Текст 1 Confronting Competition

Increasing intensity of competition in global markets constitutes yet another challenge facing companies at all stages of involvement in international markets. As markets open up, and become more integrated, the pace of change accelerates, technology shrinks distances between markets and reduces the scale advantages of large firms, new sources of competition emerge, and competitive pressures mount at all levels of the organization.

As more and more firms venture into global markets, competition proliferates, posing new threats and dangers to be reckoned with. In addition tofacing competition from well- established multinationals and from domestic firms entrenched in their respective product or service markets, firms face growing competition from firms in newly industrializing countries and previously protected markets in the Third World, as well as emerging global networks or coalitions of organizations of diverse national origins.

Firms from newly industrializing nations such as Taiwan, Singapore, Korea and Hong Kong are increasingly taking the initiative in competing in global markets, rather than acting as low-cost suppliers to firms in the Industrial Triad. The threat of competition from companies in countries such as India, China, Malaysia, and Brazil is also on the rise, as their own domestic markets are opening up to foreign competition, stimulating greater awareness of international market opportunities and of the need to be internationally competitive. Companies which previously focused on protected domestic markets are entering into markets in other countries, creating new sources of competition, often targeted to price-sensitive market segments.

At the same time, spurred by new advances in communications technology and rapid obsolescence, the speed of competitor response is accelerating. No longer does a pioneer in global markets enjoy a substantial lead time over competitors. Nimble competitors, benefiting from lower overhead and operating costs, enter rapidly with clones or low-cost substitutes, and take advantage of the pioneer’s investment in R&D and product development. Modem communications and information technology also encourage rapid competitor response to price changes, or new distribution and promotional tactics, and further heighten the pace of competition.

Not only is competition intensifying for all firms regardless of their degree of global market involvement, but the basis for competition is changing. Competition continues to be market-based and ultimately relies on delivering superior value to consumers. However, success in global markets depends on knowledge accumulation and deployment. Firms that win in the market place will be those that can use information to their advantage to guide the delivery of superior value. Further, “the increased blurring of product market boundaries and interlinkingof markets means that how value is perceived and by whom is less clear.

Firms beginning to enter international markets are in a position to limit competitive exposure by choosing markets that are free of formidable foes. They can zero in on markets where they have a competitive advantage, such as being the low cost supplier in a price sensitive market. In addition, firms in PHASE 1 tend to be dealing with established competitors that are known quantities, and frequently compete on a single dimension, e.g., cost leadership.

Competition mounts quickly for firms in PHASE 2 as they expand their operations in international markets. Not only does competition increase, but it tends to proliferate and become quite diverse. New competitors may enter the market, and existing competitors react to the firm’s actions, requiring adaptation of its competitive strategy. Furthermore, the nature of competition may vary from one market to another. In some markets, the firm may differentiate its products, to beat competition while in others it needs to focus on cost leadership, making it difficult to leverage core competencies across markets.

Firms in PHASE 3 of international market development face intense competition throughout the world. Their far-flung operations will encounter competition of all types who may mount a frontal attack, or cherry-pick lucrative niches or attempt to block the firm’ expansion into new markets or market segments. In addition, global markets are often highly interdependent, with actions in one market having consequences for many other markets. The astute global market will attempt to gain a competitive edge and take advantage of these interdependencies.

Текст 2 What is Law?

In everyday life people use the word law in many different ways. Actually the word law is very difficult to define. There is a field of law that is known as "jurispru­dence", which analyzes the concept of law and is concerned with the philosophy of law. Throughout the centuries people have attempted to define law and to set forth its role in society.

In considering the numerous definitions of law and philosophy of law it must be recognized that one of the roles of law is to maintain order and that this is the function of the criminal laws. Another role of law is to resolve disputes that arise between individuals and to impose responsibility if one person has a legal claim against another. Between these two extremes of what might be called law and order on the one hand and settlement of disputes on the other, there are many situations that cannot be so clearly defined. For example, the income tax laws require that a person pay an income tax. If he fails to do so, or if he fails to declare all his income . or takes improper deductions, he may be subjected to penalties, but he has also failed to live up to his obligations to society. In any event it is important that one bear in mind that the law is not simply a statement of rules of conduct but is also the means whereby remedies are afforded when one person has wronged another.

In one sense all issues and disputes in our society — political, social, religious, economic, or otherwise-ultimately become legal issues to be resolved by the courts. Thus it can be said that law is simply what the courts determine it to be as an expression of the public will in resolving these issues and disputes.

Another view of law is that it is a method of social control — an instrument of social, political, and economic change. Really law is both an instrument of change and a result of changes that take place in our society. It is difficult to determine whether the law brings about changes in our society or whether changes in society bring about a change in the law. In our legal system both are true. The law-respond­ing to the goals, desires, needs, and aspirations of society is in a constant state of change. Sometimes the law changes more rapidly that does the attitude of the majority of society. In this event the law and our legal system provide leadership in bringing about changes. At other times our society is ahead of the law in moving in new directions, and changes are brought about by the people who act according to their new attitude and convictions. When these changes are accepted by the rest of society, it often happens that the law then gives approval and recognition of the changes, and the law has thus been brought into line with the changing needs of society. For example, in the field of ecology various groups have put pressure on legislators to clean up the air and water. As a result of this laws have been enacted that require that devices be installed to control pollution. Here the public pressure resulted in the enactment of laws and the law was a follower rather than a leader. It is important to note that the law is not static — that it is constantly changing and that the impetus for the changes may come from many different sources.

In still another sense law has been defined as the rules and principles that are applied by the courts to decide lawsuits. These rules and principles fall into three categories: (1) laws that have been passed by legislative bodies, such as the Con­gress and state legislatures, together with the federal Constitution and the state constitutions and treaties that have been duly entered into; (2) common law or case law — the law that is derived from cases decided by the courts; and (3) procedural rules that determine how lawsuits are handled in the courts with regard to rules of evidence, enforcement of judgments, appeals, and related matters. It will be noted that the first two elements provide the rules that are applied by the courts to decide controversies and that the third provides the machinery whereby these rules of what is called substantive law are given effect and applied to resolve controversies.

Текст3. Excerpts from “The End of Chimerica”

For the better part of the past decade, the world economy has been dominated by a unique geo-economics constellation that the authors call "Chimerica": a world economic order that combined Chinese export-led development with U.S. over-consumption on the basis of a financial marriage between the world's sole superpower and its most likely future rival. For China, the key attraction of the relationship was its potential to propel the Chinese economy forward by means of export-led growth. For the United States, Chimerica meant being able to consume more, save less, and still maintain low interest rates and a stable rate of investment. Yet, like many, another marriage between a saver and a spender, Chimerica was not destined to last. In this paper, economic historians Niall Ferguson of HBS and Moritz Schularick of Freie Universität Berlin consider the problem of global imbalances and try to set events in a longer-term perspective. Key concepts include:

- The financial crisis of 2007-2009 marks the beginning of the end of the Chimerican marriage of convenience. The end of Chimerica is desirable, though the divorce needs to be amicable and its costs kept down.

- Currency adjustments must become a top priority in the international political debate. The world economy's key structural imbalance is that the second-biggest economy in the world has pegged its currency to that of the largest economy at a strongly undervalued exchange rate.

- A policy of Sino-American competitive devaluation at the expense of U.S. allies in Europe and Japan is politically shortsighted and dangerous for global trade.

- A renminbi revaluation would help the reorientation of the U.S. economy and potentially allow a quicker exit from the extreme policies currently being implemented by the Fed and the Treasury, which carry uncertain risks for the inflation outlook, global liquidity, and capital flows.

- A renminbi revaluation would also solve at a stroke the problem of China's excessively large international reserves and dollar exposure.

- Historically, periodic exchange rate revaluation has been the hallmark of economic success. It is time for China—and its currency—to step up.

In some ways China's economic model in the decade 1998-2007 was similar to the one adopted by West Germany and Japan after World War II. Trade surpluses with the U.S. played a major role in propelling growth. But there were two key differences. First, the scale of Chinese currency intervention was without precedent, as were the resulting distortions of the world economy. Second, the Chinese have so far resisted the kind of currency appreciation to which West Germany and Japan consented. We conclude that Chimerica cannot persist for much longer in its present form. As in the 1970s, sizeable changes in exchange rates are needed to rebalance the world economy. A continuation of Chimerica at a time of dollar devaluation would give rise to new and dangerous distortions in the global economy.

Thanks to the Chimerican symbiosis, China was able to quadruple its GDP since 2000, raise exports by a factor of five, import western technology and create tens of millions of manufacturing jobs for the rural poor. For America, Chimerica meant being able to consume more, save less and still maintain low interest rates and a stable rate of investment. Overconsumption meant that between 2000 and 2008 the United States outspent its national income by a cumulative 45 percent, i.e. total U.S. spending over the period was 45 per cent higher than total income. Purchases of goods from China in excess of income accounted for about a third of over-consumption.

For a time, it seemed like a marriage made in heaven. Chimerica accounted for around 13 per cent of the world’s land surface, a quarter of its population, more than a third of its gross domestic product, and around two fifths of global economic growth in the past ten years. It also seemed like a marriage with positive externalities for the rest of the world. Global trade boomed and nearly all asset prices surged. Yet, like many another marriage between a saver and a spender, Chimerica was not destined to last. We believe the financial and economic crisis of 2007-9 has put the marriage on the rocks. The reduction of the imbalance between the United States and China—in short, the dissolution of Chimerica—is now indispensable if equilibrium is to be restored to the world economy. In this paper, we consider the much-discussed problem of global imbalances as economic historians, trying to set events in a longer-term perspective. We argue that China's economic ascent came about as a result of a strategy of export-led growth following the earlier examples of West Germany and Japan after World War II. However, a key difference was the sheer scale of Chinese currency intervention and the corresponding reserve accumulation. The resulting distortions for the world economy were also far greater than anything seen in the 1950s and 1960s. In the presence of highly integrated and poorly regulated financial markets, this massive reserve accumulation sparked a debt-fuelled asset bubble in the West, again unlike anything seen in the postwar decades. Taken together, these differences render comparisons with the Breton Woods system of very limited use.

We believe that the imbalances of the past decade were to a large degree a function of exchange rate undervaluation and will not be resolved automatically without major exchange rate adjustments. The historical record has shown time and again that policies of real exchange rate undervaluation can be sustained for a long time without generating the inflationary pressures predicted in economic theory. Indeed, economic historians have often seen real exchange rate policies as important factors in explaining growth performance, in particular in the postwar catching-up process in Europe. Cheap relative production costs supported the profitability and hence investment in manufacturing industries, while surplus labor or organized wage restraint avoided a loss of competitiveness. Thus we do not agree that Chinese surpluses can be explained simply in terms of household savings behavior.

We see the Chimerican world as the result of a policy of intervention in foreign exchange markets that served two goals: to promote export-led industrialization and to build a cushion against future financial crises. Due to the pervasive role of the state in China's financial sector, the effectiveness of capital controls and the large supply of surplus labor, a policy of real exchange rate undervaluation and reserve accumulation was not automatically corrected by inflation in the way that some economic models predict. Growing real exchange rate undervaluation can account for many of the striking features of China's recent growth spurt that are otherwise hard to reconcile: a sharp increase in domestic investment, which was accompanied by an even stronger rise in national savings. The savings surge was driven by corporate profits, not by households, and was especially pronounced in exchange-rate sensitive manufacturing industries.

Nor do we think the precipitous decline of the U.S. savings rate and the widening of the current account deficit were simply consequences of behavioral changes by the American public. Government policies on the other side of the Pacific were also partly responsible for the build-up of the imbalances. The Federal Reserve mistakenly turned a blind eye to the asset bubble being inflated by excessive financial and household leverage and the distortion of interest rates by Chimerica. The Congress was much too cavalier in promoting home ownership regardless of households’ ability to service their mortgages. The Treasury and other responsible bodies underestimated the systemic risks created by financial engineering and particularly by the explosive growth of the over-the-counter derivatives market.

Текст 4 Excerpts from “The End of Chimerica”

The financial crisis of 2007-2009 marks the beginning of the end of the Chimerican relationship. First, the Chinese authorities understand that heavily indebted American consumers cannot be relied upon to return as buyers of Chinese goods on the scale of the period up to 2007. Second, the Chinese dislike their exposure to the U.S. dollar in the form of close to two trillions of USD-denominated reserve assets. But the temptations to continue business as usual are also great on both sides. In order to stimulate their ailing export industries, the Chinese authorities seem resolved to carry on pegging their currency to the dollar. American policy makers seem equally willing to prolong America's addiction to cheap money as long as the economy is in precarious state.

This paper argues that the end of Chimerica is desirable, though the divorce needs to be amicable and its costs kept down. In the light of our analysis, currency adjustments must become a top priority in the international political debate. The world economy's key structural imbalance is that the second biggest economy in the world has pegged its currency to that of the largest economy at a strongly undervalued exchange rate. In the depressed conditions caused by the financial crisis, this peg poses a double threat. First, it limits U.S. recovery by overvaluing the dollar in key Asian markets. Secondly, as the dollar weakens against other developed world currencies—notably the euro and the yen—the burden of adjustment falls disproportionately on Europe and Japan, since dollar depreciation translates automatically into renminbi depreciation, through the action of the peg. This is a recipe for protectionist responses and new distortions.

Historically, big adjustments in relative production costs and income levels have generally come about as exchange rate adjustments. Between 1960 and 1978, for example, the deutsche mark appreciated cumulatively by almost 60 per cent against the dollar, while the Japanese yen appreciated by almost 50 per cent. The lesson from history is that exporters can live with substantial exchange rate revaluations when major gains in productivity are being achieved. The world—and particularly China—should prepare for similar adjustments if it is to draw the right conclusions from the current financial crisis.

Chimerica and the crisis

China's integration into the world economy was by far the most important development of the economic history of the past decade. In the 1990s Zhu Rongji and his right-hand man Wen Jiabao embraced foreign trade and foreign direct investment as cornerstones of a new Chinese development strategy. They convinced other members of the leadership in Beijing to embark on a strategy of export-led growth following the examples of its East Asian neighbors, Japan and Korea, but also imitating the policies adopted by many European economies under the post-war Breton Woods system. Following substantial renminbi devaluation in 1994 and the opening up of the economy to FDI, the strategy quickly bore fruit as multinational companies started to relocate production to China. The Chinese export machine began to take off rapidly after WTO accession in 2001, generating higher and higher trade surpluses. Exports in 2000 were in the range of $250 billion, but climbed to $1.3 trillion in 2008. China's current account surplus in 2001 was a mere $17 billion.

By the end of 2008, it was approaching $400 billion. As exports expanded, the authorities in Beijing consistently bought dollars to avoid appreciation of their currency. China's currency interventions served two goals: first, to promote export competitiveness, since export industries provided rapid productivity gains as well as new jobs and income; second, to build up reserves as a cushion against the risks associated with growing economic and financial integration, painfully illustrated by the experience of other countries in the 1997-8 Asian Crisis. For political reasons, the Communist Party leadership in Beijing feared financial instability even more than other governments and was unwilling to subject itself to the vagaries of international capital markets.

The result of sustained currency intervention was a vast accumulation of dollar denominated securities in the reserves of the People’s Bank of China and the State Agency for Foreign Exchange (SAFE). Already by 2000 China had currency reserves of $165 billion, slightly above 10 per cent of GDP. In 2009 currency reserves reached $2.3 trillion, equivalent to more than 50 per cent of China's annual output. As we and others have argued, such persistent currency intervention caused a growing distortion in the global cost of capital: the real economic shock of China's integration into the world economy should have led to a lower capital-labor ratio and hence higher real interest rates. But global interest rates—both long-term and short-term—continued to fall.

The accumulation of large war chests of foreign reserves through currency intervention opened up a Pandora's box of financial distortions. Ben Bernanke argued that a “glut” of savings from emerging markets was a key factor in the decline of U.S. and global real-long term interest rates, despite the parallel fall in U.S. savings and the fact that the U.S. deficit manifested itself before the Chinese surplus. Lower interest rates in turn enabled American households to increase consumption levels and worsened the imbalance between savings and investment. And, because foreign savings were predominantly channeled through government (or central bank) hands into safe assets such as Treasuries, private investors turned elsewhere to look for higher yields. This led to a more general re-pricing of financial risk, which in turn incentivized financial engineers to develop new financial products such as securitized debt instruments. This is not to say that reserve accumulation was the only cause for the current crisis. The financial disaster that began in 2007 had multiple causes: regulation built on the idea of the efficiency of financial markets; incentives for bankers that encouraged them to focus on short-term profits and stock market performance; a Federal Reserve policy of ignoring asset bubbles; and, last but not least, the willingness of Anglo-Saxon households to turn themselves into highly leveraged, unhedged investment vehicles that speculated on real estate.

Beijing cannot be blamed for the reckless lending and borrowing engaged in by Western financial institutions. Yet had it not been for the Chinese willingness to fund America’s consumption and real estate speculation habit, long-term interest rates in the United States would almost certainly have been substantially higher, acting as a circuit breaker for the housing bubble. It was not “financial terror” that brought Chimerica to an abrupt end, as some commentators had feared. The main threat, as it turned out, was the distortion of global interest rates and the complacency it generated. Bankrolled by China, the U.S. economy overdosed on debt.

With the benefit of hindsight, it is easy to argue that a world order built on net capital flows from China to America was bound to end in tears. (That was why our term “Chimerica” was always intended as a play on the word “chimera”.) In the past decade capital was flowing in large quantities on a net basis to an economy that presumably had a lower marginal productivity of capital than the lender economy. Capital flows that were not driven by higher rates of return on investment financed a boom in consumption and a decade of household dis-saving. Investment spending in the U.S. did not increase in the past decade and capital inflows merely substituted for household savings.