Jamal Nazrul Islam, Haradhan Kumar Mohajan, Rajib Datta, Int. J. Eco. Res., 2012, v3i6, 01-17 ISSN: 2229-6158

STRESS MANAGEMENT POLICY ANALYSIS: A PREVENTATIVE APPROACH Jamal Nazrul Islam Emeritus Professor, Research Centre for Mathematical and Physical Sciences, University of Chittagong, Bangladesh Haradhan Kumar Mohajan Premier University, Chittagong, Bangladesh, E-mail: [email protected] Rajib Datta Department of Finance, Faculty of Business Studies, Premier University, Chittagong, Bangladesh. Cell: +8801819895389, E-mail: [email protected] Abstract At the present world human resource is considered as one of the most important resource. In the era of dynamic business most of the organizations invest a huge amount of money and spend a great deal of time and efforts as though they can properly utilize and manage this vital resource. Stress is one of the burning questions that hinder the officers’ and workers’ performance and productivity. In this paper all experiences of jobs are discussed which affects human minds and bodies. It has been essentially built the inputs which are obtained by conducting a comprehensive study covering the aspects of stress in today’s business. An attempt has been taken to address three major key areas related with the types and sources of work related stress, impact of stress on individuals and the way of managing stress. Keywords: Stress, Employee Stress, Stress management, Occupational stress, Reduction of stress, Prevention of stress. INTRODUCTION Every era in history has been characterized first to describe the “fight or flight response” by some incapacitating diseases. Plague, as a series of involuntary physiological and Polio and Pneumonia were eliminated when biochemical changes that prepare one to deal the environmental conditions were improved with threats of danger (Cannon 1918). or when the germs or viruses were destroyed Professor Hans Selye in 1956, first time or protected through drugs or vaccines. In introduced before the public the concept of the modern society we have some stress in a medical sense to indicate the characteristic diseases, but normally overloading of works on human body. He consider not being so easy to eliminate. It found that any problem, real or imagined, leads to psychosomatic disease or heart could cause the cerebral cortex (the thinking disease and it is a major contributor to part of the brain) to send an alarm to the disturbances in one’s emotional, family and hypothalamus (the main switch for the stress social life. It inhibits creativity and personal response, located in the midbrain) (Selye effectiveness and it is present as general 1976). The hypothalamus then stimulates the dissatisfaction that is so obvious in our daily sympathetic nervous system to make a series lives. The name of this condition is stress. of changes in our body and our heart rate, Stress is a feeling of emotional or physical breathing rate, muscle tension, metabolism, tension. It is a form of tension in the body or and blood pressure all increase (Stress and mind for which there is no release or outlet. Stress Management 2010). Job stress is the The Canadian Centre for Occupational major cause for job dissatisfaction, which Health and Safety (CCOHS) declares that creates disturbances in the quality of life, so, stress can worsen when there are high it results unhappiness (Kumar 2011). The demands placed on a worker in a particular theory of preventive stress management in job, but the worker has little control over organizations was originally formulated in those demands. 1977. The modern meaning of stress was laid by Stress is very much dynamic condition in Dr. Walter B. Cannon, a physiologist at which people confronted with opportunities, Harvard almost 100 years ago. He was the constraints or demand related to what one

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desires and for which outcome is perceived £26 billion in lost working time, where to be both uncertain and important. Stress is treatment cost is not included. associated with constraints and demand. Rahim (2010) studied on the employees of Two conditions are necessary for potential the banking sector of Pakistan and expresses stress to become actual stress. There must be that the banking sector is becoming uncertainty over the outcome and the increasingly competitive around the country, outcome must be important. Stress produces which increasing psychological problems, not only the bad things all time but also such as stress, strain, anxiety, depression, produce some positive outcome in some sleep disorders, etc. He expresses that the special events. Sometime when people biggest killer is not AIDS or cancer but remain under pressure they feel to get psychological problems. something and they work more and harder which increase the total productivity. This OBJECTIVES paper will provide the critical view about the The main objective of the study is to stress and consequences of it which will be evaluate the stress and the way of managing more helpful to manage it and development it in personal and organizational life. Other of way to handle more stressful situation. objectives of this paper are follows: The overall cost of stress at work has been  define stress clearly, estimated to be in the range of 20 billion  identify the causes of stress in Euros in the European Union and more than personal and social life, 150 billion dollars in the USA, mainly for  measuring the extent of stress, health care and treatment costs, absenteeism  identify the prevalence and and turnover (Daniels 2004). development of indicators for stress, Everyone suffers from stress on some level  measuring the impact of stress on and no one is free from it. Sometimes stress job, levels are comparatively higher and  the importance in managing stress, sometimes they are lower. Hence stress is a and normal part of everyday life and we cannot  ways of managing stress. really avoid it. But it is necessary to be able

to manage stress, otherwise chronic stress, if METHODOLOGY left untreated, can lead to a variety of stress This study has been conducted based on related illnesses such as hypertension, heart both primary and secondary data available disease, anxiety, depression, memory on the relevant field. The primary data are impairment, panic attacks, digestive collected through personal interviews from disorders, autoimmune diseases and chronic some professionals. Research works, fatigue syndrome (Cooper 1996, Porth 1998, publications and texts on this relevant field Gruner 2006, and Provino 2010). are used for this study. This study is covered If anybody is resulted by stress, he/she feels by 90 respondents broadly from different non-sleeping, remains nervous in much of fields and categories. Among the the time, gets sick a lot, apathy of participate respondents, 70 were married, 20 were in anything, change in the quality of work, unmarried; 70 were male, and 20 were and remains irritable and moody. Stress and female. Again among the 90 respondents, 20 stress related problems such as anxiety and were working in financial organization, 5 in depression are now the foremost reasons for service organization, 40 in manufacturing, absenteeism from workplace in the United and 15 were physician and 10 were Kingdom (UK) costing the economy at least businessman (table-1). To measure the

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opinion of respondents especially for physicians we used 5 point Likert scale (1-5) which indicate more popular to least.

Table 1: Sample distribution.

Nature of respondents Married Unmarried Total Businessman 10 0 10 Employee of service organization 0 5 5 Manufacturing employees 35 5 40 Physician 10 5 15 Employee of financial organization 15 5 20 Male 55 15 70 Female 15 5 20

We emphasized that the cause-effect of daily life and the effects of stress are not relationships is the relation between stress always negative. and cardiovascular illness. Stress also effects In small quantities, stress is good; it can the organization that is linked to motivate us and help us to become more absenteeism and productivity. productive, but too much stress or a strong response to stress can be harmful. Stress can DEFINITION OF STRESS arise from any situation or thought that Stress can be defined in general term as makes one feel frustrated, angry, or anxious. people feel pressures in their own life. The Everyone sees situations differently and has stress due to work load can be defined as different coping skills, so, no two persons reluctance to come to work and a feeling of will respond exactly the same way to a constant pressure associated with general particular situation. Situations that are physiological, psychological and behavioral considered stress provoking are known as stress symptoms. Hence stress is the harmful stressors. Many professionals suggest that physical and emotional responses that there is a difference between what we occurs when the requirements of the job do perceive as positive stress, and distress as not match the capabilities, resources, or negative stress. But we often use the term needs the worker and he expressed that job stress to describe negative situations. This stress can lead to poor health and even leads many people to believe that every injury. Stress is increasing due to stress is bad for us, which is not true actually globalization and economic crisis, which (Stress and Stress Management 2010). affects all professions, and as well as Positive stress has the following families and societies, almost all countries characteristics (Stress and Stress of the world (Bharatai and Newman 1978). Management 2010): Stress is our body’s physical and emotional  motivates, focuses energy, reaction that frightens, irritate, confuse,  is short-term, endanger, or excite us and place demands on  is perceived as within our coping the body. Stress can be caused by events that abilities, are pleasing as well as events that create  feels exciting, and crisis in our lives. But stress is a normal part  improves performance.

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On the other hand negative stress has the Hans Selye (1976) in his classic book The following characteristics (Stress and Stress Stress of Life briefly described the stress Management 2010): reactivity as a three-phase process termed  causes anxiety or concern, the general adaptation syndrome as follows:  can be short or long-term,  is perceived as outside of our coping Phase 1, Alarm Reaction abilities, The body shows the changes characteristic  feels unpleasant, of the first exposure to stressor. At the same  decreases performance, and time, its resistance is diminished and, if the stressor is sufficiently strong (severe burns,  can lead to mental and physical problems. extremes of temperature), death may result. The reaction of body to stress can be described by following three stages (Truch Phase 2, Stage of Resistance 1980): Resistance ensues if continued exposure to Alarm Reaction Stage: the body identifies the stressor is compatible with adaptation. and first reacts to the stress. In this stage the The bodily signs characteristic of the alarm body first releases hormones that help in the reaction have virtually disappeared and defense against the stressor. resistance rises above normal. Resistance Stage: the body continues to resist the stressors as they persist. If the Phase 3, Stage of Exhaustion stressors continue and there is a consistent Following long-continued exposure to the state of resistance, there is potential to move stressor, to which the body had become into the third and final stage. adjusted, eventually adaptation energy is Exhaustion Stage: the body and mind are exhausted. The signs of the alarm reaction no longer able to make the necessary reappear, but now they are irreversible, and adjustments to resist the stressors and there the individual dies (Greenberg 1990). is physical and/or mental exhaustion. Source of stress vary according to age, SOURCES OF STRESS place, time, situation etc. We have listed At present stress is the number one problem sources of some of negative stresses as for working people. It is increasing follows: continuously day by day due to globalization  death of a close family member or a and global economic crisis. It creates the close friend, the death of a business fight or flight response in the brain, the partner, sick of children or any stress hormone then circulates in the blood family member, losing health stream which causes the heart to speed up, benefits or no health insurance, the arteries to narrow and blood sugar to personal injury or illness, change in rise. In our daily life we face different type health or behavior of family member, of stressors, such as biological (toxins, heat, loss of a friend, cold), psychological (threats to self-esteem,  pregnancy, sexual difficulties, depression), sociological (unemployment, divorce, filing for divorce, death of a loved one, birth of a child), and relationship break-up, losing contact philosophical (use of time, purpose in life). with loved ones, In any case, regardless of the stressor, the  detention in jail, detention of family body’s reaction will be the same (Greenberg member or partner in jail, life 1990).

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sentence of a close person, death Social Stressors: We can experience penalty of a close relative or a friend, multiple stressors arising from the demands  unemployment, losing of job, cannot of the different social roles we occupy, such find a job or losing job of a friend, as parent, spouse, caregiver, and employee. changing of job, lack of training Some social stressors are deadlines, necessary to do a job, job insecurity, financial problems, job interviews, change in working hours, change in presentations, disagreements, demands for living conditions, our time and attention, loss of a loved one,  bankruptcy/money problems, divorce, and co-parenting. substandard housing, selling a home Physiological: Situations and circumstances or land for money, affecting our body can be experienced as  feeling unsafe in neighborhood due physiological stressors. Physiological to crime, being abused or neglected, stressors are rapid growth of adolescence, military deployment in the locality, menopause, illness, aging, giving birth, and accidents, lack of exercise, poor nutrition,  change in sleeping habits, change in and sleep disturbances. eating habits, change in finances, not Thoughts: Our brain interprets and having enough money to pay bills or perceives situations as stressful, difficult, house rent. painful, or pleasant and some such situations  create stress in our life. Now we have listed sources of some of positive stresses as follows: External Sources of Stress External sources of stress consist of  starting a new job, environmental, organizational, job-career,  receiving a promotion at service, co-worker, and family and so on. The source  marriage ceremony or birthday of external sources can vary according to the ceremony, following circumstances:  buying a suitable home or a car of  change of social circumstances, such new model, as bereavement of spouse, moving  having a child, job, marriage, holidays etc.,  winning prizes or winning a lottery,  pressure to conform to social or  planning to enjoy a vacation, employment patterns of behavior,  holiday seasons, and  conflict in relationships  taking educational classes or learning misunderstanding with the a new hobby. coworkers, superiors, subordinates, colleagues, or an absence of praise We realize that stress comes from the four and being valued by others, basic sources. Among them first two are  lack of support, time to be listened to called external sources of stress and last two and time for relaxation, are called internal sources of stress. Stress  having a high-pressure job, being Stress Management (2010) expresses and unemployed or only having a small the four basic sources of stress as follows: range of social circumstances, e.g., The Environment: The environmental rarely leaving the house, few stressors include weather, noise, crowding, hobbies, pollution, traffic, unsafe and substandard  strict deadline, too tight or too loose housing, and crime etc. supervision, lack of parity of

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authority, working at a long stretch, the age boundary of 26-35 years (Imtiaz and lack of having chance of Ahmad 2009). entertainment policies, and  boring and noisy, smoke filled work CONCEPTUAL ISSUES environment, cramped offices bitter Is there anybody who is not familiar with the fumes, the glare of sun and the term Stress? Definitely the answer will be burning heat (e.g., in street and “no”. In the era of super flexibility and rapid rerolling mills), and high turnover changing environment we all experience rate in organization. stress, rather it, is better to say “we are anxious about to stress and the way of Cary Cooper has developed a concise yet managing stress fall us in stress too.” Before complete list of six sources of work stress managing stress we should know what it is. (Cooper 1983) as follows: According to oxford dictionary, stress is 1. Job Conditions: Quantitative and defined from various points of view. Among qualitative work overload, people these we pick up the following two decisions, physical danger, meanings: technostress. 2. Role Stress: Role ambiguity, sex bias and sex-role stereotypes. 1. Mental pressure: Pressure or worry 3. Interpersonal Factors: Poor work caused by the problems in someone’s and social support systems, lack of life. management concern for the worker, 2. Physical pressure: Pressure put on political rivalry, jealousy, or anger. that can damage it or make it loose 4. Career Development: its shape. Underpromotion, overpromotion, job security, frustrated ambitions. According to the father of stress researcher 5. Organizational Structure: Rigid Professor Hans Selye, “Stress is the spice of and impersonal structure, political life, the absence of stress is death.” battles, inadequate supervision or The famous author R. S. Schuler defines training, non-participative decision stress as a dynamic condition which an making. individual is confronted with an opportunity, 6. Home-work Interface: Spillover, constraint or demean related to what one’s lack of support from spouse, marital desire and foe which the outcome is conflict, dual career stress. perceived to be both uncertain and At present employers are critically analyzing important. From these above discussions we the stress management issues which give to can find some of inputs about stresses as lower job performance of employee follows: originating from dissatisfaction and high  stress is caused by our reaction to the turnover and finally affecting organizational external environment, goals and objectives in production. Stress  it affects directly related to our mind has become major problem for employer and body that means it has physical mainly in developing nations. Sometimes and emotional effects on us, and employees do not like to work with their  stress creates positive and negative organizations due to high levels of stress feelings. among them and majorities were between We can define stress in many ways based on its area and impact. Though the impact of

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stress is directly related to both the body and performance then it could be stated as mind of individuals but from the view point dysfunctional stress. Long-term stress can of sources we can define it in the following create some problems such as, ways: cardiovascular diseases, musculoskeletal Direct Stress: When the sources of stress disorders (in the back and upper limbs), are directly related to the person then it is psychological disorders (depression and called direct stress. Suppose, Mr. X and Mr. burnout) etc. Y are working in the same department of the Certain Stress: From the view point same factory and suddenly Mr. X loses his certainty, when the result of stress is known job, then stress for Mr. X is considered as to individuals then it is called certain stress. direct stress. For example, the peak period of production Indirect Stress: When the sources of stress is generally temporary stress and known to is not directly related the person then it is all. Certain stress is less harmful and called indirect stress. In the previous produce very constructive result and example the incident of losing job of Mr. X sometimes does not produce higher result. creates a stress for Mr. Y who is still in that Uncertain Stress: When the length of time job. The losing of job of peer group (Mr. X) as well as result of stress is not perceived by of Mr. Y or the fear of losing his (Mr. Y) job the stressors is called uncertain stress. could be a cause of stress. It is of course the Generally uncertain stress is harmful and impact of direct stress is more than that of produces negative result or hinders the indirect stress. group performance. Short-term Stress: From the view point of Stress is a universal experience in the life of duration of time, when the stress affects for each person and every employee even a limited period of time then it is called executives and managers cannot avoid it. It short-term stress i.e., in a production- is estimated that in the world about 100 oriented factory in the peak period of million workdays are being lost due to stress production (generally 3 to 6 months) or at and nearly 50% to 75% disease are related to the end of the month in accounts department stress (Bashir 2007). of a company workers face a short-term stress. Some of the short-term stresses are OCCUPATIONAL STRESS short temper, headache, shortness of breath, Occupational stress was formally identified sleep disturbances, difficulty concentrating, in 1989, when the Commonwealth upset stomach, apathy, and job Commission for the Safety, Rehabilitation dissatisfaction. and Compensation of Commonwealth Long-term or Perpetual Stress: When the Employees initiated several research stress affects for a long period of time then it projects. Occupational stress can be defined could be called long-term or perpetual as the harmful physical and emotional stress. From the view point of outcome responses that occur when the requirements functional stress when the result of stress is of the job do not match the capabilities, positive or stress improves someone’s resources, or needs of the worker, which can performance in the job. Some stresses lead to poor health and even injury (Rehman support the goals of organizations and 2008). Sources of occupational stress have improve the performance; these are been categorized by Cooper and Marshall functional, constructive form of stress. (1976) as follows: When the consequences of stress is  intrinsic to the job, destructive or hinder someone’s  role in the organization,

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 relationships at work, colleagues of absent or under-performing  career development, staff (Clarke and Cooper 2000).  organizational structure and climate, Houtman (2007) expresses that stress has and also been associated with a number of other  home-work interface. ill-health outcomes, such as cardiovascular Here ‘intrinsic to the job’ will include diseases (Kivimäki et al. 2002), physical aspects of the working musculoskeletal disorders, particularly back environment, such as noise and lighting, and problems (Hoogendoorn et al. 2000) and psychosocial aspects, such as workload. neck-shoulder-arm-wrist-hand problems Occupational stress has been defined by (Ariëns et al. 2001), as well as absence from many researchers (Cox 1978, Cummings work (Houtman et al. 1999). When people and Cooper 1979, Quick and Quick 1984) as are in a state of stress, they often feel a negatively perceived quality which, as a concerned, less vigilant and less efficient in result of inadequate coping with sources of performing works (Barling et al. 2004). stress at work, has negative mental and When stress reactions persist over a longer physical health consequences. period of time, they may develop into more In a recent survey of employees, more than permanent, less reversible health outcomes, 80% said that they feel stress on the job, such as chronic fatigue, burnout, about 70% expressed a need to learn how to musculoskeletal problems or cardiovascular manage stress and 45% felt their co-workers disease. needed help in managing stress. The Our study has identified some different organization should consider that types of stresses which are related to the Occupational Stress Indicator (OSI), to work term as work-related stresses as whether to improve for preventing stress follows: (Cooper et al. 1988). The results of a large-  Some people always feel urgency in scale household survey indicated that 19.5 the work life, they are always million working days were lost in the United fighting to beat deadlines and have Kingdom (UK) during 1995 due to work- the habit of doing anything at the related illness, such as, musculoskeletal, eleventh hour, which leads to tension stress, anxiety and depression (Jones et al. and stress. 1998). Heller et al. (2002) and Rode (2004)  When people around us life juniors expressed that job stress creates negative do not behave according to the relationship with the satisfaction of the expectation, and failed to give the employees. results which expected leads to Work-related stress has growing interest interpersonal conflicts and it cause across Europe in recent years due to pain, guilt and deep impression for a dramatically globalization of the economy, long time. Someone does not agree use of new information and communications with the view and opposes, does not technology, growing diversity in the keep his promise and is cheated with workplace (Landsbergis 2003). respect to money, supply of goods, Organizations suffer business loss through and quality of goods. lost working days due to work related illness  Minds of most of the people run with or accidents, absenteeism, staff turnover, a tremendous velocity with one lowered performance, and the associated, thought after another. Mind velocity often hidden, costs of training replacement is high during emotions of hurry, staff and the added burden placed on the impatience and desperation. High

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velocity of mind leads to fatigue of drug abuse, hypertension and host of the mind due to constant alertness cardiovascular problems (Meneze 2005). and loss of concentration. Modern man suffers from worry of too many THE AFFECT OF STRESS tasks to be done simultaneously, Previously described various types of which leads to stress. stresses could end with different results.  Unrealistic target leads to Whether the stress with constructive or tremendous increase in the stress destructive it depends what types of stresses level. Modern executive punish they are. Certain stress usually products themselves by creating deadlines constructive result where the uncertain stress without bothering about health, usually produces destructive result. It is an wealth, family or peace of mind. important factor to consider in case of Such unrealistic targets make one finding out the result of stress what type of miss out the quality. Due to fear of stress it is but the result of stress depends on failure one’s stress levels go high. some factors like;  Today’s business always in  the individual strength and competitive mood and some want to personality, win the competition and climb the  the environment or situation, ladder of success in my way, even by  adoption process, and making loss. Such competition  previous experience. shoots up stress in the mind. Occupational stress risks have been The World Health Organization (WHO) increasing for many years, but at the end of predicts that by 2020, depression will be the the last decade it increases alarm due to second most long term condition worldwide. global financial crisis and globalization. By Everyone is affected by stress differently. the end of the 1990s in many countries there The strength of an individual plays an has been a combination of increasing and important role in making the end result. The stabilizing job demands, together with environment and situation, age, ability, decreasing job sovereignty which would attitude the mentality to adopt etc. are also have resulted in an increasingly stressful important factor over here. In facing stress situation within countries. High and the support from environment and situation increasing quantitative demands, combined dramatically produce constructive result. with low or decreasing control over work The way of finding the best to avoid, cope pace, increase stress-related outcomes. Some with or face the situation is a most countries showed an increase in stress- considerable factor. Generally before related health problems at work, but it was adoption with the situation generally it is also observed that workers who developed needed to find out the types of stress and in health problems had left the labor market on which way the individual wants with cope long-term absence, or were receiving with or face the way of perceiving the goals disability pensions (Houtman 2007). and situations as well as the conflicts the Finally we can express that job stress is preparation and planning, classification and considered rising and has become challenge justification of the way, identifying various for the employer and because high level alternative and implement the best ways or stress is results in low productivity, methods or processes to face could be a increased absenteeism and collection to better way to face stress. other employee problems like alcoholism,

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Stress is caused by our reaction to the  excess of harmful diet, such as external environment. The manner in which taking of too much caffeine, alcohol we perceive and understand the changes or etc., the particular events some event can bring  changes in body functions, such as happiness and causes stress in two different puberty pregnancy, menopause, people depending upon how they react it. ageing etc., and Body’s non-specific response to any demand  psychological or psychodynamic made on it. On one side stress provides the problem. means to express talents and energies and The term ‘psychodynamic’ refers to pursue happiness on the other side it can subconscious thoughts and feelings, which also cause exhaustion and illness, either often arise from childhood experiences. The physical or psychological. It is concerned way in which we learned to cope in with an individual’s perceptual and childhood is by using defense mechanisms cognitive characteristics. that involved a degree of self deception. We The factors that contribute to the experience still use these defenses today. Examples of of stress are many and varied. It is found psychodynamic causes of stress include: that both positive and negative events in  inner conflicts that have not been one’s life can be stressful. However, major addressed, but repressed (pushed out life changes are the greatest contributors of of conscious awareness), stress for most people.  encountering situations that evoke Too much travel, entering into a new stressful feelings which were environment, like new colony, new job experienced in childhood, generates stress. The social institutions of  lack of self-awareness, marriage or divorce can cause stress.  being one is capable of achieving far Pregnancy can also generate stress, some of too much-setting standards and the untoward incidents like critical illness of expectations too high and therefore death of a relative can also cause stress in falling short of them, and individuals. Time, pressure, competition,  not having the skill of knowledge to financial problems, noise, disappointments cope with certain situations, such as could be sources of stress. We can divide the spiritual development. sources of stress into two categories: The need for individual spiritual Physiological or Biological. The causes of development has long been recognized by some stresses lie in the biological make up religion. It is only during the last 30 years of our body, or the interaction of our body that psychology has acknowledged the with the food we eat or environment we live existence of a spiritual side to the individual. in. Some examples of the biological causes Some spiritual causes of stress are as of stress include: follows:  lack of physical fitness, such as  violation of personal or religious dwarf, blindness, lack of hearing, moral code, contravention of hair fall and other problems of limbs accepted group practice, or violation of body, of laws (‘sin’),  poor diet, such as deficiency of  lack of spiritual development, vitamins, minerals, starch etc.,  an absence of truth i.e., self-  genetic disorder results in chemical deception and deception of others, imbalances in the body,  the lack of a sense personal agency i.e., one can influence events or the

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failure to recognize and experience changes brought on by stress hormones in choice, and response to certain situational or event  absence of a relationship with God, stressors (Cannon 1918). Stress associated and lack of forgiveness. with positive events, helps us respond effectively in times of trauma. It also CONSEQUENCES AND SYMPTOMS increases our performance or efficiency in OF STRESS ordinary times. On the other hand distress As stated earlier stress is caused by or tends to block our performance, create reaction to the external events and bring health problems, increase anxiety and about changes in our response and our depression, and reduce optimal efficiency general behavior. It is important to learn (Selye 1976). The presence of stress can be how to know when our stress levels are out divided into three different categories; i) of control. Stress affects the mind, body, and Physiological, ii) Behavioral and iii) behavior in many ways, and everyone Psychological. Now we describe these three experiences stress differently. symptoms as follows (table-2): The stress response, also called the fight or flight response, first described by Cannon, refers to the physiological and emotional Table 2: The three categories of symptoms of stress.

Physiological Symptoms Behavioral Symptoms Psychological Symptoms •Perspiration •Impulsive behavior •Physical trauma •Eating disorders • Eating more or less • Moodiness •Irritability •Easily distracted •Anxiety •Headaches •Depression/Isolation • Agitation, inability to relax •Hair loss •Speech problems •Overestimation of danger •Loss of sex drive •Lower energy levels •Fear and tension •Illness /sleeplessness • Memory problems •Insomnia and nervous •Crying for no apparent • Irritability or short- tone of voice reason tempered •Tiredness and tiring • Sleeping too much or too •Depression easily little • Inability or difficulty •Increased heartbeat and •Change in personality concentrating blood pressure •Laughing in a high pitch •Dissatisfactions •Tense, muscle ache and •Grinding of teeth • Seeing only the negative pain •Irritable/Aggressive •Strenuous exercise •Trembling •Increasing smoking and •Metabolic disturbances •Nervous ticks use of drugs and alcohol • Panicky •Dryness of throat and •Being accident-prone • Feeling overwhelmed mouth •Susceptibility to illness • Poor judgment •Urinating frequently •Loss of appetite or over • Constant worrying •Sleeping problems eating • Underestimation of ability •Diarrhea, Indigestion and •Burnout to cope frequent urination • Nervous habits (nail • Underestimation of help •Vomiting, Nausea etc. biting, pacing) available •Butterflies in stomach •Increased errors •Depression or general

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•Premenstrual tension •Productivity unhappiness •Pain in the neck and •Turnover • Worries and catastrophic lower back •Absenteeism thoughts •Stomach ulcers •Lack of • Anxious, racing, or •Heart problems concentration/ability to ruminating thoughts •Breathlessness and think rationally • Sense of loneliness or hyperventilating •Organization and planning isolation •Palpitations and chest deteriorate discomfort •Reduced self-esteem •Sweaty palms • Using alcohol, cigarettes, •Minor illness (allergies or drugs to relax skin disorder, migraine) •Serious illness (arthritis cancer, diabetes).

The impact of excessive stress on team work series diagnosable conditions were is also harmful, and it can damage: seen as mental health problem, while  individual work performance, stress is compared at some point by  team performance, everyone.  working relationship,  Senior executives recognized that  cooperation between team members, more junior employees felt they had and to hide stress were perhaps unable to  team spirit. recognize stress which could become Though stress is caused by our reaction to unhealthy. external environment, it should be reminded Approximately 1 in 3 European workers is that a positive attitude can dramatically affected by work-related stress according to reduce the stress. So in case of managing European surveys. It has been estimated that stress at first we have to develop a positive work related stress cost Member States at outlook that plays an important role. Stress least 20 billion euro per annum. can be managed if we understand the In 2001 in a report of the American Institute reasons which cause stress and the level of of Stress (AIS) expressed that job-related stress. We should also try to estimate if we stress costs the US industry $300 billion per could bring about any change in annum. due to absenteeism (1 million environment that can subsequently reduce workers are absent on an average workday stress. Both the individual and because of stress-related complaints), organizational cooperation is necessary to diminished productivity, employee turnover, manage stress. direct medical costs, compensation claims and legal and insurance fees. In the USA in IMPACT OF WORKPLACE STRESS IN 2003 survey examining attitudes in the EUROPE AND THE USA workplace found stress about the economy, A 2001 report from the UK’s Mental Health increase in emotional ailments including Foundation, “Burn out or Burning Bright?” substance abuse and depression, incidents of determine the following two reasons to among coworkers. In 1 in 4 employees in increase stress (Ingram and Pilla 2007): the USA view their jobs as the number one  Most companies did not view stress stressor in their lives, 3 in 4 employees as a mental health problem. Only

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believe that today’s workers have more on- to think about watching your favorite the-job stress than a generation ago. television comedy. Tune In: In a study at Monash University in REDUCTION OF STRESS Melborne, Australia, two groups of students The emotional and physical disorders that were told to prepare an oral presentation. have been linked to stress including Some worked in silence; others listened to depression, anxiety, heart attacks, stroke, Pachelbel’s “Caron in D Major” stress hypertension, immune system disturbances caused the silent workers’ blood pressure that increase susceptibility to infections, a and heart rates to climb. Not so the host of viral linked disorders ranging from volunteers in the musical group whose the common cold to herpes to certain measurements remained steadier. They also cancers, as well as autoimmune diseases like reported feelings much less stress. rheumatoid arthritis and multiple sclerosis Think Happy: Focus on someone or (Stress and Stress Management 2010). something you care deeply about for Hence we need to control the stresses which anywhere from 15 seconds to five minutes. are harmful to our mind and body. Or picture a scene from a peaceful vacation phrase that makes you feel positive about Individual Approaches to Reduce Stress you and the world can work. It sounds like Planned life could reduce or prevent advice from a greeting card, but thinking negative stress. To manage stress we can happy calming thoughts can counteract the follow the sequences as follows: psychological changes that occur when  problem identification, under stress. “A lot of stress we experience  goal selection, comes from negative emotions we carry  generation of alternatives, around with us grudges, anger, hurt” says  choose the best, Laskin who studies healing power of  implementation and evaluation the forgiveness. outcomes, and Hit the Road: Get from your desk, the coach wherever you may be and take a  take corrective action if necessary. Besides this we can apply the following tips minute walk. Those who began walking four to get rid of from stress which provided by times a week, the scientists found, reported Dr. Peret Jaret: feeling less distressed and sleeping better. Do Nothing: At least once during the day, Tests showed that their blood pressure was take five or ten minutes to sit quietly and do more likely to hold steady when they do not nothing. Focus on the sounds around you, have an hour to spar. Do not sweat it. your emotions and any tension in your neck, Taking five or ten minute walks whenever shoulders, arm, chest, etc. Doing nothing you are under pressure may be just as can be considered as a real struggle. Just effective. sitting quietly slows the heart rate and Breathe Easy: For five minutes, slow your reduces blood pressure, countering two of breathing down to about six-belly breaths a the most obvious effects of stress. minute. In other words, inhale for about five Laugh Out Loud: Keep something handy minutes to relax your entire body. Start by that makes you laugh. It could be a testing by your toes; then consciously relax collection of your favorite comic strips or a them. Move on to the muscles in your feet, funny voice mail from, say, your child or a and then your calves, upper legs, but tocks, friend. You could even take a few moments moving upward until you end by scrunching up and then relaxing the muscles in your

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face. If you start your day feeling tense, and compliance facilities plays an chances are you will feel tense all day, say important role in reducing stress. stress experts Gueth. If you take your  Company should carry out the troubles to bed with you, they are likely to activities including; timely disturb your sleep, and that can mean relax inspection, investigate hazards and even you from more tension. complaints, receive information from Rise Relaxed: Right before bed, and after the workers regarding health and the alarm goes off in the morning, take five safety, and keeping consultancy with minutes to relax your entire body. Start by the worker about any safety issues. tensing your toed; then consciously relax  In stressful occupations such as the them. Move on to the muscles in your feet, police force, social and health and then your calves, upper legs, but tocks, services, Power Supply Company, moving upward until you end by scrunching crime reporter in press media, up and then relaxing the muscles in your journalism, Nursing (specially in face. If you start your day feeling tense, public medical hospital), workers in chances are you will feel tense all day, says overheated, sound-polluted, just stress expert Gueth. If you take your covered area (like steel mill, cement troubles to bed with you, they are likely to industry) sweeper, night guard, the disrupt your sleep and then can mean even employer should minimize the risks more tension. and treat personnel who have suffered from violence at work with Organizational Approaches to Reduce due care. Stress  Key personnel like managements and Organization plays an important role in personnel officers receive training to reducing stress. For better use of these recognize stress related problems human resource to pick up the best result such as high absenteeism, high management must consider these areas as turnover. follows:  The organization should have a  personnel, “stress policy” or guidelines so that  selection of job replacement, staffs know that to do if they are  training and development, suffering from stress.  use of realistic goal setting,  Instead of just offering staffs stress  redesigning job, management workshop, employer  increased employee involvement, could set up stress working parties  improve organizational that could actively involve the staff, communication, and trade unions and other  establish wellness programs. representatives who could then The following guidelines could help the develop stress policies and make organization in maintaining a negative- other useful recommendations. stress-free environment:  Arranges health related seminars,  All employees must evaluate risks to stress management workshops, health and safety and whenever managing pressure to increase possible employers should performance workshop. implement avoidance and control measures. The preventive strategies

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Other Approaches to Reduce Stress schedule meaningful and enjoyable activities Other techniques to escape from the stress which makes a significant difference in are as follows: reducing stress. We can enjoy music, sports  meditation can also be a good effort or art for meaning and enjoyment. We can to bring down the stress levels, choose a balance diet in our daily life. It is  taking exercise, especially walking important to leave time for sleep and for is the easiest and most effective restful, relaxing activities, such as reading a means of reducing stress favorite or taking a walk. Everyone must  effecting time management, such as schedule time for relaxation each day to taking a mental health day and refresh the mind and body from the tensions spend time with friends, of the day. Some people increase their stress  taking good food and nutrition, by being critical of themselves and what avoiding foods with high fat, sugar, they are accomplishing. It can be helpful to caffeine, salt etc., identify some positive features about  developing communication skills ourselves and remind ourselves of these with honest, direct, and respectful features when we feel negatively about ways and ourselves. We can prevent stress by taking care of our  spending time to relax or reading a good book, or listening to music or health, such as eating well, getting enough playing an instrument. sleep, exercising regularly, and avoiding A widely recognized proactive stress alcohol or drug. These healthy habits are not management method is to maintain a healthy easy to maintain, but they really pay off. physical state through regular exercise, a Those who are non-pious or not serious in nutritional diet and good sleep. Another well prayer they can participate in religion or recognized proactive method of combating spiritual activities to prevent stress. stress is to maintain a strong mental state We have to seek out people who are through stay intellectually stimulated encouraging and supportive, rather than (mental exercise), gain stability from critical and pressuring. It is very helpful to relationships (family/friends), practice have relationships with people we feel relaxation/meditation and participate in comfortable with. The common support religion. systems usually include, friends, family McKeown (2005) expresses that prevention members, peer support, professionals and and careful management of psychological members of one’s religious or spiritual illnesses will ease the strain on the economy, group. If our feelings are very stressful, then health care systems and individual well we do not keep them bottled up but we can being. share them with others who are very helpful and benevolent. We always talk in mind HOW CAN WE PREVENT STRESS? with positive sides if we feel stress for some If we eliminate some of the avoidable stress works, which prevent us from stress. in our life, it frees us up to enjoy ourselves Laughter is the best medicine to prevent more and to accomplish more of our goals. stress and we can spend few minutes of each We have to be aware of situations that day with amusement. caused stress us in the past. For example, if we notice that we become irritable whenever ANALYSIS OF FINDINGS we catch the bus at rush hour, we have to try From the study of all respondents’ views we catching it at a less busy time. We can found that most of the sources of stress are

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organizational workload and family related Barling, J. et al. (ed.) (2004), The Handbook of Work problems. 70% of respondents told that their Stress, Sage, California. Bashir, A. (2007), Employees’ Stress and Its Impact stress mainly comes from workload and a on Their Performance, First Proceedings of little bit from family, 30% told their stress International Conference on Business and mainly from family related problems and Technology, 17 December 2007, Iqra moderately from organizational workload, in University, Islamabad: 156-161. organizational level 70% of women told that Bharatai, T.A. and Newman, J.E. (1978), Job Stress, Employee Health and Organizational they feel stress due to social insecurity, Effectiveness, Personnel Psychology, 31: among the 40 respondents of organizational 665-669. level 75% think that due to over control and Cannon W.B. (1918), Bodily Changes in Pain, excessive supervision they feel stress. From Hunger, Fear, and Rage: An Account of the study we found that most of the stress Recent Researches into the Function of Emotional Excitement, New York: D. we can minimize by individual approaches. Appleton & Co. In this study we observed all physicians told Clarke, S.G. and Cooper, C.L. (2000), The Risk 7 ways to control the stress and among the 7 Management of Occupational Stress, Health, ways we found Do Nothing is the most Risk & Society, 2(2): 173-187. popular one and 80% suggest it as the first Cooper, C.L. (1983), Identifying Stressors at Work: Recent Research Developments, Journal of choice and scored 4.0 point in the five point Psychosomatic Research, 27: 369-376. scale, Laugh Out and Rise Relaxed stood the Cooper, C.L. (1996) The Handbook of Stress, nd rd 2 and 3 position with 3.5 and 3.0 scale Medicine and Health, Boca Raton, FL, CRC Press. point respectively. Cooper, C.L. and Marshall, J. (1976), Occupational Sources of Stress: A Review of the Literature Relating to Coronary Heart CONCLUDING REMARKS Disease and Mental Ill-health, Journal of The study indicates that nobody can be free Occupational Psychology, 49: 11-28. from stress, everybody under the stress a Cooper, C.L.; Sloan, S.J. and Williams, S. (1988), little bit or more. Managing stress is a Occupational Stress Indicator Management collaborative effort especially within an Guide, Windsor, NFER-Nelson. Cox, T. (1978), Stress, London, MacMillan. organization that helps individual to focus Cummings, T. and Cooper, C.L. (1979), A problem-solving in a structured and Cybernetic Framework for the Study of systematic way. The objective of this study Occupational Stress, Human Relations, 32: is not to eliminate the stress rather to prevent 345-419. the negative stress that hinders the Daniels, K. (2004), Perceived Risk from Occupational Stress: A Survey of 15 individual and group’s performance. Choose European Countries, Occupational and the best way to prevent stress in individual’s Environmental Medicine, 61: 467-470. organizations and within individuals. It is Greenberg, J.S. (1990), Comprehensive Stress also necessary to remind that the negative Management (3rd ed.), Dubuque, IA: Wm. C. Brown effect of stress could never be over looked Publishers. Gruner, T. (2006), Stress, Journal of Comp. and it is necessary to consult with physicians Medicine, 5(6): 12-20. or psychiatric consultant. Heller, D.; Judge, T.A. and Watson, D. (2002), The Confounding Role of Personality and Trait REFERENCES Affectivity in the Relationship between Job Ariëns, G.A.M.; Bongers, P.M.; Hoogendoorn, W.E.; and Life Satisfaction, Journal of Houtman, I.L.D.; Wal, G. van der and Organizational Behavior, 23: 815–835. Mechelen, W. van (2001), High Quantitative Hoogendoorn, W.E.; Poppel, M.N.M.; van Koes, Job Demands and Low Co-worker Support B.W. and Bouter, L.M. (2000), Systematic are Risk Factors for Neck Pain: Results of a Review of Psychosocial Factors at Work and Prospective Cohort study, Spine, 26(17): Private Life as Risk Factors for Back Pain, 1896-1903. Spine, 25: 2114-2125. 16

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Houtman, I.L.D. (2007), Work-related Stress, of an Integrated Model, Human Relations, European Foundation for the Improvement 57(9): 1205-1231. of Living and Working Conditions, Ireland. Rahim, S.H. (2010), Emotional Intelligence and Houtman, I.L.D., Kornitzer, M. et al, (1999), The Job Stress: An Analytical Study of Pakistan Stress, Absenteeism and Coronary Heart Banks, International Journal of Trade, Disease European Cooperative Study (the Economics and Finance, 1(2): 194-199. JACE-study)-Design of a Multicentre Rehman, H. (2008), Occupational Stress and a Prospective Study, EJPH, 9: 52-57. Functional Area of an Organization, Imtiaz, S. and Ahmad, S. (2009), Impact of Stress on International Review of Business Research Employee Productivity, Performance and Papers, 4(4): 163-173. Turnover: An Important Managerial Issue, Selye, H. (1976), The Stress of Life, New York: International Review of Business Research McGraw-Hill. Papers, 5(4): 468-477. Stress and Stress Management (2010), Klinic Ingram, J.S. and Pilla, S.D. (2007), Stress in the Community Health Centre, Canada. Workplace, Global Risk Control Services, Truch, S. (1980), Teacher Burnout and What to Do Occupational Health and Safety, Research About It. Novato: Academic Therapy White Paper, ESIS, Inc. Publications. Jones, J.R.; Hodgson, J.T.; Clegg, T.A. and Eluott, R.C. (1998), Self-reported Work-related Illness in 1995: Results from a Household Survey, Sudbury, HSE Books. Kivimäki, M.; Leino-Arjas, P.; Luukkonen, R.; Riihimäki, H.; Vahtera, J. and Kirjonen, J. (2002), Work Stress and Risk of Coronary Mortality: Prospective Cohort Study of Industrial Employees, British Medical Journal, 325: 857-863. Kumar, K.S. (2011), A Study on Job Stress of the Employees with Reference to Banking Sector, International Journal of Management and Transformation, 5(1): 67- 78. Landsbergis, P.A. (2003), The Changing Organisation of Work and the Safety and Health of Working People: A Commentary, Journal of Occupational Environmental Medicine, 45(1): 61-72. McKeown, A. (2005), Use of Technology in the Prevention of Psychological Illness and Stress Management, (Unpublished Manuscript). Meneze M.M. (2005), The Impact of Stress on productivity at Education Training & Development Practices: Sector Education and Training Authority. Porth, C. (1998), Pathophysiology: Concepts of Altered Health States, 5th ed. Philadelphia: Lippincott-Raven. Provino, R. (2010), The Role of Adaptogens in Stress Management, Australian Journal of Medical Herbalism, 22(2): 41-49. Quick, J.C. and Quick, J.D. (1984), Organisational Stress and Preventative Management, New York, McGraw-Hill. Rode, J.C. (2004), Job Satisfaction and Life Satisfaction Revisited: A Longitudinal Test

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LIFE SAVER ON THE WEB: E-LOYALTY

Recep ÇİÇEK Asc. Prof., Faculty of Economics and Business Administration, Nigde University, Turkiye, E-mail: [email protected]

Ozgur KARABAG Institute of Social Sciences, Nigde University, Turkiye E-mail: [email protected]

Abstract It is known that customers are the most important people for any organisation in today’s competitive markets. Establishing long term, strong and good relationships with present and potential customers has come to the fore for continuing their existence in the market and also remaining profitable. Establishing customer loyalty is priority for traditional firms which have strategic marketing plans. Therefore, there have been many studies pertaining to customer loyalty in marketing. However, as in all other fields, many changes can be observed in customer loyalty. Now it has been possible to offer goods and services through internet which is one of the most important technological development and which has lots of impacts on people’s lives. As a result of the introduction of internet “electronic loyalty” term has emerged in the marketing agenda. The study has been carried out theoretically by examining national and international literature on definition, importance, features, models of e-loyalty and ways of building it. Key Words: E-Loyalty, Internet, E-commerce Jel Classification: M30, M31

1. Introduction increasing population, adopting free market “A long time ago, there was money to be made in economy, changing living and working conditions selling people a commodity. Making your product of people have created huge markets. or service better and cheaper was a sure path to “Because it’s so easy to outsource the actual growth and profitability. Today, of course, the rules manufacturing, suddenly your plant foreman isn’t are different. Plenty of people can make something your most important asset. Southwest does not cheaper than you can, and offering a product or succeed or fail because of its pilots—pilots are easy service that is measurably better for the same to find and hire now. It’s easy to make ball money is a hard edge to sustain” (Godin, 2006:8) bearings, T-shirts, bottled water and mortgages. and technological progress has enabled modern Making isn’t hard any more. Ford makes Jaguars, mass production and many factories have seen Anheuser-Busch makes Kirin, an anonymous plant remarkable increases in their output. The number of in Vietnam makes Nike sneakers. The making is the production units has increased rapidly not hard or special or differentiating any longer” everywhere technology reaches. Meanwhile, there (Godin, 2006: 36). Some technological devices has been increase in the number of transportation such as microchips, notebooks and digital music vehicles such as cargo planes, ships, trains, trucks players can be produced for famous brands such as and lorries. Additionally, many factors, such as IBM, Cisco, Asus and HP as needed in countries

IJER | NOVEMBER - DECEMBER 2012 Available [email protected] Recep ÇİÇEK,Özgür KARABAĞ, Int. J. Eco. Res., 2012, v3i6, 18-28 ISSN: 2229-6158 such as China, Malaysia, Indonesia, Taiwan and 2. Customer Loyalty Thailand. Goods and services are produced more Today many business firms are no longer local and than necessary via using advanced technology and tend towards international activities. They have put on the market. In order to make customers increased the number of their customer. Mass choose you, you need some different things. The production and selling these products in various change which started after industrial revolution markets have become prior for companies. obliges important changes in markets and However, customer relations and loyalty which marketing. Marketers have understood that it is no used to be built by personal efforts at local and longer possible to carry on their business life and small markets before industrial revolution have activities by producing only one type of product gained another dimension. A perfume produced in and offering same products to the consumers (even France or a tropical fruit grown in Costa Rica can if they have same expectations and necessities). The be transported to a potential customer at trend has changed today. Now “top priority is to international markets in a few days or sometimes in meet customers’ demand” understanding is the a few hours. A needed product or service can be focus of today’s marketing. Business firms those purchased in a few minutes via internet. Mostly, are aware of this situation turn onto the activities there are no face to face encounters between aimed to please and build customers’ loyalty by customer and seller. giving priority not only to production but also to In addition to increase in number of customer and their demands since meeting customers’ needs is the distance between the customer and the one of their priority targets. It comes into company, the changing customer patterns make it prominence to determine marketing and customer difficult to follow up and satisfy the customer. relations strategies according to the information Today the major problem of business firms is the taken from the customers by keeping in contact decrease of the customer loyalty in time. One of the with them. For this reason, today’s big companies most important aims of a company is to increase the spend millions of dollars to produce non-temporal, number of the loyal customer (Sarac, 2006: 71). long term loyal relations with their customers by Nothing can prevent the customer to go for other listening their demands with different methods and companies for a better opportunity, unless the efforts, and meeting these demands with the most managers establish loyalty based relationships proper and productive way. (Reichheld, 2003: 4). So, the firm that loses their The changeover from product based marketing customers decreases their profitableness and it strategy to customer based marketing strategy is cannot be possible for it to hold on in the market. one of the most important changes of the There are many important expressions in the companies. Many companies invest in the literature about customer loyalty and its technologies allowing customer based relation importance. According to Gommans (2001: 43) marketing strategy. Today customers are more “building brand loyalty, maintaining it, marketing informed and the companies those are aware of this practices for sustainable competition advantage and situation focus on the customer, customer demands customer satisfaction are directly related to the and customer loyalty (Alhaiou, 2009:1). profitableness of the company”.

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If your customer is happy, they tend to be loyal. If the companies have deeper ideas about their they are loyal, they not only buy your products customers’ demand and it becomes easier to meet again but also they give advice to your potential their needs and please them”. The most important customers (www.zoomerang.com). advantages of customer loyalty for companies are 3. The Importance of Customer Loyalty (Eskandari, 2009: 20-22): The descriptions in the literature about the customer  Acquisition Cost: Getting a new customer is loyalty bear a resemblance to each other. always much costlier. Because, the most “Customer loyalty can be defined as the willing of important reasons for this situation are being continuous customer of the same company” commercials, financial discount to new (Çoban, 2005: 297). Another definition is that customer, commissions etc. customer loyalty is the behavior of purchasing the  Referrals: It is an incontrovertible truth that same brand or product again. But this is a people interact with each other. The customer superficial description. More deeply it can be who has purchased a service or a product may described as “in the circumstances where customer recommend it to others because of satisfaction, has chance to change the product brand or come trust or something else. The cost of gaining across with different brands, customer loyalty can new customers decreases because new be responsible for purchasing the same good or customers purchase as a result of the service again” (Peng et al, 2005: 75). recommendations during the decision period. It can easily be seen that the conditions those are Today, many establishments such as language expressed in the definitions occur today’s markets. courses, holiday tours, hotels, restaurants and For example, people see many domestic and foreign many others take this reality into consideration. origin detergents, oil, milk or many other products.  Price: Old and loyal customers are braver than Customers suddenly come across with the discounts the ones who will buy the product or the of different brands, the chance to raffle after the service for the first time. Because they purchase and suchlike marketing services. In this purchased it before and saw the service or the case, customer loyalty comes into prominence. The product, they are less sensitive about the price. important point is to make customer loyal.  Operating Cost: Free phone calls, e-mail, 4. The Advantages of Customer Loyalty brochure, introductory meetings, and individual “The quantity of loyal customers determines interviews for potential new customers who do enterprises’ survival and development. Customer not know anything about the service or the loyalty is the key factor of upgrading enterprises’ product can be free for the customer but it can competition ability and the footstone for be really costly for the business firms. These enterprises’ development and main headspring for activities are done less for the loyal customers. enterprises’ long-range profit” (Peng et al, 2005:  Revenue Growth: Loyal customers are more 77). According to Deb and others (2009: 253) inclined to repetitive purchase and purchase “Loyal customer reduces the cost which companies other products of the same they have enough spend to gain new customers and helps the information about the products and services. companies increase their profit. Besides, it makes As a result there can be a significant increase in easy to understand their loyal customers’ attitudes, income.

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5. E-Loyalty and Importance customer loyalty is a new subject in terms of cyber Internet revolution is mentioned as the most marketing (Peng et al, 2005: 75). In addition to this, important change effecting trade since money online firms are started to understand the replaced barter (Reichheld et al, 2000-1: 173). importance of customer loyalty and today it has its Internet has changed traditional marketing methods. part as electronic loyalty in marketing literature. As a result of this change, the distance between Customer loyalty is important for remaining company and customer has grown. The internet profitable for the firms serving in electronic customers have become much more powerful. The environment. Many researchers should understand e-firms which are aware of the customers’ power how to retain customers in electronic environment have understood that the key to is e-loyalty. better (Rui Sousa, 2007: 10). According to a With the rapid growth of online consumer shopping comprehensive research by Bain & Company, 5% practices, establishing and continuing customer increase in the customer loyalty increases the profit loyalty has become the focus of most marketing of the company 25-95 %. According to the same theories and practices (Gommans et al, 2001: 43). study, gaining a new customer is seven times The loyalty of a customer on internet environment expensive than holding existing customer is much more important than in traditional (www.zoomerang.com). E-firms which have marketing. When the speed of internet is taken into realized this situation and potential before have account, customer loyalty will be more important focused on e-loyalty as their target. for the future cyber marketing firms (Peng et al, Traditional loyalty and electronic loyalty are not 2005: 78). E-loyalty helps customer retention and totally different. Common definition in the decreases costs to gain new customers (Reichheld et literature is that online loyalty is a consumer’s all, 2000-2:105-106). Loyalty is important for intention to buy from a website or to visit it again profitableness of electronic services since gaining (Cyr, 2006: 8). Another definition is that e-loyalty new customer in electronic marketing is much more is to expand traditional brand loyalty concept to expensive than gaining them in traditional online customer behavior. Although the theoretical marketing (Oliveira, 2006: 2). Customer loyalty is bases are identical with traditional brand loyalty, e- seen as a really important source in electronic loyalty is a new concept in the literature. E-loyalty trading field and it is the magical weapon of the is specific in terms of internet based marketing and competition (Peng et al, 2005: 81). purchaser attitude. E-loyalty is related to quality 5.1. Definition of E-Loyalty customer support, strong and in time distribution, It is a well-known truth that business to customer reasonably priced shipping and handling, clear (B2C) electronic trading is rapidly growing and it privacy policies (Gommans, 2001: 44). will grow incrementally in the following years. 5.2. The Features of E-Loyalty Remarkable potential of online retail purchasing There are some differences between the elements of which is the alternative way of traditional shop traditional customer loyalty and electronic loyalty. purchasing is the proof of this fact (Devaraj, 2003: Before anything else, some physical elements those 184). Although customer loyalty has drawn affect traditional purchasing do not exist in attention for a long time, it has been ignored by electronic purchasing and some elements are many company those are active in cyber marketing. limited. That’s why there are important differences That’s why focusing on establishing and continuing in terms of loyalty between them. These differences

IJER | NOVEMBER - DECEMBER 2012 Available [email protected] Recep ÇİÇEK,Özgür KARABAĞ, Int. J. Eco. Res., 2012, v3i6, 18-28 ISSN: 2229-6158 are (Peng, 2005: 78-81, Xiaojuan Ou et al, 2003:  Customer makes his purchase choice 1734, Deb, 2009: 241, Long, 2004: 3): depending upon his own trust and his online  Internet offers stronger searching engines for information obtained through his previous less effort and at short notice for products and purchasing. But cyber environment is free services for the customer. Thanks to forming environment in terms of the information given. electronic database and reaching the data easily It is difficult to know whether the information techniques, the companies can reach is right or wrong. On the other hand, trust that information about customers more easily and was built as a result of the previous shopping is have an opinion about online customer value. an effective factor on consumer attitude. The Electronic trading benefits from many fact that all the information is open to everyone information technology practices both for makes it possible for the customer to reach all customers and service. the products and services. The price changes  The most important specialty of electronic happen rapidly and the competitors respond transaction is its difference from physical these changes immediately. As a result the purchasing environment. This physical price based advantage has been reduced to a difference can cause panic and mistrustfulness large extent. at the customers. Another problem is the  The consumers do not want to spend time and probability to be defrauded on electronic energy to search and compare prices because of environment. Against these negativities the fast paced life and busy schedule. That’s why firms have to gain their customers’ trust. customers want to be loyal to some shops  The way of doing business of the online serving online. In this way saving time companies is different than the traditional ones. increases, physical costs reduce and Traditional companies are face to face with consumption risk reduces. Therefore, internet their customers. This brings additional using customers have instinctive preference for responsibilities and gives more opportunity to loyalty in the name of making purchasing less the employees those are in interaction with the risky and making decisions more rationally. customer. Frowning and any negative change  In internet environment companies are able to in tone of voice can make the customer have communicate with customers spontaneously negative impressions about the firm. Similarly, and they can create very active databases a smile and excitement may make the customer thanks to technological opportunities. They can more interested in the product or the service. do one-to-one private marketing in order to Unfortunately, internet environment lacks these increase the customer’s satisfaction. That’s opportunities. why the efforts to have loyal customers should  Customer chooses what to purchase at cyber focus on the cyber customers’ shopping environment using their five instinct just like at experiences. traditional markets. Choosing a cybershop  Word of mouth marketing is an available which has high credit score is the most and important marketing method at traditional supportive choice of the customer to decrease marketing. In the public surveys carried on by shopping risk. Reichheld and Schefter (2000) it is proved that public praise marketing has much effect on

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electronic trading. More than half of the  Not answering the customer in time: Not internet using loyal customers is the result of answering the customers’ questions those they word of mouth marketing. The customers those transmit via e-mail or website in a short time is took recommendations from loyal customers a huge mistake. are more valuable than the ones gained by  Not being long-term: E-trading is a long commercials and knocked down price. marathon. The plans and strategies should be at E-loyalty happens in internet environment. Internet long date and competitive. is a perfect market because information stands at 5.3. The Factors Affecting E-Loyalty the tips of people’s fingers and they have the The firms which carry on electronic business opportunity to compare the offers of the salesmen should consider the affecting factors in order to spontaneously. But this specialty may cause the loss build e-loyalty. These are (Gommans, 2001: 49-52; of customer loyalty. Unless the companies gain Cyr, 2008: 53; Romulo, 2006: 4; Xiaojuan Ou, loyalty from their customers, they will not provide 2003: 1739; Long, 2004; Sarac, 2006: 87; Long, repetitive purchase and future (Xiaujuan Ou et al, 2004: 63, www.zoomerang.com): 2003: 1734). Because of the fact that your customer  Electronic trust: Electronic trust has a role to is only a click away from your competitors, gaining accelerate and consolidate e-loyalty. Electronic e-loyalty is much more difficult than gaining trust is the most important factor for decreasing traditional loyalty (Wolfgang, 2009). For this anxiety and panic at the services at which there reason business firms have to be careful about some is no physical appliance such as online points for loyalty in internet applications. Although banking. Thanks to the trust, e-loyalty can be the firms know the difficulties of e-trading, there established. A customer who has e-trust may are some general mistakes, here are the biggest recommend it to their friends and relatives. mistakes made on e-trading (Gilpatrick, 2001: 12):  Production according to the customer’s  Not making the website simple and demand and interaction: These two factors understandable: In some sites there are too contribute to electronic loyalty in terms of many links than necessary, information, customer attitude. Most of the internet user banners (advertisement bands on the websites) customers prefer the products produced and advertisements, those make the website according to the customer’s demand. This complicated. clearly shows the importance of meeting  Not investing enough in technology: As a customer’s need (customization) in building result of not investing enough in technology, electronic loyalty. Computer producer Dell there can be some negative effects such as busy gives opportunity to its customers to form their servers because of overloading, not using own computer with the help of hardware appropriate interfaces and nor using mobile choosing facility. High participation of the system for security. customer on the design of the product forms a  Not employing staff member for call center strong and effective relationship with the or helper: There should be some staff brand. As a result brand loyalty can be gained. members, free telephone lines and instant  Satisfaction: The continuous satisfaction of a messaging service like MSN to answer urgent customer is ended up with electronic loyalty. If questions and needs of the customers. the customer is satisfied after they purchased a

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product or service on virtual environment, they purchasing is the possible online credit card will come to the websites which satisfy before fraud. Privacy anxieties of the customers have when they need the same or similar product or caused some failures. There are some service. techniques and tools those firms can use in  Investment: The firms who run business in an order to gain electronic trust which is the most electronic environment should invest in high important fact for electronic loyalty. The most quality websites and electronic software in common ones are cryptography, approval and order to raise customer loyalty. This means authorization. privacy, security, ease of use, graphic style,  Brand trust: Trust has a very close endurance, fast answering and information relationship with electronic privacy and it is a quality in electronic services. very important factor in purchasing attitude.  Promotions and advertisement tools: Online Generally, because you cannot look into the firms design their websites, promotions, sales man’s eyes, you cannot touch the product, advertisements and other marketing tools not you cannot smell or feel it developing trust only to gain customer but also to make them with these methods is not possible in electronic loyal. Electronic loyalty is not a onetime work, marketing. Brand trust contributes to reduce it is a continuous work. suspense. Trust is one of the attitudinal factors  Keeping track of customer information: This forming loyalty at the same time. That’s why can be helpful to gain loyalty for online sale brand trust sweeps away some disadvantages companies. For example, it is important for a caused by some misunderstandings such as book firm to keep past shopping information, internet is not a reliable shopping environment. personal information and liked products after These misunderstandings still prevent many you enter your username and password. potential customers from purchasing online.  Background information with the customer:  Ease of use website: Another unique factor in This background helps the electronic firm to gaining electronic loyalty is an important role offer product or service according to the which is formed by first impression such as customer’s wish and prevents competitive surfing the site with ease, fast loading pages risks. and fast purchasing process.  Competitive price: It is not possible not to be  Appropriate content of the website: A effected negatively because competitor firms website should be designed to offer appropriate are only a click away and price comparison is content to its customer group. Global electronic available. That’s why offering competitive marketers should multiply their language price is very important in gaining customer choices as much as they can because they can loyalty and continuing it for the firms those are be reached everywhere and they address to the in business in electronic environment. whole world. It is also recommended that the  Operative security: In electronic environment companies should change the content of their operational security and privacy plays an websites appropriate to local circumstances. important role in gaining customer loyalty. While designing a website appropriate for local According to recent researches the main reason markets, it is necessary to understand the local why the customers do not extend their online culture and it is also necessary to design the

IJER | NOVEMBER - DECEMBER 2012 Available [email protected] Recep ÇİÇEK,Özgür KARABAĞ, Int. J. Eco. Res., 2012, v3i6, 18-28 ISSN: 2229-6158

website according to the culture. For example feedback by sending them questionnaire. colors have different meanings for Interacting with the customers via electronic communities. mail affects the impression of the customers in  The loading speed of the page: Electronic a good way. By doing so, firms can focus on firms should be aware of the fact that most of how to satisfy their customers. their customers’ time is limited. The loading  Fast solution: The wish, demands and speed of the page should be high. The surf complaints of the customers, which are sent via inside the website should be easy and people electronic mail, should be answered should be able to find the information in a short immediately. This plays a critical role in time. According to many researches 58% of the building loyalty. internet users make surfing mistakes and these 6. E-Loyalty Models cause time loss. Online companies have made many researches to  Server reliability and answering speed: In develop customer loyalty. For this aim many e- addition to website design, the reliability of the loyalty models have been formed in literature. The servers has important effects on electronic seven elements recommended for applicable and loyalty. The servers which collapse during effective electronic loyalty models are transactions, surfing and ordering goods will (www.thecustomerinstitute.com): have some negative effects on gaining  Value: It is important to offer a competitive customers loyalty. price because the price of a product or service  Order follow-up and fast delivery: Order and can easily be compared with only a click of a delivery is the other factors those have effects mouse. on the development of customer loyalty. The  Building brand: Brand names are more logistic system that guarantees fast delivery important in internet environment. The name of plays an important role on development of the domain of the website being the same with customer loyalty. the brand name is good for its being  Online customer support line: Sometimes memorable and good for its image. Rich web web designers have to design complicated content is necessary to improve the image. websites because of some reasons and  Trust: Trust is thought to have an important circumstances. On this situation a free role in developing loyalty and continuing it. telephone line and instant messaging service on Many customers are afraid of identity fraud the internet should exist. and because of this they avoid to give their  Quality: Because there are not some senses identity information to the websites. There are like touching, smelling, feeling or seeing on some ways to develop trust to websites. internet shopping, one way to overcome this Cryptography and authorized access are some negativity is to sell well-known, high quality of them. Some firms such as IBM, Apple, and guaranteed products. Heinz, Proctor and Gamble are famous for  Electronic mail: Electronic mail is used by being trustful. many companies in order to inform customers  Coziness of the website: First impression is about innovations, learn their wishes, answer very important in terms of e-loyalty. Ease of their questions, give technical support and have surfing, strength of the server, fast shopping,

IJER | NOVEMBER - DECEMBER 2012 Available [email protected] Recep ÇİÇEK,Özgür KARABAĞ, Int. J. Eco. Res., 2012, v3i6, 18-28 ISSN: 2229-6158

fast checking, fast page loading, and personal their customers for long and trust based interface builds e-loyalty. relationships. The plans and studies which are done  Technology: According to researches, 58% of to develop e-loyalty should be supported by the internet users make mistakes while using technical infrastructure which is especially the websites. Search for information and important in developing customer trust. Because surfing inside the site should be easy and fast. trust is very important in terms of developing  Safety: Firms should secure their customers loyalty and the companies should have very good about privacy and supplying safety to their technological infrastructure in order to gain the customers. customers’ trust in cyber environment.  Customer services: In order to develop e- References loyalty a website should have a well customer 1. ALHAIOU, Talhat; Irani, Zahir; Maged, service system. System should include phone Ali, (2009), “The Relationship Between E- counseling, frequently asked questions link and CRM Implementation and E-Loyalty At can evaluate the orders and deliver at the right Different Adoption Stages of Transaction time to the right place Cycle” European and Mediterranean 7. Conclusion Conference on Information Systems, The importance of loyal customers is put into words Crowne Plaza Hotel, İzmir. on all occasions in today’s competitive markets. 2. BLEUEL,William,www.thecustomerinsti Many companies those have difficulty in continuing tute.blogspot.com/2009/02/trust-and-e- their activities and increasing their profits have loyalty.html (Access Date: 16.06.2011). understood the importance of the loyalty of the 3. CYR, Dianne, (2001), “Managing E- customers and started to work hard for developing loyalty Through Experience Design”, INE customer loyalty. Many companies are trying to get Application, c.1: 2. information about their customers and to offer 4. CYR, Dianne, (2008), “Modeling Website products and service those they could prefer and Design across Cultures: Relationships to wish for. Consequently, for online operating Trust, Satisfaction and E-loyalty,” Journal companies, developing e-loyalty and having loyal of Management Information System, customers are important tools to help the firms in c.24/4: 47-72. the competition with other companies. As it can be 5. CYR, Dianne; Head, Milena; Alex Ivanov, seen with the help of literature scanning in the (2006), “Design Aesthetics Leading to M- research, it is a well-known phenomenon that Loyalty in Mobile Commerce” gaining new customer is much more expensive than Forthcoming in Information and holding existing customer of a company. In an Management, c.1: 8-15. environment in which the competitors’ products, 6. ÇOBAN, Suzan, (2005), “Müşteri services and their prices can be learnt and compared Sadakatinin Kazanılmasında Veritanablı in a few seconds, the companies, which will Pazarlamanın Kullanılması,” Erciyes develop e-loyalty and have loyal customers, will Üniversitesi, SBE Dergisi, c.19: 295-307. decrease their costs and increase their profits. The 7. DEB, Madhurima; Chavali, Kavita, marketing experts should develop plans and apply (2009), “A Study on the Significance of E- them in order to establish strong relationships with Trust and E-Loyalty in Online Banking,”

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AIMS International Journal of 18. REICHHELD, Frederick F.; Markey, Management, c.3: 241-257. Robert G. Jr.; Hopton, Christopher, (2000- 8. DEVARAJ, Sarv, Fan, Ming; Kohli, Rajiv, 1), “E-customer loyalty: Applying the (2003), “E-Loyalty: Elusive Ideal or traditional rules of business for online Competitive Edge?”, Communications of success,” European Journal, c.12: 173- the Acm, September, 2003/Vol. 46, No. 9. 179. 9. ESKANDARI, Javad Khoee, (2009), 19. SARAÇ, Ömer, (2006), “Elektronik “Influential Factors of Customer E-loyalty Ortamda Müşteri İlişkileri Yönetiminin in Iranian E-stores”, Lulea University of Müşteri Sadakatini Sağlaması Bakımından Technology. İncelenmesi ve Kilit Unsurların 10. GILPATRICK, Kristin, (2001), “E-loyalty Belirlenmesi”, Yüksek Lisans Tezi, Strategy, Credit Union Management, Marmara Üniversitesi, Sosyal Bilimler August, c.1: 11-14. Enstitüsü, İstanbul. 11. GODIN, Seth, (2006), All Marketers are 20. WOLFGANG, Jank; Yahav, Inbal, liars, Penguin, New York. (2009), “E-Loyalty Networks in Online 12. GOMMANS, Marcel; Krishnan, Krish S.; Auctions,” July Working Paper No: RHS- Scheffold, Katrin B., (2001) “From Brand 06-101. Loyalty to E-Loyalty: A Conceptual 21. XIAOJUAN OU, Carol; Ling Sia, Choon, Framework,” Journal of Economic and (2003), “ Customer Loyalty Strategy in the Social Research, c.3: 43-58. Internet Era”, 7th Pacific Asia 13. LONG, Karl, (2004), "Customer Loyalty Conference on Information Systems, 10- and Experience Design in E-business”, 13 July, Adelaide, South Australia, Design Management Review, Spring. p.1734-1741. 14. OLIVERIA, Romulo; Sousa, Rui, (2006), 22. http://www.zoomerang.com/Whitepaper/ “E-Service Quality: the link between Measuring-Tracking-Customer-Satisfactio quality and loyalty,” XII ICIEOM - (Access Date: 16.06.2011). Fortaleza, CE, Brasil, October 9-11, c.1: 23. http://wps.prenhall.com/wps/media/objects/2 1-6. 519/2580469/addit_chmatl/TURBMC12_01 15. PENG, Hong; Zhihao, Chen, (2005), 31854615OF.pdf (Access Date: 16.06.2011). “Customer Loyalty and Cyber-marketing:

Ideaistic Evolution”, China-USA Business Review, c.9: 1537-1514. 16. REICHHELD, F.F.; Schefter, P., (2000- 2), "E-loyalty: Your secret weapon on the web,” Harvard Business Review, c.78: 105-113. 17. REICHHELD, Frederic, (2003), “Loyalty Rules: How Today’s Leaders Build Lasting Relationship”, Harvard Business School Press, Bain-Company Inc.

IJER | NOVEMBER - DECEMBER 2012 Available [email protected] M.Sc. AleksandarLukić, Int. J. Eco. Res., 2012, v3i6, 29 - 33 ISSN: 2229-6158

CURRENT STATE AND PROSPECTIVE DEVELOPMENTOF ELECTRONIC COMMERCE IN SERBIA M.Sc. AleksandarLukić Credy Bank AD,Dept. of International Payments Kragujevac, SERBIA

Abstract The fast advancing global information infrastructure enable the development of electronic commerce at a global level. The nearly universal connectivity which the Internet offers has made it an invaluable business tool. This fast emerging economy is bringing with it rapidly changing technologies and increasing knowledge intensity in all areas of business. The paper analyzes the concept of e-commerce with a special emphasis on the status and prospects of its development in Serbia. In this work, the quality and quantitative method have been applied, based on the usage of descriptive and statistical analysis. Keywords:Electronic business, Electronic commerce, Payment cards, Commercial banks.

I. Introduction commercial activity dealing directly with the E-commerce is the use of electronic trading of goods and services and with other communications and digital information related business activities, in which the processing technology in business electronic communication medium plays a transactions to create, transform, and central role. These activities include the redefine relationships for value creation communication of information, the between or among organizations, and management of payment, the negotiating between organizations and individuals. E- and trading of financial instruments and the commerce is emerging as a new way of management of transport. (Heng, 2003) helping business enterprises to compete in E-Commerce is a part of e-business and its the market and thus contributing to goal is to generate profit through the various economic success. E-commerce can help set of activities based on buying and selling deliver economic growth, increased business principles. E-commerce is strongly related to opportunities, enhanced competitiveness and the information technologies and better access to markets. E-commerce can telecommunication technologies. Some of apply to purchases made through the Web or the benefits that accrue to an organization to business-to-business activities such as from implementation of ecommerce are inventory transfers. A customer can order increased revenue since you will be able to items from a vendor's Web site, paying with reach more customers, improved customer a credit card or with a previously established satisfaction since services will be readily account. Personal and account information is available and fast in their provision, cost kept confidential through the use of secured reduction because it will not have to incur transactions that use encryption heavy wage bill, reduced space requirements technology.With the development of and hence reduced rent or lease payments. network economy, e-commerce plays a Other benefits include increased efficiency major role on new economy stage. since automation enables you to do more with less input, increased level of output and II. The Concept of E-Commerce employee satisfaction. E-commerce consists of buying and selling The uptake of e-commerce is influenced by of products and services over electronic its potential to create business value and by systems such as the internet and other awareness of its participants of the potential computer networks. E-commerce is a benefits. A major reason for most

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companies, irrespective of size, to Technological challenges are related to the participate in business is to extract some acquisition, installation and maintenance of benefit from it. E-commerce is no different. the necessary hardware and software. These The benefits of e-commerce are classified in challenges are Security and Web site issues. two main categories: tangible and intangible. The organizations data may face threats The tangible benefits are benefits that from hackers and data loss occasioned by things like viruses. Technology issues directly accrue to the organization and including costs, software and infrastructure. contribute directly to increase in revenue and profit. These include: Efficiency which Others are managerial challenges and is the ability of the business process to include people and organizational issues. produce the same level of output using The people in the organization may resist reduce resource output or to produce more adoption of the new technology as they may output using the same level of input. fear that it would lead to loss of jobs. They Increased automation of processes where may also be reluctant to adopt new methods most of the operational activities which were as they may fear change. If the management done by people are carried out by machines does not support the e-commerce project, it without physical presence of people. E- means that the project will lack the commerce enables accessibility of markets necessary resources and is thus bound to that would have been otherwise inaccessible fail. without automation. According to a new report by the Interactive Intangible benefits are benefits that do not Media in Retail Group (IMRG) e-commerce directly contribute to increase in revenue but sales will pass the 1 trillion euro ($1.25 may give goodwill and customer loyalty to trillion) by 2013, and the total number of the organization. They include, enhancing Internet users will increase to approximately well-being and education of customers. By 3.5 billion from around 2.2 billion at the end providing information to customers online, of 2011. The study estimates that e- they are enabled to learn more about the commerce sales in 2011 increased to 690 organization and also how to carry out their billion euros ($961 billion), an increase of transaction effectively and efficiently at close to 20% from a year earlier. reduced time and cost. Give organizations Experts predict a promising and glorious competitive advantage in that the future of ecommerce in the 21st century. In organization that use automated business the foreseeable future ecommerce will processes are able to provide products and further confirm itself a major tool of sale. services at reduced prices than their Successful ecommerce will become a notion competitors. Customers are enabled by e- absolutely inseparable from the web, commerce to carry out their transaction at because e-shopping is becoming very any place in the world and at any time of the popular and natural. At the same time severe day that is convenient to their lifestyle. To rivalry in the sphere of ecommerce services extract benefits from ecommerce, it is will intensify their development. Thus important for businesses to overcome the e- prevailing future trends of ecommerce will commerce inhibitors and be the growth of Internet sales and challenges.(Chaffey, 2004) evolution. E-commerce challenges are classified as technological and managerial related.

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Top 10 Countries ranked by Online bayers in 2012 (milions)

Source: www.internetretailer.com

III. E-Commerce implementation in confirmed by the data of the Republic Serbia Institution for Statistics, according to which 40,1% of enterprises having the Internet The Republic of Serbia is lagging enough in ordered products and services by electronic the application of e-commerce compared to way and 20,7% of firms received orders in developed European countries. The basic this way. About 600,000 people in 2012 reasons are associated to the economic ordered goods and services on the Internet. situation in the country, standard of living In 2011 in Serbia, 73,8% of enterprises with and computer illiteracy of the population. the Internet had Web presentations of their Every year the Statistical Office of the assortments. According to the last Republic of Serbia publishes statistics on the researches, great majority of citizens in usage of information and communication Serbia want to buy online or they already technology in households and businesses. bought on the Internet, but this experience The report for 2012 showed that 98,2% of they had mostly in foreign Web shops. households have TV sets, 83,9% have (Statistical office of the Republic of Serbia, mobile phones, 50.4% have personal 2012) computers and 21,4% have laptop Basic requirementfor the development ofe- computers. The overall usage of computers in Serbia is still unsatisfactory, with 44,8% business inSerbiais the institutionaland legalregulation. The institutional push for of the population having no access to advancing e-payment and e-banking in computers. The survey also showed rather weak results in e-Commerce. The fact that Serbia was marked by the Law on Payment Operations introduced on January 1, 2003. 75% online shopping in Serbia is done by All payment operations were transferred individuals shows that that firms still abstain from online shopping. Unfortunately, the from the Accounting and Payments Operations Office to commercial banks, and volume of turnover in e-shops in Serbia is so all payment transactions were completely low that it is mostly an alternative form of shopping and business. This state is overtaken by the banks. The reform of the payment system opened a new segment of

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commerce and urged the banks to compete performs transmission, the clearing and for clients. The most widely recognized settlement of DinaCard transactions, as well payment card brand on Serbian market is as settlement of domestic transactions with DinaCard, national payment card, while the Visa and MasterCard payment cards. The most successful international brands are National Bank of Serbia regulates DinaCard Visa, MasterCard, Diners and American business, according to the Operative rules Express. DinaCard system has been founded for DinaCard System, while business with on 2003 with the aim of stepping up international payment cards is regulated in development of non-cash payments, accordance with operative rules of decreasing the amount of cash in the money respective systems. Requirements and supply and fighting gray economy. conditions for issue and use of payment DinaCard system has enabled a number of cards may differ significantly among domestic banks, who were not members of different banks, even for the same brand of international payment systems, to offer to payment cards, while the differences among their clients a payment card which can be different payment card brands are even more used in the largest acquiring network in significant.(The National Bank of Serbia, Serbia. The National Bank of Serbia 2010) Payment Cards and Accessing Devices in Serbia

2005 2006 2007 2008 2009 Number of Payment Cards Issued Debit Cards 3.443.015 4.327.537 4.613.448 4.548.241 4.884.814 Credit Cards 382.158 857.608 1.039.042 1.082.771 1.022.544 Business 33.129 55.237 72.975 97.777 107.032 Cards TOTAL 3.858.302 5.240.382 5.725.465 5.728.789 6.014.390 Value of Transactions with Payment Cards issued in Serbia (RSD milions) Debit Cards 58.746 118.070 186.220 255.497 300.854 Credit Cards 10.479 32.868 39.618 43.711 38.545 Business 2.824 6.288 9.629 14.070 15.739 Cards TOTAL 72.049 157.226 235.467 313.278 355.138

The legislative layer of e-Commerce is just Law on Electronic Signature has been developing in Serbia, influenced by the enacted by Serbian Parliament on December corresponding EU legislature, international 21st, 2004. The law regulates areas such as: standards, certain regional initiatives Serbia electronic signatures and qualified electronic has endorsed, and Serbia’s legal tradition. signatures, electronic certificates and Challenges refer to the validity of Certificate Authorities, as well as the rights, documents produced and exchanged duties and responsibilities of electronic electronically, security of transactions, and signature users and Certificate Authorities. trust, copyright and ownership issues in Essentially, the law defines a framework in trade using a website. The most important which electronic signature is considered as a regulations in the legal framework for legal equivalent of personal signature, thus electronic business are laws on electronic enabling legitimacy of electronic documents. signatures and electronic commerce. The The Law on Electronic Commerce is

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enacted on May 29th, 2009. The law enables electronic commerce in the Republic of citizens of Republic of Serbia to enjoy the Serbia should identify the opportunities and benefits of shopping over the Internet. risks of the business environment in trade Passage of the Law on Electronic Commerce organizations. In this sense, the main task of represents another big step towards the organization is to monitor changes in the development of information society in turbulent business environment with special Serbia.(Law on electronic commerce, 2009) emphasis on the globalization of markets, understanding the needs and requirements of Adoptionof legislationcreated the conditionsfor theintense development our customers and the experience of developed countries. The development of ofelectronic businessin the future. Electronic electronic commerce in Serbia institutional banking services were offered in Serbia with certain time lag compared to developed framework is an important pre-condition that reduces the risk of doing business in this countries. But the delay was not turned out area. to be so bad: in early stage of electronic banking development, numerous banks in References developed countries experienced certain problems concerning security and abuse of Chaffey, D. 2004.‘E-business and E- transactions. Foreign banks that had entered Commerce Management: Strategy, Serbian market set reliable and secure Implementation and Practice’, Financial electronic banking systems, with domestic Times/ Prentice Hall. banks following. Banks in Serbia usually Heng, M.S.H. 2003.‘Understanding offer to their clients an integrated set of Electronic Commerce from a Historical electronic banking services. The most of the Perspective, Communications of the banks have a package of services, such as: Association for Information Systems’, account information inquiry, detailed report (Volume 12), 104-118. on current account transactions for chosen Law on electronic commerce, Official period of time and detailed payment-card Gazette RS, No.41/2009. reports. Majority of banks also offer a Payment Card Operations of Banks in the number of useful applications on their e- Republic of Serbia (2010),The National banking websites: modules displaying list of Bank of Serbia, Belgrade exchange rates, loan calculators or currency Usage of information and communication conversion calculators. Certain banks also technologies in the Republic of Serbia offer business intelligence systems to their (2012), Statistical office of the Republic business clients. of Serbia www.internetretailer.com IV. Conclusion

Electronic commerce is revolutionary and modern way of conducting commercial activities and is based on the use of information and communication technologies. In modern business, trade is facing a number of changes that result from the globalization of markets and the development of information technology. For a quick and adequate development of

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A CRITICAL STUDY OF ENVIRONMENTAL RESOURCES IN ECONOMIC ANALYSIS Enwere Dike, Department of Economics , Kogi State University Anyigba, Kogi State, Nigeria, e-mail: [email protected] & Uche CC Nwogwugwu, Department of Economics, Nnamdi Azikiwe University Awka, Anambra State Nigeria Email: [email protected], [email protected]

ABSTRACT The natural environment has attracted heightened academic and policy interest since the end of the 1980s. This paper reviews the literature to provide deeper insights on the nature of environmental resources, that component element, and their essential economic characteristics. Current literature explicitly emphasizes two points. First, many environmental resources are renewable resources and have the futures of public goods-accessible to all at no change-with the result that such resources are open to over-exploitation to the point of extinction in many cases, which have social costs. Second, environmental resources constitute natural capital and should be admitted as a component of national capital stock, which gave rise to the notion of sustainable development whose essential argument is that current economic development should be made to be compatible with investment in environmental resources for future generations. KEYWORDS: natural environment, renewable resources, over-exploitation, extinction, national capital stock JEL CODE:

INTRODUCTION importance of biodiversity and The natural environment- sustainable use of the Earth‟s genetic referring to the conditions under which resources. Environmental problems also human beings, animals, and plants have constitute the 7th agenda in the to live in and reproduce themselves-has Millennium Development Goals attracted heightened academic and (MDGs), which require achieving policy interest since the end of the sustainable development patterns and 1980s. Prior to this period, the focus of preserving the productive capacity of interest was on economic growth and national ecosystems for future efficient resources allocation, and the generations. engine of economic growth and The central objective of the development was conceived to lie in present paper is to provide insights into capital accumulation. By the beginning the nature of environmental resources, of the 1990s, as just suggested, their component elements, and the way protection of the natural environment current economic literature attempts to became a major development policy incorporate environmental resources into objective, the concept of „sustainable analysis of national capital stock or development‟ being evolved to capture national wealth. The rest of the paper is the three key objectives of economic structured into six sections as follows: development: economic, social, and Section 1 provides a conceptualization environmental. Global concern for the of environmental resources. In section 2 environment lay behind the 1992 United the concepts of renewable and non- Nations „Earth Summit‟ in Rio de renewable environmental resources are Janeiro, Brazil, which focused on the examined. Sections 3 and 4,

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respectively, deal with the types of goods (Cavendish 1999). The earth‟s goods and services produced by atmosphere, specifically clean air and ecosystems and so-called environmental ozone layer, is a major contributor to the accounting dealing with how current sustenance of life on earth, as suggested literature incorporates natural capital by the dangers posed by depletion of the into national capital stock. Section 5 ozone layer and associated global explains the notion of sustainable warming (the effect of burning fossil development, and section 6 concludes fuels increasing the quantity of carbon the paper. dioxide in the atmosphere so that the earth warms up, which could cause 1. Conceptualizing Environmental large-scale climate changes, among Resources other catastrophic results – see, for Abstractly conceived, instance, Hamilton and Fay 2009; World environment refers to the conditions, Bank 2010; Bowen et al. 2010; Lombery circumstances, and influences 2009; Jones and Keen 2009; Noble and surrounding and influencing the Watson 2006). Also, many of the development of an organism or group of resources found in the natural organisms. In our present context, the environment are renewable and have the organism refers to human agents and the characteristic of public goods, to which groups of human agents are generally we return. communities, regions, countries, etc. On Indeed, the natural environment the other hand, the conditions, produces a wide range of economic circumstances and influences benefits. However, early attempts at surrounding and affecting the environmental resources evaluation were development of the groups of human hampered by economists‟ limited and beings is the natural environment or quite often defective knowledge not only ecosystem with all its life-support of what constituted environmental capabilities and short-falls. resources „beyond the obvious ones of Environmental resources on the other timber and fish‟ (The Economist, 23rd hand, refer to the goods and resources April 2005), but also the types of provided by the natural environment services provided by the ecosystems otherwise called ecosystem or apart from difficulty of putting „cash environmental or ecological services, values‟ on such services. Natural which may be categorized into three: scientists, biologists and ecologists (i).those derived from the atmosphere particularly, however, have produced in (the whole mass of air enveloping or recent decades abundant evidence that surrounding the earth) e.g. clean air, the natural environment produces a wide ozone layer, etc. (ii). those derived from range of economic benefits. Indeed, water- e.g. water itself, fish, etc; and ecologists now know a great deal more (iii). those derived from land and soil – than they used to about how ecosystems e.g. timber, farmland, minerals etc. function, which habitats deliver which Many environmental resources services and in what quantity those provide a flow of services to producers services are supplied. The World Bank and consumers overtime. Put differently, publishes or sponsors several environmental resources serve both as publications, starting since the early production inputs and final consumption 1990s, that provide useful insights into

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how ecosystem resources can be valued unwanted users is difficult to enforce (World Bank 1992; Munasinghe 1993; (exclusibility principle ;) they are thus Felli et al. 2000). These studies, unclaimed public domain with no private however, tend to focus on forests and property rights over them. Common- water-related issues, including dams, pool resources are, therefore, similar to coastal beaches, irrigation projects, etc., public goods, the difference; however, the reason being, apparently, that these being that, in certain circumstances, the elements constitute, arguably, the must use of a common-pool resource by one visible and, perhaps, the most useful of person will subtract the amount available the renewable environment resources. to other users (the substractibility As scientific understanding of principle). Examples of global commons environmental services improves, new or common-pool resources would financial opportunities emerge. For include: the atmosphere (air); fisheries example, the importance of tropical resources at sea, streams and lakes; rainforests in protecting the ozone layer waters in lakes, rivers and streams; has only recently become appreciated, forests and fossil fuel reserves, etc. – which explains, probably, the demand by these, indeed, represent „mankind‟s vast developing countries for monetary inheritance of shared natural resources‟ compensation from the industrialized available to all inhabitations in a society world for their tropical rain forests1. at zero charge. Further to this, fuller understanding of However, not all forests would environmental resource uses in the rural quality to be classified as global economy has led economists to begin to commons in the sense of having no re-evaluate the extent of rural poverty private property rights over them (in the and inequality in developing countries manner the atmosphere (air) can be (see, for instance, Cavendish, op. cit. on classified). Forests may be classified into Zimbabwe). four categories. The first is forestland that has become accessible and is Environmental Resources as ‘Global adjacent to the local market (for Commons’ production of marketed or commercial The natural environment, goods) or to the subsistence households including its renewable resources, has (for non-market consumption goods). often been described in the literature as Such forestland often is highly valued representing common property agricultural land with secure property resources-alternatively, „commons rights. Such forestland gradually gives property‟, „common pool resources‟, way to harvested forestland and „open-access property‟, etc. so-called eventually to unclaimed open-access because they belong „at once to everyone natural forest (Hyde et al. 1996). and no one‟ (The Economist 23rd April The historical origin of the global 2005, p. 11; see also Black 2002, p. 67; commons concept traces to the Industrial Ostrom 1991; Ostrom and Walker 1994; Revolution era of the 1700s. As the latter Kebede 2002). Their exploitation or use began to unravel in Great Britain, cows is open to all in a country or community still would graze on the commons in at no charge, so that nobody is excluded many villages in England and its from their use. So for common-pool American colonies (Perkins et al 2001 resources or global commons barring pp. 198-9). The essence of a village

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commons was open access, free of Victoria in East Africa) already has charge, to any member of the village. depleted fish stocks beyond their ability The first villages to take advantage of to regenerate. We return to the Lake open access would have ample grazing Chad. for their livestock; their only cost being Briefly, the concept of commons the time it would take to herd their implies that there is no „exclusion‟ animals to the commons, allow-them to principle so that the resources in graze, and herd them back home. But the question are shared freely (without any amount of land was fixed and soil price of access) by all inhabitants in a fertility and climate limited the quantity community. Because there is Zero user of grass. With more villages using the price to exploit commons property, there fixed commons, the grass became is a tendency to overexploit them or sparse, so the animals took longer time abuse them or exploit them for beyond to feed or, in the case of open rangeland, their carrying capacity. An ecosystem‟s the herder was forced to travel father to carrying capacity is the maximum stress find forage, so that everyone‟s costs that it can absorb without changing to a rose. vastly different state. Ecosystems are The effect of rising average cost endemically subject to natural shocks to each herder was to eventually and surprises-e.g. fires, floods, storms, discourage grazing on the commons. But earthquakes, droughts, etc. Ecosystems, none of the new herders had to pay the however, possess self-organizing ability rising costs to each other of the previous which determines their capacity to entrants and more grazing took place respond to such shocks. On the other than the commons carrying capacity hand, over- exploitation of a natural would sustain, which was to the resource will undermine its self- disadvantage of the village as a whole. organizing ability which could lead to Eventually, overgrazing exhausted the serious environmental degradation-e.g. commons as a useful source of feed. biodiversity loss, to which we now turn. The dilemma of the commons is a widespread phenomenon, applicable to 1.2. Biodiversity Loss any (limited) resources to which access Biodiversity loss, referring, as is unlimited by fee or regulation. already noted, to irreversible loss of Grazing on open range, whether in the certain categories of animal and plant African Savanna or elsewhere, has the species, is, perhaps, the most important same outcome: ultimate degradation or manifestation of the ecological crisis. In destruction of the resource. For example, the last eight decades or so-ie. Since the open access to tropical forests for 1930s-some 40% of animal species have logging or access at fees well below the become completely extinct in the social cost results in overextraction and industrialized world and another 660 destruction of the native forests in species are endangered (Volkvo 1985, p. Brazil, Ghana, Thailand, and many other 96). Although these figures may appear tropical countries2. Similarly, open speculative, they nonetheless reflect access to fishing grounds in the North awareness of the ecological crisis facing Atlantic, in Peru‟s Pacific waters, and in mankind. some inland lakes in Africa (e.g. the Lake Chad in West Africa3, and Lake

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A. Market Failure permanent restrictions on forest reserves This is the most commonly cited and national packs (Hyde et al. 1996). factor in the economic literature, Third, market failure can whereby it is argued that the interplay of originate in externalities which fail to market forces-deemed grossly imperfect capture the environmental benefits of – does not secure the economically resource conservation-such as, for optimal balance of habitat conversion instance, failure to impute the costs of and its conservation. Such „market biodiversity losses to transport systems failure‟ can originate in three factors. or water pollution from agricultural First, there is the pervasive ill- production. Recall that externalities are defined, disputed or non-existent benefits that accrue to society as a whole property rights problem. Recall the free- (external economies) or costs that accrue access or common-pool character of to society (external diseconomies) but renewable ecological resources, whereby cannot be internalized by the private there exist no enforceable mechanisms individuals undertaking the activities. A to exclude anybody from using private farmer, for instance, may be renewable environmental resources, unwilling to undertake costly changes in which lead to their over exploitation. farming technology that are deemed The second is that there exist missing or beneficial to biodiversity since other incomplete markets for ecological farmers and not necessary the farmer resources. Biodiversity and genetic himself, will benefit from those changes. resources are known to be broad international values conferred by highly B. Government Economic Policy specialized and generally local forest or These can, and do indeed, have aquatic resources. Although there is adverse side effects on biodiversity. some evidence of an evolving Price controls and subsides in internationals market for the protection agriculture, urban development, water of genetic resources–especially those provision, transport, energy, etc. these that go into pharmaceutical research and distort the costs of the exploitation of biotechnology–this market is yet grossly environmental resources and, hence, thin, and the resource values of species leading to their degradation. Exchange often need to be protected with rate devaluation during the structural specialized management criteria or in adjustment programmes (SAPs) of the specialized local forest reserves or some 1980s aiming to promote agricultural local specialized habitat. There is export incentives had the unintended considerable difficulty in arranging effect of pushing farmers in Sub-Saharan secure property rights for specialized Africa to exploit land and forest habitats, more so because neither flora resources in unsustainable ways (Lopez, nor fauna obey property boundaries. But op. cit;. Cromwell and Winpenny 1991; it is pretty difficult, if not impossible, to Glickman and Teter 1991; Reed 1992). ensure that a particular animal or plant species is confined to a particular C. Poor Information on Functions of locality so that other agents are excluded Economics from using it. Biodiversity protection This gives rise to sub-optimal demands special land-use management and unsound policy choices manifested that are more complex than fences and in offering „perverse incentives‟ which

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encourage behaviour that lead to restricted to what is replaced by rainfall, degradation of natural resources. but can be destroyed by Scientists point out that ecosystems overexploitation, leading to drying up or undergo „irreversible collapse‟ (a replacement of fresh water by sea-water. situation whereby an environmental Some environmental resources which are resources that has been impaired cannot in principle non-renewable or be replaced in the future by another asset depletable-e.g. iron ore- in fact exist in that provides equivalent services-e.g. such large reserves that any possible depletion of the ozone layer by GHG depletion date seems rather remote. emissions) when certain thresholds of To return to renewable resources, change are attained. But knowledge of most environmental resources are such thresholds is, at best, poor among renewable resources: they can regenerate private agents in developing counties4, themselves over time, given certain although it is of vital importance in conditions, of course. Forests or open designing biodiversity policy. rangelands reproduce themselves each year. Fish breed new stocks, wide life 2. Renewable and Non-Renewable replenishes its herds and forests reseed Resources themselves. Air and water cleanse The literature conceptually themselves of pollutants through divides environmental resources into two biological, chemical, or mechanical categories: renewable and non- transfers. Provided annual harvests do renewable –depending on whether they not exceed the annual growth of the are depletable (limited in supply by stock, it is possible to exploit renewable nature and thus exhaustible) or non- ecological resources sustainablly-the depletable (available for use on a difference between the rate of harvest continuing basis). and the rate of growth being called the rate of depletion. Indeed, the faster Renewable Resources these resources can be replenished, the Renewable ecological resources as greater the rate of economic growth that just stated, refer to those natural can be sustained indefinitely. Three resources which are available for use on questions arise then in respect of a continuing basis-e.g. the earth‟s renewable resources. First, what atmosphere including the air, solar constitutes the maximum sustainable energy, the land and soil, plant, fish and exploitation? Second, what is the plant populations, etc. In contrast, there economically optimal exploitation? And, are non-renewable or depletable third, what is the danger of over- resources, which are used up when used exploiting the resources to the point of at all, and must definitely ultimately irretrievable loss or extinction? become exhausted-e.g. coal, oil, gas, inland lake etc. It is noted, however, that Sustainable Exploitation of Renewable there is difficulty in establishing whether Common Resources certain environmental resources are Most common recourses are renewable, which may depend on the renewable resources-e.g. fish stocks in intensity of use. A good example may be the open sea or tropical rainforests: they cited in underground water resources can regenerated themselves, given time, which are renewable if pumping is if there is no destruction of their self-

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recreating potential via overexploitation maintained and extinction becomes a or degradation. It is, therefore, possible reality. to exploit renewable natural resources sustainably if the annual rate of Non-Renewable Environmental exploitation does not exceed the annual Resources rate of growth of the stock. The Non-renewable resources, as difference between the rate of already hinted, refer to depletable exploitation and the rate of regeneration resources – socalled because such or growth is called the rate of depletion resources are used up when used at all, (see, for instance, Tietenberg 2000). The and must eventually get exhausted in faster these resources/stocks can be their supplies. Non-renewable resources replenished, the greater the rate of are thus fixed in their supply (by nature) economic growth that can be sustained and are thus not unlimited in availability. indefinitely. This can be illustrated with Perfect examples are crude oil, coal, gas, example from fisheries in an open access etc. Fossil fuels are not unlimited in lake supplies; once extracted and used up the When (commercial) fishing begins stocks of fossil fuels are not replaceable. in a lake, the fish can replenish their Non-renewable resources can be stocks more rapidly, and the sustainable destroyed by over-extraction, leading to catch increases, given that fish feed is exhaustion. In sum, non-renewable made available. But as the fishing effort resources are depletable resources, increases (more fisherman enter the existing in quantities with a finite life lake), the fish stocks may not be span. Earlier, we contrasted non- replenished as rapidly as the rate of renewable resources with renewable increase in fishing effort, which results resources which are available for use on in decline in the fish stocks as well as a continuing basis-e.g. solar energy. the sustainable catch. As fishing effort continues to grow (as the number of Marketed Non-renewable Resources fishermen/boats in the lake continues to Logically, for non-renewable grow), the fish stocks may be so small or resources increases in consumption so scattered that reproduction cannot implies a reduction in available stocks. replace the catch at any level, which Economic development experience, leads to extinction. The fishery model however, gives little support to the provides a good illustration of the hypothesis that marketed non-renewable common resource problem. Recall that resources – e.g. minerals some form of with the village common, it was energy, etc. are becoming scarce in the assumed that more entrants increase the economic sense because potential or costs for all. In the case of the fishery, actual shortages are always reflected in even if the costs of operating a boat are higher or rising market prices, which constant (the same per boat), the catch provide incentives to discover new per boat, and hence fishermen‟s revenue, sources of supplies and increase fall. The lesson here is that where there reserves, improve efficiency, find is open access to environmental substitutes, and make technological resources or where a natural resources is innovations. not effectively controlled, as is the case A perfect example here is rising in developing countries, stocks cannot be energy prices since the 1970s in the

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wake of OPEC-inspired price increases. environmental problems. The latter, Between the early 1970s and 1981 crude however, do not come under the purview oil prices rose from less then $2/barrel to of the present paper. $44/barrel; in the 1980s prices were stable at around $20/barrel; as from the 3. Valuing Environmental Resources: 1990s through the late 2008 prices rose Goods and Services Provided By sharply exceeding $100 before tumbling Ecosystems in the wake of the global economic Many environmental resources, meltdown. These price increases have as noted earlier, provide a flow of provided incentives for exploitation of services to producers and consumers „marginal fields‟, conservation and over time. Put differently, ecological innovation of energy-saving devices resources serve both as production apart from discovery of substitutes in inputs and final consumption goods. synthetics, solar energy, etc. Ecological systems, beyond providing Currently, world energy demand food and production inputs, control is growing rapidly. The latest forecast floods, filter pollutants, assimilate waste, (available to the authors) by the pollinate crops, maintain a genetic International Energy Agency (IEA) library, preserve and regenerate soils, shows global energy demand, under operate the hydrological cycle, and current policies, increasing by more than maintain the gaseous composition of the 60% from 2004 to 2030. The IEA atmosphere. The tropical rainforests, for concludes that global primary resources instance contain and supply most of the are adequate to meet projected demand plant species which provide essential increases: proven reserves of gas, oil, etc ingredients in pharmaceutical far exceed cumulative projected preparations (see, for instance, Ibe and consumption and more reserves are Nwafo 2005 on Southeastern Nigeria). likely to be added during the projection Forests, swamps or „wetlands‟ provide period (Saghir and O‟ Sullivan 2006). essential environmental services: they Rather than decline in supply are known to filter and purify water, and marketed non-renewable energy and act as reservoir to capture rain and raw-materials have, indeed, increased in melting snow. „Wetlands‟ lie mostly in supply. So the problem is not how to the tropical and semi-tropical regions, increase supplies but rather how to between 30o North, 30o South of the manage the rents accruing from them to Equator, a zone which incorporates finance structural transformation; as much of Asia and the Pacific, most of well, the „side effects‟ associated with Africa, and Central and South America. their extraction and consumption pose

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Figure 1 Economic Values Attributed to Environmental Resources (with Examples drawn from a tropical rainforest)

Total Economic Value of a tropical rain forest

Use values Non-use values

Direct Indirect Option Existence use use values values values values Output that Functiona Future direct Values from can be l benefits and indirect knowledge of consumed values continued directly existence * Food * Ecology function * Biodiversity * Habitats * Biomass * Flood control * Conserved habitat * Endangered species * Wealth * Storm protection Decreasing „tangibility‟ of values to individuals Source: Adapted from Munasinghe (1993; figure 3.1, p. 22).

Illustrating With Tropical Rainforests preserve soil cover on site, and in the Conceptualizes the total case of watersheds, protect soil economic values that can accrue from an downstream from floods. Earlier studies environmental or ecological resources, show that the social value of forests (e.g. drawing examples from tropical the ecological functions-see figure1) rainforests. Thus the total economic usually exceeds the direct use-value value of an ecological resources can be sometimes by a considerable margin conceptually broken into two broad (see, for instance, Anderson 1987). categories: use-values (outputs or Mangrove Rainforests: Ecological services that can be consumed directly Functions. and indirectly) and non-use-values Mangrove rainforests provide an (Munasinghe op. cit.). For instance, example of an ecosystem whose social tropical rainforests are a vital source of benefits/values usually exceed the direct livelihood for rural populations (see use value5. The services and functions Cavendish, op. cit.; Falconer and Arnold they render to society as a whole are 1989; Falconer 1990). Apart from hardly appreciated, which has led to serving as a direct source of food, their destruction in many countries. rainforests are a source of timber, bark, Mangrove rainforests occur in saps, and pharmaceuticals (Ibe and coastal areas in the tropics where waters Nwafo, op. cit.). are shadow and river deltas receive The indirect use-values of suspended sediment (mud)-often termed tropical rainforests come in the coastlands. The mangrove rainforests of ecological services they provide: they the Niger Delta in Nigeria is the largest influence local and regional climates, in the world covering some 11,700 km2

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(Muoghalu 2007). Mangrove prop-roots More recent literature centred trap sediment from ebb and flood tidal around the notion of sustainable currents, gradually extending land development (see section 5) has seawards; mangrove forests commonly developed a framework for so-called consist of several shoreward belts of red, environmental accounting whereby black, and white mangroves which overall national wealth or capital assets constitute highly productive marines and is meant to include not only produced estuarine ecosystems. As just noted, capital (machines, plant, infrastructure, although society derives, directly or etc.) and human capital (knowledge, indirectly, immense benefits from the experience and skills inhering in a ecological services of mangrove nation‟s workforce) but, also, rainforests they are hardly appreciated in environmental or natural capital (forests, policy and planning circles. soils, rangeland, beaches, etc.) (Pearce It is noted that primary and Warford 1993; Pearce and Atkinson productivity in estuaries may be twenty 1993). It means that if an economy uses times higher than in the deep sea and ten up natural capital in generating current times higher than in near-shore waters or output, as is often the case, then the deep lakes. Mangroves generate a large economy‟s capacity to generate income volume of degradable waste (leaves, will decline in the future if the natural stems, and the like) called detritus, the capital is not replaced. This replacement primary energy source for tropical can be done through higher investment coastal marine ecosystems. Colonies of in produced capital (including human microscopic life feed on detritus and are capital), technological change must in turn consumed by estuarine species- occur to boost productivity of all shrimp, some fish, and small produced capital, or both must be done. crustaceans, which serve as forage for Only by so doing can the economy birds, predatory fish, and eventually create capacity to keep its consumption human beings. level or income per capita from Other „free‟ services are provided declining over time-which is a key test by mangroves, including storm for sustainable development, to which protection, erosion control, wastewater we retutn. cleanup, and areas for educational and This suggests an alternative, if leisure activities, as well as many direct partial, criterion for sustainable products (fuel, construction timber) and development: the maintenance of the indirect products (food from fish, total capital stock, including produced shrimp, and birds). Moreover, and natural capital stocks. The depletion mangroves are a renewable resource- of natural capital must be compensated reproducing and regenerating themselves for by net investment in produced at no cost; sustainable yields of fish and capital. It means, therefore, that timber can be harvested on a continuing sustainability can involve the depletion basis provided the ecological processes of natural resources and the eventual governing the mangrove system are not relative decline of the natural capital over exploited and destroyed. base (farming, fishing, foresting, mining, 4. Environmental Accounting: petroleum and other industries based on Ecological Resources as National natural resources). As the latter decline, Wealth. the non-natural resources dependent

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industries, including manufacturing, framework. We define gross national (or utilities, construction, finance, domestic) product (GNP or GDP) as the transportation, telecommunications, the sum of value added in the production of service industries, must also grow. finished goods and services in an Indeed, this structural transformation is economy. The concept of GNP makes no what economic development is all about. allowance for the depreciation or Perkins et al. (2001, p. 288) thus consumption of (existing) capital stock, concludes: hence he adjective gross. Another „When an economy income concept, net national product develops from a natural (NNP), is equal to GNP less the resources base, the net depreciation of produced capital7 (Dm): benefits or rents from the NNP = DNP – Dm …(1). primary sectors provide NNP is an appropriate measure of the much of the finance for resources available to the economy to secondary and tertiary meet its consumption needs once industries. And some of allowance has been made for capital the finance may go into depreciation. Given that GNP consists of research and consumption C and national saving S, development of new then: NNP = C + S – Dm….(2). technologies that will As long as national saving equals or increase productivity; exceeds depreciation consumption is less than net product and can be sustained It should be stressed that this indefinitely. Sustainable development transformation to produced capital does means, in effect, that the stock of capital not provide a rational for wanton with labour generates NNP each year; if exploitation of natural resources. Natural saving is enough to take care of resources should be exploited efficiently. replacement of used up capital, The substitution of produced capital for development becomes sustainable. natural capital in the course of economic We need therefore to obtain a development may turn out to be measure of the stock of natural capital inefficient; nor is there guarantee that and its depletion (Dn) to include in net this process can produced forever. product, which is called adjusted net Natural resources also provide inputs in national product (ANNP): the supply of produced capital and ANNP=GNP-Dm- service in the forms of raw materials, Dn=C+S-Dm-Dn……(3) energy and waste sinks‟; and if ANNP has the same implication as technological change fails to reduced NNP: if enough saving is made each this dependence on raw materials, a year to take care of Dm and Dn, the nation or even our planet earth may run economy can sustain its level of out of needed resources. consumption. Put differently, the basic sustainability criterion is that net Environmental Accounting 6 national saving (NNS) must be positive The concept of sustainability as (-ie. NNS>O,), where NNS is measured the transformation of natural resources as: NNS = S - Dm- Dn…..(4) into produced capital can be incorporated into the national accounting

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Adjusted Net national Income the above framework, table 2. Note the Empirical Example for Selected high resource depletion Dn for Indonesia Countries and Nigeria; these were more than The empirical literature has balanced by high national saving rates so produced estimates of ANNP based on that NNS remained positive.

Table 2: Adjusted Net National Income for Selected Natural-Resource-Rich Countries. Country GNP Dm Dn ANNP=GNP- National Net national Dm-Dn Savings savings = NNS- Dm-Dn Costa Rica 100 3 8 89 21 +10 Indonesia 100 5 17 78 30 +8 Brazil 100 7 10 83 21 +4 Philippines 100 11 4 85 18 +3 Nigeria 100 3 17 80 23 +3 Mexico 100 12 12 76 17 -7 Malawi 100 7 4 89 2 -9 Source: Perkins et al. (op. cit, table 6-3, p. 229). Citing world Development Report 1994 (Table 9), and Pearce and Atkinson (1993), pp. 103-8.

It should be noted, however, that both of produced capital) in their national Dm and Dn are only approximations for wealth. Economic development involves most developing countries. For this transition from a national-capital driven reason, neither NNP nor ANNP has been to produced-capital driven growth used much in official estimates, and they momentum. How a country‟s natural have hardly affected policy discussions. capital is managed how rents proceeds The United Nations and the World Bank, accruing therefore are invested to however, are encouraging countries to accumulate produced capital explains a begin incorporating resources and lot about each country‟s development environmental assets into their stock of path. national wealth. The Southeast Asian, NICS Dixon (1997) has produced approximate the textbook model of how estimates on the structure of stock of natural capital had been converted into wealth by world regions. The Middle produced capital that lead to sustainable East (rich in petroleum resources), West growth and development, „which setting Africa rich in tropical rainforests and in motion forces that eventually limited South Asia (rich in flood plains for the further and depletion of natural cultivating rice), in that order, have the resources‟ (Perkins et al., op. cit., p. highest share of natural capital in their 231). Rapid expansion of export- based stock of national wealth. In contrast, agriculture (rubber, palm produce, rice, North America, Western Europe, and etc.) supported by government policies Japan and the East Asian newly on land reform, investment in R x D, industrializing countries (NICs) have physical infrastructure and fiscal low share of natural capital (shigh share incentives, generated rapid growth in

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exports and foreign savings to finance non-renewable) natural resources and by investment in export-based generating waste and pollution, which industrialization, which, in turn, jeopardizes growth for future facilitated labour mobilization and generations. The notion of sustainable relocation from rural to urban development attempts to resolve this employments raising rural incomes and dilemma by insisting that economic wages and further encouraging policy decisions should have utmost agricultural intensification (see also regard for their possible environmental Hayami 2001, and Harrold et al. 1996). outcomes. In this way, the right kind of growth outcome-based on biodiversity, 5. Sustainable Development and The the control of environmentally Natural Enviroment unfriendly activity, and replenishment of The notion of sustainable renewable resources such as forests, fish development grew out of the United stocks, etc. – is generated, and this can Nations World Commission on protect or even enhance the natural Environment and Development capital base. Current economic (WCED 1987), otherwise known as the development is then rendered Brundtland Report. The notion of compartible with investment in sustainable development is conceived as environmental resources for further „development that meets the needs of the generations. How to achieve this present without compromising the ability compartibility has posed serious of future generations to meet their own difficulty for developing countries, needs‟. Rather than predicting greater generally, where the urge to achieve environmental degradation and rapid economic growth is most felt. difficulties in a world of ever-declining natural environmental resource levels, Relative Productivity of Natural and the Brundtland Report foresees „the Produced Capitals possibility of a new era of economic A second point of debate growth, based on polices that sustain and concerns the relative growth-promoting expand the natural environmental capacity of natural and produced resources base‟. capitals. Environmentalists tend to argue The literature of the 1980s took that fossil energy resources and other off from this notion, expatiating on the natural resources like wilderness areas, idea that economic development requires game reserves, pristine rainforests, etc. a strong policy of protecting the are very special kinds of capital assets environmental capital base as a that should be preserved so that we can component of the national capital stock attain sustainable development. (see, for instance Pezzy 1989; Pierce et Economists, on the other hand, tend to al. 1989; Solow 1986). More recent view sustainable development quite literature-particularly from differently: they regard natural resources environmentalists-goes further and as a special category of capital-along separates out natural capital for special with produced capital, including human attention. This literature proceeds from capital. the position, that most forms of Both economists and economic growth make demands on the environmentalist agree that our environment, both by using (sometimes generation should bequeath an adequate

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stock of capital assts for the future Figure 2 illustrate this process generations, with economists arguing using the production isoquant or that economic development necessarily production indifference curve, where results in produced capital substituting production capital proxied by human for natural capital in the long run; that capital (KH) on the vertical axis and further generations will benefit more natural capital (KN) on the horizontal from larger stocks of produced capital axis are two kinds of capital that would such as additional scientists and be requires to attain a certain level of engineers, medical personnel, better future output Q, holding other inputs laboratories and more efficient fixed. Output Q can be produced at point transportation, etc. than from larger C with a conservationist policy stocks of natural capital such as crude emphasizing reducing fossils energy petroleum, gas, coal, etc. Briefly, consumption currently (by present economists would argue that sustainable generation) consuming much oil, gas, development is better understood in coal, etc Qr Q might be produced at terms of substitutability of natural point B using a low natural capital capital and produced capital (see intensity and high produced capital Neumayer 2010; Atkinson, Dietz and intensity. Neumyer 2008; Hamilton et al. 2008).

Figure 2 Substitutability of natural capital and produced capital in development. Future stocks of human capital (KH)  A

 B Inputs necessary to produce Future output level Q

 C Q Future stocks of natural

capital (KN)

Either of these strategies appears What about producing at point A, feasible; and a more desirable one is that where our isoquant hits the vertical axis generating a higher consumption both indicating that Q can be produced only for present and future generations. with produced capital and no natural

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capital? Is this a feasible alternative? would exhaust the earth‟s capacity to Yes, with the greater scientific and produce the means of subsistence or technological knowledge represented by food (by using up available agricultural point A, society can develop and land assumed fixed in supply), until introduce substitute technologies like rising death rates and falling birth rates clean coal or solar energy to substitute harshly would keep population in check. completely for exhausted fossil energy. This Malthusian thinking remains Point A indicates that in the long run, influential today, although current focus fossil fuels are not essential and can be has shifted focus from land and completely replaced by produced capital. agriculture to all natural resources and This is an optimistic view mush in line the global environment. with the neoclassical perspective on Both historical and current economic growth on which factor evidence disprove the Malthusian trap combinations change in response to thesis. Indeed, the Malthusian trap has factor scarcities. been avoided, historically, in several major ways. First, tremendous progress The World is Facing a Malthusian in technology has helped to increase the Trap? productivity of land note the effect of the Modern economics is more or Green Revolution in pushing lack the less optimistic that natural capital is threat of famine in high-population substitutable (by produced capital), so countries of Asia-specifically, India, that growing natural resource scarcity Indonesia etc. Second, resource itself cannot constitute a bottleneck on scarcities have provided the major long run development but would rather incentive to search for substitutes. act as the main inducement to changes in Logically, for non-renewable resources behaviour (on how to manage resources) increases in consumption implies a and technology. In contrast, classical reduction in available stocks. Economic economics-especially the Ricardo- development experience, however, gives Malthus strand-was not particularly little support to the hypothesis that optimistic regarding natural resources as marketed non-renewable resources- e.g. fixed (by nature) and exhaustible in the minerals, energy, etc. are becoming longrun, and non-substitutable by scarcer in an economic sense because produced capital. Unlike modern potential or actual shortages are always economics which operates on the reflected in higher or rising market assumption of substitutability between prices, which provide supply incentives inputs in the production function, to discover new sources of supplies and classical economics operated on the increase reserves, improve efficiency, notion of complementarity between find substitutes, and make technological inputs-specifically, capital and labour innovations. considered to be variable inputs A perfect example here is rising combined with land assumed fixed in energy prices since the 1970s in the supply in fixed proportions in the wake of OPEC-inspired likes in crude oil classical production function. export prices: between the early 1970s Specifically, the classical and 1981, oil prices rose from less than scenario was premised on the thesis that $2/barrel to $44; in the 1980s prices rapidly growing human populations were stable at around $20/barrel. Since

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the 1990s prices have risen rapidly, on resources and pollution of the exceeding $60/barrel. environment-a trend now observed for These price developments have provided China. As a result, the world‟s stocks of incentives for exploitation of marginal non-renewable fossil fuels will become fields, conservation and innovation of depleted and the environment gets more energy-augmenting technologies in polluted. automobiles and home devices apart from discovering of substitutes in 6. Conclusion synthetics, solar energy, etc. Besides, Current explicit recognition of man-made fuels such as ethanol derived environmental resources as an legitimate from plants (mainly corn), or diesel component of national wealth suggests „conjured from coal and gas‟ hold out that environmental resources should be the promise of unlimited supply. accumulated, nurtured and protected in So the problem confronting much the same way as produced capital. global policy now is not how to increase But environmental resources constitute marketed supplies but rather that the un- inputs into the production of goods and marketed side effects associated with services just like produced (physical and their extraction and consumption have human) capital; they can be-and usually become serious problems. In the case of are-depleted and degraded in the course fossil fuels –e.g. crude oil, natural gas, of economic development just as coal, etc-the real issue is not a potential produced capital is. It is also through shortage but the environmental effects natural growth of renewable resources associated with their use particularly that environmental resources can be local air pollution and carbon dioxide regenerated and augmented, just as emissions. Similarly, solid mineral investment replenishes the stocks of extraction generates pollution and produced capital. destruction of natural habitats. A key economic characteristic of A relevant question to ask, environmental resources is that many of however, is whether the processes of these resources are renewable resources technological change, discovery of and have the features of public goods- substitutes, etc. can continue indefinitely accessible to all in a community/country to postpone the Malthusian resource trap at no charge, so that excluding unwanted indefinitely. Even though current global users is difficult. Consequently, such trends in population growth rates show resources are open to overexploitation to remove the dash (-) slowing down, the the point of extinction in many cases, rates remain high enough to expect a which imposes costs on society as a doubling of the world‟s population by whole. National and international policy 2050 or so (World Bank 1992, p. 26). interventions to grapple with the latter Most of the growth recorded in world are on-going. A future paper will attempt population since the postwar II decades to surrey the issues connected with this has originated in populous Asia and problem. Latin America. A rising share of this population will aspire to the high Note: consumption standards of the industrial 1‟Give us the money or the forest gets it‟ middle class in the OECD countries, is credited to United Kingdom which suggests more intensive demands environment minister Eliot Morley;

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quoted in The Economist April 23rd case study in Africa. The Jeans 2005, p. 79, as blackmail he received Hopkins University Press. from developing countries. Aronsson, Thomas and Karl-Gustaf 2For insightful comments on this Lofgren, eds. (2010) Handbook problem with regard to Nigeria, see of Environmental Accounting IKeyburam (2007) and Muoghalu Edward Elgar. (2007). Atkinson, Giles, Simon Dietz and Eric 3See Onuoha (2008) Neumayer, eds. (2008) 4The number of species on earth has Handbook of Sustainable never been ascertained; an estimated 5- Development Edward Elgar. 100 millien have been put up in the Belli, P., J. R. Anderson, H. N. Barnum, literature. According to the United States J. A. Dixon and Jee-Peny Tan, National Academy of Sciences (1998), a (2000) Economic Analysis of typical 10 km2 of pristine rainforest may Investment Operations: contain as many as 125 different species Analytical Tools and Practical of mammals, 100 species of retiles, 400 Applications Washington D. C. species of birds and 150 species of The World Bank. butterflies. See also Toby (1996). Bergstrom, John C. and Alan Randall 5This section relies on insights in Maler (2010) Resource Economics 3rd (1998), Soderbaum (1996), and Chemitz edition Edward Elgar. and Kumari (1998). Black, John (2002) Oxford Dictionary of 6This section relies on Perkins et al., op. Economics Oxford-New York: cit., pp. 228-31 but see also Aronsson Oxford University Press. and Lofgren (2010). Bosetti, Valentina, Reyer Gerlagh and 7Depreciation of produced capital- Stephen P. Schleicher eds. (2009) referring to the expiration of the Modelling Sustainable economic usefulness of produced capital Development: Transition to assets-results from two sources: physical Sustainable Future Edward and functional factors. Physical Elgar. depreciation involves normal wear and Bowen, Alex, Mattia Romani, and tear, deterioration and decay, and even Nicholas Stern (2010) „Challenge loss through accidental destruction, of the Century‟ Finance and through fire, war, etc. Functional Development March. depreciation involves inadequacy, Cavendish, Willian (1999) „Poverty, supercession and technological inequality and environmental obsolescence. In economies where resources: quantitative analysis technological change is rapid-e.g. the of rural households‟ Working countries of the Organization for Paper Series WPS/99-99 Centre Economic Cooperation and for the Study of African Development (OECD)- technological Economies, Oxford University. obsolescence tends to be rapid. Chomitz, Kenneth M. and Kanta Kumari (1998) „The Domestic Benefits REFERENCES of Tropical Forests: a Critical Anderson, Dennis (1987) The Review‟ The World Bank Economics of Afforestation: A Research Observer vol.13 no.1 (Feb). pp. 13-35.

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THE SPIRIT OF ENTREPRENEURSHIP IN SPIRITUAL ORGANIZATION: A STUDY IN THE BUSINESS OF THE TAREKAT OF SHIDIQIYAH INDONESIA Misbahul Munir1, Umar Burhan, Khusnul Ashar, and Multifiah1

Abstract This research aims to (a) discover the rationality of the values of local wisdom which is found in the teachings of the order (tarekat) of Shidiqiyah which has motivated the emergence of a strong spirit of entrepreneurship; (b) to explain how wealth is understood in the Shidiqiyah order; (c) to explain the behavior of the business agents of the members of the Shidiqiyah order in their effort to acquire wealth. The findings of this research shows that: (1) the strong spirit of entrepreneurship in the Shidiqiyah order is closely related to the the eight vows of willingness of the members of Shidiqiyah order, the teaching of the unity of faith and humanity, and the culture of charity, giving and maintenance of communication. (2) the members of the order believe that wealth has a very important position in their life, since wealth has not only an economic meaning but also spiritual, social, cultural and evangelical meaning; (3) in their effort to acquire wealth, they conduct business by giving emphasis to hard work and proper business management, but they also implement their strength in spiritual and social capital to achieve success in business. Keywords: spirit of entrepreneurship, wealth, rationality, homo Islamicus

INTRODUCTION developing business units which can support The order of Shidiqiyah (tarekat and accelerate the development of the order in Shidiqiyah) is a local religious order in Indonesia Indonesia. which has received much attention from the At present, many kinds of product have public lately. Despite the pro and contra been developed by the order of Shidiqiyah, concerning this order, it can disseminate its ranging from the construction of a three-star teachings in Indonesia and recruit many hotel in Jombang, manufacturing mineral water followers within quite a short period of time (Maqoo), building a partnership with cigarette (A'dam, 2008). It would not be a surprise to see company (HM. Sampoerna), opening a business that this has motivated many efforts to research for handicraft made of pandan and bamboo, this order, whether it be for its teachings, its opening a restaurant (Yusro), manufacturing tea contributions to education, its dealings with the bags, distributing honey priducts, etc. The order society and public at large, and its role in politics also has a strong and established unit for social and the economy. At a glance, this heightened and humanitarian purpose (DHIBRA), one of interest is understandable, considering that the whose product in the development of social order has unique characteristics, especially in savings account Tajrin Faf'a. In distinction from terms of its teachings and its views on earthly other understanding of the tasawuf and orders in life, which is much different from the other general which tend to embrace a kind of religious orders. fatalism, this order can concoct a version of the The unique features of the order of tasawuf teachings with strong emphasis on Shidiqiyah can be observed from the economic entrepreneurship in a unified teachings and rules behavior of its adherents, especially in of behavior.

______1 Misbahul Munir, Faculty of Economics, Islamic State University Maulana Malik Ibrahim, Malang. Gajayana Street 50 Malang, East Java, Indonesia, Telp/Fax. +62341558881, Mobil Number : +6281333194441, e-mail: [email protected] 1 Umar Burhan, Khusnul Ashar and Multifiah. Faculty of Economics, Brawijaya University Malang, Veteran Street Malang, East Java, Indonesia.

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. The obedience to a religious teachings The Shidiqiyah order has never taken and its impact on the spirit of capitalism has lightly the worldly matters, and they even give been found in several empirical study, among serious attention to it in order to it so that the others the study by Weber as written in The material well-being can facilitate the worship to Protestant Ethics and Spirit of Capitalism (2003), Allah. Zuhud (asceticism) is not necessarily an where it is proposed that the Protestant effort to run away from worldly matters, but the teachings in Calvinist sects play a strong role in worldly matters are never taken to heart. the economic activities of its members, since the Though dealing with worldly matters everyday, members of the sect has a culture or teaching but the heart never falters from Allah swt. The which considers hard work as a virtue for them economic behavior of the members of the to achieve spiritual well-being. The Protestant Shidiqiyah order not only goes against Weberian teaching embraced by the sects, especially those thesis but also against the assumption of certain related to economic education, has given rise to people who have negative opinion against the the spirit of capitalism and this can overcome teachings of tasawuf, and the institution of tarekat traditionalism. Weber states that the power of which are so far always position as the opposite religious values has active part in a qualitative of entrepreneurship or the ideas which believes manner in the formation of the spirit of that the tasawuf has no similar points with the capitalism. It is stated that religious awareness is spirit of entrepreneurship. not only a consequence of the social and This research is based on the idea that economic realities but religion is also an this economic behavior is a unique feature autonomous factor and at the same time holds a which is inspired by a local wisdom in the potential to lend its mark on the behavior teachings of Shidiqiyah order. It is said to be system (Sudrajad, 1994). unique in the sense that the order is a sufi However, the teachings and behavior of religious organization with its emphasis on the Shidiqiyah order can also be taken to refute asceticism (zuhud), where this usually means an Max Weber's thesis above, since it is believed effort to limit oneself only to things related to that unlike the Protestants (especially Puritan the cleansing of human soul (takhally), to the Calvinist sects), Islam has no theological affinity adornment of the self with dzikir (repeated in the development of capitalism (Weber, 2003). recitation of certain passage or phrase) and good As stated by Abdullah (1979), despite the fact deeds (tahally) where this is believed to be a that Islam is believed to be a religion which has means to gain intimate knowledge of the One a universal monotheistic theology, Islam is also (Dzat) who created the universe (tajally). This seen as the religion of the warring class, which research aims to discover the rationality behind has a tendency to preserve feudal interest, has the values of local wisdom which is embedded stronger orientation towards social prestige, in the teachings of the Shidiqiyah order, which sultan-oriented, and patrimonial-bureaucratic. As has stimulated the growth of a strong stated by Djakfar (2007), Weber also believes entrepreneurship in the organization of the that Islam has a tendency to reject reason and order, to explain their understanding on the knowledge, especially technological knowledge. meaning of wealth, and to explain their business According to Effendi (2001), the behavior in acquiring wealth. primary reason why Weber managed to reach that conclusion is the economic practice among Economic Rationality : The Perspective of the Muslims which did not support the growth Classical Economics and Islamic process of the capitalism as a whole, especially Economics the sufi practices of Islam with the zuhud As stated by Hamouri (1991), rationality teachings which is anti worldliness attitude in is the main key in modern economic thinking. their zuhud teaching or the exhortation to forget Rationality serves as the principle or axiom that about the world and this may have served as the human beings are rational creatures. An basis for the above conclusions. Further, Weber economic man (homo economicus) would choose also believes that the Muslims (different from among the many alternatives of choice with the the Protestants) do not have simplicity, frugality, aim to maximize utility. Before choosing, she/he perseverance or calculated way of thinking in would prepare a list of ranked priority of the their economic activity. In short, the Muslims various alternatives. The requirement of rational are considered to be lacking in Beruf or calling choice is that all individuals know completely and also lacking in asceticism which is strongly the information concerning the alternatives and affiliated with the growth of capitalism. have the ability to determine his or her rank of

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priority in accordance with his or her which can evaluate, choose and act appropriately preferences. When the two requirements are in various decision making situation in order to met, then rational choice is possible. obtain the best results (Lowenberg, 1990 in The concept of rationality was Mnawar, 2007). Basically, the individual is proposed due to the demand of the consumers modeled as autonomous actor which has perfect to maximize utility and the demand of the ability in making choices. The decision made by producer to maximize profit, all contained by such actor is always consistent, principled, the same set of constraints. The constraint in deliberate and solely focused on the neoclassical economics is the scarcity of sources optimization of goal achievement. Therefore, and income which can be acquired by human the decision made by unclear criteria such as beings from nature, though human wish is emotional impulse, sensuality, habit, traditional basically boundless. While in Islamic economics, is not neoclassical and hence can not be said to as stated by Mannan (1993), the constraint is be rational (Gellner, 2000). understood as the limitation of human ability, In Islamic economics, rational action is both in physical terms and in knowledge, in the one where one achieve economic and achieving or obtaining the unlimited resources spiritual satisfaction and profit in the world and which has been made available by Allah SWT. in afterlife, while in the neoclassical economics, Based on the statement above, then human the goal is limited only to the economic beings or individuals should make a rational satisfaction and profit. Therefore, the time choice so that the choice can result in maximum dimension in Islamic economics is wider and satisfaction or profit for the human beings. this has received special attention in the level of According to neoclassical economics, economic agents in Islam. In Islamic economics, with its idea of rational economic man, the actions the economy is run not only based on the logic of rational individual would be based on self- of reason but also based on the values of moral interest, which is the only aim of all human and ethics and still abide by the guides from activities. Neoclassical economics ignores moral Allah SWT. (Kholish, 2009). and ethics in spending and neglects the idea of Human beings need to act rationally limited time available on earth by ignoring the since human beings have certain advantage over dimension of afterlife. Adam Smith, as stated by other creatures of Allah. Human beings are Samuelson & Nordhaus (2001), believed that considered to be rational when the individual individual actions with its self interest would directs his or her behavior to achieve the bring good to the society as a whole due to the maximum stage in accordance with Islamic invisible hand working through competition in norms (Shiddiqi, 1992). Rational individual is an market mechanism. individual who tries to maximize al-falah rather In order to determine whether an than maximizing his or her own interest. individual is rational or not, there are two According to Shiddiqi (1992), rational action in parameters for such purpose in neoclassical Islamic economics does not always necessarily economics. The first is the goal, that is the goal imply maximization, since human beings have to is said to be rational when it is a goal of control and direct their want so as to bring maximization (Arrow, 1986), both maximization about the maslahah (benefit) instead of madarat of satisfaction (for a consumer) or maximization (disutility) in the life on earth and in the afterlife. of profit (for a producer). Maximization here is While need emerges from an objective thinking understood (both in the perspective of the or identification on the various means required consumer and producer) as the maximization of to gain benefit for life. Need is directed by profit and satisfaction which is of material normative and positive rationality, that is the nature, since so far neoclassical economics rationality of Islamic teachings, so that it is always uses measurable parameters which can be limited and measurable in its quantity and standardized (applicable in general) in each unit quality. Therefore, a Muslim consumes a good of analysis. or services in the effort to fulfill her or his needs The second parameter is the process to so as to obtain maximum benefit for her or his achieve maximization of satisfaction or profit. life. This is the principle and goal of the Islamic This means that the action to achieve the goal is law (syariat Islam) itself, that is maslahah al-'ibad said to be rational when it fulfills certain criteria, (true benefit for mankind) and also as the means that is: completeness, transitivity and continuity to obtain the maximum al-falah. (Graafland, 2007). In other words, individuals in Therefore, the rationality of a consumer neoclassical economics is modeled as an actor in consuming goods and services in the

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economic perspective of Islam is to obtain position, where most interpretivists would give maximum maslahah, and same must also applies much attention to how the social world is to the producers. In other words, the rationality interpreted, understood, experienced or of productive activity is to provide goods and produced (Mason in Manzilati, 2009). services which can provide maximum maslahah The background for this research is the for the consumer (Misanam et. al., 2008). More entrepreneurship spirit in the religious order of specifically, the goal of production activity is to Shidiqiyah in Jombang. The choice of Shidiqiyah improve the maslahah or benefit which can be order in the regency of Jombang, Indonesia as manifested in many forms, among others: (1) object of research is based on the phenomenon the fulfillment of human needs in moderate and information of the group, which is said to level, (2) identifying the needs of the society and have unique characteristics which is relevant to how to fulfill them, (3) preparing the provision the problems which have been planned for this of goods and services in the future, and (4) the research, that is: (1) strong commitment to fulfillment of the means for social activity and develop economic sectors; (2) strong worship to Allah. The last goal, especially, is the commitment to the teachings of the Shidiqiyah most original form of the goal of production in order. The strong commitment to develop Islam. In other words, the goal of production is economic sector is at least evident from the to obtain the divine blessing (berkah), which may number of business units that they have be physically unable to be felt by the developed so far. The subject of this research entrepreneur him/herself. Besides fulfilling the includes the actors or persons who are directly needs of the human beings themselves, involved in the reality under observation, production must also be oriented towards social especially in terms of their perception, activity and worship towards Allah SWT. This motivation and benefit obtained from the goal would bring a wide-ranging ramification business units that they have built. since the production does not always produce The sample or informants in a material and may even require sacrifice of qualitative research (known as internal sampling) is material (Qardlawy, 2001). Production activity not geared towards making statistical can still continue without providing material generalization or simply a representation of the benefit since it would bring larger benefit in the population, but more towards theoretical form of reward for the afterlife (pahala) since it generalization. The sources of data used here has been written clearly and unambiguously in does not represent the population but tend to the Al-Quran (QS. Al-Shaf: 10-12). represent the information, since its completeness and depth is largely independent METHOD of the amount of data sources (Bogdan & This research applies the Taylor, 1993). phenomenologico-qualitative approach using In this research, since the determination inductive logic, where syllogism is built on of sample or informants is also related to the specifics or data in the field and leads to the depth of the information, then the informants general conclusions. Such an approach is usually were selected by purposive sampling. The not used as a tool for gathering data in the sense objective of the analysis in this research tends to of frequency but for analyzing a social process the analysis on the meaning behind the which is being underway and the meaning of the information, data and process of a social facts which appear in the surface. In this way, phenomenon. Based on this objective, then the analysis in this approach can be taken to data analysis method in this research is the understand a process and facts and not only to group performance analysis and individual explain away the facts. experience and institution behavior. Based on The paradigm of scientific knowledge the objectives and kind of analytical method, and social science and the problems which are this research would apply the following proposed in this research certainly brings certain analytical methods: (1) analysis of life history, (2) consequences to the choice for research case study and (3) focus group discussion approach. This research applies the qualitative (FGD). approach since the approach can be used to see reality which in this case is not merely a result RESULT AND DISCUSSION but a process in progress and also other realities The Internalization of the Meaning of around the process. Qualitative approach is Lailaha Illa Allah in the Business Action of basically very careful with its philosophical Shidiqiyah Order

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The economic activities or the business analogous with the realization of the soul who is units of the Shidiqiyah order, as mentioned regretful of its nafsu amarah and therefore has the above, is an interesting phenomenon for tendency for good deeds. While nafsu research and study, and many people are muthmainnah is the most noble of the urges, since wondering why this religious order is involved in it reflects the meaning of Laailaha illa Allah and so many business, while Shidiqiyah as a tarekat or the divine values within it, that is an urge (nafsu) religious order should give more attention to which is inspired by a calm and holy soul. spiritual matters and cleansing the soul, but the In the economic context, the levels of fact is that the existence of the many business nafsu can be understood as the self interest which units has resulted in an image of rapacious has reached the awareness of tauhid and wealth hunter. Actually, the very nature of achieved self perfection. In this stage, das sein Shidiqiyah order as tarekat with Laailaha Illa and das sollen are no longer separate and the Allah (There is no god but Allah) as its core economic actions are no longer intended for the teaching is the motivating force behind satisfaction of worldly wants but directed Shidiqiyah's many business units. The teaching of towards the creation of falah, that is happiness Laailaha Illa Allah taught by Kyai Muchtar on earth and in the afterlife. Therefore, all (where kyai is a honorific) as the mursyid or satisfaction of self-interest, for example grandmaster of the order does not stop at maximization of profit and utility, is no longer merely intoning or chanting (dzikir and wirid) dominated by economic and pragmatic logic but where one must recite the words in a certain it would also be accompanied by methods of manner for certain number of times, but the achievement, goals and usage which is intoning or chanting should be able to motivate consistent with the syariah (Hoetoro, 2007). a person to struggle to realize the meaning of According to Triyuwono (2006), when the Laailaha illa Allah, or termed as the jihad fi presence of God has crystallized within a person sabilillah (holy struggle/war), while the struggle fi then the person has truly reached the peak of sabilillah would certainly require a lot of funding. awareness, the “Manunggaling Kawula Gusti”, The importance of the spirit of Laailaha which would change the person' behavior with illa Allah in business is made possible by its divine framework as a reflection of the apex of ability to stimulate heightened motivation and its the awareness of Godliness. The divine distinctive output from the perspective of the framework would incite the presence of God in members of Shidiqiyah order, since the wealth the hearts of each individuals, will remain and obtained by the spirit of Laailaha illa Allah is not then deliver the soul of human beings to be used for personal satisfaction but spent for the united with the divine (Manunggaling Kawulo development of Jamiatul Mudzakkirin, that is for Gusti). helping the poor and orphan. The business The teaching of Laailaha illah Allah which is based on the spirit of Laailaha illa Allah which is practiced in the Shidiqiyah order seems actually has a deep meaning and internal values, to be closer to the teachings of neosufism or that is the idea that all human life would end in modern sufism, which is a development of the the principle of tauhid or Laailaha illa Allah classical tasawuf as mentioned above, which is (There is no god but Allah), and therefore there generally “keep the distance” with social world is no purpose in life but for Allah and Allah is and economic world. The teachings of the only goal, and that is the essence of tauhid. neosufism endeavor to internalize the values of The meaning of tauhid indicates that all of the tasawuf in the modern life without rejecting the life goals for human beings is to worship Allah material world in human life, and it even has the (Koran, 51:56) and to none other. tendency to lead to the goals which are A human being is truly subject and consistent with the principles of Islamic subservient only to God Almighty and to none teaching and at the same time integrate the other, and not even to her or his own urges spiritual values in various aspects of human life, (egoism), since it would taint one's spirit of both social, economic and cultural. The term tauhid. Therefore, in Al-Quran it has been “neosufism” itself was first introduced by Fazlur written about the kinds of human urges, that is Rahman in 1979 C.E. in his book Islam and nafsu amarah (Koran, 12:53), nafsu lawwamah Modernity and this book has since inspired (Koran, 75:2) and nafsu muthmainnah (Koran, 89: various scientific studies including those in 27-28). The nafsu amarah is one which tends to economics, for instance the work of Triyuwino the acquisition of pleasure and satisfaction of (2006) “Akuntansi Syariah: Menuju Puncak utility in material terms. The nafsu lawwamah is Kesadaran Ketuhanan Manunggaling Kawulo

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Gusti”. In the Shidiqiyah order, the tauhid The Shidiqiyah order also understands sentence, “Lailaiha illah” is understood not only that work and accumulation of wealth is one of as a incantation (dzikir or wirid) which is to be the obligations in religion, both in direct and practiced routinely everyday or after each prayer, indirect sense. In direct sense, as stated by Kyai but more than than they are sources of Muchtar in various sermons (ceramah pengajian) or inspiration for all behavior in daily life, including as exemplified by the man himself in various economic activity and business. The sentence business and products which have been “lailaha illah” is a spiritual expression which developed by the Shidiqiyah order, work which is must be united with the rhythm of daily life and carried out with true intention due to Laailaha that is the core of the teaching of illa Allah is a form of worship. While in indirect “Manunggaling Keimanan dan Kemanusiaan” sense, it means that in order to implement the which is the basic teaching of Shidiqiyah order. essence of Laailaha illa Allah, one would require The teaching of “Manunggaling material means and wealth in sufficient amount. Keimanan dan Kemanusiaan” itself is a The grandmaster (kyai) relates this reflection of the teachings of Al-Quran, the understanding with a principle in fiqih which surah of Al-Ma'un, verse 1-3 in which it is states “mala yatimmu al-wajibu illa bihi fahuwa written that persons who are untrue in their waajibun”, meaning that “an obligation would religion do not have empathy, social awareness not be perfect unless the obligation comes from and are not keen on helping the poor and it being present”. In order to operationalize the orphans, though the person might have a great principle, the grandmaster took as an example “understanding” or “knowledge” of religion and the ritual of wudlu. is part of the category of “practitioner of On the other hand, there are principles religion” who practices his or her religion in the Al-Quran and in the Sunnah which are so zealously (hablun minallah). The spiritual piety is far being applied by the Shidiqiyah order to not directly comparable to social piety, and this explain the importance of wealth in their life. In is a simple indicator of a person who is untrue Al-Quran, for instance, there are many verses in religion, and therefore it would not be which contains the injunction to carry out the surprising that in several moments and activities jihad fi sabilillah with our wealth and and our in the Shidiqiyah order, this verse has become a soul. What is interesting here is that the sentence motto which is always printed in invitation cards is ordered in such a manner than the word amwal and read in the opening of each sermon, so that (wealth) is placed before the word anfus (soul). the members of the Shidiqiyah order do not The commandment to carry out jihad with our forget the teachings contained within it. wealth is always put before the commandment According to Kyai Muchtar, the leader to carry out jihad with our soul (except for Surat of the Shidiqiyah order, the essence of the al-Taubah: 111) and this is certainly not devoid teaching of Manunggaling Keimanan dan of meaning. Kemanusiaan is actually inseparable from all Several experts in Islam believe that the practice and ritual in worship which is carried majority of persons would rather fight the jihad out by an individual, for instance the prayer with their wealth rather than with their soul (that (shalat), the fast (puasa) and others. When Al- is their personal effort and thinking) and some Quran says that prayer can prevent evil and believe that jihad with wealth has more emphasis corruption: “Verily the prayers can prevent evil than jihad with soul. What is clear is that the and corruption” (Koran, 29:45), the prayer is many calls for jihad with wealth in the Al-Quran actually a media for communication and spiritual has shown that there is an emphasis on the idea link between a servant and his/her God. that “accumulating wealth or doing business” is However, as a means to create peace and a very good as long as it is carried out with the harmony among human beings, the prayers are intention of jihad fi sabilillah (Al-Kautsar, 2012). also ended with a greeting of peace (salam), then The internalization of the meaning of Laailaha the greeting of peace is practiced by turning illa Allah in the teaching of Manunggaling one's head to the right and left, which bears the Keimanan dan Kemanusiaan is also capable of meaning that a person in a prayer must pray for creating the opportunity for the emergence of a the blessing and peace for the right side (the culture of charity, giving and continuous good people) and also to the left side (the bad communication (shilaturahim) or 3S among the people), which are spread all over the earth and members of the Shidiqiyah order. This is interact with them in searching for blessing. consisten with the teachings of the eight Vows of Willingness (Delapan Kesanggupan) of the

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members of the Shidiqiyah order, that is: willing Capitalism (Weber, 2003), that unlike the to devote oneself (bakti) to Allah SWT; willing Protestants (especially the Puritan Calvinist to devote oneself to Rasulullah SAW; willing to sects), Islam does not have theological affinity in devote oneself to both parents; to devote the development of business and oneself to fellow human beings; to the State; entrepreneurship, and moreover, the assumption willing to love the Motherland (Tanah Air); is based more on the sufi practices of Islam willing to practice the teachings of Shidiqiyah; which tends to emphasize the disdain of the and willing to appreciate the importance of time. world, forgetting the world, which then From the discovery of meaning in the field, contributed to the emergence of a fatalist which is acquired by observation, in-depth economic behavior. The inclusion of the moral observation and other field data, it can be values of Laailaha illa Allah in the business concluded that the teachings above has directly activities of Shidiqiyah order has important and indirectly stimulated a spirit of business and implication for the meaning of wealth in the life entrepreneurship in the religious order of of the members of this religious order but also Shidiqiyah. implies that wealth has not only economic The internalization of the meaning of function but also has spiritual, social, culture and Laailaha illa Allah in the business activities of the evangelical (dakwah) value. Shidiqiyah order has lent support to the embedded perspective in sociology of The Meaning of Wealth in Shidiqiyah Order economics, which states that the rationality of The internalization of the meaning of economic actions cannot be separated from Laailaha illa Allah in Shidiqiyah order then brings moral values (Nugroho, 2001). This idea is about a shift in the position of the individual, certainly in direct contradiction with the from a homo economicus into a homo Islamicus, who neoclassical idea which tends to separate the two sees wealth in double meaning, where wealth (Etzioni, 1992), since neoclassical paradigm is not only has an economic function but also not only ignoring the moral dimension but also spiritual, social, culture and evangelical actively resistant to the inclusion of moral functions. The spiritual meaning of wealth is dimension. In neoclassical economics, it is reflected among others in the belief of the emphasized that individual can have different existence of blessing (berkah) in it. As with most rank of preferences for a choice but none is members of any order, the members of considered to be better than the other. Shidiqiyah believe and trust that wealth can bring Neoclassical economics endeavors to discover blessing. Theoretically, blessing (berkah) contains the mechanisms (especially price) which can the idea of a goodness which continues to result in the most efficient allocation of accumulate and the benefit is continuous. For resources, that is the allocation which can fulfill the members of the Shidiqiyah, it would not be individual wants the most. However, difficult for them to accept the concept of neoclassical economics tends to see the will as blessing in wealth since the world of tarekat is something which is centered on self interest of actually amenable to the spiritual dimensions the individual which is independent of the social which are often irrational but is still believed to values or altruism, let alone spiritual values be true since the members sometimes (Chapra, 2001). However, the values are experience them directly. For instance, what important for individuals since they are the they feel when they acquire wealth and blessing reason for the individual to exist and maintain would always be related to the peace, harmony, his/herself in fulfilling their own needs and to happiness, harmonious household, good and maintain the continuity of their business. pious kids, and the benefits which they receive However, even Adam Smith himself did continuously and those who flow to the wide not wish to eradicate morality and religion in public. economic activities, and he even supported the While the meaning of economy and social institution of market, religious community wealth for the members of the Shidiqiyah order and the enactment of laws to strengthen self can be observed from the efforts of the control and charitable disposition of the mind, members of the order to improve their income. since Smith is after all not just an economist but Led in the front by Kyai Muchtar himself, the also a professor of moral philosophy (Skousen, members of the Shidiqiyah order are enjoined to 2006). The phenomenon of entrepreneurship in participate in developing all business potential the Shidiqiyah order is a critique against the thesis which can give rise to economic profit for them. in Weber's Protestant Ethic and the Spirit of The signs of success for the Shidiqiyah order in

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endeavoring to strive in the economic arena is the wall also reflects the symbols of all religion abundant. The partnership with PT. Maan in Indonesia, as if it wished to preserve the Ghodaqo Shiddiq Lestari to market mineral culture of religious harmony and tolerance water has struck a vein of success. The same is which has long taken root in Indonesia. also evident from the restaurant of Yustro and From the phenomenon above, it seems the three-star Yusro Hotel. Now the order is that the Shidiqiyah order in their hotel business is making preliminary steps to acquire a 250 ha tea not only after the material gain but also pays due plantation which is estimated to cost tens of attention to the symbols as stated above since billions. the Shidiqiyah order wishes to maintain and teach The social meaning of wealth for the the high values of Indonesian cultures which members of Shidiqiyah order cannot be separated have been formed for a long time, that is the from the values taught by Kyai Muchtar himself value of tolerance, mutual respect and mutual which is imbued by social values in his tarekat appreciation on the differences in belief and teaching. As often stated by the Mursyid or opinion and the culture of harmony and warm Grandmaster himself and also by his senior relation (among those from different groups and disciples, the core of tarekat is the Manunggaling interests) as the culture of the Eastern people Keimanan dan Kemanusiaan, where “keimanan” or which has been handed down by the ancestors faith here is related to the spiritual depth and of Indonesian people. This is important since at “kemanusiaan” or humanity is related to the task present this culture seems to be waning and of all human beings to become a khalifah (leader) withering in time with the strong undercurrent in their worldly life so that the spiritual depth of of globalization which has stimulated the a person must be directly comparable to his or emergence of individualism which only strives her social role in the society. As a tasawuf after material interest and the social problems organization, the order of Shidiqiyah does not which are caused by sentiments of tribal recognize the dichotomy of tasawuf versus social connection, religion, group affiliation and life, and the realities even shows that it is the interest. other way around: the teachings of tasawuf On the other hand, the meaning of motivates the members of the order to carry out religious dissemination or evangelism (dakwah) social, economic and cultural behavior. They for the members of Shidiqiyah order is evident believe that spiritual depth without social from their effort to build a positive image for concern is empty, meaningless and lacking in the order, to stimulate curiosity for the Shidiqiyah substance, while social concern without spiritual order, and to attract the wide public to be part depth is useless before Allah SWT, since it does of the Shidiqiyah order, since tarekat is one of the not have the value as worship, and even the solution for gaining peace, happiness and “other effort to separate the spiritual aspect of the solutions” in dealing with the daily problem. Of religion from social concern is considered to be course, this must be accompanied by a new way a form of lie or untruth in the religion of Islam of seeing or paradigm in understanding the itself. problems in life. Therefore, the meaning of Though wealth has a very important religious dissemination from wealth in this case part to play in creating economic independence is inseparable from the perspective of the and improve income, for the members of the members of Shidiqiyah order in making sense of Shidiqiyah order, wealth is understood not only wealth in relation to the effort of the order to as a means to fulfill their economic needs aline. generally strengthen their existence in the midst The establishment of Yusro Hotel in Jombang of society, especially since in its initial can serve as an illustration how wealth can give emergence, this order was considered to be culture meaning in the life of a multicultural ghairu mu'tabarah (not recognized by the nation like Indonesia. Jombang as a town which mainstream groups and other tarekat), to be is renowned for its santri (religious student) now superstitious and other negative epithets. has a new icon which is not less interesting that The phenomenon of the dual meaning its present logo Ringin Conthong, that is Hotel of wealth for the members of the Shidiqiyah Yusro. This hotel, which was established by the order lends increasing support to the idea that Shidiqiyah order, is the only three-star hotel in wealth is not simply part of the economic Jombang. The physical appearance of the hotel instrument in the life of the society, and this has reflects the local cultures of Indonesia and in been discussed by Simmel (1991) and Weber each of the room there are five holy books of (2003), who see wealth and money as social each religion in Indonesia and the paintings on phenomenon. This is further proven by

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Nugroho (2001) in a study on the essence of the For the members of the Shidiqiyah meaning of money for the people in Bantul, order, working is an obligation since it is the who make sense of money with a special only way for a person to be independent in purpose approach (where money is seen to have economic sense so as to prevent them from special meaning other than economic one) begging and impinging upon others. Hard work instead of all purpose (generalization of money is important for that matter and also for in single sense, that is the economic sense). The enabling people to practice their unique culture three studies also criticize the utilitarian and the culture of 3S (charity, giving and approach (which includes classical and maintenance of communication) cannot be neoclassical economics) which sees money and separated from wealth and therefore the wealth in the society with only a single lens. members of the order must work and try to They see wealth and money as economic acquire wealth. Even the Grandmaster of the instrument but with multiple dimensions. Order himself, Kyai Muchtar, categorizes Money and wealth can be understood not only working and struggling to fulfill economic needs from the economic side but also from the social, as part of the jihad in Islam to become an culture and political dimensions. Money and independent human being (insan), who can share wealth as the product of culture have symbolic his or her riches and do not impinge upon meaning in the form of qualitative values. This is others. Concerning the jihad to build the possible since the proponents of utilitarianism economy, Kyai Muchtar stated in no uncertain limit the meaning of money within the terms that jihad in this category requires a trinity, economic realm. In this way, money can that is: strong will, feeling of ability and power probably “corrupt” values in the numbers, while of ability. values and sentiment can in turn corrupt money The concept of hard work as part of by embedding it inside the moral, social and worship and part of jihad for all members of the religious meaning. Shidiqiyah order is similar to the concept of calling in the Calvinist Protestant sects The Behavior of The Members of Shidiqiyah mentioned in Weber (2003). Weber puts down Order In Acquiring Wealth the basis of his argument on the obligation of an As it has been stated before, the individual which is placed by God on him or rationality of the meaning of wealth for the her. In other words, the concept of calling is a members of the Shidiqiyah order is related not belief that all power on the face of the earth is only with the sense of wealth itself in the social, given by God and acquiring that power is a holy economic, spiritual, culture, evangelical and task. The understanding on the concept of wisdowm (hikmah) context, but it is also related calling makes all profane activities in daily life to the rationality of their way in acquiring the acquire religious overtone. According to Amilda wealth. In their daily practice, the members of (2010), the most important part of this concept Shidiqiyah order believe that in their effort to is that work is a holy task, and the obligation to achieve success, including the success in work stimulates the emergence of a work ethic acquiring profit or wealth, their success is which supports the development of a capitalist determined by not only effort and hard work mentality who is prudent, wise, diligent and but also by the principles of “Atas Berkat earnest in conducting business. Rahmat Allah SWT” (by the blessing of Allah However, in the Shidiqiyah order, the SWT). This means that all wealth and riches concept of hard work as worship (ibadah) and which human beings have acquired actually do holy endeavor (jihad) does not automatically not come from their own effort but also neglect other forces which are “unseen”, such as determined by “external forces” whether they the power of prayer (especially the prayers from realize it or not, and therefore it is not surprising our Mursyid and our parents), “money of that the members of this order take many kinds blessing” (uang barokah) or the power of miracle of endeavor which they believe would assist effected through charity. This is perhaps the them in obtaining wealth or riches as they wish. part which distinguish this order from the Among the means which they believe are useful teachings of Calvinist Protestants since for accumulating wealth are: hard work, prayer, according to Weber, the spirit of capitalism in its continuous communication with other Calvinist variety has driven away the belief in (shilahturahim), practicing the “amalan” from the magical power in the world and has led to the Grandmaster (Mursyid, leader of the tarekat) and dismantling of all magical means of obtaining lots of charity. salvation since such means are considered to be

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superstition and sin. While in the order of Shidiqiyah order can also be understood as a Shidiqiyah, magical means of salvation is means to improve piety and the spiritual degree considered as support for as long as the on individuals, where this would have direct and individual is maintaining his or her endeavor indirect impact on the improvement of their (ikhtiyar) and hard work as it is commanded in business. This is consistent with the statement Islam and has the strong base of belief so as to of Monzer Kahf (1995) in the book The Islamic prevent him or her from idolatry (syirik), that is Economy: Analysis of the Functioning of the Islamic the behavior in which one admits of other Economic System, where it is stated that the degree powers beside Allah (Al-Kautsar, 2012a). of one's piety has positive correlation with its Prayer is one of the teachings and level of production. When a person has practice (amalan) which cannot be separated heightened level of piety, then his/her from daily life of this order. They believe that productivity would also increase, and the other when one wants to achieve success, including way around, too, since when the piety is success in acquiring blessing or wealth, then degraded, then it would have negative impact on mere effort and hard work are not sufficient. the productivity and the level of productivity They always see that what they are doing is would be reduced. subject to the principle of “Atas Berkat Rahmat In the context of business, the need for Allah Yang Maha Kuasa” (“by the Blessing and information, number of connection and relation Approval of Allah Almighty”), meaning that all and the need to build trust with business partner of their success is essentially a blessing from is absolutely necessary. A business would find it Allah SWT, and therefore human beings must hard to grow when it does not have complete, humbly pray to Him so as to achieve what they quick and accurate information, when it lacks want through prayer. However, this belief does relation or when it is not trusted by the not mean that human beings can stop working, consumers and other business partners. It is since for them, work is a kind of “syariat” (law) here that the teaching of maintaining which must be applied in order to obtain the communication (silaturahim) become an “hakekat” (essence) of the blessing of Allah important part of the business and of other SWT which has been determined by His will. effort to seek “blessing”. Since trust and loyalty In the perspective of economics, the would not grow overnight and trust should be belief that prayer is one of the supporting power built upon connectedness, the sense of knowing for business is categorized as part of the spiritual one another and warm relationship and also capital. The concept of spiritual capital itself was mutual respect. first proposed by Zohar & Marshall (2005), as a The concept of “silahturahim” as a reaction to the weakness in the narrow means to build network and maintain the interpretation of social capital, that is: though a harmony for the business actors among the high level of social capital in a company can members of Shidiqiyah order can be categorized benefit the employees, consumers and as social capital. Bourdieu (in Winter, 2000) has shareholders, however the construct actually given emphasis on the social capital for social ignores a dimension which is wider than the networks which give access to group resources policy to maintain stability in wider society. so that the individuals in the network can enjoy However, for Samdin (2007), the concept of economic benefit. For Bourdieu,the economic spiritual capital from Zohar & Marshall is benefit would only be open for the individuals considered to be imperfect since it does not when the individual is involved continuously include belief and religious spirit or religious with the group. It is within this context that capital within it. According to him, Zohar & social capital can be understood as something Marshall only introduce the value of spiritual instrumental. The harmonious relation between capital for a secular economics which is based the employees and consumers is essentially the on the social dimension or humanitarian values. core of the element of trust in the social capital The point is that the economic concept of itself. As stated by Putnam (1995), social capital spiritual capital is not directly related to certain is the expression of the social organization such religion or theological system of belief since they as network, norms and social trust which can do not believe that companies can be made facilitate the mutually beneficial coordination more spiritual by building a temple or asking the and cooperation. employees to pray. The belief that charity (sedekah) can Morever, the prayer, dzikir and amalan bring blessing and wealth for the doer is a belief or “readings” (bacaan) for the members of the which is held strongly by the members of the

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Shidiqiyah order and this is not merely limited to doctrine of Santri, the doctrine of Manunggaling their belief only since this belief is also practiced Keimanan dan Kemanusiaan and the culture of 3S and the result has been felt personally by the (silahturahim, sedekah and santunan). The doctrin members of the order. They have even made of Santri has the meaning of the human being of charity and giving as unique characteristics and three (insan tiga or manusia tiga) as the culture of their daily life. Though blessing (rizki) manifestation of the perfection of human may have a far-reaching dimensions, which nature, which consists of spirit, reason and jism. includes material (wealth) and non-material The perfection of human nature has aspects (such as health, harmony, peace of life), implications for the balance in human they also believe and feel that the wealth that interactions, both with God (Allah), with fellow they have given for charity would in the end not human being and with the universe. Interaction be reduced but on the contrary it would increase with God is carried out by worship, interaction due to various unexpected ways. They also with fellow human being is carried out by believe that those who are reluctant to give or mu'amalah, in this case to fulfill the economic give only sparingly would be reduced in their needs and the culture of 3S would directly blessing, and their business would be in trouble motivate them to acquire sufficient wealth and and the life would not be at ease. indirectly would motivate them to work hard in The meaning of charity as a means to business and develop their entrepreneurship as avert bala' (calamity) is also quite familiar for what they have been doing so far. Muslims, and even Sutikno (2011) in The teachings, doctrine and culture of “Memaknai Perilaku Muslim dalam Bersedekah: the Shidiqiyah order as described above bring an Studi Fenomenologi Pengalaman Muzakki implication that the understanding of the LAGSIZ Sabilit Taqwa Bululawang” has come members of Shidiqiyah order on the meaning of to the conclusion that charity can be used as an wealth is wide-ranging and plays important role alternatives for health and accident insurance, in their life. For them, wealth has double since routine giving is essentially a way of meaning, where wealth is understood not only in investing part of wealth to protect oneself, one's economic terms alone but also in the framework family, and one's own wealth and business since of other meanings, such as social, spiritual, giving would guarantee protection from Allah cultural, evangelical (dakwah) and wisdom SWT as it has been promised and would give “a (hikmah) sense. The dual meaning of wealth also guarantee of safety and comfort” from the has an implication for the rationality of the people around him/her. When a business has meaning of wealth for the members of Shidiqiyah been guaranteed with such an “insurance plus”, order, where wealth is aimed not only for then directly and indirectly, it is believed that the material benefit and satisfaction alone. On the business would be better manager, and would be other hand, in developing business and guaranteed of its survival and in the end would entrepreneurship, the spiritual capital and social result in a more maximum profit and would be capital play important role for the business able to increase the blessing of the proprietor, behavior of the members of Shidiqiyah order, both in material and non-material sense. since for them the success of a business is determined not only by economic capital alone, CONCLUSION though economic capital has important The strong entrepreneur spirit in the functions which cannot be ignored. order of Shidiqiyah is born from the internalization of the teaching of Laailaha illa Allah and the application of teachng REFERENCES Manunggaling Keimanan dan Kemanusiaan and Al-Quran Al-Karim various other teachings and doctrines in the A’dam, Syahrul, 2008. “Tarekat Shiddiqiyah di order of Shidiqiyah, among others the Eight Indonesia: Studi Tentang Ajaran Dan Vows of Willingness of the members of Penyebarannya”, Disertasi Program Studi Shidiqiyah order, especially the willingness to Pengkajian Islam Sekolah Pascasarjana devote oneself to Allah SWT and His UIN Syarif Hidayatullah, Jakarta. Messenger; the willingness to devote oneself to Abdullah, Taufik. 1979. “Agama, Etos Kerja dan the state, Indonesian Republic; and the Perkembangan Ekonomi”. LP3ES, Jakarta. willingness to practice the teachings of Shidiqiyah Al-Kautsar, 2012a. Edisi 66, Majalah bulanan order. The strong spirit of entrepreneurship in diterbitkan oleh Badan Pengembangan the Shidiqiyah order is also inspired by the

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Unit Usaha Dhilal Berkat Rahmat Allah, Mannan, M.A, 1993. Ekonomi Islam: Teori dan Tarekat Shidiqiyah, Jombang. Praktek (terj). Dana Bhakti Wakaf, Amilda, 2010. Meneropong Etika Protestan dan Spirit Yogyakarta. Kapitalisme Mark Weber dari Sudut Pandang Manzilati, Asfi. 2009. Tata Kelola Kelembagaan Antropologi Agama. Jurnal Ilmu Agama (JIA) (Institutional Arrangement) Kontrak Usaha Tahun XI, Nomor 1 (Edisi Juni) Tani Dalam Rangka Persoalan Keagenan Arrow, Kenneth J. 1986. Rationality of Self and Others in (Principal Agent Problem) dan Implikasinya an Economic System. The Journal of Bussiness, vol 59. No. 4. Part 2: The Behavioral Terhadap Keberlanjutan Usaha Tani. Foundation of Economic Theory. The Program Doktor Ilmu Ekonomi University of Chicago Press, USA. Pascasarjana Fakultas Ekonomi Bogdan, Robert & Steven J. Taylor, 1993. Universitas Brawijaya Malang. Disertasi Kualitatif: Dasar-Dasar Penelitian. (tidak dipublikasikan) Terjemahan oleh A. Khozin Afandi, Misanam, Munrokhim et. Al. 2008. “Ekonomi Islam”. Cetakan Pertama. Usaha Nasional. PT. Raja Grafindo Persada. Jakarta. Surabaya Munawar, 2007, “Kritik Sosiologis Terhadap Chapra, Umar. M. 2001. The Future of Economic: An Kedudukan Individu Dalam Bangunan Teori Islamic Perspective. Terj Amdiar Amir et.al. Ekonomi Neoklasik”, Pidato Pengukuhan Penerbit SEBI Jakarta. Guru Besar Disampaikan dalam Rapat Djakfar, Muhammad. 2007. “Agama, Etos Kerja dan Terbuka Senat Universitas Brawijaya. Perilaku Bisnis: Studi Kasus Makna Etika Bisnis Malang, 10 Desember 2007. Pedagang Buah Etnis Madura di Kota Malang”. Nugroho, Heru. 2001. Uang, Rentenir dan Hutang Disertasi IAIN Sunan Ampel, Surabaya. Piutang di Jawa. Penerbit Pustaka Pelajar. Effendy, Bahtiar, 2001. “Masyarakat Agama dan Yogyakarta. Pluralisme Keagamaan”. Galang Press, Putnam, R. D. 1995. Bowling Alone: America’s Declining Yogyakarta. Social Capital dalam Journal of Democracy Vol 6 Etzioni, Amital. 1992. Dimensi Moral Menuju Ilmu No. 1 hal 65-78. Ekonomi Baru. PT. Remaja Rosdakarya, Qardlawy, Yusuf. 2001. Daur al-Qiyam wal Akhlaq fi Bandung. al-Iqtishad al-Islami. Maktabah Wahbah, Kairo. Gellner, Ernest. 2000. Reason, Rationality and Samdin. 2007. Pemahaman Modal Dalam Praktek Rationalism. In Adam Kuper et.al (ed.). Dagang Masyarakat Muslim Gu Lakudo di Ensiklopedi Ilmu-Ilmu Sosial. Terj. Aris Sulawesi Tenggara. Program Doktor Ilmu Munandar et al. PT. Raja Grafindo Persada, Ekonomi Pascasarjana Fakultas Ekonomi Jakarta. Universitas Brawijaya Malang. Disertasi Graafland Johan J. 2007. Economics, Ethics and The (tidak dipublikasikan). Market: Introduction and Aplications. Routledge Samuelson, Paul dan Nordhaus, William D., 2001. Taylor & Francis Group, New York. “Microeconomic”, (New York: McGraw-Hill,), Hamouri, Qasem, 1991. “Rationality, Time and edisi 17, hlm. 30-31 dan 216. Accounting for The Future in Islamic Thaought”, Shiddiqi, Muhammad Nejatullah, 1992. “Islamic dalam Faridi (ed), Essays in Islamic Economic Consumer Behaviour” Journal of Economic Analysis”, Genuine Publication & Media PVT. Literature, Classification Numbers: P3, D25. Ltd., New Delhi. Simmel, Georg. 1991. The Philosophy of Money. Edited Hoetoro, Arif. 2007. Ekonomi Islam: Pengantar by David Frisby. Roudledge, London.. Analisis Kesejarahan dan Metodologi. Badan Skousen, Mark. 2006. Sang Maestro Teori-Teori Ekonomi Penerbit Fakultas Ekonomi Universitas Modern: Sejarah Pemikiran Ekonomi. Terj. Tri Brawijaya. Malang. Wibowo Budi Santoso. Prenada Media, Kahf, Monzer, 1995, “The Islamic Economy : Analiytical Jakarta. of The Functioning of The Islamic Economic Sudrajat, Ajat. 1994. Etika Protestan dan Kapitalisme System”, terj. Machnun Hesein (Ekonomi Barat: Relevansinya dengan Islam Indonesia. Islam: Telaah Terhadap Fungsi Sistem Jakarta, Bumi Aksara. Ekonomi Islam). Pustaka Pelajar, Yogyakarta. Sutikno, 2011. ”Memaknai Perilaku Muslim dalam Kholish, Nur. 2009, “Konsep Rasionaliti dalam Bersedekah: Studi Fenomenologi Pengalaman Perspektif Ekonomi Konvensional dan Muzakki LAGZIS Sabililt Taqwa Alternatifnya Menurut Pandangan Ekonomi Bululawang”. Program Doktor Ilmu Islam”. Ekonomi Pascasarjana Fakultas Ekonomi http://nurkholis77.staff.uii.ac.id/hello- Universitas Brawijaya Malang. Disertasi world/, 15 Januari 2009. (tidak dipublikasikan). Triyuwono, Iwan. 2006. “Akuntansi Syariah: Menuju Puncak Kesadaran Ketuhanan

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Manunggaling Kawulo Gusti”. Pidato Winter, I. 2000. “Towards A Theorised Pengukuhan Guru Besar Disampaikan Understanding of Family Life and Social dalam Rapat Terbuka Senat Universitas Capital”. Australian Institute of Family Brawijaya. Malang, 2 September 2006. Studies. Weber, Max, 2003. “Etika Protestan dan Semangat Zohar, Danah & Ian Marshal, 2005. Spiritual Capital. Kapitalisme”. Terj. Yusuf Priasudiarja. Terjemahan oleh: Helmi Mustofa, Cetakan Pustaka Promethea, Jakarta. Kedua, Mizan, Bandung.

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QUANTUM MECHANICS, RELATIVITY AND THE CLASSICAL THEORIES Anamitra Palit Author/Teacher ,Freelancer-physicist,P154 Motijheel Avenue,Flat C4, Kolkata: 700074, India [email protected], 91-33-25514464

Abstract This paper seeks to review certain salient aspects of Quantum Mechanics in the light of the Classical theories.. There is also an effort to find an alliance between Quantum Mechanics and Relativity based on the Fourier Transforms. This leads to the theoretical prediction of the gravitons and the “Otherons”. The finiteness or barrier limitations of physical quantities has been discussed with the help of the Taylor series. Keywords: Quantum Mechanics, Fourier Transforms, Relativity, Taylor Series

1. Introduction Quantum mechanics is often interpreted as having aspects opposed to commonsense intuition-----a subject “injury to commonsense intuition”. This article seeks to review several facts and ideas of QM with classical interpretations. There is an effort to associate QM with Relativity and to predict theoretically the existence of the Gravitons and the “Otherons”. Finally the barrier limitations of the physical observables has been considered by analysis of the Taylor series.

2. Points to Ponder Let’s start our review with some points to ponder upon: 1.In Quantum Mechanics the value of an observable results from the interaction between the "system" with the "Measuring gadget". But when the experimenter[or the technologist concerned] is devising/constructing the gadget he has an isolated view the "system" with its stand alone properties/attributes.It seems to be so. But QM theory itself cannot ascribe the value of some observable to the system independent of measurement which is a physical process. How does one explain this?

2. On Bell's Theorem: The QM expectation Liboff (2006, p 563) is given by: ˆˆ 12aˆˆ.. b   a b ------(1) a and b are unit vectors. In the above relation we are considering the measured value of spin which is the outcome of the interaction of some property of the system itself and the measuring process which involves the gadget

The "classical" formula Liboff (2006, p.563) for evaluating the expectation with the hidden variable is as follows: P(,)()(,)(,) aˆˆ bˆˆ  d  A a  B b  ------(2) Lambda is the "hidden variable" A(a) and B(b) are the values of spin along the unit vectors a and b

Now some property of the system may depend on the value of λ and the probability distribution ρ(λ). Is the effect of measurement being fully accounted for by the hidden variable λ and the pdf ρ(λ), especially in view of the fact that the process of measurement

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modifies the wave function itself. We must remember that relation (2) depends on classical intuition. Classically we think of a property as something independent of observation. Lambda should have some relationship with the process of measurement apart from the stand alone properties of the system if we are to compare relation (1) with relation (2). Such considerations are not visible given by relation (2). Interestingly each measurement disturbs the closed nature of the system. The Hamiltonian will (generally speaking ) have different eigenvalues pertaining to different states of the system. Clearly the energy of the system is changing with each measurement due to the effect of measurement. Our quantum mechanical system is certainly not a closed one. The variable should relate not only to the system but also to its environment in regard of the measurement issue. Would it be possible remove the contradiction between QM and commonsense intuition, expressed through Bell's Inequality, by considering the above factors?

3. Non-locality (Wikipedia)Entanglement (Wikipedia) Let’s consider a pair of particles [with signals being exchanged between them ] comprising an isolated system. Any change in some property of either particle is due to the signal/s received from the other. Each particle has the knowledge of the signals emitted by it and the consequences of such signals on the other. This is a “continuous process” which may go simultaneously with increasing separation between the particles.

The entanglement of some property ,between the particles, even in the highest level of non- locality seems to be intuitively “natural” so long the system remains an isolated one, comprising the two particles and the signals exchanged between them.

Would it be correct to say that the entanglement of properties in the non-local context should not be considered as an injury to commonsense perceptions?

Work done by a magnetic force(even over an infinitesimally short displacement)=0

Net Force Liboff (2006, p.523) in a current loop in an external magnetic field is given by:  FB(.) ------(3)

How does one prove:?  dW ( . B ). dr  0 ------(4)

Since magnetic forces are no-work forces.

The conventional(Classical Analysis) of the Stern Gerlach Experiment uses the formula . Does the forgoing formula for force express a no-work force as expected for forces having pure magnetic origin? The classical interpretation of a continuous smear in the SG experiment results from the application of the formulas (3) and (4). Misapplication of Classical concepts can always lead to erroneous results.

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3. Fourier Transforms in QM

Let’s consider the Fourier transform,F(p,E) of an arbitrary well behaved function of position and time f(x,t) FEp(,)(,) fxteia() Et px dxdt  ------(5)

The limits of integration are from - to + for both the integrations in the above integral

“a” is constant wrt to “x“and “t”

Now,

F  0 x

Therefore,

f ia() Et px iapf e dxdt 0 ------(6)  x

f => f( x , t ) iaE  0 ------(7) x

[We may use different values for the constant a to obtain relation (6)(7)]

Solving (9) we have, iapx f(,)() x t Const A t e ------(8) “x” on RHS depends on time

Again F  0 t Therefore, f f( x , t ) iaE  0 ------(9) x f => f( x , t ) iaE  0 ------(10) x Solving (10) we have,

------(11)

From (8) and (11) we have,

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ia() Et px f(,) x t Const e ------(12)

Relation (12) is again a periodic function When (12) inserted into (5) we obtain the Fourier Transform:

F(,)()() pm E m C m p  p m E  E m ------(13) If relation (13) is integrated over the (,)Ep domain we get nC where n is the number

states having EE m and pp m .

For modes covering several particles we may think of a   function : (,)x t C eia() pkm x k E km t k k k k ------(14) k1,2,3..

“k” runs over different particles

Fourier Transform: of (,)xtkk using xk and tk as variables of integration:

F(,)()() pkm E km C kj p kj  p km E kj  E km ------(15) kj Where .as before, F(,) E p is the Fourier transform of  (,)xt

Integration of relation (15) wrt Ek and pk (ie, using dEkk dp ) over he entire (E,p) domain produces counts the number of states E=Ekm and p=pkm.”k” relates to the different particles and “m” to different modes/states of the same particles.

Observations:

1. The function represented by relation (8) satisfies the Klein Gordon Equation provided we 2 2 2 are on the mass shell: E p m0 .An assumed independence of E from p in the Fourier transforms should suggest “off the mass shell” situation. The value of  is depicted through the constant “a” 2. We may obtain a probability density picture for the - function or the -function

The invariance of the exponential part in relations (12) is suggestive of the fact that the Lorentz Transformations are a suitable candidate provided “a” is a Universal constant. The constant “a” contains the information for  .

For different sets (a,c) we have different Universes having the same type of fundamental laws but different Universal constants

3.1Gravitons and “Otherons”

The function f(,,,,) t x y z xi along with their Fourier Transform F(,,,,) E px p y p z p i with

i=1,2,3…… The variables xi are related to some “hidden dimensions”. And pi are their

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Fourier counterparts.For the invariance of the ensuing exponential part we may extend our familiar Lorentz Transformations may the extra dimensions

For uniform motion in the xxii  direction we have,

xii  () x vt v t  () ti x c2 i Other variables do not change their values on transformation.

vi is the n-Dimensional speed for translation along direction the ith component being non-zero in this case and t is time .”c” is the speed of “n-dimentional light”and should be a universal constant for the higher dimensions. 1   v2 1 c2 In the above context we have n+1 dimensions if time is considered.

We may assume a relative motion in some hidden dimension—some translation wrt time in so far as their values in one frame ands a transformed one are considered. As a result clocks will tick at different rates for different observers who are spatially at rest. This happens in General relativity in curved space. The GPS is an excellent example in the weak field context. Clocks run at different rates at different gravitational potentials Our known “c” is the limiting speed of a signal in the 3D case. Such signals are a stream of photons. It is quite possible that the higher dimensional “c” s could relate to gravitons or other type of particles which we may call the “Otherons”.

3.2 Why should “p” and “E” represent momentum and energy respectively?

If px and Et are dimensionally the same, “p” representing momentum and “E” representing energy are most plausible to make a proper fit.

3.3Ultraviolet Catastrophe and the Classical Principles

The Maxwell-Boltzman distribution is a Unimodal distribution represented by a bell shaped curve. The most probable speed and the mean speed of the particles are quite close to each other.The average speed of a high frequency oscillator is much greater than the mean speed which takes into account all particles/oscillators in the system. That the probability of occurrence of the high-frequency oscillators be less(rather much less) than the ones having their mean speed close to the mean speed of all the particles taken together is in conformity with the classical theories. Raleigh-Jeans theory denies this by assigning equal probability to all modes-----like assigning the amplitude of the fundamental to all overtones in the vibration of a string stretched between two fixed points.

3.4 The Uncertainty Principle from the Classical Ideas:Let X andY are two variables that have an association with each other ,for example, the position coordinate x and momentum px, in the process of some measurement.

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Cov(,) X Y xy  

Or,

Cov(,) X Y  xy 

The above relation is of the most general nature that emerges from the classical theories. he precise measurement of some physical property would make Cov(x,y) zero. The variables would become independent in the process of measurement—the s5tandard deviation of the other variable would become independent of each other.

If the variables are allied to each other or inter-related in some process of measurement the

quantity:xy is expected to be different form zero. There could be some minimum limit to its value in some particular type if measurement.

3.5 Discreteness

We consider a system of "n" particles whose total energy E and net momentum P are fixed are fixed.There no net force on the system(assumed)

i E   pP For an individual particle its momentum and energy remain constant for the time τ,the relaxation time(average time between successive collisions). That's an extra constraint for each particle [Radiational energy density at some point is assumed to be constant for some physically small time interval]

For such a situation, we get discrete solutions for energy and momentum apart from the continuous ones especially if we consider transfer of energy between different particles with a finite energy speed.We have an indication of such finite speed in our previous discussion. There is also an indication of the said fact in the next section. . 4. On Barrier Values: Finiteness of the Universe Let's consider the Taylor series for the expansion of energy in terms of speed or the expansion of momentum in terms of energy without assuming any standard formula: v v 2 v  3 v  4 EvvvEv()()()()()()    Ev   Ev   Ev   Ev  0 01! 0 2! 0 3! 0 2! 0 ------(16) vn ...... Evn ( )...... n! 0 EEE 23  pEEEpE()()()()()    pE   pE   pE   0 01! 0 2! 0 3! 0 ------(17) En ......  pEn ( )...... n! 0

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If 1) The higher order derivatives are non zero[for some order greater than an arbitrary nth order] 2)If in some physical situation there exists an approximation in the form of a truncated ,terminating series comprising a fixed number of terms[ex:E=pc for high energy particles 2 2 orE=m0c +0.5mv for slow moving particles] Then it follows that v’ and E’ should be less than one or that each of the said quantities

should have a barrier value : vc or Ec E so that we may use vc/ or Ec/ E may be used on the Taylor expansion.

[Special Relativity ,incidentally, puts a restriction on the speed of light but it does not restrict the value of momentum or energy for that matter. The restriction on the value of energy we find in this paper is not a contradiction. It is analogous to the situation that Conservation of Energy does not disallow the spontaneous flow of heat from lower to higher temperatures while the Second Law of Thermodynamics forbids such an event. An interesting alternative would be to assume the existence of negative energy states in order to provide a maximum application of the Special Relativity provision of accelerating the speed of a particle as close as possible to the barrier value of “c” without crossing it The finite energy limitation will not pose any problem if negative energy states are assumed to exist.]

Incidentally, for Taylor expansion or Maclaurin series for that matter we may have E'>1 or v>1. You may consider the expansion. x x23 x xn ex 1     ......  ...... 1! 2! 3n !

The series converges for values of x>1. A necessary[but not sufficient] condition for convergence is the |Tn|should tend to zero as n tends to infinity. In relation to the RHS point (2) this is important.If we have p=A+BE [where A and B are constants] in some physical situation as an approximation, E’<1 or E’/Ebarrier<1 is a suitable option.. Otherwise the higher powers of E would lead to the failure of the approximation

4.1 Generalization This relates to other physical properties If x and y ate two physical properties[measurable] related by the function y=f(x) and the following two conditions are satisfied: 1) ]The higher order derivatives in the Taylor or Maclaurin expansion of f(x) about some point are non zero[for some order greater than an arbitrary nth order] 2)If in some physical situation there exists an approximation in the form of a truncated ,terminating series[E=pc for high energy particles] The the stated property should have a barrier value. If we have some interaction(or some other physical property that can be measured) having an accurate form 1 1 1 F A AAA  +  ...... ------(18) 0 1r 2 r23 3 r

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and in some physical situation it may be approximated by a truncated finite series than the quantity 1/r should have a barrier: 1  c r 1/r Or, 1 r  c1/r r may be used in pace of r in the Taylor expansion. 1/c1/r Similarly,

If we have some interaction having an accurate form 23 F A0 Ar 1  A 2 r + A 3 r  ...... ------(19) and in some physical situation it may be approximated by a truncated finite series than the

quantity 1/r should have a barrier: rc r r may be used in place of r in the Taylor expansion. cr

5. Conclusions The role of the classical theories in re-analyzing modern concepts like Quantum Mechanics and Relativity has been discussed. The FourierTransforms and the Taylor series have been utilized to this end. A link between QM and Relativity has been indicated at .

6. Acknowledgments I owe my indebtedness to authors whose works have always inspired me to work in the area of physics. I take an opportunity to thank Dr Tanja Likso , Head of Department for Climate Monitoring at Meteorological and Hydrological Services,Zagreb ,Croatia, for her financial contributions that have favored the publication. My gratitude goes to the EJER Editor for allowing major concessions in the publication charges. I also thank all journals and their editors who have published my works previously —this has been a continuous source of motivation for me.

References

Liboff R. L., Introductory Quantum Mechanics,Pearson Education,2 nd Edition,2006, pp 563 Liboff R. L., Introductory Quantum Mechanics,Pearson Education,2 nd Edition,2006, pp 523 Wikipedia online free Encyclopedia : http://en.wikipedia.org/wiki/Principle_of_locality Wikipedia online free Encyclopedia,http://en.wikipedia.org/wiki/Quantum_entanglement

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TAPPING ENERGY BY USING THE EARTH’S MAGNETIC FIELD Anamitra Palit Author/Teacher[Free-Lancer-Physicist] P154 Motijheel Avenue,Flat C4,Kolkata 700074 Email: [email protected], Phone:91-33-25514454

Abstract We may consider a flat rectangular plate moving horizontally in a vertical magnetic field,motion being in a direction perpendicular to the length of the plate. We have an induced emf=BLV[B,L and V having their usual/conventional meanings] between the tips,in the length wise direction of the conductor perpendicular to the motion.That's the axial EMF. During the formation of the axial emf a current flows along the length of the conductor. This current should get deflected in the lateral direction due to the existing magnetic field, producing a transverse emf between the lateral edges.If the tips are connected by a wire we have a closed circuit condition--we should simply have the Hall voltage between the lateral edges[in the direction of the motion].And we can show this by calculation.The question that naturally arises: Would it be possible to use these voltages as supplementary power sources in moving vehicles---in moving trains,cars ,airplanes etc., utilizing the earth's magnetic field? In fact the induced current running out through the wheels in moving trains is at the cost of the engine power. We could think of saving this energy. The other alternative would be to use the energy --the energy that is already being wasted.Saving the energy might increase the speed of the train by a negligible amount spread over a long period of time.But if we use the wasted energy over a long period of time we will gain Ampere-hours--more especially so in consideration of so many trains covering long distances. We could also think of storing the charge running out of the wheels and use it in future.Another application would be to move objects in the earth's magnetic field by tidal ,wind or hydro power[of flowing rivers] and utilize the induced emf in a productive way. We have the ready-made field of the earth very much in favor of such enterprise/endeavor

INRODUCTION The basic point of this writing is to convey the importance of the earth’s magnetic field[1] in tapping energy from other sources. Energy wasted from fuel in generating induced emf in trains and other vehicles may be put to human use. Energy from the waves on the ocean surface or from flowing water in the rivers may be garnered with the help of the earth’s magnetic field which is continuously available to us all over the world irrespective of the hour of the day or the night.

A BASIC CONSIDERATION Let us consider two electric cells having electrolytes of the same type and electrodes of the same nature. You may take two Daniel cells as an example. One is a large cell with a greater amount of electrolyte and the other is a small one. Both will produce the same voltage but the larger cell containing a larger amount of electrolyte will run for a longer period of time producing the same voltage. Actual advantage is in the gain in terms of ampere hours. The larger cell produces a greater amount of energy at the same voltage. If the running vehicles are considered as sources of electromotive force and if we consider their running for a very long period of time our basic gain would be in terms of ampere- hours.

RUDIMENTARY CALCULATIONS You may consider the huge number of trains running all over the world starting from the advanced countries to the less advanced ones---the entailing loss of electric charge into the ground due to induced emf. The induced emf is generated due to the loss of fuel

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which is spread over a large period of time covering a huge number of trains. For these rudimentary calculations we assume Emf[2]=BLv=10-3 V If a 10-3 volt cell consumes only one 1 joule of energy over some period of time,. we have, W=VQ Where W:Energy Wasted ; V:Voltage;Q: Charge If W=1J VQ=1 Or, 10-3×Q=1 Q=1000C That gives us a rough idea of the amount of charge passed in wasting energy at a low voltage! Passing all that charge could take a lot of time. But just think of the large number of trains and other types of vehicles running for long hours. If the wastage of 1J of energy is spread over a huge number trains running for long periods of time, the time factor is no more so tediously offensive..

SOME DETAILED CALCULATIONS Lets consider a train moving in the vertical magnetic field(B) of the earth. The speed of the train=v m/s and the width of the ceiling= L

FIGURE I

Induced Emf=BLv Induced Current= BLv/R R: resistance of the roof+resistancse on the sides.

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Power of the Engine wasted by the induced current=BLv×BLv/R =B2L2v2/R As a specific example let us take B=5.2×10-5T L=3m v=12 m/s=43.2km/hr [The above value of speed has been taken in a defensive way to account for slow moving trains] Induced Emf=BLv=5.2×10-5×3×12 V=1.872×10-3 V=1.872 mV A 10 cm wide strip is considered cross-wise on the ceiling as shown in Figure I.. We take the thickness of the material of the roof to be 0.5 cm. Resistivity 10-8 SI units Resistance, R= l/A =10-8×(3+2.5+2.5)/(0.1×0.005)  =1.6×10-4 Induced current, i=BLv/R=1.872×10-3/1.6×10-4 A = 11.7 A Power wasted by the engine on the 10 wide strip cell=11.72×1.872×10-3 watt = 0.2562 W

If the thickness of the material is considered to be 1 mm, we have

R= l/A =10-8×(3+2.5+2.5)/(0.1×0.001)  =8×10-4 Induced emf remains the same: Emf=BLv= 1.872×10-3 V Induced Current=1.872×10-3/8×10-4 A =2.34 A If the thickness of the material is taken to be 0.5 mm the current should be 1.17A Not a negligible amount! Can we run a device with it?Well, the resistance of the device will in all probability be sufficiently large to reduce the current by a considerable amount. But we don’t need to go that far. The induced emf acting through the gadget and the connecting wires will oppose the driving induced emf of the strip cell on the roof.. One may think of using wires [and the gadget]shielded[3] from magnetic effects to get the advantage of running some device It would be convenient to add up the voltages of several strip cells by using some suitable circuit arrangement.

A better idea would be to collect the charge with a capacitor by connecting it to the ends of a strip cell of voltage =1.872×10-3 V and cell resistance=8×10-4. Suppose I use a 1F capacitor. The time constant for the C-R circuit,=CR=1×8×10-4 s is negligibly small. Charge accumulating on the capacitor=1× 1.872×10-3 C =1.872 milli-C If a 10 farad capacitor [Ex:http://www.youtube.com/watch?v=_wBkHyb8zkchttp://www.youtube.com/watch?v =_wBkHyb8zkc] is used then the fully charged capacitor will contain 18.72 milli

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coulombs. About 63%[=1-e-1] of this amount will accumulate in the time =CR which will is an extremely small interval of time. This charge may be transferred to some object and accumulated for future use in the particle accelerators. If we arrange thousand transfers in an hour, 18.72 coulombs will be obtained from a single strip-cell circuit, in an hour’s time. The cost of running the gadget working out the transfers has to be compared against the economic benefit obtained from the charge procure

ALTERNATIVE-TECHNIQUE: Now let us considering detaching the 1F capacitor from the Strip Cell after the capacitor has been fully charged, remembering that the time constant for the arrangement was very small. We connect the charged capacitor in series with a high voltage, 1F capacitor and a 10,000 ohm resistor and start a discharging process. The effective value of capacitance is approximately 1F and the time constant =CR=10-6×10,000=10-2 seconds which is reasonably small.

FIGURE II Now, t CR Q Q0 e Where Q0=1.872 milli-C Net capacitance C10-6F and R=10,000Ohms dQ 1 t i   Q eCR dt0 CR Magnitude of the instantaneous current 1 t i Q eCR 0 CR Average value of current in a period of 1 second: t 1 1 i  Q eCR dt 0 CR 0

1 CR i  Q0[1  e ]

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1 106 10,000 i  Q0[1  e ] er 100 i  Q0[1  e ] Or

iQ  0 =1.872 mA Therefore an average of 1.872 mA would flow through the 10,000 ohm resister in 1 second. The average value of potential drop across this resistor would be 18 volts . If a 100,000 ohm resistor was used the potential drop across it would be about 187 volts but the time constant of the C-R circuit would increase to about 0.1 second. Such a value for the time constant would not be an impediment for our work.. One should understand that the average value of the current is quite high if one considers the period =CR. But it spreads out in an interval of one second. It is quite interesting and also important to note that the same average current should flow through any resistor provided the time constant is of a suitably low value. Another point to take care of is that the wires connecting the capacitors have to be shielded from the external magnetic field of the earth.

OCEAN WAVES Just think of an ocean wave[4] moving at 10m/s carrying a 3m long conductor with it . The magnetic field of the earth is of course there and we take it to be approximately 10- 5T. Now,E=BLv=10-5×3×10=3×10-4 volts=0.3 millivolt. The ocean surface can be the source of such innumerable millivolt sources. And the Kinetic energy of the wave itself is the source of energy here. We tapping the ocean’s energy the kinetic energy of the waves with the help of the earth’s magnetic field. Cells of the said type may be used in combination to produce higher voltages to be used directly for different purposes. This can go a long way in resolving the power problem. Water of flowing rivers could be used for similar purposes. Calculations: Lets consider a 3m aluminum wire of cross-section =1 cm2=10-4m2 Specific resistivity for aluminum=2.82×10-8 m . 3 l 2.82  1084    8.46  10  Resistance= R   104 A 0.846milli ohm 3 2.82  1084    8.46  10  0.846milli ohm 104

CS of the rod=10-4m2. Length of each aluminum rod=3m Volume of each rod:=3×10-4 m3 Density of Aluminum=2700kg/m2 Weight of the block=3×10-4×2700kg =0.51 kg One could always embed 10000 ,3m aluminum rods in a larger wooden block [or in several such blocks] so that the effective density is less than sea water . If the voltages are

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added up by some suitable circuit arrangement we get thirty volt source. The internal resistance would be quite low if we consider the specific resistance for aluminum. And the cost of aluminum is less as compared to other metals like copper4 or silver Cost of installation won’t be very large if one considers the ultimate gain of having a 30volt source. One could also think of a capacitor arrangement to collect the charge and store it for future use in particle accelerators, cyclotrons and similar devices..

AIRPLANES Airplanes have much higher speed than trains or other types of surface transport. The induced emf may be used for running gadgets or for storing charge for future use in particle accelerators.

CONCLUSION The earth’s magnetic field may be used in tapping energy fruitfully from other sources to the best advantage of human beings. Its universal availability at no cost is an important factor to reckon with.

ACKNOWLEDGMENT I owe my indebtedness to the authors whose works have kept alive in me an earnest desire and willingness to explore different areas of physics and physics related subjects. I take this occasion as an opportunity to thank Dr Tanja Likso, Head of Department for Climate Monitoring at Meteorological and Hydrological Services, Zagreb, Croatia, for her financial contributions that have favored the publication. My gratitude goes to the EJER Editor for allowing concessions in the publication charges. I also thank all journals and their editors who have published my works previously —this has been a continuous source of motivation for me.

REFERENCES [1]All About Circuits,Retrieved from http://www.allaboutcircuits.com/vol_1/chpt_11/3.html [2]Griffiths, D. J.,Introduction to Electrodynamics(Second Edition),Prentice Hall of India Private Ltd.pp279-282 [3]University of Texas, Magnetic Shielding ,Online retrieved from: http://farside.ph.utexas.edu/teaching/jk1/lectures/node52.html [4]Hyperphysics, Ocean Waves, Retrieved from http://hyperphysics.phy- astr.gsu.edu/hbase/waves/watwav2.html

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IMPACT OF GOVERNMENT SECTORIAL EXPENDITURE ON THE ECONOMIC GROWTH OF NIGERIA Ebiringa, Oforegbunam Thaddeus Federal University of Technology, Owerri, Nigeria e-mail:[email protected] Charles-Anyaogu Nneka B Department of Banking and Finance Imo State Polytechnic, Umuagwo, Nigeria e-mail: [email protected]

Abstract Government expenditures remain the bedrock of Nigeria’s economic growth. Hence the need to critically evaluate the impact of expenditures’ some priority sectors on the economic growth. A Cochrane-Orcutt and ECM method was adopted to measure the long run effect of selected macroeconomic variables economic growth. The result shows that expenditure on telecommunication, Defence and security, Education and Health Sector have made positive impact on Nigeria’s economic growth. But transportation and agricultural expenditures have impacted negatively in the economic growth in Nigeria. The conclusion therefore is that the level of government expenditures for transportation and agricultural development is still not adequate to build the much need capacity in the sectors to impact positively to economic growth. Keywords: Error correction model, Education, Cochrane-Orcutt, telecommunication, Economic Growth, Government expenditure, Health

Introduction Government expenditure on health and The relationship between government education raise the productivity of labour expenditure and economic growth has and increases the growth of national continued to generate series of output. Education is one of the important controversies among scholars in economic factors that determines the quality of literature. The nature of the impact is labour and is considered an independent inclusive. Some authors believe that the factor of production that is indispensable impact of government expenditure on to achieve high and sustainable economic economic growth is negative or growth rate (Harshorn, 1985). Government insignificant (Akpan 2005, Folster and expenditure on health could lead to Henrekson 1999, Laudau 1983), others economic growth in the sense that human believed that the impact is positive and capital is essential to growth. A healthy significant (Korman and Brahmasrene, population is the wealth of a nation. 2007, Donald and Shuaglin 1983). On the Healthy labour force enhances productivity other hand some others believe that and promotes economic growth. government expenditures on does not exert Expenditure on infrastructure such as any impact on economic growth (Gupta et transportation and communication brings al; 2002). Economic growth is an essential about reduction in production costs, which ingredient for sustainable development. surely increase private sectors investment Economic growth brings about a better and profitability of firms and thereby standard of living of the people and this fostering economic growth. Good health most a time is brought about by promotes productivity. Expenditure on improvement in availability of defence is a necessity for safe guarding infrastructures, access to food, health, and protecting the nation from outside and housing, education. These sectors are very internal aggressions, while agriculture important in stimulating the economic expenditure promotes food production, a activities as well as addressing the nation’s basic necessity for human existence. This human developmental and thereby bring paper investigates the long run effect of about sustainable development. government expenditure on some key

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sectors on the economic growth of Nigeria. (2007) investigated the relationships The objective being to see the extent to between government expenditure and which the opinion that government economic growth for a group of 30 expenditure does not lead to significant countries during the period 1970-2005. growth in the economy can be validated The regression results showed the using Nigerian data. existence of a long-run relationship between government expenditure and Literature Review economic growth. In addition, the authors It is of paramount important to critically observed a unidirectional causality from examine the linkage between government government expenditure to growth for 16 expenditure and economic growth. In the out of the countries, thus supporting the Keynesian model, increase in government Keynesian hypothesis. However, causality expenditure (on infrastructures) leads to runs from economic growth to government higher economic growth. Contrary to this expenditure in 10 out of the countries, view, the neo-classical growth models confirming the Wagner’s law. Finally, the argue that government fiscal policy does authors found the existence of feedback not have any effect on the growth of relationship between government national output. However, it has been expenditure and economic growth for a argued that government fiscal policy group of four countries. (intervention) helps to improve failure that Studying the relationship between might arise from the inefficiencies of the government expenditure and economic market. The studies of Barro and Sala growth for a sample of wealthy countries (1992), Easterly W, Rebelo (1993) and for 1970-95 periods, using various Brons De Grel (1999) emphasized that econometric approaches, the authors government activity influences the submitted that more meaningful (robust) direction of economic growth. Similarly, results are generated, as econometric Dar and Amir (2002) pointed out that in problems are addressed. In India, Ranjan the endogenous growth models, fiscal and Sharma (2008) examined the effect of policy is very crucial in predicting future government development expenditure on economic growth. Many researchers have economic growth during the period 1950- attempted to examine the effect of 2007. They discovered a significant government expenditure on economic positive impact of government expenditure growth. For instance, Laudau (1983) on economic growth. They also reported examined the effect of government the existence of co integration among the (consumption) expenditure on economic variables. Al-Yousif (2000) indicated that growth for a sample of 96 countries, and government spending has a positive discovered a negative effect. Komain and relationship with economic growth in Brahmasrene (2007) examined the Saudi Arabia. On his part, Ram (1986) association between government studied the linkage between government expenditures and economic growth in expenditure and economic growth for a Thailand, by employing the Granger group of 115 countries during the period causality test. The results revealed that 1950-1980. The author used both cross government expenditures and economic section, time series data in his analysis, growth are not co-integrated. Moreover, and confirmed a positive influence of the results indicated a unidirectional government expenditure on economic relationship, as causality runs from growth. Cooray (2009) used an government expenditures to growth. econometric model that takes government Lastly, the results illustrated a significant expenditure and quality of governance into positive effect of government spending on consideration, in a cross-sectional study economic growth. Olugbenga and Owoye that includes 71 countries. The results

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revealed that both the size and quality of used the heterogeneous panel data to the government are associated with investigate the impact of government economic growth. Abu and Abu (2003) expenditure on economic growth. The employed multivariate co-integration and authors employed the GMM technique, variance decomposition approach to and discovered that countries with large examine the causal relationship between government expenditure tend to experience government expenditures and economic higher growth, but the effect varies from growth for Egypt, Israel, and Syria. In the one country to another. In Saudi Arabia, bivariate framework, the authors observed Abdullah (2000) analyzed the relationship a bi-directional (feedback) and long run between government expenditure and negative relationships between economic growth. The author reported that government spending and economic the size of government is very important in growth. Moreover, the causality test within the performance of economy. He advised the trivariate framework (that include that government should increase its share of government, civilian expenditures spending on infrastructure, social and in GDP, military burden, and economic economic activities. In addition, growth) illustrated that military burden has government should encourage and support a negative impact on economic growth in the private sector to accelerate economic all the countries. Furthermore, civilian growth. government expenditures have positive Donald and Shuanglin (1993) investigated effect on economic growth for both Israel the differential effects of various forms of and Egypt. Li, Younis and Hsu (2008) expenditures on economic growth for a examined the causal relationship between sample of 58 countries. Their findings GDP and public expenditure for the US indicated that government expenditures on data during the period 1947-2002. The education and defence have positive causality results revealed that total influence on economic growth, while government expenditure causes growth of expenditure on welfare has insignificant GDP. On the other hand, growth of GDP negative impact on economic growth. does not cause expansion of government Niloy, Emranhul and Osborn (2003) used a expenditure. Moreover, the estimation disaggregated approach to investigate the results indicated that public expenditure impact of public expenditure on economic raises the US economic growth. The growth for 30 developing countries in authors concluded that, judging from the 1970s and 1980s. The authors confirmed causality test Keynesian hypothesis exerts that government capital expenditure in more influence than the Wagner’s law in GDP has a significant positive association US. Loizides and Vamvoukas (2005) with economic growth, but the share of employed the trivariate causality test to government current expenditure in GDP examine the relationship between was shown to be insignificant in government expenditure and economic explaining economic growth. At the growth, using data set on Greece, United sectoral level, government investment and Kingdom and Ireland. The authors found expenditure on education are the only that government size granger causes variables that had significant effect on economic growth in all the countries they economic growth, especially when budget studied. The finding was true for Ireland constraint and omitted variables are and the United Kingdom both in the long included. Erkin (1988) examined the run and short run. The results also relationship between government indicated that economic growth granger expenditure and economic growth, by causes public expenditure for Greece and proposing a new framework for New United Kingdom, when inflation is Zealand. The empirical results showed that included. Gregoriou and Ghosh (2007) higher government expenditure does not

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hurt consumption, but instead raises indicated that real government capital private investment that in turn accelerates expenditure has a significant positive economic growth. influence on real output. However, the results showed that real government Mitchell (2005) argued that the American recurrent expenditure affects growth only government expenditure has grown too by little. Also, study by Ogiogo (1995) much in the last couple of years and has revealed a long-term relationship between contributed to the negative growth. The government expenditure and economic author suggested that government should growth. Moreover, the author’s findings cut its spending, particularly on showed that recurrent expenditure exerts projects/programmes that generate least more influence than capital expenditure on benefits or impose highest costs. In growth. Akpan (2005) used a Sweden, Peter (2003) examined the effects disaggregated approach to determine the of government expenditure on economic components (that include capital, growth during 1960-2001 periods. The recurrent, administrative, economic author emphasized that government spends service, social and community service, and too much and it might slowdown transfers) of government expenditure that economic growth. Devarajan, Snoop and enhances growth, and those that do not. Zou (1996) studied the relationship The author concluded that there was no between the composition of government significant association between most expenditure and economic growth for a components of government expenditure group of developing countries. The and economic growth in Nigeria. regression results illustrated that capital This study is an improvement on other expenditure has a significant negative studies on economic growth-government association with growth of real GDP per expenditure relationship in Nigeria for two capita. However, the results showed that reasons. Firstly, it considers government recurrent expenditure is positively related expenditure on defence as an important to real GDP per capita. variable that affects economic growth.

In Nigeria, many authors have also Methodology attempted to examine government The Cochrane-Orcutt Method was adopted in expenditure-economic growth relationship. analyzing the relationship and Error For example, Oyinlola (1993) examined Correction Model (ECM) for the the relationship between the Nigeria’s endogenous variable (GDP) estimated by defence sector and economic development, OLS based on co integrating Vector and reported a positive impact of defence Autoregressive model. The reason and expenditure on economic growth. justification for choosing this method is Fajingbesi and Odusola (1999) empirically based on the unique nature of the data and investigated the relationship between assumptions properties that is best linear government expenditure and economic unbiased estimate (BLUE). growth in Nigeria. The econometric results

Model Specification To establish the impact of Government sectorial expenditure on economic growth, the model is specified as follows;

GDP  0 1TCM 2 DCI 3TE 4 ES 5 AP 6 HS   t 1 Where: GDP- Gross domestic product;

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TCM - Total Communication expenditure DCI - Defense expenditure AP -Agriculture expenditure ES -Education expenditure TE -Transportation expenditure HS -Health expenditure The result for the long run effect model is estimated by applying error correction approach and the equation is given as:

n n n n GDPt  1  2 GDPti  3 TCMt1  4  DCIt1  5  ES t1  i1 i1 i1 i1 n n 6  HSt1  8  APt1 1VAR1  t i1 i1 Empirical Results Table1: Cochrane-Orcutt Method AR(2) converged after 5 iterations ****************************************************************************** Dependent variable is GDP 35 observations used for estimation from 1977 to 2011 ****************************************************************************** Regressor Coefficient Standard Error T-Ratio[Prob] TCM 8.9143 1.6021 5.5643[.000] DCI 252.3377 43.0874 5.8564[.000] AP -68.6607 10.1077 -6.7929[.000] TE -20.9784 22.9674 -.91340[.369] ES 184.2148 25.3926 7.2547[.000] HS 41.2967 21.5889 1.9129[.066] C -63245.8 611785.1 -.10338[.918] ****************************************************************************** R-Squared .99009 R-Bar-Squared .98678 S.E. of Regression 772132.9 F-stat. F( 8, 24) 299.5933[.000] Mean of Dependent Variable 4854185 S.D. of Dependent Variable 6625546 Residual Sum of Squares 1.43E+13 Equation Log-likelihood -488.9486 Akaike Info. Criterion -497.9486 Schwarz Bayesian Criterion -504.9476 DW-statistic 2.0940 ****************************************************************************** Source: Microfit 4.0 Result Output From the above results, we infer that The analysis also reveals that there is no Agriculture, Defence, and Education presence of first order serial expenditures are statistically significant at autocorrelation. However, the regression 5% level while Health and Transportation estimate shows that agricultural and sector expenditures are not significant at transportation sector expenditures are 5% level. However the joint effect of all negatively related to economic growth in the exogenous variables is statistically Nigeria while Telecommunication, significant at 5% level. On the average the Defence and security, Education and independent variables can explain 98% of Health Sector are directly related to the the Gross domestic Product (economic GDP. It also means that their impact is growth). positive, which implies that a unit increase

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in expenditures in these sectors will bring the economic growth of Nigeria with about 89.1%, 25.2%, 18.4% and 41.2% 68.9% and 20.9% decrease. Also the correspondent increase in economic analysis shows that there is no presence of growth. But transportation and agricultural multicolinearity and model is fitted at expenditures are impacting negatively on 99.9%.

Table2: ECM for variable GDP estimated by OLS based on cointegrating VAR (2) *************************************************************************** Dependent variable is dGDP 33 observations used for estimation from 1979 to 2011 *************************************************************************** Regressor Coefficient Standard Error T-Ratio [Prob] dGDP1 .14685 .11299 1.2996[.208] dTCM1 1.8129 .94491 1.9186[.069] dDCI1 -110.9184 33.1749 -3.3434[.003] dAP1 -13.0145 10.5671 -1.2316[.232] dTC1 -87.5002 21.8968 -3.9960[.001] dES1 -100.0224 32.8597 -3.0439[.006] dHS1 121.0754 29.3805 4.1209[.000] ecm1(-1) -1506285 242708.7 -6.2061[.000] *************************************************************************** List of additional temporary variables created: dGDP = GDP-GDP(-1) dGDP1 = GDP(-1)-GDP(-2) dTCM1 = TCM(-1)-TCM(-2) dDCI1 = DCI(-1)-DCI(-2) dAP1 = AP(-1)-AP(-2) dTC1 = TC(-1)-TC(-2) dES1 = ES(-1)-ES(-2) dHS1 = HS(-1)-HS(-2) ecm1 = -.1283E-6*GDP -.1964E-6*TCM + .3301E-4*DCI -.8374E-5*AP + .3058E-4*TC -.1080E-3*ES + .1462E-3*HS; ecm2 = .1822E-7*GDP -.1888E-6*TCM + .4873E-5*DCI + .4344E-4*AP -.6878E-5*TC - .4703E-5*ES -.4906E-4*HS; ecm3 = -.3035E-7*GDP + .2216E-6*TCM + .6113E-4*DCI -.4286E-5*AP + .1599E-4*TC - .3797E-4*ES + .2288E-4*HS ecm4 = -.3659E-6*GDP + .1155E-5*TCM -.2573E-4*DCI + .2685E-4*AP -.5300E-7*TC -.1341E-4*ES + .1433E-3*HS; ecm5 = .1053E-6*GDP -.4268E-6*TCM + .1197E-3*DCI - .5067E-4*AP -.1696E-4*TC - .2947E-6*ES -.4473E-4*HS *************************************************************************** R-Squared .98701 R-Bar-Squared .98021 S.E. of Regression 242708.7 F-stat. F(11, 21) 145.0924[.000] Mean of Dependent Variable 529998.6 S.D. of Dependent Variable 1725312 Residual Sum of Squares 1.24E+12 Equation Log-likelihood -448.5546 Akaike Info. Criterion -460.5546 Schwarz Bayesian Criterion -469.5336 DW-statistic 1.8904 System Log-likelihood -2061.3 ***************************************************************************

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Diagnostic Tests *************************************************************************** * Test Statistics * LM Version * F Version * *************************************************************************** * A: Serial Correlation*CHSQ(1) = .49696[.481]* F(1, 20) = .30579[.586]* * B: Functional Form *CHSQ( 1) = .0082729[.928]* F(1,0) = .0050151[.944]* * C: Normality *CHSQ( 2) = 35.1678[.000]* Not applicable * * D: Heteroscedasticity*CHSQ( 1) = .46780[.494]* F(1, 31) = .44577[.509]* *************************************************************************** A: Lagrange multiplier test of residual serial correlation B:Ramsey's RESET test using the square of the fitted values C:Based on a test of skewness and kurtosis of residuals D:Based on the regression of squared residuals on squared fitted values Source: Microfit 4.0 Result Output

The empirical result estimation of VAR needs to be given to crucial sectors such as models which typically presented Health, security, Education and multivariate autoregressive equations in Agriculture. This is evidence that these which the variable is regressed on its past sectors can bring about economic growth values of the other variables in the system in the long run. reveal that TCM, ES and AP are not Recommendations statistically significant to GDP while HS, On the basis of the results obtained, TC and DCI are statistically significant in the following recommendations are made: the long run. The carry over effect are felt 1. Allocation of government spending on the GDP exerted by the needs to be based on the level of telecommunication, education and need and the versatility of agricultural sectors in Nigeria. individual sector of economy in Nigeria. Conclusion 2. In as much as government is trying We can conclude from the results that her best to see that education is government expenditure should spend better funded to promote economic more on health sector, education, growth in Nigeria, the impact of Telecommunication and security since this funding is not felt as result of they are significant and have positive mismanagement and poor impact on the economic growth of the implementation. One of the reasons nation. Spending on agriculture and could be due to the fact that the transportation sector based on the money spent on education is not empirical findings has negatively influence translated to economic gains in the the economy but agricultural sector domestic economy but has significantly impact on economic growth evidence of impacting on the while the transportation sector does not economy through technical know- impact significantly. The carry over effect how and expertise. The gains are of the telecommunication and agricultural being transferred to other sector by error correction model indicate economies in the form of brain that communication is significant and drain, which is a reduction in the positively impacting on the economic level of GDP. growth but the agricultural impacted 3. Higher government expenditure on negatively and they are not statistically transport and communication significant. Finally, allocation of public should be continually encouraged funds can now be checked and attention to create an enabling environment

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Appendix 1

YEAR TCM DCI AP TC ES HS GDP 1977 5004.60 97.70 105.50 2300.40 500.00 114.10 31520.30 1978 5200.00 39.80 128.40 1331.10 301.40 49.60 34540.10 1979 4219.50 44.40 321.90 1865.70 533.20 96.20 41974.70 1980 10163.40 127.50 435.60 2349.30 952.60 147.20 49632.30 1981 6567.00 96.20 775.10 1625.70 440.90 128.40 47619.70 1982 6417.20 82.20 1035.10 1283.90 488.00 130.20 49069.30 1983 4885.70 200.80 1185.20 1094.40 346.60 136.00 53107.40 1984 4100.10 38.40 252.50 261.90 144.90 51.10 59622.50 1985 5464.70 30.60 985.40 241.00 180.70 56.20 67908.60 1986 8526.80 209.00 892.50 516.10 442.00 81.20 69147.00 1987 6372.50 18.50 365.10 375.10 139.10 69.50 105222.80 1988 8340.10 271.30 595.70 704.00 281.80 183.20 139085.30 1989 15034.10 124.10 981.50 683.80 221.90 126.00 216797.50 1990 24048.60 196.40 1758.50 877.00 331.70 257.00 267550.00 1991 28340.90 411.10 551.20 353.40 289.10 137.60 312139.70 1992 39763.30 683.20 763.00 625.00 384.10 188.00 532613.80 1993 54501.80 1085.60 1820.00 1436.70 1563.00 352.90 683869.80 1994 70918.30 1286.80 2800.10 1294.00 2405.70 961.00 899863.20 1995 121138.30 2031.20 4691.70 3800.30 3307.40 1725.20 1933211.60 1996 212926.30 2670.10 3892.80 8820.00 3215.80 1659.50 2702719.10 1997 269651.70 3820.80 6247.40 7147.70 3808.00 2623.80 2801972.60 1998 309015.60 6147.70 8876.60 6228.00 12793.00 7123.80 2708430.90 1999 498027.60 4856.30 6912.60 3313.70 8516.60 7386.80 3194015.00 2000 239450.90 6954.90 5761.70 3021.00 23342.60 6569.20 4582127.30 2001 438696.50 16400.00 57879.00 19241.00 19860.00 20128.00 4725086.00 2002 321378.10 22093.60 32364.40 17083.00 9215.00 12608.00 6912381.30 2003 241688.30 10679.70 8510.90 6639.60 14680.20 6431.00 8487031.60 2004 351300.00 10657.10 48047.80 9751.00 21550.00 26410.00 11411066.90 2005 519500.00 21535.20 79939.40 19982.50 27440.80 21652.60 14572239.10 2006 552385.80 14686.00 15176.80 6531.00 35791.80 38039.80 18564594.70 2007 759323.00 14717.24 22518.58 35529.35 48293.51 51171.01 20657317.70 2008 767952.83 14397.31 39754.17 17975.61 27991.13 26416.15 13781913.83 2009 872784.66 15318.90 45729.54 13560.03 28193.43 28129.64 14582453.63 2010 975998.36 16564.34 40841.08 18900.72 34929.89 34748.26 17094151.28 2011 888915.00 15091.22 29572.66 19734.17 36751.58 37593.81 17524494.38 Source: Central Bank of Nigeria, Statistical Bulletin (2012) TCM - Total Communication expenditure. DCI - Defence expenditure, HS -Health expenditure, AP -Agriculture expenditure, ES -Education expenditure and TE - Transportation expenditure.

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EFFECTIVENESS OF FISCAL POLICY IN ECONOMIC GROWTH: THE CASE OF ZIMBABWE.

Author: Munongo Simon Great Zimbabwe University Box 1235, Masvingo, Zimbabwe Email: [email protected]

Abstract The study investigates the effectiveness of fiscal policy in spurring economic growth in Zimbabwe. Annual data covering 1980-2010 were utilized. Unit roots of the series were examined using the Augmented Dickey-Fuller technique after which the cointegration test was conducted using the Johansen Approach. Error-correction models were estimated to take care of short-run dynamics. The results indicate that government consumption expenditure and income tax positively impacted on economic growth during the period of coverage but capital expenditure by government has a negative effect and a long-run relationship exists between them as confirmed by the cointegration test. Keywords: Fiscal Policy and Cointergration

Introduction consistent with sustainable growth (Ocran 2009). The major question however has Over the last decade in Zimbabwe, been has fiscal policy been used to interventionist macroeconomic policies achieve economic growth this in have been dominant. However the growth Zimbabwe in view of the fact that the impact of fiscal policy still remains extent to which fiscal policy affect unclear to policy makers in the economy. economic growth continue to attract Most of the studies on fiscal policy theoretical and empirical debate especially effectiveness paid more attention on in developing countries. In recent years developed economies and the inclusion of Zimbabwe has given fiscal policy the developing countries in case of cross- biggest role in economic stimulus given country studies were mainly to generate the multi- currency regime which has enough degrees of freedom in the course limited the role of monetary policy. of statistical analysis (Aregbeyen, 2007).

The purpose of the paper is to examine the The intent of fiscal policy is essentially to effectiveness of fiscal policy instruments stimulate economic and social in Zimbabwe on economic growth as the development by pursuing a policy stance major target variable in the period 1980- that ensures a sense of balance between 2010. The fiscal policy variables taxation, expenditure and borrowing that is considered in the study include

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government gross fixed capital formation, Lack of macroeconomic policy tax expenditure and government implementation credibility, inconsistent consumption expenditure. policy formulation and high inflation levels, the maturity structure of domestic The rest of the paper is structured as debt became concentrated towards the follows. Section two provides a brief shorter end of the market (RBZ report review of the evolution of fiscal policy 2002) stance over the study period in Zimbabwe. Previous studies of relevance to the study The first fiscal policy announcement in are discussed in Section three. The Zimbabwe 1980 saw the government methodology adopted for the estimation making a commitment of fiscal soundness, and data issues are considered in Section targeting a reduction in the rate of growth four. In chapter five we show the study of net current expenditure to levels below findings and conclusions. 7% in real terms or 1% below that of Gross Domestic Product (GDP) per Fiscal policy in Zimbabwe annum. This was meant to reduce the budget deficit and allows sustainable fiscal The Zimbabwean government in the 1980s policy management in the 1980s. to 1990s widely used financial budgetary support from International Monetary Fund, In the early 1990s the government of World Bank and other commercial lenders. Zimbabwe adopted the liberalisation The over reliance on external borrowings policies under the Economic Structural to finance the national budget led to the Adjustment Programme (ESAP). The accumulation of huge debt obligations, and ESAP policy sought to achieve fiscal in 1999, the country defaulted on its deficit reduction. Budget deficit as a payment obligations and was labelled not proportion of GDP was to reduce by 2% credit worthy. This led to the withdrawal annually from 10% to a target of 5% by of financial assistance by international 1995. In addition, Government targeted to organisation. The Zimbabwean reduce tax ratio from 35% of GDP to government then resorted to domestic about 33% by the end of the reform period, borrowing, resulting in domestic debt while at the same time introducing cost stock progressively increasing over the recovery measures to boost non-tax years (MEFMI report 2001). revenues. Measures proposed to reduce budget deficit involved postponement of

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capital expenditure, reduction of civil after the great depression the body of service wage bill from 16.5% of GDP to knowledge on the effectiveness of fiscal 12.9% of GDP, removal of subsidies policy have grown over time. Now the (which stood at 3.7% of GDP) and major research question has been on the enhancement of revenue collection conditions that improve the effectiveness efficiency by 1995. Tax reforms targeted of fiscal policy intervention on economic dispersion of tax rates, strengthening of tax growth and recent years have seen a administration and reduction of tax burden revival of the debate about the role of on export and import sectors (RBZ report fiscal policy in stimulating economic 2000). activity.

A severe economic crisis beset the country The theoretical underpinning for this towards the end of 1997, following the study is basically endogenous growth suspension of balance of payments support theory, which advocates the stimulation of by the IMF. The suspension of balance of level and growth rate of per capita output payment support led to 50% depreciation through within the model using policies of the Zimbabwe dollar in November like fiscal (e.g. government spending). 1997. The economic turmoil continued in More specifically, models of the growth Zimbabwe till 2008 before the introduction effects of fiscal policy are usually built on of the multicurrency regime which have the basis of Barro (1990) framework and relatively stabilised the economy. During subsequently Barro and Sala-i-Martin the period 1997-2008 and the post 2008 (1992, 1995). This study draws inspiration era the government of Zimbabwe heavily from these studies by employing a Cobb- relied on fiscal policy to achieve economic Douglas production function in which stabilisation. government expenditure enters as input.

Therefore in this study we want to For the Keynesians, fiscal policy refers to establish whether fiscal policy was the manipulation of taxes and public successful in Zimbabwe in achieving spending to influence aggregate demand. economic growth and stabilisation in In Africa Sikiru et al (2010) investigated Zimbabwe. the impact of fiscal policy on economic Literature review growth in Nigeria. Annual data covering Since the days of Keynes the father of 1977 – 2009 were utilized. Unit roots of macroeconomic interventionist policies the series were examined using the

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Augmented Dickey-Fuller technique after countries is still limited thus we seek to which the cointegration test was conducted extent the debate to Zimbabwe. using the Engle-Granger Approach. Error- Methodology correction models were estimated to take The models we are going to use follow the care of short-run dynamics. Over all, the leads of Sikiru et al (2010) in a similar results indicate that productive expenditure study on Nigeria. The model specification positively impacted on economic growth is:

during the period of coverage and a long- InGDPt += ββ 10 InGCEt + β 2 InDYTt 3GKE ++ εβ tt run relationship exists between them as

confirmed by the cointegration test. The Where InGDPt is Log of Real Gross

paper recommends improvement in Domestic Product, InGCEt is the Log of government expenditure on health, Government Consumption Expenditure. In

education and economic services, as GKEt is the government consumption

components of productive expenditure, to expenditure and InDYTt is the Direct boost economic growth. Income Tax.

ε t is a white noise error term. Mansouri (2008) studied the relationship between fiscal policy and economic Econometric techniques to be employed growth in Egypt, Morocco and Tunisia. include unit root test and cointergration The spans of data for each country are: tests. Many economic and financial time 1970-2002 for Morocco, 1972-2002 for series exhibit trending behaviour or non- Tunisia and 1975-2002 for Egypt. The stationary in the mean. Leading examples empirical results showed that 1 percent are asset prices, exchange rates and the increase in public spending raised the real levels of macroeconomic aggregates like GDP by 1.26 percent in Morocco, 1.15 real GDP. Unit root tests can be used to percent in Tunisia and 0.56 percent in determine if trending data should be first Egypt. The results also indicated existence differenced or regressed on deterministic of long-run relationships for all the three functions of time to render the data countries. stationary. Moreover, economic and finance theory often suggests the existence Though there is vast literature on of long-run equilibrium relationships effectiveness of fiscal policy in developed among non-stationary time series countries evidence from developing variables. Thus, we intend to adopt

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Augmented Dickey-Fuller (ADF) step in the cointegration modelling Technique to verify the unit root property discussed. Thus to avoid spurious of the series. If these variables are I (1), regression we are going to test for then cointegration techniques can be used cointergration using the Angle-Granger to model these long-run relations. Hence, method. pre-testing for unit roots is often a first Results and conclusions

Table 1 Unit Root Results Variable ADF statistic P-value Order of intergration Log GDP -3.066 0.008 I(1) Log GKE -5.739 0.000 I(1) Log GVTEXP -3.219 0.000 I(1) Log TAX -3.348 0.002 I(1)

Note: all variables are significant at 5% Source: Author’s computer calculations. Table 1 above shows that the variables are stationary after first difference hence are intergrated of order 1 Table 2 Johansen Cointergration Results Eigenvalue Likelihood Ratio 5% critical value Hypothesized No. of CE(s) 0.818191 76.20648 47.21 None** 0.495561 28.47210 29.68 At most 1 0.246167 9.311475 15.41 At most 2 0.048740 1.399097 3.76 At most 3

*(**)denote rejection of hypethesis at 5% (1%) significance level Source: Author’s computer calculations. Table 2 above shows the cointergration regression results. Using the Johansen procedure we find out that there is on cointergrating equation shown below: LogGDP −−= GKE + 159.0log214.0359.9 LogGVTEXP + 066.0 LogTAX

IJER | NOVEMBER - DECEMBER 2012 97 Available [email protected] Munongo Simon, Int. J. Eco. Res., 2012, v3i6, 93 - 99 ISSN: 2229-6158 The equation shows that government capital expenditure is negatively related to Gross Domestic Product which shows inefficiencies in government investments in Zimbabwe. Government expenditure positively affects GDP thus fiscal stimulus increase growth. Also taxation positively affects GDP. The results show that a one percent increase in government consumption expenditure increases economic growth by 15.9 percent.

Table 3 Error Correction Model Estimated Using VAR Dependent Variable Log GDP

Variable Coefficient Standard error t-ratio C -7.06*** 0.12256 -1.9567 Log GKE -5.18*** 0.20139 -2.57183 Log GVTEXP 0.608** 0.38165 1.59188 Log TAX 0.05** 0.19283 0.25789 ECT 0.179*** 0.0728 2.46673

**(***) shows 5%(1%) level of significance S.D dependent variable 0.1304 Adjusted R-squared 0.896 Log-likelihood 24.13

Table 3 shows error correction which is short-run speed of adjustment back to the the short run speed of adjustment an error long run equilibrium in the variables. correction value of 0.179 shows a fast

References 3. Barro, R. J. & Sala-I-Martin, X. 1. Aregbeyen, O. (2007). Public (1995). Economic Growth. Expenditure and Economic Growth McGraw-Hill. in Africa. African Journal of 4. Barro, R. J. (1990). Government Economic Policy, 14(1): 1-25. Spending in a Simple Model of 2. Barro, R. J. & Sala-I-Martin, X. Endogenous Growth. Journal of (1992). Public Finance in Models Political Economy, 98 (2):103-25. of Economic Growth. Review of Economic Studies, 59:645-661.

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5. Mansouri, B. (2008). Fiscal Policy and Economic Growth: Egypt, Morocco and Tunisia Compared. Proceeding in UNECA Conference on: Macroeconomic Policy, Productive Capacity and Economic Growth in Africa. Addis Ababa, 23-25 November, 2008. 6. MEFMI (2001), “Sustainability of Domestic Debt”, A MEFMI Study 7. Ocran. K. (2009). Fiscal Policy and Economic Growth in South Africa. A paper presented at the Centre for the Study of African Economies “Conference on Economic Development in Africa”, St. Catherine’s College, Oxford University, UK. March 22-24, 2009. 8. Reserve Bank of Zimbabwe, “Annual reports, Quarterly Economic and Statistical Review”, various issues 9. Sikiru. J. B. and Umaru A. (2010) Fiscal Policy and Economic Growth Relationship in Nigeria. International Journal of Business and Social Science Vol. 2 No. 17.

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