Test your UK economy awareness and general knowledge with this fifteen question quiz! Good luck!
One of the key skills that makes a good economist is the ability to make logical links and connect things that may appear unconnected.
A nice example I came across today involved this skill.
Q: What is the link between a growth in the middle classes and the need for more poppies?
A: Read this article at the FT for the answer.
For those of you whose Internet filters don't like the word drugs...
Here's a brief explanation:
There is increasing demand for pain relief drugs as the global middle classes expand...
Demand for pain relief more than tripled between 1993 and 2012 to the equivalent of 14bn daily doses. Demand is expected to rise further as middle class consumers, particularly in Asia, consume more pain relief medicines...
Opium poppy plants contain morphine, codeine and thebaine, ingredients in a wide range of common pain killers such as solpadine...
Growing opium poppies is regulated by the UN, which has approved Australia as one of only a handful of countries for legal commercial production.
Australia is the world's largest supplier of poppies (c.50%)...
The Australian government has handed this licence to Tasmania, creating a monopoly for farmers worth A$120m a year and processed into A$5.5bn for the drugs industry...
Pharmaceutical firms like GSK is lobbying Australia to expand its poppy growing industry beyond the remote island of Tasmania amid fears the world’s biggest supplier of narcotic raw ingredients for pain killers faces a supply crunch as global demand surges.
If they don't give in, expect the price of your Nurofen to rise in the coming years...!
A mega merger is creating the world’s largest banana company - it has been announced that Chiquita of the USA and Dublin-based Fyffes will be merging to form a giant banana distribution company.
The merger takes place against the background of rising global consumption and production of bananas. But there is a significant retail price squeeze as the major supermarkets put pressure on distributors such as Chiquita and Fyffes to absorb increases in wholesale costs.
Many supermarkets are now buying direct from banana growers. In the UK, fierce supermarket price wars have forced down the price of loose bananas, making them cheaper now than 20 years ago. Many supermarkets use bananas as a loss-leader to attract customers into their stores.
The merger is likely to give the horziontally integrated company more negotiating (monopsony) power with suppliers - the new business will distribute over 160 million cases of bananas per year and put it well in front of rivals Del Monte and Dole. In Europe Fyffes has a market share of 16%, the combined European market share will be closer to 30% and their global market share is estimated to be 16%.
The global banana market is an oligopoly - 80% of the world banana market in the hands of only three companies
Around one third of the bananas sold by Fyffes meet the criteria established by the FairTrade Foundation. Although the bulk of bananas grown in the world are consumed in the country of production, when it comes to banana exports, only 12% of the final retail price stays in the producing countries.
An even smaller proportion goes to small farmers (5%-7%) or to plantation workers (1%-3%). Few banana growers are able to pay their workers a living wage.
The new company, ChiquitaFyffes, will be worth around $1bn (£600m). It will be listed on the New York Stock Exchange but based in Dublin, Ireland.
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