Forest industries in South American countries

This paper analyzes the performance of forest industries in South American countries. Special attention is given to the relationships that exist between the evolution of forest industries and the exploitation of natural and planted forest as well as on the role of national governments in stimulating that kind of industries. South America has large natural forest areas and excellent natural conditions for planting trees. However, forest industries have not grown in a way that permit sustainable exploitation of natural forests and improve the Gross National Product and Trade Balance of South America's countries. This paper suggests how the latter can be done better.

The Evolution of Reforestation in Brazil

This paper analyzes the evolution of reforestation in Brazil and makes an evaluation of federal government policies used to stimulate that activity. Despite the huge increase of reforestation areas in Brazil since the 1970s, what put up Brazil as the sixth large country with reforested areas, a scarcity of roundwood from reforested areas is happing in that country during the first decade of the 21st century. Federal government implemented three programs to foster the reforestation in Brazil during the 1960s, 1970s and 1980s. However, nothing was implemented during the 1990s, when demand of roundwood increased, but not its production. This paper analyzes those programs, using a traditional cost-benefit approach. The results of that evaluation are used to suggest new federal government policies to foster the enlargement of reforestation in segments where price mechanism has not working well.

Lessons from East Asia's Crisis and Recovery

This paper provides an empirical analysis of the currency crisis and recovery in three East Asian countries, Malaysia, Thailand and South Korea. Using macro economic data for the three countries over a 13 year period, 1990 – 2002, the paper examines the factors leading to the crisis, the policy response to the crisis, an evaluation of their recovery and the lessons that can be learnt. During the seven year period prior to the crisis, all three countries experienced very rapid GDP growth. Collectively, average annual GDP growth was 11.5%. This growth however was fueled by rapid monetary growth, current account deficits, negative S-I gaps and short term capital inflows. As a result, serious structural weaknesses were built. Overvalued exchange rates enhanced the vulnerabilities. The two year period of crisis, saw sharply negative GDP growth in all three countries. These were accentuated by the contractionary policies. While Thailand and South Korea had to turn to the IMF and adopt the IMF package, Malaysia took the ‘unorthodox’ route of capital controls and currency peg. The paper argues that despite different policy stance the underlying responses were the same. All three countries experienced a V-shaped recovery. Malaysia’s controversial policies appears to have provided no additional advantage. The paper concludes with an outline of key lessons for policy makers from the experience of the three countries.Lessons from East Asia's currency crisis; and recovery

Value Preservation through Risk Management - A Shariah Compliant Proposal for Equity Risk Management

This paper makes a case for the preservation of Muslim Wealth through risk management. It provides an exposition of risk management techniques used in conventional finance and outlines the limitations faced by Muslim fund managers and businesses. This limitation arises from the proscription of key risk-management tools, in particular financial derivatives. Though the reasons for the prohibition are diverse, the overriding concern appears to be that they encourage speculative behaviour. As such the emphasis of Islamic risk management has been on, On Balance Sheet methods. The problem with On Balance Sheet methods is that they require the restructuring of business transactions which can render businesses less competitive and subject to residual risk. The paper proposes a portfolio insurance scheme that uses the logic and mechanics of conventional Index Put Options but in a Shariah compliant manner. The proposal is intended to strike a balance between the need to avoid speculation and the genuine need for hedging equity risks.Shariah compliant, equity risk management

The Islamic Inter bank Money Market and a Dual Banking System : The Malaysian Experience

This paper examines the operation of an Islamic Interbank Money market (IIMM), within a dual banking system. The paper argues that even though an Islamic Money market operates in an interest free environment and trades shariah compliant instruments, many of the risks associated with conventional money markets, including interest rate risk is relevant to an Islamic Money Market operating within a dual banking system. The empirical evidence based on Malaysian data, points to Islamic money market profit rates/yields that are highly correlated and move in sync with conventional money market rates. Given the dynamics of fund flows and cross linkages, an IIMM operating within a dual banking system cannot sterilize itself from interest rate risk. In fact, the paper argues that such an IIMM may actually enhance interest rate risk transmission to the Islamic banking sector, by providing additional channels of transmission. Ironical as it may be, the operations of an IIMM in a dual banking system may serve to bring the Islamic banking sector into closer orbit with the conventional sector.Islamic Interbank Money Market, Dual Banking, Malaysia

Analysis of Increased Participation of Agriculture in the Brazilian GDP From 1960 to 2004

According to international experience, the importance of agriculture in the gross domestic product (GDP) has a declining trend during the time. It has happening in all nations, including in Brazil from 1960 to 1993. However, starting in 1994 Brazil has experiencing an increasing in this variable, what has not being followed by most of the South American countries. This paper analyzes the factors that explain the increase of agriculture importance in the Brazilian gross domestic product during the last 11 years, comparing Brazilian experience with other South American and the most developed countries in the world. The methodology used is both organization of published dataset in graphs and tables as well as econometric analysis of these data. An accounting model is developed for explaining the main factors affecting the importance of agriculture in the GDP and an econometric model is adapted for estimating the accounting model. Using dataset from 1986 to 2004, our econometric findings suggest there is a structural change in the curve of agriculture share in the GDP, and the increase of agricultural production and productivity as well as the increase of (prices received/prices paid) ratio are the most important variables determining the increase of agriculture importance in the Brazilian GDP since 1994.

Derivative Instruments and Islamic Finance: Some Thoughts for a Reconsideration

This paper examines contemporary derivative instruments and the Islamic viewpoint of these new instruments. The validity and permissibility of these instruments appears to vary by scholar. Even where Islamic scholars have found them to be objectionable, their reasons for objection differs. Much of the work by Islamic scholars has been of a highly juridical nature. They examine derivatives within narrow confines of contractual arrangements and thereby miss the broader picture of why instruments like futures and options are needed in modern business environments. This paper analyzes forwards, futures and options, examines the evolution of these instruments, their unique benefits and makes a case for why they are needed. Islamic Finance instruments with derivative like features such as the Ba’i Salam and Istijrar contracts are also examined. Some of the key concerns that Islamic scholars have regarding derivatives is addressed. The paper is divided into four parts. Part 1, outlines the objective and introduces derivative instruments. Part 2, examines the Islamic viewpoint and shariah conditions for financial instruments. Part 3, examines Ba’i Salam and Istijrar contracts. Part 4, clarifies why some of the objections of Islamic scholars regarding features and trading mechanism may be misplaced and concludes.Islamic Finance and Derivative Instruments; The need for a reconsideration of their acceptability

The Use of Forest Resources versus Economic Growth in Brazil: is possible to reach a balance?

This article analyzes how forest resources have been used in Brazil since 1930, in an attempt to prove two hypotheses. The first hypothesis is that the destruction of our forests and the unsustainable use of the remaining forests have always been linked to the developmental policies adopted in the country. These policies, in their turn, have been based on the main economic models in vogue at the time. The second hypothesis is that, even recognizing the ineffectiveness of only adopting policies to regulate and control deforestation, policy-makers have only broadened and sophisticated this type of policy over time (through the forest legislation), without creating meaningful economic incentives to preserve and conserve forest resources. To prove these hypotheses, this article contains a discussion of the importance of forests to a nation and emphasizes that Brazil is destroying them on a large scale in different intensities among the Brazilian states. The latter has taken place despite the deforestation cannot be justified by the need of new farming land in most of Brazilian states. Finally, the article discusses some policies that allow the rational use of forest resources in Brazil without hindering the growth of other economic activities and considering the Brazilian states differences.