainability) make difficult the study of governance of MFIs, especially with their different types: Non profit, Non-Governmental Organizations (NGOs), For-profit Microfinance Institutions, Credit Unions. This challenge is surmounted by formulating and testing hypothesis based on insights from the literature on corporate governance, formers studies, governance in banks and in non profit organizations, and by estimating the impact of the go vernance mechanisms on both sustainability and outreach. 4.1. Internal Governance mechanism The incentives of top management have been characterized as an important mechanism of corporate governance as it ensures the alignment of the management and the shareholders interest (John et al., 2004). In other words, it serves as a mechanism for resolving the conflict of interest among the managers and shareholders. Brick, Palmon and Wald (2006) highlighted that director compensation should also affect performance of a firm. With regards to banking institutions, higher-powered incentives may encourage managers to take higher risks at the expense of depositors, who would suffer if the institution fails; thus low pay-performance sensitivity is suggested (John John, 1993). In fact, it is proved by Adams Mehran, 2003; Houston James, 1995; John Qian, 2003, that pay-performance sensitivity in banking in lower than other industries. Since in non-profit firm there is a growing problem of informational asymmetry between clients and managers (i.e., managers possess many crucial information about the product), it seems that the fixed management salaries is the best choice for mission-driven organizations (Easley OHara, 1998). With the fixes salaries, the managers, indifferent between telling the truth or lying, will find it in his benefit to tell the truth. Therefore, if the client and donors find the information provided by non-profit managers more credible, the firm will be better-funded and better-performed. Hypothesis 1. MFIs whose manager receives a fixed salary will not perform worse than MFIs whose managers receive performance based remuneration. Most guidelines recognize that the board of directors is the focal point corporate governance. The composition and structure of the board have a direct bearing on corporate governance. Board of directors is designate for the purpose of ensuring the alignment of the firm activities and its specified objectives. The board has the duty for making sure that the top managers are behaving in a way that will provide the optimal value for shareholders (Coles et al., 2001). There is a view that larger boards are better for corporate performance because they have a range of expertise to help make better decisions, and are harder for a powerful CEO to dominate. However, recent thinking has leaned towards smaller boards. Jensen (1993) and Lipton Lorsch (1992) argue that large boards are less effective and are easier for a CEO to control. When a board gets too big, it becomes difficult to co-ordinate and process problems. Smaller boards also reduce the possibility of free riding by individual directors, and increase their decision taking processes. Empirical research supports this. For example, Yermack (1996) documents that for large U.S. industrial corporations, the market values firms with smaller boards more highly. Eisenberg et al. (1998) also find negative correlation between board size and profitability when using sample of small and midsize Finnish firms. In Ghana, it has been identified that small board sizes enhances the performance of MFIs (Kyere boah-Coleman and Biekpe, 2005). Mak and Yuanto (2003) echo the above findings in firms listed in Singapore and Malaysia when they found that firm valuation is highest when board has five directors, a number considered relatively small in those markets. In a Nigerian study, Sanda et al (2003) found that, firm performance is positively related with small, as opposed to large boards. Hypothesis 2. Board size should have an inverse correlation with MFIs performance A third common monitoring mechanism advocated by the agency perspective is a board composed of a majority of independent directors. These non-executive or outside directors are believed to provide superior benefits to the firm as a result of their independence from firm management. Under this organizational design, conflicts of interest can be avoided and executive leaders can be evaluated more objectively. The literature suggested that increases in the proportion of outside directors on the board should increase firm performance as they are more effective monitors of managers (Adams and Mehran, 2003). The proportions of the outside directors can be measured in terms of the ratio of outside directors to board size. The positive aspect of having board independence was evidenced in a study by Byrd et al (2001) that highlighted the survival of firms in the thrift crisis due greater proportion of independent directors in the board. Kyereboah-Coleman and Biekpe (2005) found also a positive relationship between proportion of outside board members and performance of MFIs in Ghana. Hypothesis 3. MFIs performance will be affected positively by the proportion of non-affiliated outsiders on the board. Corporate governance literature argues that board diversity in terms of women and minority representation is potentially positively related to firm performance. Board diversity promotes a better understanding for the market place, increases creativity and innovation, produces mores effective problem solving, enhances the effectiveness of corporate leadership, and promotes effective global relationships (Robinson and Dechant, 1997). Fondas and Sassalos, 2000 argue that diversity in board composition via greater female representation will lead to improved board governance and top management control. In microfinance, the study of Coleman, 2006 show that having women in CEOs on MFI boards enhance performance and also the more the women there are on a board, the better the performance. Furthermore, having a high fraction of women in the board would help the MFI understand its customers better so as to separate the good risk from the bad (Mersland R. et Oystein Strom R. 2007). Hypothesis 4. Board diversification and the presence of women and minority will lead to a better performance of MFI. Another principle of effective bank supervision is effective internal audit. Internal audit helps to identify problem areas and to avoid major collapse. The internal board auditor provides independent, objective assessments on the appropriateness of the organizations internal governance structure and the operating effectiveness of specific governance activities. Reporting of all internal audit reports in an accurate and timely manner is essential for evaluation of the institutions status and need for any change in strategy. Policy papers for MFIs stress the importance of internal audit and recommend that the internal auditor reports directly to the MFI board (Steinwand, 2000). Hypothesis 5. MFI allowing their internal auditors to report directly to the board should show higher financial performance. 4.2. External Governance Mechanisms The external governance mechanism can be implemented as a result of the failure or the weakness of internal governance mechanisms. In the microfinance industry donors and creditors are increasingly relying on information from audited financial statement and rating agencies (Hartarska, 2005). These external governance mechanisms are an important mechanism that provides depositors, creditors and shareholders with credible assurances that they will refrain from fraudulent activities. In other words it reduces informational asymmetries between the different stakeholders and the firm (Healy Palepu, 2001). Audited financial statements are an important tool for the assessment of MFIs by regulators and capital markets. They form an important part of the effective corporate governance. The auditors role is to provide a disinterested an objective view of the financial statements of the MFI in the line with generally accepted accounting standards. It is a mean to ensure potential investors and donors that an MFI complies with the accounting practices and managers do not misrepresent financial information. Hypothesis 6. MFIs with financial statement audited achieve better performance than MFIs without financial statement audited. According to Hartarska (2005), in the absence of developed equity and debt market, donors and investors rely on independent evaluation of MFIs performance. A MFIs rating reflects a rating agencys opinion of entitys overall creditworthiness and its capacity to satisfy its financial obligations. The raters evaluate objectively and independently the corporate governance in MFI and rank it on a relative rating scale that would facilitate comparison. Unlike typical rating agencies that rate the riskiness of issued debt, microfinance rating agencies rate the overall performance of the MFI in terms of outreach and sustainability. Hypothesis 7. Rating helps MFIs to achieve better results Many MFIs around the world operating as NGOs have increased their assets, reorganized, and transformed into regulated entities that can capture savings deposits. A regulated MFI has more chance to earn customer trust, and by the way to have a higher financial performance. Hence, regulation is crucial for microfinance sector development since it affect MFI performance by changing the internal rule of the organization. It implies the access to an important and low-cost funding source through the right to mobilise savings. Due to this effect, the MFI win the opportunity to increase the number of clients, but also to increase average loan amounts for existing borrowers. Moreover, if demands to fulfill regulatory requirements divert attention away from serving the poor, and hold back innovation in lending technology that has been the driving force behind MFIsability to serve even poorer borrowers, regulatory involvement will lead to mission-drift (Hartarska, 2007). Therefore, the effects upon depth and breadth in outreach may be uncertain as well, either upon depth or breadth, or a combination of the two (Mersland R. Oystein Strom R. 2007). Hypothesis 8. Regulation may guide the MFIs to fulfill better sustainability, but not to achieve better outreach. 5. Data and methodological issues Data for this study are issued from various sources. The major part comes from a survey conducted by the author in 2006 in order to test the efficiency of microfinance institution in Mediterranean (Ben Soltane, 2008). The performance variables and some governance variables are also obtained from the annual financial reports of the microfinance institutions collected from Microfinance Information Exchange (MIX); a non governmental organization whose object is to promote the exchange of information on the microfinance sector around the world  [4]  . All these information are updated and completed by a questionnaire dealing fundamentally with detailed question on governance addressed to the MFIs in the region. The response rate was 58% with 40 institutions. A special questionnaire was also addressed to the Mediterranean microfinance institutions that dont figure in the MIX MARKET data base. The response rate for these MFIs was weak and near 20%, with four institutions. Due to missed data, only two institutions are taken into account. The final sample comprises 42 institutions working in 20 countries. Our sample is quite representative of the Mediterranean microfinance industry as well as of the governance mechanisms and the performance of MFIs in the region. Following Hartarska (2005) works, our empirical model used to test the hypothesis include five major potential groups of determinants and is on the form: Where is a performance variable for MFI i in country j at time t; are MFI specific variables; are management specific variables; are board-specific variables, are external governance mechanisms; and are the country-specific macroeconomic variables. It is crucial to mention at this level that our choice of a single-equation model is supported by the hypothesis that various governance mechanisms are endogenously determined is not always supported by empirical evidence  [5]  . Since MFIs are special institutions having a dual mission, their performance is measured in terms of outreach and sustainability. Outreach is measured in breath and depth. Breach of outreach (NAB) is the logarithm of active borrowers, depth of outreach (DEPTH  [6]  ), is the average loan size on GDP per capita. Sustainability is measured by return on assets (ROA) which is a standard finance literature measure of performance, and by operational self-sufficiency (OSS). This variable measures how well the MFI can cover its costs through operating revenues. Table 1. Definitions of dependent variables used in analyses Variable Explanation Social Performance: Outreach NAB Logarithm of the number of current borrowers DEPTH The average loan size on GDP per capita Financial Performance: Sustainability ROA Return On Assets OSS Operational Self-Sufficiency MFI specific variables () are MFI size measured by the logarithm of total assets, MFI age measured in years sine commencement, and MFI type measured by three dummies (NGO, Nonbank Financial Institution, and bank). Since further studies (Navagas, Conning, Gonzalez-vega, 2003) show that the type of lending methodology used influences the success of these organization, our study include a variable Individual which is a dummy that takes the value of one if the MFI used individual lending technology. Variables built-in are Fixed-wage, which is a dummy for pay not based on performance, Experience is used to proxy for a mangers quality and is measured by the years of work experience. The board-specific variables contains Board-size, measured by the number of board members; Employees measured as the proportion of MFI employees who are voting board members; Independent measured as the proportion of non-affiliated board members; Women measured as the proportion of women in the board; Internal Board Auditor is a dummy variable that takes the value of one if there was an internal auditor with direct access to the board. The variables included in are Regulation, which is a dummy that takes the value of one if the MFI was supervised by the central bank or other bank supervisory agency; Rated is a variable that indicates whether the MFI was subject to independent evaluation or rating by an outside organization; Audited is a dummy that take also the value of one if there was an audited financial statement in the year t-1. Since MFI are issued from north and south of the Mediterranean, the dissimilarity in economic conditions across countries are controlled by the size of the economy (Economy size), measured by the logarithm of a countrys GDP, and by the average inflation rate (Inflation), measured by the average consumer price index. These variables are issued from the World Bank Development Indicators. We wanted also to build a variable that take account of the institutional differences between countries but we did not find an adequate measure. Table 2. Definitions of independent variables used in analyses Variable Explanation Fixed-wage<