Alices Adventures In Wonderland Essays - Alice In Wonderland

Alice's Adventures In Wonderland Essays - Alice In Wonderland Alice's Adventures In Wonderland An analysis of Alice's Adventures in Wonderland The following text is a small part of a project from: Jerry Maatta, HII, Katedralskolan, Uppsala, Sweden Written in March 1997 Interpretations and opinions It is important to bear in mind that Alice's Adventures in Wonderland, however special it may seem and however many different interpretations one thinks one can find, is, after all, but a story written to entertain Charles Dodgson's favourite child-friends. It is very obvious in the story that it was written for the three Liddell girls, of whom Alice was the closest to Dodgson. In the introductory poem to the tale, there are clear indications to the three, there named Prima, Secunda and Tertia Latin for first, second and third respectively in feminized forms. The part considering rowing on happy summer days was derived directly from reality. It is said that he used to row out on picnics with the Liddell girls and tell them stories. On one of these excursions it started raining heavily and they all became soaked. This, it is said, was the inspiration to the second chapter of the book, The Pool of Tears. The ever-occurring number of three points out Dodgson always having in mind the three girls he tells the story to. It could, of course, having in mind the fact that he was a cleric, be the Christian Trinity or something completely different. Many people have seen Alice's Adventures in Wonderland as a prime example of the limit-breaking book from the old tradition illuminating the new one. They also consider it being a tale of the variations on the debate of gender and that it's continually astonishing us with its modernity. From the looks of it, the story about Alice falling through a rabbit-hole and finding herself in a silly and nonsense world, is fairly guileless as a tale. The underlying story, the one about a girl maturing away from home in what seems to be a world ruled by chaos and nonsense, is quite a frightening one. All the time, Alice finds herself confronted in different situations involving various different and curious animals being all alone. She hasn't got any help at all from home or the world outside of Wonderland. Lewis Carroll describes the fall into the rabbit-hole as very long and he mentions bookshelves on the sides of the hole. Perhaps it is an escape into literature he hints at. Carroll is an expert at puns and irony. The part with the mad tea-party is one of the best examples of this. There's a lot of humour in the first Alice book, but in the second the mood gets a bit darker and more melancholic. The theme with Alice growing and shrinking into different sizes could reflect the ups and downs of adolescence with young people sometimes feeling adult and sometimes quite the opposite. The hesitation so typical of adolescent girls is reflected in Alice's thoughts: She generally gave herself good advice (though she very seldom followed it). Many short comments point to teenage recklessness, restlessness and anxiety in all its different forms. One other example of maturing is Alice getting used to the new sizes she grows. She talks to her feet and learns some of the new ways her body works in. Her feelings are very shaken from her adventures and she cries quite often when it's impossible to obey the rules of the Wonderland or is it adulthood? Everything is so out-of-the-way down here, as Alice often repeats to herself. Alice doesn't like the animals in Wonderland who treat her as a child, but sometimes she gets daunted by the responsibility she has to take. The quote Everyone in Wonderland is mad, otherwise they wouldn't be down here told by the Cheshire Cat can be given an existential meaning. Is it that everyone alive is mad being alive, or everyone dreaming him- or herself away is mad due to the escape from reality? Time is a very central theme in the story. The Hatter's watch shows days because it's always six o' clock and tea-time. Time matters in growing up, I guess, but further interpretations are left unsaid. The poem in chapter 12 hints at forbidden love, and it is entirely possible that it is about his platonic love for children, or Mrs. Liddell, for that matter. Considering the fact, that the first manuscript was called Alice's Adventures

Minorities essays

Minorities essays You can choose your friends, but you cant choose your relatives. Neither can you choose your parents or your place of birth. If you could any sensible foetus would choose at least twenty other countries to be born in rather then New Zealand. New Zealand's children's needs are being seriously neglected. This essay will challenge New Zealand's performance in child health and welfare. Looking at the widespread abuse of children, the growing rate of violent youth crime, and the effects of a damaged cultural environment. New Zealand children are born with grossly unequal opportunities for health. Professor Gluckman (Prof. Of paediatrics at the Auckland University School of Medicine) said, The state of our children's health is not what it should be. Relative to other comparable countries our children are sicker and get poorly treated. About 200 children die in their first year of life in New Zealand who would not if they live in Australia or elsewhere in the Western world... We admit children with diseases that should not exist rheumatic fever is rite; TB still occurs. Were New Zealand's children equal to the rest of the world we would not see such a high understaffing of paediatric services. For example, in New Zealand there is one paediatrician for every 3,400 children, whereas in the U.S.A., even with its much larger population, there is one for every 1,300. The simple truth behind this, is that there is not an appropriate share of funds being assigned to child health. Dr Liz Segedin, a Paediatric Intensivist, believes the limitations of the endlessly awaited children's hospital in Auckland reflect the low status of children's health in New Zealand. Theyll be no specialised accident and emergency facility. No specialised adolescent unit. No intensive care unit. Its really sad. This just reflects the national priorities. Children's s...

Effects of Cell Phone on the Human Body Research Paper - 1

Effects of Cell Phone on the Human Body - Research Paper Example Along with the increase in cell phone use, the incidences of cancer have also exploded all over the world. This may be a consequence of the microwave radiation that is employed for communicating through cell phones. â€Å"Studies that claim a relationship between cell phones and diseases like cancer and Alzheimer’s should not be brushed aside as ‘inconclusive’† (â€Å"Disadvantages of Cell Phones†). Cell phone affects the brain activity by giving a boost to the brain glucose metabolism in particular regions, though if or not it is something serious is still debatable. Talking to WebMD, the director of the National Institutes of Health’s National Institute on Drug Abuse, Nora Volkow said, â€Å"[w]e don’t know that this is harmful [but we know that] glucose metabolism is a direct indicator of brain activity† (Volkow cited in Doheny 1). The sugar is consumed by cells in the brain for energy. This conclusion was drawn after a comprehensive research by Nora Volkow and her colleagues. They involved 47 healthy volunteers in that research and performed PET scans of their brains after placing the cell phones on their left and right ears. The glucose metabolism in the brain was measured twice. While studying the effect of cell phone on the brain on the positron emission tomography (PST) scans, Volkow found a 7 percent increase in the metabolism of glucose in the regi on of the brain that was nearest to the antenna in people that held the cell phone on either side of the brain for 50 minutes.  

Business#3 Essay Example | Topics and Well Written Essays - 500 words

Business#3 - Essay Example sing topped out at $367 million for the presidency (not counting indirect party funding or expenditures by 527 committees), $7.3 million for a Senate seat, and $1.14 million for a House seat. (p. 150) The incredible amount is partly due to the changed process of the American political system wherein primaries have become the chief means by which candidates gets nominated and parties have shrunk in importance in the nominating process. This means that there is a necessity for, say a Presidential candidate, to campaign across the nation and before the voting public to win the political exercise where in the past candidates only had to woo party leaders. The campaign effort will be replicated in the election proper. The result of all these, particularly the latter information, is that political parties has no strong function in the American political system. The bulk of campaign funding for the candidates comes from sources other than party funds. And so when the candidate wins, his or her policies are his own. An interesting variable in this equation emerges: here the candidate is in effect more beholden to private donors that funded the winning campaign more than his or her party’s programs because they have a bigger contribution. There is a growing dependence by the American political leaders on moneyed individuals and organized interests such as corporations and unions which often expect returns for their favors. Therefore, in policy-making the influence of these contributors as a third-party is very significant. To illustrate this, we have the case of the Congress wherein there is a growing perception that private contributors, particularly the â€Å"political action committees† (PAC) are helping shift the political balance towards the right. Gordon Adams (1981) emphasized this as he wrote: A PAC contribution, in conjunction with other government relations work can help cement the relationship between industrial and the Congressional sides of the â€Å"iron

The Case for Islamo-Christian Civilization Essay

The Case for Islamo-Christian Civilization - Essay Example The successor state and the Caliphate, the Munghalsand the Safavids, Islam law development and interest issues that come because of the confrontation of medieval with the ideas of Aristotelian (center). The second issue was that the author wanted to avoid using the word margin and periphery, since the two words are commonly perceived as geographical words. These words take into consideration the center. The third reason involved the fact that terminologies like edge and cutting edge will fit into the contention of the edge in Islam instead of the center which is a place where many new categories of things occur. The author also argues out that the lack of an ecclesiastical hierarchy, the Islamic narratives put the institutions of politics at the story center like those of the Caliphate followed by the plethora of the succeeding states all having juris consults, judges, and inspectors of the market as identified by the sheria. This means that like individuals having full faith the Isl am find vital identity elements and solace in observing those practices that they encountered first. The local custom fails to provide guidance for the people who consider a shift in the identity of religion through embracing a varied ancestral faith or rather by changing to different religions. Though parallel in other religions, the edgde situations display creativity in the Islamic history, since getting the answers of some questions that are raised by the converts and Muslims exposes the ambiguities that underlie the spiritual authority. The future. In this section the author identify the case and speed communication as the two things, which separate the today edge from the ones in the past, and the de-valuation or the disappearance of the institutions. It is easy to find Muslims from every conditions and land accessing the world wide audience in an easy way. The author uses examples like a preacher inside the Harlem a political leader residing in Kuala Lumpur, a terrorist in Mo mbasa, and a feminist living in Marrakesh accessing similar audience with Shaikh al-Azhar of Cairo. The old authorities devaluation through the regimes that are modernized of the twentieth and nineteenth century and the establishment of the mass literacy of the youth by the very government have made many Muslims on the edge believe that they have the freedom of choosing the type of Ismalic brand, which best satisfies their circumstances. The perspective of the edge regarding the history of Islam shows that the resolution of the crisis will be depended of minimum ideas than on institutions such those which convince a larger portion of the Muslim segment. The author also suggests that a free market of religion and the beliefs is combined with blessing, at that time when the clouds of war gather and the region voice heard by Luslims who struggle to uplift their families in the sinking countries. Sinking, according to the author implies those countries that suffer as a result of poverty or disorder. These are the individuals who go in a certain religion for their moral and spiritual sustenance, and comfort that is derived from the living in a supportive and caring community of religion. The author is inclined to doubting the current Islam religion, whether it would be fruitful in the future. In this case, the author discusses the challenges that face the new institutionalizing experiments authority. Part 2 According ot the author, the future is characterized by

Analysis of the Daimler-Benz and Chrysler Merger

Analysis of the Daimler-Benz and Chrysler Merger ABSTRACT Globalisation has changed the appearance of the economy. Especially in the 1990s firms expanded into new markets to operate more global and to develop their business. To do so, many companies choosed to expand via corporations with other companies to make the market entry easier or simply to strenghten their market position. Mergers and acquisition became one of the most used tools for development, whereas a merger between well known and successful companies always caused a sensation. Mergers caused such a stir as the companies involved in a merger faced a complete new identitiy and innovations were about to alter the company. The research project proves the decision for a merger rather than an alliance and the synergies gathered due to this tool of development. Two companies, Daimler-Benz and Chrysler, are investigated to illustrate the academic frameworks in practice to come to a conclusion why they merged. Methodology includes analysis of secondary data which has been published on the subject area. The findings and analysis of the research conducted, concluded that synergy is the most important aspect when companies grow through mergers. Furthermore, the results show that internationalisation due to globalisation is the key driver of mergers. The paper concludes with an evaluation of the study and recommendations for further research. CHAPTER ONE 1.1. Reason for Choice of Topic Companies come and go, chief executives rise and fall, industry sectors wax and wane, but an outstanding feature of the past decade has been the rise of mergers and acquisitions (MA). Whether in times of boom or bust, MAs continue to be the preferred option for businesses seeking to grow rapidly. A company has several options to choose from when it comes to growth strategies. One option is to grow organically by increasing sales personnel, new product developments and by expanding into new geographical areas. Alternative options to achieve the desired growth, companies traditionally build, buy, merge with other companies or co-operate through alliances. However, the best example of how to grow inorganic is to merge or aquire (Sherman, 2005). MAs are mainly about growth according to Lees (2003) and Sudarsanam (2003). Internal or organic growth is in most cases a slow process and MAs is another option that will increase the growth process. By doing an MA deal, the acquiring company or the merged companies can get instant access to new markets, technology and operations can be completed more efficiently. Several reasons and motives exist why a company chooses to grow through MA. According to Gaughan (2002) the most common motive for MA is to create synergy. However, other motives play also an important role, like diversification, improved management, market power or tax motives. Johnson and Scholes (1997) state that MAs are a quick way of entering new markets or products. The company can also gain competences or resources through this way. Knowledge about the market situation is also a significant cause why companies choose to develop through MA. Another reason for companies to develop through MA is that they are actively s earching for benefits arising from synergies. The author has chosen the topic to gain further knowledge about the topic of why do companies actually merge to gain synergy. The reasons for attempting to gain further knowledge are based on the authors fascination on MA in general and to the extend why Daimler-Benz and Chrysler did actually merge. The split between those two has not been long ago and therefore the author was particularly interested in this merger. Furthermore, the author is interested what type of synergies were the most relevant in this merger of equals. 1.2. Academic Obejctives of Dissertation This research aims to point out that synergies play an important role when two companies are doing a corporation in order to grow. The author has chosen the following objectives in order to support the research hypothesis: To discover why companies select mergers instead of strategic alliances as tool for development To investigate to what extend synergies play an important role when merging To explore the importance of internationalisation in times of globalisation 1.3. Outline of Chapters Introduction: Introduces the topic of this research and explains the aims and objectives of the study. Setting the scene: This chapter is to set the scene for the study. It presents background information about the two companies and what actually did happen. Literature review: Discusses the academic literature on mergers and acquisition and synergies concentrating on several approaches to be applied to the case study. Methodology: Discusses how the research was conducted and recognizes any limitations and biases of the chosen methods. It involves a description of how the research and data was analysed. Findings: Presentaion of the case study including important information for the research Analysis: The findings from the secondary research are analysed against the earlier literature and research from chapter three. Conclusion: The research project is finally concluded, commenting on the initial objectives of the study. The limitations and recommendations for further research are also discussed in this chapter. CHAPTER TWO 2.1. Background of Daimler-Benz AG As Jurgen Schrempp became the new CEO of Daimler-Benz AG in May 1995, one of his first jobs was the promulgation of a new strategic concept containig five points to strenghten their market position and to expand further. Mercedes considered the US market to be the important and competitive automobile market in the world. They established a greenfield plant in Tuscaloosa in 1994 already to strenghten their position in the US market and were supposed to be market openers. Those were the first signs that Daimler-Benz wanted to expand. 2.2. Background of the Chrysler Corporation From 1994 to 1997 Chrysler beat one historical record after another, where even some models were selected as cars of the year. It was even crowned by Forbes as the company of the year 1996. Bad labour relations have been improved through corporatist agreements. However, most cars were sold in the home market and plans to expand to other non-american countries have been scattered more or less. Nevertheless, the frequent crises and the internationalisation deficits of the company had planted the idea of a partner in the minds of the Chrysler executives. 2.3. The Merger When in May 1998 the CEO of Daimler Benz, Jurgen Schrempp and Robert Eaton, CEO of Chrysler signed the contract for a merger between those two companies, they made the biggest industrial merger in history. Both partners expected great value and advantages, as both companies seemed to complement well with each other. As a matter of fact, the company did not develop as good as anticipated. From the beginning on DaimlerChrysler could only announce little profits and losses, in the year 2001 it was even the biggest loss in history of all German companies. By mid 2004 the market value of the company has been less than half of what the value has been of both companies before the merger. By the same time the sales figures and business numbers of competitors increased. In May 2007, not even ten years after the merger, the dream of a super company bursted like a bubble. CHAPTER THREE 3.1. Reasons for Internationalisation As Kwon Kopona (1993) state in their theory the choice of market entry should relate to the companys corporate strategy and the extent, depth and geographical coverage of the present and intended foreign activities. Furthermore, the decision for growing should be made when there is a sufficient understanding of the different types of entry. On the one hand companies could gather experience through alliances and on the other hand fail to see that in particular cases an acquisition would be more successful (Clark, 2005). Dyer et al. (2004) state that a specific advice is needed about when to apply each strategy that is based on internal and external circumstances. Especially internally, the companies should focus on resources that are to be combined, the extent of unnecessary resources and the type of synergy which the firms seek. Externally, important factors are the degree of market uncertainty and the level of competition. As experience and interests of the company are different, t hese factors will have different degrees of importance. In Porters (1987) point of view entering a new market must be attractive for the expanding company. It needs feasibility of making profits in the target organisation. The costs of entry must be taken into account. These include direct costs as the cost of shares and advisors and indirect costs include such costs as integration costs. According to Dunning (1988) where he argues with the eclectic theory that additional costs can occur because of the failure of knowledge about market conditions, the legal and cultural diversities and the increased costs of operating at a distance. It also must be taken into consideration if the possibility of gaining synergies exists and what the opportunity of benefiting from the target companys core competences is. The local advantages of countries play an important role. The main country advantages can be classified as economic advantages, consisting of quantity and quality factors such as transportation, production, scope and the size of the market. Then there are political advantages that include government policies which have a positive influence on the market entry. And finally there are social and cultural advantages, which implicate the physical distance between the home country and the foreign country, language and cultural diversities and the general attitude towards foreigners. Dunning (1988) declared that companies have to be aware that relative attractiveness of locations can change over the year. He also declares that particular know-how and specific core abilities which count as an internalisation advantage can have a positive impact on the general business performance. 3.2. Methods of Development 3.2.1. Merger and Acquisitions As De Witt Meyer (1998) state in their thesis, mergers and acquisition are the most popular and influential form of discretionary foreign direct investment. Acquiring of another company is a takeover, be it friendly or hostile, while mergers only represent the share in a company according to Douglas Craig (1995). A non-adversarial approach benefits not only buyers but vendors as well, claimed by Beckett (2005). Mergers and acquisitions are significant alternatives to internal growth of companies as they enable companys fast penetration of new and foreign markets, acquire necessary know-how and skilled personal and obtain economies of scale and scope, according to Jackson (1995). Companies that merge gain access to supply and distribution channels through an upstream alliance. Furthermore Contractor Lorange (1998) state that enhancing their reputation and reducing competition if the integrated company is a competitor might be seen as an advantage. MAs are a well developed strategy and not a reaction to the first apparent opportunity as Simmons (1988) argued. As Coyle (2000) states, MA can be the outcome of either an aggressive or defensive strategy. Aggressive would mean that the company will seek to improve its market position to create a bigger company and finally to produce on a bigger scale and more cheaply through economies of scale. Defensive strategies on the other hand are made in order to survive in changing industry. A totally different reason for doing MA claimed Beckett (2005) as he said that companies may benefit from MAs when they acquire a company at a certain value and sell it later at a higher value. Through increasing shareholder value by providing a higher level of dividend and capital gain return and securing a higher return on the investment. This paper is mainly looking for the purposes for a merger and therefore for the realisation of potential synergy effects, as the purpose of most MAs is to achieve some kind of synergy. The belief is that two comparable companies together will achieve far better results than independently. Cost cuttings and savings will often lead to this effect. A successful MA can be classified as one where the potential synergies identified are to be utilised best as Coyle (2000) states. 3.2.2. Strategic Alliances Johnson (1999) has declared that defining strategic alliances are difficult to define as various forms exist. Clark (2005) defines it as two companies which are brought together with similar interest but with different strengths to work on particular projects, developmental approaches and marketing agreements which will offer benefits for both companies. Lorange and Ross (1992) even came to the conclusion as strategic alliances entail a very broad definition that it incorporates MA. Strategic alliances can be separated into three different types as Contractor and Lorange (1988) state: Joint ventures, Non-equity alliances and Minority equity alliances. Preece (1995) recognised 6 main reasons for strategic alliances, starting all with the letter L, therefore they can be named as the 6 Ls. Learning is the first one of them, as he argues that knowledge will be acquired. Leaning is meant as replacing the value chain activities and filling in the missing infrastructure. Leveraging will fully integrate the firms operation. Linking suggests that the links between supplier and customer should be build closer. Leaping pursues a radically new area of endeavour. And finally Locking out, which means reducing competitive pressure from non-partners. 3.2.3. MA versus Alliances The main difference between MA and alliances is the power of control according to Lorange Roos (1992). A pure acquisition would mean that the brought up company is under the control of the ones who bought it. To achieve growth due to acquisition and remain in control, huge financial resources are needed. Rather than buying a whole company, a corporation can propose a joint venture with a specific division in which the corporation is interested in. In case this joint venture works well, a multi-activity alliance could be grown. Equity swaps can be conducted for long-term stabilisation. However, without full control the corporation cannot decide for its own how the alliance or the merger will develop or if it will continue. A company with two equal CEOs does not work out well due to different interest and objects as Lorange Roos (1992) state. And Clark (2005) stated earlier that companies could gather experience through alliances but fail to see later that in particular cases an acquisition would be more successful. 3.3. Mergers 3.3.1. Types of mergers In a merger, the assets of two previously separate firms are combined to establish a new legal entity. In fact, the number of mergers in mergers and acquisition is almost vanishingly small. Less than 3 percent of cross border mergers and acquisitions by number are mergers. In reality, even when the mergers are supposedly between equal partners, most are acquisitions where one company controls the other. When there is a merger between two competing firms in the same industry, it is called a horizontal merger. (Buckley and Ghauri, 2002). When there is a vertical merger, two companies merge that have a buyer-seller relationship. Then there are the three conglomerate types. Pure conglomerate will be a merger where there are different markets and different products, so totally unrelated. Then there is conglomerate market extension, where it is a merger between a company that offers the same products but in a different geographical market. The last type is the conglomerate product extensio n, where the merged company sells non-competing products, but functionally related in production and distribution. In the case of the dissertation, it focuses on horizontal mergers which operate on overlapping markets and segments. Cartwright Cooper (1996) claimed that the definitions and intentions of MAs often read like a cheesy novel with a likeness to a more or less welcomed dating or courtship. The following four approaches are made: Pillage and Plunder One-night stand Courtship/Just Friends Love and Marriage Love and Marriage would certainly best fit to the focus of this paper, as the aim is to achieve a positive long term international growth. The fourth category is aiming for long term integration through assimilation and blending. 3.3.2. Cross-Border Mergers One important aspect of understanding cross-border MA is to examine the logic driving the deals. Strategic motives for a cross-border merger involve acquisitions that improve the strength of a firms strategy. Examples would include mergers intended to create synergy, capitalize on firms core competence, increase market power, provide the firm with complimentary resources, products and strengths, or finally to take advantage of a parenting advantage. However, in a recent book by Mark Sirower (1997) he argues that synergy rarely justifies the premium paid. Sirower declares, many acquisitions premiums require performance improvements that are virtually impossible to realize even for the best managers in the best of industry conditions (p.14). In exploiting a core competence a firm takes an intangible skill, expertise, or knowledge and leverages it by expanding its use to additional industries where it may create a competitive advantage in several different businesses. One strategic reas on to acquire is to gain complimentary products, resources or strengths. Research shows that one important driver of cross-border mergers and acquisitions may be undervaluation (Gonzalez et al., 1998). A driver of cross-border mergers might be differences in the macro-economic conditions in two countries. That is, one country might have a higher growth rate and more opportunity than some other country. Thus, it would seem reasonable to expect the slower growth country to be more often home to acquirers whereas the faster growth country is likely to more often home to target firms as Hitt et al. (2001) stated. Reasons for cross-border acquisitions include market power, overcoming market entry barriers, covering the cost of new product development, increasing the speed of entry into a market, and greater diversification. Cross-border acquisitions can produce both economies of scale and economies of scope. They help a firm enter new international markets and thereby enhance their ability to complete in global markets. Of course, cross-border acquisitions are even more challenging to complete successfully than acquisitions of domestic firms according to Hitt et al. (2001). In fact, some research studies suggests that with the right strategy and the right approach to post-merger integration, cross-border acquisitions can create value for the acquiring firm according to Belcher and Nail (2000). 3.4. Motives and Objectives for Merging The literature on motives for MA has placed a significant amount of different sources and theories by several authors. The merits of using mergers to reduce costs are disputed by managers and by practitioners. For example, managers have been heard to comment that costs reductions are the merger benefit that is most likely to be achieved whereas the achievement of synergy is highly uncertain. On the other hand, Michael Porter argues that what passes for strategy today is simply improving operational effectiveness. Porter (1998) argues, In many companies, leadership has degenerated into orchestrating operational improvements and making deals (p.70). It is understandable how operational effectiveness may have come to be the driving motive for many mergers, however. Often at the same time a merger is announced, there will be an announcement of a cost reduction target. Merging in order to create synergy is probably the most often cited justification for an acquirer to pay a premium for a target company. Synergy effects can be created by redeploying assets. This can mean two different things. In the first case, the acquiring company may transfer a resource belonging to the target company to the acquiring company. Colombo et al. (2007) also found out that a strong predictor of acquisition performance was the extent of asset redeployment from the target to the bidder. Weston and Weaver (2001) stated that the first category is synergy or efficiency for a merger, in which total value from the combination is greater than the sum of the values of the component firms operating independently. Hubris is the result of the winners curse, causing bidders to overpay; it postulates that value is unchanged. Of course, in a synergistic merger, it would be possible for the bidder to overpay as well. The third class of mergers comprises those in which total value is decreased as a result of mistakes or managers who put their own preferences above the well-being of the firm, the agency problem. Economic motives are an important subcategory creating strategic logic for a merger. One example is to establish economies of scale. A second closely related reason is to be able to reduce costs due to redundant resources of two firms in the same or closely related industry. Thus if the company acquires a company that is in the same or a closely related industry and there is substantial overlap between the two businesses there may be ample opportunities to reduce costs. Another reason is that the stock of the firms from a particular country may be undervalued. A fourth reason is the macroeconomic difference between countries such as different growth rates. Finally, the exchange rates may play a role. Recent research did show that acquiring a foreign company when the home country currency has appreciated in relation to the target companys currency has great benefits for the acquiring company when the industry is highly technological (Georgopoulos, 2008). Firms engage in merger and acquisition activity for many reasons. Effective mergers and acquisitions can, for example: serve as a platform for corporate growth, lead to increased market share, provide the foundations required to generate and gain advantages from economies of scale (these are benefits that occur when the firm is able to use its resources to drive costs lower across multiple products; scale economies are acquired primarily at the operational level) and economies of scope (these are benefits realised through using one units resources in the operations of another unit), and reduce organizational expenses by eliminating duplication and transferring knowledge between and among business units and/or individual product lines (Collins and Montgomery, 1999). One of the most important motives for MA activities, as seen from the experience of the last decade, has been economies of scale and scope. Companies aim to achieve economies of scale by combining resources of two merging companies or create economies of scope by acquiring a company allowing product/market diversification. Other motives include access to each others technology or market reach, achieving a dominant position in the industry, consolidation of the industry, and manipulating rules of competition and antitrust as Buckley and Ghauri (2002) state. The question as to whether merge primarily concerns the identification of the corporate objects and which of these objects are to be pursued through organic growth and which through MA in the form of participations or a full takeover. At the same time, the consequences of the growth strategy and its economic or financial effects in the light of the competition situation and the extension of the value added chain must be carefully examined. Empirically, in approximately 85 per cent of all concentrations between undertakings and acquisitions, the question as to whether is answered with a view to the object of achieving growth in the core business (Picot, 2002). However, Buckley and Ghauri (2002) stated also that mergers and acquisition have become the most dramatic demonstration of vision and strategy in the corporate world. More than 50 percent of the mergers so far have led to a decrease in share value and another 25 percent have shown no significant increase. When coming to a conclusion what is now the main purpose to merge, the author would conclude that it depends on the companys expansion strategy and the different motivation to form alliances. However, effective mergers and acquisitions can serve as a platform for corporate growth, lead to increased market share, provide the foundations required generating and gaining advantages from economies of scale and scope as Collins and Montgomery (1999) concluded. These factors are seen as the most important motives to form a merger and to believe that it would help the effected corporations to strengthen their market position and even gain more market share. 3.4.1. Synergy According to Coyle (2000) synergy is the additional benefit that can be derived from combining the resources of the bidding and target companies. Synergy has been described as the two and two makes five effect. It can also be classified as Gaughan (2002) put it, as synergy and value creation are a synonymous and synergy is when the value of the MA exceeds the value of the two separate firms put together. According to Habeck et al. (2000) the term synergy is used as a synonym for cost cutting. However, in his book he argues that those companies that understand this definition of synergy as cost cutting need to redefine it as it also includes the positive aspects of the MA such as growth and knowledge sharing. Furthermore, he states that it is important to capture growth synergies as quickly as possible and favour those areas where cost efficiencies can be gained. Therefore synergy is an important part in a successful merger. Ansoff (1986) classified different types of synergies. Manag ement synergy occurs when the top management of one of the companies resolves problems of the other company through their experience. Investment synergy can occur from the joint use of plant and equipment, joint research and development efforts, and having common raw materials inventories. Operating synergy can arise from better utilization of facilities and personnel and bulk-order purchasing to reduce upcoming material costs. And finally sales synergy where a merged organization can benefit from common sales administration, distribution channels, warehousing and sales promotion. 3.4.2. Creating Synergy through Mergers Hitt et al. (2001) states that there are four foundations in the creation of synergy which are called strategic fit, organisational fit, managerial actions and value creation. As all four foundations exist the chance of creating synergy is substantially better. Strategic fit can be defined as the match between the two companies organisational capabilities. As two companies with similar capabilities and the same strengths and weaknesses merge the chances of creating synergy is reduced. Organisational fit means that the two companies are highly compatible, meaning that these have similar management processes, cultures, systems and structures. This makes it easier for the firms to share resources, knowledge, skills and effectively communicate. Companies without organisational fit could find that the integration process will be hard to implement. Managerial actions is that creating synergy requires the active management of the acquisition process, in order to realize the different synerg ies and the benefits they convey. To create synergy an active management is needed that recognises the international issues and other problems connected with the MA process. Value creation is the last of the four synergy creation foundations. It is based on the fact that the benefits from the synergy need to exceed the cost of creating and capturing synergy. The costs that should be less than the value of the synergy that is created include those associated with a purchasing premium, financing of the transaction and the set of implementation actions required to integrate the acquired unit into the existing organisational structure. Synergy will add no value as creating it outweighs the value of the synergy. Gaughan (2002) has compiled a model of the process of realizing synergistic gains. The management needs to carefully deal with the strategic planning since the better planned MA is a better chance to succeed. Secondly the management needs to integrate the two companies into one. Finally the synergy can be separated into revenue enhancing synergies or cost cutting synergies. Ficery et al. (2007) furthermore points out that synergy created through MA, the targeted company has access to new geographic market or access to a new customer segment allowing the acquiring company to reach those new markets and segments at a faster pace and at a lower cost. CHAPTER FOUR 4.1. Introduction In this chapter, the author examines the most suitable methodology for the research area and justifies the different methods chosen. It outlines the authors main decisions on methods and data collection and considers their implications for the research findings. It also includes details for the sources used for information collection and explanations why other research methods were rejected. Furthermore, this chapter will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues. 4.2. Research strategy This chapter examines the most suitable methodology for the research area and justifies the methods chosen. The author explains how the linkage between the academic literature and reality was explored by using research methods. Furthermore, it will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues for this thesis. According to Jankowicz (2000) there are four research strategies that can be used for conducting: the archival method, the case study, the survey and the field experiment. By using the archival method, the companys present and future performance can be analysed by using past financial figures. Using the case study as a research method, a specific organisation can be analysed by researching the internal and external situation of the organisation to find conclusion for a specific subject. Through surveys, human input can be used to find representing input out of the population to a specific topic. A field experiment applies the scientific method to experimentally examine an intervention in the real world. The case study is the most suitable research method to use, as the objective of this research is to analyse and investigate the external situation within a real-life Analysis of the Daimler-Benz and Chrysler Merger Analysis of the Daimler-Benz and Chrysler Merger ABSTRACT Globalisation has changed the appearance of the economy. Especially in the 1990s firms expanded into new markets to operate more global and to develop their business. To do so, many companies choosed to expand via corporations with other companies to make the market entry easier or simply to strenghten their market position. Mergers and acquisition became one of the most used tools for development, whereas a merger between well known and successful companies always caused a sensation. Mergers caused such a stir as the companies involved in a merger faced a complete new identitiy and innovations were about to alter the company. The research project proves the decision for a merger rather than an alliance and the synergies gathered due to this tool of development. Two companies, Daimler-Benz and Chrysler, are investigated to illustrate the academic frameworks in practice to come to a conclusion why they merged. Methodology includes analysis of secondary data which has been published on the subject area. The findings and analysis of the research conducted, concluded that synergy is the most important aspect when companies grow through mergers. Furthermore, the results show that internationalisation due to globalisation is the key driver of mergers. The paper concludes with an evaluation of the study and recommendations for further research. CHAPTER ONE 1.1. Reason for Choice of Topic Companies come and go, chief executives rise and fall, industry sectors wax and wane, but an outstanding feature of the past decade has been the rise of mergers and acquisitions (MA). Whether in times of boom or bust, MAs continue to be the preferred option for businesses seeking to grow rapidly. A company has several options to choose from when it comes to growth strategies. One option is to grow organically by increasing sales personnel, new product developments and by expanding into new geographical areas. Alternative options to achieve the desired growth, companies traditionally build, buy, merge with other companies or co-operate through alliances. However, the best example of how to grow inorganic is to merge or aquire (Sherman, 2005). MAs are mainly about growth according to Lees (2003) and Sudarsanam (2003). Internal or organic growth is in most cases a slow process and MAs is another option that will increase the growth process. By doing an MA deal, the acquiring company or the merged companies can get instant access to new markets, technology and operations can be completed more efficiently. Several reasons and motives exist why a company chooses to grow through MA. According to Gaughan (2002) the most common motive for MA is to create synergy. However, other motives play also an important role, like diversification, improved management, market power or tax motives. Johnson and Scholes (1997) state that MAs are a quick way of entering new markets or products. The company can also gain competences or resources through this way. Knowledge about the market situation is also a significant cause why companies choose to develop through MA. Another reason for companies to develop through MA is that they are actively s earching for benefits arising from synergies. The author has chosen the topic to gain further knowledge about the topic of why do companies actually merge to gain synergy. The reasons for attempting to gain further knowledge are based on the authors fascination on MA in general and to the extend why Daimler-Benz and Chrysler did actually merge. The split between those two has not been long ago and therefore the author was particularly interested in this merger. Furthermore, the author is interested what type of synergies were the most relevant in this merger of equals. 1.2. Academic Obejctives of Dissertation This research aims to point out that synergies play an important role when two companies are doing a corporation in order to grow. The author has chosen the following objectives in order to support the research hypothesis: To discover why companies select mergers instead of strategic alliances as tool for development To investigate to what extend synergies play an important role when merging To explore the importance of internationalisation in times of globalisation 1.3. Outline of Chapters Introduction: Introduces the topic of this research and explains the aims and objectives of the study. Setting the scene: This chapter is to set the scene for the study. It presents background information about the two companies and what actually did happen. Literature review: Discusses the academic literature on mergers and acquisition and synergies concentrating on several approaches to be applied to the case study. Methodology: Discusses how the research was conducted and recognizes any limitations and biases of the chosen methods. It involves a description of how the research and data was analysed. Findings: Presentaion of the case study including important information for the research Analysis: The findings from the secondary research are analysed against the earlier literature and research from chapter three. Conclusion: The research project is finally concluded, commenting on the initial objectives of the study. The limitations and recommendations for further research are also discussed in this chapter. CHAPTER TWO 2.1. Background of Daimler-Benz AG As Jurgen Schrempp became the new CEO of Daimler-Benz AG in May 1995, one of his first jobs was the promulgation of a new strategic concept containig five points to strenghten their market position and to expand further. Mercedes considered the US market to be the important and competitive automobile market in the world. They established a greenfield plant in Tuscaloosa in 1994 already to strenghten their position in the US market and were supposed to be market openers. Those were the first signs that Daimler-Benz wanted to expand. 2.2. Background of the Chrysler Corporation From 1994 to 1997 Chrysler beat one historical record after another, where even some models were selected as cars of the year. It was even crowned by Forbes as the company of the year 1996. Bad labour relations have been improved through corporatist agreements. However, most cars were sold in the home market and plans to expand to other non-american countries have been scattered more or less. Nevertheless, the frequent crises and the internationalisation deficits of the company had planted the idea of a partner in the minds of the Chrysler executives. 2.3. The Merger When in May 1998 the CEO of Daimler Benz, Jurgen Schrempp and Robert Eaton, CEO of Chrysler signed the contract for a merger between those two companies, they made the biggest industrial merger in history. Both partners expected great value and advantages, as both companies seemed to complement well with each other. As a matter of fact, the company did not develop as good as anticipated. From the beginning on DaimlerChrysler could only announce little profits and losses, in the year 2001 it was even the biggest loss in history of all German companies. By mid 2004 the market value of the company has been less than half of what the value has been of both companies before the merger. By the same time the sales figures and business numbers of competitors increased. In May 2007, not even ten years after the merger, the dream of a super company bursted like a bubble. CHAPTER THREE 3.1. Reasons for Internationalisation As Kwon Kopona (1993) state in their theory the choice of market entry should relate to the companys corporate strategy and the extent, depth and geographical coverage of the present and intended foreign activities. Furthermore, the decision for growing should be made when there is a sufficient understanding of the different types of entry. On the one hand companies could gather experience through alliances and on the other hand fail to see that in particular cases an acquisition would be more successful (Clark, 2005). Dyer et al. (2004) state that a specific advice is needed about when to apply each strategy that is based on internal and external circumstances. Especially internally, the companies should focus on resources that are to be combined, the extent of unnecessary resources and the type of synergy which the firms seek. Externally, important factors are the degree of market uncertainty and the level of competition. As experience and interests of the company are different, t hese factors will have different degrees of importance. In Porters (1987) point of view entering a new market must be attractive for the expanding company. It needs feasibility of making profits in the target organisation. The costs of entry must be taken into account. These include direct costs as the cost of shares and advisors and indirect costs include such costs as integration costs. According to Dunning (1988) where he argues with the eclectic theory that additional costs can occur because of the failure of knowledge about market conditions, the legal and cultural diversities and the increased costs of operating at a distance. It also must be taken into consideration if the possibility of gaining synergies exists and what the opportunity of benefiting from the target companys core competences is. The local advantages of countries play an important role. The main country advantages can be classified as economic advantages, consisting of quantity and quality factors such as transportation, production, scope and the size of the market. Then there are political advantages that include government policies which have a positive influence on the market entry. And finally there are social and cultural advantages, which implicate the physical distance between the home country and the foreign country, language and cultural diversities and the general attitude towards foreigners. Dunning (1988) declared that companies have to be aware that relative attractiveness of locations can change over the year. He also declares that particular know-how and specific core abilities which count as an internalisation advantage can have a positive impact on the general business performance. 3.2. Methods of Development 3.2.1. Merger and Acquisitions As De Witt Meyer (1998) state in their thesis, mergers and acquisition are the most popular and influential form of discretionary foreign direct investment. Acquiring of another company is a takeover, be it friendly or hostile, while mergers only represent the share in a company according to Douglas Craig (1995). A non-adversarial approach benefits not only buyers but vendors as well, claimed by Beckett (2005). Mergers and acquisitions are significant alternatives to internal growth of companies as they enable companys fast penetration of new and foreign markets, acquire necessary know-how and skilled personal and obtain economies of scale and scope, according to Jackson (1995). Companies that merge gain access to supply and distribution channels through an upstream alliance. Furthermore Contractor Lorange (1998) state that enhancing their reputation and reducing competition if the integrated company is a competitor might be seen as an advantage. MAs are a well developed strategy and not a reaction to the first apparent opportunity as Simmons (1988) argued. As Coyle (2000) states, MA can be the outcome of either an aggressive or defensive strategy. Aggressive would mean that the company will seek to improve its market position to create a bigger company and finally to produce on a bigger scale and more cheaply through economies of scale. Defensive strategies on the other hand are made in order to survive in changing industry. A totally different reason for doing MA claimed Beckett (2005) as he said that companies may benefit from MAs when they acquire a company at a certain value and sell it later at a higher value. Through increasing shareholder value by providing a higher level of dividend and capital gain return and securing a higher return on the investment. This paper is mainly looking for the purposes for a merger and therefore for the realisation of potential synergy effects, as the purpose of most MAs is to achieve some kind of synergy. The belief is that two comparable companies together will achieve far better results than independently. Cost cuttings and savings will often lead to this effect. A successful MA can be classified as one where the potential synergies identified are to be utilised best as Coyle (2000) states. 3.2.2. Strategic Alliances Johnson (1999) has declared that defining strategic alliances are difficult to define as various forms exist. Clark (2005) defines it as two companies which are brought together with similar interest but with different strengths to work on particular projects, developmental approaches and marketing agreements which will offer benefits for both companies. Lorange and Ross (1992) even came to the conclusion as strategic alliances entail a very broad definition that it incorporates MA. Strategic alliances can be separated into three different types as Contractor and Lorange (1988) state: Joint ventures, Non-equity alliances and Minority equity alliances. Preece (1995) recognised 6 main reasons for strategic alliances, starting all with the letter L, therefore they can be named as the 6 Ls. Learning is the first one of them, as he argues that knowledge will be acquired. Leaning is meant as replacing the value chain activities and filling in the missing infrastructure. Leveraging will fully integrate the firms operation. Linking suggests that the links between supplier and customer should be build closer. Leaping pursues a radically new area of endeavour. And finally Locking out, which means reducing competitive pressure from non-partners. 3.2.3. MA versus Alliances The main difference between MA and alliances is the power of control according to Lorange Roos (1992). A pure acquisition would mean that the brought up company is under the control of the ones who bought it. To achieve growth due to acquisition and remain in control, huge financial resources are needed. Rather than buying a whole company, a corporation can propose a joint venture with a specific division in which the corporation is interested in. In case this joint venture works well, a multi-activity alliance could be grown. Equity swaps can be conducted for long-term stabilisation. However, without full control the corporation cannot decide for its own how the alliance or the merger will develop or if it will continue. A company with two equal CEOs does not work out well due to different interest and objects as Lorange Roos (1992) state. And Clark (2005) stated earlier that companies could gather experience through alliances but fail to see later that in particular cases an acquisition would be more successful. 3.3. Mergers 3.3.1. Types of mergers In a merger, the assets of two previously separate firms are combined to establish a new legal entity. In fact, the number of mergers in mergers and acquisition is almost vanishingly small. Less than 3 percent of cross border mergers and acquisitions by number are mergers. In reality, even when the mergers are supposedly between equal partners, most are acquisitions where one company controls the other. When there is a merger between two competing firms in the same industry, it is called a horizontal merger. (Buckley and Ghauri, 2002). When there is a vertical merger, two companies merge that have a buyer-seller relationship. Then there are the three conglomerate types. Pure conglomerate will be a merger where there are different markets and different products, so totally unrelated. Then there is conglomerate market extension, where it is a merger between a company that offers the same products but in a different geographical market. The last type is the conglomerate product extensio n, where the merged company sells non-competing products, but functionally related in production and distribution. In the case of the dissertation, it focuses on horizontal mergers which operate on overlapping markets and segments. Cartwright Cooper (1996) claimed that the definitions and intentions of MAs often read like a cheesy novel with a likeness to a more or less welcomed dating or courtship. The following four approaches are made: Pillage and Plunder One-night stand Courtship/Just Friends Love and Marriage Love and Marriage would certainly best fit to the focus of this paper, as the aim is to achieve a positive long term international growth. The fourth category is aiming for long term integration through assimilation and blending. 3.3.2. Cross-Border Mergers One important aspect of understanding cross-border MA is to examine the logic driving the deals. Strategic motives for a cross-border merger involve acquisitions that improve the strength of a firms strategy. Examples would include mergers intended to create synergy, capitalize on firms core competence, increase market power, provide the firm with complimentary resources, products and strengths, or finally to take advantage of a parenting advantage. However, in a recent book by Mark Sirower (1997) he argues that synergy rarely justifies the premium paid. Sirower declares, many acquisitions premiums require performance improvements that are virtually impossible to realize even for the best managers in the best of industry conditions (p.14). In exploiting a core competence a firm takes an intangible skill, expertise, or knowledge and leverages it by expanding its use to additional industries where it may create a competitive advantage in several different businesses. One strategic reas on to acquire is to gain complimentary products, resources or strengths. Research shows that one important driver of cross-border mergers and acquisitions may be undervaluation (Gonzalez et al., 1998). A driver of cross-border mergers might be differences in the macro-economic conditions in two countries. That is, one country might have a higher growth rate and more opportunity than some other country. Thus, it would seem reasonable to expect the slower growth country to be more often home to acquirers whereas the faster growth country is likely to more often home to target firms as Hitt et al. (2001) stated. Reasons for cross-border acquisitions include market power, overcoming market entry barriers, covering the cost of new product development, increasing the speed of entry into a market, and greater diversification. Cross-border acquisitions can produce both economies of scale and economies of scope. They help a firm enter new international markets and thereby enhance their ability to complete in global markets. Of course, cross-border acquisitions are even more challenging to complete successfully than acquisitions of domestic firms according to Hitt et al. (2001). In fact, some research studies suggests that with the right strategy and the right approach to post-merger integration, cross-border acquisitions can create value for the acquiring firm according to Belcher and Nail (2000). 3.4. Motives and Objectives for Merging The literature on motives for MA has placed a significant amount of different sources and theories by several authors. The merits of using mergers to reduce costs are disputed by managers and by practitioners. For example, managers have been heard to comment that costs reductions are the merger benefit that is most likely to be achieved whereas the achievement of synergy is highly uncertain. On the other hand, Michael Porter argues that what passes for strategy today is simply improving operational effectiveness. Porter (1998) argues, In many companies, leadership has degenerated into orchestrating operational improvements and making deals (p.70). It is understandable how operational effectiveness may have come to be the driving motive for many mergers, however. Often at the same time a merger is announced, there will be an announcement of a cost reduction target. Merging in order to create synergy is probably the most often cited justification for an acquirer to pay a premium for a target company. Synergy effects can be created by redeploying assets. This can mean two different things. In the first case, the acquiring company may transfer a resource belonging to the target company to the acquiring company. Colombo et al. (2007) also found out that a strong predictor of acquisition performance was the extent of asset redeployment from the target to the bidder. Weston and Weaver (2001) stated that the first category is synergy or efficiency for a merger, in which total value from the combination is greater than the sum of the values of the component firms operating independently. Hubris is the result of the winners curse, causing bidders to overpay; it postulates that value is unchanged. Of course, in a synergistic merger, it would be possible for the bidder to overpay as well. The third class of mergers comprises those in which total value is decreased as a result of mistakes or managers who put their own preferences above the well-being of the firm, the agency problem. Economic motives are an important subcategory creating strategic logic for a merger. One example is to establish economies of scale. A second closely related reason is to be able to reduce costs due to redundant resources of two firms in the same or closely related industry. Thus if the company acquires a company that is in the same or a closely related industry and there is substantial overlap between the two businesses there may be ample opportunities to reduce costs. Another reason is that the stock of the firms from a particular country may be undervalued. A fourth reason is the macroeconomic difference between countries such as different growth rates. Finally, the exchange rates may play a role. Recent research did show that acquiring a foreign company when the home country currency has appreciated in relation to the target companys currency has great benefits for the acquiring company when the industry is highly technological (Georgopoulos, 2008). Firms engage in merger and acquisition activity for many reasons. Effective mergers and acquisitions can, for example: serve as a platform for corporate growth, lead to increased market share, provide the foundations required to generate and gain advantages from economies of scale (these are benefits that occur when the firm is able to use its resources to drive costs lower across multiple products; scale economies are acquired primarily at the operational level) and economies of scope (these are benefits realised through using one units resources in the operations of another unit), and reduce organizational expenses by eliminating duplication and transferring knowledge between and among business units and/or individual product lines (Collins and Montgomery, 1999). One of the most important motives for MA activities, as seen from the experience of the last decade, has been economies of scale and scope. Companies aim to achieve economies of scale by combining resources of two merging companies or create economies of scope by acquiring a company allowing product/market diversification. Other motives include access to each others technology or market reach, achieving a dominant position in the industry, consolidation of the industry, and manipulating rules of competition and antitrust as Buckley and Ghauri (2002) state. The question as to whether merge primarily concerns the identification of the corporate objects and which of these objects are to be pursued through organic growth and which through MA in the form of participations or a full takeover. At the same time, the consequences of the growth strategy and its economic or financial effects in the light of the competition situation and the extension of the value added chain must be carefully examined. Empirically, in approximately 85 per cent of all concentrations between undertakings and acquisitions, the question as to whether is answered with a view to the object of achieving growth in the core business (Picot, 2002). However, Buckley and Ghauri (2002) stated also that mergers and acquisition have become the most dramatic demonstration of vision and strategy in the corporate world. More than 50 percent of the mergers so far have led to a decrease in share value and another 25 percent have shown no significant increase. When coming to a conclusion what is now the main purpose to merge, the author would conclude that it depends on the companys expansion strategy and the different motivation to form alliances. However, effective mergers and acquisitions can serve as a platform for corporate growth, lead to increased market share, provide the foundations required generating and gaining advantages from economies of scale and scope as Collins and Montgomery (1999) concluded. These factors are seen as the most important motives to form a merger and to believe that it would help the effected corporations to strengthen their market position and even gain more market share. 3.4.1. Synergy According to Coyle (2000) synergy is the additional benefit that can be derived from combining the resources of the bidding and target companies. Synergy has been described as the two and two makes five effect. It can also be classified as Gaughan (2002) put it, as synergy and value creation are a synonymous and synergy is when the value of the MA exceeds the value of the two separate firms put together. According to Habeck et al. (2000) the term synergy is used as a synonym for cost cutting. However, in his book he argues that those companies that understand this definition of synergy as cost cutting need to redefine it as it also includes the positive aspects of the MA such as growth and knowledge sharing. Furthermore, he states that it is important to capture growth synergies as quickly as possible and favour those areas where cost efficiencies can be gained. Therefore synergy is an important part in a successful merger. Ansoff (1986) classified different types of synergies. Manag ement synergy occurs when the top management of one of the companies resolves problems of the other company through their experience. Investment synergy can occur from the joint use of plant and equipment, joint research and development efforts, and having common raw materials inventories. Operating synergy can arise from better utilization of facilities and personnel and bulk-order purchasing to reduce upcoming material costs. And finally sales synergy where a merged organization can benefit from common sales administration, distribution channels, warehousing and sales promotion. 3.4.2. Creating Synergy through Mergers Hitt et al. (2001) states that there are four foundations in the creation of synergy which are called strategic fit, organisational fit, managerial actions and value creation. As all four foundations exist the chance of creating synergy is substantially better. Strategic fit can be defined as the match between the two companies organisational capabilities. As two companies with similar capabilities and the same strengths and weaknesses merge the chances of creating synergy is reduced. Organisational fit means that the two companies are highly compatible, meaning that these have similar management processes, cultures, systems and structures. This makes it easier for the firms to share resources, knowledge, skills and effectively communicate. Companies without organisational fit could find that the integration process will be hard to implement. Managerial actions is that creating synergy requires the active management of the acquisition process, in order to realize the different synerg ies and the benefits they convey. To create synergy an active management is needed that recognises the international issues and other problems connected with the MA process. Value creation is the last of the four synergy creation foundations. It is based on the fact that the benefits from the synergy need to exceed the cost of creating and capturing synergy. The costs that should be less than the value of the synergy that is created include those associated with a purchasing premium, financing of the transaction and the set of implementation actions required to integrate the acquired unit into the existing organisational structure. Synergy will add no value as creating it outweighs the value of the synergy. Gaughan (2002) has compiled a model of the process of realizing synergistic gains. The management needs to carefully deal with the strategic planning since the better planned MA is a better chance to succeed. Secondly the management needs to integrate the two companies into one. Finally the synergy can be separated into revenue enhancing synergies or cost cutting synergies. Ficery et al. (2007) furthermore points out that synergy created through MA, the targeted company has access to new geographic market or access to a new customer segment allowing the acquiring company to reach those new markets and segments at a faster pace and at a lower cost. CHAPTER FOUR 4.1. Introduction In this chapter, the author examines the most suitable methodology for the research area and justifies the different methods chosen. It outlines the authors main decisions on methods and data collection and considers their implications for the research findings. It also includes details for the sources used for information collection and explanations why other research methods were rejected. Furthermore, this chapter will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues. 4.2. Research strategy This chapter examines the most suitable methodology for the research area and justifies the methods chosen. The author explains how the linkage between the academic literature and reality was explored by using research methods. Furthermore, it will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues for this thesis. According to Jankowicz (2000) there are four research strategies that can be used for conducting: the archival method, the case study, the survey and the field experiment. By using the archival method, the companys present and future performance can be analysed by using past financial figures. Using the case study as a research method, a specific organisation can be analysed by researching the internal and external situation of the organisation to find conclusion for a specific subject. Through surveys, human input can be used to find representing input out of the population to a specific topic. A field experiment applies the scientific method to experimentally examine an intervention in the real world. The case study is the most suitable research method to use, as the objective of this research is to analyse and investigate the external situation within a real-life

Analysis of South of the Slot by Jack London Essay -- South of the Slo

Analysis of South of the Slot by Jack London The slot is a metaphor of the â€Å"class cleavage of society†. There was a contrast between the North and South of the Slot in terms of building types: in the North were the higher-class centers of diversion, lodging, and business; and in the South were the lower-class centers of lodging, unskilled work/business. The buildings are figures of two contrasting classes that were segregated (?). In order to study the southern people (the working class) a sociology professor of the University of CA, Freddie Drummond (FD), decides to work temporarily as an unskilled laborer. Initially he experiences social problems of adaptation and acceptance by his fellow workers. For example, he doesn’t understand their insistent admonitions to reduce his work pace. As a result of his fierce competition against them, by the 6th day FD doubles his earnings. He misunderstands their lack of loyalty to the business, and looks down on them. Being unable to convince Drummond, and as a last resor t, his co-workers jumped on him and attacked him so badly that he becomes ill. Once recovered, Drummond changes job. He finds himself working as a fruit-distributor among the women and decides not to change their work conditions. In six months, Drummond works at many jobs, and succeeds in imitating a genuine worker. As FD makes tentative generalizations about the working class, he is applauded by the business people, who divulge and spread his studies to the working cl...

Business Practice in Australia

Some rural communities will not have the same exposure to immigrants and international visitors, although the popularity of Australia as a budget traveler destination has affected that. Generally variety is accepted and people of many cultures will be seen in the workplace and are accepted. (Source 3) Source 3: Cultural Dimension and Concept Hoofed Background to Business in Australia Book Author: Egger The country is very large with smallest amount of population compared to land area though has equally states of USA relatively has a population half the size of California.Due to lack of domestic market in size compared to geographic isolation which means Australian business increasingly recognize the need of international market to ensure their future country income as well as well being of country. Indeed, a criticism that has been leveled against Australian business organizations has been their slowness to take up the challenge of international. Source 4) Thus, Australia finds itsel f needing to become ever more international in its outlook both economically and politically.The extremely successful economy is dependent upon trade with both the US and increasingly with key Asian countries such as China, Japan and India. Traditional British Commonwealth links have been declining in importance over several decades. ( Source 4) In short Australia is a small market with a highly educated, affluent population which realizes the importance of international trade – they are waiting to do business with you! ( Source 4) Australian Business Structures people do not give the impression that they ‘think they are somebody'.It is much better to be seen as a ‘good bloke' or a ‘good mate' than somebody who is overtly proud of themselves and their achievements. Australian business thinking is based on US business modeling where people would have conflict with influence to be slavish with others who are in favor of US style entrepreneurial. ( Source 5) Th ese dispute combination leads Australian organization to be fairly non-hierarchical in their structure. Attention is paid to titles and ranking with the organizations. Thus NY integration organization looking to set up operation in country should be well advised against their behavior of business structure.Similarly, do not be too surprised if Australian business contacts seem willfully disrespectful of hierarchy when working internationally – they are not being rude, merely acting in a consistent Australian manner. ( Source 5) (Source 4 & 5: Horticulturalists. Com/ Australian Business Structure. HTML) Australian Management Style It is believe in Australia that in work everyone is Just having different Jobs not as in terms of different position, therefore manages are not expected to see themselves as n any way superior to their colleagues.Such approach may provoke outright hostility. Challenging the idea of boss in open meeting is not at all consider as rude or disrespectful on contrary it is found as committed or an professional approach, therefore it is compulsory to adopt consultative style of management which is inclusive of person's opinions or an open debate of ideas. In keeping with the Australian direct style of communication, debates between senior and Junior executives may appear from the outside as confrontational and occasionally they rarely are.This style of interaction is merely viewed as the most acrimonious ? effective way of attaining the end goal. ( Source 6) Australian managers to not remain aloof from members of their team ? they usually want to be ‘one of the boys' and be seen as ‘a good bloke'. The idea of managers only socializing with other managers would be viewed as very affected and would be likely to result in alienation. ( Source & 6: Horticulturalists. Com/Australian Management Style) Australian Meetings Australian do considered punctuality as virtue, however meeting often start five or ten minutes late.In addit ion, it has tradition to go through few minutes of small talk fore getting down to serious discussion of meeting where sport is considered as common theme of discussions. Post planning culture is very well known in Australia prior to client facing meetings where little preparation is done before to attend such meetings. As an egalitarian approach, Australian are often set as an forum for open debate of an issue during meeting and found professional in doing so.Being ‘over- prepared' for meetings can result in certain negative feelings towards those who have prepared in advance as they can be seen to be trying to dictate and force their ideas on other people. If something important arises during the open debate it will not be excluded simply because it does not occur on the agenda. ( Source 7) Source 7 : Horticulturalists. Com/Australian Meetings Australian Team Australian looks for those who are very good as team player and has extreme importance according to their psyche wher e as Loner or invariable person not considered as good team person.Food and drinks are actively encouraged during make themselves out to be better than their colleagues in workplace does not make a good team player. A competitive edge should be directed towards the other am' (the competition) rather than being internally focused. ( Source 8: Horticulturalist. Com/ Australian Team) Australian Communication Styles Although Australia is resided with many different people from parts of world with over 100 languages being spoken by those population who have emigrated there, English is the official and by far most commonly spoken language.Directness is cherished in Australia and failure to say what you mean and mean what you say can be mistaken for evasiveness and even hypocrisy. ( Source 9) It is important not to be too self-promotional when presenting to Australians. A hard sell approach can often be misconstrued as bragging and can provoke a very negative response. Remember that people do not like to make out that they are better than others ? the same probably applies to products and services. A factual description of issues will be far better received than a more hyperbolic approach. Source 9) First names are invariably used in all business situations in Australia. It would be very unusual to call a business contact by their surname. Similarly, educational titles play relatively little part in business situations. (Source 9: Horticulturalists. Mom/Australian Communication style) Women in Business in Australia Women currently make up a large percentage of the workforce but as in many other countries are often found in lower paid and part-time Jobs. Whilst progress is being made, statistics will show that women are still paid comparatively less for doing the same Job as a man.On the other hand, women have made more progress in attaining managerial positions than in many other leading industrialists nations and more and more women are reaching the highest levels o f Australian organizations. (Source 10) :horticulturalists. Mom/ Women in business in Australia Australian Dress Code In corporate Australia, standard business dress is still very much the norm. Dark suits and ties are the standard dress for management level businessmen with women wearing business suits with either skirts or trousers.Remember that, for much of the year, Australia is a very hot country – so make sure that your clothing is lightweight and cool during those periods. Try to avoid excessive Jewelry and accessories which may be viewed as too ‘flashy' and therefore unprofessional. ( Source 1 1 : Horticulturalists. Mom/Australian dress code. HTML) Australian Etiquette & Customs ( Source 12) Meeting Etiquette Australians are not very formal so greetings are casual and relaxed. A handshake and smile suffices. While an Australian may say, ‘Giddy' or ‘Giddy, mate', this may sound patronizing from a foreigner.Visitors should simply say, ‘Hello' or ‘Hello, how are you? ‘ Gussies prefer to use first names, even at the initial meeting Gift Giving Etiquette Small gifts are commonly exchanged with family members, close friends, and neighbors on birthdays and Christmas. Trades people such as sanitation workers ay be given a small amount of cash, or more likely, a bottle of wine or a six-pack of beer! If invited to someone's home for dinner, it is polite to bring a box of chocolates are opened when received. Dining Etiquette Many invitations to an Gussies home will be for a ‘Barbie' (BBC).Guests to a barbeques typically bring wine or beer for their personal consumption. In some cases, very informal barbecues may suggest that you bring your own meat! Arrive on time if invited to dinner; no more than 15 minutes late if invited too barbeques or a large party. (Source 12: Kiss, Bow, Shake hand , Page 25-26) Successful Entertaining in Australia There is no great tradition for business entertaining in Australia and it ce rtainly shouldn't be viewed as the quick way to cement relationships with a new client or contact.In fact, you are more likely to be asked out for lunch or dinner once a firm relationship has been established – in this way the meal can in no way be seen to have influenced a business decision. People will very often ‘go Dutch' over a meal – this means that the bill is split equally amongst those present at the meal. If you wish to pay, make sure you make this clear before the meal to avoid any embarrassing abates when the bill is presented. ( Source 13) If invited to a pub or bar for a drink, it is very important to make sure you pay your ‘shout' – that means that everybody is expected to pay for a round of drinks.It is unadvisable to develop a reputation as someone who does not pay for his or her fair share of the drinks! Tipping is not always necessary but is usually expected at the better restaurants. Tips are usually for about 10% of the total bil l. (Source 13 : Worldliness culture website- Entertaining in Australia. HTML ) Appendix Source: World Business Culture -Australia/ Tips to live and to do business in Australia . Although Australia is relatively geographically remote and has a small domestic market, it is economically successful and its citizens have a comparatively high standard of living. . Due to its small domestic market, Australia needs to trade actively on the international market place and Australians know this – they are open to new ideas from overseas. 3. Australians prize their egalitarian approach to life- people should not try to make out that they are better than others. 4. This egalitarian world view is mirrored in many aspects of Australian business culture from corporate truckers to management and communication style. 5. On the whole, Australian hierarchical approach tends to sit uneasily in egalitarian Australia. 6.Managers try to develop a ‘mate' relationship with their colleagues and w ould be viewed negatively if they tried to seem aloof from subordinates. 7. Everybody expects to have an input into the decision-making process even if, in the final analysis, the boss still makes the decision. If the boss makes the decision with no prior consultation, it unlikely that people will be very keen to ensure implementation. 8. Decision-making meetings can e quite animated and it is expected that people will say exactly what they think without necessarily having to defer automatically to the boss' viewpoint. . Although Australians will say that they value punctuality as a professional necessity, do not be surprised if people appear five to ten minutes late for a meeting. 10. Some small talk is usually engaged in before the meeting proper starts. This stage of the meeting is, however, rarely protracted (five minutes or less. ) 1 1 . Australians tend to plan in less detail than certain other countries 12. The object of a meeting is often to explore the arioso possibilities available at that time, in order to determine what detailed actions may need to be taken after the meeting 13.Agendas are often produced at meetings but will not, necessarily, be strictly adhered to. Some deviation is allowed if it is felt to be constructive deviation. This is viewed as pragmatic. 14. Australians like to be viewed as good team players and will try very hard to play the role. 15. Teams are best managed by somebody who wants to be part of the team, rather than somebody who wished to be seen as apart from the team. 16. A team leader should IEEE themselves the ‘first amongst equals'. 17. Australians like people to say exactly what is on their mind.Hiding your views behind diplomatic language can be seen as evasiveness. 18. Never try to ‘hard sell' things to Australians who will probably view such an approach as bragging. Such an approach will invariably backfire in Australia. 19. Humor is an oft-used communication device in Australian business circles. It is difficult to envisage many situations where the use of humor would be deemed inappropriate. 20. Business attire in Australia tends towards the formal with suits ND ties the norm for men in management positions in major cities.Appendix II Australian Society & Culture Susie Modesty Australians are very down to earth and always mindful of not giving the impression that they think they are better than anyone else. They value authenticity, sincerity, and loathe pretentiousness. Australians prefer people who are modest, humble, self- deprecating and with a sense of humor. They do not draw attention to their academic or other achievements and tend to distrust people who do. They often downplay their own success, which may make them appear not to be achievement- oriented. Mates Australians place a high value on relationships.

Role of Human Capital in Economic Development

CHAPTER ONE INTRODUCTION a)  Ã‚  Ã‚  Ã‚  Ã‚   BACKGROUND Kenya is one of the less Developed countries that are endowed with relatively good levels of resources and labor. However, there are still a lot to be done to tap those resources into viable productivity and industrialization levels. One way of achieving this is by maximizing the use of both physical and human capital. In or case we shall consider human capital. Human capital, according to Adam Smith refers to the acquired and useful abilities of all the inhabitants or members of the society. The acquisition of such talents by the maintenance of the acquirer, during his education, study or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were in his person. Those talents, as it makes a part of his fortune, so do they likewise to that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as the machine or instrument of trade which facilitates and bridges labor and which, though it costs a certain expense, repays that expense with a profit. Therefore, the greatest improvement in the productive power of labor and the greater part of the skill, dexterity and judgment with which it is anywhere directed or applied, seem to have been the effects of division of labor. Other types of capital being equally important, they can be provided with ease if the private sector and the government, through public expenditure can use the existing human capital to develop and widen the capital stock base, both in domestic production and production of industrial goods. Human capital is therefore a vital factor of production, seemingly the most prominent of all the other types of Capital. Owing to increasing population growth in Kenya, labor is not a hindrance to development. In fact, people export their workforce to the United States of America through the famous Green card lottery. There is more than this in economic development process. Explaining why less developed countries are poor, Robert L. Heil Broner, the author of the book, ‘The Economic Problem, 1970’, said that these are poor countries because they are traditional societies, that is, societies that have developed neither the mechanisms of command nor of the market by which they might launch into sustained process f economic growth. He stressed that as he examines the less Developed Countries he gets a feeling that he is encountering in the present the anachronistic counterparts of the static societies of antiquity. He considered agricultural and industrial capital not to be the only reason for low productivity and economic development. To him, an endemic cause of low par capita output and inc ome lies in the prevailing social attitudes that are vital determinant of human capital development. Typically, people of underdeveloped economy have not learned the economic attitudes that foster rapid industrialization. Instead of disciplined workers they are reluctant and untrained workers. Instead of product-minded businessmen, they are trading-oriented merchants. It’s therefore very necessary to inculcate human capital into the economy of less developed countries. b)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   STATEMENT OF THE PROBLEM What exactly is the role of human capital and other social variables in economic growth and development of an economy? In the traditional neoclassical growth models developed by Robert Solow and Trevor Swan in the 1950s, the output of an economy grows in response to larger inputs of capital and labor (all physical inputs). Non economic inputs such as human capital or human health variables have no function in these models. However, the endogenous growth models developed by Paul Romer (1980) broadened the concept of capital to include the human capital. The advent of endogenous growth models with human capital (providing externalities) is argued to have enhanced the understanding of the mysteries of rapid and long sustainable high growth performance of some developing countries. However, to establish the point whether healthy human capital was one of the important factors in explaining the economic development for east African countries including Kenya, it will be useful to analyze the actual data on these variables across the countries. This paper therefore seeks to determine if, indeed, human capital has been the factor that has caused a rise in economic growth and development in east Africa. c)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   RESEARCH QUESTIONS ?   What is the role of human capital in economic development in east African countries?    Is healthy human capital and other non economic inputs are part of the determinants of economic growth in east African countries? d)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   OBJECTIVES OF THE STUDY ?  To find out the role of human capital in economic development in east African countries. ?  To determine whether healthy human capital and other non economic inputs are part of the determinants of economic growth in east African countries. e)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   SIGNIFICANCE OF THE STUDY This study is seeking to establish the relationship between human capital and economic growth and development in east Africa. By so doing, we will be able to know with certainty whether human capital is actually one of the reasons for economic growth in east Africa, in which case the findings will be used to establish the right proportion of human capital needed to mix with other economic inputs so as to facilitate sustainable economic development in the region. It also gives an indication of the possible way to rate human capital against other inputs to the economic development of east African community. The findings of this study will help the implementation process of the east African development goals and objectives. This will be possible given the evidence of the role of human capital in economic development, as established in this study. Furthermore, this study will also shed light to east African states on whether to put much reliability on social amenities such as hospitals, schools and churches. If the study finds a positive relationship between human capital and economic development, then it is left with no much option but to improve on its social amenities and allocate more of its resources to the same. CHAPTER TWO LITERATURE REVIEW In this chapter, we will first consider past theories regarding the field of the study. This is to appreciate the various aspects that are of significance in our study as has been developed in theories. In the traditional neoclassical models developed by Robert Solow and Trevor Swan in the 1950s, the output of an economy grows in response to larger inputs of capital and labor (all physical inputs). Non economic variables such as human capital or human health variables have o function in these models. Furthermore, the economy under such a model conforms to the law of diminishing returns to scale. With these assumptions, the neoclassical growth models afford some implications to the economy; particularly that as capital stock increases, growth of economy slows down, and in order to keep the economy growing it must capitalize from the infusions of technological progress. It is well known that this type of mechanism is the neoclassical model is neither inherent nor does it strive to explain much. In economic lexicon, this simply means that the technological progress is exogenous to the system. Yet the reality is quite contrary to that, especially in East African countries which kept over the years. This implies that it is not only technology which is the main driving force accountable for maintaining such high growth performance in the economies but there are other factors which are outside the realm of neoclassical growth model. Addressing the above issues, in the mid 1980’s, a new paradigm was developed in literature, mostly due to the Paul Romer (1986), which is now commonly known as Endogenous growth models. By broadening the concept of capital to include human capital, the new endogenous growth model argues that the law of diminishing returns to scale phenomenon may not be true as is the case for developing countries. In simple terms, what this means is that if the firm which invests in capital also employs educated and skilled workers who are also healthy , then not only will the labor be productive but it will also be able to use capital and technology more efficiently. This will lead to the so-called ‘hicks neutral’ shift in the production function and thus there can be an increasing rather than decreasing returns to investment. In other words, technology and human capital are both endogenous to the system. Indeed, the advent of endogenous growth models with human capital (improving externalities) have certainly enhanced the understanding of the mysteries of rapid and long sustainable high growth performance of east African economies. Julie Turcotte & Lori Whelwel Reninson also studied on technology and human capital. They examined the effects of education, training and technology use on productivity and wages at firm level. They made innovative use of statistics in Canada’s orkplace and employee survey, which allows the linking of characteristics of workers in a firm to firm performance measures. They found that productivity is higher; the intensively the technology is used in the firm, the greater the proportion of university educated workers, the greater the participation of workers in training programs the greater the proportion of workers who get computer training the greater the firm’s ex port orientation. A key finding with important policy implications is that computer skills training can augment the qualifications of low skilled workers and consequently boost firm productivity. From the theories, therefore, we can correctly postulate that human capital has a role to play in economic development of any nation, especially the developing ones like the east African countries; Kenya Uganda and Tanzania. CHAPTER THREE METHODOLOGY OF THE RESEARCH CONCEPTUAL FRAMEWORK The methodology of carrying out this research is ideally dependent on the various aspects of human aspects such as human health, education and training. In regard to health, we shall consider the mortality rates of the three countries under study. This study will then seek to show the relationship between mortality rates and the level of economic development in the three countries. In respect to education and training, this study will use the level of education and other skills acquired through training. It will then determine the relationship between education and training and economic development for each of the three countries under study. Finally, this study will establish the overall impact of the different trends in education, training and health on economic development of each of the three countries. If we find that there is a positive relationship, then we shall be able to conclude that human capital has a role to play in economic growth and development. On the other hand, if there is a negative relationship, then we dismiss the possibility of human capital playing a role in economic development. RESEARCH MODEL The research model to be developed in this study is that which considers economic growth given by output (y) as a function of both labor and capital, but puts much emphasis on human rather than physical capital. We shall first consider the cob Douglass function given by; Q=Af (L, K): where Q is the level of output, K is the level of capital, L is labor and A is technology. Now, if we assume that the amount of labor is sufficiently provided and that technology is constant, then capital will be the determinant factor in production. If we break down capital into fixed Physical capital and human capital we get; Q=Af (L,Kp,Kh): where Kp refers to physical capital and Kh refers to human capital. Therefore, output is directly related to human capital, and we have to prove this in our study by using relevant variables. DESCRIPTION AND MEASUREMENTS OF VARIABLES The variables to be used in this model will be the two major determinants of human capital. In order t explain the point whether healthy human capital is one of the important factors in explaining the economic development for east African countries, it will be useful to analyze the actual data on these variables across the countries. Although there are many variables that can represent human capital and healthy conditions of the people of a nation, to keep the analysis simple while, at the same time, capturing the basic broad thrust of these two variables, this paper will focus on total literacy rate and life expectancy at birth. Total literacy rate will give us an overview of what we expect as the overall level of education and skill development, while life expectancy at birth will determine the level of health among the citizens of a nation. This gives the overall level of human capital which we shall relate to the level of output, growth and economic development. Life expectancy at birth refers to a measure of overall quality of life in a country and summarizes the mortality at all ages. It can also be thought of as indicating the potential return on investment in human capital and is necessary for the calculation of various actuarial measures. This entry contains the average number of years to be lived by a group of people born in the same year, if mortality at each age remains constant in the future. Literacy rate on the other hand includes a definition of literacy and census bureau percentages for the total populations; males and females. There are no universal definitions and standards of literacy. Unless otherwise stated, all rates are based on the most common definition – the ability to read and write at a specified age. Information on literacy, while not a perfect measure of educational results, is probably the most easily available and valid for international comparisons. Low levels of literacy and education in general can impede the economic development of a country in the current rapidly changing, technology-driven world. SOURCES AND TYPES OF DATA The sources of data in our study are basically the internet, lecture notes, library books and journals and magazines. We shall use available data relating to the life expectancy rates and literacy rates from the internet, government documentaries and articles. We shall also use lecture notes and library books to get the theories of scholars and adopt them in our study. The types of data will be of secondary nature. It will involve data of theories, findings by other individuals or groups, established models and empirical studies. It will also include government documentaries and public opinions as established in secondary data. DATA ANALYSIS In analyzing the data, we shall first quantify the value of each variable using the appropriate society preference schedule. We then tabulate the results, establish the graphs, evaluate the results, interpret and draw conclusions. In summary, the data analysis will involve a systematic process of putting the variables into quantifiable statistics, evaluating them, interpreting and making conclusions. This will include the use of both geometric and mathematical analysis. SCOPE AND LIMITATIONS OF THE STUDY This study will be carried out within Kenyatta university premises in a period not less than three months and not more than four. It will include visits to the library, use of Kenyatta university computers, discussions with Kenyatta university students especially from the school of economics and also consulting lecture notes, perhaps in the study room or in the hostels. There are some limitations to this study just like any other kind of study. First is the intermittent network failure in the school computers. There is also the problem of inadequate books in the library and the school policy not to allow undergraduate students to access research materials from the Africana section of the library. Worse still, is the problem of shallow coverage of the syllabus content by lecturers and the students’ tendency not to cooperate in discussions. CHAPTER FOUR INTRODUCTION The world today is very different from the one which experienced the two world wars. During the second half of the Twentieth century, considerable advancements in science and Technology, along with the establishment of broadly-based Governments and strengthening of institutions, have led to significant Socio-economic progress and improvement in the lives of a large number of people in many countries. However, there are still many others among us who are lagging behind. The current reality in the East African region is the existence of significant differences in the state of economic development among countries. For instance, when GNP per capita income is taken as an indicator of economic development (see figure 1. 1), the figures for Kenya, Uganda and Tanzania. Fig 1. 1 1999 | KENYA 1600 | UGANDA 1060 | TANZANIA 550 | 2000 | 1500 | 1100 | 710 | 2001 | 1000 | 1200 | 610 | 2002 | 1020 | 1260 | 630 | 003 | 1000 | 1400 | 600 | 2004 | 1100 | 1500 | 700 | 2005 | 1100 | 1800 | 700 | 2006 | 1200 | 1900 | 800 | 2007 | 1700 | 1000 | 1300 | 2008 | 1600 | 1300 | 1300 | 2009 | 1600 | 1200 | 1400 | 2010 | 1600 | 1300 | 1400 | Given the vastly divergent economic development among the three countries, it would be a common myth to presume that the discrepancy in development is somehow inherited by the respective groups of countries. Contrary to this general perception, it is quite an enigma to note that, this had not been the case in the past. In fact, figure 1. 1 distinctly shows that economic development measured in terms of GNP per capita in the early 2000 for these countries except Kenya was quite similar and comparable to the extent that they were below 1200 USD mark. In light of the above, the pertinent question is: what factors led to this exceptional economic development for some countries (i. e. , East African developing countries) in the last three decades? Obviously, the factors could be numerous, ranging from social to cultural, from economic policies to institution development, geographic location to opportune time. In this paper, however, rather than focusing on all these factors together, which of course is beyond the scope of this study, only the socio-economic factors, particularly the human capital dimensions, are briefly investigated across the group of countries to establish the possible role and linkage of human capital with economic development. HUMAN CAPITAL AND ECONOMIC DEVELOPMENT In inspecting the total literacy rate data for various East African countries in figure 1. 2, it is intriguing to note that even in the 1990s when most of these countries were at similar stages of economic development, Kenya was far ahead of both Uganda and Tanzania. In fact, the total literacy rates for Kenya in 1995 was as high as 78. 1 per cent, 67. 8 per cent for Tanzania and even Uganda had a rate of over 61. 8 per cent. After three decades, while Kenya and Tanzania have somewhat ameliorated their human capital, the total literacy rates are still far below 70 per cent in the case of Uganda as shown in figure 1. . During the same period, however, Kenya and Tanzania have more or less achieved the formidable task of educating most of their people. As a result, in the late 2003, the total literacy rate of the Republic of Kenya has reached 85. 1 per cent and Tanzania managed to achieve a rate of about 78. 2 per cent. Fig 1. 2 | KENYA | UGANDA | TANZANIA | 1995 | 78. 1 | 61. 8 | 67. 8 | 2000 | | 62. 7 | | 2002 | | 66. 8 | 69. 4 | 2003 | 85. 1 | 69. 9 | 78. 2 | Analyzing the health variable measured in terms of life expectancy at birth across the three groups of countries in the East African region, like the literacy rate, again a similar sort of pattern is evident among these countries. For instance, in 2000, all East African countries had a Life expectancy at birth below 50 years except Tanzania with Uganda having a figure of even much less than 45 years as shown in figure I. 3. On the other hand, during the same period, Tanzania had a life expectancy at birth well over 50 per cent with the Republic of Kenya having a figure almost 50 years (47. 98 years). In 2011, although East African countries enhanced their life expectancy to a level of over 50 years, Tanzania and Uganda, in this context, is far more stagnant, as shown in figure 1. 3. In the case of Kenya, the life expectancy rate is now in the order of over 55 years. Fig 1. 3 | KENYA | UGANDA | TANZANIA | 2000 | 47. 98 | 42. 93 | 52. 26 | 2001 | 47. 49 | 43. 37 | 51. 98 | 2002 | 47. 02 | 43. 81 | 51. 7 | 2003 | 45. 22 | 44. 88 | 44. 56 | 2004 | 44. 94 | 45. 28 | 44. 39 | 2005 | 47. 99 | 51. 59 | 45. 24 | 2006 | 48. 3 | 52. 67 | 45. 64 | 2007 | 55. 31 | 51. 75 | 50. 71 | 2008 | 56. 64 | 52. 34 | 51. 45 | 2009 | 57. 86 | 52. 72 | 52. 01 | 2010 | 58. 82 | 52. 98 | 52. 49 | 2011 | 59. 48 | 53. 24 | 52. 85 | What can one infer from the discussions so far? First of all, the empirical data overwhelmingly incarnate that, in the past decade, the three East African countries considered in this paper started with a similar state of economic development but now, in 2011, there is a marked dif ference among them on account of their per capita incomes. Kenya is now well beyond the reach of Uganda and Tanzania in 2011 in terms of economic development. Tanzania, on the other hand, is overtaking Uganda as depicted by the economic growth in terms of GDP per capita in 2011 in fig. 1. 2. Secondly, although in terms of per capita income all these countries were quite comparable in the early 2000, nevertheless, in the context of human capital and health sector development, there were huge differences among them; Kenya and Tanzania were, by far, ahead of Uganda. In the 1990s, most Kenya’s population were literate while Uganda and Tanzania still had a long way to go. Thirdly, based on the facts presented earlier, it is evident that the onslaught of East Africa developing countries’ rapid economic progress in the 1990s occurred along with their reasonably well developed and healthy human capital endowment which started to take momentum in the 1960s or even earlier. It is the view of the author that, for human capital to spawn a perceptible impact on economic development, a nation needs to have a minimum captious mass of at least 70 per cent or more literate population. What this means is that if an overwhelmingly large number of people in a country are literate, even with simple basic education as being able to read newspapers, this may open up the minds of the masses, possibly make them more enlightened workers and perhaps institute some element of discipline in them. These are, of course, some of the essential prerequisites for a large organized production to run efficiently and for leading to rapid growth. Through mass literacy, better prepared healthy workers and conducive investment friendly government policies, Kenya and Tanzania seem to have been able to furnish those essential elements of rapid growth at the very early stages of their development. And, therefore, at the dawn of globalization in the early 1980s, Kenya and Tanzania were befittingly prepared to attract large sums of foreign investments thus accomplishing rapid economic progress. On the other hand, during the same period, unfortunately Uganda was neither primed in terms of human capital endowments t large nor were its government investment policies responsive enough to allure foreign investors in sizeable quantities to trigger rapid economic growth. Thus, in a mere two decades, Uganda lagged far behind Tanzania and Kenya to the extent that any catching up in the near future by the former country to the level of the latter countries would be a very challenging onus. As shown by the GDPs per capita, Kenya still maintain s its High level of 1600 USD as it was in 1999 and Tanzania has rose fast to 1400 USD from 550 USD of 1999. On the other hand, Uganda seems to stagnate around 1300 USD. These results are due to the well developed human capital base depicted by literacy rates and life expectancies of Kenya and Tanzania in figures 1. 3 and 1. 4 respectively. What led to the divergence in human capital among nations? As demonstrated above, a well developed human capital base of a nation played an important role in economic development and, on this count, Kenya and Tanzania were far ahead of Uganda even at the early stages of economic development. A germane public policy question, in this context, is how Kenya and Tanzania managed to delude such a well developed human capital base as compared to Uganda even when the per capita incomes for all these countries were rather similar as shown earlier. In other words, for all practical purposes, in the 1990s, all these groups of nations could be contemplated as equally rich or equally poor, yet in terms of human capital development they were distant apart from each other. What led to this significant divergence in the human capital development among these groups of countries? This study argues that it is the direction of a nation’s priorities and commitments measured in terms of actual resources devoted towards the education sector that led to such differences in human capital among the groups of countries. Since independence and now in the new millennium, however, the disparities in per capita expenditure on both education and health between the three countries are staggering. For instance, data from CIA world fact book shows that the Kenya’s government spending on education as a percentage of GDP in 2006 was 7%. Uganda’s spending on education as a percentage of GDP was 3. 2% in 2009 while that of Tanzania in 2008 was 6. 8%. The world fact book’s data government’s spending on health in the last decade also shows that Kenya spends more as a percentage of GDP as compared to Tanzania and Uganda. Kenya’s spending was 12. 2%, Uganda’s spending was 8. % while that of Tanzania was 5. 1%. These data show that Kenya spends more of its GDP on health and education than any other east African country. Therefore, it is correct to say that a country which is committed to providing education and good health to its citizens is able to make use of its human development in an economically productive manner, hence raising its GDP per capita and its economic growth and development. CHAPTER FIVE GESTATION PERIOD FOR HUMAN CAPITAL INVES TMENT Given the acceptation of human capital investments towards Economic development, a pertinent question is whether the time taken or the gestation period of such investments to proliferate intended Impact in terms of literate skilled workers is comparable to that of physical infrastructure investments such as roads, highways and hydroelectric dams. It needs to be underscored that, while the physical infrastructure investments may ordinarily take a long time to be completed, however, the impact period for human capital investments could be even longer if it is to forge results. Not only that, while it may even be possible to abbreviate the gestation period of physical infrastructure investment by apportioning more resources through borrowing or foreign aid, the same cannot be said for human capital. Notwithstanding of the size and pace of human capital investments, it will necessitate a fixed number of years (say five years for a primary high school or eight years for secondary education) to shape a generation of educated and skilled labor force. Another important distinction between physical infrastructure and human capital investments is that the former type of investment customarily requires one-time capital expenditures while the latter category enjoins investments on an interminable basis. For instance, once a hydroelectric dam project is completed, it is expected to generate electricity for a long time without entailing future heavy capital expenses. On the other hand, to mould a generation of educated workers will entail investments in human capital on an incessant basis. Thus, the return of the social sector investment is a long term continuous proposition and, therefore, its affiliation with economic growth and development should be delved and analyzed within a framework which has a longer perspective. This proposition is also empirically substantiated by the author for Pakistan in two other earlier studies (Pasha, Hassan et al, 1996a, and 1996b). Based on a large, over 200 equations dynamic econometric model of Pakistan, the findings of these studies insinuated that a shift in the investment priority to social development (i. . , education sector) would entail enduring positive impact on economic growth but with long lags of about eight years. The results of the studies further suggested that, in the short to medium term, the impact of human capital investment on economic growth for the country may not be noticeable; however, after the critical time period of eight years the economic growth for the country will be substantial and long-lasting. CONC LUSION How relevant is this study to public policy? First of all, the study empirically found out that in the past decade, among other things, the east African nations broad based healthy human capital (such Kenya and Tanzania) grew faster than the ones with less human capital investment (such as Uganda), where the elements of human health were missing. Thus, the empirical results in this study corroborated the premise that there is an important link between healthy human capital and rapid economic development of any country. This link can be illustrated mathematically by deriving the cob Douglas function and modifying it to include the aspect of human capital. In this sense, we take a country’s GDP represented by its output Q as a function of labor, human capital and physical capital. The function is represented by the linear equation; Q=Af (L,Kp,Kh): where Kp refers to physical capital and Kh refers to human capital. Therefore, output is directly related to human capital, just as the results of our study have shown. Secondly, the study also found that, under similar economic Predicaments with comparable per capita, Kenya and Tanzania were investing far more in human capital and health sectors on a per capita basis than Uganda. This result substantiated the point that it is the commitment and priority of a nation rather than other economic factors alone that led to more economic growth and development in Kenya and Tanzania as compared to Uganda. Even when they were all equally endowed with resources, and in fact Uganda was doing better in earlier years than Tanzania in terms of GDP per capita, but is now lagging behind. Thirdly, it is important to acknowledge the fact that there is a distinction between investments in human capital versus physical capital. The finding of the study, in this context, upholds the view that, while it is possible to cut down the gestation period of physical infrastructure the same outcome, however, may not be possible for human capital investment. Unlike physical infrastructure investment, human capital development investment is a long term as well as continuous proposition. Commitment and public policy are very simple and unpretentious. In the 1990s, most countries in the east Africa were remarkably analogous in terms of their economic development. However, at the dawn of the new millennium, although Kenya and Tanzania have made some economic progress, these countries are still attributed to their earlier copious investments made in human capital. What policy options and choices are available to the Uganda under the prevailing circumstances to improve economic development and to catch up with the other east African countries? It is the view of the author that it will have to adopt similar policy options that Kenya and Tanzania did in the 1960s – that is, to deeply commit and heavily invest in human capital development. This study has shown that there is no shortcut procurable in terms of educating the masses of a nation and in the event these countries demonstrate any laxity in building up a broad human capital base sooner than later. This is likely to be a recipe of postponing the impending quagmire to a future date. REFERENCES Hafiz Pasha, M. Aynul Hasan, Aisha Ghaus and M. Ajaz Rasheed, Pakistan†, Pakistan Development Review – 579. , 1996b. â€Å"An integrated planning model and expenditure on social development: the case of Pakistan,† 2) Romer, Paul, 1986. Increasing returns and long-term capital†, Journal of Political Economy, Vol. 94, pp. 1002-1020. Wishart, M. D. , Principles of Microeconomics, 4e, 2005. Stamford, Thomson publishing. Robert, L. H. , The Economic Problem, 2e, 1970. New Jersey, Englewood. http//:www. ciafactbook. com http//:www. gisdevelopment. net Republic of Kenya (1965). African Socialism and its Application to Planning in Kenya, Nairobi. Governmen t press. Todaro, M. P. , Latest edition, Introduction to Economics for a Developing World. Oxford. Chapter 24. Role of Human Capital in Economic Development Introduction Our research topic is to analyze the relationship between human capital and economic growth. Economic growths important determinant are physical capital, labor and human capital. But from the recent trend of world economic growth, we found that human capital is playing a key role by taking the place of material capital and labor. Human capital is intimately related to growth as it increases the nation's capacity to produce goods and services. It also creates more Job opportunities and lifts the living standards of a country through increase in income levels.Human apital deals with individuals who learn special skills and knowledge trough education at school, training and experience in the labor market (Barro et al, 2000). However, Economic growth refers to the increase in the amount of the goods and services produced by an economy over time Cones, 1996). As a result of their skills and education, productivity level would increase because educated workers would work at a faster pace than less educated workers Human capital refers to the knowledge and skills embodied in people.It is widely recognized that some types of human capital are obtained through experience or nteractions with others and with formal education. Human capital is intimately related to the economic growth. Masses believe that capital means a bank account, stock or factory plants in the industrial area. These are also a type of capital that they are assets that increase income and other useful outputs over long periods of time. But such tangible forms of capital are not the only type of capital.There is another very important type of capital known as human capital. It implies to Schooling, a computer training course, expenditures on medical care, and lectures on the virtues f punctuality, expertise and honesty. It is because these factors are also contributing to raise earnings, improve health, or over all increasing the economic growth rate. Therefore, economists regard spending o n training, medical care, education and so on as investments in human capital.They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets. The notion of human capital arose out of the awareness that physical capital alone was not enough to explain long term growth. Many social indicators such as educational enrolments and life expectancy became combined in a common term: human capital. Often, human capital is implicitly referred to as formal and informal education.Yet, it can also contain factors such as the costs of raising children, health costs, and ability. Significance Economic gr n depends on many tactors such as the quantity and quality ot education, how education can impact on fertility rate, government policies to sustain incentives for human capital, a reduction in the cost of technology adoption and increase expenditure on education. Education and other aspects of human capital is important to economic growth because more educated individuals tend to have higher employment rate and earnings and produce more output relative to those who are less educated.Education is considered as a positive investment that allows individuals to be equipped with knowledge and skills that can improve their employability and productive capacities that would lead to higher earnings in the future and hence, economic growth. Moreover, it has shown that it is not only the amount of formal education that matters, but also that the type of knowledge ossessed by labor in a region also plays a key role in determining the level of economic activity.There are various type of education having there own effect on the economic growth such as skilled based education primary education specialized education higher education and education to develop entrepreneur skills, the more the entrepreneurs are in a country, more the business will flourish in that country . As a result, the countrys economy will rapidly grow. The continuing growth in per capita incomes of many countries during the nineteenth and twentieth centuries is partly due to the expansion of scientific and echnical knowledge that raises the productivity of labor and other inputs in production.And the increasing reliance of industry on sophisticated knowledge greatly enhances the value of education, technical schooling, on-the-Job training, and other human capital. New technological advances clearly are of little value to countries that have very few skilled workers who know how to use them. Investment in human capital is long term as compare to the investment on physical capital. It is also a continuous process unlike investment on physical capital. But the outcome of human capital is much greater than other investment. In past decades the healthy human capital countries grew faster than the one where these factors were missing.Economic growth closely depends on the synergies between new knowledge and human capital, which is why large increases in education and training have accompanied major advances in technological knowledge in all countries that have achieved significant economic growth. The outstanding economic records of Japan, Taiwan, and other Asian economies in recent decades dramatically illustrate the importance of human capital to growth. We are going to support the positive orrelation of human capital and economic development by reference on some previous conducted researches.Maudos, Pastor and Serrano aimed to find the role of human capital in the productivity gains of OECD countries form 1965-1990. There research supports the correlation of human capital and economic growth. Their findings suggest a positive the link between human capital and economic development. They concluded that human capital not only is an additional input in the production formula but also is a catalyst for technical change. Thus, the estimation of a stochastic tran slog production unction shows a statistically significant product elasticity of human capital, and non- parametric techniques confirm its significance as input.Xu, Qi came to conclusion in the research conducted in 2008 that human capital is contributing towards Total factor production (TFP), which is contributes directly to economic development. They concluded that human capital had lower impact in technologically strong provinces compared technologically backward provinces. We have seen that human capital have an impact on the growth rate. But there is various composition of human capital. Various composition of human capital has different impact on the economic growth. Role of Human Capital in Economic Development Our research topic is to analyze the relationship between human capital and economic growth. Economic growths important determinant are physical capital, labor and human capital. But from the recent trend of world economic growth, we found that human capital is playing a key role by taking the place of material capital and labor. Human capital is intimately related to growth as it increases the nation’s capacity to produce goods and services. It also creates more job opportunities and lifts the living standards of a country through increase in income levels.Human capital deals with individuals who learn special skills and knowledge trough education at school, training and experience in the labor market (Barro et al, 2000). However, Economic growth refers to the increase in the amount of the goods and services produced by an economy over time (Jones, 1996). As a result of their skills and education, productivity level would increase because educated workers would work at a fast er pace than less educated workersHuman capital refers to the knowledge and skills embodied in people. It is widely recognized that some types of human capital are obtained through experience or interactions with others and with formal education. Human capital is intimately related to the economic growth. Masses believe that capital means a bank account, stock or factory plants in the industrial area. These are also a type of capital that they are assets that increase income and other useful outputs over long periods of time. But such tangible forms of capital are not the only type of capital.There is another very important type of capital known as human capital. It implies to Schooling, a computer training course, expenditures on medical care, and lectures on the virtues of punctuality, expertise and honesty. It is because these factors are also contributing to raise earnings, improve health, or over all increasing the economic growth rate. Therefore, economists regard spending on training, medical care, education and so on as investments in human capital. They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be  separated from their financial and physical assets.The notion of human capital arose out of the awareness that physical capital alone was not enough to explain long term growth. Many social indicators such as educational enrolments and life expectancy became combined in a common term: human capital. Often, human capital is implicitly referred to as formal and informal education. Yet, it can also contain factors such as the costs of raising children, health costs, and ability.SignificanceEconomic growth depends on many factors such as the quantity and quality of education, how education can impact on fertility rate, government policies to sustain incentives for human capital, a reduction in the cost of technology adoption and increase expenditure on education. Education a nd other aspects of human capital is important to economic growth because more educated individuals tend to have higher employment rate and earnings and produce more output relative to those who are less educated.Education is considered as a positive investment that allows individuals to be equipped with knowledge and skills that can improve their employability and productive capacities that would lead to higher earnings in the future and hence, economic growth. Moreover, it has shown that it is not only the amount of formal education that matters, but also that the type of knowledge possessed by labor in a region also plays a key role in determining the level of economic activity.There are various type of education having there own effect on the economic growth such as skilled based education primary education specialized education higher education and education to develop entrepreneur skills, the more the entrepreneurs are in a country, more the business will flourish in that coun try. As a result, the country’s economy will rapidly grow.The continuing growth in per capita incomes of many countries during the nineteenth and twentieth centuries is partly due to the expansion of scientific and technical knowledge that raises the productivity of labor and other inputs in production. And the increasing reliance of industry on sophisticated knowledge greatly enhances the value of education, technical  schooling, on-the-job training, and other human capital.New technological advances clearly are of little value to countries that have very few skilled workers who know how to use them. Investment in human capital is long term as compare to the investment on physical capital. It is also a continuous process unlike investment on physical capital. But the outcome of human capital is much greater than other investment. In past decades the healthy human capital countries grew faster than the one where these factors were missing. Economic growth closely depends on the synergies between new knowledge and human capital, which is why large increases in education and training have accompanied major advances in technological knowledge in all countries that have achieved significant economic growth.The outstanding economic records of Japan, Taiwan, and other Asian economies in recent decades dramatically illustrate the importance of human capital to growth. We are going to support the positive correlation of human capital and economic development by reference on some previous conducted researches.Maudos, Pastor and Serrano aimed to find the role of human capital in the productivity gains of OECD countries form 1965-1990. There research supports the correlation of human capital and economic growth. Their findings suggest a positive the link between human capital and economic development. They concluded that human capital not only is an additional input in the production formula but also is a catalyst for technical change.Thus, the estimation of a s tochastic translog production function shows a statistically significant product elasticity of human capital, and non-parametric techniques confirm its significance as input. Xu, Lai, and Qi came to conclusion in the research conducted in 2008 that human capital is contributing towards Total factor production (TFP), which is contributes directly to economic development. They concluded that human capital had lower impact in technologically strong provinces compared technologically backward provinces.We have seen that human capital have an impact on the growth rate. But there is various composition of human capital. Various composition of human capital has different impact on the economic growth. There can be different composition of human capital agriculture human capital (AGR); high-tech  human capital (TECH); business and service human capital (SERVICE); the humanities human capital (HUMAN); and health and welfare human capital (HEALTH). These divisions are done by Chun-li Tsai, Ming-Cheng Hung, and Kevin Harriott in their research conducted in 2010. They concluded that, secondary education is a large contributor to economic growth in developing countries than it is in developed countries.However, they find tertiary education also plays an important role in economic growth equally for both developing and developed countries. The findings also indicate high-tech human capital is positively correlated with economic growth. It indicates that a country should promote greater enrolment in high-tech fields of study, that is, the percentage of tertiary graduates in science, engineering, mathematics and computer science is an important indicator of high-quality labor-force. It provides skilled and specialized labor to work with hi technology.Daren A. Conrad conducted a research on four Caribbean countries; he divided them in two groups according to the nature of the development. he concluded that countries with high development status in Caribbean which are Barbado s and Trinidad & Tobago. The human capital contribution in these countries is high towards economic development in all sectors. However, in less developed countries which includes (Guyana and Jamaica), the human capital contribution is low in tertiary sector because in these countries the human capital is not very much developed because of lack of resources on education compared o developed countries. In the end this research paper does give concrete reasons of dependency of economic development on human capital.Teixeira and Fortuna (2004) in their research paper made a conclusion that the main estimation results emphasize that human capital stock and internal innovation capability (internal stock of knowledge) are important in explaining Portuguese productivity during the period of study which is from 1960 to 2000.Nazneen ahmed and Joseph French had shed light on the casual relationship between growth rate and human capital in developing countries such as Bangladesh. Their studied the Bangladesh economic growth in relation with its human capital. Bangladesh, like other developing nations, depends upon  production processes that are largely labor intensive. according to Nazneen Ahmad and Joseph French, These results indicates that increases in human capital have a propensity to follow increases in per capita GDP and at the current state of the economy, emphasis on secondary and higher secondary education should be a priority for Bangladesh.Secondary and higher secondary education are imperative because of the labor-intensive nature of the Bangladeshi economy. Again this research gives importance to the composition of human capital and type of education imparted to the labor. Skills acquired from secondary and higher secondary levels of education are in utmost demand and as their results show, contribute considerably to economic growth in Bangladesh.Musila Jacob and Belassi Walid in their research emphasized on the fact that government expenditure on the huma n capital can be an important determinant to analyze this relationship of human capital and economic growth. Government expenditure on education would also have an impact on the economic growth. Moreover investment on growth can be represented as the investment on the human capital. As government will spend more on educating the human capital, more will be the skilled labor to positively contribute towards the economic growth of the country. Author investigated that the increase the government expenditure on the education would increase the economic growth. That the average education expenditure per worker positively correlates with the economic growth.LR test indicate that education expenditure in the model are weakly exogenous, suggesting therefore, that they drive economic growth. Government expenditure on education in the long term investment to increases the economic growth of the country. This research clearly proves the point that how human capital contributes to economic gro wth.Ruth Judson in 1998 tried to find answers to two questions. First, does investment in education help growth; second, does the allocation of investment in education matter? He came to conclusion that if allocation is the done in organized manner in different levels of education, then countries can gain more from human capital.He is trying to make a point that that human capital speeds up the economic development so it is  necessary that one develops them in best possible manner by allocating appropriate investment in different levels of education. He says that basic education is most important as it lays foundation for further education, so it can be concluded that, countries should emphasis greatly on basic education in order to gain maximum for human capital as human capital is catalyst for economic growth.â€Å"Education is empowerment. It is the key to establishing and reinforcing democracy, and development, which is both sustainable and humane. It is also the only avenue for a lasting peace founded upon the mutual respect and social justice. Indeed, in a world in which creativity and knowledge play an ever-greater role, the right education is nothing less than the right to participate in the modern world.†(UNESCO, 1998).Vladmir tries to prove this relation by using two models. He uses Lucas model and Nelson-Phelps approach. The Lucas model establishes that the driving force behind economic growth is the rate of accumulation of human capital. On the other hand, the Nelson–Phelps approach considers that high levels of human capital increase the capacity of individuals to innovate (by discovering new technology) or to adopt new technology. Thus, again it can be said that human capital is one of the major pillar of economic development.Abel J.R and Todd M.Gabe in their research prove empirically the dependence of economic growth on human capital. By using educational attainment as an indicator of human capital, it is found that a 1 percenta ge point increase in the proportion of residents with a college degree is associated with about a 2% increase in US metropolitan area GDP per capita.ConclusionThrough above discussion it can be clearly claimed that there is a positive relationship between human capital and economic development. They both are directly proportional to each other; weak human capital would slow down the economic growth. On the other hand, strong human capital would accelerate  the economic growth. Human capital is very important to nation’s development and it cannot be neglected.Neglect of human capital would negatively impact the economic growth. Furthermore, it can be said that it is important to invest on basic education as it lays foundation for other important skills and further education. Human capital is a resource on which countries build and it should be polished as economic growth is dependent on skilled human capital.