GKE task 3 - 1952 Words

A. African Colonization Colonialism is defined in the dictionary as a policy by which a nation maintains or extends its control over foreign dependencies. African colonization is one example. Africa was oppressed by the European imperial powers in the late 19th and early 20th centuries (Parker, 2007). Unlike in other parts of the world, African colonization was short lived and the colonial period was over by the 1960s (Parker, 2007). The European ‘scramble’ for territory at the end of 19th century is probably the best-known occurrence in the continent’s history. The involved imperial powers were Britain, France, Portugal, Germany, Italy, and Spain (Parker, 2007). These countries were competing for†¦show more content†¦(2007). African History: A Very Short Introduction. Oxford, GBR: Oxford University Press, UK. The Colonization of Africa. (n. d.). Retrieved July 9, 2013 from http://exhibitions.nypl.org/africanaage/essay-colonization-of-africa.html Studying Africa through the Social Studies. (n. d.). Retrieved July 9, 2013 from http://exploringafrica.matrix.msu.edu/students/curriculum/m7b/activity2.ph B. Russian Revolution of 1917 The events of the Russian Revolution made dramatic changes in the world’s history but it is still not clear if the First World War caused the Russian Revolution in 1917; it is obvious that domestic situations were reaching the crisis point before August 1914; state and society were tilting toward dramatic confrontation. In 1915-1916 the country was headed toward disaster economically and financially as enterprises were converting to military production when it became obvious that the war would not be over soon. There were problems with transportation, and the undersupply of raw materials. People began to voice their discontent at government’s incompetence. Members of the Duma formed the political association Progressive Block that was calling for the tsar to be replaced with a government of public confidence- by which they meant themselves. The pressure for the tsar’s resignation was rising. The population was mobilizing itself to continue revolutionaryShow MoreR elatedEssay on GKE Task 3 Themes In US And World History A789 Words   |  4 Pagesï » ¿ GKE Task 3: Themes in US and World History Vivian White Western Governors University GKE Task 3: Themes in US and World History A. Colonialism in North America England’s desire for economic gain and religious freedom sparked the beginning of their interest in colonialism in America (Gouch, LeGuin, Walton, 1998). While some settlers came to America in search of gold or other riches, the Puritans that settled the Massachusetts Bay Colony came to escape religious persecution and have freedomRead MoreTask 1790 Words   |  4 PagesFrost, GKE1 Task 1 Page 1 GKE Task 1 Part A: Over the centuries there have been many different environmental and geographical factors that have shaped the development of the United States. Two of these factors that I feel are extremely significant to this development are the Irish Potato Famine and the discovery of gold in California. The Irish Potato Famine began in Ireland in September 1845. The famine was caused by an airborne fungus, phytophthora infetans, which attacks the leaves of theRead Moretask 31185 Words   |  5 Pages Task 3 for GKE 1 March 25, 2014 Western Governors University Page 2 In 1615 the East India Company acquired its first territory in Bombay, India. The East India Company was a British company that traded for goods, services, and raw materials with India. What initially started as a trading company became a company ruling a country with Brittan’s backing. The company established an army in India comprised mostly of local citizens called Sepoys. With help from the British

Fiscal Decentralization and Economic Growth in Pakistan Free Essays

FISCAL DECENTRALIZATION AND ECONOMIC GROWTH IN PAKITAN A Thesis Submitted to the Faculty of Institute of Management Sciences, Peshawar In Partial Fulfilment of the Requirements for the Degree of MBA (Finance) (2009-2011) Institute of Management Sciences, Peshawar Chapter 1: Introduction According to James Edwin Kee, Fiscal decentralization is the devolution of certain administrative and fiscal powers and functions to the sub-national governments. It also means the shifting of responsibility to the low-level governments with concomitant accountability. The extent of Fiscal devolution can be measured in terms of the powers of low-level governments to raise revenue or to incur expenditures. We will write a custom essay sample on Fiscal Decentralization and Economic Growth in Pakistan or any similar topic only for you Order Now Fiscal devolution in the public sector has received great attention during the last two decades for many reasons. The implications of financial autonomy on the performance of sub level government and economic growth has been studied widely both for the developing and the developed world. In transition countries, with the disintegration of centralized system, fiscal federalism emerged; and in many developing countries, like India, Brazil and Argentina, financial decentralization was debated regarding its effects on economic stabilization. Some studies have, however, suggested that the relationship between the two has not been conclusive. [Financial devolution] is reckoned as a key policy tool that ensures economic efficiency and good governance through financial autonomy of the [federating units]. It leads to the integration of provinces and enhances their participatory role in the economic development of a country. It relieves the central government from paying attention to the details of financial matters, thereby enabling it to undertake the tasks at national level in a more effective and efficient manner. Also, if the central government for some reasons becomes inefficient, then devolution can be a possible solution. It accelerates growth and empowers the low-level governments through financial autonomy and administrative empowerment. The devolution makes the federating units more responsible as it brings the government closer to the people. Decentralization policy has a positive effect on economic growth as it helps implement social policies in a better manner. In decentralized set ups, the lower tiers of governments know more about the necessities and developmental needs of the people, which leads to economic efficiency in service delivery, thereby accelerating the growth rate at national and regional levels. This is also called the â€Å"Oats Decentralization Theorem†. It says that if the people in one municipality are not provided with adequate public services, they may opt for shifting to other municipalities having more facilities. Financial autonomy reduces the wasteful utilization of resources by the central government. According to Bird and Smart (2002), for effective service delivery it is important that the recipient of funds has clear mandate, sufficient resources and powers to make decisions. Through decentralization, responsibilities as well as resources are devolved to the lower level governments (Rondinelli,1981). In this way , the federating units are empowered which enable them to use the resources to good effect , raise living standard of the people and distribute the work load (Gordin, 2004). In Pakistan’s case, the significance of Fiscal devolution cannot be overemphasized. Pakistan is a federation having a centralized taxation system. The major chunk of revenue is collected by the central government, which is then distributed among the provinces to remove financial disparities. Article 160 of the constitution empowers the president that he shall constitute National Finance Commission after every five years for the distribution of funds, taxes and other monetary assets among the federating units. The decision of the commission is called National Finance Commission Award. The commission is comprised of the finance ministers of the federation and the provinces and such other persons as may be appointed by the president in consultation with the governors of the respective provinces. So far, seven NFC Awards have been announced, the latest being the 7th NFC Award of 2010. Except for the 1974 Award, there has been a growing tendency in the transfer of revenue from the centre to the provinces. The 4th NFC Award was a significant move forward towards fiscal decentralization as it enhanced the share of the provinces by 18% and accepted their right over hydel profit, developmental surcharge and excise duty on crude oil. The 7th NFC Award accepted the demands of Baluchistan, KPK, Sindh by devising a formula, wherein poverty, inverse population density and under development have also been given due weightage. Moreover, the provincial share has been enhanced from the previous 47. 5% to 56%. The provinces were also given the powers to collect Sales Tax on their own. Following this decision, the Sindh Province has already undertaken this task and claims to have collected 50% more Sales Tax in the first five months of the financial year compared to the corresponding period last year [Dawn, Dec 10, 2011]. The 8th Financial Award is scheduled to be held on 16th Dec, 2011. Apart from the resource distribution Through NFC Award, Article 161 of the Constitution provides for transfer of Royalty on natural resources to the respective provinces in the shape of surcharge on gas and crude oil. This will lead to greater transfer of funds from the centre to the provinces. With the 18th Constitutional amendment, the concurrent list has been abolished, and with it entry No. 49 in the 4th Schedule to the Federal Legislative list has also been amended. As a result, the GST Services in Federal Excise mode have been assigned to the provinces. Despite the presence of this constitutional mechanism for resource distribution, the smooth allocation of funds was interrupted due to deadlocks among the provinces over the distribution formula, and, resultantly, the NFC Award failed to narrow down the vertical and horizontal resource gaps. At the district level, The National Reconstruction Bureau launched a decentralization programmed through Government Plan 2000, wherein it was acknowledged that without Fiscal Decentralization no authority is devolved, which further emphasizes the importance of transfer of funds to the lower tiers of government. The above paragraphs portray only one side of the picture. There are many studies which suggest that there is no direct relationship between fiscal devolution and economic growth and efficiency at the level of sub-national governments. As a matter of fact, there is also a strong case against the Fiscal federalism. It may lead to social inequalities as for instance, incomes and taxes may not be equitably distributed among the various regions of a country. Also, fixed costs are associated with running administrations of low-level governments. So, in low-income countries it may not be justified to spend substantial amount of the available funds on these expenses (Homme,1995). The relationship of Fiscal devolution and economic growth has been studied extensively in recent years. So, large volume of literature is available on the topic. Different relationships were studied to establish any clear relationship between Fiscal devolution and economic growth, but inconsistent results were obtained both for the developed and the developing economies. Some studies have shown positive relationship, others negative and still others no relationship at all between economic growth and fiscal autonomy. For Pakistan, too, studies have yet to find any clear relationship between financial decentralization and economic growth. Important contributions on this subject have been made by Zang and Zou(1998) ,Xie , Zou and Davoodi (1999) , Lin and Liu (2000) , Thieben (2001) , Martinez-Vazquez , McNab(2001) , Felenstine Iwata (2005) and Kardar (2006) etc. This study identifies strengths and weaknesses of the existing Resource Distribution System (RDS) through historical review. It is generally believed that that proper information about the existing RDS will lead to better policy formulation, which will ultimately put the country on the road to prosperity. In this connection, it is also worthwhile to analyze the implications of the current resource distribution policies on the economic growth of the country. Thus, this study helps ascertain the extent of financial autonomy of the provinces and measures its long term benefits. Rest of the study is arranged as follows: Chapter 2 pertains to Literature review i. e. study conducted previously by other researchers on this topic; In chapter 3 theoretical background and econometric methodology for our estimation is being discussed; chapter 4 discusses sources of our data and construction of variables; chapter 5 covers results and interpretation thereof results and chapter 6 is about the conclusion of research. Chapter 2 Literature Review 2. 1 Introduction In this chapter, we discuss the empirical studies related to our study i. e. work done previously by other researchers on this topic. 2. 2 Previous empirical studies The significance of relationship between the financial autonomy and economic growth can be gauged from the volume of literature available on this topic. Various important relationships were studied to establish clear relationship between the two, but inconsistent results were obtained both for the developed and the developing economies. For Pakistan too studies have yet to find any clear relationship between financial decentralization and economic growth. On leafing through the pages of available literature, one comes across valuable work on the topic, some of which is discussed in the following paras: Davoodi and Zou (1998) developed a theoretical model for studying the relationship between Fiscal autonomy and economic growth on the basis of averaged panel data of 46 countries. The study showed a negative relationship between the two for developing countries. Zhang and Zou (1998), while using China’s provincial panel data for the period 1978-1992, found a negative association between provincial economic growth and the degree of financial autonomy over the past fifteen years. Philips and Woller (1997) studied the above referred relationship for seventeen developed and twenty three less developed countries on the data collected for the period 1974 to 1991. A negative weakly significant relationship was found for the developed world. However, no such relationship could be proved between the two variables for the less developed countries. Xie , Zou and Davoodi (1999) observed that there is a highly insignificant relationship between Fiscal Decentralization and economic growth for the United States, which the authors attributed to the fact that the country had already reached optimal level of fiscal autonomy and thus no further progress on this line was possible. Thieban (2001) made use of OECD countries cross sectional data for the period 1975 to 1995, but the study failed to establish any link between revenue decentralization of the low-level governments and economic growth of these countries. Martinez –Vazquez and Mc Nab (2001) concluded that the relationship between fiscal decentralization and economic growth is still unclear, and that little attention has been paid to indirect factors through which fiscal devolution may influence economic growth. In contrast to the above findings, Lin and Liu (2000), while using panel data of 28 provinces for the period 1970 to 1993, arrived at the conclusion that there exists a positive relationship between fiscal decentralization and economic growth in China. The authors noted that the impressive growth of china for the last twenty years can be linked to fiscal reforms. Ebel and Yilmaz (2001), observed that Fiscal design of OECD countries is unable to explain Fiscal decentralization in true sense. Martinez –Vazquez and Mc Nab (2003), on the basis of panel data, covering the period 1972-1997, studied the direct and indirect relationship between fiscal decentralization, economic growth and macroeconomic stability . They arrived at the conclusion that devolution minimizes the inflation rate, has no direct influence on economic growth, and has positive indirect effect on growth as it results in on macroeconomic stability. Justin Yifu and Zhiqiang (2000), investigated the implications of fiscal decentralization of economic growth in China, and found that it has made remarkable contribution to economic growth. This finding is in conformity with the hypothesis that Fiscal devolution enhances economic efficiency. Fielstentein and Iwata (2005), while using VAR (Vector Auto regressive) model found that there is a relationship between decentralization and macro economic performance in China. They concluded that Fiscal decentralization is positively related to growth in the period after the war, and has negative effects on the inflation rate after the 1970s. While using the cross country data for 78 countries, Mello and Barenstein (2001) observed that as the share of receipts, including non-tax revenue, grants and transfer of funds, from the federal government increases in the total provincial revenues, the relationship between financial devolution and governance grows stronger. Shah (1991) pointed out that poor performance in most of the developing countries in the last 40 years can be attributed to highly centralized regimes. Huther and Shah (1998) noted that good governance and fiscal decentralization are positively related, which in turn may enhance economic growth. Akai and Sakata (2002) used single country data and predicted that fiscal decentralization plays a role in economic development. They pointed out that in the United States, high government spending was required in the initial phases of economic development, therefore, any analysis that took into consideration this period is bound to overestimate the role of central government in the economic development. This led Xie et al (1999) to declare that decentralization has adverse effect on economic development. Jorge Martinez-Vazquez and Mark Rider (2006) pointed out the structure of financial system plays a pivotal role in determining the conduct and performance of low-level governments, which indirectly influence economic growth of a country. According to them, though both China and India show great financial decentralization, the central governments restrict the fiscal autonomy of the sub-national governments through conditional grants and inadequate powers to raise revenue. Thus, the regional governments are forced to use extra budgetary allocations to overcome their financial constraints, which results in waste of resources. These structural infirmities in the financial systems entail profligacy and unproductive expenditure policies, which may hamper the growth rate in the future in both the countries. Nobuo Akai, Yukihiro Nishimura and Masayo Sakata (2007), while using panel data of the fifty states of the US, showed that fiscal decentralization minimizes the variance of GDP growth due to decentralization among various levels of government. They also observed that there exists a negative relationship between fiscal devolution and economic volatility. Hiroko Uchimora and Yurika Suzuki (2009) studied Fiscal Decentralization in the Philippines after the promulgation of Local Government code (1991) . This study examined the fiscal relationship between the central and sub national governments by using the indicators of Fiscal decentralization. According to their findings, in the Philippines, the responsibility to incur expenditures by the local governments is not accompanied by corresponding strengthening of the fiscal capacity. As a result, local governments rely heavily on fiscal transfers from the central government and Internal Revenues Allotment, which render the local finance unstable. Atushi Alimi(2004) Although , in theory, decentralization promises efficient provision of public services at local level, empirical evidence gives a mixed picture regarding its implications on economic growth. They attempted to resolve this inconsistency by using instrumental technique on the data for the period 1997 to 2001. In this study, fiscal decentralization is measured in terms of the ratio between local expenditure to total government expenditure. The result showed a significant positive relationship between per capita growth rate and Fiscal decentralization. Perraton, J. and Wells, p. (2003), in their paper, ‘Multi level governance and Economic cohesion’ noted three general trends in economic policy making: the transfer of powers to supranational institution in economic policy formulation, e. g. he formation of the European Union and World Trade Organization; secondly, almost all developed countries have established regional organizations, to which powers of economic policy-making have been devolved. In the transition states, there is a growing tendency towards decentralization to curtail expenditures and to make the governments more accountable; thirdly, the governments are now inclined to reduce their sizes and make alternate arrangements for governance through NGOs. This concept o f governance is referred to as multi-level governance. In Pakistan’s case, Fiscal Federalism has been studied in detail. According to Anwar Shah, World Bank (Dec, 2006), there are two ways of transferring funds from the Centre to the provinces: assigning share of the federal revenues to the provinces at a pre-determined rate and direct transfer of funds (other than revenue) from the Centre to the provinces. According to him, the revenue sharing system in Pakistan affects the transfers in a lump sum and predictable manner to the federating units, which are at liberty to use these funds the way they choose. The author further argues that NFC places greater responsibility of revenue collection on the Federal government, thereby making the tax machinery efficient and tax compliance cost effective. The Revenue sharing system may have its merits, but it is also associated with certain demerits. For example, the provinces enjoy vast discretion in the utilization of funds, but have no control over the amount of funds they receive from the centre ; the federal government cannot influence the provinces to set priorities for achieving uniform standards in reas like health and Education; the provinces receive the funds without any strings attached to it , therefore, they feel less accountable while spending the funds; the share received by the provinces have no relation with the expenditures they incur, as usually the expenditures outgrow the rate at which the Federal revenue grows. Nighat Bilgrami and Mahpara Sadaqat (2006) have given an account of evolution and working of NFC Award ever since i ts introduction in 1951. According to the authors, with the exception of 1974 Award, there is a growing tendency in increase of revenue transfer to the provinces. The major step forward in this direction was the 1991 NFC Award, wherein new taxes were included in the divisible pool. In addition, as envisaged in Article 161 of the Constitution, royalty on crude oil and surcharge on gas were also transferred to the provinces. This caused greater decentralization of funds, which over a period of time played a pivotal role in improving service delivery in health, education and irrigation etc sectors. The paper identifies various forms of fund transfers from the Federal government to the provinces. These include Revenue Sharing Transfers, Straight transfers, Recurring Grants, Development Grants and loans. The authors have also elucidated that how resources are transferred in Pakistan from the federal government to the provinces in four ways: from the centre to the provinces, from provincial to local governments, from the federal government to the local governments and from local to local governments. The paper also gives a rationale for transfers of resources from the federal to provincial and municipal governments. At the end of the paper, the authors have suggested that smaller provinces be provided with soft loans and factors like backwardness and poverty be also considered while allocating the resources. Moreover, the provinces should be allowed to generate revenues that fall within their domain. Iftikhar Ahmed, Usman Mustafa and Mahmood Khalid (2007) have dilated upon the evolution of resource distribution over time. According to them the divisible pool has been expanded by the inclusion of more taxes. However, as population is the sole criteria for the distribution of resources through NFC awards, it has given birth to serious differences among the provinces. The paper says that resources are transferred from the centre to the provinces in two ways: Systematic or Formula Based transfer, comprising of revenue sharing and Random transfer, including grants, executive discretionary funds and Parliamentarian funds etc. According to the authors, with the passage of time the federal government has become more centralized, thereby adversely affecting the efficiency of the provincial governments. The federal government has got engaged in activities that purely fall within the purview of provinces. These include irrigation, roads, culture, tourism, youth affairs etc. This has increased the burden on federal government. The Federal government collects 93 % of the revenue but expends only 72%, whereas the provinces generate just 7% but spend 28%. The argument behind greater revenue collection by the centre is that it is more efficient in revenue collection than the provinces. But this argument is flawed as the provincial and local governments are left with lesser opportunities to collect revenue. This results in the dependency of the provinces on the federal government for transfer of resources. In this paper, NFC Award has also been criticized in that the criteria for resource distribution are mainly population. Elsewhere in the world, other factors like backwardness, population density, and revenue generation are also considered while devising a formula for distribution of resources. According to the authors, the major shift towards fiscal decentralization appeared in the 1996 NFC Award, whereby all duties and taxes were included in the divisible pool. By so doing transparency and predictability in resource distribution was though enhanced, yet the resource distribution formula between the federal and provincial governments changed little. The paper says that resources distribution has never been taken seriously. Only one criterion, that is population, has been followed for resource distribution, that’s why the NFC Award has failed to resolve the problem of Fiscal Decentralization. Usman Mustafa (2011) has highlighted the importance of federal form of government and has argued that even European Union has the characteristics of federalism. While referring to works of notable authors on the subject, it has been argued that Fiscal Decentralization increases efficiency, transparency and accountability. According to the author, in Pakistan’s case, there are pre-federalism (from 1947-71) and post federalism (from 1973 onwards) periods. In the first perid, the authority was centralized (one unit), whereas the second period is characterized by the march towards decentralization of powers from the centre to the provinces. In this context, the author argues that NFC Award is a step forward towards decentralization. He, however, criticizes population being suitable criteria for resource distribution between the centre and the provinces. In order to remove the grievances of the smaller provinces, a historical decision was taken in the 7th NFC Award on Dec, 2009 at Gawadar, to which all the provinces agreed. In this award, the demands of the smaller provinces were accepted, and a multifactor formula was devised. In the formula, factors like poverty, underdevelopment and inverse population density were also included for resource distribution. Moreover, the Federation sacrificed more that 10% of its share in favour of the provinces. It was also agreed that collection charges received by the Federal government on revenue would be curtailed from the existing 5% to 1%. This will increase the volume of net transfer of revenue from the federal to the provincial governments. All these decisions taken in the 7th NFC Award will contribute favourably towards Fiscal Decentralization in Pakistan. According to Kardar (2006), local governments have significance both in the context of Devolution plan and failure of central and provincial governments to deliver quality services to the masses ever since the emergence of Pakistan. He further argued that though legislation on devolution is a landmark achievement, the biggest challenge is to settle the row over powers between the provinces and district governments. Dr. Shahnawaz Malik, Mahmood-ul-Hassan and Shahzad Hussein analyzed the relationship between Fiscal decentralization and economic growth for the period 1971-2005. They obtained mixed results on the basis of different variables used in analysis. The study further showed that with the continuous rise in the share of provincial government revenues and expenditures, economic growth slows down. Naeem-ur-Rehman Khattak, Iftikhar Ahmed and Jangraiz Khan, while using time series data, for the period 1980 to 2007, analyzed the resource distribution, and studied the impact of financial decentralization on the economic growth of Pakistan. According to them, the divisible pool has expanded over the years by the inclusion of more taxes in it. They pointed out that the resource distribution mechanism failed to affect economic growth positively, and suggested that the distribution formula be revisited, having regard to factors like tax collection and backwardness of the provinces. They further suggested that more powers be delegated to the provinces to raise their own revenues. Chapter 3 THEORETICAL BACKGROUND AND ECONMETRIC METHODOLOGY 3. 1 Introduction In this chapter we discuss the theory which guides our research, variables of our model, type of statistical relationship and the model we will use for estimation. 3. 2 THEORETICAL BACKGROUND Various forms of Decentralization. It refers to the delegation of powers and functions from the central to low-level governments. There are three main forms of decentralization (JICA 2008): . 2. 1. Decentralization It is the weakest type of decentralization, and refers to the transfer of decision making powers along with financial and management responsibilities from the officials in the centre to those serving in the local /regional offices. 3. 2. 2. Delegation Here the powers are delegated to the autonomous bodies, including corporations, housing authorities’ etc. , working under the supervision of the central go vernment. These organizations enjoy vast discretion and decision making powers. 3. 2. 3. Devolution It is the gradual transfer of administrative, financial and political authority to the local bodies, which exercise their powers and functions within certain geographical confines. It has three main constituents, as discussed below: a) Political decentralization It refers to the shifting of powers and authority to local bodies, run by local political representatives. It has a well-established system of political decision-making and accountability at the local level. b) Administrative decentralization It is the form of devolution whereby staff of line ministry is dissociated from their corresponding ministries and brought under the control of the local administration. This is done through establishing local pay roll, which empowers them to reward and punish the staff. c) Fiscal decentralization It refers to the shifting of authority and responsibility to the sub-level governments with regard to decision-making on distribution of financial resources. This also includes the powers to raise local revenue. Fiscal decentralization has attracted great attention, among the economic circles, especially for improving service delivery at the local level. The main objectives of Fiscal decentralization include efficient utilization of resources, effective service delivery, macroeconomic stability and economic growth. With these objectives in view, the developing world is following the principle of Subsidiarity, which emphasizes that authority should rest with the lower tiers of government for effective use, and that the responsibility of incurring expenditures should match with adequate financing. Decentralization leads to efficient utilization of funds through improvement in governance, as lower strata of government can better assess people’s problems and know their priorities. Decentralization enhances participation of local population as the beneficiaries are directly involved in planning the allocation of funds. Increased decentralization gives birth to democratization, which keeps the government close to the masses, thereby making it more accountable. 3. 3 Various theories regarding decentralization The above narrated advantages, and many more not discussed here, emphasize the importance of Fiscal decentralization. But it was since the publishing of Tiebout’s article, â€Å"A pure theory of local Expenditure† that this concept has gained great popularity among the theorists, and the volume of literature on this topic has increased tremendously. According to Tibeout (1956), Fiscal decentralization improves production efficiency through greater mass mobilization. In 1959 Musgrave pointed out that the role of government is to bring stability to the market and effect the redistribution of income. He further argued that efficient utilization of resources can be secured only when local tastes and choices are taken into consideration. Oates (1972) pointed out that people living in different localities have peculiar tastes and preferences for public service, therefore, local governments, as against central government, being better informed, will provide better services to its citizens. This concept is called Oates â€Å"Decentralization Theorem†, according to which economic efficiency can be enhanced by decentralizing the availability of public goods and services. Thus, the central government should be responsible for devising a national policy and providing efficient levels of government for distribution of goods . (Oates,2005) So, equipped with the requisite paraphernalia , the sub-national governments are in a better position to put in place welfare-maximizing policies. Cremer, Estach and Seebright (1994), stated that government at the centre cannot reach the information about local tastes and choices. Thus, it is through Fiscal Decentralization that local agents can bring about efficient supply of goods and services to their constituencies. Almost identical views were expressed by Qian and Weingast (1997), who opined that decentralization puts a check on budget expansion by promoting competition and strengthening accountability, which effects supply of goods and services in an efficient manner. Having said this, there is always a tendency among the local political agents to enlarge the scope of public goods and services at the cost of other jurisdictions. Rodden (2003) attributed this predilection to the type of decentralization being followed. If decentralization is dependent on self-generated tax revenue, smaller governments emerge; and if transfer of funds occurs from the centre, it results in budget expansion. Though from economic and political point of view there are many benefits of Fiscal decentralization, yet it is not a cure for all ills. For instance, Fiscal Decentralization entails loss of Economies of Scale and loosens control over scarce resources. From it follows that centralization and Decentralization are not alternatives, rather the countries should find a balance between the two as per their requirements. . 4. Rationale for Fiscal Transfer in Pakistan The first reason is the general perception that the federal government is better equipped to collect major taxes, but is inefficient to collect smaller taxes. Also, the federal government may undertake major projects, but fail to deliver on smaller projects. Hence, the efficiency criteria must be followed while deciding allocation of means and responsibilitie s. The second reason for resource transfer from the centre to the provinces is that the latter lack the resources to finance the provision of even basic services. In the last ten years, the average revenue generated by the centre, provinces and municipalities stand at 89%, 5% and 6% respectively. As against the revenue generation, the share in recurring expenditure of the federal, provincial and municipal governments is 74%, 23% and 4% respectively. As regards developmental expenditure, the share of these governments is as follows: Federal government 65%, provincial government 25% and municipal governments 6%. These figures indicate that the provinces have limited resources vis-a-vis the amount of expenditure they incur. This necessitates the transfer of resources from federal to lower-tiers of government. Another reason that can be attributed to the allocation of resources among the different levels of government is Adequacy of Revenue. This concept refers to the capability of government not only to generate the initial revenue required to start a project but also to its ability to sustain it. In Pakistan’s case, Adequacy of revenue does not exist; hence transfer of resources to the lower tiers of government is necessary if they are to undertake any such projects. The fourth reason of transfer funds from the centre to the provinces is that there are taxes which though provincial in nature but is collected by the federal government, for example Sales Tax. Another rationale for transfer of funds is that federal government uses certain taxes for the overall stabilization of the economy; hence they should be under the control of the federal government. [NFC AWARDS Commentary and Agenda, Nighat Bilagarami, Jaffery and Mahpara Sadaqat (2006)]. 3. 5 ECONMETRIC METHODOLOGY 3. 5. 1Augmented Dicky Fuller (ADF) Test In this study a time series data is being used. Since this kind of data is usually non-stationary in nature, we first test it for stationarity or non-stationarity. For this purpose, an enhanced version of Dicky fuller Test, known as Augmented Dicky Fuller Test, is being employed. The ADF includes extra lagged terms of the dependant variable so as to remove auto-correlation. The following equations denote the three possible forms of ADF Test. i) Without any constant and trend ?yt=? *yt-1+i=1p? i? yt-i+et ii) Constant with non trend ?yt=a+? *yt-1i=1p? i+? yt-1+et iii) Constant with trend ?yt=a+? t+? *yt-1+i=1p? i+? yt-1+et Of the above equations, (iii) represents a more generalized form of ADF Test. Mackinnon(1991) gave critical values for the DF test The critical values for the ADF Test are the same as those for Dickey Fuller Test. If the DF Statistical value is smaller than the critical value, Null hypothesis of a unit root is rejected, which suggests that the yt is stationary process or the variables are stationary. If on running the ADF Test the variables are found non-stationary in their original levels of series, the variables are made stationary in their first difference level of the series. . 5. 2 Ordinary least square model (OLS) Once the variables are made stationary, estimation is made by employing Ordinary least square model (OLS). This model is suitable for ascertaining linear interdependencies in a time series data. Here it is also worthwhile to discuss Regression model. A multiple linear regression model estimates value of dependant variable (also called response variable) on the basis o f independent variables (also called explanatory variables). But there is always a difference in estimated and observed values. Therefore, a Regression model also possess unexplained variable, also called error term, which measures the difference between observed and estimated values. y= b+b1 x1+ b2 x2+ b x3 †¦Ã¢â‚¬ ¦ +ei A regression model will be â€Å"best fit† if the difference between observed and estimated value is minimum. We cannot take error term by simply adding all the difference between observed and estimated value because it may contain both positive and negative values which can cancel the effect of each other. So, we take the square of error terms which leads us to OLS . i. e. minimum squared difference. OLS is useful for structural inference and policy analysis. For the purpose of Structural Analysis of data, certain assumptions regarding the causality of data are made. These are : error term (i) is normally distributed (ii) has zero expected value of mean (iii) has constant variance in each time period and for all values of X and (iv) its value in one time period is unrelated to its value in another time period. OLS is a very simple technique by which we can calculate the coefficient of each variable in other words it gives us the impact of one variable on another variable, which is summarized by impulse response function. | | | | | Chapter 4 DATA AND VARIABLE 4. 1 INTRODUCTION This chapter covers how data is collected, what are sources of our data and how variables have been constructed variables for our estimation. 4. 2 Data type For the purpose of studying the relationship between Fiscal decentralization and economic growth, secondary data is being utilized. 4. 3 Sources of data For the purpose of this study the following sources have been utilized. i) Issues of â€Å"Economic survey of Pakistan† ii)World Development Indicators iii)Ten years in Pakistan Statistics† (1983) iv)UNDP Human Development Report, 2007. )Hand book of Statistics on Pakistan Economy (2005)† 4. 4 Construction of variables Economic growth of the country is taken as dependant variable. It is measured in terms of per capita Log of per capita gross domestic product (LYP), which is rebased by the year 2000 market prices. The variable is expressed in real terms using GDP deflator to ascertain the pattern of economic growth over the years. The Fiscal decentralization is captured on the ratio of Provincial share in Total Revenue to the Total Revenue (PRFR). The data source for these variables is â€Å"Economic survey of Pakistan and covers the period from 1964 to 2008. As regards investment, it is captured by the Gross Fixed Capital Formation (GFCF) and data is taken from â€Å"Pakistan Economic Survey† Moreover, a variable for trade openness (OPN) is also used in the estimation model. This variable is obtained by adding imports and exports and dividing the same by LYP (at market prices). Here, too, the source of data is â€Å"Economic Survey of Pakistan† Other variables in the estimation model are Tax to GDP ratio (TGDP) and GINI co-efficient, the latter being used to calculate income equality and its source is UNDP Human Development Report. Chapter 5 RESULTS AND DISCUSSION . 1 INTRODUCTION The section consists of results and their interpretation. In para 5. 1, 5. 2 and 5. 3 Stationarity of data, Autocorrelation and the results of OLS model respectively have been discussed. 5. 2 Unit Root test In a time series data, the major problem is the non-stationarity of variables. So, before estimation, a test is applied to make the variables stationary. For this purpose various tests can be employed, but in our case we have used Augmented Dickey Fuller test, the results of which are shown in table 5. 1 below. Table 5. 1 UNIT ROOT TEST| Non stationary variables| ADF-value| 5% Critical value| Gfcf| -1. 693492| -2. 9303| Gini| -2. 462911| -2. 9303| Lpy| 0. 863730| -2. 9303| PRFR| -2. 206432| -2. 9303| TGDP| 0. 158213| -2. 9303| Stationary variables| | ADF-value| Critical value| Gfcf| -3. 997577| -2. 9320| Gini| -4. 766215| -2. 9320| Lpy| -4. 632922| -2. 9320| OPN| -3. 453532| -2. 9303| PRFR| -3. 662186| -2. 9320| TGDP| -3. 01612| -2. 9320| Gfcf- Gross fixed capital formation, Gini- Income inequality, Lpy- Log of GDP, OPN- Openness to trade (export+import/GDP), PRFR- Ratio of provincial shares in total revenue to total revenue, TGDP- Tax to GDP ratio. At the level, all the variables except â€Å"OPN† were found non-stationary, and were, therefore, stationarized at First difference level by using ADF Test. 5 . 3 TEST FOR AUTOCORRELATION Autocorrelation tells about the relationship between two or more error terms in the model. For unbiased estimation, autocorrelation must be zero. If there exists problem of autocorrelation, it has to be removed. For this purpose, two hypothesis are constructed : one, H0: Co-Var(u,u+1)=0,there is no autocorrelation between the error terms and second, Ha: Co-Var(u,u+1)not equal to zero, meaning there is a problem of autocorrelation. To check autocorrelation in our model, we have used Breusch-Godfrey Serial Correlation LM Test (BG TEST), as shown in table 5. 2. According to the table, probability of F-statistic is significant at 5%, so we reject the hypothesis that cov (ut, ut+1) is equal to zero. In other words, there is autocorrelation problem in our model. In order to remove the autocorrelation problem, we have applied ARMA model with autocorrelation through AR (1), AR (3) and MA (2). Breusch-Godfrey Serial Correlation LM Test:| F-statistic| 4. 781666| Probability| 0. 001241| Obs*R-squared| 20. 50376| Probability| 0. 002252| Probability of F-statistic is significant at 5%, so we reject the hypothesis that cov (ut, ut+1) is equal to zero. It means there is autocorrelation problem in our model. 5 . 4 ESTIMATION The results of the estimation with OLS are tabulated in Table 5. 3 below: Dependent variable:LPYMethod: Least Squares| Date: 03/25/12 Time: 11:13| | | | | | Variable| Coefficient| t-Statistic| Prob. | | GFCF| 0. 004693| 3. 806074| 0. 0006| | GINI| -0. 324275| -2. 919698| 0. 0065| | OPN| 0. 000254| 0. 468847| 0. 6425| | PRFR| -0. 000173| -0. 517278| 0. 6086| | TGDP| -0. 003194| -0. 809929| 0. 4242| | | | | | | R-squared| 0. 97793| Prob(F-statistic)| 0. 000000| Adjusted R-squared| 0. 997081| | | Durbin-Watson stat| 1. 705104| | | | | | | In the model ‘’R^2’’ shows strength of the regression line, which means how much important variables are covered by a model or how well variation in independent variables explains the variation in dependent variable. For time series analysis â€Å"R^2’’ value must be greater than 0. 70 or 70%, which means the model must explain at least 70% of the total variation in dependent variable. In our results, â€Å"R^2=99%† value is greater than 70%, so 99% of variation LPY is explained by our variables i. . GFCF, GINI, OPN, PRFR, TGDP. But the values in the 3rd column against each variable show â€Å"t† values. If the t value, in absolute form, is greater than â€Å"2†, the relationship between the variables is significant. In our case, the financial autonomy is measured in terms of â€Å"Ratio of Provincial share in Total Revenue (PRFR)†, whereas the Economic growth is captured on the variable LPY. It is evident from the table that the relationship between LPY (dependent) and PRFR (independent) is insignificant because the â€Å"devalues, in absolute form, are less than â€Å"2†. It implies that LPY is not influenced by PRFR. In other words, in Pakistan’s case, Fiscal decentralization has no bearing on economic growth. The model shows that GFCF and GINI with variables have ‘’t’’ value greater than 2 in absolute form affect economic growth. Durbin-watson value in the table tells us about the problem of auto-correlation in the model. If the value of Durbin-watson test is between 1. 7 and 2. 2 there will be no auto-correlation. In our table its value 1. 7, so we say that the problem of auto-correlation has been removed. CHAPTER NO: 06 CONCLUSION This study focuses on identifying the impact of fiscal decentralization on economic growth through compilation of its historical trends. It is generally believed that that proper information about the existing fiscal decentralization system will lead to better policy formulation, which will ultimately put the country on the road to prosperity. In this regard, it is also worthwhile to analyze the implications of the current fiscal decentralization policy on the economic growth of the country. Thus, this study helps ascertain the extent of financial autonomy of the provinces and measures its long term benefits. In this study secondary data has been used, which covers the period from 1964 to 2008. Provincial share in total revenue (PRFR), GFCF- Gross fixed capital formation, Gini- Income inequality, OPN- Openness to trade (export+import/GDP), PRFR- Ratio of provincial shares in total revenue to total revenue, TGDP- Tax to GDP ratio are dependant variables, whereas LPY (Log of GDP) is dependent variable in the data. We used OLS model for our estimation, the results of which revealed that only GFCF and GINI have significant impact on GDP growth. On the other hand the influence of, OPN, TGDP and PRFR on economic growth (LPY) are insignificant. As PRFR and LPY measure the extent of fiscal decentralization and Economic growth respectively, we conclude that economic growth in Pakistan does not depend on fiscal decentralization. This may be due to the fact the Resource Distribution Formula has been mainly based on population. The results of other factors, included of late in the NFC Award, are yet to be seen. It is, therefore, proposed that not only the impact of population in the distribution formula be diluted by the inclusion of other factors, being emphasized by the smaller provinces, but also the powers of the provinces with regard to revenue generation be enhanced. ——————————————– [ 1 ]. The words, Financial devolution, financial autonomy and Financial /fiscal decentralization are being used interchangeably in this study. [ 2 ]. In this discussion ,the words, federating unit, unit, province, sub-national government and low-level government will be used interchangeably. How to cite Fiscal Decentralization and Economic Growth in Pakistan, Essay examples

Human Desire to Fit In Essay Example For Students

Human Desire to Fit In Essay Two common ways of handling a situation are either to do soaccording to ones own personal needs and desires with nospecific regard to other people, or one can base a decision onhow it will be viewed by others. The vast majority of peoplefall on the side of being worried about what others are sayingand thinking. Both good and bad can come from living this way,but it has seemed to remain constant throughout history. Peoplehave a natural desire to belong, and to fit in with a certaingroup. No matter what group an individual chooses, thatindividual almost always is forced sacrifice a part ofthem self in order to seem more a part of things. People in thisworld seem to need companionship and are often too weak to standalone. As a result, they stand together in what ever group theyare best suited to. It is a point of interest to many of the people who have stoppedto think about this fact. The idea that people live according tohow others will perceive then has been established as the rule,not the exception. The real question now lies in the reasons forthis way of life. It was hypothesized by C.S. Lewis that thisdesire to belong and to fit in is a natural human characteristic. He believed that people have an instinctive drive to belong, inthe same sort of way species reproduce. It is possible that histheory of instinctive necessity is accurate, and humans are as awhole are week and scared when they are faced with solitude. The old adage there is safety in numbers is appropriate inthis topic. Often in this world terrible things happen becausepeople group up and commit unspeakable acts, then take shelter inthe numbers of those involved. The Annual Freaknik celebrationis the perfect example. Thousands of individuals crowd thestreets of Atlanta and pillage the city for a weekend, all thewhile they show no respect for the laws or the residents of thecity. This can be directly related to the issue of people doingthings to be a part of the group. If these people were askedindividually why they did these terrible things, for the mostpart they would respond by saying everyone else is doing it. This could be translated to I am just trying to be a part ofthings. In this particular example those involved sacrificeany sense of morals or upbringing that they might have had. Everybody is doing it. This sentence has ruined thousands oflives. It could could be the worst four word combination in theEnglish language. People have been convinced to begin drug use,drunk driving, cliff jumping, and countless other unwiseactivities. The reason behind this is clear, the human necessityto fit in and to seem cool is often to strong to compete with. Aperson could have the world and all of its riches, but with outsomeone to share it with, that person would be totally alone. People need each other. This is a fact of the world, and it willnever change. This need is a natural desire that is found everywhere in every person with very few exceptions. It is true thattrouble can brew and awful things can happen because of thesegroups, but the advantages associated far out weigh the costs. These groups that people form between themselves often serve asshelter for the lonely, for this reason it is natural forpeople to go far out their way if necessary to belong aparticular crowd. As a result the opinion of others iscrucial part of life. .u64db4046ff4bba5eb0d656ef381d6636 , .u64db4046ff4bba5eb0d656ef381d6636 .postImageUrl , .u64db4046ff4bba5eb0d656ef381d6636 .centered-text-area { min-height: 80px; position: relative; } .u64db4046ff4bba5eb0d656ef381d6636 , .u64db4046ff4bba5eb0d656ef381d6636:hover , .u64db4046ff4bba5eb0d656ef381d6636:visited , .u64db4046ff4bba5eb0d656ef381d6636:active { border:0!important; } .u64db4046ff4bba5eb0d656ef381d6636 .clearfix:after { content: ""; display: table; clear: both; } .u64db4046ff4bba5eb0d656ef381d6636 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u64db4046ff4bba5eb0d656ef381d6636:active , .u64db4046ff4bba5eb0d656ef381d6636:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u64db4046ff4bba5eb0d656ef381d6636 .centered-text-area { width: 100%; position: relative ; } .u64db4046ff4bba5eb0d656ef381d6636 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u64db4046ff4bba5eb0d656ef381d6636 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u64db4046ff4bba5eb0d656ef381d6636 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u64db4046ff4bba5eb0d656ef381d6636:hover .ctaButton { background-color: #34495E!important; } .u64db4046ff4bba5eb0d656ef381d6636 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u64db4046ff4bba5eb0d656ef381d6636 .u64db4046ff4bba5eb0d656ef381d6636-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u64db4046ff4bba5eb0d656ef381d6636:after { content: ""; display: block; clear: both; } READ: Recycling Essayand fuck youyou are a bunch of profiteering whores and should be bludgoned to death with a wet noodle!thank you and go to hell†¦.pigfucker!!!

The major musical development of the classical period Essay Example For Students

The major musical development of the classical period Essay Outline the major musical development of the classical period and the main characteristics of the classical style. Main characteristics of the classical style: Contrast of mood Mood in classical music may change gradually or suddenly. Masters like Haydn and Beethoven were able to impart unity and logic to music of wide emotional range. Rhythm In Classical music, there is a flexibility of rhythm. A classical composition has a range of rhythmic patterns. The classical style also can include unexpected pauses, syncopation, and frequent changes from long notes to short ones. Also they have a change from one pattern of note lengths to another, which may be either sudden or gradual. Texture Classical music is basically homophobic. However, texture is treated as flexibly as rhythm. Pieces shift smoothly or suddenly from one texture to another. Melody Classical melodies are one of the most tuneful and easy to remember. The themes of even highly sophisticated compositions may have a folk or popular flavor. Occasionally, composer simply borrowed popular tunes, but more often, they rote original themes with a popular character. We will write a custom essay on The major musical development of the classical period specifically for you for only $16.38 $13.9/page Order now Classical melodies often sound balanced and symmetrical because they are frequently made up of two phrases of the same length. The second phrase, in such melodies, may begin like the first, but it will end more conclusively and it will be easier to sing. Dynamics and the piano The Classical composers interest in expressing shades of emotion led to the widespread use of gradual dynamic change crescendo (gradually getting louder) and diminuendo ( gradually getting softer). The end of basso continuo The basso continuo was gradually abandoned during the classical period. One reason why the basso continuo became obsolete was that more and more music was written for amateurs, who could not master the difficult art of improvising from a figured bass. The major musical development of the classical period and the main characteristics of the classical style. By Rebecca The dates of the Classical period in are generally known as being between about 1750 and 1820. However, the term classical music is used colloquially to describe a rarity of Western musical styles from the ninth century to the present, and especially from the sixteenth or seventeenth to the nineteenth. The Classical period falls between the Baroque and the Romantic periods. The best known composers from this period are Joseph Haydn, Wolfgang Amadeus Mozart, and Ludwig van Beethoven; other notable names include Lugging Bickering, Mezzo Clementine, Antonio Soles, Antonio Saltier, Francis Joseph Gooses, Johann Stamina, Carl Frederica Able, Carl Philipp Emanuel Bach, and Christopher Willable Cluck. Ludwig van Beethoven is also sometimes regarded either as a Romantic composer or a composer who was part of the transition to the Romantic. At first the new style took over Baroque forms, the ternary dad capo aria and the assassin and concerto, but composed with simpler parts, more notated ornamentation and more emphatic division into sections. However, over time, the new aesthetic caused radical changes in how pieces were put together, and the basic layouts changed. Composers from this period sought dramatic effects, striking melodies, and clearer textures

Persecute, Prosecute

Persecute, Prosecute Persecute, Prosecute Persecute, Prosecute By Sharon Persecute and prosecute are occasionally mixed up. Persecute means to torment or cause suffering, usually because of some perceived difference. School bullies persecute those whom they perceive to be weaker than they are. In the adult world, people may be persecuted because of their religious beliefs, political beliefs, ethnicity, sexual orientation or social grouping. Prosecution, on the other hand, involves bringing legal charges against someone. In some US states jaywalkers are prosecuted. That means that they face court charges because they crossed the road at the wrong time. And these days, if you have been persecuted for your beliefs, you are often able to prosecute your persecutor. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Misused Words category, check our popular posts, or choose a related post below:The Yiddish Handbook: 40 Words You Should KnowItalicizing Foreign WordsWhat the Heck are "Peeps"?

3 Ways Women Sabotage Themselves in Business

3 Ways Women Sabotage Themselves in Business There’s a new book out there by Tara Mohr called Playing Big, and everyone should read it. It’s a how-to  for brilliant and talented women who are playing it too small and could really use a chance to break out of self-sabotaging patterns to fully live up to their potential. Here are three takeaway strategies to counteract some common things you might be doing to hold yourself back.1. Change the â€Å"this before that† approachWe’re all guilty of this one. â€Å"I’ll have that chat with my boss once I’ve done x, y, and z.† Or, â€Å"I’ll approach this contact once I have x, y, and z to show for myself.† Sometimes we’re being careful and  coming up with a solid game plan, but other times we’re just scared to make the big moves.If you find yourself having a â€Å"this before that† moment, ask yourself if that assumption is based on real strategy, or if whether you just assume you aren’t ready for the next step. If you can’t find any real reasons to wait, then don’t.2. Don’t let your â€Å"commitment to quality† hold you backSometimes â€Å"commitment to quality† just means overcomplicating things and â€Å"endless polishing.† Being detail-oriented and quality-concerned is great, but can be crippling. Rather than obsess over details at every stage, allow yourself to brainstorm, think big, and let your preliminary work be just that- preliminary. Waiting for every idea and aspect of a project to be perfect will delay its completion and your success. Besides, it might just be a cover-up for fear and insecurity. Be bold and own your work.3. Don’t hold yourself back because you don’t have the degreeMohr says, â€Å"Talented women with a dream believe they need another degree, training, or certification because they are not ‘enough’ as they are.† We all like the structure and reassurance of being a stu dent, but sometimes it’s time to take the leap into the big, bad business world without the safety net.Figure out what you can do with the training you already have and start there. Don’t take no for an answer. Get as far as you possibly can- and only stop for more education when it’s absolutely necessary. You’ll probably surprise yourself at how far you can go without that next degree.Make 2016 the year of you. Make sure you’re not holding yourself back because you don’t think you’re good enough. Chances are, you are your own worst limiting factor. Get out of your own way!3 Ways You May be Sabotaging Yourself at Work (and what to do about it)

Human resorce web Article Example | Topics and Well Written Essays - 500 words

Human resorce web - Article Example It also said that the company's management had failed to address and correct the issue even after the victims raised complains. The acts violated the Civil Rights of 1964, Title VII. The company also was to offer training to all employees, furnish the commission with its employment-practice reports for 3 year period and source for consultancy to review the company's policies dealing with harassment and the involved procedures in an agreed consent decree which was, on September 5 approved by the court. The above case shows that rules on work discrimination needed to be strengthened and taken very seriously. In addition, the laws are still weak on these cases since I feel that the senior officials would have been taken personally responsible for this misconduct. All forms of sexual harassment to interfere with a person's employment, performance at work un- reasonably, intimidates him/her or sense of it, hostile or work environment that is not conducive. The laws also prohibit discrimination against age, disability, pay discrimination, national origin, pregnancy, race, religion and retaliation.

Importance of Understanding of Marketing to Organizations Essay - 1

Importance of Understanding of Marketing to Organizations - Essay Example This paper illustrates that successful firms adjust their marketing approaches to the changes in the set-up of the environment. Nevertheless, an awareness of the market-place is critical as there is a very little effect if the firm is marketing knowledge remains within its own boundaries. So that information can become useful, it has to be shared in the entire organization. Some of the knowledge may be codified to create a situation where they can be sent through information technology systems. However, tacit knowledge can only be shared through a give and take method which may be developed by participants over time after they understand the intricacies associated with a particular situation. Tacit knowledge allows an organization to apply critical knowledge in operational activities whose outcome is improved efficacy, the creation of value and improved financial performances. For instance, when a sales-person gets more knowledge concerning what an executive requires in a main custom er’s firm, they can utilize this information to better customize the message, create a better solution and increase the chances of amassing revenue. Therefore, this form of knowledge may be used as a source of competitive advantage creating the need to understand the ways in which this form of knowledge may be shared. In order for a business to succeed, the customers must be aware of the product associated with the business. Except if the public is aware of the firm and the firm’s communiquà © with the clients is easily obtainable, the firm has to utilize marketing approaches to develop product awareness. The use of marketing in the promotion of the company’s product provides the business with the opportunity of being discovered by prospective clients. When the prospective clients become aware of the product and the company, the chances that the customers will make purchases increases.

Denver Art Museum Essay Example for Free

Denver Art Museum Essay The Denver Art Museum is one of the few luxuries Colorado residents and tourists alike, have the pleasure of experiencing. It is truly a world class facility, from the outside in. Within the confines of its walls reside masterpieces from the likes of Monet, Degas, and Picasso. There is a broad spectrum of art from all corners of the globe represented here. This includes art from various European nations, as well as that of far eastern cultures to American Indian design. Each exhibit presented work which seemed to grasp and shed light onto the respective time period or culture represented. I found three particular compositions to be representative of their era or genre. The first of which is an oil painting on a wood panel by an Englishman named William Larkin to be completed in 1610. This piece, entitled Mary Radclyffe, is a portrait of King James’s wife, Mary Radclyffe. It is very obvious to see, after reviewing the Roman artistic style of idealizing an individual in a realistic way, that this is a idealized view of Radclyffe. As a matter of fact, William Larkin was one of the last artists to work in this refined, elegant portrait style of Elizabeth I. The clothing Radclyffe is donning in the aforementioned painting is typical of the high class during the time it was completed in the early 17th century. This piece can also be classified as having a Baroque nature about it. The Baroque cultural movement pertained to not only art, but music, dance, and literature as well. The artistic style emits a sense of awe and a tremendous attention to detail which is seldom mistaken for any other method. This Idealized style derives from Plato and the â€Å"higher reality of eternal truths† which he refers to in his book, the Theory of Forms. â€Å"Plato’s theory of forms proposes that all sensory objects are imitations of Forms, which, like the simplest mathematical equations, are imperishable and forever true. † (Fiero I: 98) The next piece which caught my attention is a sculpture I have always been intrigued in. Shiva, King of Dancers, or Shiva Nataraja, comes from Tamil Nadu during the Chola Dynasty, in India. The Chola Dynasty enjoyed a long ime span of power from the late 9th century all the way up to the 13th century. The bronze sculpture standing 36’ 7/8† tall, encompasses radial balance contains a strong symbolic message, typical of most Hindu art. This iconic statue portrays Shiva dancing, with his right foot supported by a crouching figure, and his left elegantly raised in the air. The figure appears to have four arms, so it is clearly not meant to be realistic. Shiva is understood to be two conflicting things. One side of him signifies total tranquility, whereas he is also filled with total activity and energy on the other side. Not only does this depict what many people from this culture aspire attain, but people in many different cultures all over the globe as well. Although this particular work was made centuries after the Greeks revolutionized portraying the human body in sculpture, this freestanding figure was almost directly influenced by the Greeks. Not only for the fact that it is freestanding and praises the individual, but also because it pays homage to something greater than the human. As it says in the text, The Humanistic Tradition, â€Å"they paid perpetual homage to the gods. (Fiero I: 109) Not only that, but the perfection of the piece also comes from the Archaic period in Greek sculpture. More specifically, â€Å"the quest for realism was offset by the will to idealize form. (Fiero I: 109) This is also an idea from the philosopher Plato in his book, Theory of Forms. At the end of my journey of cultural enlightenment, I felt an obligation to take a gander at the African art exhibit because of how unique the style is compared to the rest of the museum. While there were many interesting works in the gallery, a certain piece done by Moyo Ogundipe caught my eye from a distance. Perhaps one of the better known images within the gallery, Soliloquy: Life’s Fragile Frictions was completed in 1997 and was done in acrylic on a 54’ x 78’ canvas. The cool collection of analogous colors really drew me into the image. The content in the piece is said to be inspired by the Egungun Festival in the village where the artist grew up. Some of the influences were drama, acrobatics, poetry, mime and pantomime, and black magic all play a role in creating the mood and atmosphere of this piece. Although this piece isn’t an ancient African work of art, it embodies my view of African art for its vivid color selection, organic shapes, chaotic nature, and intricate detail in the patterns. To me, this composition is reminiscent of an Egyptian scene done on the tomb walls in the 14th century. It tells a story in a similar fashion which the Egyptians did and depict the importance of the figure by size in a comparable way as well. This style is referred to as conceptual â€Å"that is, based on ideas rather than perceptual†¦ based on visual evidence. † (Fiero I: 34) Each piece I reviewed from the Denver Art Museum clearly depicted the transcendent nature of how art progresses. Each culture and movement reflect the ideals of the past through either subject matter, content, style, or technique. In many cases, philosophy and literature influenced the development of art especially Plato’s teachings. Overall, I felt more comfortable when I was in the North building because of not only the subject matter, but the architecture as well. Call me old fashioned, but I find that I appreciate art in a more intimate setting like the North building provides. From the wood floors, to the tighter confines of the vicinity between each piece, and the amount of information provided for each exhibit, I felt like I walked away with a deeper appreciation for the art in this building. The Hamilton building gave a unique presentation of each exhibit, though. I enjoyed the abstract architecture although I don’t think it is very practical for a museum. The next time I venture out to the museum, I will definitely spend more time in the temporary exhibitions, as I did not even scope that specific area out.

D. H. Lawrences You Touched Me and Nietzches The Use and Abuse of His

Compare Happiness and Life Between D. H. Lawrence's You Touched Me and Friedrich Nietzche's The Use and Abuse of History Taken From The Twilight Of the Idols INTRODUCTION   Ã‚  Ã‚  Ã‚  Ã‚  In this paper, I won't stick to only one topic. I will compare different topics, such as happiness and life between two romantic writers, D. H. Lawrence and Friedrich Nietzsche from D. H. Lawrence's You touched me and Friedrich Nietzche's The use and abuse of history taken from The twilight of the Idols. I will start talking about life and happiness by giving my own little definition of each of these two terms. LIFE   Ã‚  Ã‚  Ã‚  Ã‚  Life: one word, many meanings. Life: one word, one precious thing.   Ã‚  Ã‚  Ã‚  Ã‚  We see life in a total different way by the two writers. Life, in D. H. Lawrence's You touched me, is one, short and precious thing. We see life through the eyes of a dying father and his two daughters, who loves their father a lot and an adopted son enrolled in the army. The father continuously fights his disease, battling to stay alive. We see life as a fragile, vulnerable thing. It can also vanish unexpectedly. What I mean by "life can also vanish unexpectedly" is that you never know when something terrible could happen to you and see it taken away.   Ã‚  Ã‚  Ã‚  Ã‚  Friedrich Nietzshe explains us a lot more his perception of life. Unfortunately, I didn't understand most of the things he meant, but I will explain what I think I understood. Nietzshe describes life with the help of a man and a bea...

Heredity, the Environment, and Development Essay

The field of behavioral genetics strives to understand how and why we develop the way we do. Behavioral genetics seeks to find how not only heredity, but also environment, plays a role in the development of human beings. The field has evolved quite a bit in the last few years. Studying genetics helps us to be able to predict future behaviors and also potentially help us to use genetic engineering. Since the study of behavioral genetics can potentially lead us down the road of genetic engineering it attracts a lot of controversy. As will be examined here genetics shows some strong correlations between heredity and environment. The field has studied numerous examples to help explain what is caused by heredity, what is caused by environment, and how the two can be linked together to further understand why we behave the way that we do. Behavior Genetics†Human behavioral genetics, a relatively new field, seeks to understand both the genetic and environmental contributions to individual variations in human behavior.† (McInerney, 2008) Human behavior genetics studies how an individual’s genetics and environment influences their behavior. â€Å"Behavior genetics focus is on the effect of heredity on differences between individuals.† (Boyd & Bee, 2006) Heredity refers to genetic and traits being transmitted from one generation to the next or from the parent to the offspring. â€Å"Traits or behaviors are believed to be influenced by genes when those of related people, such as children and their parents, are more similar than those of unrelated people.† (Boyd & Bee, 2006) Behavior geneticists study behavior genetics and the way they can affect an individual. Behavior geneticists have shown in their studies that heredity can affect some traits and behaviors, like intelligence, shyness, and aggressiveness. The basic concepts of behavior genetics are: phenotypes which are observable or measurable characteristics (hair and eye color); genotype which are genetic complement of an individual, like having a recessive gene for color blindness; polygenic which is many genes influencing a trait but no one gene has a major effect (hundreds of genes influence IQ and personality). Correlations between Heredity and EnvironmentCorrelation between heredity and environment can be looked at through genotypes or a person’s â€Å"unique genetic blueprint† (Boyd & Bee, 2006) and the environment which a child tends to experience. Active genotype environment correlation, evocative genotype environment correlation, and passive genotype environment correlation are three casual mechanisms to describe the correlation between heredity and environment in relationship to human behavior (Scarr & McCartney, 1983, p.4). Genotype environment correlations affect phenotypes through the course of a person’s development (p.4). A child’s development stems directly from traits his or her parents pass along and environmental experiences therefore behavioral genetics has developed theories of the correlation between heredity and environment. Active genotype environment correlation is defined as a child’s tendency actively to seek environments he or she finds to be â€Å"compatible and stimulating† (Santrock, 2002,  ¶2). An example would be a child who is introverted tends to seek solitary environments. A child who is extroverted tends to seek out social environments. Evocative genotype environment correlation is â€Å"when the child’s genotype elicits certain types of physical and social environments† ( ¶19). The responses a child receives from his or her environment molds the child’s development. A child who demonstrates a pleasant disposition evokes positive reactions in his or her social environment for example. (Scarr & McCartney, 1983, p.4) Passive genotype environment correlation describes correlation based on the â€Å"rearing environment† (Santrock, 2002,  ¶31) supplied by the â€Å"biological parents† . The explanation the passive type of correlation is the parent passed the genes to the child and supplies the environment in which the child is raised. The environment a parent supplies is directly related to the parents genes which were passed to the child hence the correlation (Scarr & McCartney, 1983, p.4). The example given by Scarr and McCartney is one of a positive nature. A parent who is well versed and enjoys the activity of reading books reads often to the child. The child will most likely be well versed at reading books and enjoy the activity based on the environment provided and the genotype inherited. The Ugly Side of EugenicsAs mentioned previously, the ethical study of genetics is a concern. Galton and his American colleague, Charles Davenport, studied and promoted eugenics in an effort to improve the quality of humans and to create a better future for mankind. Galton and Davenport researched patterns for undesirable character traits such as alcoholism, insanity, the propensity for criminality. In time, certain behavioral tendencies were linked to particular races. Lehrman cited examples of Davenport’s characterizations of â€Å"Italians as drawn toward crimes of personal violence, Greeks as slovenly, and Swedes as tidy† (1998,  ¶8). Society began to adopt laws and policies based on the principles of Galton’s and Davenport’s findings with the purpose of correcting social and economic problems before they started. Although Nazi Germany was the first country to rationalize mass sterilization and then extermination of a race based on their perceived inferiority, the United States also contributed to the mindset of an inferior people. As many as 30 states had legislation concerning the sterilization of people regarded as genetically inferior. The horror and immorality of the holocaust discredited eugenics. Ethics are a guiding force for today’s human behavior geneticists who seek to understand traits that enhance the human race and those that are harmful (Lehrman, 1998). Twin StudiesIdentifying traits that are beneficial and those that are harmful is just the first of many steps. Behavior geneticists must also identify correlations between the genes humans inherit and the environment that humans are fostered in. Researchers have an exceedingly difficult task before them since experiences and environments are intricately influenced by genetic predispositions. For example, identical twins both are born taller than average. When they complete surveys for behavioral geneticists, they both score high for people who are extroverted and self-confident. Is this because they have a â€Å"self-esteem† gene, or is this a result of society reacting towards them in a manner with more respect and attention because they are tall (Piercy, nd.)?Likewise, a child who is predisposed towards shyness will not seek out social situations that are uncomfortable to her. She may not choose to participate in organized sports. Whatever athletic ability or talent she may possess will remain dormant. Due to her choices, she will not receive any instruction to develop athletic ability.  Conclusions that outgoing individuals possess more athletic ability could be grossly inaccurate (Boyd & Bee, 2006). Due to the difficulty found in the previous two illustrations, most research involves fraternal and identical twin sets for the following reasons: †¢Fraternal twins raised together show a correlation with a shared environment but not agenetic sameness. †¢Identical twins raised apart as adoptees show correlations for non-shared environmentsbut a shared genetic foundation. One such study examined the influences of heredity and environment on the differences of children’s conversational language use among twins. The study measured language skills with two standardized tests among 380 twins. According to the study, more than half of the variance in conversational language skills can be attributed to genetics. Additionally, evidence was not found to support significant shared environmental influence. This study sheds new light on this issue. Previously, differences were attributed to environmental influences such as premature birth and low birth weight (DeThorne et al., 2008). Conclusion â€Å"To be born and die are common to all animals, but there are specifically diverse ways in which these phenomena occur.† (Aristotle, trans. 1984). How humans grow and mature behaviorally is important in understanding the impact heredity, shared and non-shared environmental experiences have on humans. As humans age behavioral social-environmental and psychological changes emerge in a direct correlation with cultural and environmental influences. Environmental, heredity and behavioral genetics all give rise to â€Å"obesity, pre-diabetes, atherosclerosis, cancer, immune-suppression, menopause, and osteoporosis† (Biological, Social-Environmental, and Psychological Dialecticism: An Integrated Model of Aging, 2000). As well with age innate biological changes impact our brain based on both shared and non-shared environmental experiences. A keen understanding of morbidity, mortality and how genetics influence both health and behavior are all important factors in how biological changes in the  brain are associated with each stage of aging. Human behavior can be influenced by genetic pre-dispositions as well as shared and non shared environmental experiences each of these forces account for physical changes and/or declines throughout adulthood. References Blumenthal, H. T. & Von Dras, D. D. (2000). [University of Phoenix e-Text]. Biological, Social-Environmental, and Psychological Dialecticism: An Integrated Model of Aging. Lawrence Erlbaum Associates Inc. Boyd, D., & Bee, H. (2006). Lifespan Development (4th ed.). Upper Saddle River, NJ: Allyn &Bacon, Inc. A Pearson Education Company. DeThorne, L., Petrill, S., Hart, S., Channell, R., Campbell, R., Deater-Deckard, K., Thompson, L. A., & Vandenbergh, D. (2008). Genetic effects on children’s conversational language use. Journal of Speech, Language & Hearing Research, 51 (Issue 2), Retrieved June 4, 2008, from EBSCOhost database. Lehrman S., (1998). DNA & behavior: the topic in-depth. Retrieved June 6, 2008, fromhttp://www.dnafiles.org/archive/about/pgm2/topicMcInerney, J. (2008, September 16). Behavioral Genetics. Retrieved April 8, 2009, fromwww.ornl.gov/sci/techresources/Human_Genome/elsi/behavior.shtm1Piercy J., (n.d.). Psychology 230. Retrieved May 20, 2008, fromhttp://courses.cvcc.vccs.edu/Psychology_Piercy/. Sandrock, J. (2002). Life-Span Development: A topical approach. McGraw-Hill HigherEducation. Retrieved April 7, 2009, from http://highered.mcgrawhill.com/sites/0072435992/student_view0/glossary.htmlScarr, S. & McCartney, K. (1983, April). How people make their own environments: a theoryof genotype → environment effects. Child Development. Vol. 54 Issue 2, p424, 12p.

Coffee and Starbucks Essay

Starbucks began in 1971 when three academics—English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker—opened a store called Starbucks Coffee, Tea, and Spice in the touristy Pikes Place Market in Seattle. The three partners shared a love of fine coffees and exotic teas and believed they could build a clientele in Seattle much like that which had already emerged in the San Francisco Bay area. Each invested $1,350 and borrowed another $5,000 from a bank to open the Pikes Place store. Baldwin, Siegel, and Bowker chose the name Starbucks in honor of Starbuck, the coffee-loving first mate in Herman Melville’s Moby Dick(so company legend has it), and because they thought the name evoked the romance of the high seas and the seafaring tradition of the early coffee traders. The new company’s logo, designed by an artist friend, was a two-tailed mermaid encircled by the store’s name. The inspiration for the Starbucks enterprise was a Dutch immigrant, Alfred Peet, who had begun importing fine arabica coffees into the United States during the 1950s. Peet viewed coffee as a fine winemaker views grapes, appraising it in terms of country of origin, estates, and harvests. Peet had opened a small store, Peet’s Coffee and Tea, in Berkeley, California, in 1966 and had cultivated a loyal clientele. Peet’s store specialized in importing fine coffees and teas, dark-roasting its own beans the European way to bring out their full flavor, and teaching customers how to grind the beans and make freshly brewed coffee at home. Baldwin, Siegel, and Bowker were well acquainted with Peet’s expertise, having visited his store on numerous occasions and spent many hours listening to Peet expound on quality coffees and the importance of proper bean-roasting techniques. All three were devoted fans of Peet and his dark-roasted coffees, going so far as to order their personal coffee supplies by mail from Peet’s. The Pikes Place store featured modest, hand-built nautical fixtures. One wall was devoted to whole-bean coffees; another had shelves of coffee products. The store did not offer fresh-brewed coffee by the cup, but samples were sometimes available for tasting. Initially, Siegel was the only paid employee. He wore a grocer’s apron, scooped out beans for customers, extolled the virtues of fine, dark-roasted coffees, and functioned as the partnership’s retail expert. The other two partners kept their day jobs but came by at lunch or after work to help out. During the start-up period, Baldwin kept the books and developed a growing knowledge of coffee; Bowker served as the â€Å"magic, mystery, and romance man. â€Å"1 The store was an immediate success, with sales exceeding expectations, partly because of a favorable article in the Seattle Times. In the early months, each of the founders traveled to Berkeley to learn more about coffee roasting from their mentor, Alfred Peet, who urged them to keep deepening their knowledge of coffees and teas. For most of the first year, Starbucks ordered its coffee beans from Peet’s, but then the partners purchased a used roaster from Holland and set up roasting operations in a nearby ramshackle building. Baldwin and Bowker experimented with Alfred Peet’s roasting procedures and came up with their own blends and flavors. A second Starbucks store was opened in 1972. By the early 1980s, the company had four Starbucks stores in the Seattle area and could boast of having been profitable every year since opening its doors. But the roles and responsibilities of the cofounders underwent change. Zev Siegel experienced burnout and left the company to pursue other interests. Jerry Baldwin took over day-to-day management of the company and functioned as chief executive officer; Gordon Bowker remained involved as an owner but devoted most of his time to his advertising and design firm, a weekly newspaper he had founded, and a microbrewery he was launching (the Redhook Ale Brewery). Howard Schultz Enters the Picture In 1981, Howard Schultz, vice president and general manager of U. S. operations for Hammarplast—a Swedish maker of stylish kitchen equipment and housewares—noticed that Starbucks was placing larger orders than Macy’s was for a certain type of drip coffeemaker. Curious to learn what was going on, he decided to pay the company a visit. The morning after his arrival in Seattle, Schultz was escorted to the Pikes Place store by Linda Grossman, the retail merchandising manager for Starbucks. A solo violinist was playing Mozart at the door, with his violin case open for donations. Schultz immediately was taken by the powerful and pleasing aroma of the coffees, the wall displaying coffee beans, and the rows of red, yellow, and black Hammarplast coffeemakers on the shelves. As he talked with the clerk behind the counter, the clerk scooped out some Sumatran coffee beans, ground them, put the grounds in a cone filter, poured hot water over the cone, and shortly handed Schultz a porcelain mug filled with the freshly brewed coffee. After three sips, Schultz was hooked. He began asking the clerk and Grossman questions about the company, about coffees from different parts of the world, and about the different ways of roasting coffee. Next, Schultz met with Jerry Baldwin and Gordon Bowker, whose offices overlooked the company’s coffee-roasting operation. The atmosphere was informal. Baldwin, dressed in a sweater and tie, showed Schultz some new beans that had just come in from Java and suggested they try a sample. Baldwin did the brewing himself, using a glass pot called a French press. Bowker, a slender, bearded man with dark hair and intense brown eyes, appeared at the door and the three men sat down to talk about Starbucks. Schultz was struck by their knowledge of coffee, their commitment to providing high-quality products, and their passion for educating customers about the merits of dark-roasted coffees. Baldwin told Schultz, â€Å"We don’t manage the business to maximize anything other than the quality of the coffee. â€Å"2 Starbucks purchased only the finest arabica coffees and put them through a meticulous dark-roasting process to bring out their full flavors. Baldwin explained that the cheap robusta coffees used in supermarket blends burn when subjected to dark roasting. He also noted that the makers of supermarket blends prefer lighter roasts because they allow higher yields (the longer a coffee is roasted, the more weight it loses). Schultz was struck by the business philosophy of the two partners. It was clear from their discussions that Starbucks stood not just for good coffee, but rather for the dark-roasted flavor profiles that the founders were passionate about. Top-quality, fresh-roasted, whole-bean coffee was the company’s differentiating feature and a bedrock value. It was also clear to Schultz that Starbucks was strongly committed to educating its customers to appreciate the qualities of fine coffees, rather than just kowtowing to mass-market appeal. The company depended mainly on word-of-mouth to get more people into its stores, then relied on the caliber of its product to give patrons a sense of discovery and excitement. It built customer loyalty cup by cup as buyers of its products developed their palates. On his trip back to New York the next day, Howard Schultz could not stop thinking about Starbucks and what it would be like to be a part of the Starbucks enterprise. Schultz recalled, â€Å"There was something magic about it, a passion and authenticity I had never experienced in business. â€Å"3 Living in the Seattle area also had a strong appeal. By the time Schultz landed at Kennedy Airport, he knew he wanted to go to work for Starbucks. Though there was nothing in his background (see Exhibit 2) that prepared him for the experience, Schultz asked Baldwin at the first opportunity whether there was any way he could fit into Starbucks. The two quickly established an easy, comfortable rapport, but it still took a year of numerous meetings and a lot of convincing to get Baldwin, Bowker, and their silent partner from San Francisco to agree to hire Howard Schultz. Schultz pursued a job at Starbucks far more vigorously than Starbucks pursued him. There was some nervousness at Starbucks about bringing in an outsider, especially a high-powered New Yorker, who had not grown up with the values of the company. Nonetheless, Schultz continued to press his ideas about the tremendous potential of expanding the Starbucks enterprise outside Seattle and exposing people all over America to Starbucks coffee—arguing there had to be more than just a few thousand coffee lovers in Seattle who would like the company’s products. Schultz believed that Starbucks had such great promise that he offered to take a salary cut in exchange for a small equity stake in the business. But the owners worried that by offering Schultz a job as head of marketing they would be committing themselves to a new direction for Starbucks. At a spring 1982 meeting with the three owners in San Francisco, Schultz once again presented his vision for opening Starbucks stores across the United States and Canada. He flew back to New York thinking a job offer was in the bag. But the next day Baldwin called Schultz and indicated that the owners had decided against hiring him because geographic expansion was too risky and because they did not share Schultz’s vision for Starbucks. Schultz was despondent; still, he believed so deeply in Starbucks’ potential that he decided to make a last-ditch appeal. He called Baldwin back the next day and made an impassioned, though reasoned, case for why the decision was a mistake. Baldwin agreed to reconsider. The next morning Baldwin called Schultz and told him the job of heading marketing and overseeing the retail stores was his. In September 1982, Howard Schultz took on his new responsibilities at Starbucks. Starbucks and Howard Schultz: The 1982–85 Period In his first few months at Starbucks, Schultz spent most of his waking hours in the four Seattle stores—working behind the counters, tasting different kinds of coffee, talking with customers, getting to know store personnel, and educating himself about the retail aspects of the coffee business. By December, Jerry Baldwin decided that Schultz was ready for the final part of his training—roasting coffee. Schultz spent a week at the roaster examining the color of the beans, listening for the telltale second pop of the beans during the roasting process, learning to taste the subtle differences among Baldwin and Bowker’s various roasts, and familiarizing himself with the roasting techniques for different beans. Meanwhile, he made a point of acclimating himself to the informal dress code, blending in with the culture, and gaining credibility and building trust with colleagues. Making the transition from the high-energy, coat-and-tie style of New York to the more casual ambience of the Pacific Northwest required a conscious effort on Schultz’s part. One day during the busy Christmas season that first year, Schultz made real headway in gaining the acceptance and respect of company personnel at the Pikes Place store. The store was packed and Schultz was behind the counter ringing up sales when someone shouted that a customer had just headed out the door with some stuff—two expensive coffeemakers it turned out, one in each hand. Without thinking, Schultz leaped over the counter and chased the thief up the cobblestone street outside the store, yelling â€Å"Drop that stuff! Drop it! † The thief was startled enough to drop both pieces and run away. Schultz picked up the merchandise and returned to the store, holding up the coffeemakers like trophies. Everyone applauded. When Schultz returned to his office later that afternoon, his staff had strung up a banner that read â€Å"Make my day. â€Å"4 Schultz was overflowing with ideas for the company. Early on, he noticed that first-time customers sometimes felt uneasy in the stores because of their lack of knowledge about fine coffees and because store employees sometimes came across as a little arrogant. Schultz worked with store employees on developing customer-friendly sales skills and produced brochures that made it easy for customers to learn about fine coffees. Schultz’s biggest idea for Starbucks’ future came during the spring of 1983 when the company sent him to Milan, Italy, to attend an international housewares show. While walking from his hotel to the convention center, Schultz spotted an espresso bar and went inside to look around. The cashier beside the door nodded and smiled. The barista (counter worker) greeted Howard cheerfully, then gracefully pulled a shot of espresso for one customer and handcrafted a foamy cappuccino for another, all the while conversing merrily with those standing at the counter. Schultz judged the barista’s performance as â€Å"great theater. † Just down the way on a side street, he entered an even more crowded espresso bar, where the barista, whom he surmised to be the owner, was greeting customers by name; people were laughing and talking in an atmosphere that plainly was comfortable and familiar. In the next few blocks, he saw two more espresso bars. When the trade show concluded for the day, Schultz walked the streets of Milan exploring espresso bars. Some were stylish and upscale; others attracted a blue-collar clientele. What struck Schultz was how popular and vibrant the Italian coffee bars were. Most had few chairs, and it was common for Italian opera to be playing in the background. Energy levels were typically high, and the bars seemed to function as an integral community gathering place. Each one had its own unique character, but they all had a barista who performed with flair and exhibited a camaraderie with the customers. Schultz was particularly struck by the fact that there were 1,500 coffee bars in Milan, a city about the size of Philadelphia, and a total of 200,000 in all of Italy. His mind started churning. Schultz’s first few days in Milan produced a revelation: The Starbucks stores in Seattle completely missed the point. Starbucks, he decided, needed to serve fresh-brewed coffee, espresso, and cappuccino in its stores (in addition to beans and coffee equipment). Going to Starbucks should be an experience, a special treat; the stores should be a place to meet friends and visit. Re-creating the Italian coffee-bar culture in the United States could be Starbucks’ differentiating factor. Schultz remained in Milan for a week, exploring coffee bars and learning as much as he could about the Italian passion for coffee drinks. In one bar, he heard a customer order a caffe latte and decided to try one himself—the barista made a shot of espresso, steamed a frothy pitcher of milk, poured the two together in a cup, and put a dollop of foam on the top. Schultz concluded that it was â€Å"the perfect drink,† and thought to himself, â€Å"No one in America knows about this. I’ve got to take it back with me. â€Å"5 Schultz’s Growing Frustration On Schultz’s return from Italy, he shared his revelation and ideas for modifying the format of Starbucks stores with Baldwin and Bowker. But instead of winning their approval, Schultz encountered strong resistance. Baldwin and Bowker argued that Starbucks was a retailer, not a restaurant or bar. They feared that serving drinks would put them in the beverage business and dilute the integrity of Starbucks’ mission as a coffee store. They pointed out that Starbucks was a profitable small, private company and there was no reason to rock the boat. But a more pressing reason for their resistance emerged shortly—Baldwin and Bowker were excited by an opportunity to purchase Peet’s Coffee and Tea. The acquisition took place in 1984; to fund it, Starbucks had to take on considerable debt, leaving little in the way of financial flexibility to support Schultz’s ideas for entering the beverage part of the coffee business or expanding the number of Starbucks stores. For most of 1984, Starbucks managers were dividing their time between their operations in Seattle and the Peet’s enterprise in San Francisco. Schultz found himself in San Francisco every other week supervising the marketing and operations of the five Peet’s stores. Starbucks employees began to feel neglected and, in one quarter, did not receive their usual bonus due to tight financial conditions. Employee discontent escalated to the point where a union election was called, and the union won by three votes. Baldwin was shocked at the results, concluding that employees no longer trusted him. In the months that followed, he began to spend more of his energy on the Peet’s operation in San Francisco. It took Howard Schultz nearly a year to convince Jerry Baldwin to let him test an espresso bar. After Baldwin relented, Starbucks’ sixth store, which opened in April 1984, became the first one designed to sell beverages and the first one in downtown Seattle. Schultz asked for a 1,500-square-foot space to set up a full-scale Italian-style espresso bar, but Jerry agreed to allocating only 300 square feet in a corner of the new store. There was no pre-opening marketing blitz and no sign announcing Now Serving Espresso—the lack of fanfare was part of a deliberate experiment to see what would happen. By closing time on the first day, some 400 customers had been served, well above the 250-customer average of Starbucks’ best-performing stores. Within two months the store was serving 800 customers per day. The two baristas could not keep up with orders during the early morning hours, resulting in lines outside the door onto the sidewalk. Most of the business was at the espresso counter; sales at the regular retail counter were only adequate. Schultz was elated by the test results; his visits to the store indicated that it was becoming a gathering place and that customers were pleased with the beverages being served. Schultz expected that Baldwin’s doubts about entering the beverage side of the business would be dispelled and that he would gain approval to take Starbucks to a new level. Every day he went into Baldwin’s office to show him the sales figures and customer counts at the new downtown store. But Baldwin was not comfortable with the success of the new store; he believed that espresso drinks were a distraction from the core business of selling fine arabica coffees at retail and rebelled at the thought that people would see Starbucks as a place to get a quick cup of coffee to go. He adamantly told Schultz, â€Å"We’re coffee roasters. I don’t want to be in the restaurant business . . . Besides, we’re too deeply in debt to consider pursuing this idea. â€Å"6 While he didn’t deny that the experiment was succeeding, he didn’t want to go forward with introducing beverages in other Starbucks stores. Schultz’s efforts to persuade Baldwin to change his mind continued to meet strong resistance, although to avoid a total impasse Baldwin finally did agree to let Schultz put espresso machines in the back of two other Starbucks stores. Over the next several months, Schultz—at the age of 33—made up his mind to leave Starbucks and start his own company. His plan was to open espresso bars in high-traffic downtown locations that would emulate the friendly, energetic atmosphere he had encountered in Italian espresso bars. Schultz had become friends with a corporate lawyer, Scott Greenberg, who helped companies raise venture capital and go public. Greenberg told Schultz he believed investors would be interested in providing venture capital for the kind of company Schultz had in mind. Baldwin and Bowker, knowing how frustrated Schultz had become, supported his efforts to go out on his own and agreed to let him stay in his current job and office until definitive plans were in place. Schultz left Starbucks in late 1985. Schultz’s Il Giornale Venture Ironically, as Schultz was finalizing the documents for his new company, Jerry Baldwin announced he would invest $150,000 of Starbucks’ money in Schultz’s coffee-bar enterprise, thus becoming Schultz’s first investor. Baldwin accepted Schultz’s invitation to be a director of the new company, and Gordon Bowker agreed to be a part-time consultant for six months. Bowker urged Schultz to make sure that everything about the new stores—the name, the presentation, the care taken in preparing the coffee—was calculated to lead customers to expect something better than competitors offered. Bowker proposed that the new company be named Il Giornale (pronounced ill jor-nahl-ee ) Coffee Company, a suggestion that Schultz accepted. In December 1985, Bowker and Schultz made a trip to Italy during which they visited some 500 espresso bars in Milan and Verona, observing local habits, taking notes about decor and menus, snapping photographs, and videotaping baristas in action. Greenberg and Schultz then drew up plans to raise an initial $400,000 in seed capital and another $1. 25 million in equity—enough to launch at least eight espresso bars and prove the concept would work in Seattle and elsewhere. The seed capital was raised by the end of January 1986, primarily from Starbucks and two other investors who believed in Schultz and his ideas, but it took Schultz until the end of the year to raise the remaining $1. 25 million. He made presentations to 242 potential investors, 217 of whom said no. Many who heard Schultz’s hour-long presentation saw coffee as a commodity business and thought that Schultz’s espresso-bar concept lacked any basis for sustainable competitive advantage (no patent on dark roast, no advantage in purchasing coffee beans, no way to bar the entry of imitative competitors). Some noted that consumption of coffee had been declining since the mid-1960s, others were skeptical that people would pay $1. 50 or more for a cup of coffee, and still others were turned off by the company’s hard-to-pronounce name. Being rejected by so many potential investors was disheartening (some who listened to Schultz’s presentation ? didn’t even bother to call him back; others refused to take his calls). Nonetheless, Schultz continued to display passion and enthusiasm in making his pitch and never doubted that his plan would work. He ended up raising $1. 65 million from about 30 investors; most of this money came from nine people, five of whom became directors of the new company. One of Howard Schultz’s earliest moves during the start-up process was to hire Dave Olsen, who in 1974 had opened a coffee bar, Cafe Allegro, near the busiest entrance to the University of Washington campus. Olsen was a long-standing Starbucks customer, having discovered the quality of Starbucks’ coffee beans, gotten to know the owners, and worked with them to develop a custom espresso roast for use in his cafe. Olsen’s successful Cafe Allegro had become known for cafe au lait, a concoction equivalent to the Italian caffe latte. When Olsen heard of Schultz’s plans for Il Giornale, he called Schultz and expressed an interest in being part of the new company—he was intrigued by the Italian coffee-bar concept and was looking for a more expansive career opportunity. Olsen not only had coffee expertise but also had spent 10 years in an apron behind the counter at Cafe Allegro. Schultz immediately picked up on the synergy between him and Olsen. His own strengths were in forming and communicating a vision, raising money, finding good store locations, building a brand name, and planning for growth. Olsen understood the nuts and bolts of operating a retail cafe, hiring and training baristas, and making and serving good drinks. Plus, Olsen was fun to work with. Schultz put Olsen in charge of store operations, made him the coffee conscience of the company, and gave him the authority to make sure that Il Giornale served the best coffee and espresso possible. The first Il Giornale store opened in April 1986. It had a mere 700 square feet and was located near the entrance of Seattle’s tallest building. The decor was Italian, the menu contained Italian words, and Italian opera music played in the background. The baristas wore white shirts and bow ties. All service was stand-up—there were no chairs. National and international papers hung from rods on the wall. By closing time on the first day, 300 customers had been served, mostly in the morning hours. Schultz and Olsen worked hard to make sure that all the details were executed perfectly. For the first few weeks, Olsen worked behind the counter during the morning rush. But while the core idea worked well, it soon became apparent that several aspects of Il Giornale’s format weren’t appropriate for Seattle. Some customers objected to the incessant opera music, others wanted a place to sit down, and many didn’t understand the Italian words on the menu. These â€Å"mistakes† were quickly fixed, without compromising the style and elegance of the store. Within six months, Il Giornale was serving more than 1,000 customers a day and regulars had learned how to pronounce the company’s name. Because most customers were in a hurry, it became apparent that speedy service was a competitive advantage. Six months after opening the first store, Il Giornale opened a second store in another downtown building. A third store was opened in Vancouver, British Columbia, in April 1987. Vancouver was chosen to test the transferability of the company’s business concept outside Seattle. To reach his goal of opening 50 stores in five years, Schultz needed to dispel his investors’ doubts about geographic expansion. By mid-1987 sales at the three stores were equal to $1. 5 million annually. Il Giornale Acquires Starbucks In March 1987 Jerry Baldwin and Gordon Bowker decided to sell the whole Starbucks operation in Seattle—the stores, the roasting plant, and the Starbucks name. Bowker wanted to cash out his coffee-business investment to concentrate on his other enterprises; Baldwin, who was tired of commuting between Seattle and San Francisco and wrestling with the troubles created by the two parts of the company, elected to concentrate on the Peet’s operation. As he recalls, â€Å"My wife and I had a 30-second conversation and decided to keep Peet’s. It was the original and it was better. â€Å"7 Schultz knew immediately that he had to buy Starbucks; his board of directors agreed. Schultz and his newly hired finance and accounting manager drew up a set of financial projections for the combined operations and a financing package that included a stock offering to Il Giornale’s original investors and a line of credit with local banks. While a rival plan to acquire Starbucks was put together by another Il Giornale investor, Schultz’s proposal prevailed and within weeks Schultz had raised the $3. 8 million needed to buy Starbucks. The acquisition was completed in August 1987. After the papers were signed, Schultz and Scott Greenberg walked across the street to the first Il Giornale store, ordered themselves espresso drinks, and sat at a table near the window. Greenberg placed the hundred-page business plan that had been used to raise the $3. 8 million between them and lifted his cup in a toast—†We did it,† they said together. 8 The new name of the combined companies was Starbucks Starbucks as a Private Company: 1987–92. The following Monday morning, Schultz returned to the Starbucks offices at the roasting plant, greeted all the familiar faces and accepted their congratulations, then called the staff together for a meeting on the roasting-plant floor. He began: All my life I have wanted to be part of a company and a group of people who share a common vision . . . I’m here today because I love this company. I love what it represents . . . I know you’re concerned . . . I promise you I will not let you down. I promise you I will not leave anyone behind . . . In five years, I want you to look back at this day and say â€Å"I was there when it started. I helped build this company into something great. â€Å"9 Schultz told the group that his vision was for Starbucks to become a national company with values and guiding principles that employees could be proud of. He indicated that he wanted to include people in the decision-making process and that he would be open and honest with them. Schultz said he believed it was essential, not just an intriguing option, for a company to respect its people, to inspire them, and to share the fruits of its success with those who contributed to its long-term value. His aspiration was for Starbucks to become the most respected brand name in coffee and for the company to be admired for its corporate responsibility. In the next few days and weeks, however, Schultz came to see that the unity and morale at Starbucks had deteriorated badly in the 20 months he had been at Il Giornale. Some employees were cynical and felt unappreciated. There was a feeling that prior management had abandoned them and a wariness about what the new regime would bring. Schultz determined that he would have to make it a priority to build a new relationship of mutual respect between employees and management. The new Starbucks had a total of nine stores. The business plan Schultz had presented investors called for the new company to open 125 stores in the next five years—15 the first year, 20 the second, 25 the third, 30 the fourth, and 35 the fifth. Revenues were projected to reach $60 million in 1992. But the company lacked experienced management. Schultz had never led a growth effort of such magnitude and was just learning what the job of CEO was all about, having been the president of a small company for barely two years. Dave Olsen had run a single cafe for 11 years and was just learning to manage a multistore operation. Ron Lawrence, the company’s controller, had worked as a controller for several organizations. Other Starbucks employees had only the experience of managing or being a part of a six-store organization. When Starbucks’ key roaster and coffee buyer resigned, Schultz put Dave Olsen in charge of buying and roasting coffee. Lawrence Maltz, who had 20 years of experience in business and eight years of experience as president of a profitable public beverage company, was hired as executive vice president and charged with heading operations, finance, and human resources. In the next several months, a number of changes were instituted. To symbolize the merging of the two companies and the two cultures, a new logo was created that melded the Starbucks and Il Giornale logos. The Starbucks stores were equipped with espresso machines and remodeled to look more Italian than Old World nautical. The traditional Starbucks brown was replaced by Il Giornale green. The result was a new type of store—a cross between a retail coffee-bean store and an espresso bar/cafe—that became Starbucks’ signature format in the 1990s. By December 1987, employees at Starbucks had begun buying into the changes Schultz was making and trust had begun to build between management and employees. New stores were on the verge of opening in Vancouver and Chicago. One Starbucks store employee, Daryl Moore, who had voted against unionization in 1985, began to question his fellow employees about the need for a union. Over the next few weeks, Moore began a move to decertify the union. He carried a decertification letter around to Starbucks stores and secured the signatures of employees who no longer wished to be represented by the union. After getting a majority of store employees to sign the letter, he presented it to the National Labor Relations Board and the union representing store employees was decertified. Later, in 1992, the union representing Starbucks’ roasting plant and warehouse employees was also decertified. Expansion into Markets Outside the Pacific Northwest Starbucks’ entry into Chicago proved far more troublesome than management anticipated. The first Chicago store opened October 27, 1987, the same day the stock market crashed. Three more stores were opened in Chicago over the next six months, but customer counts were substantially below expectations—Chicagoans didn’t take to dark-roasted coffee as fast as Schultz had anticipated. At the first downtown store, for example, which opened onto the street rather than into the lobby of the building where it was located, customers were hesitant to go out in the wind and cold to get a cup of coffee in the winter months. Store margins were squeezed for a number of reasons: It was expensive to supply fresh coffee to the Chicago stores out of the Seattle warehouse, and both rents and wage rates were higher in Chicago than in Seattle. Gradually, customer counts improved, but Starbucks lost money on its Chicago stores until 1990, when prices were raised to reflect higher rents and labor costs, more experienced store manag.