The Distributional And Encompassing Coalitions Politics Essay

The Distributional And Encompassing Coalitions Politics Essay Introduction In our term paper we would like to analyze some well-known theories and also combine them with real life examples to have a comprehensive overview of whether the theories are applicable to real life and how accurate they are. For the theme of our paper we decided for the topic interest groups. Based on this topic, we further decided to use Mancur Olsons theory of special interest groups, which he precisely described in his famous book The Rise and Decline of Nations. In the first part of our paper we will mainly focus on providing general information and insights into the Olsons theory and we will also take a general look at the framework of the car lobby itself. In the following part of our paper we will discuss the ex-ante predictions regarding the success or failure when it comes to specifically selected lobby groups, based on Olsons theory as well. The final part offers a brief introduction to the particular car lobby group ACEA and also analyses the actions and influence of the lobby group. The question whether the theory is consistent with our real life example is broadly discussed and advocated as well. 1. Introduction to the Theory In this chapter we will present the theory we will use in order to conduct our case study on the influence and impact of special interest groups on government decisions. We define special interest groups as a coalition of individuals or representatives trying to gain influence on the political environment. In order to have a collective impact on a particular matter they develop access strategies to reach the decisive officials and legislators. Precisely, we will set a framework of a social coalition theory based on Mancur Olsons theory of special interest groups and their collective action in pursuing a common goal, published in his book The Rise and Decline of Nations. We will then apply this framework on the car lobby. The car lobby is considered to have strong internal connections to political officials as they are equipped with a vast number of resources and backed by the politically crucial automotive industry. We will focus on the European Automobile Manufacturers association (ACEA), which is one of the most important car lobbies in the European Union. ACEA is a representative association of the automotive industry with great impact on decisions made in Brussels. It reflects the interest of the car industry in most European Countries. We will analyze its access and impact strategies on EU institutions and their influence on democratic decision procedures. Furthermore we examine how their actions affect the total soci ety. In order to introduce Olsons theory of special interest groups, it is essential to know the underlying assumptions and problems Olson describes. Given Olsons assumption of rationality of individual behaviour, a social group may fail to achieve collective action. That is, that the group may fail to achieve its common goal. In our case it would mean the group is not able to have an influence on political decisions. To some extent it is individually rational to not take part and contribute in the groups action as it involves personal costs. It is rather rational and self-interest maximizing to withdraw from the action but to benefit from the groups outcome. Clearly, if every individual in that group is assumed to be rational the groups goal would not be achieved. Especially groups with increasing size are likely to face problems of collective action (free-riding) as group members can hardly be monitored in their individual contribution and not be excluded from group benefits. Small groups in contrast, consisting of individuals with homogenous preferences are likely to achieve a common interest. According to Olson, the presence of selective incentives, i.e. frequent interactions within the group, the ability to monitor, punish and reward individual behaviour increases the likelihood of collaboration and overcoming the collective action problem. Therefore, groups with relatively smaller size are privileged to groups larger in size. Although not a particular problem under examination in this case study it is important to mention the collective action problem. It is the underlying obstacle of a groups formation and has to be overcome in order to have an influence on decisions. However, besides overcoming the collective action problem, it is of special interest for us to examine and analyze how interest groups, here applied to the ACEA, gain access and increase impact on political decision procedures and the societies welfare as a whole. 2. Types of Coalitions 2.1. Distributional and Encompassing Coalitions According to Olson, the degree of influence of interest groups and as a result the impact on the societies welfare depends on the type of coalition in existence. He introduces the concept of coalitions called distributional coalitions and encompassing coalitions. Both types of coalition try to gain access to the political environment. In the valuation part of a real life example of an ACEA action we will evaluate to which coalition the ACEA may belong to in order to conduct a proper analysis of their influence and especially about their impact on the society. Distributional coalitions are special interest groups that only represent interests of a small number of firms. The representatives of these groups try to maintain and strengthen the companies market position by supporting protectionist and even monopolistic legislation procedures. Such protectionist measures could be tariffs, taxes or non tariff barriers imposed on market competitors which negatively affect an efficient allocation of recourses and may support inefficient economic segments. This type of interest group will heavily oppose technological progress as it might be harmful to its own position. Thus, the outcome of such penetration of political decisions is disadvantageous from a societies point of view. Successfully influenced legislation will be heavy in favour of a small number of individuals that only make a fraction of the society. But the society as a whole will face a decrease in economic output due to a lack of technological progress and even stagnate over a longer period of time. Distributional coalitions occur especially in the presence of politically stable democracies. They will form in huge numbers all across the society and will grow in size over time. Therefore, they will accumulate power and increase their degree of influence and access on political decision making. With an increasing number of distributional coalitions the political environment will be distorted and a social welfare maximizing outcome of political decisions is highly unlikely. Clearly, these coalitions try to redistribute wealth and income within the interest group leaving the society worse off, as the total welfare decreases. On the other hand, the counterpart of distributional coalitions is encompassing coalitions. The nature of encompassing coalitions is that they do not restrict their actions to the interests of a small number of individuals or firms but rather reflect the interests of the broader society. According to Olson, encompassing coalitions influence political decisions in a way that is beneficial to the society. Since their interests correspond with the broader interests of the society, comprehensive bargaining about legislation will lead to efficient political outcomes (Rosser, 2007). In contrast to distributional coalitions, encompassing coalitions foster technological progress and economic growth. Thus, their actions and impact on political decisions increase the welfare of the whole society. In conclusion of the theory part, based on Olsons special interest group theory, we defined two types of coalitions. Both coalitions, distributional and encompassing, try to gain access and impact on legislation procedures. Distributional coalitions represent the interest of a small number of individuals and rather oppose technological progress, hence, slow down economic growth. Encompassing coalitions reflect the interest of the broader society, hence; rather increase the welfare of the society. 3. Ex-ante predictions 3.1. Olsons framework on EU car lobby Considering the previous definitions and analysis on Olsons developed theory about the influence of interest groups on different realities and its impact in governmental decisions, as well as, the defined framework of the EU car lobbying which is mainly led by ACEA. It is now the purpose of this section to predict the outcome of ACEA actions in the EU political environment based on the theory. In order to achieve our purpose we might first set up some considerations on our previous analysis. First of all, we have to bear in mind that it was never Olsons goal to study the impact of particular organizations or a group. It was, instead, an attempt to highlight the role played by several interest groups in the economic development of a country as a whole. Therefore he did not trail a specific framework which would be possible to apply to a particular organization or group, although his work is accurate enough to study the outcome of any lobbying activity in its broader sense. Focusing now on the car lobbying role, we might also underline some important features of this organization regarding its history, experience, resources and internal decision-making process, some of them already described before. These features might influence the outcome of its actions under the analysis of Olsons model. When referring to automobile industry we immediately link it with a high level of complexity and regulation. Here we might wonder if that is the result of political and social evolution itself or if it may be connected with some kind of external force (interest group coalition) which influences the market outcome. It is our aim now to understand whether or not there are conditions in the car industry to the establishment of a coalition which is strong enough to influence political decisions on related matters. 3.2. Car industry and interest groups coalitions Olson identified a main requirement, to the appearance of successful interest groups: the maturity level of a certain industry. When considering this point we easily realize that automobile manufactures and all its stakeholders have been interacting for long enough to derive some successful coalition actions. Olson supported this direct relation between industry maturity and the success of interest groups action with some empirical evidence on US market. For that reason we are lead to undertake the US market as a benchmark (due to several similarities with EU system) and then conclude that it might also be the case that car industry is in a well-developed position to set off some thriving coalitions. Apart from industry maturity, so far we dont have enough information which leads us to conclude if ACEA is a distributional coalition or an encompassing one. In order to do so, we have to analyse some of the car industry background. As any other market operating industry, companies withi n the car industry can be considered rational. Therefore they will be profit-maximizers. If so, an association like ACEA, which is willing to increase companies benefits, might above all care about the impact of certain decisions for companies and not really be concerned about the outcome for society as a whole. Unless we argue that an increase in society surplus due to certain decisions will increase companies benefits. We have found the first reason why we should look at ACEA as a distributional coalition as defined in the previous section. It is also true that there are better conditions for an interest group coalition to arise and to be successful in a stable economy. Despite that, it works even better in a democracy where the de facto political power is closer to a centrist orientation rather than the extremes of laissez-faire or a socialist command. It is actually the case of the European Union. Another argument which may be crucial in our approach is that it is more likely that some groups goals prevail when the opposition, even if it exists, is not sufficiently strong to offset others damage, which will make them suffer in silence. Altogether it would lead us to conclude that ACEA, as the major car lobbying player, is closer to be a distributional coalition rather than an encompassing one. Even though it is not our main focus here, we might also refer the adoption of this framework is not consensual in the field. Some experts would be against what we are arguing here, mostly because it is not guaranteed that car lobbying activities have only negative effects in societys view. At this point it is fair to mention that some might consider lobbying activities as a way to undertake more openness and competitiveness in the political system which would lead to more transparency in EU (Schendelen, 2002). We could also support this idea in the sense that lobbyists bring out facts about political matters mainly through the media. The reason to mention this argument here, is to ensure that we do not exclude the possibility of some positive effects in further analysis of the actual ACEA activity. Bringing together our reasoning we might be in a position to set up some predicted impact ACEA may have towards political decisions in EU. This is our goal for the next subsection. 3.3. Expected ACEA impact In pursuing our attempt to apply Olsons framework to car lobbying in the EU, it seems logical to argue that car lobbying actions might be strong enough to influence political decisions on this field. Every coalition which may arise within this market segment (e.g.: ACEA) will then be the reason for time-consuming political decisions throughout crowded agendas and bargaining tables. It is expected that ACEA will achieve that by finding some means of communicating directly with EU representatives. That kind of action is also likely to involve high amounts of money due to the necessity of qualified people who work with complex regulation and try to persuade politics. For that reason ACEA will only be successful if it is able to aggregate high amounts of contributions from the biggest companies in the industry. If it happens to be so, this pressure would somehow be able to slow down societys ability to move towards more efficient technologies and to reallocate resources (e.g.: alternatives to oil market or more efficient energy-using technologies, however we will have some deeper analysis into these results in the next section). Once big enough, this distributional coalition could have its well-noticeable impact in the rate of economic growth. Thus, we could also mention that the build up of this distributional coalition would increase the complexity of regulation in areas related with car industry. In its extreme upshot it would by some means influence the course of social evolution. 4. Analysis and empirical evidence We will focus our analysis in the field where the ACEA plays its higher stakes: the negotiations for the reduction of CO2 emissions by automobile vehicles. Particularly, we intend to highlight ACEA evolution and its impact on the quality of policy making by the European Commission in the last two decades. Then, we intend to figure out if there is a link between this groups actions regarding the topic and the European Union performance in technological development, more specifically the move towards a greener and more fuel-efficient society. But first, its important to provide a brief characteristics description of this particular interest group. 4.1. ACEA a heavyweight special interest group The European Automotive Manufacturers Association ACEA, is well-known and highly respected Economic interest Grouping within the Europe. ACEA was established in 1991 with Brussels headquarters, Secretariat and Secretary General. Later ACEA also opened two other offices in Beijing and Tokyo even though the main purpose was to advocate the car manufacturers rights and interests on the highest European level possible. Today ACEA has significant importance and voice because it is gather 18 big and powerful car, truck and bus manufacturers such as BMW Group, GM Europe, Volkswagen, IVECO, Renault, Jaguarà ¢Ã¢â€š ¬Ã‚ ¦ The automotive industry itself is a vital part of European Union economy, the ACEA members alone contribute every year roughly 20 billion euros into research and development, claim 42.8 billion on net exports and deliver taxes on approximately 3.5% of the European Union GDP. Surprisingly for such a significant lobby group, the organization of the ACEA is quite simple. The main organ is the Board of directors. Each member of the directors board is also a CEO in a company, which is a member of ACEA. The board of directors is the decision-making organ and selects a President on an annual basis. Decisions are taken into force by the Joint Committee, which is represented by senior executives of the member companies. In the case of particular issues, there is also available a specialized Committee to discuss and help on the issues. Apart from these organs, there are also more than twenty specialized working groups working for the ACEA, who are responsible for technical expertise and advisory. Every member of the specialized working group is an expert in his field and works for the member company. The general and main purpose of ACEA is to be included in these activities with European Union: 1.To have a constant dialogue with European Union and all the other organizations influencing the automotive industry; 2.Cooperation with all the responsible and decision-making organs in order to offer the industry knowledge and expertise, which ACEA has. To provide relevant opinions and suggestions to the policy makers; 3.To provide valuable partnership within the whole organization as well as to offer partnership to other interdependent industries, in order to achieve the mutual beneficial policies; 4.To provide strategic reflection on the current and future completion within the industry and on corporate responsibility; 5.To communicate the importance and activities of the industry, also to communicate the acquired data, information and expertise. 6.To monitor all the activities and threats which might influence the industry and afterwards properly respond to them or cooperate with the stakeholders. 4.2. Analysis of real-life outcomes 4.2.1. The growing size of the group Taking a closer look at this groups evolution along the last decades, we conclude that its rate of growth in terms of size and influence has been staggering. Having as a predecessor the old CMCC (Comità © des Constructeurs du Marchà © Commun), founded in 1972 and consisting of seven members, the ACEAs number of members in 2005 was two times bigger. In September 2012, the organization comprised 18 different automobile manufacturers. What can explain this phenomenon? Since the CMCC times we can perceive this interest group as an umbrella association. This kind of groups provides resources and often an identity to the smaller organizations that are part of it. In this kind of arrangement, the umbrella organization is to some degree responsible for the groups under its care. Economies of scale, a better pool of experts and experience, shared apprenticeship and exchange of know-how are some factors that theoretically attract more groups, enhancing the ability for smaller organizations and companies to influence the politic-process in a legislation negotiation context. An important point is that it is harder for a single organization and also smaller lobby groups operating outside large established lobby groups to get their voice through in this matter. In practice, it is more often the ACEA that stands for the press-releases and statements in the media, but what the ACEA does do and say is a product of the discussions within the organization by smaller organizations within them; so, in that way the smaller companies grow in strength and enhance their ability to influence and compete in Brussels over this issue. By gathering and discussing the issue under one organization like ACEA, the organizations and companies get greater power in Brussels than if they would split up into 10-15 smaller organizations, so this means that representation is a mean for these organizations and companies to permeate the EU. We can almost consider this to be a kind of natural monopoly, in terms of the rights of representing the industries interests. This phenomenon confirms Olsons hypothesis of increasing size, influence and access to policy making, in respect to this special interest group. 4.2.2. The official position of the ACEA regarding CO2 emissions reduction Officially, according to its own institutional information, the ACEA agrees with the Commission that something has to be done about the CO2 emissions and they fully support the EU objective of reducing car emissions. But the ACEA believes that most of the burden within this situation has been placed on the car manufacturers. The ACEA calls for an integrated approach, which means that everybody has to do their part in order to reach the goals. The association wants the other elements (fuel industry, policy makers and car users) to take a larger part in lowering CO2 emissions. The integrated approach to lower CO2 emissions that the ACEA presents contains five components. The first one is vehicle technology which they themselves are responsible for. Then we have alternative fuels which need to be developed further with help from the fuel industry. The third component is consumer behavior, that we as consumers/drivers need to be educated in so-called Eco-driving, which in the long run saves 5-7% save in fuel consumption and therefore also in emissions. The fourth component is infrastructural measures concerning for instance traffic lights and the planning of roads in larger cities which often causes traffic jams. If steps could be taken to solve these infrastructural problems a lot of emissions would never occur. The last component concerns CO2-related taxation, which would stimulate buyers to choose fuel-efficient cars, if they cost less in taxes; and in this area the ACEA believes that the Commission has failed on their part of the agreement. To steer free from stricter car safety and emissions regulations, lobbyists have been stating and defending before the EU decision-makers that driving behavior, trees next to roads and other infrastructure are also very important factors. Important as they may be, these are matters which the European Parliament and other EU institutions have no power over as they are controlled at member state level. Therefore, bringing these topics to discussion at a EU level is fallacious and distorting the reality of the fact and, as we later expose, may contribute to the preservation of a certain status quo in the industry. Its important to bear in mind that the cars that yield the biggest profit to carmakers are the biggest ones in size SUVs and 44. Precisely the ones raising more concerns, due to their higher rates of CO2 emissions. 4.2.3. The 1998 ACEA-EC agreement In 1995 the European Council approved a community strategy to reduce CO2 emissions from passenger cars to an average of 120gkm for newly registered cars by 2005, and at the latest by 2010. The ACEA agreement represented the first VA explicitly aimed at climate protection. Theoretically, this represented an ideal context for the use of this new policy instrument, as the basic conditions were in place: a strong euro car industry association a large share of the market, a level of trust between government and industry, and concern for the economic effects and competitiveness implications of regulations. The strategy was based in 3 policies: 1. A voluntary fuel economic agreement 2. A fiscal framework for member states 3. A fuel economy labeling scheme In 1998 a Voluntary agreement was reached between EC and ACEA under the terms of which the industry is committed to reduce average CO2 emissions figures from all cars to 140g/ by 2008. An intermediate target was set for 2003 at 170g/km. The negotiation was marked by an important democratic deficit: the process bypassed the EP, the only directly elected EU institution, and failed to ensure public participation NGO have only be consulted once during the years of negotiations. Because negotiations have been carried out behind closed doors, the danger of regulatory capture has been always present during the negotiations. This agreement also lacked monitoring, as until 2002 the only source of statistical data regarding ACEA progress concerning the goals was coming from car association sources, and an enforcement mechanism. Actually, the agreement didnt contain any enforcement mechanism it did not contain sanctions for non-compliance or measures to address the issue of internal free riders. The industry would effectively be its own watchdog. Given the highly competitive characteristics of the car industry, conditions for failure where perfectly reunited. Another interesting fact is the length of negotiations: the time span for conclusion was four years, in comparison to an average of two years, regarding the European voluntary agreements normal standards. The lack of a high level of technical capacity of the EC, in comparison with all the expertise from the ACEA side, adding to the lack of credible threats for the industry, left the EC negotiators at the mercy of the pure political bargaining. In this situation, the strength of such a strong interest group dictated the final outcome (figure 1). The content of the agreement was clearly outdated. The target of 140g/km was meant to bring about cars that would drive at 5 liters for 100km. However , recent OECD studies prove that a 50-80% improvement in fuel economy would be possible using existing technology at little extra cost over 10-15 years. In contrast , its impact would not even likely stabilize CO2 emissions from passenger cars at 1999 levels by 2010. Furthermore, the objective was not sufficiently ambitious to support a technological shift from the internal combustion engine towards lower emissions technologies such as electric or hybrid engines, not to mention hydrogen based fuel cells. Although these technologies were more or less close to commercial production, barriers of higher costs and lack of supportive infrastructure delayed their large scale development. The terms of the ACEA agreement were clearly not designed to support the introduction of much needed zero emission technologies, but to assist the continuation of the conventional car design. 4.2.4. The 21st century negotiations The voluntary agreement signed in 1998 set the deadline for the main goals accomplishment for the year 2008. However, that deal proved not to be the final one. The ACEA worked successfully to delay the date first until 2010 then until 2012. The association argued that the dates were not reasonable and its consequences, in times of economic crisis, would seriously harm the industry, with direct consequences on the employment level. Yet time has shown that most of their alarmist claims were not borne out in reality. In fact, many companies will meet the legal requirements even earlier than they have to According to European Commission official data, CO2 emissions from road transport increased by nearly 23% between 1990 and 2010, and without the economic downturn growth could have been even bigger. Transport was the only major sector in the EU where greenhouse gas emissions are still rising, being light-duty vehicles a major source of greenhouse gas emissions, producing around 15% of the EUs emissions of CO2. Since then, the EU has been putting in place a comprehensive legal framework to reduce CO2 emissions from new light duty vehicles as part of efforts to ensure it meets its greenhouse gas emission reduction targets under the Kyoto Protocol and beyond. The legislation sets binding emission targets for new car and van fleets. For cars, manufacturers are obliged to ensure that their new car fleet does not emit more than an average of 130 grams of CO2 per kilometre (g CO2/Km) by 2015 and 95g by 2020.This compares with an average of almost 160g in 2007 and 135.7g in 2011. In fact, the new goal for 2015 was actually the original EC goal for 2012. Due to lobbying regarding the first voluntary agreement, the 120g of CO2 for 2012 turned into 130g by 2015. Recent studies prove that carmakers will reach these values well ahead of time. In July 2012, the Commission proposed legislation setting out the modalities for implementing the 2020 targets. The ACEA was a major player during this round of negotiations. Volkswagen, nowadays the most relevant member of the European automobile industry and the one that invests the most in lobbying (figure 2) has described the 95g legislative target as not based on sound impact assessment nor on a realistic appreciation of the costs and technical progress necessary to meet the goal within the timescale. A new loophole, inserted following lobbying by the ACEA, would undermine the overall fleet target. Instead of calculating average fleet emissions by adding up the emissions of every car and dividing by the number of cars, carmakers will be allowed to offset the most polluting cars against a smaller number of their cleanest cars. If this accounting trick makes it into the final law, carmakers will be able to sell more polluting cars, resulting in real average fleet emissions in excess of 95g CO2/km. At the same time, Greenpeace and several other pro-environment groups and parties call on the European Parliament and EU governments to lower the 2020 cars target to 80g CO2/km and to back a 2025 target of 60g CO2/km. Its a clear fact that efficiency standards reduce Europes need for expensive crude oil imports and drive down fuel bills for drivers. European drivers currently pay between à ¢Ã¢â‚¬Å¡Ã‚ ¬1,235 and à ¢Ã¢â‚¬Å¡Ã‚ ¬2,143 to fill their tanks every year. A 95g CO2/km target without loopholes would cut costs to between à ¢Ã¢â‚¬Å¡Ã‚ ¬962 and à ¢Ã¢â‚¬Å¡Ã‚ ¬1,665 by 2020, according to independent calculations. If EU governments decide to set a target of 60g CO2/km by 2025, fuel costs will drop further to between à ¢Ã¢â‚¬Å¡Ã‚ ¬494 and à ¢Ã¢â‚¬Å¡Ã‚ ¬863 by 2030. The new proposal must go through a long negotiation process between EU governments and the European Parliament before it can become law. Lobbying is likely to continue, with increasingly new arguments and strategies. For example, in 20th September 2012, VDA, a German automobile industry lobby controlled by the ACEA, proposed the possibility of getting bonus points for electric cars they have not actually sold, but to also allow car companies to bank CO2 credits. If the companies reduce their CO2 emissions more than required by 2015 they should receive a credit for this performance which should be used for underperformance in following years. After all, the Commission failed to propose any efficiency targets for 2025. Without this milestone, the rate of technological innovation could slow down in Europe, threatening the competitiveness of European cars on the global market. Europe is currently the global leader on vehicle efficiency, but the United States and China are catching up. The US has recently proposed its own 2025 target for carmakers embraced by thirteen global carmakers including BMW, Toyota and Hyundai curiously, not VW. 5. Conclusion According the Olsons theory, there are several types of interest groups, which we can basically divide into small and big interest groups. Generally sma

Brain research and full day kindergarten

Education is an important aspect of the human life and society. Today, it is quite noticeable how the society has institutionalized education and the educational system. Today, individuals start schooling as early as four or five years of age. The common entry point for schooling is kindergarten. All around the world, many parents send their children to schools for kindergarten, with many different expectations, but mostly in the belief that this is a solid starting point that can help the child be ready for the next step in his or her education.Over the years, kindergarten has become increasingly important, especially during the time when researchers have found out the connection on dendrite growth and academic stimulation. This made them believe that if individuals are submitted to academic stimulation in the earliest time possible, this can impact significantly his mental faculty and capacity. Brain development has been responsible for the new perspective and approach to kindergar ten leading the change and shift from half day to full day.However, it appears that in analysis, even with the merit of this model hypothetically, unanimous approval and appreciation for this scheme is still to be achieved considering how sectors of the society are reacting differently and in varied fashion regarding this issue. This is an important aspect of discussion and exploration regarding full day kindergarten scheme and the brain development premise. History Kindergarten Kindergarten came to America from Germany, the term meaning children's garden.Friedrich Froebel and Margethe Meyer Schurz are two of the leading personalities who began the practice of kindergarten (Persky, Golubchick, 1991, p. 263). As the name implies, it refers to a system and a place wherein children are brought together and is being prepared for formal schooling. Kindergarten, as a form of preparatory stage, at first, was focused on making children possess sufficient social skills to allow them to inter act correctly with other individuals during formal schooling.Kindergarten education prepares them by teaching basic things which they will need in formal schooling and will serve as foundation of what they will learn and how they will learn in formal schooling. Kindergarten eventually spread all around the world. Educators working in kindergarten follow learning models as well as educational theories that make the kindergarten experience useful and constructive for the child. Kindergarten originally was just a half day session, with educators thinking that half a day is enough schooling for individuals this age (Persky, Golubchick, 1991, p.263). This was changed when scientists put forward the discovery involving the brain and its development (Eden, 2008, p. 214). During this stage and age, the role of intervention and the resulting conclusion that if this was the case, then it is important that the child is correctly and sufficiently prepared, therefore the shift from half day to a ll-day or full day or whole day kindergarten scheme. Half day to full day kindergartenFrom purely being half-day sessions, changes and developments and new perspectives regarding kindergarten education surfaced and resulted in the change from half day to all-day or whole day sessions. There were two important factors that led to the shift from half day to whole day or all-day kindergarten – the scientific basis and the practical basis. No one knows for sure which came first. Is the practical need for all-day kindergarten inspired researchers to look at any possible scientific credence this option might possess?Or was it the other way around and was a case of scientific intuition among professionals leading to the discovery of the scientific basis for all day kindergarten? This, in turn, made parents realize that besides the scientific basis, this option also has practical significance for them and the children that support and popularity for all-day kindergarten grew especial ly across America, as well as in other parts of the world. Regardless of this chicken-and-egg condition, it is nonetheless important to discuss both aspects affecting the creation of and the shaping of all-day kindergarten as it is known to day.a. Scientific basis – The main artery of the shift from half day to all day or whole day kindergarten is based on the discovery on the brain, in particular, the development that is happening in the brain when it is being subjected to academic stimulation at an early age. Professionals who were involved in this scientific study explain that dendrites grew when under academic stimulation. Dendrites are found in the brain. They are important in the learning ability and processes of the human beings. Their development is important in the mental faculty of an individual.In layman's terms, the growth and branching out of dendrites indicate active mental practices and exercises which in turn allows for improved processes of the mental faculty or thinking. Professionals as well as neuroscientists have already connected the growth and branching out of dendrites when under academic stimulation. This is proof that when the brain is exposed to academic stimulation or learning process especially in the early formative years, the physiological make up of the individual, particularly the brain develops and adjusts depending on what it is being subjected to.Therefore the child’s mind is subjected to longer academic stimulation that can be an important factor for mental growth and capability in the future. This is the main premise of the scientific basis of the full day kindergarten scheme. Professionals argue that it is important that â€Å"we must look at our children's entry point into education (Miller, Gore, 2007, p. 140). † â€Å"New research into brain development demonstrates that the first three years of a child's life are extremely critical for her emotional and intellectual growth (Miller, Gore, 2007, p. 140)† which necessitated the need for â€Å"all day kindergarten programs (Miller, Gore, 2007, p.140). † People involved in it – Educators, psychologists, neuroscientists and different professionals have been involved in the studies leading to this particular discovery and in the creation of a new perspective in kindergarten. â€Å"Today's early childhood educators recognize children as active learners, not jugs waiting to be filled or blank slates waiting to be written upon (Handelman, Auerbach 2000, p. 4). † Individuals like David Sousa as well as many other professionals came forward in support of this new notion regarding brain development and the need for a whole day kindergarten schedule and the merits of this kind of scheme.Professionals explain that it is understandable why such discovery was only made today because of many important considerations, one of which is the ethical as well as technological considerations on the ability of the human to understand the brain. In the past and without the technology for non-invasive and ethical brain study procedures, scientists are left with the one and only option available for them – to study brains from dead people. This option left them with very limited areas of research and study, and no prospect at all at studying the human brain while it is still alive and in motion.However, because of the current technology and scientific processes and abilities available to scientists today, the brain is now accessible for exploration in such a way that it is not unethical, immoral and non-invasive. This led the scientists to what they recently discovered about dendrite activity and its connection with academic stimulation. b. Practical basis – Besides the scientific basis, there is also the practical basis that was used by parents and educators in approving the full day scheme.This has something to do with the current family and parent socio-economic and socio-cultural condit ions. Economy has made it a necessity for both parents to work at the same time. This allows the parents money to send their children to good schools which they hope can look after their children while they are at work. Parents believe that full day kindergarten is like hitting two birds with one stone. First, their child is exposed to extended periods of studying and education and has limited time for other things that are harmful to the child in the long run like watching television, for example.At the same time, parents are more assured of their child's safety and well being since they are at school, attended by teachers who are trained to handle children. While this does not fully eliminate the use of nanny or a household helper, parents believe that besides the children, parents are also benefited in particular, specific ways through this scheme (Lerner, Jacobs, Wertlieb, 2003, p. 202). â€Å"Full day kindergarten was introduced to speak to the needs of the growing number of w orking parents who wanted their children to be looked after for the whole day (Lerner, Jacobs, Wertlieb, 2003, p. 202). † Full day kindergarten todayToday, many schools all around the United States, as well as in many other different countries that feature kindergarten in their school and education system, use the all-day or whole day kindergarten scheme. It adheres to the idea presented by scientists, psychologists and educators who believe that exposing children to longer educational experiences at school can help improve the mind and improve the capacity of the individual for learning and mental processes in the future. The full day kindergarten scheme has attracted many supporters who called for the institutionalization of full day kindergarten schemes.Organizations, groups and institutions, such as the Education Commission of the States or simply the ECS (Neal, 2006, p. 117), support the full day kindergarten. The shift from half day to all-day or whole day kindergarten s ession is not just merely an extension of time, nor was it a quantum leap in the learning experience for the kindergarten. Part of the change in session was the realization that teaching style, educational approach and learning perspectives should also change. It should focus more on the newfound consciousness regarding the learning ability of a child and the importance of maximizing it in the earliest possible time.Because of this, kindergarten changed. From focusing in learning through play in the past, the learning structure of kindergarten became more oriented in structured academic learning. This means that part of the learning experience included learning languages and mathematics as well as other things like color and shape cognition and identification, memorization skills, interpersonal skills, play, even good morals and conduct and religion in other kindergarten schools and institutions (Persky, Golubchick, 1991, p.263). â€Å"These early kindergarten programs focused on t he basic concept that child's play was significant and that when it was intelligently directed gave impetus to cognitive development (Persky, Golubchick, 1991, p. 263). † From this point, the perspective changed and focused more on academic learning. This move towards change was hinged on the scientific discovery regarding the brain of the child and how in that stage the brain should begin the experience of being harnessed.When the individual grows up and matures, he or she will possess the mental capacity for competitive and capable learning and is suitable for more advanced learning in the future. Today's full day kindergarten, despite its admirable background and history, is nonetheless facing many different problems as well as criticisms. Professionals involved in this field undertake many different studies to be able to find answers to these problems and to address the different criticisms hurled at the practice of full-day kindergarten.a. Studies regarding all day kinder garten – Authors like Cryan (1992) and Elicker and Mathur (1997) provide the people with materials they can read and refer to when considering full day kindergarten scheme and their opinion about it (Cryan, 1992, p. 187; Elicker and Marthur 1997, p. 459). These authors as well as many other authors have come up with results of studies, research and analysis tackling this matter both in books as well as in peer reviewed journals.Psychologists and educators appear to have undertaken intensive study and research efforts regarding the different aspects of all-day kindergarten so that they can discover new information regarding this practice that can help in determining what new course of action to take with regards to the full-day kindergarten scheme. There are currently numerous published works as well as books and even internet articles about the results of studies and research efforts focused on full day kindergarten. In general, the content of these materials stand in two pol ar regions.There are those that attest to the positive impact of this scheme; while on the other hand, there are those who present criticisms as well as new areas of investigation which they believe is important. These realms that they identified remain unexplored. This means that full day kindergarten scheme cannot be considered to be fully ideal and suitable, not until all areas of inquiry and possible sources of problem are identified, studied and resolved. b. Criticisms and problems – The full day kindergarten scheme was not without criticisms as well as its own set of problems.Parents are one of the most important groups that can strengthen or derail the progress and practice of full day kindergarten. They also became sources of important criticisms and arguments regarding full day kindergarten scheme. One of the most basic areas of standoff resulting to criticisms of this scheme is the resulting tug of war between parents who want two different things for their children – those who want to keep kindergarten at half day while those who wanted schools to shift to whole day or full day kindergarten (Lerner, Jacobs, Wertlieb, 2003, p. 202).â€Å"The introduction of full day kindergarten more than a decade ago has brought to a head an ongoing controversy between parents who want half day program and those who want the full day program (Lerner, Jacobs, Wertlieb, 2003, p. 202). † Some parents point out that despite what scientific research claims as the ideal learning time and opportunity, a child is presented and should be exposed to at that age. Parents argue and reason that scientific research, on the other hand, has not fully answered the query regarding the effect to the children of being removed from their biological parents for that long period of time.They still could not explain the effects as well as possible problems that can arise when children are constantly under the care of someone they do not know and does not know the child , even with the fact that they are certified professional and capable educators (Lerner, Jacobs, Wertlieb, 2003, p. 202). â€Å"Parents†¦ look at kindergarten in the traditional way and regard full day away from home as too much time for a 5-year old to spend in the care of a non parental adult (Lerner, Jacobs, Wertlieb, 2003, p.202). † There are also those who pointed out that full day kindergarten does not automatically mean dramatic change in learning and development. The main supporting ideas for the establishment of this kind of approach to kindergarten education is about the scientific claims on improved and increased brain development via academic stimulation. Part of the equation (and an important part) is curriculum, teaching styles and methods as well as other equally important factors like teacher competency, environment.Eden (2008) pointed out in a book that â€Å"providing a full day program for four year olds, for example, has much merit, but not if what i s provided is simply watered-down first-grade curriculum (Eden, 2008, p. 214). † Conclusion The work of the forerunners of the concept of kindergarten has come a long way. Today, it is something that appears to have evolved significantly over time, with many different important changes. This includes the change happening during the 90s – the shift from half day to full day kindergarten school time.Like many complex issues in the society, the debate over which between half day and full day kindergarten scheme is better. There is also a debate if full day kindergarten schedule by itself and outside of comparison is ideal for children and their welfare is a topic that is not easily answerable by a yes or a no. There are many gray areas and dark areas that are yet to be discovered and explored so that more answers are available for people to use in this particular decision and position.Nonetheless, the brain development and its connection to education in early childhood is an important breakthrough that can impact education for years. As for kindergarten, the newfound scientific perspective has made it clear that even the humble and previously seemingly non-bearing educational experience which is kindergarten appears to be, after all, something that holds a significant importance in the mental development of the individual. This is something that professionals should look on and design carefully in the future, for the benefit of the child above anyone else.References Cryan, J. (1992). Success outcomes of full day kindergarten: More positive behavior and increased achievement in the years after. Early Childhood Research Quarterly, 2, 187-203. Eden, S. T. (2008). Play Works: Helping Children Learn Through Play. Indiana: Author House. Elicker, J. and Mathur, S. (1997). What do they do all they? Comprehensive evaluation of a full-day kindergarten. Early Childhood Research Quarterly, 4, 459-480. Handelman, M. S. and Auerbach, J. J. (2000). Jewish Every Day : The Complete Handbook for Early Childhood Teachers.Colorado: Behrman House, Inc. Lerner, R. M. , Jacobs, F. and Wertlieb, D. (2003). Handbook of applied developmental science: promoting positive child, adolescent, and family development through research, policies, and programs, Volume 1. California: SAGE. Miller, J. and Gore, A. (2007). The Compassionate Community: Ten Values to Unite America. New York: Palgrave Macmillan. Neal, R. G. (2006). The Deserved Collapse of Public Schools. Indiana: Author House. Persky, B. and Goubchick, L. , H. (1991). Early Childhood education. Maryland: University Press of America.

Memories of Childhood Essay

Childhood is a golden period of man’s life. It is the time when man is dependent but he enjoys all the comforts of the life. He has nothing to worry about. He has to do nothing to get his demand fulfill except weeping. It is a carefree time. In my childhood I was free from worries and sorrows. When every day and night brought joys for me. Parents tried to amuse me. They loved me so much that I began to think they were living only for me and it was not wrong as well. Near our house there was a pond. Father took me daily to the pond to enjoy the beautiful sight of the setting sun. Once my father fell ill and could not go to the pond. I was very fond of taking bath in the bright water of the pond but father did not allow me to fulfill my desire. Now it was a golden chance. I went alone to the pond and jumped into the water. Deep water took me into its lap. After this what happened I do no know. When I opened my eyes a doctor was bending over me. Mother and sisters were weeping. I had to remain for one month in the hospital. Now when I recall that horrible accident my heart begins to sink with fear. Then I decided not to do anything without the permission of parents. There is one more thing which I cannot help mentioning More over I can never forget the day when I was beaten by the gardener for stealing mangoes. My friend Maria and I went to the garden to eat mangoes. Maria was very active and clever. She remained out of the garden and asked me to climb up the mango tree. Consequently I was caught by the gardener and he bead me with his sharp stick. Maria ran away The gardener took me before my father and told the whole story. Father prohibited me from going to the garden. I was much ashamed but soon all it was over. If you have female companion you are fond of dolls as well. The same case was with me. I was very fond of dolls in my childhood. Maria and I played with the dolls for hours, marrying and decorating them. Mother did not like her daughter wasting time in playing. As a result she took me to the school. I was much frightened and puzzled among the strange girls. I began to weep bitterly. While I was weeping I felt a soft hand on my back it was my teacher. She consoled me and gave me a beautiful book of colorful pictures. I was taught by her to smile in the storm of tears and sufferings. Now she is far away from me but her memory is fresh in my mind and I will never forget her as well. Children usually keep on gamboling and playing . Sometimes they keep on running in childhood I was like a playful deer wandering through the meadows. Maria and wandered the whole day long in the green fields of our villages picking wild flowers and making garlands. How beautiful moonlit nights were in childhood! When the shining moon appeared we all played in the open fields catching one another. Now childhood is no more but it appears a beautiful dream.

4 Types of Research Theories - 1205 Words

CRJS430 – 1104A – 01 Unit 1 IP Charlotte Cordova October 6, 2011 American Intercontinental University Abstract In this paper, I will discuss the four types of research theories – deductive, inductive, grounded, and axiomatic. I will also discuss why and how these theories are used, and which is the most relevant, or most important. I will discuss the differences and similarities in theory and hypothesis. I will also discuss variables, and why they are important components of theoretical research. Four Types of Research Theories When doing research, it is important to first have your idea, or subject you will be researching. Once you have chosen the subject, then the research begins. There are so many places to†¦show more content†¦This is called the top – down approach to research. We start out by using a general idea, then working it down to a hypothesis that can be tested. We can even go further and narrow this hypothesis down to an observation and test that into a confirmation of the original deduction of our theory. Inductive research works the opposite way. We start our research from a very specific idea, and change it into a very broad and generalized theory. This is called a bottom – up approach to research. We start with very specific measures or observations, detect patterns, then reach a hypothesis that we explore, ending up with generalized conclusions and theories. The differences in these two theories, is that deductive research starts out very open ended and exploratory, while inductive research starts out more specific. Most research contains both methods, even though it may seem that the information is one or the other type. (Trochim, 2006). Grounded research is when the theory is developed using the facts. This is somewhat an inductive method or approach. Some experts say that grounded research separates theory and data, while others say it combines the two. This type of theory takes questions and comparisons and uses explicit procedures to guide this type of research. This method of research provides the researcher density, saturation,Show MoreRelatedAnalysis Of Mullen Rhoadsrbtm7109-2 : Develop And Apply A Personal Toolkit1622 Words   |  7 PagesMullen-RhoadsRBTM7109-2: Develop and Apply a Personal Toolkit To develop a personal toolkit for critiquing research article, critical thinking that imposes intellectual standards will be the fundamental strategy employed (Elder Paul, 2008; â€Å"Public Library,† 2013). Critical thinking will be employed to minimize bias from the literature review, which should provide a more solid springboard for the dissertation process. 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Senate Bill 420 The Issue Of Prostitution And Separating...

Senate Bill 420 would recast provisions by clearly defining prostitution and separating the buyers from the sellers. This bill not only defines the crime of prostitution but it also divides the crime into three sections: the involvement of the buyer, the involvement of the seller, and/or the involvement of a minor. Senator Huff first introduced this bill on February 25, 2015 where it was first presented to a committee on RLS, waiting for the approval to print. Freshly off the printer on February 26, 2015, the bill was accepted and began its journey through the Senate. On March 5, 2015 the bill was referred to the committee on PUB. S (â€Å"Bill History-SB 420,† 2015). On April 6, 2015 the committee read the bill for a second time and amended†¦show more content†¦The success of the bill is that it has passed through the Senate. The failure is that the bill is currently held up in the Assembly. The Assembly is waiting to hear what the total budget will be for the bill before they make their decision. The Assembly seems hesitant to pass this bill because they do not think that the budget is worth a crime resulting in a misdemeanor. The bill has been modified so many times through its journey of the life cycle of legislation. Which makes us wonder why can’t the Assembly create a draft to somehow link prostitution to human tracking; therefore the crime would go from being a misdemeanor to a felony; therefore when factoring in the budget one gets the best bang for their buck. B. Scope of Issue: Human Trafficking is â€Å"considered a form of modern slavery† involving the recruitment, transportation, transfer and/or harboring the receipt of a person by either the means of force or coercion that is affecting thousands of men, women and children per year both abroad and locally. This is a crime in violation of human rights (â€Å"Human Trafficking/What is Human Trafficking†, 2015). Human trafficking is an umbrella term that is not quite defined and/or recognized by law. The three elements of human trafficking are the act (what is done), the means (how it is done), and the purpose (why it is done). The act includes recruitment, transportation, transfer, harboring, and the receipt

The Effects Of Global Warming On The World - 1349 Words

Global warming is the term used to describe the rise in the Earth’s temperature observed over the last century. It has had significant effects on the polar ice caps, as the rising temperature is causing them to melt. It has also been linked to rising sea levels as the rise has been quicker than ever recorded in the last century. It is believed to be caused by increasing amounts of greenhouse gases in the atmosphere, due to burning fossil fuels, other human activities and volcanic activity. It also doesn’t help that most of the world’s forests are being cut down to be used for wood and other materials, this means those plants can no longer photosynthesise and get rid of some of the CO2 (which is a greenhouse gas) from the atmosphere. The rising temperatures therefore have significant effects on the Earth and its organisms. The most imminent and noticeable threat is that on the organisms which live in polar habitats, such as polar bears and penguins, because of the melting ice caps it means that their habitats are being destroyed. There has been a noticeable decline in the numbers of Adà ©lie penguins on Antarctica, their numbers have gone down from 32,000 breeding pairs to 11,000 breeding pairs in the last 30 years. Over the last 40 years there has been a fall in the population of polar bears, their status has changed from least concern to vulnerable to endangered. Polar bears use drifting ice to catch prey and if there is no ice left then their eating habits will decreaseShow MoreRelatedThe Effects Of Global Warming On The World1235 Words   |  5 PagesThey may not be feeling the effects of global warming at the moment, but in time it will become a more widespread issue. The effects of global warming are hard to refute, and there is endless evidence of this growing problem in our world today. 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Property Economics and Finance for Securitisation - myassignmenthelp

Question: Discuss about theProperty Economics and Finance for Securitisation. Answer: Sources and Types of Finance The developer within the property industry has to identify and evaluate the various alternatives of financing before selecting the best one. Most of the developers first go for personal savings as source of funds. In addition, they also rely on different banks and life insurance companies for funding as its primary source. However, globalization has led other sources like private funders and joint ventures to emerge as an alternative for many developers. Moreover, they can also get advances from third parties as lease and securitisation (SPVs). Further, they get the funds from mortgage brokers and mortgage bankers for re-mortgaging as they have proficiency and understanding in property industry. Other main sources include pension funds, auction finance and bridging finance, real estate investment trusts, corporate finance and state finance programs (Berry et al., 2013). The capital structure in property industry helps to know the quantum of equity and debt in financing property and further expansion. Further, this also helps in to compute the firms leverage (Migl, 2016). In this industry developer majorly uses debt for financing so the company has a high leverage. However, it plays a crucial role in period of bankruptcy also. It is important for a developer to focus on capital structure as helps to maximize the market value of the firm which in turn increase the share price and dividends, minimizes the cost of financing, recognize better investment opportunities for growth of the company and the industry (Trisha, 2018). The main capital structuring issue that are relevant to investor returns is considering cost of capital which should be lower than expected returns. In addition to this, a tax deduction in debt financing decreases the cost of debt and increases the possibility of returns and dividends. Further, a high tax rate increases the proportion of debt in financing, but increase the risk of bankruptcy. The concept of window of opportunity is also a major issue as it states the time when the funds are available at a lower cost considering the economy conditions. Further, the restrictions on management and its style adopted as aggressive or conservative is also a major issue affecting the investors return. The growth rate of the company can finance its capital from debt easily increasing the business risk of the company (Lumen, 2018). Financing Techniques The various risk faced by the financiers in the project finance are identified as controllable or uncontrollable risks. Construction and completion risk is crucial to lenders as they need to mitigate it by commodity derivatives if the completion costs increases. Operating risk is faced when the cost of operations goes up and these can be mitigated through future contracts, lump sum payments, turnkey contracts and warranty agreements. Force majeure and change in law is a major risk for lenders so they need to regularly review it. Further, political and regulatory risks are uncontrollable risk so lenders should be ready to face this risk. This risk can be reduced through insurance. Repayment risk is the most important risk to lenders and it is managed through Project Company itself by maintaining reserve accounts and evaluating potential ratios. Currency exchange risk and interest rate risk are some other risks that lenders have to deal with. To reduce it to the lowest level they use t he method of swapping with a different market financier (World Bank Group, 2018). Further, the risk between parties is shared considering that which party can control the risk efficiently and effectively. The party which can control the risk should tolerate it. However, if none of the parties can control it than the party which can tolerate it easily should take efforts to do so. Evaluation Techniques Computation of Net Present Values- Period Cash Flows ($) PVF @ 8.90% PV of Cash Flows 0 -450551 1 -450551 1 45000 0.918273646 41322.31405 2 45000 0.843226488 37945.19196 3 45000 0.774312661 34844.06976 4 45000 0.71103091 31996.39096 5 45000 0.652920946 29381.44257 NPV 626040.4093 Period Cash Flows ($) PVF @ 7.50% PV of Cash Flows 0 -600000 1 -600000 1 45000 0.930232558 41860.46512 2 45000 0.865332612 38939.96755 3 45000 0.80496057 36223.22563 4 45000 0.74880053 33696.02384 5 45000 0.696558632 31345.13846 NPV 782064.8206 Period Cash Flows ($) PVF @ 8.00% PV of Cash Flows 0 -562500 1 -562500 1 45000 0.925925926 41666.66667 2 45000 0.85733882 38580.24691 3 45000 0.793832241 35722.45085 4 45000 0.735029853 33076.34338 5 45000 0.680583197 30626.24387 NPV 742171.9517 Period Cash Flows ($) PVF @ 8.5% PV of Cash Flows 0 -529412 1 -529412 1 45000 0.921658986 41474.65438 2 45000 0.849455287 38225.48791 3 45000 0.782908098 35230.86443 4 45000 0.721574284 32470.84279 5 45000 0.665045423 29927.04405 NPV 706740.8936 Period Cash Flows ($) PVF @ 9% PV of Cash Flows 0 -500000 1 -500000 1 45000 0.917431193 41284.40367 2 45000 0.841679993 37875.5997 3 45000 0.77218348 34748.2566 4 45000 0.708425211 31879.1345 5 45000 0.649931386 29246.91238 NPV 675034.3069 Period Cash Flows ($) PVF @ 9.5% PV of Cash Flows 0 -473684 1 -473684 1 45000 0.913242009 41095.89041 2 45000 0.834010967 37530.49353 3 45000 0.761653851 34274.42331 4 45000 0.695574293 31300.84321 5 45000 0.635227665 28585.24494 NPV 646470.8954 Period Cash Flows ($) PVF @ 10.00% PV of Cash Flows 0 -450000 1 -450000 1 45000 0.909090909 40909.09091 2 45000 0.826446281 37190.08264 3 45000 0.751314801 33809.16604 4 45000 0.683013455 30735.60549 5 45000 0.620921323 27941.45954 NPV 620585.4046 Period Cash Flows ($) PVF @ 10.50% PV of Cash Flows 0 -428571 1 -428571 1 45000 0.904977376 40723.9819 2 45000 0.81898405 36854.28226 3 45000 0.741162036 33352.29164 4 45000 0.670734875 30183.06936 5 45000 0.606999887 27314.99489 NPV 596999.6201 Period Cash Flows ($) PVF @ 11.00% PV of Cash Flows 0 -409091 1 -409091 1 45000 0.900900901 40540.54054 2 45000 0.811622433 36523.0095 3 45000 0.731191381 32903.61216 4 45000 0.658730974 29642.89384 5 45000 0.593451328 26705.30976 NPV 575406.3658 The WACC taken as the discount rate for future cash flows assess the present value of the property for overall year instead of a single year. The company will have a net present value of around USD$626040 by discounting the cash flows with WACC at 8.90%. On the other hand, the company under property industry also uses capitalization rate for discounting its cash flows to assess the value and profitability the property will attain. Further, the capitalization rate is the rate which is driven by market forcesThe capitalisation rate will give ambiguous results when the cash flows of the property tend to change. Therefore, the investor selects that investment which will generate him more profits. So, after analysis from the above calculation the investor will tend to be more biased were the NPV is higher and that is at the PV Factor of 7.50% generating the value of USD$ 782064.8206. The use of capitalisation rates has helped the above analyses in decision making. It has helped to compare the property with discounted cash flow method and take out its valuation. This approach of rule of thumb is easy and quick to measure the financial position of the assets (Kobzeff, 2016). The value of the property is influenced by many factors which should be considered by the investors. These include location of the property, valuation of the property, purpose of the investments and profit expectations. Risk and Risk Management From the investors side, the key risk connected with the property investment is market risks which include equity, interest and currency risks. Liquidity risk is challenge to sell the investment at a reasonable price. There is concentration risk also i.e. not diversifying in different portfolios. Investors who do not get their principal amount and interest on maturity from Companies facing financial difficulties faces credit risk. Some other major risks faced by the investors are foreign investment risks, horizon risk, inflation risk, capital risk, on-going return risk, degradation in the value of the property. These risks when identified can be majorly managed through guidance from experts and diversification of the property portfolio. Investors should avoid leverage margin trading. Risk can also be reduced by investing in companies which have a stable and consistent record of stock in the past. Further, in the recession period, investors should avoid investing in levered companies. However, a positive cash flow should be managed by the investors for high returns (Duggan Benzinga, 2014). Correlation indicates the degree of relationship between the two variables or sectors. It helps the investors to diversify their risk in investments by decreasing the correlation between them. Commercial and residential sectors as two variables have a strong correlation between them. This means that the value for both will fluctuate in same directions. According to some economist, there are same factors that affect the demand for both the sectors. However, demand plays an important factor for measuring the relationship between these two markets. For example, increase in the household market cause the commercial market to also increase indicating a strong positive correlation. Similarly, a negative correlation is seen when there is unemployment caused in the commercial market affecting the household market (Konigsberg, 2018). However, this indicates that these sectors are more risky as they have a positive correlation. This portfolio risk can be diluted by using the assets that have a lesser amount of correlation, thus contributing to an efficient portfolio (Reisman, 2014). Property economics overall view Changes to interest rates When any change is seen in the interest rates, it has a significant impact on mixed development. A high interest rate will make it difficult for the developer to gather funds for financing from different sources. Further, this leads to increase in costs of loans and other fundings. The new mixed development proposal will have to face a challenge by this factor as for commercial and residential development, huge amount of funds are required. Federal government changes (increase) to withholding tax applicable to offshore REIT investors Retail Estate Investment Trust (REIT) investors are tax efficient investors in the property industry. They will tend to invest less in the property due to increased changes in the federal government to withhold tax applicable to them. This will reduce their profits as they have to pay more tax. From the profits they earn, they are required to benefit their investors and shareholders by paying out 90% out of it. So, they will be left with lesser profits after tax disappointing the shareholders. Rising unemployment Rising unemployment will have a major impact on the new mixed development proposal. This will make the proposal less attractive. The problem of unemployment leads to less capital in the hands of developer and as well as investors. There will be fewer saving from the household sectors leading to decrease channelizing and mobilizing of funds. Therefore, it will have a direct impact on the developer as they will be less investor in the market. Rapid growth in supply of residential property - to be delivered / settled within 3 years This rapid growth will affect the commercial property proposal by the developer to the investors. The corporate investors will not find this proposal attractive as they want the commercial development also fast along with residential property supply. On the contrary, this will benefit the household investors in many ways like working from home in case of emergencies. Continued strength / investment in the resources sector Investment in the resources sector will affect the investments in the new mixed development proposal; thereby, putting the developer in great loss. Resources sector needs a great development for the uplift of the economy and the country thereby, letting the property industry to struggle in the market for its development. The government and the legislation will majorly emphasize on this sector instead of property development. Rising interest rates A rise in the interest rate will make the investors more prone to invest in property. This will generate huge loss to the developers. Therefore, it will have a direct impact on the mixed used development proposal. The investors will not find this situation attractive to buy or purchase the property and will wait for the market conditions to improve and fall in the interest rates. References Berry, J.N., Deddis, N.G., McGreal, W.S. (2013). Urban Regeneration: Property Investment and Development: Taylor Francis. Yardney, B. (2018, April 6). Property Development Guide Part 5 Financing your Project. Retrieved from https://propertyupdate.com.au/property-development-finance/. Migl, A. (2016). Capital Structure in the Modern World: Springer. Trisha, (2018, February 28). Capital Structure: Concept, Definition and Importance. Retrieved from https://www.yourarticlelibrary.com/financial-management/capital-structure/capital-structure-concept-definition-and-importance/44063. Lumen, (2018, February 28). Capital Structure Considerations. Retrieved from https://courses.lumenlearning.com/boundless-finance/chapter/capital-structure-considerations/. Fletcher, P. Pendleton, A. (2018, February 28). Identifying and Managing Project Finance Risks: Overview (UK). Retrieved from https://www.milbank.com/images/content/1/6/16376/5-564-5045-pl-milbank-updated.pdf. World Bank Group (2018, February 28). Risk Allocation, Bankability and Mitigation in Project Financed Transactions. Retrieved from https://ppp.worldbank.org/public-private-partnership/financing/risk-allocation-mitigation. Duggan, W. Benzinga (2014, November 18). 4 Ways to Manage Risk in your Portfolio. Retrieved from https://www.benzinga.com/general/education/14/11/5012949/4-ways-to-manage-risk-in-your-portfolio. Koenigsberg, R. (2018, February 28). A Link between Commercial and Residential Real Estate. Retrieved from https://aiprops.com/newsletter/april/Koenigsberg-Bulletin_commercial-and-residential.pdf. Reisman, E. (2014, May 19). What is Correlation and Why Does it Matter for your Portfolio? [Blog post]. Retrieved from: https://www.stockrover.com/blog/what-is-correlation-and-why-does-it-matter-for-your-portfolio/. Kobzeff, J. (2016, July 19). Capitalization Rate: How to Compute and Use. Retrieved from: https://www.proapod.com/Articles/capitalization_rate.htm.