Disadvantages and Risks of the Euro

5. Disadvantages and Risks of the Euro

6. Venture capital is a type of private equity capital typically provided by professional, outside investors to new, high-potential-growth companies in the interest of taking the company to an IPO. Venture capital investments are generally made as cash in exchange for shares in the invested company. A venture capitalist (VC) is a person who makes such investments. A venture capital fund is a pooled investment vehicle (often an LLC or LP) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies, or ventures, with limited operating history, who cannot raise funds through a debt issue. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.

Venture Capital and Development

Venture capital can be used as a financial tool for development, within the range of small and medium enterprises (SME) finance, by playing a key role in business start-ups, existing small and medium enterprises and overall growth in developing economies. Venture capital acts most directly by being a source of job creation, facilitating access to finance for small and growing companies which otherwise would not qualify for receiving loans in a bank, and improving the corporate governance and accounting standards of the companies.

Venture capital is used as a tool for economic development in areas such as Latin America and the Caribbean.

Venture Capitalists carry out very detailed due diligence and make 2-7 year investments. The VCs also hand-hold and nurture the companies they invest in besides helping them reach IPO stage when valuations are favourable. VCs help entrepreneurs at four stages: idea generation, start-up, ramp-up and finally in the Exit, which is done through M&As.[7]

9. The International Monetary Fund (IMF) is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments. It also offers financial and technical assistance to its members, making it an international lender of last resort. Its headquarters are located in Washington, D.C., USA.

The IMF describes itself as "an organization of 185 countries (Montenegro being the 185th, as of January 18, 2007), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". With the exception of North Korea, Cuba, Andorra, Monaco, Liechtenstein, Tuvalu, and Nauru, all UN member states participate directly in the IMF. Most are represented by other member states on a 24-member Executive Board but all member countries belong to the IMF's Board of Governors.

History

The International Monetary Fund was formally created in July 1944 during the United Nations Monetary and Financial Conference. The representatives of 45 governments met in the Mount Washington Hotel in the area of Bretton Woods, New Hampshire, United States of America, with the delegates to the conference agreeing on a framework for international economic cooperation.The IMF was formally organized on December 27, 1945, when the first 29 countries signed its Articles of Agreement. The statutory purposes of the IMF today are the same as when they were formulated in 1944

The purposes of the International Monetary Fund are:

• To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
• To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.
• To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
• To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.
• To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
• In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.

10.Globalization (or globalisation) in its literal sense is the process of globalizing, transformation of some things or phenomena into global ones. It can be described as a process by which the people of the world are unified into a single society and function together. This process is a combination of economic, technological, sociocultural and political forces.[1] Globalization is very often used to refer to economic globalization, that is integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.[2]

Effects of globalization

Globalization has various aspects which affect the world in several different ways such as:

Industrial (alias trans nationalization) - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within transnational corporations, and access to goods by wealthier nations and individuals at the expense of poorer nations and individuals who supply the labour.

Financial - emergence of worldwide financial markets and better access to external financing for corporate, national and subnational borrowers. Simultaneous though not necessarily purely globalist is the emergence of under or un-regulated foreign exchange and speculative markets leading to inflated wealth of investors and artificial inflation of commodities, goods, and in some instances entire nations as with the Asian economic boom-bust that was brought on externally by "free" trade.

Economic - realization of a global common market, based on the freedom of exchange of goods and capital.

Political - political globalization is the creation of a world government which regulates the relationships among nations and guarantees the rights arising from social and economic globalization. [11]

Informational - increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fibre optic communications, satellites, and increased availability of telephony and Internet, possibly ancillary or unrelated to the globalist ideology.

Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities such as Globalism - which embodies cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture"; loss of languages (and corresponding loss of ideas), also see Transformation of culture

Ecological- the advent of global environmental challenges that can not be solved without international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Many factories are built in developing countries where they can pollute freely. Globalism and free trade interplay to increase pollution and accelerate it in the name of an ever expanding capitalist growth economy in a non-expanding world. The detriment is again to the poorer nations while the benefit is allocated to the wealthier nations.

Social - increased circulation by people of all nations with fewer restrictions. Provided that the people of those nations are wealthy enough to afford international travel, which the majority of the world's population is not. An illusory 'benefit' recognized by the elite and wealthy, and increasingly so as fuel and transport costs rise.

Transportation - fewer and fewer European cars on European roads each year (the same can also be said about American cars on American roads) and the death of distance through the incorporation of technology to decrease travel time.[clarify] This would appear to be a technological advancement recognized by those who work in information, rather than labour intensive markets, accessible to the few rather than the many, and if it is indeed an effect of globalism, reflects the disproportionate inequitable allocation of resources rather than a benefit to humanity overall.

International cultural exchange

Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood and Bollywood movies). However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but Sinicization of cultures has taken place over most of Asia for many centuries. Arguably the hegemonic efects of globalism and homogenization of culture as the capitalist globalist economy becomes the "only" way that countries may participate through the IMF and World Bank leads to a destruction rather than an appreciation of differences in culture.

Greater international travel and tourism for the few who can afford international travel and tourism.

Greater immigration, including illegal immigration, except for those countries around the world including the UK, Canada, and the United States who have in 2008 accelerated removal of illegal migrants and modified laws to increase the ease of removing those who have entered the country illegally, while ensuring that immigration policies allow those more favourable to the stimulation of economy to enter, primarily focusing on the capital that immigrants can move into a country with them.

Spread of local consumer products (e.g. food) to other countries (often adapted to their culture) including genetically modified organisms. A new and novel feature of the globalist growth economy is the birth of the licensed seed which will only be viable for one season and can not be replanted in a subsequent season - ensuring a captive market to a corporation. Entire nations may have their food supply controlled by a company successful in implementing such GMOs potentially through World Bank or IMF loan conditions.