Difference Between Common Market and Custom Union

Difference Between Common Market and Custom Union George Walles How does a common market differ from a custom union with respect to the dynamic effects of European economic integration? What may impede the transition from a customs union to a common market? This essay will be looking to identify how a common market differs from a custom union in respect to dynamic effects of European economic integration. After that, the essay will be looking at the sort of factors, which may impede the transition from a custom union to a common market. A custom union is where all obstacles of free movement of goods and services are removed and a common external tariff is agreed. A common market is union of partners with free movement of goods, services, and the addition of free movement of labour and capital. The Treaty of Rome in 1957 set out the intension of a legal basis for the start of the EEC and to establish a Common market (Nello 2012). Custom union theory mainly looks at the static effects of European economic integration; this can be shown through the welfare effect diagram (figure 1). In the home country, based on their domestic supply and demand the price would be at Ph. World trade prices would be at P3 where world supply plus a tariff is equal. At P3 the domestic economy would Produce Q2 and import up to Q3. However once a custom union is established the price will fall to P2 as this is the price at which the union partners sell at. Yet they are still not as productive as the world supply because if you exclude the tariff they would produce the good more efficiently at a price of P1. At the price P2, the home country now produces only Q1 and imports up to Q4. However, the home country gains from being in the custom union, areas X and Y are gains and are trade creation of which are larger than the losses from trade, which is area Z, which is trade diversion. Area X is the gains to the consumer due to the lower prices, while area Y is the gains to the producer because of greater efficiency. However the gains from a custom union are only predicted to be with just 0.15 percent increase in growth. The problem with this analysis is that it only shows the static effects of a custom union, and it is only looking at an individual industry and not the economy as a whole. There are a number of dynamic effects made by a custom union is respect of European economic integration. However, these dynamic effects are explicit to that of a firm or an industry and are similar or the same effects of which a common market has, due to both custom union and common market having free movement of goods and services. These effects are a reduction in Monopoly power and increased competition, reduction in the levels of x-inefficiency and the reaping benefits of economies of scale. The difference between custom union and common market is the free movement of capital and labour, this essay is going to concentrate on the free movement of capital. The free movement of capital is where capital controls and restrictions on the amount of currency that may be imported or exported are abolished (Deutsche Bank 2013). Figure 2 is going to illustrate a situation where there is no capital mobility to free capital mobility in a common market to look at its welfare effects. The native capital owners in Home lose since their reward has fallen from r0 to r. The amount they lose is measured by the rectangle A. The Home labour increases its income by area A plus triangle B, thus the total impact on Home citizens is positive at equal to area D. The Home country also gains from the extra capital flows as it raises total output by area B+C+D+E, while payment to the new capital is only equal to C+D+E, which is r times the capital flows. Moreover, Foreign output drops by D+E, while capital remaining in foreign sees its rewards rise from r*0 to r. The size of this gain is shown in the rectangle F, which is the change in r times the amount of capital left in the foreign country after integration. The total gains to foreign capital is area C+D+E, while the loss to foreign labour is area D+F. The Foreign country therefore gains from the capital outflow by an area equal to triangle C (Baldwin Wyplosz 2009:557). Thus to conclude from this diagram, Capital flows create winners and losers in both nations but collectively they both gain from free movement of capital. The main reason why is due to greater efficiency. For example, foreign capital was producing at r*0 which is inefficient but once there is free movement of capital it then produces at r0 in the Home country. Therefore, capital flows improve the overall efficiency of the EU economy of which the gains and losses are split between the member countries (Baldwin and Wyplosz 2009:558). Furthermore, free movement of capital makes it more profitable to invest into other members economies, this is backed up by the fact that the EU is the largest source and destination of FDI (Foreign Direct Investment) in the world (European commission 2014). The main reason for greater investment this is due to heightened efficiency in the EU zone as the same amount of capital and labour can produce more output, as was explained in the figure 2. Free movement of capital has positive dynamic effects, due to an increase in investment. The best way to show an increase in investment due to European economic integration is through the Solow growth mode. For example When Spain join the EU along with Portugal in 1986 they both had an increase in FDI, for example Portugal FDI was $274,036,105 in 1985 and by 1987 this almost doubled to $465,868,833 and in Spain FDI was $1,967,804,468 in 1985 and by 1987 it had increased dramatically to $4,570,700,793 (World Bank 2014). This increased investment because of the theory of the multiplier effect should lead to an increase in growth, which both Portugal and Spain experienced after EU entry. For example in 1985 Portugals growth was 2.8% by 1987 it had increased to 6.4% similarly Spain in 1985 growth was 2.3% and by 1987 it had increased up to 5.5% (World Bank 2014). Furthermore, Albu (2013) found that the EU, is characterized by complete liberalization of capital movement, foreign trade and economic growth in general were directly influenced by foreign direct investment increasing, this can be shown the diagram below. (Baldwin Wyplosz 2009) If European integration raises investment from S to S2, the inflow of the curve S(GDP/L) will rotate upwards as shown in figure 3 to S2(GDP/L). This change would alter the equilibrium K/L (capital/labour ratio) and at point C. This can be seen also by the movement form K/L to K/L (2). Furthermore, the rising K/L ratio would raise the output per worker from Y/L to Y/L (2). The difference between point B and D show the medium run growth bonus from joining the EU (Baldwin Wyplosz 2009: 224). This can be backed up by economist Richard Baldwin who predicted an increase in GDP within 3.1 percent to 8.1 percent in the UK and even higher in other EU economies once the single market was completed (Baldwin 1989: 265). The second part of this essay will be looking at what may impede the transition from custom union to a common market. It can be argued that the European union was a custom union right up to the late 1980’s because of the impediments of free movement of labour and capital, which some are going to be looked at now. According to Pelkmans (2001: 184) the financial capital market has been completely liberalised since the late 1980s. On the other hand, Molle (2006: 123) found a number of different forms of impediments to free movement of capital. For example the lack of tax harmonization, as differences in tax levels may distort the market as they induce investors to locate in countries which offer the highest tax adjusted profit rates. The European Commission (1996: 42) found that insufficient liquidity of local markets, exchange rate risks, the tax treatment of non-residents, local prudential and incorporation requirements, and national differences in company law were reported as still inhibiting or distorting capital movements. A example of difficulty with free movement of capital is regarding to the banking system in the 1988, where the main obstacles to establishing banks in other member states was a mixture of authorization procedures, capital endowment requirements and restrictions on foreign acquisition. This restriction is proved, as only 1 percent of member states banks were foreign in 1988 (Nello 2012). However, the Maastricht Treaty outlined that all restrictions on the movement of capital between member states and between member and third countries shall be prohibited (Molle 2006: 140). Another issue which impedes the transition of a custom union to a common market is the free movement of labour. There are both cultural and social reasons and economic, the cultural are issues such as having to learn a new language and a new way of life and having to get used to new surroundings, while having to move away from family and friends is also an issue for people because of tight relationships. The social problems exist due to the labour market being heavily regulated, and with member states having different laws on minimum wage, hiring and firing , flexible labour contracts and qualifications (Pelkman 2001:168). This diversity between members acts as a deterrent for people to migrate. Another form of impediment to a common market is diversity is the lack of mutual recognition of qualification completed by people at university or course of training has not kept up to pace with another members standard (The Social and Economic Council in the Netherlands 2001). There showing how a lack of common recognition of standards and qualifications can hinder labour mobility. As free movement is crucial to common market as the EU created the Schengen group in 1985, the main aim was to eliminate border controls. The original members of the Schengen group were Germany and France with all the members later joining (Nello 2012). However, Ireland and England opted out and Demark partially opted out, therefore there is not complete free movement of labour. Furthermore, there are also restriction imposed by the EU itself, for example, migration in the EU is in principle free. Yet when the EU was expanded in 2004, special provisions were temporally imposed on the ten new members to limit migration from these countries to the EU15, with similar policies imposed on Romania and Bulgaria in 2007 (Baldwin Wyplosz 2009: 250). Thus showing more examples of what can and has impeded the transition from a custom union to a common market. In addition to accept, a job a person must have accommodation, while a residence permit for foreigners can be refused or made hard to ge t (Molle 2009). In conclusion this essay looks at identifying the main differences in respect of the dynamic effects of European economic integration of a common market and custom union, of which were found to be greater efficiency, and greater investment between member states as shown with the Spain and Portugal example. Furthermore, by using the Solow growth model demonstrated how these changes have led to higher economic growth within the EU. The Essay also demonstrates how custom union theory only explains the static effects of European economic integration and microeconomic effects within an industry and firms. The essay also outlines a number of potential impediments that moving from a custom union to a common market can have on both the labour and capital mobility, but also gave empirical examples of these impediments taking place in the contemporary European Union. References Albu, L (2013) Foreign trade and FDI as main factors of growth in the EU. Romanian Journal of Economic Forecasting, 16 (2), PP. 7-17 Baldwin, R. (1989) The Growth Effect of 1992. Economic policy, 4 (2), pp. 247-281 Baldwin, R,. Wyplosz, C,. (2012) The Economics of European Integration. 4th Ed. Maidenhead: McGraw-Hill Deutsche Bank (2013) The Single European Market 20 years on. Frankfurt: DB Research European Commission (1996) Economic evaluation of the internal market.no. 4. Brussels: Commission of the European Communities European Commission (2014) Investment [online] available from http://ec.europa.eu/trade/policy/accessing-markets/investment/> [25 October 2014] McDonald, F,. Dearden, S. (2005) European Economic Integration. 4th Ed. Harlow: Prentice Hall Molle,W. (2009) The Economics of European Integration, Theory, Practice, Policy. 5th Ed. Aldershot: Ashgate Nello, S. (2012) The European Union Economic, Policies History. 3rd Ed. Maidenhead: McGraw-Hill Pelkman, J. (2001) European Integration Methods and Economic Analysis. 2nd Ed. Harlow: Prentice Hall The Social and Economic Council in the Netherlands (2001) Labour mobility in the European Union. Bezuidenhoutseweg: Social and Economic Council World Bank (2014) Foreign direct investment, net inflow (BoP current US$) [online] available from http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?page=5> [25 October 2014} World Bank (2014) GDP Growth (annual %) [online] available from http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?page=5> [02 October 2014]

Stonehenge :: essays research papers

In the hill country of northern England, many sites of Stonehenge exist. Approximately 150 to 200 enormous stones lie stacked on top of each other forming somewhat of an altar. Tall stones stand upright surrounding the center stone which is bluestone. This is unlike the sandstone columns which surround it. This may not seem unusual at first; however, there are three main factors that make Stonehenge extremely odd. Each of these stones weigh close to 4 tons. There are also no other stones in a radius of 15 miles. With today’s sophisticated equipment the moving of these large stones would not be difficult, but one must remember, Stonehenge was built approximately 4800 B.C. Radiocarbon dating shows that these stone structures are older than the great pyramids of Egypt, and the large cities of Rome. Of course Stonehenge is not as advanced as the great pyramids but it was built in an area which wasn’t as advanced as the Egyptians or Romans.   Ã‚  Ã‚  Ã‚  Ã‚  The outside stones are made completely of sandstone, this is at least 18 miles from the site where the sandstone was quarried from. Each stone stands upright and are expertly balanced. Stones of the same composition and size, rest on top forming a circular structure. In the middle of these stones, giant pieces of bluestone lay on the ground in â€Å"horse shoe† like shapes. These stones are also called spotted dolorite, and are not found within a 225 mile radius. In the very center, a piece of Welsh sandstone lay as a monument.   Ã‚  Ã‚  Ã‚  Ã‚  One of the most interesting facts about Stonehenge is that it is perfectly lined up with the winter (December 21) and summer (June 21) solstices. This is when the beginning of summer and winter when the Earth’s axis changes. As the sun rises over the horizon on those two days, its rays go through a small hole in one of the rocks. The alignment is perfect. The other significant characteristic of these prehistoric masterpieces, is that absolutely no mortar or cement exists throughout the entire structure. These huge stones lay balanced on top of each other with no glue or substance to hold them together. The only thing that stops these gargantuan stones from falling is a simple system of joints. Originally these structures were thought to be circles. In fact, many people still think they are circular; however, they are not. Some have flattened sides, some are hexagonal and some are elliptical. This is not easy to see with the naked eye which is why so

Narrative of the Life of Frederick Douglass Essay

In the autobiography, the Narrative of the Life of Frederick Douglass, an American Slave, there is an underlying theme of knowledge as the path to freedom. During Douglass’ time, slave owners deprived slaves of an education and as a result, the slaves were thus deprived of freedom. Knowledge among slaves is what the white men feared the most, as knowledge not only â€Å"spoiled† slaves, it also provided them with the insight that ultimately paved their road to freedom. Knowledge corrupts, or â€Å"spoils† slaves, as it happened with Frederick Douglass. Because uneducated slaves could not think for themselves, they were thus forced to obey their masters, or â€Å"thinkers† who made their decisions for them. After Douglass learned to read The Columbian Orator, a book that boldly denounced the immorality of slavery and the whites, he began to harbor such bitter resentment toward his masters that he â€Å"wishes [him]self dead.† Knowledge emboldened Douglass, and gave him the courage to rebel against his masters. As a result, Douglass vowed to â€Å"run away† from the â€Å"band of successful robbers †¦ that reduced him to slavery.† Indeed, wisdom had â€Å"spoiled† Douglass; he has now gained a keen insight that allowed him to fully articulate the inhumanities of his masters. Knowledge gave Douglass the ability to recognize the enormities of the corrupt white slave owners. Douglass, for instance, points out that it was the white man who â€Å"shut [Douglass’] mouth, and then ask why [he doesn’t] speak,† thus proving that slave owners neither allow slaves to think for themselves, nor do they allow the slaves a voice in that decision. Furthermore, slave owners had previously instilled in their slaves the idea that any man who is independent is doomed to fall; consequently, slaves were misled to believe that freedom is slavery. However, Douglass, an educated slave, was able to realize that he too was created equal, that he too had rights, and also that he was not a slave, but a free man. In this way, Douglass managed to set into motion the gears of his emancipation. For Frederick Douglass, education was his â€Å"pathway from slavery to freedom.† With his wisdom, he not only dispersed his experiences to other slaves but also stirred up sentiments within the white abolitionists as well. Unlike  their ignorant fellows, educated slaves can band together and finally reach for freedom. Works Cited 1. Douglass, Frederick. â€Å"The Church and Prejudice.† Plymouth County Anti-Slavery Society. Massachusetts, Plymouth County. 14 Nov. 1841. 2. Douglass, Frederick, Houston A. Baker, and William Lloyd Garrison. Narrative of the Life of Frederick Douglass : An American Slave. New York: Penguin Books, Limited, 1982.

The Cask of Amontillado Essay

The Cask of Amontillado Essay In the short story â€Å"The Cask of Amontillado†, by Edgar Allen Poe, the author uses many different stylistic elements to convey a certain and eerie sense of tone and theme. â€Å"The Cask of Amontillado†, written in 1846, is considered a horror fiction that is based on the mental thoughts and feelings of the author, Poe. The story, based on one man’s obsession with revenge and how he plans on doing it. The main character and narrator, Montresor, a wealthy nobleman or seems to get picked on tremendously by the other character Fortunato. Fortunato, a connoisseur of wine, has a hard time not wanting to drink it all the time. The plot goes on to lure Fortunato into the catacombs and into the shackles where he is put to his doom. Montresor then surrounds his enemy with bricks and watches him die in a long and slow death. The theme is made through many stylistic elements, such as character and Edgar Allen Poe’s background. â€Å"The Cask of Amontillado† shows how one man’s revenge is another man’s death. Edgar Allen Poe was born on January 19, 1809, in Boston, Massachusetts. A year after his birth, his mother died of an unknown cause which also caused his father’s death. He then went to live with the family of John Allan and then went to the University of Virginia until it closed in December 1826. Because of Poe’s debts that he accumulated over the entire school year, he and Allan quarreled and Poe left Richmond a penniless youth. Poe’s early life is relevant to this writing style because this lifestyle is where he got his unlimited images and countless morbid fears about life and death. Without the death of both parents and him being sent away because of debts, the world might never had known the Poe that we know today. In his later years, Poe ended up marrying his cousin and her death cause him much suffering and sorrow that ultimately caused Poe’s unexplainable death in October, 1949. Poe was much more than a writer, he was a critic about his own work a nd the work of others. He invented the detective story and made the reader study the art of conscience in his short stories. Theme played another big part in Poe’s short stories because they conveyed the sense of suspense and fear to the reader and how people get revenge. Theme also plays a big part in a short story and even in a novel. Theme can determine if the plot was good or if the suspense was thrilling enough. Even if a story has no theme, the reader still can enjoy the story for enjoyment and not for interpretive reading. In the story, â€Å"The Cask of Amontillado†, the characteristics of both characters make for a gruesome end of the story but a theme no less. In an excerpt by the Salem Press, the author states, â€Å"that Montresor is devoured by the lust of hate, which destroys his soul just as he destroys Fortunato† (Press 2). The theme stated here is that one of true hatred can conquer all even if it means death. Poe’s life also played an important part in determining the theme of the story. â€Å"Poe himself seems to have had a morbid fear of premature burial†, says D. H. Lawrence (Lawrence 1). The characters and Poe himself convey that sense of morbid and horrifying theme common to all of his short stories. Many critics also love the style in which Edgar Allan Poe writes. In the case of â€Å"The Cask of Amontillado†, many critics find that the narrative voice in the story fits perfectly the character of the avenger. Without this character, the story would be without its suspense and horror. Critics also agree that the main theme of the story deals with the struggles of conscience and oneself in nature and in society. Critics revere Poe’s use of characters and suspense but quote that he may be a little too excessive with his imagery and poetic quote. One critic, Leonard W. Engel, states that, â€Å"Poe uses a sort of confinement to restrict his characters and their freedom† (Engel 87). This is in fact true, as Fortunato is restricted by his oppressor and his freedom and then seeks revenge to get the ultimate truth. This is one of the many stylistic devices that makes Poe and his themes a work of beauty. In the short story, â€Å"The Cask of Amontillado†, the author uses many literary devices in order to convey and certain theme about the story. He in fact uses his own life and hardships to make the reader understand what kind of life he went through. Poe also uses his characters to convey how their own conscience can lead them to their ultimate doom. This in fact is also what the theme itself consists of. Without oppression itself, one can seek their own revenge no matter what the conscienques. â€Å"The Cask of Amontillado† is one of Poe’s best works as well as the scariest.

Free Essays on Americas Horrific Teen Drivers

America’s Horrific Teen Drivers In America, driving is the main source of transportation. Being an American teenage driver myself, I clearly remember dreaming about that golden day I’d be allowed to get my driver’s license. American teenagers place driving, being the first major milestone in the transition into adulthood, on a pedestal. The idea of being able to come and go as you please without calling mom for a ride is every teen’s ideal world. Dates, parties, and many other weekend activities become options thanks to a driver’s license. However, stepping behind the wheel furnishes a lot of responsibility teenagers are just not equipped to handle. Issues regarding driving ability and safety can sometimes be too much for the selfish teenage frame of mind, more concerned with having a good time and impressing their friends, to handle. The awful reputation of teen drivers is due not only to the confused period of adolescence, but also insufficient testing procedures and self impose d distractions while driving. Combining these factors makes American teens the most dangerous presence on the road. Becoming the stereotypical bad teen driver is a simple process. The first step is passing the written test, which when you look back, was much easier than persuading your parents to let you take it. Pennsylvania’s testing procedure is a prime example of America’s insufficient practices. The written permit test, which when passed, grants the driving student a permit to practice with another licensed driver. The Department of Motor Vehicles (DMV) provides a manual of laws and other guidelines to study from. The permit test consists of only eighteen questions and fifteen correct is passing. What are these people thinking, that one short, simple test is enough to assess a teen on rules and regulations of driving? Teens are experts when it comes to cramming for a test without the information actually sinking in; this ... Free Essays on Americas Horrific Teen Drivers Free Essays on Americas Horrific Teen Drivers America’s Horrific Teen Drivers In America, driving is the main source of transportation. Being an American teenage driver myself, I clearly remember dreaming about that golden day I’d be allowed to get my driver’s license. American teenagers place driving, being the first major milestone in the transition into adulthood, on a pedestal. The idea of being able to come and go as you please without calling mom for a ride is every teen’s ideal world. Dates, parties, and many other weekend activities become options thanks to a driver’s license. However, stepping behind the wheel furnishes a lot of responsibility teenagers are just not equipped to handle. Issues regarding driving ability and safety can sometimes be too much for the selfish teenage frame of mind, more concerned with having a good time and impressing their friends, to handle. The awful reputation of teen drivers is due not only to the confused period of adolescence, but also insufficient testing procedures and self impos ed distractions while driving. Combining these factors makes American teens the most dangerous presence on the road. Becoming the stereotypical bad teen driver is a simple process. The first step is passing the written test, which when you look back, was much easier than persuading your parents to let you take it. Pennsylvania’s testing procedure is a prime example of America’s insufficient practices. The written permit test, which when passed, grants the driving student a permit to practice with another licensed driver. The Department of Motor Vehicles (DMV) provides a manual of laws and other guidelines to study from. The permit test consists of only eighteen questions and fifteen correct is passing. What are these people thinking, that one short, simple test is enough to assess a teen on rules and regulations of driving? Teens are experts when it comes to cramming for a test without the information actually sinking in; this ...

Profile and Biography of Socrates

Profile and Biography of Socrates The Greek philosopher Socrates was born c. 470/469 B.C., in Athens, and died in 399 B.C. To put this in the context of the other great men of his time, the sculptor Pheidias died c. 430; Sophocles and Euripides died c. 406; Pericles died in 429; Thucydides died c. 399; and the architect Ictinus completed the Parthenon in c. 438. Athens was producing the extraordinary art and monuments for which she would be remembered. Beauty, including personal, was vital. It was linked with being good. However, Socrates was ugly, according to all accounts, a fact that made him a good target for Aristophanes in his comedies. Who Was Socrates? Socrates was a great Greek philosopher, possibly the wisest sage of all time. He is famous for contributing to philosophy: Pithy sayingsThe Socratic method of discussion or dialogueSocratic irony A discussion of Greek democracy often focuses on a sadder aspect of his life: his state-mandated execution. Family Although we have many details about his death, we know little about the life of Socrates. Plato provides us the names of some of his family members: Socrates father was Sophroniscus (thought to have been a stonemason), his mother was Phaenarete, and his wife, Xanthippe (a proverbial shrew). Socrates had 3 sons, Lamprocles, Sophroniscus, and Menexenus. The oldest, Lamprocles, was about 15 at the time his father died. Death The Council of 500 [see Athenian Officials in the Time of Pericles] condemned Socrates to death for impiety for not believing in the gods of the city and for introducing new gods. He was offered an alternative to death, paying a fine, but refused it. Socrates fulfilled his sentence by drinking a cup of poison hemlock in front of friends. Socrates as Citizen of Athens Socrates is remembered chiefly as a philosopher and the teacher of Plato, but he was also a citizen of Athens, and served the military as a hoplite during the Peloponnesian War, at Potidaea (432–429), where he saved Alcibiades life in a skirmish, Delium (424), where he remained calm while most around him were in a panic, and Amphipolis (422). Socrates also participated in the Athenian democratic political organ, the Council of the 500. As a Sophist The 5th century B.C. sophists, a name based on the Greek word for wisdom, are familiar to us mostly from the writings of Aristophanes, Plato, and Xenophon, who opposed them. Sophists taught valuable skills, especially rhetoric, for a price. Although Plato shows Socrates opposing the sophists, and not charging for his instruction, Aristophanes, in his comedy Clouds, portrays Socrates as a greedy master of the sophists craft. Although Plato is considered the most reliable source on Socrates and he says Socrates was not a sophist, opinions differ on whether Socrates was essentially different from the (other) sophists. Contemporary Sources Socrates is not known to have written anything. He is best known for the dialogues of Plato, but before Plato painted his memorable portrait in his dialogues, Socrates was an object of ridicule, described as a sophist, by Aristophanes. In addition to writing about his life and teaching, Plato and Xenophon wrote about Socrates defense at his trial, in separate works both called Apology. The Socratic Method Socrates is known for the Socratic method (elenchus), Socratic irony, and the pursuit of knowledge. Socrates is famous for saying that he knows nothing and that the unexamined life is not worth living. The Socratic method involves asking a series of questions until a contradiction emerges invalidating the initial assumption. Socratic irony is the position that the inquisitor takes that he knows nothing while leading the questioning.

Ethic theory on the Workplace Case Study Example | Topics and Well Written Essays - 1500 words

Ethic theory on the Workplace - Case Study Example First, there are two kinds of ethical theories, consequentialist and non-consequentialist. There are two consequentialist theories that include egoism and utilitarianism (Shaw et al., 2009). Ethical egoism is the first theory that can be used to give an answer as to what Kehal should do. According to the theory, Kehal should give the gifts that the influential individuals are demanding. In this way, he will be acting in his own interest as prescribed by the theory. This is because it is assured that the airline will be granted the landing rights once the influential individuals receive what they demanded. Once the company has obtained the landing rights, Kehal will receive the promotion as well as a bonus. This will help him to cater for the medical expenses of his ailing parents and sort out all his commitments. Egoism is largely viewed as a consequentialist theory since it focuses on the consequence of an action for the agent instead of the final outcome. In other words, the theory is based on self interest and its major strength is that it evades the possibility of a conflict between self interest and morality. It would be rational for Kemal to offer the gifts to the influential individuals since by pursuing his interest morality is equated to rationality.   The second consequentialist theory that can help in cracking the ethical dilemma is utilitarianism. Based on this theory Kemal should not hand the gifts demanded by the local manager to be given to the influential individuals.