The decision of China’s policy makers to tweak the exchange rate of the country against the dollar leads to several reactions across the different global economies. This event occurred in August which started off a chain reaction of uncertainties in the global market and reactions in the currency market as well.
Many might wonder whether the currency war is the solution to all problems. Those who define the policies that influence the global economy seem to think that keeping the currency weak is the only way to propel the global economy forward. This was one of the overall findings that emerged from the discussions held at the bi annual meeting of the International Monetary Fund which was held in Peru recently.
Findings that raise concern are:
- The policy makers agreed that if an exchange rate is deprecated around ten percent, that will lead to a rise in exports and export related earnings, which will help to add on about 1.5 percent to the output of an economy.
- The re-evaluation of the renminbi of China was not around ten percent, but the weakening of the rate by three percent seemed to have a large effect on the global economy. However, this step that the China’s policy makers took was one of the biggest ones that has been taken over twenty years.
- The cut of the exchange rate by China was seen as a move that will force the corresponding and neighboring economies to retaliate so that they can boost a sagging growth rate.
- It is a known principle in economies that when a currency rate is devalued it is in an attempt to make its goods seem cheaper and more attractive to foreign buyers. When an economy’s growth rate is flagging, it is a great step to boost the GDP of an economy.
There is no denying the evidences shown by history where exchange rates have been made weak by developing nations in order to make their goods and services seem more competitive. It also helps to protect the shares of export in the global economy as one can undercut rival countries and exporters.
Debate on the way forward
For IMF, it has always been a focus on the reform of tax policies, ways to boost investment and freeing up markets of labor across the world. However, in this particular scenario, as pointed out in the article called Policy Makers are Confused about the Way Forward, the stuttering signs of the economy might not be resolved by simply making the exchange rates weaker. Most policy makers feel that it is a way of seeking easier alternatives to structural reforms that certain economies need. These reforms will come by when the right directives are given so that investment is boosted in the economies which will propel the demand cycle globally. This is also in accordance of the World Bank’s report, which goes against the weakening of the currency rates as it feels that the current global economic state of affairs will not be helped by this kind of a situation.
Today there are several students who are taking up the challenges and risks of starting up new ventures and startups. They are participating in finance as well as insurance jobs as well as in services related to the technical sector. For those who are on the verge of choosing a career and wondering how the global scene will influence careers in the near future, need not worry about facing stagnation in a career in finance.
Study findings at a premium university
There was a study conducted at Princeton University that showed that employees have increased about 200 percent of the alumni network of the university. Of the classes that graduated between the years 2006 and 2010 the technical services as well as professional and scientific jobs increased rate of hiring from seven to nine percent. The number has nearly doubled between the year 2011 and 2014. The rates of employment in insurance and finance held steady around eleven to twelve percent over the last five years. The choice of these sectors has gone down among the graduates, with only nine to fifteen percent choosing to work in finance related sectors. That is as per the data collected by the career services of the University.
Changes in career preferences
The directors of the university point out the change of preferences in graduation subjects among students from 2011.
- There are students who take up specializations for consulting and finance, but they are not the majority percentage any more. As Princeton is a revered university, most financial companies recruit from the campus and hence the demand of the companies is already known among the students who comprehend and choose their specializations accordingly.
- The main change that has come from being in the interest in startups. Most students are looking at being entrepreneurs and are concentrating on technology oriented startup ventures. The companies that belong to the scientific, technical and professional sectors are able to attract more of the youngsters due to the creative opportunities that lie which can be explored by these young minds. The college graduates are looking forward to doing meaningful work than simply doing a job from nine to five.
- Today the tech companies and startups have increased and occupy a larger economic space in any country, especially the developed ones. With innovation, showing returns within a short time frame, more and more graduates are interested in exploring novel initiatives.
- The other attraction is the ability to take on a responsible position early in one’s career. With an entrepreneurial role, youngsters are able to explore higher job responsibilities and gain job satisfaction, faster than in a strait jacket corporate scenario.
With startups being successful more often, many are willing to take the risks as against the comfort and security of a corporate job. However, with the global economy growth rate being a sign of concern as seen in the article on policy makers uncertain about the way forward, there might come a time when the startups flicker out in growth prospects and profits too soon and leave the young entrepreneurs turning to the corporate offices for the traditional job roles.