The above title is a dictum which is applicable to all individuals, schools, colleges, companies, governments, economies and other all types of businesses. An individual also needs to have assistance either directly or indirectly or both from other economic agents to move forward or backward. Such a dependency supplies the emergence of two forms in the global economy namely, one is profit and the other one is loss. They can be explained as under:
For insistence: There is a car business out in a town. Is not that business going to succeed when its cars are sold? Absolutely! Well, who are going to buy its cars? Maybe the town’s consumers would be buyers or other people from different places, or both. From the last two statements it is clear that the business is also reliant on buyers for its success or failure. When there are sales, it would prosper, and similarly when there are no sales, it would not.
One key truth is that once you make money, sooner or later you run out of at least some part of that money. At the most, one can delay the inevitable loss. Yeah, one is bound to incur loss as well. How are you going to make money and incur loss without dependency? You just cannot! Hence proved, DEPENDENCY IS BOTH PROFIT AND LOSS.
Another insistence: When exchange rate of a home country wanes in the international market, its exporters would earn more profit and importers would incur more or just loss. And when the rate goes up, exporters would make less money which is a sort of loss arising from being reliant on foreign trade and vice versa.
Some of other noteworthy examples are as under:
- Some Asian shares in Asia rise due to stimulus hopes in the United Kingdom, United States of America and the euro area.
- World oil prices surge owing to Iranian economy’s economic decision to halt its oil supply to some European and other countries of the world.
- Deficient monsoon pulls down bourses in Africa.
- German and Chinese exporters feel the heat of the current plight in the euro area.
- Developing countries enjoying the rise in investments in their economies due to the present slowdown in the European continent.
- “The worst winter in four decades across north India has proved to be a blessing for industries such as beverage makers and woolen manufacturers.”*
The bottom line is dependency is both profit and loss but it can be reduced but not entirely, strictly speaking, if an economic player has to stay alive. That is kind of inevitable stuff indeed.
*Source: The Economic Times paper on 09/01/2013, first p.
The following are some vital references that would aid you to understand “DEPENDENCY IS BOTH PROFIT AND LOSS” finding:
- Rajan, R. G., “HAS FINANCIAL DEVELOPMENT MADE THE WORLD RISKER?” NBER Working Paper No. 11728, October 2005, The National Bureau of Economic Research, www.nber.org/papers/w11728
- The IMF, “Iceland: fiscal, monetary tightening required to reverse economy overheating” The IMF Survey Vol. 35, No. 19, 16 October 2006, p 299, www.imf.org/external/pubs/ft/survey/2006/101606.pdf
- Cater Dougherty, “Stopping a Financial Crisis, the Swedish Way”, The New York Times, 22 September 2008, http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html
- BBC News UK, “Iceland nationalizes Glitnir bank”, 29 September 2008, http://news.bbc.co.uk/1/hi/business/7641753.stm
- McVeigh, T., “The party’s over for Iceland, the island that tried to buy the world”, The Guardian, 05 October 2008, http://www.guardian.co.uk/world/2008/oct/05/iceland.creditcrunch
- Iceland Review, “Russia Grants Iceland Giant Loan in Euros”, 07 October 2008, http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=313200
- BBC UK News, “Iceland nationalises biggest bank”, 09 October 2008, http://news.bbc.co.uk/2/hi/business/7660511.stm
- The Central Bank of Iceland, “The Republic of Iceland’s sovereign credit rating”, 09 October 2008, http://web.archive.org/web/20081009223338/http:/www.sedlabanki.is/?PageID=789
- Nielsen, B., “Iceland’s Krona Currency Trading Halts as Kaupthing Taken Over”, Bloomberg, 09 October 2008, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aiz5QIq94nrw&refer=europe
- Reuters, “Iceland businesses feel sting of financial crisis”, 10 October 2008, http://www.reuters.com/article/2008/10/10/financial-iceland-business-idUSLA15877520081010
- Lewis, P., “Offshore Icelandic Funds At Risk”, BBC News UK, 11 October 2008, http://news.bbc.co.uk/2/hi/programmes/moneybox/7665119.stm
- The Telegraph, “UK freezes £4bn of Icelandic assets”, 12 October 2008, http://www.telegraph.co.uk/finance/businesslatestnews/3185190/UK-freezes-4bn-of-Icelandic-assets.html
- Brogger and Einsardottir, “Iceland Minister Says IMF Aid Needed to Attract Foreign Loans”, Bloomberg, 12 October 2008, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajdlxBMwjMMU&refer=europe
- Jones, S., “Iceland: Landsbanki gets £100m loan to pay UK depositors”, The Guardian, 14 Oct 2008, http://www.guardian.co.uk/money/2008/oct/14/savings-banking
- Sherwood, J., “Iceland Seen Turning to IMF”, The Wall Street Journal, 17 October 2008, http://online.wsj.com/article/SB122425739356744673.html?mod=sphere_ts&mod=sphere_wd
- Iceland Review, “Central Banks for Increased Collateral”, 21 October 2008, http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=314005
- Mason, R., “Iceland raises rates to 18pc as part of IMF’s £1bn rescue”, The Telegraph, 28 October 2008, http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3273300/Iceland-raises-rates-to-18pc-as-part-of-IMFs-1bn-rescue.html
- Lyall, S., “Stunned Icelanders Struggle After Economy’s Fall”, The New York Times, 08 Nov 2008, http://www.nytimes.com/2008/11/09/world/europe/09iceland.html?pagewanted=all
- Iceland Review, “Grace under Fire… and Ice”, 13 November 2008, http://www.icelandreview.com/icelandreview/daily_life/?cat_id=16571&ew_0_a_id=315319
- Jolly, D., “Concession by Iceland Clears Path for I.M.F Aid”, The New York Times, 16 November 2008, http://www.nytimes.com/2008/11/17/business/worldbusiness/17imf.html?fta=y
- Jolly, D., “$ 2.5 Billion Is Added to Bailout Iceland”, The New York Times, 20 November 2008, http://www.nytimes.com/2008/11/21/business/worldbusiness/21icebank.html?fta=y
- FreshPlaza, “Iceland’s inflation hits record 18.6 in Jan”, 29 January 2009, http://www.freshplaza.com/news_detail.asp?id=37630
- Landon Thomas Jr. and Nicholas Kulish, “I.M.F. Promises More Aid for Greece as European Crisis Grows”, The New York Times, 28 April 2010, http://www.nytimes.com/2010/04/29/business/global/29euro.html
- Stothard, M.., “Iceland’s crisis inquiry is model for UK”, Financial Times, 05 July 2012, http://www.ft.com/intl/cms/s/0/f3990d4a-c5e5-11e1-b57e-00144feabdc0.html#axzz2G9F5bVkc