Accounting and Finance Accounting

Question: How does financial information affect decisions made managers with the success or failure of their companies ? Answer: Introduction In case of every business organizations, the importance of collection of financial information is inevitable for the business organizations. With the help of respective financial information, the prospective managers can analyze and implement different forms of decisions, which may lead their organization either to success or to failure. The given report will throw light on the aspect of literature review of the importance of financial information which will affect the decision making function of the given organizations (Cardinaels and Veen-Dirks, 2010). Different types of financial information of an organization There are different types of financial information, which reflects the flow of operations of different business organizations. These are in the form of level of cash flows, segmentation of incomes and expenses, structure of capital and nature of assets and liabilities of any modern business organization (Li, 2010). The level of cash flows interprets about the total amount of cash inflows and cash outflows of the respective business organization. The higher the level of cash flows of the organization, higher will be the liquidity level of the organization. In addition to this, if the organization has enough liquidity, then it is interpreted that the organization is successful in meeting the short-term debt on a regular basis. The structure of capital interprets about the percentage of debt and equity of the respective business firm (Altman et al. 2010). The income and expenditure statement interprets about the segmentation of level of profit of the organization. In addition to this, t he financial performance of the organization is reflected through the analysis of the balance sheet and assets and liabilities of any form of particular business organization. In addition to this, if the organization is a public limited organization, then, the different sorts of financial information can be reflected through the analysis of stock prices of the respective business organization. The percentage of dividend given to the shareholders can also be considered as financial information of the respective business organization (Kober et al. 2010). Decision making through the analysis of financial information Various forms of decision-making process can be interpreted through the analysis of financial information. For example, the cash flow statement of the organization, the management of the organization can easily take financial decisions in terms of maintaining liquid cash of the organization. With the assist of income and expenditure statement, the top-level managers of the organization will be able to know which portion of the expenses is on the higher side and portion of the expenses are on the lower side. This will further assist the managers of the organization to identify the potential weaknesses of the organization and they can take appropriate steps to minimize the variances in their respective financial performance (Merig and Gil-Lafuente, 2010). With the help of the capital structure of the organization, the managers can take appropriate steps in accordance to their cost of capital associated with the firm. The managers can easily adjust the capital structure of the firm as p er the aims and objectives of the organization. If the current business situation demands a higher portion of equity, then, the managers will incur more sources of funds in terms of equity. If the situation demands a higher portion of debts, then, the management of the organization will opt for debt source of funds (Schniederjans et al. 2010). Apart from this, financial ratios will also reflect the decision making purpose of the respective top-level managers. For example, the liquidity and financial ratios of the organization highlights the business security of the firm. On the other hand, efficiency, investment and profitability ratios reflect about the efficiency pattern of the firm. If, liquidity ratio of the firm is on the lower side, then, the managers can take appropriate steps, to improve the liquidity nature of the firm (Smith et al. 2010). The same thing happens in case of other financial ratios of the firm. All the financial ratios will the managers to forecast the future activities of an organization effectively. Similarly, with the help of stock prices, the managers can take decisions in terms of declaration of dividends, additional shares or bonus shares to the respective shareholders or investors of the business organization. This is the reason why financial information regarding the stock prices of the firm is of great essence for the managers to determine the success of the firms. The effectiveness of decision making of the managers of the firm will determine the success and failure success of the respective firm (Ladbury et al. 2010). If it is seen that the managers have taken a wrong decision in terms of financial behavior, then, that particular firm will not succeed in the end. Therefore, it can be inferred that financial information has an effective impact on the decision-making process of the managers of business organizations. The higher the effectiveness of decision process of the managers , the more effective will be the success of the organization in terms of its competitors. Challenges faced by the managers to procure effective financial information for decision making There are multiple challenges faced by the managers of the organization in order to procure financial information for their decision-making. In real terms, financial information can be procured through collection of data and preparing the respective financial statements after analysis of the data. It has been often seen that there are several errors in case of procurement and recording of information of different financial statements. If the information procured and recorded do not reflect the true picture of the business, then, it will be very difficult for the managers to implement decisions in a strategic manner (Schniederjans et al. 2010). It is of great challenge for the managers to procure and analyze all the financial information effectively. Apart from this, if the organization manipulates their respective financial data, then, the managers may take ineffective decisions that will further hamper the growth or success of the respective organizations (Cardinaels and Veen-Dirks, 2010). Therefore, it is of great essence for the managers to procure true picture of the firm and take steps in accordance to that. Conclusion The above report concludes financial information has a major impact on the decisions made by various organizations. It also determines the success and failures of the firm. A manager needs to minimize the respective challenges in order to procure and analyze the respective decision. Reference list Cardinaels, E., and van Veen-Dirks, P. M. (2010). Financial versus non-financial information: The impact of information organization and presentation in a Balanced Scorecard.Accounting, Organizations and Society,35(6), 565-578. Li, S. (2010). Does mandatory adoption of International Financial Reporting Standards in the European Union reduce the cost of equity capital?.The Accounting Review,85(2), 607-636. Altman, E. I., Sabato, G., and Wilson, N. (2010). The value of non-financial information in small and medium-sized enterprise risk management.The Journal of Credit Risk,6(2), 1-33. Kober, R., Lee, J., and Ng, J. (2010). Mind your accruals: perceived usefulness of financial information in the Australian public sector under different accounting systems.Financial Accountability and Management,26(3), 267-298. Merig, J. M., and Gil-Lafuente, A. M. (2010). New decision-making techniques and their application in the selection of financial products.Information Sciences,180(11), 2085-2094. Schniederjans, M. J., Hamaker, J. L., and Schniederjans, A. M. (2010).Information technology investment: Decision-making methodology. World Scientific. Smith, J. P., McArdle, J. J., and Willis, R. (2010). Financial decision making and cognition in a family Context*.The Economic Journal,120(548), F363-F380. Ladbury, J. E., Klebe, G., and Freire, E. (2010). Adding calorimetric data to decision making in lead discovery: a hot tip.Nature Reviews Drug Discovery,9(1), 23-27.

Critical and Creative Thinking free essay sample

Critical thinking is an important and valuable skill to have. Critical thinking affects both your professional lifestyle as well as your personal lifestyle. Critical thinkers should encompass skills needed to thoroughly analyze all the variables in a problem. During critical thinking, decisions should be based upon logic, and relevant and accurate data. Problem-solving and decision making is part of our everyday lives. It is important to use critical and creative thinking when solving problems and making decisions. Without thinking critically, you may miss out on important details that may help you come up the best solution or make the best decision. Identify an important decision you have made that required critical and creative thinking One of the most important decisions I have had to make that required critical and creative thinking is selecting an undergrad university to obtain my bachelor’s degree. This decision required critical thinking because the ultimate choice would have a crucial impact on my future endeavors. An irrational person finds it impossible to detect and stand out strongly against issues put forth and which affect them in one way or another, falling victims of these issues. In regard to our parliamentarians, they tend to use ideological philosophies to mobilize people psychologically towards some desired goals. With the general election coming soon- in March parliamentarians who are interested in the presidency seat have already come together to form large coalitions which intend to bring different communities together by the goals they desire to reach. For example Hon. Uhuru Kenyatta has been seen around mobilizing Women and Youths in His campaigns as these groupings hold the majority of votes. They have done this, keeping in mind that their goal is to hold the highest seat in 2013 general elections. Since change is inevitable in the society, the ideas leading to this change has to be managed carefully and reasonably, otherwise we could end up with half-baked ideas which could be disastrous in the society. With these changes our parliamentarians have change their political positions and understanding from foreign influence, into critically appraising the national understanding of their own people. MPs are joining social networks with a good example being Hon. Martha Karua, who has used both Twitter and Facebook to educate Kenyans on her presidency bid, she also uses it as a feedback tool where Kenyans can freely interact with her by expressing their opinions using the social media. The current government tries to insist on people’s participation in thinking about any change in the society. Parliamentarians have overtime been forcing dogmas on people but it has emerged that people are becoming thinkers and hence giving the society directions in terms of ideas. More youths have gone through the education system and are coming back to educate their societies, thus parliamentarians have started indulging youths in their day to day activities as they have become the back bone of the society. For example, Hon. Raila is seen as a politician who is popular among the youths and also carries with himself a reform tag. This is a might be a massive boast for his presidential campaign because the voters in Kenya are no longer in the dark old days of KANU. They are enlightened on their rights, what their country needs and which kind of leader can create a better Kenya for them. In the recent past, members of parliament have increased their pays tremendously without being taxed. Thus they are not showing a good example to Kenyans, whose salaries are heavily taxed each month. A few members like Hon. Johnson Muthama has insisted that MP’s should be taxed by Kenya Revenue Authority (KRA) in the same way as all other Kenyan citizens are taxed. He  is the first politician in Kenya to voluntarily have his Parliamentary salary taxed and he beliefs that if the poorest Kenyans are forced to pay their taxes to the Kenya Revenue Authority (KRA), then it is only fair that the highest paid Kenyans (many of whom are Members of Parliament or members of the government) should also be taxed. In regard to personal identity, most of our parliamentarians are in the second stage on individual development, in that they inherit mass conscience and ra tionality from the social environment, thus becoming authoritarian and paternal in their ways of life. The difference between our parliamentarians is to do with one’s own initiative in thought and action. A critical and creative person becomes an agent of change with unique identity. With this many parliamentarians will be elected back to power by what they have done to the communities. Some Members exhibit sensitive interpersonal intelligence where they tend to fully understand their people, their intentions, motivations and desires as a result to work effectively with them. This intelligence allows them to stay in power as voters still re-elect them for the good work and leadership they exhibit. For example, Hon. Johnson Muthama played a crucial role in the peace building efforts that various political leaders were involved in. Hon. Muthama spent nine days in the Rift Valley in the period of post-election violence, visiting Internally Displaced persons and looking for ways in which to assist them in their time of need. They use survival tactics that year in, year out they are elected back to the parliament, i. e delay projects so that just at the beginning of the election year they will promise to speed up the projects especially in infrastructure developments in their constituencies. Our parliamentarians tend to be intellectual people, who generate ideas that help solve everyday problems and who innovatively produces useful things. With the current regime many parliamentarians have used funds allocated to them effective in helping their communities, such funds include the Constituency Development Funds, where they have built hospitals, schools and create new ventures and businesses for their people. In parliament, problems are identified and solutions need to be decided upon. Some decisions are made due to intuition, where members trust their gut feelings more than they trust the analytical aspect. Though this thinking may be fast, it can lead to poor decision making due to prejudice and lack of open discussions. Decisions make as calculation tend to generate workable conclusions as there are steps required to follow, during parliament sittings when a problem is termed as strong, commission of inquiries are selected to find gather information, identify criteria, weighs them before coming into a concrete decision. They use people to gang up against each other on their favor; the 2007 General election may have been caused due to political influences on some sectors of Kenyan communities, who turned against each other, thus leading to the election violence. They tend to be very inconsiderate in their doings as soon as they are elected in to power. Most do not appear in their local constituencies for a whole year. Most members of parliament have been listed in corruption scams, where they use money allocated for a project for their own benefits. Recently Prof. Anyang Nyong’o The Medical Services Minister Prof Anyang has been on the headlines over the National Hospital Insurance Fund. Nyong’o who is ODM Secretary General has been on the spotlight over mass plundering of billions of shillings belonging to NHIF. It is also alleged that Prof. Anyang wired KShs 900 million to his personal accounts in Jersey and Cayman islands. Corruption cases have crippled the Kenyan economy and delayed improvements in various projects within the country. Reference 1. Wambari, K. (Ed). 1992. Reading in Introduction to Critical Thinking. Kijabe: A. I. C. Printing Press.

Giving Advice about Treatment

Children and the Net essays

Children and the Net essays The U.S. created the Internet in the 1960s as a communications tool for the military, it was not until after the government opened it to the public in the late 1980s that the Internet became a unique phenomenon. Nobody could predict the speed by which people all over the world captured this new form of technological communication. In 1995, there were an estimated 56 million Internet users worldwide; by 1999, this figure topped over 200 million. This tremendous growth has caused something that our world has never seen before; for the first time in history, the governments of this planet are facing something that is larger than all of them combined . . . . .and they are terrified. Parents are terrified too, they are concerned that children are vulnerable to what they see and read on the Internet, therefore pornography, hate propaganda, and violent content are confusing the childrens mind and veering them to be emotionally destructive. Parents are concerned that the Internet makes pornographic, hateful, violent, profane and destructive content too easily accessible to their children. A wealth of information is readily available to those who possess the technological means to access and contribute to it. It is the place where "any person can become a town crier with a voice that resonates farther than it could from any soapbox" (Sheremata 22). This makes the Internet a very powerful and positive forum for free expression. Pornography is behind the counter at any local convenience store. The pornographic magazines may be there, but they are blocked and regulated to a certain age. Of course, children do not have access to this pornographic medium. They do, however, have easy access to the Net through their homes, schools, and libraries. The access eventually lures the children in, but if that access was not existent their sex drive would eventually diminish. ...

The Car Industry in the 1990s Essay Example | Topics and Well Written Essays - 2750 words

The Car Industry in the 1990s - Essay Example The political factors that affect cars and car manufacturers have become one of the major impacts on the industry. Government laws and regulations had been continuously set in place as compelled by increasing concerns for the safety of the consumers and users as well as for the protection of the environment. Because of consumers’ clamor, almost every concern that cropped up over the years that relates to the car, there is a corresponding bill that is passed or a regulation that is being enforced. This includes not just safety issues but also economic concerns such as the rising cost of petroleum or environmental alarm like gas emissions. Taxes, duties and subsidies also play a major part in the factors that exert themselves on the car manufacturers and the industry in general (Highfill et al, 2004). The huge impact of the auto industry to the country’s economy cannot be ignored. A study revealed that the industry supports other jobs in other industries (Gale, 2004 as cited by Highfill et al, 2004). However, the industry itself is faced with so many economic challenges. At present, even if the European market could increase or decrease depending on the specific economic climate, the scenario of over capacity if the market demand is low is always a real threat. The entry also of imports is a concern to the European based car manufacturers. This is especially so because of price competition which is the prevailing competitive advantage of imports (Trends and drivers of change). The economic downturn had been one of the greatest influences in the economic aspect of this industry. A research from Uswitch.com, an independent price comparison and switching service reported in 2008 than 77% of the motorists put a halt to their plans of acquiring a new car (Ganly, 2008). The economic aspect of the automobile industry is largely affected by oil prices also. Thus, it is a  very important factor in the demand for cars.   An increase in prices might put a brake on their sales potential while the reverse could boost the demand for the product.   (Sector futures, 2004, p2).

Should the Fed intervene in Asset Bubbles Thesis

Should the Fed intervene in Asset Bubbles - Thesis Example Since hindsight offers perfect or a 20/20 vision, many people opined the US central bank failed in its task to promote healthy and sustainable economic growth for the country, and by extension of being a multi-trillion dollar economy, for the entire world. The advent of a global economy has made potential economic disruptions like bursting of asset bubbles a serious matter to contend with. Economists, politicians and policy makers now pay more attention to the formation of asset bubbles, how these start, how these bubbles could be prevented from growing bigger and what actions can be considered as appropriate if a bubble is clearly identified. It must be admitted that despite the experience of several prior asset bubbles, policy options are still woefully limited. Economists and academic theorists are conflicted on what responses are considered to be the most appropriate in such situations. The experience with asset bubbles is not fairly recent since the phenomena had existed since t he middle Renaissance period. A frequently-used example was the so-called â€Å"tulip-mania† in 1634 up to 1637 in which a few special black tulips fetched the same price as a mansion! Although there are many types of asset bubbles, there is some agreement that bubbles are formed by two causes: the first cause is when financial intermediaries like banks, brokers, brokerage houses and even the central bank (by failing to act and is guilty by default) â€Å"pump† up the price of an asset or a particular asset class; the second cause is when a nation's financial institutions lend to people or groups who are politically connected. The US housing market is a good example of the first cause cited above in creating a bubble. Banks, mortgage lenders and mortgage brokers fed the frenzy by making obtaining a housing loan very easy, even to an extent of giving out mortgages to people who were imminently not qualified for a loan for the reason of not having adequate incomes to pay the monthly amortizations or even approving a loan to non-existent borrowers (bordering on outright fraud). The practice of American banks to originate and distribute (in contrast to other countries in which banks originate and hold) is seen as further hastening the expansion of the housing bubble. Some experts blame complex financial instruments known as derivatives as the prick that finally caused the bursting of the housing bubble; in particular, they liked to cite collateralised debt obligations (CDOs) as the culprit. CDOs were and still are risky investment instruments; these represented an ill-defined asset class, namely derivatives similar to options (puts and calls) and credit default swaps. The second cause is when large sums of monies are lent to people who are politically well connected in a form of financial cronyism. Although not very prevalent in the US and in other Western economies, such practice is contributory to asset bubbles because it results in the misallocati on of scarce financial resources better invested elsewhere. Good examples are the Korean chaebols and the Japanese zaibatsu which are the equivalents of classic American business conglomerates. The bottom line is that cheap funds channelled to the conglomerates cause them to drive up the prices of their

Effects of Climate Change on the Middle East

Effects of Climate Change on the Middle East The Effects of Climate Change on the Middle East The Middle East is going to experience a very tough patch in the coming years, with Climate Change threatening basic life, political tensions dividing countries and the economy relying on depleting oil reserves. Of course this is not true for the whole region but mealy a vague overview and this is what this essay aims to look at in more depth. Global climate change is predicted to have many effects across the face of the earth, some of which can be seen right now. The Middle East is one of the most water scarce places on Earth. A person living in this region only has access to â€Å"1,200 cubic meters of water per year, compared with the average of about 7,000 cubic meters worldwide†. As temperatures rise due to anthropogenic climate change, evaporation rates will also rise, leading to reduced output from any surface water storages (reservoirs and rivers). The first effect will be water shortages hitting agriculture as there will be lack of water to feed crops, then ordinary lower class civilians with basic jobs will also feel the impact of water shortages. The result would cause crop failure and lead to starvation as basic local food becomes scarce (Saudi Arabia is nearly self sufficient in wheat but without water crops will be lost). Food prices will rocket as they have to import more to meet the demand. This has already been seen as two recent droughts in Iraq 1999/00 and 2000/01 caused non-irrigated wheat production to decrease by 90%. Exports of agricultural products will cease and over sea revenue will dwindle excluding the oil industry. This will lead to increased poverty across the region. Lack of available jobs and poverty mixed together with food and water scarcity may push people to extreme political groups as those in Iraq and Afghanistan, thus making stable regions ticking time bombs. The lack of available drinking water would embark on people finding other sources which could distort their health increasing cholera and other water born diseases, as countries in the Middle East do not have well developed sewerage systems outside of main cities and that people relieve themselves where ever possible⠁ ´. This pressure puts immense strain on services such as the health service, but also on the government as citizens will be demanding action, raising political tensions. The government could respond by importing more water at a financial cost but also an environmental one. By importing water you require transport. Pipe lines are expensive and time consuming to build, so short term solutions will include the transportation of water by either lorry or ship, into the country either from Asia or Europe. This method releases even more COâ‚‚ and acts as a positive feedback towards climate change, so is not a suitable method as it leads to even greater water scarcity. Aquifer sources are already under serious depletion in this region⠁ ¸ and as the demand increases it will require more to be abstracted, which means improvements in technology will be made so that more water can be pumped to the surface at a faster rate. However it will have devastating consequences such as subsidence or saline water intrusion which will be just as serious. Subsidence is already occurring in western Saudi Arabia due to over abstraction of groundwaterand that the majority of the water supplies are retrieved from non-renewable water with only a small percentage coming from internally renewable sources. The West Bank and Gaza are in a much more comfortable situation compared to Saudi as they have much more internally renewable water but that does not exempt them from a water crisis. Of Gazas available sources of water, only 5-10% is potable due to contamination. The diagram above shows that the Middle East (especially Saudi Arabia, Iraq and Syria) has a very high stress for water availability. Saudi Arabia has invested heavily in desalination plants with money from the oil industry but is still struggling to cope with demand. The country is now abstracting from â€Å"underground supplies in its east province reducing the agriculture and water availability of Qatar and Bahrain†Ã¢  ¸ and the annual recharge rate is a mere 0-5mm⠁ µ. This climate in Saudi Arabia is predominantly arid and semi arid but temperature extremes can be found at the Najd high Plateau with very hot summers and bitter cold winters. The coastal region experiences a slightly less harsh climate due to the Red Sea. The mean annual rainfall for this region is very worrying already (see diagram below) without the predicted impacts of climate change. The diagram also highlights that large areas are unable to cultivate crops without heavy irrigation which leads back to the political tensions arising over abstraction of underground water supplies and reduced output of crops. As you can see Turkey and the North West of Iran have much wetter climates but this could all change. Precipitation is expected to shift in the negative direction around the Middle East as shown in diagram from the IPCC Technical Paper leading to a decline in soil moisture content which increases daytime temperatures⠁ ´. Countries on the northern side, for example Turkey, are expected to bit hit hard due to their reliance on rivers and surface water storages. Turkeys average annual rainfall fluctuates depending on the area. Coastal regions experience 668mm per year, but central regions can get as low as 382mm per year. Large drops in annual rainfall could cause serious droughts as rivers and surface storages dry up leading to consequences highlighted earlier in this essay. Precipitation extremes will become more frequent due to climate change in this area, which would vastly increase the chances of flooding around the Jordan River as well as leading to serious soil erosion by rain splash. The sheer volume of precipitation will cause channels Climate Change and Water and gullies to form, washing the soil and sediments into water bodies. In turn it could reduce potable water even more so due to contamination as synthetic fertilisers and nutrients are washed out of soilsas well as having the effect of increasing turbidity. Predicted increases of runoff in the northern region of the Middle East will not help matters. Eutrophication is a major consequence leading to a decline in aquatic life as the excess nutrients (nitrogen and phosphorous) enter a water body and cause an algae bloom. This blocks sunlight from reaching bottom dwelling photosynthesising organisms which results in them dying. Zooplankton which feed on algae also live and hide amongst the lower photosynthesising organisms so their population will decline rapidly promoting algae growth to increase further (predator prey relationship). The algae have a high turnover rate (high growth and high death rates) and the dead algae are decomposed by respiring organisms which uses the oxygen up. This has been noted in the Keban Dam in eastern Anatolia. Pollutants like those leaked from the oil industry would have detrimental effects on the surrounding plant and wildlife with increased runoff, ultimately leading to decreasing biodiversity and the loss of environmentally sensitive areas along the Red Sea coast line. Coastal regions are also becoming under immense stress and are extremely vulnerable to increases in sea level. The table taken from The Impact of Sea Level indicates the overall effects of increases in 1m sea level changes across the Middle East and North Africa. A 1m increase would cause 24,000 sq km to be impacted which is a huge amount but the only country to be largely affected by this is Qatar. Around 13% is predicted to be impacted with a 5m increase ²Ã‚ ². This will cause mass displacement of people, forcing migration of people living close to the coast. Their quality of life will be directly affected as would the standard of living unless governments intervened and relocated them in permanent locations. If not, refugee camps will be a large regional problem. A Comparative Analysis 5% of UAEs population will experience the consequences of a 1m rise but 10-15% will be exposed to further increases. Qatars GDP will suffer greatly (10%) leading to further money deficit problems, and unable to counter the consequences of climate change and increased sea level ²Ã‚ ². The country will fall to outside help but whether it receives it is another matter. The population and economy are not the only victims of climate change. Precious wetlands will be lost in the Middle East around coastal countries like Qatar, Kuwait and UAE. With a 1m rise in sea level over 20% of Qatars wetlands will be affected which is alarming as they are essential for bird and invertebrate diversity. Populations are very small and are very vulnerable to slight changes. The red sea is home to a large variety of coral reefs. The increasing concentration of carbon dioxide in the atmosphere is not only causing increasing temperatures and sea levels, but also the sea to become more acidic. These three effects are having direct impacts of precious coral reefs around the world. Coral structures are being weakened by carbonic acids reacting with their skeletons due to the acidification of the sea, making them more prone to damage. What is more alarming is corals chose a habitat with a very limited tidal range. With increasing sea levels There will be catastrophic social and economic consequences due to anthropogenic climate change. The social classes are already distorted in the third world oil exporting countries. The poor do not benefit from the oil revenues directly and it often has the effect of bringing about authoritarian and repressive regimes. Saudi Arabia owns 20% of the worlds oil reserves and is also the main producer of crude oil, with an estimated production of 10.72 million barrels a day. This is a huge over sea revenue generator and without it Middle Eastern countries like Saudi, Kuwait and United Arab Emirates would find it very difficult to develop as huge investments in infrastructure are needed. With increasing worry about serious climate change, many things are bound to happen in the near future. The first prediction is that MEDCs stop buying oil completely due to worldwide cooperation against climate change (which is extremely unlikely as no main alternative for the transport sector has been fully developed and applied on a large scale⠁ ´ let alone countries committing to such ‘risky deals). Alternatively large COâ‚‚ cuts may be sanctioned and oil will fall to this. The UK has agreed to 80% emission cuts by 2050. The hypothetical reason behind this is that as climate change becomes more rooted in politics, more action will be taken. Eventually oil will run out anyway and some governments in the coming century may take the first leap for their countries and find ways to live entirely on renewable resources. This would be devastating for Saudi Arabia, Iraq, Kuwait and the United Arab Emirates as oil exports are their biggest revenue generator. Saudi Arabias eco nomy revolves around oil, â€Å"the petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings. About 40% of GDP comes from the private sector. Roughly 6.4 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors†, the countries with their biggest reliance on oil in their economy is highlighted in the diagram above, and out of the top five, four of them are situated in the Middle East with nearly 97% related to oil. If countries stop buying this oil, then the demand will dramatically drop leading to a vast decrease in the price of a barrel of oil (simple supply and demand economics), a decrease in $1 per barrel would lose $3.4billion in revenue. This will lead to decreased public spending on projects like motorways, airports and hospitals, but the whole crude oil industry could be vulnerable to total collapse if a worldwide embargo was set to stop the use of crude oil. Saudi citi zens benefit from not paying taxes due to the shear flow of capital from the oil industry but without it, life will become much harder. It would have direct effects on employment; although oil exporting countries are trying to diversify their economy before it is too late, showing that there is a concern over the coming future. As the public spending dwindles, development will start to cease. The infrastructure will not improve as large amounts of revenue needed cannot be found and unemployment rates will sky rocket, even though unemployment rates are the highest in the world already at 13.2%. Standard of life will drop significantly as well as quality of living. This is where the most social consequences will be seen as education will be in jeopardy as will health and well being. If schools cannot be built then children are denied of learning which vastly decreases the chances of a higher skilled job and lowers literacy rates. As road building slows down, trade will be limited as i t requires vast networks which are not fully installed in the more rural areas. In result foreign investors will be put off, and agricultural trade will be limited to local markets⠁ ´. Tourism will be greatly affected by the changing climate, political tensions and rising concerns over food and water security. â€Å"The Middle East totalled 46 million international tourist arrivals and continues to be one of the tourism success stories of the decade so far, despite ongoing tensions and threats† in 2007. This is leading to a vast increase in pressure but is also fuelling the diversification of the economy. Hotels are struggling to cope with numbersand the indication of extreme events does not seem to be slowing the average annual growth of 9.3% ³Ã¢  ´. The tourism industry will be ruined by any such event mentioned previously due to the reputation of the area; but does deeply depend on how the governments handle the situations. If the countries in this region act now by carefully managing scare non-renewable water supplies as well as energy usage and keeping cooperation between countries going they stand a good chance of adapting to the effects of anthropo genic climate change. Investing in the local economy would benefit the region as a whole, by providing more jobs and help areas to develop which would otherwise be left on their own to cope with the changes. In conclusion it is clear that climate change will have enormous effects on this region of the world, ranging from the social distortion from dwindling unemployment rates to the increase in precipitation extremes leading to soil desertification. 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