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GLOBAL JOURNAL OF
MULTIDISCIPLINARY AND
MULTIDIMENSIONAL STUDIES
Dr. N.M.Lall B.com, M.A.(Eco), Ph.D.
FRAS (LONDON)
Patron
Dr. A.K.Jha M.A.(Eco), Ph.D., PGDM
Managing Cum Chief Editor
Dr. Suresh Sachdeva Dr. Brajesh Mishra M.A.(Eco), Ph.D., D.Lit., MBA MOT Prof. of Economics HOD (OT)
Govt. SLP College, Govt. SLP College Smt.K.P.P.I.P.O
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Editor Editor Editor
ISSN No.2394-8965
SHRUTAAYUSH PUBLICATION
GREATER NOIDA
ii
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vii
Editorial
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viii
GLOBAL JOURNAL OF MULTIDISCIPLINARY
AND MULTIDIMENSIONAL STUDIES
Vol. 1 Issue No. 3 July- September 2015
1. AN ANALYTICAL STUDY OF THE FDI I IN INDIA 1 DR. I .JANAKI
2. INFORMATION NEEDS AND INFORMATION 8
SHARING AMONG MANAGERS OF SMALL
AND MEDIUM SCALE ENTERPRISES IN
EKPOMA, ESAN WEST LOCAL GOVERNMENT
AREA, EDO STATE.
JAMES AFEBUAMEH AIYEBELEHIN
3. HEALTH AND ECONOMIC IMPLICATIONS OF 28
SOLID WASTE DUMPSITES: A CASE STUDY
HAZAR KHWANI DUMPSITE – PESHAWAR CITY
Huma Salma Gillani 4. AN ANALYTICAL STUDY OF THE RELATIONSHIP BETWEEN 43
GDP, INFLATION AND STOCK MARKET
Sudha Swaroop
5. GLOBAL WARMING IS MAJOR CONCERN FOR 48
ENVIRONMENT & ECOLOGY Dr. V. D. SHARMA
1 INFORMATION NEEDS AND INFORMATION SHARING AMONG
MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN
EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
ISSN NO. 2394- 8965 GJMMS
Vol. – 1, Issue – 3, July-September - 2015
An analytical study of the FDI in India
Dr.I.Janaki
Associate professor
Department of Economics
Wollo university ethopia
ABSTRACT To attain accelerated economic growth domestic investment has to be complemented by
FDI. It increases employment opportunities, increases gross domestic product and
standards of living of people and population at large. There are inward and outward FDI and the difference will be the net inflow of FDI. Another differentiation in FDI is
horizontal and vertical. There are two routes under which an Indian company receives vertical FDI: automatic route and government route. The key advantage of FDI is
employment generation. More competition also leads to increased productivity and
greater efficiency in the host country. Make in India initiative also is resulting in more
FDI into different states in India. With regard to inflows and outflows we see fluctuations
during four year period. Most of the countries reduced outflows and increased inflows. Multilateral Investment Guarantee Agency of World Bank opined that macroeconomic
instability is the main reason for this decline.
Key words: Economic development, employment, inflows, outflows
Introduction
“It is the intent and objective of the Government of India to attract and promote
foreign direct investment in order to supplement domestic capital, technology and skills,
for accelerated economic growth.”1
The fundamental requisite of the present Indian Government is to promote
employment opportunities and increased income levels of the residents of its nation
through „Make in India‟ approach as can be clearly noticed in its objective with reference
to FDI. Foreign Investment Promotion Board (FIPB) was also constituted to facilitate
investments from NRIs and resident Indians. It contributes to the growth of economy‟s
GDP and in turn increases the per capita income. The GDP of a nation is considered as Y
=C+I+G+(X-M) in which C stands for national consumption level, I stands for national
investment level, G stands for national expenditure level and (X-M) stands for balance of
trade. FDI belongs to the national level investment I, i.e., the net inflows of investment
(inflow minus outflow). It is the sum of equity capital, other long-term
1 “Consolidated FDI Policy (Effective from May 12, 2015)”, Department of Industrial Policy
and Promotion, Ministry of Commerce and Industry Government of India, 2015, P.1
Dr.I.Janaki
2
capital, and short-term capital. It customarily involves participation in different levels of
management, joint ventures, transfer of technology and expertise etc.
Foreign capital inflow is considered as FDI only if the investment is made in equity
shares, fully and mandatorily convertible preference shares and fully and mandatorily
convertible debentures with the pricing being decided upfront as a figure or based on the
formula that is decided upfront.
Objectives To know the nature and kinds of FDI that operates in different countries.
To know why countries go for FDI
To know why countries deny FDI
To know India‟s stand on FDI and comparison between different conditions
Methodology The study relies on secondary data compiled from various published sources like, RBI
Bulletins, Ministry of Finance, Department of Economic Affairs, Economic Division,
National Accounts Statistics, Central Statistical Organization, Government of India;
Ministry of Commerce and Industry, India; research papers and journals etc.
Literature Review Foreign direct investment has a long history in India‟s economic record. Indian
kingdoms had enjoyed relations with Greek and Roman traders who visited India and
carried out business with them. In recent past also East India Company from the UK
carried out business and exercised authority almost all over India. India need not go
anywhere to attract but has to see that political and social conditions are stable and steady.
Dale R. Weigel, Neil F.Gregory, Dileep M.Wagle opine the same idea that the pace of
integration into the global economy is related to progress on creating and enabling policy
environment for FDI. Byung-Hwa Lee (2002) studied the Korean case which shows that
there is a large potential for other emerging economies to gain from FDI flows and that the
initial costs from lost internal investment are largely outweighed by the medium-term
benefits. Theodore H. Moran in his „Foreign Direct Investment and Development:
Launching a Second Generation of Policy Research: Avoiding the Mistakes of the First,
Reevaluating Policies for Developed and Developing Countries FDI is not a single
phenomenon‟, argued that FDI has such different impacts in the extractive sector,
infrastructure, manufacturing and assembly, and services and presents distinctive policy
challenges that each broad category of FDI must be treated on its own terms. Anthony
Bende Nabende focuses on the ongoing globalization process, which has ignited an
unprecedented worldwide debate. He seeks to provide a "one-stop centre" for unbiased
coverage of the theoretical, empirical and policy issues connecting globalization with
foreign direct investment, regional economic integration, sustainable development and
economic growth.
Types of FDI
Foreign Direct Investment (FDI) is a kind of investment that replicates the objective
of forming a long-lasting financial concern by a resident enterprise in one country (direct
entrepreneur) in an organization (direct enterprise) that is resident in another country. The
long-lasting financial concern denotes the presence of a long-term association between the
direct entrepreneur and the direct enterprise and a significant degree of control on the
3 INFORMATION NEEDS AND INFORMATION SHARING AMONG
MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN
EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
business administration of the enterprise. The direct or indirect ownership of 10% or more
of the voting power of an enterprise resident in one economy by an investor resident in
another economy is the statistical evidence of such a relationship.
There are two different types of FDI, namely inward and outward which results in a
Net FDI inflow which will be either positive or negative. The cumulative number for a
given period of time is known as „stock of foreign direct investment. It is an important
example for international factor movements.
There is another kind of differentiation in FDI.
1. Horizontal FDI: It takes place when a company replicates its parent country –
based activities at the same value chain stage in a host country by means of FDI. For
example, Wal-Mart opening retail chain in host countries.
2. Platform FDI: It originates from source country into another country for the
purpose of exporting to a third country. For example, some tobacco companies have their
European Headquarters and plants in Switzerland. The world famous Vinyl Chrolide
Mononer producer, Shinetsu Chemical has its plants in Portugal and supplies all European
countries from there.
3. Vertical FDI: When a company executes value addition activities phase by phase
in a upright manner in host country. For example capital imports to produce finished
products by companies like BHEL, HAL etc.
4. There are two routes under which an Indian company may receive vertical
Foreign Direct Investment:
a. Automatic Route: FDI is allowed under the automatic route without prior
approval either of the Government or the Reserve Bank of India in all sectors as specified
in the consolidated FDI policy, issued by the Government of India from time to time.
b. Government Route: FDI in activities not covered under the automatic route
requires prior approval of the Government which are considered by the Foreign
Investment Promotion Board, Department of Economic Affairs, Ministry of Finance.
Advantages of FDI An increased inflow of FDI may cause improved economic growth due to the
increased technology, employment and income levels in the host country. In order to
augment the development process the host countries often make attempts to channelize
these FDI investments into new infrastructure and other projects. It encourages
investment in host country by providing new markets, demand for inputs like labor, new
technology, etc., employment generation is the key advantage of FDI.
Competition from multinational companies can lead to increased productivity and
greater efficiency in the host country. Furthermore, FDI also results in the transfer of
more advanced technology, job creation, skill development in host country.
It creates a sense of globalism and improves understanding between participating
countries and can lead to sustainable living conditions.
FDI in India It was first introduced into India during 1991 after the liberalization of business and
trade policies. But India disallowed overseas corporate bodies to invest. It imposes cap
Dr.I.Janaki
4
on equity holding by foreign investors in various sectors. FDI is prohibited under the
Government Route as well as the Automatic Route in the following sectors.
i. Atomic Energy
ii. Lottery Business
iii. Gambling and Betting
iv. Business of Chit Fund
v. Nidhi Company
vi. Agricultural and Plantations activities with some exceptions
vii. Housing and Real Estate Business with some exceptions
viii. Trading in Transferable Development Rights (TDRs)
ix. Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes.
Recent Policy Measures by the Government of India:
100% FDI allowed in medical appliances
FDI cap increased in insurance & sub-activities from 26% to 49%
100% FDI allowed in the telecom sector.
100% FDI in single-brand retail.
FDI in commodity exchanges, stock exchanges & depositories, power exchanges,
petroleum refining by PSUs, courier services under the government route has now been
brought under the automatic route.
Restrictions in tea plantation sector are removed.
FDI limit increased to 74% in credit information & 100% in asset reconstruction
companies.
FDI limit in defense sector increased from 26% to 49% in Government approval
route and Foreign Portfolio Investment up to 24% is permitted under automatic route.
Construction, operation and maintenance of specified activities of Railway sector opened
to 100% foreign direct investment.
India needs around $ 1 trillion between 2012-2013 and 2016-2017, in the 12th Five Year
Plan period to finance infrastructure development that include sectors such as ports,
airports, highways, and so on. In order to enter into Indian retail market, the foreign super
markets have to invest $50 million on infrastructure and logistics within a three year
periods. Also the investment must be in new back-end infrastructure, and not in existing
acquisitions. This includes cold chain, warehouses, processing plants and logistical
support and is critical for the smooth functioning of a retail firm.
FDI in Different States
Maharashtra was in first place to attract foreign in India during 2000 and 2014. The
National Capital Region (NCR) including some parts of UP and Haryana, received $45.77
billion FDI and counted 19% of India‟s total FDI. Tamil Nadu stood third highest in FDI
inflows worth $15.80 billion during the same period.
The highest FDI of USD 83.73 billion came from Mauritius, second by Singapore USD
29.19 billion, third the UK USD21.76 billion and fourth by the US USD 13.28 billion.
During the same period India received USD 236.46 billion foreign inflows. The
government is making efforts to attract FDI from all major investing nations. The FDI
5 INFORMATION NEEDS AND INFORMATION SHARING AMONG
MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN
EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
policy is liberalized in several important sectors like insurance, defense, construction and
medical apparatus sectors.
To magnetize foreign investors the government is ardently engaging with states through
„Make in India‟ campaign to improve ease of doing business. After the launch of „Make
in India‟ initiative in September 2014 there is an increase in FDI equity inflows by 48
during October 2014 and April 2015.2
Different surveys and industry experts have revealed that India is amongst the top
destinations for investments across the globe. Following are some facts and figures
pertaining to the FDI developments in the world.
Key trends in 2014 • Africa attracted the largest inward investment, with $87bn of FDI announced in 2014.
• India, Malaysia, Vietnam and Japan were four of the rapidly growing target countries
for FDI in 2014.
• Inward investment into the area comprising Russia, the Commonwealth of Independent
States, and central, eastern and south-eastern Europe decreased by 24%, with $44bn of
FDI.
The apex supply country in 2014 was the US, and peak sector was real estate, top target
country was China. Total capital investment from FDI was $649 billion and total
emploment created in 2014 were 1,843,609. FDI projects into India increased by 47% in
2014 with 641 projects declared. Indian overseas FDI decreased by 19% to 226 projects in
the same year. The table shown in Appendix – I gives the percentage of FDI net inflows
and outflows in GDP of concerned countries namely, Australia, Brazil, China, France,
Germany, India, Italy, Japan, Russian Federation, Singapore, South Africa, Spain,
Switzerland, Sweden, the UK and the USA. Among these countries except Japan, South
Africa, the UK and the USA all other countries reduced their outflows of FDIs. As far as
inflows are concerned most of the countries are welcoming the investments from abroad.
The major causes of fluctuations in FDI flows
According to a World Bank study, the FDI to emerging markets is going to decline in
2015 because of demanding concerns about the global economy. The major reason for
this decline in investment in these markets over the next two to three years would be the
macroeconomic instability. This opinion is expressed by Multilateral Investment
Guarantee Agency (MIGA) of World Bank.
The unwavering global economic uncertainty seems to have infected the overall business
attitude, and the economic pessimism is reinforcing the stagnant FDI levels. As fuel to the
existing fire the IMF lowered its world growth estimates for the 6th
straight time in two
years, in October, 2014, cautioning a slow growth in the developing world.
According to MIGA study the overseas financing into developing countries is believed to
fall 4.5% next year after raising 2% in 2013. However, the FDI has increased four times
at around $600 billion a year, than the levels seen a decade ago. Growing investments into
sub-Saharan Africa and South Asia are a bright spot, although Europe and Central Asia
are noticing declines.
2 Nirmala Sitaraman, E-government report , web pages.
Dr.I.Janaki
6
But the MIGA said most of the 459 companies it surveyed about their activities in
emerging markets were not planning to withdraw or cancel existing investments. Though
income gap between developed countries particularly OECD countries and emerging
countries like India has continued to whither but still remains large. It mainly stems from
the ever increasing population and relatively declining resources. It results in productivity
shortfall and structural bottlenecks. The hurdles in foreign direct investment have been
lessened in particular in telecom, civil aviation, railways, defense, construction and multi-
brand retail. Financial reforms are gradually implemented and the Reserve Bank of India
has taken steps to increase competition in the banking sector as well as its efficiency but
more is needed to achieve a more efficient allocation of capital. Moderation in
administrative and regulatory burden on companies and encouraging infrastructure
development would encourage foreign investors to start business in India. To increase the
creation of formal jobs, shrink labor market duality and help the participation of women,
labor laws should be simplified and rigorous employment protection policies should be
reconsidered. Improved learning and training systems would promote the group of
qualified workers and augment labor productivity. Women workers should be given
special concern and job guarantee. Updating labor laws is vital to support employment
formalization and to trim down labor market segmentation, gender bias and income
inequality. Raising the quality of education and training systems would also promote the
economy‟s ability to respond to new market opportunities and thus job creation, thereby
reducing severe poverty and income inequalities.
Conclusion
Foreign Direct Investment fundamentally exploits the existing natural resources in the host
country. When it is used people have to keep in mind that sustainable ways of utilizing
the FDI will save the country from disappearance of natural resources. These ways
include the customs, traditions, culture, social needs, age of population etc. They are
developed in a region on the basis of geological and environmental conditions. The
customs, traditions, environment and weather conditions, social needs etc., of a desert area
are not same with that of a green or wintry regions. Hence one cannot apply the same
rules all over the world. It is always better to avoid esteem needs of the society because
they drive away the health of both people and the nature. To maintain balance is crucial
for sustainable development. Otherwise world has to face poultry growth in sustainability
of natural resources in the years to come.
Referrences:
1. http://self.gutenberg.org/articles/foreign_direct_investment web pages
2. FDI http://self.gutenberg.org/articles/foreign_direct_investment
3. Tadashi ITO, „Export Platform Foreign Direct Investment: Theory and
Evidence‟,http://www.ide.go.jp/English/Publish/Download/Dp/pdf/378.pdf
4. ARUN KUMAR, „Walmart to buy 49% in holding company of Bharti Retail,
Cedar Support for Rs 455.8 cr‟, ET Bureau 9th
May, 2013
5. World Bank Report, 2013
6. http://economictimes.indiatimes.com/articleshow/20319850.cms?_source=content
ofinterest&utm_medium=text&utm_campaign=cppst web pages
7. http://finmin.nic.in/stats_data/nsdp_sdds/index.html web page
7 INFORMATION NEEDS AND INFORMATION SHARING AMONG
MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN
EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
8. Dale R. Weigel, Neil F.Gregory, Dileep M.Wagle, Lessons of Experience – FDI,
International Finance Corporation and Foreign Investment Advisory Service, Washington,
D.C. USA 1997.
9. Byung-Hwa Lee, FDI from Developing Countries: A vector for Trade and
Development, OECD ilibrary.org. EBooks.
10. Anthony Bende Nabende, „Globalization, Fdi, Regional Integration and
Sustainable Development: Theory, Evidence and Policy, ISBN-13 EBook.
APPENDIX - I
FDI – Outflows and Inflows
Count
ry
Percentage in GDP
Country
Percentage in GDP
2009 2010 2011 2012 2009 2010 `2011 2012
X Y X Y X Y X Y X Y X Y X Y X Y
Austra
lia
3.
1
1.
8
3.
1
2.
4
4.
8
1.
2
N.
A
1.
0
Russian
Federati
on
3.0 3.5 2.8 3.5 2.9 3.5 2.6
2.4
Brazil
1.
9
0.
3 2.
5
0.
8 2.
9
0.
2 3.4
0.
4
Singapo
re
12.
8
12.
4
24.
7
11.
7
22.
8
10.
7
20.
6
8.4
China
2.
6
1.
6 4.
1
1.
5 3.
8
1.
4 3.0
1.
4
South
Africa
1.9 0.5 0.3 0 1.5 0 N.
A
1.1
Franc
e
1.
0
4.
2 1.
5
2.
7 1.
6
2.
3 2.5
1.
5 Spain
1.3 1.5 3.3 3.1 2.2 2.9 2.7 0.4
Germ
any
1.
1
2.
5 0.
9
2.
8
1.
2
1.
3 0.8
2.
6 Switzerl
and
2.1 0.2 3.7 0.1 2.4 N.
A
N.
A
N.
A
India
2.
6
1.
2 1.
5
0.
9 1.
7
0.
8 N.
A
N
.
A
Sweden
2.2 6.3 0.4 5.0 0.5 3.9 0.7 4.1
Italy 1.
9
2.
1
-
0.
3
0
.
9
1.
3
2.
2
0.
4
1.
4 UK
0.
2
1.
2
2.
7
1.
7
1.
5
3.
8
2.
3
2.
9
Japan 0.
3
1.
6 0
1
.
1
0
1.
9
N.
A
2.
1
USA
1.
0
2.
3
1.
9
2.
5
1.
7
2.
9
1.
3
2.
7
Source: World Bank Report 2013. = Outflows; Y=Inflows
JAMES AFEBUAMEH AIYEBELEHIN
8
ISSN NO. 2394- 8965 GJMMS
Vol. – 1, Issue – 3, July-September - 2015
INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS
OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST
LOCAL GOVERNMENT AREA, EDO STATE.
JAMES AFEBUAMEH AIYEBELEHIN
(B.SC, M.LIS, CLN)
Lecturer, Department Of Library And Information Science,
Ambrose Alli University, Ekopma-Nigeria
ABSTRACT
This study surveyed the information needs and information sharing among managers of
SMEs. The descriptive survey research design was used. The instrument used for data
collection was questionnaire. Descriptive statistics was used to analyze the data collected.
The population of this study consisted of all SME managers within Ekpoma, Esan West L.
G. A. However a sample size of 200 SME managers were randomly selected and used for
this study. It was found that SME managers require more customers' information and their
customers were viewed as the most essential sources of information. SME managers
possess SSCE as their highest educational qualification and their highest annual income
ranges from N 51,000-N100, 000. It was also found that SME managers have positive
attitude towards information sharing. However, SME managers were cautious about the
nature of information they share. Physical/verbal communication was found as the major
channel of sharing information. The recommendations were that; SME managers should
maintain cordial relationship with their customer, and SME managers should equally build
a positive attitude among their colleagues to enhance information sharing. Workshops,
seminars, conferences should be organized by Government and Non-Governmental
organizations to prepare SME managers for a competitive environment.
Words count: 193
Keywords: SME, Managers, Information need, Information Sharing.
INTRODUCTION
Information has remained a veritable tool to man just as air of life he breathes for healthy
growth. This simply means that information serves as the major basic need in a man's life.
It is imperative to note that man has need of wide range of information in other to run
daily activities most effectively in his life time. The need to find what has to be, people
utilize information in various ways. Thus information is a resource that must be acquired
and used in other to make informed decisions. Every individual whether literate or non
literate, self employed or civil servant need information for decision making.
According to Utor (2000), information is understood in terms of books, journals,
magazines, public and private sector, documents of all kind of whether published for mass
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INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
circulation or unpublished and of restricted or confident nature, results or research efforts
which are made available to colleagues in form of reports, books articles and non print
materials.Traditionally, information has been stored in people's mind and it has been
updated and modified through social contact, learning and communication. As society has
grown and become more complex, a large quantity of information has been required.
However, increasingly numbers of people have been deprived access to information
through poverty, illiteracy or lack of knowledge and the disadvantage have been suffering
from increased information deprivation.
There is no universally accepted definition of Small and Medium Scale Enterprise
as a term, many scholars and researchers have defined the term small and medium scale
enterprise from different angles and perspective. The definition even change with time
depending on the level of development of the country (Akinbinu, 2003).
Under the venture of Capital Trust Fund Act 2004 (ACT 680) small and
medium scale enterprise (SME) is characterized as an industry, project, undertaking or
economic activity whose asset base excluding land and building does not exceed the cedi
equivalent of U.S one million dollars in value (Aregbeyen, 1999 CBN: 1996). The small
and medium industries and Equity Investment Scheme (SMIEIS) defines small and
medium enterprise as any enterprise with a maximum asset base of two hundred (200)
million naira excluding land and working capital and with the number of staff employed
not less than ten (10) or more than three hundred (300). Small and medium enterprise
have been defined along a broad range of size and type in terms of size, measures
used to classify SMEs include employment assets and revenue.
The definition of medium- sized industries may vary among different countries. There are
majorly two keys and ways to define the size of a business:
- The number of revenue,
- The number of employees.
Some industries are a lot more labour intensive and the definition of "small" may include a
large number of employees, other industries especially those that rely on technology or
specific skills of an individual may reach only a low employee number before being
bumped into the next size category.
The central Bank of Nigeria defines small and medium scale enterprise in Nigeria
according to asset base and number of staffs employed. The criteria are an asset base
between five (5) million and five hundred (500) million naira and staff strength between
eleven (11) and three hundred (300) employees.
Whatever definition it takes, SMEs are important to socio-economic
transformation and it is estimated that SMEs employ 22% of the adult population in
developing countries (Daniels and Ngwira, 2003). Apart from the number of employees,
there are other key factors that characterize the SMEs and these are related to the
management and the nature of operations. The SMEs may be managed by their owners
who are often assisted by family members (Okello-obura….. et al, 2009) in this regard,
the decision making system is quite flexible, informal and dependent on the personal
drive of one or more executives. By their vary nature of operating, the SMEs have a
JAMES AFEBUAMEH AIYEBELEHIN
10
narrow range of products/services and a relatively simple and unsophisticated
management structure with a narrow tolerance of risks. Individual SMEs experience
difficulties in achieving economics of scale in the purchase of inputs and one often
unable to take advantage of market opportunities that requires large production quantities
homogenous standards and regular supply. Above all, SMEs are confronted with
situations where decisions are made haphazardly and not based on accurate information.
In information science literature, information is understood as the need and
demand necessary to life's success and fulfillment.
Apart from Land, Labour, Capital and entrepreneur which happens to be four (4)
factor of production in business , Nwalo (2009)noted that information is at present
believed to be a fifth factors of production which is by no means inferior to the four
factor of production. This is to say that information is of paramount importance to both
small and medium scale enterprise. Tamiyu (2002) cited by Odunewo and Omagbemi
(2008), noted
that at all levels of human needs, individual would require information about the nature
and extent of their needs and about the resources they can harness to meet these needs.
Information is crucial not only to an individual need but as well as handling
managerial processes of business. Aiyebelehin (2011) citing Buckland (1991) defines
information as a process which occurs in the mind when a problem is united with data that
can solve it. Information is a part of a process of converting messages received into
knowledge. Within a business organization like small and medium scale enterprise, this
information must be gathered in the form of data and appropriately processed by the
information managers before it can be utilized.
Vividly, information needs and information sharing habits are seldomly used
because they are different in terms of analysis, while information need in nature is the
findings of that which is to fill a conscious or unconscious gap, information sharing habit
on the other hand tends to display the way and manner one pass out his or her findings
after the search of a valuable information. According to Jorosi, Holland (2000) supports
the sharing of information and ideas for effective product development. Sharing
information appropriately and securely is a vital step in helping organizations work
together to deliver better services to the public. Information sharing is important in
business in helping to promptly meet customers and clients needs.
To Wilson (2008) information is an individual or groups desire to locate and
obtain information to satisfy a conscious or unconscious need. Information is desirable in
human life; information is not an opportunity cost i.e. To say information cannot be
forgone for another as it (information) is inevitable.
Information needs can also be defined as that which may be vocal or written and
made known to the library or to some other information system. Therefore the need and
sharing habit of information has to be expressed in a particular form either orally,
verbally, by asking or questioning for it in writing.
Information need and sharing habit of managers of small and medium scale
enterprise varies according to various factors responsible in perpetuating its functions. The
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INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
factors maybe background qualification of the manager's, job affiliation, individual's
employment has a great effort on his information need and sharing habit.
The need for the production of value added goods and services may put pressure on the
managers in business organization to seek for relevant information to improve their
information. Hwang (2011) reported that employees in a large insurance company in
Korea are motivated to use information effectively to make better decisions and seek for
information and share information to increase their productivity. When information is
appropriately managed, it goes a long way to enhance decision making, information is
paramount within the walls of an establishment, and information is a continuous process.
De Alwis and Higgins (2011) established that managers in Singapore used information to
prepare reports, strategic plan and executive summary. Information is necessary to make
plans, without good information an establishment will be stagnant.
The business environment is constantly changing and evolving. Business
themselves change over time and as they grow and develop, the information needs of the
managers change as well, the information system needed to support growth and
development will also need to change (Vakola and Wilson, 2004). It is therefore
important to review those information needs so as to continue to adjust business
operations with changing market needs. Information needs of managers varies from
manager to managers, the information needs of SMEs managers may range from accessing
finance/capital, developing managerial skills bench marking, business trends, new
technologies, government services available to business e.t.c.
Many managers do too much information seeking and less information sharing
and this often leads to information silo. Information silos exist because management
does not believe there to be enough benefit from sharing information and because
information might not be useful to personnel in other systems.
To ensure survival in today's competitive business world, small and medium
enterprise requires access to accurate and relevant information both at the start up
stage and during their day-to- day operations. small and medium enterprise generally
tend to be information intensive, this various interventions maybe required on the part of
the management to ensure that information needs and resources of the enterprise are met
and well managed through the use of information, top managers of firms are able to
reactively and pro-actively adapt their organizations environmental changes in order to
survive and prosper. Opara (2004) noted that the flow of information or data in an
organization is a continuous record of the status of the pertinent elements that affects the
survival and growth of the organization. Managers of SMEs need to have access to
adequate information to enhance productivity and to facilitate market access. The
establishment of an active SMEs sector and the effective utilization of quality business
information has been identified as crucial in attaining long-term and sustainable
economic growth for developed and developing countries alike (Corps, 2005). The
SMEs need tailor made information solutions i.e business information services that assess,
JAMES AFEBUAMEH AIYEBELEHIN
12
verify and apply information to a specific business problem (okello-Obura ….. et al,
2008). Human beings are continuously engaged in some activity or other in order to satisfy
their unlimited wants. Everyday, we come across the word "business" or "businessman"
directly or indirectly. Business has become essential part of modern world. Business is an
economic activity which is related with continuous and regular production and distribution
of goods and services for satisfying human wants.
The etymologies of 'business' stem from the state of being busy and imply
commercially viable and profitable work. Olagunju (2008) defines business as an
enterprise that engages in the production of goods and services that provide satisfaction for
consumer's i.e to say that apart from the objective of earning profit in establishing a
business enterprise, consumers satisfaction is also another objective. A business is a
concern, an enterprise or organization set up by an individual or group of individuals or
group of individuals for purpose of making profit.
STATEMENTS OF THE PROBLEM
Several studies on various aspects of information needs have been carried out in
the field of social science, humanities, science and technology, a number of reviews and
bibliography covers various aspects of information needs, however not many studies have
attempted to investigate information needs and sharing habit of small and medium scale
enterprise managers. Most previous literature are focused on information needs and
seeking behaviors, hence, not much has been done so far to cover the aspect of
information needs as well as information sharing habits in Nigeria.
Information is an essential resource for development. Small and medium scales
enterprise managers generally need information to enable them various duties in their
fields of endeavours.
Considering that the world and the rural areas in particular function on the flow of
information and that information itself is a prime resource, this study sought
to determine the characteristics that impact upon the manner in which information is
sought, used and shared by small and medium scale enterprise managers and the study
will cover all phrases of their information needs and sharing habits as opposed to previous
literature that focused on a particular aspect of information need and seeking behaviour.
This study is therefore designed to study the information needs and sharing habits of small
and medium scale enterprise managers.
OBJECTIVES OF THE STUDY The general objective of this study is to survey the information needs and sharing
habits of managers of small and medium scale enterprise.
The specific objective of this research studies are:
1. To find out the information needs of managers of small and medium enterprise.
2. To identify their various sources of information.
3. To examine the attitudes of small and medium enterprise managers towards
information sharing.
4. To unveil how information sharing among managers of small and medium
enterprise is done.
5. To examine the type of information managers of SMEs are willing to share.
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INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
6. To discover the problems encountered by small and medium scale enterprise
managers when sharing information
RESEARCH QUESTION
1. What are the information needs of managers of small and medium enterprise
when carrying out their duties?
2. What are the various sources available to managers of SME when consulting
information?
3. What are the attitudes of SME managers towards information sharing?
4. How is information sharing carried out within small and medium enterprise?
5. What are the types of information managers of SMEs are willing to share?
6. What are problem encountered by SME managers in the course of information
sharing?
LITERATURE REVIEW
INFORMATION AND INFORMATION USE BY SME MANAGERS
Information is universally accepted as important resources. In any organization,
information is prerequisite for effective decision making. Consequently, the position or
handiness or awareness and use of right timely information ensure organizational
effectiveness. Information has been subjected to various definitions due to the increase
growth in the use of the term.
Aina (2004) opined that information means many things to different people. To
some people, information means news, while others refer to information as facts and yet
others view information as data. To the telecommunication engineer, information is
associated with bits and data, the philosophers identify it with recorded facts, with the
context or content or with the experience stored in the human mind, the microbiologist
consider information as the genres in DNA which are transmitted from one generation to
another and to the librarian, information is associated with recorded knowledge.
Information can be viewed as a "data that have been put into meaning and communicated
to a recipient who used it make decisions". Information is knowledge and wisdom that
contribute to the cultural, economic, educational, political and well being of a society or
nation. Afolabi (2003) identified setbacks to the flow of information like social, economic,
environmental, occupational and infrastructural setbacks. If these setbacks were not
removed, it would be difficult for any free flow of information from the sources through
media to the users.
Uhegbu (2001) saw information as power by which an individual or group can
get it's own ways in a social relationship. Information as powers confer unequal
opportunities on people as those who get it gets things done faster and easier while
those who do not have it are left out right in the scheme of opportunities. Information is
knowledge when it is performing the role of impacting knowledge on to an individual
where it reduces uncertainty. Information is intangible; it becomes tangible when it is a
thing, that is to say a physical object such as data or documents.
Austin (2007) is of the view that information starts whenever a message is conveyed from one person to another. It starts from our room when instructions are passed
from one member of the household to another. It continues in the class when ideas are
JAMES AFEBUAMEH AIYEBELEHIN
14
passed across from the lecturers to the student, it is equally passed within subordinates in
an organization. Information is passed in different forms and has classification. In other
words, every individual or an organization needs a classified information on peculiar
information in order to function and achieve it's desired goals.
Afolabi (2003) argued that information is indispensable, an ingredient for social,
economic, industrial, political and technological advancement as it is apparent in every
facet of human endeavors. Burch and Grudinitski (2002) further viewed information as a
message of and reception of intelligence and knowledge which "appraise and notifies ,
surprises, reduce uncertainty, records additional alternative or help eliminates
individuals and stimulates them to action". Thus, information is not an end in itself but a
means to an end and so the origin of the need which can be intellectual, social and
cultural. Fosekette et al (2000) point out that "information is an explicit ingredient of
knowledge, but only when a human mind get to work on it becomes knowledge of itself.
Nwakwo (2004) perceives information to include "a wide range and variety of things
ranging from oral and printed words, figure, statements, files and documents to such
intangible elements as to needs, signals, rays or colour and waves". In the light of all the
definitions, it can be inferred that information is not a discipline like chemistry but it is
the bedrock of every discipline and every development. Without information, human
being will be wallowing in ignorance and thriving in chaos.
Information is the raw materials of managerial work. A large part of the
manager's information comes from or concerns the environment external to the
organization. Customer preference, competitor strategies, technological advancements,
government regulations and social and economic conditions are all in a constant state of
flux. Traditionally, management research has always recognized the important role of
information in managerial work. Managers use information in managerial decisions. The
work of managers is information intensive, managers are exposed to a huge amount of
information from a wide range of sources and selectively use the information to make
day to day decisions and to formulate longer term strategies.
The classic conceptualization of managerial work by Mintzberg (1999) clearly
articulates how the acquisition, dissemination and use of information lie at the heart of
managerial work. Mintzberg divides the work of mangers into three set of interlocking
roles.
- Interpersonal
- Informational and
- Decisional roles
By virtue of the formal authority vested in the position, the manager performs three
interpersonal roles:
- As figure head, the manager represent the organization in informal matters
- As leader the manger defines relationship with subordinates
- Finally, as liaison, the manager interacts with external persons to gain information
and favours.
Interpersonal roles give the manager access to many internal and external sources of
information and so enable three informational roles:
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INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
- As monitor, the managers continually seek and receive information from a variety
of sources in order to develop thorough understanding of the organization and its
environment.
- As disseminator, the manager transmits special information into the
organization's information out to the environment. The unique access to information
combined with the authority empowers the managers to use information he has to
discharge four decisional roles:
- As an entrepreneur, the manager initiates "improvement project" that exploits an
opportunity or solve problem.
- As disturbance handler, the manager deals with unexpected but important events.
- As resource allocator, the manager controls the distribution of all forms of
organizational resources.
- Finally, as negotiator, the manager engages in major negotiations with other
organizations or individuals. The three set of ten managerial roles meld into a portrait of a
manager as an "information processing system".
In essence, the manager is an input output system in which authority and status give rise to
interpersonal relationships that lead to inputs (information) and these in turn leads to
outputs (information and decision) one cannot artibitrarily remove one role and expect the
rest to remain intact (Mintzberg, 1999) in fact, "it is the manager's informational roles that
tie all managerial work together linking status and the interpersonal roles with the
decisional roles" (Mintzberg, 1999).
Managers in business organizations may seek for and use information for
problem solving, decision making, business planning, social competence, creativity and
innovation, conflict resolution, market research and improved productivity all of which
have direct impact on business performance of an organization. Information seeking by
managers includes searching, locating selecting, comparing or differentiating, acquiring,
consulting, trail and error and even environmental scanning. Environmental scanning is
defined as the acquisitions of external environment, the knowledge of which would assist
management in planning the organization's future course of action (Choo and Auster,
1999).
Aguilar (1997) defines environmental scanning as "scanning for information
about events and relationships in a company's outside environment, the knowledge of
which would assist top management in its task of charting the company's future course of
action" certainly not all of the information from scanning may be actually used in making
strategic decisions, yet an piece of such information whether it is obtained with or
without a purpose could have an impact on managerial decision making.
Research on environmental scanning began in the 1960s with path findings
studies by Aguilar (1967) and Keegan (1968) since then most of the studies have revolved
around a few research themes: the effect of perceived environmental uncertainly on
scanning; the focus of scanning; information sources used and scanning methods. In each
of these areas it is possible to discern a consistent picture of how managers scan. With
regard to environmental uncertainty, most studies found that managers who perceive
greater environmental uncertainty tend to do more scanning (Auster and Choo, 1993. The
JAMES AFEBUAMEH AIYEBELEHIN
16
focus of scanning is on market related sector of the external environment, with
information on customer's competitors and supplies being the most important (Jain, 2002).
SOURCES OF INFORMATION OF SME MANAGERS
Sources of information are those medium through which information seekers get
relevant information. There are two (2) broad sources of information: formal and informal
sources in the view of Efe (2006) information sources are divided into four (4) types
which include people, organization literature and information services. Efe (2006) further
referred to those sources of information as those who are highly knowledgeable in a
particular field of study, also referred to as resources, persons, they provide authentic of
first hand information, facts ideas and data on any issue, events, subject topic e.t.c. people
as a source of information are used when the required information cannot be found in
literature of publications or when the people are ignorant of how to sought for information
in the case of SME managers, newspapers, television broadcast, co-workers e.t.c. are
sources of information other activities that serves as information source includes, seminar,
workshops, conference, meetings e.t.c.
The third source of information as out together or introduced by Efe (2006) is
literature. They are either primary or secondary in nature; the primary literature consists
materials which are original in nature and represents new knowledge. Information in
primary literature has not been modified. Examples include research report, thesis and
dissertations, conferences, proceedings. The secondary literature originates from the
filtering of primary sources through modification or re-arrangement. They include
textbooks, encyclopedia, abstract and indexes, dictionaries e.tc. Which SME managers
can use in meeting their information needs.
Dua (2000), studying Chinese SMEs using face to face interviews concludes that
some managers mostly used personal sources of information and rarely used formal
information services. Mc Lachlan (2003) through telephone interviews investigated
various aspects associated with the information needs of small business executives.
Results suggested that:
- Business managers relied more on magazines and to a lesser degree on trade
show, workshops, suppliers, seminars and professional organizations were the most
frequently cited sources of oral information.
- Market and economic conditions were the most frequently cited sources of oral
information. In a national study of over 200 CEOs in the Canadian publishing and
telecommunication industries, Auster and Choo (2003) found that the most frequently
reported sources were internal and personal.
Chalmers (1999) undertook a qualitative study on the needs for and uses of published and
personal information by managers in New Zealand. Among the findings was that:
- Most respondents did not systematically seek information from secondary
published sources to assist them in decision making and
- Environmental scanning usually involved the use of primary sources and where
published sources used, in most cases, they were supplements to personal sources.
SME managers rarely use formal sources when seeking for information as they mainly
sought information via personal sources.
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INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
Bournois and Romani (2000) in their study of environmental scanning of firms in
France found that eight percent of the firms sourced their needed information form
databases and only five percent of them using competitive intelligence tools.
Popoola (2011) citing Jorosi (2005) reported that the managers in small and
medium enterprises in Botswana spent their time seeking for competition information,
customer information, economic information, technical organizations work in information
rich environment and they often faced with the problem of information overload. It must
be noted that managers are socialized to depend on an accurate, objective and generally
sufficient source of information, maybe to improve their creative and innovate efforts.
According to Popoola (2011) citing Rosewell (1997) asserted that company
information is commonly sought throughout industry and sources of business information
include information brokers, financial data, company accounts, financial news,
shareholders, stock brokers, internet, report, newspapers and magazines, broadcast media
(radio and television) textbooks e.t.c. similarly, Houtari and Wilson (2001) posited that
sources of business information are direct contact, printed information materials and
electronic information services. Business managers prefer to seek and obtained needed
information from the available sources that are current, relevant comprehensive and
reliable.
INFORMATION NEED AND SHARING HABITS OF SME MANAGERS
Line (2001) defined information need as what an individuals ought to have for his
or her work, his or her research, his or her edification, his or creation e.t.c. information
therefore is a necessity for substantial growth in all ramification of an individual's life.
Adewunmi (2003) also reported that information needs vary with users, time purpose,
location and alternatives. Hernon and Chen (2004) submit that information needs occur
whenever people find themselves in situation that required some form of knowledge
resolution.
Kumar (1998) also viewed that the identification of information needs maybe
expressed as an input process – output model the basic component of the systems are:
- Problems (Existing solution)
- Problem (Solving process) and
- Solution
With the afore-mentioned ideas by the investigators, information need is focused on an
individuals' best interest, when a problem exist, the most appropriate solution is needed,
and the solution hence is the information need. The concept of information need have been
proved intractable by Wilson (2000) by the simple reason that need is a subjective
experience which is not directly accessible to an observer. Information needs are those
innate desire or quest for relevant facts to be processed and used to settle life's option. The
information need of SME managers is determined by the type of information sought for,
the source of the information and the rate at which the information is being communicated
or transferred. Young (2002) found that information needs often reflect the age and
changing socio-economic, health, family and personal circumstances of people and are
therefore not permanent but ever-changing. Belkin et al (2004) describes information need
as an anomalous state of knowledge. It is pertinent to note that everybody needs
JAMES AFEBUAMEH AIYEBELEHIN
18
information to reach his or potential conscious activity under taken by human being is
directed towards the satisfaction of need. The more information available to a system
about itself and about it's environment, the more reliable it becomes and the greater its
chance of survivals (Ihenyen, 2010).
Mchombu's (2000) small explanatory study probed the information needs of
women in small business in Botswana in order to establish how these needs arose and
factors which create information sharing habits. The study employed structured
interviews as the main data gathering tool. Among the key findings, it was found that
respondents' information needs centred on business management, sources of financial
assistance, business diversification and legal information. Shokane (2003) investigated the
extent to which small and medium – sized enterprise in Acornhoek, (South Africa) make
use of business information for sustainable competitive advantage. The study utilized a
pre-structured questionnaire to gather data. The study's finding revealed that:
- Many business managers lacked information in managing their business.
- Many were not aware of their information needs and how business information
devices could support and advance their business activities when sharing information.
- Business managers still relied on informal sources for managing their business
enterprise consequently, the findings of a study conducted in one geographical and social
context have limited applicability in another context because of the significant differences
in the context, likewise, the information sharing habits of mangers in a developing country
context should not be generalized to a developing country or vise versa.
As a result, we know very little about sharing manager's information needs and sharing
habit. The net result of this limitation is a gap in the empirical literature that needs to be
filled.
RESEARCH METHOD In order to achieve a comprehensive result, this research work was
carried out using the descriptive method because it involves a systematic and
comprehensive collection of data or information about the opinions, attitude, feelings and
behaviors of people. Utsoko (2002) reaffirmed this when he said that the descriptive
research is used to collect data from a relatively large number of classes at a particular
time in order to foster the current status of particular population. The data intended for this
study was collected through application of questionnaires.
The population of this study comprised of all small and medium scale enterprises
in Esan West Local Government Area, Ekpoma. Presently, there is no official data on the
exact number of small and medium scale enterprise in Esan West L.G.A., but empirical
evidence shows that there are hundreds of them scattered around the local government
with many of them situated at Ekpoma, the Local Government headquarter.
Considering the nature of this study, a sample of two hundred (200) SME managers were
randomly selected from the available managers of small and medium scale enterprise in
Esan West L.G.A., Ekpoma. The method of data analysis that was used in this project was
the simple percentage (%) and frequency tables. The essence of this was to help the
researcher to see the similarities and relationship of the data.
DATA ANALYSIS AND PRESENTATION OF RESULTS
QUESTIONNAIRE ADMINISTRATION AND RESPONSE RATE
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INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
A total of two hundred (200) questionnaires were administered. One hundred and
fifty eight (158) copies were successfully retrieved, representing 79% response rate and
these were found usable for analysis.
Table 1:
Demographic Profile of Respondents
Variables Frequency Percentage (%)
Gender Male
Female
57
107
36.1
63.9
Marital status Single
Married
Divorce
99
58
1
62.7
36.7
0.6
Highest Educational Qualification Primary Cert.
Junior
SSCE
Diploma
Degree
Post graduate
7
9
61
41
37
3
4.4
5.8
38.6
25.9
23.4
1.9
Income per annum 10,000- 50,000
51,000-100,000
100,000 & Above
31
68
59
19.6
43.1
37.3
Table 1 shows the results of the demographic profile of the respondents. From the table,
we can see that females were more than males with 101(36.9%) and (36.1%) respectively.
Among the managers, those that were single dominated the respondents with 99(66.7%) as
against those that were married with 58(36.7%) and divorce 1(0.6%) respectively. For the
highest education qualification of the managers, 61(38.6%) has SSCE, 41(25.9%)
diploma, degree 37(23.4%), post graduate 3(1.9%), Junior Certificate 6(5.8%) and primary
school certificate with 7(4.4%) respectively.
Finally, on the income per annum, managers that receive between 51,000-100,000
dominated the respondents with 68(43%) as against 10,000-50,000 with frequency of
31(19.6%) and 100,000 above with frequency of 59(37.3%).
Table 2:
What Information Do You Need?
S/N Items SA A D SD
1 Where to get goods 79
(50%)
70
(44.3%)
3
(1.9%)
6
(3.8%)
2 How to attract
customers
94
(59.5%)
51
(32.3%)
11
(6.9%)
2
(1.3%)
3 Taxes 26
(16.5%)
54
(34.2%)
65
(41.1%)
13
(8.2%)
JAMES AFEBUAMEH AIYEBELEHIN
20
4 Government
Regulations
20
(12.7%)
59
(37.3%)
65
(41.1%)
14
(8.9%)
5 Social-cultural issues 17
(10.8%)
59
(37.3%)
62
(39.2%)
20
(12.7%)
6 Festive seasons 53
(33.5%)
61
(38.6%)
33
(20.9%)
11
(7%)
7 Business management 54
(34.1%)
88
(55.7%)
14
(8.9%)
2
(1.3%)
8 Customer's retention 72
(45.5%)
70
(44.3%)
14
(8.9%)
2
(1.3%)
9 Customers information 63
(39.8%)
77
(48.8%)
14
(8.9%)
4
(2.5%)
Table 2 revealed that the most paramount information need of SME managers is on how
to attract customers with a total of 91.8% strongly agreed and agreed and the information
of less concern to SME managers is on social cultural issues as 51.9% Disagreed to the
need of this information.
Table 3:
Sources of information
S/N Where do you get
business information
from?
SA A D SD
1 From my customers 80
(50.6%)
50
(31.6%)
20
(12.7%)
8
(5.1%)
2 From my business
associates
54
(34.2%)
75
(47.4%)
24 (15.2%) 5
(3.2%)
3 Government officials 17
(10.8%)
36
(22.7)
85
(53.8%)
20
(12.7%)
4 Newspapers 32
(9.5%)
55 (23.4%) 55
(51.9%)
16
(15.2%)
5 Government
publications
15
(9.5%)
37
(23.4%)
82
(51.9%
24
(15.2%)
6 Union/Associations 25
(15.8%)
49
(31.1%)
68
(43%)
16
(10.1%)
7 Internet 36
(22.8%)
65
(41.1%)
41
(26%)
16
(10.1%)
8 Library 18
(11.4%)
38
(24.1%)
68
(43%)
34
(21.5%)
9 Television/Radio 30
(19%)
63
(39.9%)
41
(26%)
24
(15.1%)
10 Watching competitors 35
(22.2%)
72
(45.6%)
28
(17.7%)
23
(14.5%)
21
INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
Table 3 revealed that the major source of information to SME managers is their customers
constituting a response rate of 82.2% strongly agreed and Agreed. The library was
however viewed as the least consulted information sources with a response rate of 64.5%
Disagreed and strongly Disagreed.
Table 4:
Reason for preferred source(s) of information
S/N Why Do You Prefer The Source
(s)?
SA A D SD
1 It is reliable 43
(27.2%)
64
(40.5%)
27
(17.1%)
24
(15.2%)
2 It is accessible 50
(31.6%)
74
(46.8%)
20
(12.7%)
14
(8.9%)
3 It is always current 55
(34.8%)
68
(43%)
23
(14.6%)
12
(7.6%)
4 It is easy to use 67
(42.4%)
54
(34.2%)
18
(11.4%)
19
(12%)
Table 4 revealed accessibility as the major reason why SME managers prefers their
consulted information sources. Accessibility superseded all other preferred sources with a
total of 78.4% responses on strongly agreed and Agreed. A close look at the table equally
shows that SME managers pay attention to reliability (67.7%), currency (77.8%) and ease
use (76.6%) while selecting a source of information.
Table 5:
Attitude towards information sharing
S/
N
What is Your Attitude towards
Information Sharing?
SA A D SD
1 To me, sharing information with my
workers is harmful
15
(9.5%)
42
(26.6%)
83
(52.5%)
18
(11.4%)
2 To me, sharing information with
workers is pleasant
14
(8.9%)
83
(52.5%)
51
(32.3%)
10
(6.3%)
3 To me, sharing information with my
workers is worthless
10
(6.3%)
22
(13.9%)
98
(62%)
28
(17.7%)
4 To me, sharing with my workers is
wise
26
(16.5%)
77
(58.7%)
43
(27.2%)
12
(7.6%)
5 I love sharing ideas with my
colleagues
22
(13.9%)
73
(46.2%)
55
(34.8%)
8
(5.1%)
6 I don‟t like sharing vital information
with competitors
53
(33.5%)
61
(38.6%)
29
(18.4%)
15
(9.5%)
7 I don't believe in hoarding vital
information as long as it won't affect
my salary
24
(15.2%)
70
(44.3%)
50
(31.6%)
14
(8.9%)
JAMES AFEBUAMEH AIYEBELEHIN
22
Table 5 Revealed that SME managers have a positive attitude towards information
sharing as 75.2% respondent perceive information sharing with workers to be wise.
However, the responses show that SME managers exercise great caution with regards to
the nature of information they give as 72.1% of managers are not willing to share vital
information.
Table 6:
Types of information SME managers are share
S/N What Type Of Information Are
You Willing To Share?
SA A D SD
1 Profit making 21
(13.3%)
23
(14.6%)
78
(49.4%)
26
(16.5%)
2 Information of products 30
(19%)
84
(53.2%)
35
(22.1%)
9
(5.7%)
3 Information on know-how 25
(15.8%)
81
(51.3%)
39
(24.7%)
5
(3.2%)
4 Customer retention 22
(13.9%)
73
(46.2%)
52
(32.9%)
11
(7%)
5 Price of goods 23
(14.6%)
64
(40.5%)
64
(40.5%)
7
(4.4%)
6 Personal management 20
(12.6%)
52
(32.9%)
75
(47.5%)
11
(7%)
7 Business management 21
(13.3%)
74
(46.8%)
51
(32.3%)
12
(7.6%)
8 Best business location 21
(13.3%)
74
(46.8%)
47
(29.8%)
16
(10.1%)
9 Wages/salary issues 15
(9.5%)
43
(27.2%)
72
(45.6%)
28
(17.7%)
Table 6 revealed that SME managers to a large extent relent in sharing information on
profit making with 65.9% total response rate of Disagreed and strongly. However, they are
willing to share information on information of product (72.2%), information on know-how
(67.1%), and business management (60.1%) respectively.
Table 7:
How SME managers share information
S/N How Is The Information
shared?
SA A D SD
1 Through phone calls 53
(33.5%)
64
(40.5%)
30
(19%)
11
(7%)
2 Physical/ verbal
communications
50
(31.7%)
80
(50.6%)
10
(6.3%)
18
(11.4%)
3 E-mail 59
(37.3%)
62
(39.2%)
17
(10.8%)
20
(12.7%)
23
INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
4 Social networks (whatsapp,
facebook, 2go e.t.c.
47
(29.8%)
54
(34.2%)
32
(20.3%)
25
(15.8%)
5 Union/association meetings 46
(29.1%)
63
(39.9%)
24
(15.2%)
25
(15.8%)
Table 7 Revealed physical/ verbal communication to be the major channel/medium for
sharing information among managers with 82.3% total response for both strongly
Agreed and Agreed. The table equally revealed that Union/Association (69%) is the lease
likely medium of sharing information among managers
Table 8:
Challenges of information sharing
Table 8: revealed poor attitude of SME manager's colleagues to be the major problem
encountered by managers in the cause of information sharing with a total of 83.5%
agreed and strongly agreed.
DISCUSSION OF FINDINGS
Majority of the SME managers were found to be females (63.9%) while the males
accounted for (36.1%). This is similar to Jorosi (2000) findings on the information needs
and information seeking behaviour of SME managers in Botswana. It was found that there
were more females SME managers than males in Botswana.
Majority of the SME managers were found to be single (62.7%) and possess
SSCE as their highest educational qualification. This is also similar to Jorosi research
where it was found that SME managers in Botswana possess SSCE as their highest
educational qualification.
The findings revealed that information on how to attract customers with a total of
(91.8%) is the most paramount information need for SME managers. This finding is
equally similar to Olagunju (2008) findings that claims customers attraction and satisfaction is the main objective of a business apart from the objective of earning profit.
S/N What Are The Problems
Encountered When Sharing
Information?
SA A D SD
1 Network failure 43
(27.2%)
34
(21.5%)
28
(17.7%)
53
(33.5%)
2 Poor attitudes of my colleagues 78
(49.3%)
54
(34.2%)
17
(10.8%)
9
(5.7%)
3 Lack of trust 63
(39.9%)
74
(46.8%)
10
(6.3%)
11
(7%)
4 Fear of losing customers 73
(46.2%)
66
(41.8%)
9
(5.7%)
10
(6.3%)
5 Poor power supply 29
(18.4%)
58
(36.7%)
41
(25.9%)
30
(19%)
JAMES AFEBUAMEH AIYEBELEHIN
24
The findings revealed that the major source of information to SME managers is their
customers (82.2%), similarly Shokane (2003) affirmed in his investigation to the extent to
which small and medium sized enterprise in Acornhoek (South Africa) make use of
business information for sustainable advantage, it was found that managers still relied
enormously on informal sources of information, customers being one of the informal
sources. Chalmers (1999) in this regard also found out that SME managers rarely use
formal sources when seeking information as they mainly sought for information via
personal sources.
The findings revealed that accessibility is the major reason why managers of SME
prefer informal sources of information with (78.4%) total response to accessibility
preference. This is also similar to Jorosi (2000) findings which saw accessibility as the
highest frequency of information sources preference.
The findings revealed that SME managers have a positive attitude towards
information sharing as 75.2% respondent attest to this. Similarly, Holland (2000) in his
research found out that most business personnel love to share information but however, on
some occasion they relent for fear of been retarded. This is slightly different from
Shokane (2003) investigation that found out most business were not aware of how
information devices could support and advance their business activities when sharing
information and as such, they relent in sharing information. Consequently, the findings of
a study conducted in one geographical and social context have limited applicability in
another context because of the significance differences in the context, likewise, the
information sharing habits of manager in a developing country context should not be
generalized to a developing country or vice versa. The findings also revealed that the
major channel/medium for sharing information is physical/verbal communication (82.3%)
and poor attitude of SME managers colleagues was revealed as the major problem
encountered by managers in the cause of information sharing with (83.5%) as affirmed in
Belkin (2004) study which revealed fear of been outshined in an enterprise as the major
reason why managers refuse to share information.
RECOMMENDATION Based on the findings of the study it has been that SME managers should maintain cordial
relationship with their customer. Also SME managers should build a positive attitude
among their colleagues to enhance information sharing. Workshops, seminars,
conferences should be organized by Government and Non-Governmental organizations to
prepare SME managers for a competitive environment. This research generates a number
of potentially meaningful directions for further research, the researchers therefore
recommend that further research be conducted to explore different setting in order to
unveil what drives human information sharing habits in different environmental contexts.
CONCLUSION
As business environment becomes intensely competitive, firms are confronted
with challenges to adapt, survive and prosper. Numerous decisions on the source and
allocation of resources are necessary and executives need an abundance of information. In
fact, managers want a familiarity with the supply of resources and market conditions, an
25
INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.
awareness of these problems and potentials and a store of up-to-date facts, opinions and
insights which will facilitate their negotiation and decision making activities.
The information needs and sharing habit of SMEs has received little or no
attention from researchers in Esan West Local Government Area, despites the fact that an
understanding of this phenomenon is considered crucial to the growth and long-term
survival of these firms. This study is one of the few systematic probes into the information
needs and sharing habit SME managers in Esan West a developing Local Government
Area context as district from a developed L.G.A. context because of environmental
munificence. As such the study fills an apparent gap in the empirical literature and
broadens and enriches our understanding of the information sharing habit research by
presenting evidence from an environment that prior research has tended to neglect.
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Huma Salma Gillani
28
ISSN NO. 2394- 8965 GJMMS
Vol. – 1, Issue – 3, July-September - 2015
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
Huma Salma Gillani
Department of Economics,
Institute of Management Sciences,
Peshawar - Pakistan
Abstract
This study evaluates the economic burden of diseases associated to the inappropriate
disposal of solid waste at dumpsite located at the Hazar Khwani, Peshawar provincial
headquarters of Khyber Pukhtoon Khawah Province of Pakistan. A sample of 200
respondents was selected from 5% of the total population residing in the target area based
on two-stage sampling technique. The sample data was regressed with the help of Tobit &
Poisson models for estimation of mitigation costs and work days lost. Poisson & Tobit
model estimates suggest an inverse and significant association between the distances and
work days lost and mitigation costs, respectively. Annualized monetary benefit of one
representative individual in Pakistani Rupees is from 186,612,897.66 to 192,559,787.244
for residential proximity within 4km radius of the dumpsite. Therefore, the study
recommends adoption of an alternate solid waste management solution, such as
composting or sanitary landfill, or providing the populace of the target area comprising of
residential facilities at a considerable distance from the dumpsite.
Keywords: Municipal Solid Waste; Dumpsite; Environmental Economics; Cost of Illness
I. INTRODUCTION
Waste also referred as rubbish, garbage or refuse is the by-product of the human
economic activities. The solid wastes have adverse impact on the environments as well as
public health, and are major source of water, land and air contamination. Municipal Solid
Waste Management (MSW) is a much bigger problem of developing economies as
compare to developed nations. The South Asian region, specifically Pakistan is no
different from the rest of the world and is faced with the challenge of providing scientific
SWM solution to its population. The lack of awareness and implementation of existing
faulty framework add to the problem of defective SWM.
The civic facilities managers of major cities in Pakistan in-spite of serious and
continuous efforts are unable to cope with the menace of municipal waste management.
The road sides and empty open areas overflow with filthy unhygienic heaps of wastes
portraying a sorry state of affair all over the country. This uncollected waste a cause of
environmental degradation and is a source of many life threatening diseases and economic
cost of huge magnitude to the general public. The waste management is the centre of
attention of the municipal authorities around globe because of increased pollution which
29
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
leads to environmental hazards and economic costs due to non-existent or inappropriate
wastes management. The term waste management covers the collection, segregation,
handling and disposal of wastes in an environment- friendly manner. (A. A. Khan, Ahmed,
& Siddiqui, 2012; J. A. Khan, 2006; Mahar et al., 2007)
Study Area and Statement of the Problem
Peshawar lies between 33° 44′ and 34° 15′ north latitude and 71° 22′ and 71° 42′
east longitude covering an area of 1257 sq. km. According to a UNFPA report, the city’s
population has crossed 2.5 million3. District Peshawar is the provincial capital of K-P
consisting of 92 union councils.
The Municipal Corporation (MC) is responsible for managing the solid waste of
urban as well as rural areas; the Peshawar Development authority (PDA) is responsible for
the management of Hayatabad and Regi Lalmah whereas the Cantontment is being
independenly supervised by the Cantonment Development authority (CDA).(J. A. Khan,
2006; Pak-EPA/OECC, 2007)
Peshawar Municipal Corporation is still utilizing old fashioned and discarded
waste management techniques of open dumping and burning. There are two dumping sites
on the outskirts of the city which have also become a part of the city due to population
explosion and city extension. These dumpsite situated at Hazar Khwani and Lundi Akhune
Ahmed employ the same techniques or open dumping and burning or burying along the
roadsides (J. A. Khan, 2006).
The dumpsite at Hazar Khwani is located at Ring Road about 7 km from the city
centre. The problems addressed by the study are; the inappropriate waste disposal methods
and costs evaluation of ill-planned and mis-managed waste. Dumping, burning and
burying of wastes in open spaces though reduce the quantities of wastes are no more a
desirable waste management solution. Resultantly, it impacts the health of the residents in
adjacent localities through spreading skin and respiratory tract infections, stomach and
chest related problems, malaria, dengue and other chronic diseases, psychological
disorders, gastrointestinal problems, and allergies. It is also worth mentioning that these
dumping sites have a very high economic and social cost not yet estimated. (Salam, 2010;
UNEP, 2007)
Various studies have proved that economic cost of illness to the people living
near dumpsite is much higher than to those living in a cleaner environment (Folefack,
2008). Therefore, the aim of this paper is also to estimate the costs of illness of the
residents residing near the Hazar Khwani dump site (the largest in-operation dumping
ground).
II.MATERIALS AND METHODS
A structured questionnaire was administered by three trained enumerators from the
targeted respondent households, living within the 4km radius of the Hazar Khuwani
1 Article published in Express Tribune: “Bane or boon: Urbanization, displacement pushes
Peshawar’s population over 2.5m” Posted By Irfan.Shaikh On Nov 5, 2013
Huma Salma Gillani
30
Dumpsite. Before conducting the final survey, questionnaire were pre-tested for checking
the reliability and validity and the econometric specification.
Cross-Sectional household survey collected health and medical expenditure data from
the household as a primary source. The research adopted multistage sampling procedure
following the sampling technique used in Gupta (2006) and Aggrey (2010). The purposive
sampling was used in the first stage and Union Council 37 (Hazar Khuwani-I) of Town VI
was identified as a sample unit for data collection. The second stage involved stratifying
the households in the area according to the residential proximity from the open dump
which included Afridi Ghari, Chamkani, Jameel Chowk and Dir Colony.
The sample size consists of 200 households from the Union council 37-Hazar
Khuwani I of Peshawar district. The sample constitutes 5% of households, out of the total
4,236 residential properties within four-kilometer radius of the dumpsite. Data collection
was carried out for one month, i.e. November, 2013, only due to time limitation.
Methodology:
The theoretical model that is being employed is the simplified version of the
health production function (Freeman, 1993) as used by (Adhikari, 2012), (Gupta, 2006)
and (Chowdhry & Imran, 2010), to estimate the optimal choice of medical expenditure.
The basic individual health production function can be written as
H = H (Q, M, X) (1)
Where, H represents the number of work days lost referring to the health status of
the individual which is positively related to the level exposure to pollution (Q); and
negatively related to the mitigation activities (M) carried out by the individual; and X
includes the vector of individual‟s health characteristics.
The utility function (U) of an individual is defined as
U = U (C, L, H (Q, M, Z), Q) (2)
with U/C, U/L O and U/H O.
C is consumption of other commodities, L is leisure and H is health status and Q
representing the level of pollution.
The individual allocates his non-labor income (Y); wage rate (w); the income
earned from work such that the sum of these two components gives the total income of an
individual (T-L-H) and the price per unit of mitigating activity (PM).
The budget constraint for an individual is expressed as
Y+ w (T-L-H) = C+PMM (3)
Here, w is the wage rate, while price of M are given by PM, respectively, and the
price of aggregate consumption is normalized to one. The individual maximizes U by
choosing C, L and M, subject to budget constraint (3).
The demand for mitigating activities for an individual can be written as:
M =M (PM, H, Q, X, Z) (4) Where;
Given the pollution level (Q), prices of mitigating activities (PM), wage rate (w), income
31
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
(Y), and other exogenous variables (X), individuals maximize (1) with respect to X, M,
and L given the budget constraint (3). By solving the following problem,
Max G= U (X, L, H, Q) + [Y+ w (T-L-H)-X-PM M] (5)
Where, represents the Lagrange multiplier The first order conditions of the optimization problem yields the following
demand functions for mitigating activities (PM), which depend on prices, wage rate (w),
non labor income (Y), level of pollution (Q), and the vector of individual characteristics
(X).
The cost of illness (COI) can be derived as the sum of individual‟s COI as the
sum of lost earnings due to workdays lost and medical cost to the concerned individual as
follows:
dQdMP
dHdQ
wCOI M (6)
ECONOMETRI C SPECIFICATI ON OF THE MODEL The study aims to quantify the health costs associated with the inappropriate
waste management. Therefore, both the functions namely; health production and demand
for mitigating activities functions are being employed for cost assessments and evaluations
using Poisson and Tobit Regression models. is to be estimated. (Gupta, 2006; Chowdhry
& Imran 2010; Naveen, 2012)
The Poisson regression model estimates the household health production function
as:
Hit = E (Hit) + Uit = it + Uit
ln it = β1 1n Xit + Uit
According to this model it is the mean value of the number of sick days, β1 is the vector
of regression coefficients, and Xit is the vector of independent variables.
The Tobit model is used to estimate the demand function for mitigating activities is
specified as:
M*it = Xit β2 + Uit
M*it is a latent variable with
M*it = Mit if Mit >0
M*it =0 if Mit ≤ 0 Where, β2 is the regression coefficients vector and Xit is the
independent variables vector.
The two estimated reduced form equations of the health production function and
the demand for mitigation activities are:
LogPCIILLSUFAWRMRST
EDUGNDAgeAgeDSTPRCODRH
1211109
87
2
654321
(7)
LogPCIILLSUFAWRMRST
EDUGNDAgeAgeDSTPRCODRM
1211109
87
2
654321
(8)
Huma Salma Gillani
32
μ and ώ are the stochastic error terms
* Explanation of the variables is given in Table 1
III. RESULTS AND DISCUSSION
REGRESSION RESULTS
Using the statistics software STATA, the results of the regression analysis are
reported in this section. The estimated Tobit equations for the demand for mitigating
activities (Table 2) while in addition to the Poisson, and Negative Binomial Regressions
are estimated for the dose response function (Table 3 and 4). We used the Tobit results in
Table 2 and the Poisson results in Table 3 to compute the annual health benefits to a
representative individual and the entire city due to living in a polluted area.
For estimating the effects of pollution variables and the individual characteristics
on the mitigation costs incurred by the household, mitigation costs were taken as the
dependent variable. As it is a discrete variable, it violates the linearity assumption of the
least squares, therefore Tobit regression is being employed for getting better results.
Whereas the dose response function is being estimated by employing the Poisson and
Negative Binomial regression models s the dependent variable, i.e., number of work days
lost due to living in a dirty environment. However, there are two separate tables for
estimating the number of work days lost with distance and odor. The rationale for
estimating them separately was that odor and distance were not giving significant results
when computed together because of multicollinearity between them.
INTERPRETATION OF TABLE 2- TOBIT REGRESSI ON
The parameter estimates from the reduced form equation of mitigation cost are presented
in table 2. The significant and negative coefficient of distance (DST) measured in
kilometers, which was used as a proxy for the pollution variable, indicates a monthly
reduction in the mitigation costs by Rs. 1258/- after moving away from the dumpsite.
Similarly, the burning practice (PRC) adopted has a negative relationship with the
household cost on mitigating activities, which implies that the cost of people living at a
distance of 4km or more is PKR. 321/-, less than those who live within the 2km or less
radius of the dumpsite. The pollution variable, odor (ODR) as reported by 70% of the
respondents was troubling odor nuisance, so their mitigation costs increases although it is
statistically insignificant. The socio-economic variables such as gender (GND), education
(EDU), marital status (MRTS) have positive signs, as expected, but insignificant. The
coefficient of age is negative and that of age2 is positive. Both the coefficients are
significant at 1% and 5% levels, respectively. The coefficient of LogPCI is positive and
significant which means that as the level of income increases so does the mitigation cost of
the respondent. It can be seen that the coefficients for household type is negative and
significant, whereas the awareness level of the respondent is insignificant and have an
inverse relation with the mitigating costs.
Interpretation of Table 3- Poisson and Negative Binomial for distance and Work
Days lost Table 3 shows the estimates of the reduced form of health production function
due to work days lost. The pollution variable, distance (DST) measured in kilometers is
negative; as me move away from the dumpsite the expected work days lost decreases. If
33
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
the distance is increased, expected work days lost is decreased 2.8% (100*0.028). The
coefficient of burning practice adopted (PRC) is positive and significant at 1 percent,
showing an increase in the sick days due to the emissions of the burning of wastes makes
the state of health of the people residing near the dumpsite more vulnerable. As the
emissions from the burning of wastes increases, the expected number of work days lost
increases by 20%. The socio-economic indicators of the respondents‟ show that age,
education (EDU), gender (GND) and marital status (MRTS) have their expected signs but
some of them, such as age and gender are only statistically significant at 1% and 10%,
respectively. The LogPCI of the respondents is statistically significant and is negatively
influencing the days of illness. This implies that the more the respondent is exposed to the
pollution originating by the dumpsite; the probability of the work days lost is increased
positively by more than 100% and is highly significant. However, results from the same
table shows that the awareness level (AWR) doesn‟t have any insignificant impact on the
work days lost and do not have the expect sign either.
The negative binomial estimates do not show any statistical significance with all
the variables. In fact the signs of the coefficients are also changed from those of Poisson
regression estimates. Only the coefficient of the illness suffered (ILLSUF) by the
respondents‟ is significant and has the expected sign, which implies that due to living in a
polluted area the probability of expected work days lost increases by more than 100%.
INTERPRETATION OF TABLE 4- POI SSON AND B INOMIAL FOR ODOR AND
WORK DAYS LOST
Table 4 shows that the coefficient of odor nuisance (ODR) is positive and
significant at 1% level, as expected. The probability of the expected work days lost, who
were troubled by the odor nuisance is almost 18 %. As the workers work in an unhealthy
environment, so, it positively affects their hours of work. However, results from the same
table shows that 1 unit increase in the burning practice adopted by the municipality will
increase the probability of work days lost by 19% and is highly significant. The
respondents‟ characteristic shows that age, education, gender and marital status have the
expected signs but only age is statistically significant at 1%. The awareness level of the
participants is negatively affecting the potential of working hours but does not explain any
significant impact. The log of per capita income (LogPCI) of the respondents is
statistically significant and is negatively influencing the days of illness. This implies that
the more the respondent is ill, the less the income would be generated and the probability
of the sick days increases positively by more than 100% at 1% significance level.
However, the results interpreted from the negative binomial regression of the dose
response estimations does not show any significant relationship with the pollution
variables, respondent‟s characteristics as well as the respondents‟ per capita income and
awareness levels; except for the illness suffered by the respondents due to living in a
polluted area which is highly significant.
WELFARE GAI NS The COI estimates provided in this study are lower bounds estimates as they
exclude the Avertive expenses by the people living in a polluted area. The total benefits to
Huma Salma Gillani
34
a person should include the benefits from avoiding the number of sick days due to illness
and saving mitigation costs. To calculate the benefits in monetary terms from living at a
distance more than 4km, the marginal effects from the Tobit regression, given the
coefficient of distance multiplied by the probability of the mitigation costs considering
only the positive values (Gupta, 2006; Naveen, 2012).
TOBIT REGRESSI ON RESULTS FOR D ISTANCE AND ODOR
FOR D ISTANCE
The distance was taken as the main variable in the study for measuring the
mitigation costs and the work days lost.
Saving from reduced mitigation costs per year = β * Pr (MC>0) * 365/30
Therefore, the estimated annual welfare gain to a representative individual in the
sample is PKR. 15,305.7 /-, per annum due to living at a distance more than 4km from the
dumpsite. So the estimated annual reduction in the mitigation costs for the entire
employed population of the Union council4 will be PKR. 192,559,787.244 (US$
1,816,601.77)5
FOR ODOR
The other main independent variable that influence the mitigation costs and the
work days lost was Odor.
Saving from reduced mitigation costs per year = β * Pr (MC>0) * 365/30
Therefore, the estimated annual welfare gain to a representative individual in the
sample is PKR. 14,833.016 /-, per annum due to living at a distance more than 4km from
the dumpsite. So the estimated annual reduction in the mitigation costs for the entire
employed population of the Union council will be PKR. 186,612,987.66(US$
1,760,499.88)
Poisson Regression Results for Distance and Odor
For Distance Similarly, the number of work days lost due to living around a dumpsite,
computed from the Poisson regression will be as follows:
Restricted days per annum = 30/365** Xe
; where, α is the coefficient of distance
and eΣαX
is the predicted value of the Poisson regression.
The results of Poisson regression estimates shows that as the distance increases
the work days lost decreases by 0.029. Whereas the annual restricted days saved for
increasing the distance for more than 4km will be 0.353. The average per day wage rate of
the sample was PKR. 848. As 27%6 of the population in the area is employed, so the
estimated annual benefit for saving the sick days would be PKR. 3,766,022.917 (US$
35,528.52)
4 Households in UC 37 are 4326; average family size is 11, therefore, the population of UC-37,
Hazar Khwani-I, Town VI is 46, 596 5 The exchange rate used is USD=106 PKR.
6 27% employed population is 12,580.92
35
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
For Odor Similarly, the number of work days lost due to living around a dumpsite,
computed from the Poisson regression will be as follows:
Restricted days per annum = 30/365** Xe
; where, α is the coefficient of distance
and eΣαX
is the predicted value of the Poisson regression.
The results of Poisson regression estimates shows that as the distance increases
the work days lost decreases by 0.18. Whereas the annual restricted days saved by
increasing the distance for more than 4km will be 2.19. The average per day wage rate of
the sample was PKR. 848. As 27% of the population in the area is employed, so the
estimated annual benefit for saving the sick days of the employed population would be
PKR. 23,364,278.15 (US$ 220,417.72)
CONCLUSION
Both, Tobit and Poisson regressions shows that distance has a negative
relationship with the mitigation costs and the work days lost, respectively. This implies
that we are going to accept the hypothesis that the cost of illness of the people living near
the dumpsite is higher than that living far from it. The health status of the people living in
the residential proximity of the dumping site is vulnerable and needs to be taken seriously
by the local authorities. The annual health benefits from having an alternate waste disposal
system, e.g. composting will save up to PKR. 186,612,897.66 to 192,559,787.244. Hence,
it is recommended that the population should be provided with colony which is situated at
least more than 4km from the dumping ground or the government should adopt an
alternate waste disposal method, such as composting to reduce the adverse health effects
and odor nuisance originating from the dumpsite.
IV. CONCLUSIONS AND RECOMENDATIONS
Conclusions
Socio-politico economics as one of the important branches of economics serves the
concept of social welfare and equality. SWM is a social problem with high costs and
environmental disasters. It needs to be tackled in a scientific manner meeting the
challenges of today‟s world. All stakeholders must share the responsibility and contribute
towards solution of this environmental menace with dedication, sincerity and devotion.
Federal and provincial governments provide sufficient financial and human capital to
the municipal authorities within the ambient of prevailing laws. Good governance is the
key to the successfully tackling the issue under discussion. Therefore, authorities
responsible must meet the required standards, all local, national and global prescribed
regulations. The transparency and accountability will ensure immediate and successful
implementation of all recommendation and suggestions enumerated in this paper.
The study evaluates the negative health and environmental challenges of old-
fashioned SWM practices in Peshawar city using the Cost of Illness (COI) approach and
the alternate SWM practices accessible, keeping in mind both the present and future needs.
The health status of the residents living within the 4km radius of the Hazar Khwani
dumpsite is assessed employing the Tobit and Poison regression models for estimating the
association between the mitigation costs of the residents from the distance of the dumpsite
Huma Salma Gillani
36
and the odor nuisance due to living in a polluted area. From the Tobit results it is observed
that there is a negative association between mitigation costs and the distance from
dumpsite. Correspondingly, the Poisson regression estimate shows that if the population
moves away from the dumpsite at a distance of 4 km or more than 4km, it results in the
reduction of work days lost. The Poisson results also shows that odor nuisance is much
higher for the people living within 3km radius than those living 4km away from the
dumpsite, as reported by the respondents during the survey, for which it is suggested that
an alternate waste disposal method, such as composting or sanitary landfill should be
adopted which yield low health costs, improved infrastructure and healthy environment for
the general public. The annual welfare gains due to adoption of environment-friendly
SWM practices to a representative individual in the study area is in the range of PKR.
186,612,987.66 -192,559,787.244.
Recommendations
After studying the solid waste condition in Peshawar and for reduction in the
burden of disease, some recommendations which local municipalities can adopt to
improve the current situation are as follows:
1. Public and private partnership should be encouraged for adoption of new waste disposal
technologies such as composting and incineration.
2. The people living around the dumpsite belonged to lower middle income group or lower
income group brackets, are more exposed to environmental and health hazards, so the
local government should provide them a colony or a community at a considerable distance
that is affordable for them.
3. The municipal authorities should define the boundary walls of the dumping ground so that
the exposure of environmental and health hazards are restricted and the health costs
associated with living in a polluted area can be reduced.
4. A comprehensive waste management policy needs to be developed to efficiently deal with
all types of wastes, reflecting the waste management hierarchy. The policy should identify
an integrated approach in coordination with other policies to lessen waste generation.
LITERATURE CITED Adhikari, N. (2012). Measuring the Health Benefits from Reducing Air Pollution in
Kathmandu Valley (Working Paper). from SANDEE
Balasubramanian, M., & Birundha, V. D. (2012). An Economic Analysis of Solid
Waste Management in Madurai District, Tamil Nadu. Applied Journal of Hygiene, 1(1), 1-
7.
Basnayake, B. F. A., Visvanathan, C., Trankler, J., Chiemchaisri, C., Joseph, K., & Gonming, Z. (2004). Landfill Management in Asia-Notions about Future Approaches to
Appropriate and Sustainable Solutions. from CISA, Environmental Sanitary Engineering
Centre
Chowdhry, T., & Imran, M. (2010). Morbidity Costs of Vehicular Air pollution:
Examining Dhaka City in Bangladesh. from SANDEE
Folefack, A. J. J. (2008). The Economic Costs of Illness from the Disposal of the
Yaoundé Household Waste at the Nkolfoulou Dumping Site in Cameroon. J. Hum. Ecol.,
24(20).
37
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
Freeman, A. M. (1993). The Measurement of Environmental and Resource Values.
Washington, DC.
Gordon, H. S. (1954). The Economic theory ofcommon property resources: the Fishery.
Journal of Political Economy, 62, 124-142.
Gupta, U. (2006). Valuation of urban air pollution: a case study of Kanpur City in India.
Kathmandu. from SANDEE
Khan, A. A., Ahmed, Z., & Siddiqui, M. A. (2012). Issues with solid waste management
in South Asian countries: A situational analysis of Pakistan. Journal of Environmental and
Occupational Sciences, 1(2), 129-131.
Khan, J. A. (2006). Solid Waste Management System of Peshawar. Journal of Pakistan
engineering council, 43(8).
Mahar, A., Malik, R. N., Qadir, A., Ahmed, T., Khan, Z., & Khan, M. A. (2007). Review and Analysis of Current Solid Waste Management Situation in Urban Areas of
Pakistan. Paper presented at the International Conference on Sustainable Solid Waste
Management, Chennai, India.
Masood, F. (2013). Solid Wastes Use as an Alternate Energy Source in Pakistan. (M.Sc
Uplublished), University of Arcada, Helsinki, Finland.
Pak-EPA/OECC. (2007). Urban Environmental Problems in Pakistan (A Case Study for
Urban Environment in Hayatabad, Peshawar) Peshawar.
Salam, A. (2010). Environmental and Health Impact of Solid Waste disposal at
Mangwaneni Dumpsite in Manzini: Swaziland. Journal of Sustainable Development in
Africa, 12(7).
UNEP. (2007). Environmental Pollution and Impacts on Public Health: Implications of
the Dandora Municipal Dumping Site in Nairobi, Kenya. Kenya: United Nations
Environmental Programme (UNEP).
Huma Salma Gillani
38
Tables
*TABLE 1- SUMMARY VARIABLES TABLE
Variable
Code
Variable
Type Variable Definition and Measurement
Age Continuous Age of the respondents
EDU Continuous Education in years of the respondents
MRST Dummy Marital Status of the respondent; if married=1; otherwise= 0
GND Dummy Gender of the respondent, for male=1& for female=0
LogPCI Continuous The log of the per capita income of the household per month
HHtype Dummy Tenure of dwelling: Owner=1; otherwise =0
DST Continuous Distance from the dumpsite from 1km to 4km
ODR Dummy Annoyed by the odor nuisance; if yes=1; 0 otherwise
AWR Dummy Living near a dumpsite is harmful: If aware=1; otherwise = 0
PRC Dummy Disposal practice by government: Burning/burying=1; 0
otherwise
M Continuous
The household per month costs on all the mitigating activities,
i.e., medication costs, laboratory costs, dr.‟s fee and the travel
costs in the last one month
H Discrete The number of work days lost due to illness in the last one
month
ILLSUF Dummy The illness suffered due to living near a dumpsite;
0=infections, 1= fevers; 2= chronic illness.
39
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
TAB LE 2- DE SC R I P TI V E STA TI STI C S
Variable Obs Mean Std. Dev. Min Max
M 1782 569.3732 4215.25 0 137300
H 1782 1.916386 5.159475 0 45
Odr 1782 0.70651 0.455489 0 1
Prc 1782 0.767677 0.422433 0 1
Dst 1782 0.936027 1.235064 0 4
Age 1782 22.74411 17.45001 0 94
age2 1782 821.6263 1147.325 0 8836
Gnd 1782 0.546577 0.497966 0 1
Edu 1782 4.62514 5.241372 0 18
Mrst 1782 0.404602 0.490953 0 1
Hhtype 1782 0.590909 0.491804 0 1
Awr 1782 0.704265 0.456501 0 1
Illsuf 1782 0.122335 0.391753 0 2
M 1782 569.3732 4215.25 0 137300
H 1782 1.916386 5.159475 0 45
Odr 1782 0.70651 0.455489 0 1
Prc 1782 0.767677 0.422433 0 1
Dst 1782 0.936027 1.235064 0 4
Age 1782 22.74411 17.45001 0 94
age2 1782 821.6263 1147.325 0 8836
Gnd 1782 0.546577 0.497966 0 1
Edu 1782 4.62514 5.241372 0 18
Mrst 1782 0.404602 0.490953 0 1
Hhtype 1782 0.590909 0.491804 0 1
Awr 1782 0.704265 0.456501 0 1
Illsuf 1782 0.122335 0.391753 0 2
Huma Salma Gillani
40
TAB LE 3- T OBI T R E G R E S SI O N Dependent Variable:
Mitigation Costs per
month (value in
PKR.)
Tobit Regression
Independent
Variables Coef. Std. Err. t P>|t|
Odr 1219.152 904.3548 1.35 0.178
Dst -1258.752 350.0837 -3.6 0***
Prc -321.895 877.8417 -0.37 0.714
Age -224.441 106.8938 -2.1 0.036**
age2 4.112592 1.221448 3.37 0.001***
Gnd 362.1657 721.4553 0.5 0.616
Edu 77.47083 83.64961 0.93 0.355
Logpci 2475.868 1158.195 2.14 0.033**
Mrst 1258.311 1219.219 1.03 0.302
Hhtype -1985.656 725.6559 -2.74 0.006***
Awr -655.1911 1337.137 -0.49 0.624
Illsuf
1 12023.64 1028.436 11.69 0***
2 18694.42 1693.95 11.04 0***
_cons -17907.32 4042.116 -4.43 0***
/sigma 9531.808 379.8036
log likelihood -3993.5546
LR chi2(13) 338.20(0.00 )
No. of obs. 1782 ( 1438-Left
Censored)
344-Uncensored
0-Right Censored
**and *indicate significance at 1% and 5% levels.
41
Health and Economic Implications of Solid Waste Dumpsites:
A Case Study Hazar Khwani Dumpsite - Peshawar City
TAB LE 4- POI S SO N A ND NE G ATI V E B I NO M I A L FO R D I S TA NC E A ND WOR K DAY S
LO ST Dependent
Variable
(work days
lost in last
one month)
Poisson Negative Binomial
Independent
Variables Coef. Std. Err. Z P>z Coef. Std. Err. z P>z
Prc 0.19996 0.042836 4.67 0*** -0.01869 0.200351 -0.09 0.926
Dst -0.02853 0.015342 -1.86 0.063* -0.03872 0.065278 -0.59 0.553
Age 0.01341 0.004947 2.71 0.007*** 0.025342 0.026916 0.94 0.346
age2 -3.10E-
05 5.48E-05 -0.57 0.572 -0.00011 0.000335 -0.32 0.752
Gnd 0.065513 0.036656 1.79 0.074* 0.151513 0.167029 0.91 0.364
Edu 0.001928 0.003951 0.49 0.626 -0.00744 0.020469 -0.36 0.716
Mrst 0.004965 0.054707 0.09 0.928 -0.03706 0.28724 -0.13 0.897
Awr -0.03514 0.06617 -0.53 0.595 -0.14531 0.300306 -0.48 0.628
Illsuf 1.231553 0.022883 53.82 0*** 1.45841 0.209996 6.94 0***
Logpci -0.24721 0.056242 -4.4 0*** -0.20071 0.280796 -0.71 0.475
_cons 0.660062 0.195953 3.37 0.001 0.474439 1.00608 0.47 0.637
/lnalpha
2.305808 0.065126
Alpha 10.03228 0.653358
Log
likelihood -5527.9065 -2204.9183
Chi2(10) 2889.6(0.00) 100.65(0.00)
No. of obs. 1782 1782
***, ** and * indicate significance at 1%, 5% and 10% levels.
Hausman test does not reject the random effects.
Huma Salma Gillani
42
TAB LE 5 - POI S SO N A ND B I NO M I A L F OR OD OR A N D WOR K DA Y S LO S T
***, ** and * indicate significance at 1%, 5% and 10% levels.
Hausman test does not reject the random effects.
Dependent
Variable
Work days
lost in one
month)
Poisson Negative Binomial
Independent
Variables Coef. Std. Err. Z P>z Coef. Std. Err. Z P>z
Prc 0.191774 0.042232 4.54 0*** -
0.0386993 0.1957295 -0.2 0.843
Odr 0.177136 0.0433 4.09 0*** 0.2940076 0.1878441 1.57 0.118
Age 0.014497 0.004936 2.94 0.003*** 0.0289963 0.0268375 1.08 0.28
age2 -4.2E-05 5.46E-05 -
0.77 0.444
-
0.0001485 0.0003333 -0.45 0.656
Gnd 0.054343 0.036775 1.48 0.139 0.134992 0.1668523 0.81 0.418
Edu 0.001845 0.003935 0.47 0.639 -
0.0042219 0.0205525 -0.21 0.837
Mrst -0.01247 0.054413 -
0.23 0.819
-
0.0520727 0.2849934 -0.18 0.855
Awr -0.10829 0.068748 -
1.58 0.115 -0.289745 0.3148033 -0.92 0.357
Illsuf 1.235453 0.022879 54 0*** 1.474229 0.2102822 7.01 0***
Logpci -0.26031 0.056156 -
4.64 0***
-
0.2689494 0.277361 -0.97 0.332
_cons 0.606784 0.197962 3.07 0.002 0.5291671 0.9942343 0.53 0.595
/lnalpha
2.302095 0.0651654
Alpha 9.9951 0.6513348
log likelihood -5521.0879 -2203.9007
Chi2(10) 2903.23 (0.00) 102.68 (0.00)
No. of obs. 1782 1782
43
AN ANALYTICAL STUDY OF THE RELATIONSHIP BETWEEN GDP,
INFLATION AND STOCK MARKET
ISSN NO. 2394- 8965 GJMMS
Vol. – 1, Issue – 3, July-September - 2015
AN ANALYTICAL STUDY OF THE RELATIONSHIP BETWEEN GDP,
INFLATION AND STOCK MARKET
Sudha Swaroop
Assistant Professor
HIMT, Greayter Noida
ABSTRACT
The stock market promotes the growth and development of the economy of a nation. This
paper investigates the relationship between GDP, Inflation rate and Stock market. Using
time series data for the period from 1997-2011 the study findings suggests that GDP and
SENSEX are positively related at low level , inflation rate and SENSEX are negatively
related at low level and when we talk about the relationship between GDP and inflation
rate it is positively related at low level.
Key words: GDP, SENSEX, BSE, Inflation,
Introduction
Stock markets play an important role in the financial sector development of any economy.
They allocate funds to the most productive sectors of the economy (Cooray,2010;
Billmeier and Massa, 2009; Caporale et al., 2004). More generally, stock marketscan
influence economic growth through mobilizing and directing savings, facilitating
risksharing, and providing a venue for investments (see Hou and Cheng, 2010; Arestis et
al.,2001; Rousseau and Wachtel, 2000; Enisan and Olufisayo, 2009; Levine and
Zervos,1996; Levine, 1991).The concentration of research is to evaluate the relationship
between GDP, Inflationand stock market returns in India.
Inflation is an increase in general level of price of goods and services in an economy
resulting in a fall in purchasing power or value of money. Earliest inferences on relation
between inflation and stock returns were based on hypothesis presented by Irving Fisher in
1930. From Fisher‟s hypothesis, it can be inferred that real assets returns should move
positively with expected inflation rates. Thus, there should be a positive relationship
between Inflation and stock returns whereby nominal stock returns should rise along with
inflation providing investors a hedge against inflation. On the other hand, a contrarian
view of a negative relation between inflation and stock returns is also very much
prevalent. Fama (1981) explained that negative stock returns-inflation relations are
induced by the positive correlation between stock returns and real activity and the negative
correlation between inflation and real activity – the Proxy Hypothesis. This is based on the
following reasons:
1. Increase in inflation increases the consumption expenditure (as more money is required
to buy same quantity of goods and services), resulting in fall in savings and investment by channelizing scarce resources meant for investment to consumption. This decreases the
demand for stocks and other financial assets causing a fall in share prices.
Sudha Swaroop
44
2. Also, an increase in inflation adversely affects corporate profits through increased input
costs, increased interest pay-outs and demand pressures. This again causes a fall in stock
prices due to adverse corporate performance.
3. From another perspective, a rise in inflation rate increases the discount rate in the stock
valuation model, leading to lower share prices .
METHODOLOGY The empirical analysis was conducted using time series model. The study uses long and
up-to date annual time-series data (1997-2011), with a total of 15 observations for each
variable. The data for the study, GDP, SENXEXand Inflation Rate, are obtained from RBI
Handbook, CSSO and BSE Sensex sites. The following tools is used for the analysis of the
data:
1. Correlation
2. Standard error == 1− 𝑟2/ 𝑛
3. Probable error = 0.6745*Standard error
4. t-test at 5% at n-2 degree of freedom
5. Ho= GDP growth, inflation and investment in stock market are related to each other.
H1= GDP growth, inflation and investment in stock market are not related to each other.
Review of Literature The linkage between stock market returns and inflation if any has drawn the attention of
researchers and practitioners alike particularly since the twentieth century. The foundation
of the discourse is the Fisher (1930) equity stocks proclamation. According to the
generalized Fisher (1930) hypothesis, equity stocks represent claims against real assets of
a business; and as such, may serve as a hedgeagainst inflation. If this holds, then investors
could sell their financial assets in exchange for real assets when expected inflation is
pronounced. In such a situation, stock prices in nominal terms should fully reflect
expected inflation and the relationship between these two variables should be positively
correlated ex ante (Ioannides, et.al., 2005:910). This argument of stock market serving as a
hedge against inflation may also imply that investors are fully compensated for the rise in
the general price level through corresponding increases in nominal stock market returns
and thus, the real returns remain unaltered.
Further extension of the hedge hypothesis posits that since equities are claims as current
and future earnings, then it is expected that in the long run as well, the stock market should
equally serves as a hedge against inflation. Fama (1981) however, put up a proxy
hypothesis when he argued the relationship between high rates of inflation and future real
economic growth rates as negative. Views that rationalize the negative co-movements
between inflation rates and real stocks returns however differ.
The inflation illusion hypothesis of Modigliani and Cohn (1970) point‟s out, that the real
effect of inflation is caused by money illusion. According to Bekaert and Engstrom
(2007:1), inflation illusion suggest that when expected inflation rises, bond yields duly
increase, but because equity investors incorrectly discount real cash flows using nominal
rates, the increase in nominal yields leads to equity under-pricing and vice versa. Feldstein‟s (1980) variant of the inflation and stock market returns theoretical nexus,
suggests that inflation erodes real stock returns due to imbalance tax treatment of
45
AN ANALYTICAL STUDY OF THE RELATIONSHIP BETWEEN GDP,
INFLATION AND STOCK MARKET
inventory and depreciation resulting to a fall in real after-tax profit. Feldstein further
observed that the failure of share prices to rise during substantial inflation was because of
the nominal capital gains from tax laws particularly, historic depreciation cost (Friend and
Hasbrouck, 1981). In Fama‟s (1981) hypothesis, which is based on money demand theory;
correlation between inflation and stock market returns is not a causal one; rather, it is a
spurious relationship of dual effect. Yeh and Chi (2009:168) in explaining the Fama‟s
hypothesis observed that the reason for the revised correlation is because when inflation is
negatively related to real economic activity, and there is a positive association between
real activity and stock returns, the negative relationship and stock returns holds. This flow
of relationship according to them is not direct.
Hoguet (2008), explanation of stock-inflation neutrality is anchored on two stances as
outlined from Giammarino (1999); 1) that companies can pass on one-for-one costs; and
2) that the real interest rate which investors use to discount real cash flows does not rise
when inflation rises and in addition, inflation has no long-term negative impact on growth.
The appropriate direction of the relationship or the neutrality between inflation and stock
market returns relationship have equally generated a large body of evidence in the
empirical literature. Earlier studies by Bodie (1976), Nelson (1976), and Fama and
Schwert (1977) were aroused by the rising inflation of the 1970s in the US. According to
Alagidede and Panagiotidis (2006), these studies compared the inflation hedge properties
of common stocks with those of other financial and real variables for the US. They found
that common stock acted as poor hedge against unexpected and expected inflation. In
another development, Firth (1979) and Gultekin (1983) found reverse evidence using UK
data. Jaffe and Mandelker (1976) also report a negative relation between annual stock
returns and concurrent rates of inflation over short sample periods but a positive relation
over the much longer period 1875-1970. In another vein, Marshall (1992) argued that the
negative relationship between stock returns and inflation will be less pronounced during
periods when inflation is generated primarily by monetary fluctuations. Studies that have
agreed with this proposition are Graham (1996), who found a positive relationship
between common stocks and inflation in the USA (1976-1982) during the period money
rather than real activity was the cause of the inflation. Spyrou (2004) study of ten
emerging economies further provide evidences that may suggest equity providing an
effective hedge against inflation and that the inflation could be explained by a significant
relationship between money and consumer prices in the emerging markets.
Rapach (2002) employed data of 16 OECD countries to determine the direction of the
correlates. He observed that long-run inflation neutrality exists in the stock markets of the
countries. Following the methodology of King and Watson (1997) in the establishment of
time series properties, Rapach explained that the long-run Fisher effects exists if the long-
run real stock returns do not respond to a permanent inflation shock ( Yeh and Chi, 2009:
169). Studies on the inflation-stock return maxim for the Nigerian economy as the scan on
the literature revealed are however relatively sparse. The available few from our search
equally have their limitations. Subair and Salihu (n.d.)using an error correction model to investigate the effects of exchange rate volatility on the Nigerian stock market though
found exchange rate volatility to exert strong negative impact on the Nigerian stock
Sudha Swaroop
46
market, the rate of inflation did not have any long run relationship with stock market
capitalization. The reason for no long run relationship as adducedby the authors are the
overbearing participation of the government in the market. First, the co integration result
which authors claimed to underscore this reason was not reported. Second, which market
(stock exchange or foreign exchange) government participation is overbearing is not
explicitly defined. However, in either of the two markets, government participation over
the years has been eroded. Consequently, Subair and Salihu findings may be misleading.
Findings
The Correlation between GDP and Sensex is 0.27; it means it is positively related at low
level. Its standard error is 0.07 which is within the upper and lower limit. Since it is within
the limit so it is significant and errorless. The probable error between GDP and Sensex is
0.24.Since 6*probable error is less than correlation between GDP and Sensex so it means
there is no error. When t-test is done between GDP and Sensex it‟s result came 1.91 at 5%
significance level at n-2 degree of freedom and when it is compared to it‟s critical value i.e
1.77 it is found that critical value is less than t value.so this hypothesis will not be
accepted. It means growth in GDP and investment in stock market is not related to each
other.
The Correlation between WPI and Sensex is -0.19,it means it is negatively related at low
level. It‟s standard error is 0.24 which is within the upper and lower limit. Since it is
within the limit so it is significant and errorless. The probable error between WPI and
Sensex is 0.16.Since 6*probable error is greater than correlation between WPI and Sensex
so it means there is error. When t-test is done between WPI and Sensex it‟s result came -
0.70 at 5% significance level at n-2 degree of freedom and when it is compared to it‟s
critical value i.e 1.77 it is found that t value is less than critical value.so this hypothesis
will be accepted. It means growth in WPI and investment in stock market is related to
each other.
The Correlation between WPI and GDP is 0.029; it means it is positively related at low
level. It‟s standard error is 0.25 which is within the upper and lower limit. Since it is
within the limit so it is significant and errorless. The probable error between WPI and
GDP is 0.16.Since 6*probable error is greater than correlation between WPI and GDP so it
means there is probable error and it is not significant. When t-test is done between WPI
and Sensex it‟s result came 0.11 at 5% significance level at n-2 degree of freedom and
when it is compared to it‟s critical value i.e 1.77 it is found that t value is less than critical
value.so this hypothesis will be accepted. It means growth in GDP and growth in WPI is
related to each other.
REFERENCE
Merika, G. A. & Anna, A. M. 2006. Stock prices response to real economic variables: the
case of Germany,
Managerial Finance. 32(5):446-450. Moon, W. s. 2001. Currency Crisis and Stock Market
Intergration:A comparison between East Eastern and European Experiences. Journal of
International and Area Studies 8:41-56.
Rapach, D. E. 2002. The longrun relationship between inflation and real stock prices,
Journal of Macroeconomics. 24:331-351.
47
AN ANALYTICAL STUDY OF THE RELATIONSHIP BETWEEN GDP,
INFLATION AND STOCK MARKET
Saryal, F. S. 2007. Does inflation have an impact on Conditional Stock Market Volatility?
Evidence from Turkey and Canada. International Research Journal of Finance and
Economics, 11.
Spyrou, S. 2001. Stock returns and inflation: Evidence from an emerging market, Applied
Economics Letter. 447-450.
Taylor, B. 1996. World Stock Market Returns 1990-1995:Domestic Real Stock Market
Performance.
Appendix
Year GDP Growth rate
(%)
Sensex Growth
rate (%)
WPI Growth rate
(%)
1997 10.7 18.5 2.89
1998 14.68 -16.49 4.37
1999 12.18 63.83 2.69
2000 7.62 -20.64 3.27
2001 8.19 -17.86 1.83
2002 7.66 3.5 2.63
2003 12.03 72.88 5.67
2004 14.10 13.07 6.26
2005 13.91 42.33 -38.42
2006 16.28 46.70 5.66
2007 16.12 47.14 4.80
2008 12.89 -52.44 6.17
2009 15.05 81.03 2.24
2010 20.33 17.43 5.68
2011 15.13 -24.64 7.22
Dr. V. D. SHARMA 48
ISSN NO. 2394- 8965 GJMMS
Vol. – 1, Issue – 3, July-September - 2015
GLOBAL WARMING IS MAJOR CONCERN FOR ENVIRONMENT &
ECOLOGY
Dr V D SHARMA Gandhian Professor of Spiritual Mgt, Deptt. of Business Economics (FMS), Coordinator: Centre for
Gandhian Studies, Extn Cell, Ex. Proctor, VBS P U Jaunpur-222001 (U.P.),
Abstract
Global warming is caused by human efforts - destruction of Nature - deforestations,
erosion / damaging of hills, mountains and Ecology in the name of so called
development. Unwanted and unethical pattern of industrialization is causing the
huge Carbon emission and CFC & green house gases. Such irrational human efforts
cause the depletion of ozone layer and ultimately global warming which results
climate change. Researches warrant that if such anti Nature destructive efforts
(because of western/ waste model of so called development) are not controlled
anyway, it may cause the danger not only for environment & ecology but also for our
universe. Its truly said that Global Warming is a great & major concern for
environment & ecology.
Getting rid from Poverty, Unemployment, Illiteracy, and lack of basic access to primary
Health Care and Education, Free from Malnutrition, Stabilizing Population, Reduction in
Infant Mortality Rate, Ensuring Safe Drinking, Water and Sanitation: still remains far-off
for the more than the 90% population of the world today. On the other hand, due to higher
Green House Gas Emissions, Earth is experiencing a higher rise in temperature (40°
Centigrade in 100 years), which drastically influencing the changes in the weather
patterns, resulting in melting the Ice-caps, causing flash floods, droughts, different types
of cyclones, hurricanes, abnormal increase or decrease in rainfall, arising water scarcity,
desertification, change in crop-yield, sea level rise or coastal flooding, causing victor-
borne diseases, and many unexpected natural disasters including the changes in major
river systems and even adversely affecting Bio-diversity.
We must follow Vedic & Gandhian Philosophy to regard the mother-nature (environment
& ecology) to address the challenges of Global Warming by adapting the path of
alternative & sustainable (huge & abundant) resources of energy like Gobar Gas Energy,
Solar Energy, Wind Energy, Waves Energy rather than conventional energy like thermal
power projects, fossil fuels (coal & petroleum products etc) and Hydro Energy by way of
construction of huge dams etc.
Introduction
Global warming is caused by human efforts - destruction of Nature - deforestations,
erosion / damaging of hills, mountains and Ecology in the name of so called
development. Unwanted and unethical pattern of industrialization is causing the
huge Carbon emission and CFC & green house gases. Such irrational human efforts
cause the depletion of ozone layer and ultimately global warming which results
climate change. Researches warrant that if such anti Nature destructive efforts
49
GLOBAL WARMING IS MAJOR CONCERN FOR ENVIRONMENT &
ECOLOGY
(Because of western/ waste model of so called development) are not controlled
anyway, it may cause the danger not only for environment & ecology but also for our
universe. Truly said that Global Warming is great /major concern for environment
& ecology.
While achieving “Development”, remains as a major challenge of the Developing
Countries; most of them are not in a position to ensure basic human need such as food,
shelter, clothing and minimum “standard of living” to all of their citizens. Getting rid from
Poverty, Employment, Literacy, and lack of basic access to primary Health Care and
Education, Free from Malnutrition, Stabilizing Population, Reduction in Infant Mortality
Rate, ensuring Safe Drinking Water and Sanitation still remains far-off for the more than
the Ninety per cent population of the world today. On the other hand, due to higher Green
House Gas emissions, earth is experiencing a higher rise in temperature (40 Centigrade in
100 years), which drastically influencing the changes in the weather patterns, resulting in
melting the Ice-caps, causing flash floods, droughts, cyclones, hurricanes, abnormal
increase or decrease in rainfall, arising water scarcity, desertification, change in crop-
yield, sea level rise or coastal flooding, causing victor-borne diseases, and many
unexpected natural disasters including the changes in major river systems and even
adversely affecting Bio-diversity.
As a priority, Development certainly comes first. Because Climate Change Policy, cannot
solve the problems and need of a developmental prospects of a country and at the same
time initiatives for Adaptation and Mitigation for Climate Change, can also not be
ignored; since this is closely linked to the process of development at each stage. The
climate of the future is going to be different from the climate of the past; hence from our
experience and traditional knowledge, built over the years, we should able toadopt
appropriate Climate Change Policies and subsequently implement the Mitigation
Strategies; otherwise the poorest of the poor would suffer the most, since they are the
ones, most vulnerable to climate change process.
The most of the Developing Countries, unfortunately do not have sufficient either
financial resources or technological know-how to support their minimum developmental
programmes and in such a situation, Adaptation and implementing Mitigation Policy
would certainly be an additional burden for them. In fact, Capacity Building assumes
prime importance in such a context for the Developing World.India has the world‟s second
largest population and fourth largest economy, with a per capita annual GDP of $ 2.4.
While our economy has been among the fastest growing in the world in the last two
decades, the major part of this growth is due to the service sectors, including information
technology, bio-technology, and media and entertainment. The nation aims to reduce the
poverty rate to 15 per cent, provide full employment, and ensure food, energy and
economic security and double per capita income – all by 2012. In order to achieve these
goals, India has developed an open, market-based economy.
Dr. V. D. SHARMA 50
India‟s carbon emissions per capita, is the lowest in the world, averaging only one-quarter
of the global average and one-twentieth the U.S. rate. While India places a higher priority
on development needs, policies driven by economic and environmental challenge have
reduced growth in greenhouse gas (GHG) emissions. The greatest challenge has been
economic liberalization and restructuring to improve living standards of the people.
Pressure from citizen activists to reduce air pollution has also led to sufficient legal
interventions in mandating strong clean air measures that affect energy systems. India
ratified the United Nations Framework Convention on Climate Change (UNFCCC) in
1993 and the Kyoto Protocol in 2002. First, our per capita Green House Gas emissions are
only a fraction of the world average, and an order of magnitude below that of many
developed countries. This situation will not change for several decades to come. We do
believe that the ethos of democracy can support equal per capita rights to global
environmental resources.
In Five-year Planning process, India stated placing “ Environment Protection “, due
importance right from its fifth Five-year Plan. The Ninth Plan (1997-2002) recognizes the
synergies among environment, health, and development, and identifies as one of its core
objectives, as the need for ensuring environmental sustainability of the development
process through social mobilization and participation of people at all levels (Planning
Commission 1997).
The Approach Paper to the India‟s Tenth Five-year Plan (2002-2007) links economic
development and poverty with environmental degradation. As the poor are dependent on
nature for their livelihoods, they are highly vulnerable to natural calamities, environmental
degradation, and ecological disasters. Any economic development, which destroys the
environment, may aggravate problems of poverty, unemployment, and disease. Moreover,
the Approach Paper also emphasizes that India would target a high rate of economic
growth (8% GDP), simultaneously striving for enhancement of human will being. This
includes adequate levels of consumption of food and other consumer goods, access to
basic social services (education, health, drinking water, and basic sanitation), expansion of
economic and social opportunities for all individuals and groups, reduction of disparities,
and greater participation in decision-making. This is the key challenge for the Indian
economy at the start of the new millennium.
Targets set for India’s Tenth Plan period (2002-07) and Beyond
Growth in gross domestic product at 8% for the period 2002-07.
Reduction of poverty ratio by 5% by 2007 and by 15% by 2012.
Providing gainful high-quality employment to the addition to the labourforce over the plan
period.
Admittance of all children in school by 2003; completion of five yearsof education by
children by 2007.
Reduction for gender gaps in literacy and wage rates by at least 50%by 2007.
Reduction in the decadal rate of population growth between 2001 and2011 to 16.2%.
Increase in literacy rate to 75% within the Plan period.
51
GLOBAL WARMING IS MAJOR CONCERN FOR ENVIRONMENT &
ECOLOGY
Reduction of infant mortality rate to 45 per 1000 live births by 2007and to 28 per 1000
live births by 2012.
Reduction of maternal mortality ratio to 2 per 1000 live births by 2007and to 1 per 1000
live births by 2012.
Increase in forest and tree cover to 25% by 2007 and to 33% by 2012.
Sustained access to potable drinking water for all villages within the Plan period.
Cleaning of major polluted rivers by 2007 and other notified stretches by 2012
Although the countries of the developing world are more vulnerable to climate change,
their contribution to the greenhouse problem has been much smaller than that of developed
countries, historically; developed countries have been responsible for more than 60% of
GHGs (greenhouse gases)added in the last 100 years (WRI 2001). This is recognized in
the UNFCCC, which follows the principles of „common but differentiated responsibilities‟
and‟ respective capabilities‟ in addressing its ultimate objective of stabilizing atmospheric
GHG concentrations. In 1990, India accounted for approximately three per cent of global
GHG emissions. The major part of India‟s emissions came from fossil-fuel-related CO2
emission. In per capita terms, India emitted 1.19 tones of CO2 – equivalent, compared to
Japan‟s 8.8 tones andUS‟s 19.8 tones in the same year (ADB-GEF-UNDP 1998).
Ten year later, India‟s CO2 emissions from fossil flue combustion continue to be much
lower than those of key Developed Countries. In per capita terms, India‟s emissions
constitute just a fraction of the world average. Despite its low share in atmospheric GHG
concentrations, and its overriding development priorities, India is undertaking numerous
initiatives that contribute significantly to international efforts for atmospheric protection,
thus putting the country on the path of climate-friendly development.
Recent Energy and Emissions Profile
After climbing steadily for at least two decades, India‟s energy, power, and carbon
intensities all began to decline rapidly after 1995 and this shift suggests the start of a
decoupling of energy and economic growth, as has historically occurred in industrialized
nations at higher per capita income levels.
Industrial development has contributed significantly to economic growth in India, though
not without an environmental price. With coal accounting for over half of total primary
energy consumption, this industrial development has been fueled by a relatively high-
polluting energy source. Industrial pollution is increasing public health risks, and
abatement efforts are consuming a significant portion of India‟s GDP. Energy
consumption by the industrial sector accounted for 41 per cent of the total energy
consumption in1998.
Non-commercial biomass energy meets the cooking needs of most rural India households
and nearly half of urban households. Although commercial forms of energy are
penetrating rural and traditional sectors, biomass still accounts for roughly one-third of
total Indian energy use. India‟s carbon emissions have grown by 63 per cent over the last
decade, despite the decline in carbon intensity later in the decade. This emissions growth
Dr. V. D. SHARMA 52
results primarily from energy use associated with economic development and heavy
dependence on coal. Methane, originates primarily from rice paddies and ruminant cattle,
contributed one-third of India‟s total GHG emissions, although its share decreased rapidly
with the rise in energy related carbon emissions.
Appropriate Mitigating Measures
Growth of energy-related carbon dioxide emissions in India was reduced over the last
decade by an estimated 111 million tons. The key factors in these reductions have been
economic restructuring, local environmental protection, and technological change. These
drivers have been mediated through economic reform, enforcement of existing clean air
laws by the nation‟s highest court, and renewable energy incentives and development
programs funded by the national government and foreign donors. In 2000alone, energy
policy initiative reduced carbon emissions growth by 18 million tons-about 6 per cent of
India‟s gross energy-related carbon emissions. Market reform driven by domestic policy
and international dynamics over the past decade has improved India‟s fuel quality,
technology standards, infrastructure, and operating practices. A key example is power
sector restructuring and reform. This Electricity Supply Act of 1905 designated electricity
as essentially a human right in India. The advent of market-based pricing for both power
and liquid fuels is replacing the administered-price system of the old planned economy.
Current prices and bill collections now cover about two-thirds of the cost of power; they
remained amount is recovered by only through various forms of subsidy. In some cities
such as Delhi and Bangalore power costs more than the U.S. average. Many people still do
not pay for power, meaning that the high price reflects a large cross subsidy for the poor
and free riders. Liquefied petroleum gas, which is used widely for cooking, is modestly
subsidized, but prices are headed toward international levels. Other market reforms have
allowed the import of foreign cars and appliances, which generally are more energy-
efficient than those they replace.
Technology development measures in the energy sector have contributed a series of small
but notable reductions in emissions growth. Improvements in stoves, reduction of gas
flaring in fossil-fuel production, improvements in demand-and supply-side efficiency, and
the introduction of modern renewable energy systems now mitigate about 18 million tons
of carbon per year. None of these measures has been exploited to its full potential, and
many could lead to further reductions in emissions growth in the future.
Lower carbon emissions also have resulted from important technological advancements in
coal washing. Indian coal averages approximately one-third ash, wreaking havoc with
boilers and their efficiency, driving up transportation costs, and creating serious air
pollution. One recent government policy restricts the transportation of unwashed coal to
less than1,000 kilometers. Customers are motivated to reduce ash content to improve
efficiency, reduce local pollution, and cut freight costs. New combustion technologies,
including supercritical coal-fired power plants, are being introduced, and the capture of
coal-bed methane is being promoted. While coal shall continue to be the most important
source of energy in India in the foreseeable future, we are promoting many technological
innovations in this sector to enhance efficiency and reduce its environmental impacts.
53
GLOBAL WARMING IS MAJOR CONCERN FOR ENVIRONMENT &
ECOLOGY
Government policy has included public investment to develop the Natural Gas
infrastructure for long-distance and local distribution as well. One example is the HBJ
1,500- kilometer high-pressure gas pipeline from near Mumbai to the north of Delhi,
which carries 4 to 5 billion cubic meters ofgas from off-shore production. The share of gas
in power generating capacity has risen to 8 percent against the 2 per cent ten years ago.
Liquefied petroleum gas has significantly replaced commercial coal and kerosene in urban
households. Public vehicles have been converted to Compressed Natural Gas.
India has instituted a sizable renewable energy program over the past 20 years, which is
implemented by the Ministry of Non-Conventional Energy Sources, since 1992. About 3.3
million household Biomass Gasification Systems have been built, which produce 3-4
cubic meters of Biogas per unit per day, enough to supply cooking fuel for a large
percentage of rural homes.
A larger scale program has improved the efficiency of wood stoves in 34million homes,
reducing deforestation in areas, where wood-fuels were unsustainably harvested.
Forest covers nearly one-fifth of India‟s geographical landmass. The per capita
deforestation rate has been among the lowest of the major tropical countries. In recent
years, closed forests have actually increased in total area. Forest conservation measures
include prohibiting the use of forestland for non-forestry purposes, encouraging agro-
forestry and private plantations to meet industrial wood needs, and expanding areas under
protection. During the last decade, over 14 million hectares were protected under Indian
forestry programs. These efforts have led to a steady increase in the rate of forestation,
significantly contributing to the removal of atmospheric carbon.
Future Mitigation Options Projections assuming sustained economic growth and continued dependence on domestic
coal resources, suggest sharply rising energy use and GHG emissions in India. One studies
the Asia Least-Cost Greenhouse Gas Abatement Strategy (ALGAS), projected energy-
sector carbon emissions of at least 688 million tons in 2030, which is nearly three times
then the current level. Forestry-related emissions would reach 21 million tons of carbon by
2020 and about 29 million tons by 2030. More recent studies have given lower energy-
related estimates, one projecting 572 million tons in 2020.
The ALGAS scenario is driven by a continuation of economic, demographic, and energy
trends and current policies. The economy would grow at an annual rate of 5 per cent,
increasing GDP in 2030 to nearly fivetimes the present level. India‟s population would
increase from 1 billion to1.35 billion. However, energy use would only triple, mainly
because thecurrent energy intensity reduction rate of 1.5 per cent per year is assumed
tocontinue. Carbon emissions would increase at about half the rate of GDP –2.7 times –
because carbon intensity would decrease as gas and renewablesubstitute for coal. Methane
emissions would grow slowly due to low growthin the agriculture and livestock sectors,
the main contributors of methaneemissions. Local air pollutants would rise at much lower rates– and particulateemissions would actually decline- due to policies that are already
beingimplemented as a result of increasing public pressure.
Dr. V. D. SHARMA 54
Most studies of future emissions in India suggest a hierarchy of mitigation options. It is
estimated that India could reduce projected emissions over the next 30 years by nearly
one-quarter for less than $25 per ton of carbon equivalent, with a substantial portion
available at a very low cost.
Over the next decade, 120 million tons of carbon mitigation could be achieved at a cost of
$0-15 per ton avoided. Major opportunities include demand supply-side efficiency
measures, fuel switching from coal to gas, a forestation, and power transmission
improvements. Demand and Supply side efficiency measures alone could avoid 45 million
tons of emissions.
The cost of these measures depends on the extent to which they would be applied, which
in turn depends in part on the stringency of GHG production policies. India could in the
midterm help finance these mitigation measures by selling emission reduction credits,
either through the Clean Development Mechanism established under the Kyoto Protocol or
in a futures market based on expectations that future global policies would certainly
impose more stringent GHG restrictions, provided that credits could be banked and sold.
Now let us pledge for:
Recognition that, given current scientific knowledge, deep cuts in emissions will be
necessary to avoid dangerous climate change. These must be achieved with the principles
of equity and common but differentiated responsibilities.
Increased capacity and financing for adaptation must be ensured. In practice, adaptation
should be integrated with sustainable development. However, without far deeper
emissions reductions, no amount of adaptation can stave off catastrophic impacts.
Fair and adequate public participation in Decision-making and implementation, which
requires increased public awareness, education and training.
Reaffirmation at the right to sustainable development is fundamental to achieving the
goals of the convention and the protocol. This includes making poverty eradication a
global priority, just as it includes shifts to equitable and sustainable patterns of
consumption.
Global Warming has emerged as one of the most serious environmental concerns of our
times, which is a global phenomenon with diverse local impacts. The problem has aroused
because of “Waste Model of West” and solution is there to leave it immediately. In the
name of so called development, we have created the natural disasters & calamities. There
is a need to pay adequate attention to the concerns of developing countries on vulnerability
and adaptation issues. It‟s truly said that Global Warming is great/ major for
environment & universe. Hence adaptation is the key theme for achieving the goals of sustainability of resources.
Let us expect this should not be a substitute for Mitigation for cutting back emissions. We
should follow the Vedic & Gandhian Philosophy to regard the mother-nature
(environment & ecology) for addressing the challenge of Global Warming as an integral
part of achieving sustainable development to create a better world for all our people
adapting the path of alternative & sustainable (abundances) resources of energy like Gobar
gas energy, Solar Energy, Wind Energy, Waves Energy rather than conventional energy
55
GLOBAL WARMING IS MAJOR CONCERN FOR ENVIRONMENT &
ECOLOGY
like thermal power projects, fossil fuels (coal & petroleum) and construction of huge dams
etc.
References:
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Assessment Reportof the Intergovernmental Panel on Climate Change, Cambridge
University Press, Cambridge, 1996.
Climate Change 2001: Synthesis Report, Intergovernmental Panel on Climate Change,
Geneva, Switzerland, 2001.
Climate Change 2001: Impacts, Adaptation, and Vulnerability, Summary for Policy
Makers and Technical Summary of the WorkingGroup II Report, Intergovernmental Panel
on Climate Change (2001), Geneva, Switzerland, IPCC.
Climate Change 2001: Mitigation, Summary for Policy Makers and Technical Summary
of the Working Group III Report, IntergovernmentalPanel on Climate Change (IPCC),
Geneva, Switzerland, 2001.
Garg, A., Ghosh, D. and Shukla, P. R., Energy sector policies and mitigation of GHG
emissions from India. In Climate Change Economicsand Policy: Indian Perspectives (ed.
Toman M.), Resources for the Future Publication, Washington DC, 2003.
Bruce, J. P., Lee, H. and Hates, E. F., Climate Change 1995: Economic and Social
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Assessment Report of Intergovernmental Panel on Climate Change (IPCC), Cambridge
UniversityPress, Cambridge, 1996.