Steganography Using Lsb Insertion Technique Computer Science Essay

Steganography Using Lsb Insertion Technique Computer Science Essay Steganography is a method used for hiding a message by fixing in a carrier data. There are two types of data. They are internal data and external data .The external information contains visible part or audible part of data which is not useful for data owner and the internal information contains embedded data. The techniques used in Steganography makes hard to detect hidden message within an image file. By this technique we are not only sending a message but also we are hiding the message. Steganography system is designed to encode and decode a secret file embedded in image file with a random Least Significant Bit (LSB) insertion technique. By using this technique the secret data are spread out among the image data in a random manner with the help of a secret key. The key generates pseudorandom numbers and identifies where and in which order hidden message is laid out. Steganography includes cryptography which is an advantage for Steganography .In cryptography, diffusion is applied to secret message.   INTRODUCTION: The Data transmitted comes in many forms and it is used for more than one application. Communications should be done secretly. Secret communication varies from bank transfers, corporate communications and credit card purchase. Steganography is an art of embedding a secret message into a normal message. Steganography is used in watermarking for protecting data copyrights .Unsurprisingly, methods of Steganography change because innocuous spam contents are growing frequently by embedded texts Cryptography is technique used to make secret message scribbled for third party and are normally used in internet. The encrypted message is targeted by attackers in cryptography because it hides the message content. An another data hiding technique known as watermarking used for embedding and hiding, some symbol data or digital manifest in the digital valuable data like photo picture, digital movie, musical sound etc. Watermarking purpose is mainly used to protect ownership or copyrights of the data. In this technique, hardness of embedded evidence and hidden evidence are very small and is important. In this technique the important information is present in external information which is visible or audible. In the Steganography technique, confidential information is made invisible to a human eye by embedding it as a dummy data such as a speech sound and a digital image. Steganography contains another research topic called as steganalysis which is used to find a stego file from the available files. Steganalysis is used in detecting suspicious image file. The suspicious image files are embedded with the crime associated information All traditional Steganography techniques have limited information-hiding capacity. These techniques can hide 10% or less than 10% data of a carrier data. The principle of these techniques is to replace frequency components of carrier or to replace LSB bits of multivalued image with secret information. Steganography uses image as a carrier data and it embeds secret information in bit planes .We can replace all noise like regions in the bit planes without disturbing the quality of image and is termed as B.P.C.S Steganography .BPCS Steganography is known as Bit plane complexity segmentation Steganography. BACKGROUND HISTORY: Steganography is derived from a Greek word which means as a covered writing or hidden writing. In Steganography stegos means cover and grafia means writing. THEORY: Steganography is used to hide confidential information from human eyes by embedding it in a carrier data such as digital image or speech sound. A carrier data is a color image having RGB color components in a multi-bit data structure. The embedded information is extracted using special extracting program and key .The techniques of Steganography are different from file camouflage or file deception technique. File deception is a technique used for hiding secret data in computer file and it almost looks like a Steganography. But, it is an trick to disguise a secret-data file as a normal file and is possible in files which have dont care option. For example, Word file or JPEG image OR MPEG will allow for adding an extra data (extension) at the end of a regular file. Even an extra data (which can be encrypted) are added, the JPEG image, word file or MPEG looks like the original image and original sound, or document on the computer. People may think this is due to Steganography. The lengthy files are easily detected by engineers. So, file deception and Steganography are different. The Steganography softwares that are available in the market are based on file deception. In Steganography, if output file size is increased by embedding the information then the program is called as File deception. A secret data can be made unreadable by encrypting the data. The secret data should be encrypted to make it unreadable for third party. With the help of data encryption, secret data can be safe. Data encryption is based on data scrambling and it uses a secret key. Data encryption can create a doubt to the people that owner of the data is hiding something in an image. In data encryption we can find easily that he is hiding something in a image. Therefore encryption of data is not enough. Steganography is the solution for data encryption. There are two types of data in Steganography .they are secret data and carrier data. Secret data is very valuable when compared to the carrier data. Carrier data is a type of dummy data which is not so important but it is needed. The data which is embedded is called as stego data.If we want to recover the secret data , we can extract that data from stego data.We need a special program or a key for data extraction.. The carrier is image data which has color components of red green and blue colors in 24 bit pixel structure. The figure below shows an example of carrier image and stego image. The secret data is embedded in stego image. Steganography is a method of hiding the secret data by fixing it in media data .For example in the figure a secret data is embedded but we cant find in which place the secret data is embedded. The Embedded data will be very safe in the Steganography because it will hide content of the message and location of hidden image. There are many methods to embed the data .but; it is very hard to find about the method used in embedding the message.. Steganography can co-operate with cryptography to embed the encrypted data safely. In Steganography , Stego data will not have any evidence about the embedded data. The Steganography user should discard the original carrier data after embedding such that it will not allow comparison of stego and original data. Embedded capacity should be larger. BPCS method is the method available method for image Steganography. If anyone detect the Steganography image, it is very difficult for him to retrieve the hidden image. There are three basic ways to hide a message in image. They are Injection, substitution and generation. Using Injection method we can find in which place data to be inserted and using substitution we can find least significant bits for hiding the message. Using generation method we can create a new file based on the hidden information. Method of implementation: Least significant bit insertion is one of the important methods of implementation. In this method, the LSB bits of byte are altered so that it form bit string and represents an embedded file. By changing the LSB bits, it will cause some small differences in color which are not noticeable to human eye. After that an image is compressed and a text message is hidden in image .In LSB method, LSB bits of the covered image is altered such that they form embedded information. Embedding a message into cover image will result a stego image. For normal vision, stego image looks identical as cover image; this is because of only small changes of pixel values. Therefore there is no significant difference. The embedded message is sequentially embedded in covered image so that it is easy for a third party to recover the message by retrieving the pixels sequentially starting from the first pixel of the image. Steganography uses a key which as a better security. It is difficult to recover the embedde d image without valid key. LEAST SIGNIFICANT BIT INSERTION Least significant bit insertion is the common technique used in Steganography. In LSB method, an image is used. An image is more than strings and string of bytes. Each byte in an image represents different colors. The last few bits in a color byte do not hold much significance as the first few bits. Therefore only two bits differ in last few bits that represent a color which is undistinguishable to human eyes. In LSB method, least significant bits of a cover image are altered such that we can embed information. The example shows how letter A is hidden in first 8 bytes of 3 pixels in a 24 bit image. Since the 8 bit letter A requires only 8 bytes to hide it, ninth byte of the 3 pixels used to hide the next character of the hidden message. Example shows that in a 24 bit image, letter A can be hidden in first 8 bytes of 3 pixels Pixels: (00100111 11101001 11001000) (00100111 11001000 11101001) (11001000 00100111 11101001) A: 01000010 Result: (00100110  11101001 11001000) (00100110  11001000 11101000) (11001001  00100110  11101001) The five underlined bits are the 5 bits which were altered. With LSB insertion technique, on an average half of the bits of an image are changed. A is a 8 bit letter and requires 8 bytes for hiding. The ninth byte of 3 pixels is used for hiding next character of secret message. The slight variations of this technique allows a message to embed into two or more least significant bits per bytes, and increases the information hidden capacity of the cover object .but cover object is degraded and easily detectable.LSB insertion is easy to implement and is also easily attacked if the modifications are done wrongly. Improper modifications in color palette and simple image calculations will destroy hidden message. Image resizing and image cropping are some examples of image manipulations. Applications of Steganography: Steganography is applicable the following areas. 1).Private communication and secret data storing. 2).Security of data. 3).Accessing the control system for distributing the digital content 4).Media data base systems. The application area of Steganography differs based on the features utilized in a system. 1).Private communication and secret data storing: The secrecy of embedded data is important in this area. Steganography provides capacity for hiding the existence of secret data and Steganography makes very hard to detect the embedded data in a image and Steganography strengthens the encrypted data. In Steganography, select a carrier data according to the size of embedded data. Carrier data should not be effective. Now embed the secret data using an embedding program with the help of a key. To recover the embedded data, an extracting program is used with a key. Before starting the communication in this case, Key negotiation is used 2).Security for a data: Steganography is used in military applications for maintaining the secret data .In military secret information should be very secure to avoid sudden attacks on them from enemies. Steganography can hide the existence of contents of data but it cannot hide the presence of data. Data should not be larger than carrier image .Steganography strengthens the secrecy of the data. Fragility of the embedded data is advantage for this application area. Embedded data can be rather fragile than robust. But embedded data is fragile in most of the Steganography programs. No one can change or tampered the data .If anyone changes or tampers the data, and then it can be easily detected by the extraction program. 3). Accessing the control system for distributing the digital content : In this application, embedded data is explained to publicize the content. Here embedded data is hidden data. Digital contents are being commonly distributed by internet. Some music companies release the music for free in some web sites and in some sites it charges for the music downloads. Digital contents are equally distributed to user who accesses the web pages. Even it is possible to send digital content to e-mail messages it takes more time. We can to upload any content on the web page; we can issue a special access key to extract the content. In Steganography a prototype of an access control system is developed for distributing the digital content through internet. This can be explained by following steps. 1).The content owner will classify his digital content in a folder and embeds the folder according to Steganography method by accessing the folder access key and uploads embedded content on web page. 2).On the web page, owner will explains the contents clearly and publicises it worldwide and gives his contact information on web page. 3).The owner will receive access request from the customer who visited that web page. Then owner creates an access key and provides it to the customer for free or charge. 4).Media database systems: In this type of application secrecy of data is not important, converting two types of data into one data is important. Photos, Pictures, movies and music will come under media data. For example the media data for a photograph will contain about the title of the photo and date and time of a photo and it also contain about the camera used to take that photograph. à £Ã¢â€š ¬Ã¢â€š ¬ Data hiding in .bmp images: There are several formats exists for an digital image. .BMP, JPG, GIF are some formats .Each format is associated with advantage and disadvantages. Because of its simplicity, windows BMP file offers more advantages. It has an advantage of widely spreader and the information contained is minimum .Bmp file is a binary file.bmp file is divided into four sections such as file header, image header, color table and pixel data. The file header is used to know about size of the image and to learn where actual image data is located within the file. The Image header gives information about the image and its data format such as width and height of the image. Image header also gives information such as how many bits are used per pixel and checks whether the image data is compressed data or uncompressed data. Depending on the image data, color table will be present. When color table is not present, a set of bit masks are used to extract the color information from the image data. When dealing with 24-bit image, color table is not present. When dealing with 8-bit image, color table consists of 256 entries. Each entry consists of four bytes of data. In these four bytes of data, first three bytes are blue, green and red colors values .The fourth byte must be equal to zero because it is not used. In 8-bit format, each pixel is represented by single byte of the data which is index in to color table. In 24-bit format, each pixel I represented by RGB component values .The pixel data holds entire hidden data and there are changes by one pixel value either positive or negative. MATLAB: The MATLAB is a language for technical computing. MATLAB integrates computation, visualization and programming in a easy way in which problems and solutions are expresses in mathematical notation. Typical uses include Math and computation Data acquisition Algorithm development Modelling, simulation and protyping Data analysis, exploration and visualization Application development MATLAB is a system whose data element is an array without dimensions. It allows in solving computing programs such as Matrix and vectors formulations. It writes program in a scalar language such as FORTRAN within a fraction of seconds. MATLAB can be abbreviated as a matrix laboratory. MATLAB was developed to access matrix software. The matrix software was developed by linpack and eispack projectsdeveloped .MATLAB engine incorporates LAPACK and BLAS libraries by embedding the state of art in software for matrix computation. Matlab has evolved over a period of years with input from many users. MATLAB has become a standard tool for advanced courses such as engineering, maths, and sciences .MATLAB is like a tool for high research productivity, analysis and development. MATLAB SYSTEM: MATLAB system consists of five main parts: 1).desktop tools and development environment 2).MATLAB Mathematical functions library 3).MATLAB language 4).graphics 5).MATLAB application program interface 1).Desktop tools and development environment: MATLAB is a set of tools and facilities that helps to use and to become more productive with MATLAB function and files. In MATLAB most of the tools are graphical user interfaces and includes MATLAB desktop, command window, editor and debugger, code analyzer and browser for viewing help, workspace and folders. 2). MATLAB Mathematical functions library MATLAB is a huge collection of computational algorithms ranging from elementary functions such as sum, sine, cosine and complex arithmetic to more sophisticated functions like matrix inverse, matrix Eigen values, Bessel functions and fast Fourier transforms 3). MATLAB language MATLAB language is an high level matrix language with control flow statements, functions, data structures, and object-oriented programming features. It allows small and large programming .In programming in large is to create complete large and complex application programs and programming in small is to create quick and dirty throw away programs. 4). GRAPHICS:- MATLAB is having extensive facilities to display vectors and matrices as graphs. It includes high level functions for two dimensional and three dimensional data visualization, image processing, and presentation graphics .MATLAB also includes low-level functions and allows in customizing appearance of graphics to build complete graphical user interfaces on MATLAB application. 5).MATLAB Application program interface (API):- It is a library which allows us to write C and FORTRAN programs to interact with MATLAB .It also includes facilities such as calling routines from MATLAB, calling MATLAB as a computational engine and for reading and writing MATA FILES. MATLAB working environment: MATLAB DESKTOP:- It is the main application window in MATLAB. This window consists of five sub windows such as current directory, command history, workspace browser, command window, and a figure which is shown while displaying a graphic. The User types commands in command window and expressions at the prompt. The output of these commands is displayed. In MATLAB, workspace is defined as a set of variables created by user in work session. These variables are shown in workspace browser. The workspace browser launches array editor by clicking on a variable. In array editor, we can edit properties of a variable and we can also get information about the variables. In MATLAB, the current directory tab is above the workspace tab. The Current directory tab shows contents of current directory and its path is shown in current directory window. In windows operating system, the path c:MATLABwork indicates work as a subdirectory and MATLAB as a main directory and is installed in c drive. In current directory window, click on an arrow button to see recently used paths. To change a current directory, click on a button on right side of a window. To find M-files and other MATLAB files, MATLAB uses a search path that is organized in system files. The files that are to be runned in MATLAB should locate in the current directory or in directories available on search path .Math work related tools and files that are supplied by MATLAB are already exist in search path. On desktop from file menu select set path to modify or to add search path or to see which directories are existing on search path. To avoid repeated changing, the current directory adds a commonly used search paths to directory. In MATLAB, the commands used by the user in current and earlier sessions are recorded in command history window. Using right click on command history window, we can select and re-execute previously entered MATLAB then it launches a menu. For execution of the commands select the options from menu. We can select various options from menu for execution of the commands which are useful in implementation of various commands. MATLAB EDITOR TO CREATE M-FILES: The MATLAB editor is used for creating M-files. The graphical window will appear in a separate window or a sub window. The M-files are represented as extension .m on desktop. MATLAB editor is having some options to debug a file and saving a file and to view the file. In differentiating various codes MATLAB editor will perform some simple checkings. In MATLAB, text editor is used to write and to edit M-functions. To edit a text in MATLAB, type as EDIT at prompt then it an M-file is opened with a filename. Therefore it is ready for editing. The files should be in a search path or in a current directory. How to get help in MATLAB: Use the MATLAB help browser for any help in the MATLAB. The help browser will be opened in a separate window when we click on symbol (?) on desktop toolbar or in command window type as help. The Browser Help is displayed separately as a HTML document .HELP browser is incorporated into MATLAB desktop .HELP pane and DISPLAY pane are the two panes that are available in HELP browser. HELP pane is used in finding the information and display pane is used for viewing the information. To perform a search, Navigator pane is used. CONCLUSIONS: This project explains techniques for embedding a data in an color image and also some features are added which include file types excluding bitmap images and Steganography methods. Data extracted from cover image depends on pixel values of an image CODING : %I=imread(sravs.bmp); %%read an image I=uigetfile(.bmp,select the iamge); I=imread(I); b=1; disp(orginal text to be embedded); %txt= textread(message.txt, %c, whitespace , ); fid = fopen(message.txt); A=fread(fid,schar); fclose(fid); A1=char(A); disp(embedding text); txt=A1; txt N = 8*numel(txt); %%%%%%% to find out the total no of elements for the text S = numel(I); %%%% total no of elements for the image if N > S warning( Text truncated to be within size of image );%%%%%%if text size is more than the image size %%%%%% process block segmentation txt = txt(1:floor(S/8));%%%%%% dividing into 8*8 blocks for the text N = 8*numel(txt); end %%%%% initializing the total no of bits for the text and the image p = 2^b; h = 2^(b-1); I1 = reshape(I,1,S);%%%%% resize the elemnts for the new image size %figure ,imshow(I1,truesize); addl = S-N;%%%%%%%take the difference of the elments for the imagfe and the text dim = size(I); I2 = round(abs(I1(1:N)));%%%%%%take the complexity of each block si = sign(I1(1:N)); for k = 1:N if si(k) == 0%%%%%%%replace ment of the bits for the complexity blocks si(k) = 1; end I2(k) = round(I2(k)); if mod((I2(k)),p) >= h I2(k) = I2(k) h; end end bt = dec2bin(txt,8);%%%%%% bint = reshape(bt,1,N); d = h*48; bi = (h*bint) d; %%%%%%remove the complexity blocks of the image and replace with the non complexity blocksof image I3 = double(I2) + bi; binadd = [bi zeros(1,addl)]; I4 = double(si).*double(I3); I5 = [I4 I1(N+1:S)]; intl = reshape(I5,dim);%%%%%%resize the image and display the stego cotents figure,imshow(intl);title(stegnograph image); %return figure,imshow(I);title(original image); I=im2bw(I); %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% %%%%%%%%%%%%%%%%%%%decoding%%%%%%%%%%%%%%%%%%%% siz=length(txt); bsiz = 8*siz; n = numel(intl); if bsiz > n error(Size of text given exceeds the maximum that can be embedded in the image) return end dim = size(intl); addl = n-bsiz; I1 = reshape(intl,1,n); I2 = round(abs(I1(1:bsiz))); p = 2^b; h = 2^(b-1); rb = zeros(1,bsiz); for k = 1:bsiz I2(k) = round(I2(k)); r = rem(I2(k),p); if r >= h rb(k) = 1; end end rbi = (dec2bin(rb,1)); rbin = reshape(rbi,siz,8); rectxt = (bin2dec(rbin)); disp(retrived text from the steg image); rextxt=char(rectxt) return

The Egyptian Pyramids Essay example -- Ancient History Egypt

The Egyptian Pyramids When most people think of Ancient Egypt they think of Pyramids. To construct such great monuments required a mastery of architecture, social organization, and art that few cultures of that period could achieve. The oldest pyramid, the Step-Pyramids, grow out of the abilities of two men, King Djoser and Imhotep. Djoser, the second king of 3rd dynasty, was the first king to have hired an architect, Imhotep, to design a tomb (Time-Life Books, 74). Imhotep was known as the father of mathematics, medicine, architecture, and as the inventor of the calendar (White, 40). He had a great idea of stacking mastabas until they reached six tiers, a total of 60 meters high and its base 180 meters by 108 meters (Casson, 118). A glistening costing of limestone was added to the mastabas that made them shimmer in the sun. The main feature of the pyramid was its 92-foot underground shafts and burial room lined with pink granite. It was the first time that this feature appeared (White, 41). Imhotep surrounded Djoser’s pyramid with a number of funerary courtyards and temples. He then, surrounded these complexes with a mile long protective wall (Time-Life Books, 74). Another pyramid was Khufu’s Great Pyramid. It is the largest tomb every built. It was the height of a forty-story building, and its base was the average size of eight football fields. The pyramid contains about 2,300,000 stone blocks. The limestone was covered with a layer of polished stone to add a shine. Deep inside the pyramid are the tomb chambers, one for the king and another for the queen. Narrow shafts lined with granite lead the way to the tomb chambers (Time-Life Books, 75). Social organization was another key factor in creating... ...0). The Ancient Egyptians were one of the first people to develop such well-proportioned figure. The Egyptian painter painted murals inside of the pyramids depicting the things that the pharaoh accomplished in his life (Cannon, 50). In conclusion, to create such a great monument, like the Step-Pyramid, took the mastery of architecture, social organization, and art that was amazing for that period. Today, we still do not know how the Ancient Egyptians created such grand monuments. Also, we are still fascinated about all the artifacts inside the tomb, and the possible uses for them. It will forever be a mystery. Bibliography Casson, Lionel. Ancient Egypt. 1965. Time Inc. NY, NY. Editors of Time-Life Books. Egypt: Land of the Lost Pharaohs. 1992. Time-Life Books, VA. White, Jon Manchip. Everyday Life in Ancient Egypt. 1963. G.P. Putnam’s Sons, NY.

How to Build a Backyard Kennel

? How to Build a Backyard Kennel? By Kimberly Mathis The most important thing, about building a backyard kennel, is what size, what strength and what features are needed for your dog. What is a backyard dog kennel? A backyard dog kennel is a small, fenced – in area used to contain your dog. It is an area used to keep your dog safe and contained while outdoors. It is not recommended that your dog stay in the kennel permanently. In fact, dog psychologists recommend that you allow your dog time inside as well. What size do you need? Well, what size is your dog? If you have a small dog, you won't have to build a big yard. The larger the dog, the bigger the yard. A yard has to be big enough for your dog to eat, sleep, and use the bathroom. A dog will not soil the area where he eats. This is very important because if you have a large dog and you put him in a small kennel, he has nowhere to eat and do his business. The size of your dog, also, depends on how strong you need to make it. You also need to ask yourself â€Å"How long is my dog going to stay in this kennel? † As I mentioned before, it is not a good idea to make the kennel your dog's permanent home. It causes anxiety in your dog. It also causes behavioral differences in your dog. Okay, let's get started. First, you will need to get supplies. Now most of the supplies can be bought at a local feed store or a local hardware store. You will need the following: Wooden Support Poles. You want these poles to be 6 ft high and at least 4 inches at the base. Unless you have a big dog, then you want to go taller with the posts. We don't want the dog to jump out of his cage and cause a unpleasant mess. U-nails is also required. These will help hold your fence in place. You will also need fencing. The experts prefer you to use portable metal fencing. You will need a gate for your kennel. This gate needs to be heavy and with a latch. That way your pooch can't push it open and escape. Finally, you will need a hammer and a screwdriver. Next, you will need to measure out where you are going to put this kennel. You need to make sure that it is big enough so your dog can run around yet not so big it inhibits your whole yard. Then you go and buy your materials. Remember that your yard is outside and should be able to withstand the forces of nature. Pick your spot. Make sure that there is shade and sunlight. A grassy yard is a good thing. It helps recycle the dog's urine and feces well. You also want to make sure that when it rains, it isn't going to fill up with mud and puddles. These can cause serious problems for your pet. Make your fence. Put your posts in the ground approximately 2 feet down and 4 foot apart. After you put in your posts, you want to put the dirt in around them and pack them down well. It will help your fence stay sturdy and strong. Now you are ready to attach the fence. You will attach your fence by using the U-nails. The experts say to use 3 per post. You are almost finished now. The last thing you want to do is attach your gate. Now to attach the gate, you have to make sure that it will close†¦. that was a little humor†¦. I would be the type to put a gate on and it not close properly. The gate should have a latch on it. You want to screw the hinge onto a post. Check that the gate swings easily. I cannot express how important it is that the latch work. I actually have a backyard dog kennel that was built almost exactly like the one I am describing. There is no latch on the gate. This creates a problem. My dog manages to push the concrete bricks, that are holding the gate shut, out of the way. With a latch, I wouldn't be having this problem. I have stated previously that I have a backyard kennel made almost exactly like the one I described. I found that it doesn't work very well. I have a wolf breed type of dog and she digs out from under the fence. My suggestion would be to lay concrete down and make sure the fence is in the concrete. Also, with a large breed dog, you will want to make sure that it is high enough so your dog will not crawl out of it. We have had that problem as well. I searched for different sites to help me write the best description of a backyard kennel and found only one. It is apparent that most sites do not recommend putting your pet outside in an enclosure. I, personally, am one that doesn't find anything wrong with it. I tried to let my dog inside and she ate my house. She likes being outside. Unfortunately, she likes to be UNDER our house and that is not acceptable. So we built her a dog yard with house and a porch and a canteen area. She is living the life of dogs out there and doesn't seem to like it. She is constantly figuring ways to escape and go under our home and into our duct system. I refuse to put air conditioning in her house. We have a state-of-the-art dog house that is under a perfect shade tree. The only solution, that I could come up with is that I am going to have to install concrete around the fence line. I am hoping that it works and keeps our dog in her yard. I did my essay on this subject in hopes of finding out what we did wrong. Unfortunately the only thing I see that we did wrong was making it her permanent home. I really didn't learn a lot about this but it was a fun and informative subject. This is how to make a backyard dog kennel. http://www. ehow. com/about_4568749_backyard-dog-kennels. html

Share Holder Wealth Maximization Vis a Vis Social Responsibility

Share Holder Wealth Maximization Vis a Vis Social Responsibility Introduction Limited information is found on how economic enterprises can incorporate business ethics and social responsibility as a means through which their primary objective of shareholder wealth maximization is achieved (Hawley 1991, p. 714).Advertising We will write a custom essay sample on Share Holder Wealth Maximization Vis a Vis Social Responsibility specifically for you for only $16.05 $11/page Learn More This lack of ethical considerations seems to be not only confined within the academic sphere but there is evidence of it taking a toll in the realm of corporate practice in the economy. Enterprises have ignored the ethical concerns in strategizing on how they will achieve their goal of wealth maximization. Through their total disregard of ethical issues, corporates are assuming that the mere pursuit of the wealth maximization goal meets the social responsibilities that could possibly be expected from any entity. However, there has been limited res earch and analysis of the ethical foundations and the perceived implications of the goal of shareholder wealth maximization. This paper seeks to analyze to what extent the corporate world incorporates business ethics and social responsibility in pursuing their primary objective of maximizing the shareholders’ wealth and how this pays back in terms of increased returns to the shareholders. It highlights the main differences between the goal of profit maximization and that of wealth maximization and the role played by market forces in the pricing of stocks within the shareholder wealth maximization paradigm. It argues that empirical and theoretical evidence on this subject will most usually lead to overlapping interpretations (Smith 2003, p. 58). Share Holder Wealth Maximization Since Milton Friedman’s largely criticized position that â€Å"the social responsibility of business is to increase its profits†, the ethical aspect in the maximization of shareholder weal th has been given a wide consideration. In order to build a logical analysis of this notion, it is of paramount that we understand the crucial link between the two distinct goals of a corporation, i.e. Wealth maximization and profit maximization. While the two may share some similarities, they are also characterized by various inconsistencies as analysed by Solomon in his work, (Solomon 1963, p. 2). For instance, profit maximization as an objective best suits a traditional macroeconomic market which is characterized by minimal uncertainties; the entrepreneur is the main decision-maker, the shareholding is fixed and determines within a given period.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More This kind of business structure is especially of great utility in analyzing the variables, i.e. Prices of raw materials and end products, production level etc., which occupies a central po sition for any corporate whole. According to Winch (1971, p. 14), profit maximization goes hand in hand with the ethical goal of the utilitarian mode of resource allocation. Contrary to the microeconomic world, proper allocation of resources is very integral to a corporate entity in regard to its financial dealings (Beurden Gossling 2008, p. 412). This difference in terms of the central focus of each establishes new fundamentals which the profit maximization paradigm declines to involve itself with. For example, this whole new structure separates the entity’s decision making from its ownership and places it in the hands of a separate and distinct management body. As this happens, uncertainties on the future earning capability of the firm sets-in when capital stock features in as a variable to be determined too. The goal of wealth maximization is developed by maximally utilizing the utility maximization strategy, i.e. management, being agents of the shareholders are required to maximize the projected utility of the shareholders’ wealth. If for instance wealth is the main argument in the utility of the shareholder, maximizing the anticipated utility of the wealth of the shareholder reduces the core objective of the entity as maximization of shareholder wealth. To this end, the ethical concept of a corporate finance adopts the same approach as that of microeconomics as use of utility maximization incorporates characteristics of the utilitarian ethic (Shaw 2009, p. 569). Conversely, the introduction of an element of the future, uncertainty, separated decision making structure creates complications in utilitarian allocation of resources. When even this basic objective cannot be achieved, it only holds strong for the argument that wealth maximization is incapable of providing a feasible ethical foundation for a corporate entity.Advertising We will write a custom essay sample on Share Holder Wealth Maximization Vis a Vis Social Responsibility s pecifically for you for only $16.05 $11/page Learn More Nevertheless, some essential features of wealth maximization are not included in the utilitarian resource allocation framework. For instance, the wealth of the shareholder is directly linked to the price of capital stock and in extension, the mode through which marketing for ownership claims contains elements of ethical concerns by the entity (Wilcke 2004, p. 198). Working on the assumption that the main objective of an entity is wealth maximization, various issues can be identified. For instance, since wealth maximization is completely dependent on market forces in order to create a strong value for the ownership of the firm, a question arises whether these market forces bring about stock prices incorporating the value of the social responsibility of the firm. To answer this question, we need to determine to what extent security prices reflects information on a firm’s ethical concern. Unfortunately, if this debate continues, it will take us to the more irresolvable question of what the world perceives as constituting proper ethical behaviour. It even gets more complex when management, as the agents of shareholders, gets into the picture and we are faced with the question of whether shareholders would count management actions as constituting acceptable ethical behaviour (Cosans 2009, p. 396). Determining Share Prices Determination of security prices is a fundamental concern of corporate finance. Through efficient market hypothesis, the price of securities is a reflection of the information available to investors when making investment decisions. Through the market hypothesis, we can attempt to analyze the ethical impacts of the wealth maximization goal. For example, if wealth maximization is to meet a specified ethical standard, the price of securities should incorporate information containing ethical elements. In order to succeed in this, we need to first set an ethical standard. Then empirical tests will be carried out based on the changes in prices of securities and determine the impact of ethical issues on the market prices.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The analysis will be made based on the assumption the main goal of the management is maximization of shareholders wealth (Husted Salazar 2006, p. 83). The hypothesis could also test on separate aspects, for example when a certain firm has been known to exhibit differing degrees of adherent to ethical issues. But this latter hypothesis will present various challenges. For example, there may be a situation whereby an organization allows management to engage in both socially acceptable behaviour as well as unethical acts which are perceived to result into positive effects. This may occur where the returns of the illegal acts are significant as compared to the costs to be suffered when such acts come to light such as litigation costs, fines and other penalties, reduced goodwill, etc. there could also be other mitigating factors such as the ability to keep the illegal activities as well hidden company secrets or by putting up strategies for timely damage control when such activities com e to light. Besides, even when using efficient market hypothesis, it is hard to tell whether if an alternative course of action was taken it would have resulted in a different price change pattern. For example, it would be difficult to determine whether the unethical behaviour was a reflection of the ethical failures of the wealth maximization goal or that management diverted from practices consistent with wealth maximization objectives. This debate is premised on the idea that the efficient market hypothesis, by its very nature is characterized by joint hypothesis, i.e. price determination models are usually implied. Such an assumed model of price determination if it dictates that we assess a particular ethical issue, then a null hypothesis of the efficient market hypothesis requires that unethical act would violate the primary goal of wealth maximization. According to Treynor (1981, p. 7), management should address financial demands of the different factions within the organizatio n if it is to emerge as a successful entity. These factions include customers, employees, suppliers and other stakeholders. The wealth maximization goal requires that in pursuing its objectives, a corporation should take into consideration the interests of all the stakeholders of the organization, not just the shareholders. Thus we can use this argument to say that wealth maximization encourages the adoption of socially responsible business behaviour. The crucial connection between wealth maximization and the efficient market hypothesis can be well illustrated using the classical corporate theory. This theory proposes that a firm would most likely invest in a project projecting positive net present value. The variables used to calculate the projected cash flows is based on the performance of the firm which has been theorized by the management where it may have or may have not incorporated ethical behaviour. Here, the price of securities will be based on the management’s asses sment of the market. Including social responsibility and ethical behaviour in calculating the projected cash flows will be in line with wealth maximization where such considerations are reflected on the prices of securities. Empirical Considerations As we have noted above, empirical evidence does not help us determine whether pursuing wealth maximization will amount to a socially responsible and ethical managerial behaviour. It requires us to define what constitutes proper ethical behaviour and since ethical issues are complex in themselves, it will create conflicting opinions on the subject. Nevertheless, we can draw from the few theoretical and empirical studies relating to the impact of socially responsible behaviour on the price of stocks. In this light, it has been argued that price fixing has the potential to increase new entrants into the market industry leading to higher competition and thus diminishing returns (Waldman 1988, p. 78). Therefore, if the wealth maximization is the main objective, price-fixing is aimed at offsetting losses in profit by offering a lower discount rate facilitated by a reduced business risk leading to a higher net profit margin. Yet, if this is not the end result, then price fixing will ultimately have the effect of reducing shareholders’ wealth. Research has shown that disclosing a legal action intended to correct corporate price fixing has resulted in significant negative returns (Skantz et al. 1990, p. 159). On this basis, while the reduced returns could be the market’s punitive costs for behaving unethically, it could also have arisen from a perceived increased business risk which has nothing to do with ethical issues. This is further evidence of the difficulties encountered in attempting to use market data to determine whether pursuing wealth maximization leads to ethical outcomes. Since the reduced returns arose because the market became aware of the unethical behaviour and not because of engaging in the a ctual price fixing, a question arises as to what information was originally included in the prices. If the original share price were impacted by information on the firm’s engagement in price fixing, then the reduced returns could mean that the entity needs to adopt a risky, highly competitive, reduced profit margin business policy. Here, the anticipated litigation costs arising from court cases will be expected to have been discounted into the stock prices. However, if price fixing was done in secrecy, then news on a legal action would lead to price adjustment to reflect the resulting costs of unethical act, which would include the lost goodwill. For this, the costs that would be involved in adopting a more competitive strategy are already reflected in the price. The probability of reaching different conclusions using the same piece of evidence has been found in other areas of our present concern. There is evidence that in making investment decisions, investors do indeed rely on the information available on social responsibility (Patten 1990, p. 581). Other sources reveal superior investment performance of previously divested portfolios, though these results could have resulted from a combination of factors as opposed to mere social concerns. This may be explained in a number of ways. For example, following the net profit value method, the corporate financial theory holds that slight changes in either the projected net cash flows or the perceived discount rate impacts on the returns of capital stocks. Therefore, the grand performance of the divested funds may have resulted from a continuing increased risk or a weakening expected corporate performance as opposed to any ethical issues concerned. This argument can also be applied to the impact of ethical behaviour on investment in the nuclear industry. It has been found that markets place a lower value on nuclear firms at 20% as compared to other industries (Fuller at al. 1990, p. 124). On careful consider ation, the results reveal that perceived risk changes could have contributed to the valuations observed. Thus this leaves us with the option that social responsibility concerns could have had a positive effect on the whole affair. As witnessed above, untangling the effect of a certain activity on the prices of stock has its own complexities. Besides, we have to give room for the possible assumption that management may not be pursuing wealth maximization. There is significant evidence that often times, management has been known to unethically chase their own selfish ends especially if they are in conflict with shareholder wealth maximization (Findlay Whitmore 1974, p. 28). This will give rise to additional agency costs which the shareholders will incur to monitor management activity and in effect, will lead to reduced returns. When agency costs are involved the equation becomes even more complicated as we need to now to assess the effect of agency costs on the security prices. Evide nce of price fixing can be used to explain how agency costs bring-out a whole new interpretation of the empirical data. For example, working on the assumption that there is no diverging information, the stock market values its own stocks from the assumption that wealth maximization is the main objective of the firm. On this basis, announcement of a legal action could produce reduced returns because of the additional costs incurred in monitoring the activities of the management and not because of the unethical behaviour. Therefore, without a way of determining what kind of information was included in the original share price, major difficulties arise in trying to assess whether a certain pricing activity was impacted on by social responsibility behaviour. This raises the requirement for exercise of caution in interpreting the results of any given Empirical Study. The effect of agency costs may also help in the analysis of study results obtained for other perceived unethical activitie s, more so in the area of mergers and acquisition whereby there are insider dealings by the management. Of particular relevance is the case of hostile takeovers. Drawing from debates on what constitutes ethical behaviour (Jones Hunt 1991, 839), we can base our argument on the assumption that hostile takeovers are unethical. As such, it would appear that, ethical behaviour is being rewarded in this scenario. This is because, ordinarily, the returns of the target group increase significantly while those of the hostile bidders become negative to zero following the announcement of the intended takeover, (Franks Harris 1989, p. 238). Further, due to the existence of agency costs, the use of ‘poison pills’ or ‘shark repellants’ by target management will most probably result in negative returns on the part of the target shareholders (Meulbroek et al. 1990, p. 1113). So do these results support the argument that ethical considerations on hostile takeovers are evi denced in stock prices? Unfortunately, this evidence raises even more questions rather than answering them. For instance, given the potentially negative returns suffered by bidding shareholders, it would not be appropriate to say that the management bidders are pursuing wealth maximization for their shareholders, thus increasing the likelihood of incurring agency costs. On the other hand, it is likely that the bidding management only pays high prices to the target group innocently since the target bid premium payable is in most cases given back through wage concessions. Besides, the ‘unethical’ bidders will most likely be the targets in the future other than the bidders who helped increase the firm value. Thus from this conflicting evidence, it is only the unethical takeover activities that are properly reflected in the ultimate prices of stock. Undoubtedly, this is as a result of the obvious reduction in firm value that is a unique feature of the anti-takeover strategi es. Conclusions This paper has argued that wealth maximization as an objective will naturally adopt the ethical expectations inherent in its particular niche of operation. The best indicator of management’s performance is the price changes of the entity’s stocks in the capital market. Though management decisions could incorporate ethical concerns, it is the security market to determine whether these decisions are in accordance with wealth maximization goal through a valuation of stocks. Thus, this raises the question of to what degree is ethical behaviours reflected in the prices of securities? This question requires a careful study on the implications of unethical behaviour to the ultimate stock prices. But this presents a problem in that there is no established procedure on how to determine what does or does not constitute ethical behaviour, among other difficulties. For instance, assuming that stock markets rewards certain business ethical behaviour through attracti ve prices of securities, it does not automatically follow that when one pursues wealth maximization it will result into a socially responsible corporate behaviour. However, enterprises would most likely choose this path by choosing to believe that as long as actions are geared towards wealth maximization, then they are ethical and, therefore, justifiable. With this, changing management policy may become a big challenge since even reduced securities prices may not be adequate market sanctions. Thus even if it was determined that managerial decisions need to incorporate ethical considerations, market forces will not be sufficient to induce this. From this we can conclude that pursuing wealth maximization for the shareholders will definitely not result to a socially responsible corporate behaviour. However, evidence shows that the pursuit of wealth maximization could deter an entity from engaging in illegal activities. For example, a negative pattern of security price changes is noted whenever it is revealed that an entity has been engaging in illegal activities. Generally, it would appear reasonable to conclude that the stock market presumes that entities try to avoid engaging in illegal activities because of the possible incidental costs that they may suffer from engaging in such activities. References Beurden, P Gossling, T 2008, ‘The Worth Of Values – A Literature Review On The Relation Between Corporate Social And Financial Performance’, Journal Of Business Ethics, vol. 82 no.1, pp 407-424. Cosans, C 2009, ‘Does Milton Friedman Support A Vigorous Business Ethics?’ Journal Of Business Ethics, vol. 87 no.1, pp 391-399. Findlay, M Whitmore, G 1974, ‘Beyond Shareholder Wealth Maximization’, Financial Management (Winter), vol. 1 no1, pp. 25-35. Frank, J Harris, R 1989, ‘Shareholder Wealth effects of Corporate Takeovers. The U.K. Experience 1955-1985’, Journal of Financial Economics, vol.1 no.2, pp. 225 -249. Fuller, R, Himman, G, Lowinger, T 1990, ‘The Impact of Nuclear Power on the systematic Risk and Market value of Electricity Utility Common Stock’, Energy Journal, vol. 2 no1, pp. 117-113. Hawley, D 1991, ‘Business Ethics and Social Responsibility in Finance Instruction: Abdication of Responsibility’, Journal of Business Ethics, vol. 3 no.2, pp. 711-721. Husted, BW Salazar, DJ 2006, ‘Taking Friedman Seriously: Maximizing Profits And Social Performance’, Journal Of Management Studies, vol. 43 no.1, pp 76-91. Jones, T Hunt, R 1991, ‘The Ethics of Leveraged Management Buyouts Revisited’, Journal of Business Ethics, vol. 3 no.4, pp. 833-840. Meulbroek, L, Mitchel, M, Mulherin, J, Netter, J Poulsen, A 1990, ‘Shark Repellents and Managerial Myopia: An Empirical Test’, Journal of Political Economy, vol, 1 no.4, pp. 1108-1117. Patten, D 1990, ‘The Market Reaction to Social Responsibility Disclosures: The Case of the Sullivan Principles Signings’, Accounting, Organizations Society, vol.1 no.5, pp. 575-587. Shaw, W 2009, ‘Marxism, Business Ethics, And Corporate Social Responsibility’, Journal Of Business Ethics, vol.86 no.1, pp 565-576. Skantz, T, Cloninger, D Strickland T 1990, ‘Price-Fixing and Shareholders Returns: An Empirical Study’, Financial Review, vol.3 no.5, pp. 153-163. Smith, CN 2003, ‘Corporate Social Responsibility: Whether Or How?’ California Management Review, vol. 45, no. 4, Summer, Pp 52-76. Solomon, E 1963, The Theory of Financial Management, Columbia U Press, New York. Treynor, J 1981, ‘The Financial Objectives in the Widely Held Corporation’, Financial Analysis Journal, vol.1 no.5, pp.5-15 Waldman, D 1988, ‘The Inefficiencies of Unsuccessful Price Fixing Agreement’, Antitrust Bulletin, vol.6 no.3, pp. 67-93. Wilcke, RW 2004, ‘An Appropriate Ethical Model for Business and a Critique of Milton Friedman’s Thesis’, The Independent Review, vol IX, no. 2, pp 187-209. Winch, D 1991, Analytical Welfare Economics, Penguin, Harmonsworth, U.K.

Evaluate the Influence of Two Major Theories of Ageing on Health and Social Care Service Provision Essays

Evaluate the Influence of Two Major Theories of Ageing on Health and Social Care Service Provision Essays Evaluate the Influence of Two Major Theories of Ageing on Health and Social Care Service Provision Paper Evaluate the Influence of Two Major Theories of Ageing on Health and Social Care Service Provision Paper Occupational Therapy is influenced by The Activity Theory because it helps to promote independence. An OT’s typical day would be that they teach their patient a self-care task i. e. dressing, grooming or personal hygiene. They could also teach their patients therapeutic activities such as balance, coordination or a reaching task, or help them with a therapeutic exercise which helps to improve their flexibility, strength and movement. All of these tasks will aid the patient in their everyday life, making it easier for them to do the things they want this could be to brush their own teeth, use the restroom by themselves and even dress themselves without any help. An OT really helps to do this because they tailor their treatments to each patient they have. This helps the patient to get the most out of the treatment and rather than just get back their movements they had before they overall improve it with the treatments. An OT also promotes activities because it gets people back out after they’ve had a stroke, illness or a fall doing the things that they loved and the things that they want to do. This also gets people socializing again because they are getting out and about and not staying cooped up inside their home, so therefore OT promotes social interaction as well as promoting activities. Occupational Therapy and the Disengagement Theory Occupational Therapy is influenced by The Disengagement Theory because people with may withdraw from society because they feel that they don’t need the therapy and/or they don’t want it. By them feeling like this they may not go to the treatments and as a result of this, their condition may get worse making them stay inside their home. For example, if a male resident had a fall and broke his arm he may be reluctant to get any treatment for it because he feels that he hasn’t ever needed a doctor before so he will be fine and it will heal. This may result in his arm getting stiff and the movements in his arm may be halved. This could make him feel stupid and embarrassed because he now can’t do things like he did before, making him want to stay inside and not participant in activities or social events. Care homes and The Disengagement Theory Care homes are influenced by The Disengagement Theory because they allow people to withdraw from society, they are primarily care based and only a few activities are put on in the care homes. Some examples of the activities they may put on are bowls and hoops. These activities may not interest all the residents which may make them stay inside as they can’t be bothered to come down just to watch or the activity may not accommodate for their needs so they may not be able to participate in the activity, this could make the resident feel stupid, embarrassed and lonely as they can’t get involved with the other residents. This in turn could make the resident not want to come out of their apartment at all because they haven’t got involved with anything in the past, they may feel less confident because they don’t know anyone very well. This may create potential barriers to social interactions between the residents within the care home. Care homes don’t promote independence very well either. This is because they are mainly care givers, however this isn’t all care homes just the majority. They don’t promote independence because they would normally give all the care, such as helping residents get dressed, bathe them, help them to go to the restroom and even help them to eat. Some residents may like this because it gives them an easy life but some residents won’t have much of a choice because of their health or illness they may have. Care homes and The Activity Theory Care homes are influenced by The Activity Theory because some care homes such as Norah Bellot Court promote activities to get the residents involved and moving which allows the staff members to assess the health and wellbeing of the residents. Norah Bellot Court is more of a sheltered housing but I’m going to use it as an example. They put on activities such as pool or snooker, bowls, hoops, the WII plus all the games they may have, book days and movie days. You can tell that the residents really like to get involved even when their health or illness does disable them from joining in they still come down to join in and share the company with the other residents.

Clock Manufacturing Essay Example | Topics and Well Written Essays - 2500 words

Clock Manufacturing - Essay Example All cuckoo clocks sold and manufactured within Austria have to comply with this new standard. However this new technical standard was not informed to the European Commission. European Parliament and Council Directive 98/34 on the provision of information in the field of technical standards, require that all new technical standards be notified to the Commission before they are brought into force. Secondly, from November 2005, following complaints from German trading standards officers about the poor quality of some cuckoo-clocks exported from Austria, all cuckoo clocks which did not meet the new technical standards specified were prohibited from being exported to countries outside Austria to preserve the reputation of the clock manufacturing tradition. This new legal provision was again not notified to the Commission. Considering these new standards and legal provisions in place and the fact that the European Commission has not been informed either of the new standards in place or the changes to legal provisions for export of clocks from Austria, legal advice on manufacturing and export/import issues could be given to the clients. The role of the direct effects of directives and access to justice for individuals with employment rights seem to be central in such situations1. Differentiating direct and indirect effects, indirect effects apply to a principle in EU law stating that EU directives are capable of dis-applying laws of member states if these laws are not approved by the EU under certain circumstances2. Thus in EU a directive is a legislative order requiring implementation by every member state of the union. Member states however do have the freedom to implement their own laws, yet they must comply with the aims of the original directives3. In contrast, regulations imply a single law that is directly effective on each Member state. EU law has the provision for incidental effects which is used in association with indirect effects of EU directives for suits that are filed against individuals4. An individual cannot be sued for failure to comply with EU directives. In a similar case C-194/94 CIA Security International SA v. Signalson SA and Securitel Sprl ([1996] ECR I-2201, the CIA had attempted to distribute a burglar alarm in Belgium which was not in accordance with the technical specifications laid out by the Belgian authorities. Yet, since the Belgian government had failed to inform the EU on these specifications, as required by a directive in 1983, the court ruled that this constituted a disrespect or degradation of the effectiveness of the EU directives. The EU directives are meant to remove barriers to trade within the EU5, and that the Belgian government's breach of this directive made the Belgian law inapplicable to individuals. This assignment is done to advise the clients Andreas, Bergland and Christina, who are facing similar problems and the cases for each are given below. The Legal Provisions: A new technical standard for Austrian cuckoo clock manufacturing was introduced in 2005 and this is a standard laid down by the Austrian authorities. The new regulations and legal standards that all manufacturers and sellers of Austrian clocks are required to follow are given in the context of advice to three clients namely Andreas, Bergland and Christina. The three cases are discussed separately according to the legal provisions available and the legal regulations

International Political Economy Essay Example | Topics and Well Written Essays - 3500 words

International Political Economy - Essay Example (Ttreault and Abel, 1998: p. 3). With reference to the material reality individual actors are expected to be pursuing their self-interest through bargaining and the interplay of the market. (Ttreault and Abel, 1998: p. 3). Similarly considering the ideological reality one would expect to see a multi-faceted order and its potential for improving overall production and wealth skewed in various ways to provide different sorts of short-term advantages for those who can manipulate the system to conform to specific goals. (Ttreault and Abel, 1998: p. 3). For instance the flow of resources, the availability of money as well as the cost of doing business can be manipulated, even by weak countries if they seize the right moment. While the material reality may be evolving toward a complex interactive system, such an outcome serves to justify and describe one way or another to rig the system to a particular advantage rather than to structure a mutually beneficial international economic order likely to raise overall global wea lth but unlikely to generate individual distinction or preeminence for particular countries. (Ttreault and Abel, 1998: p. 3). Dependency theory refer to a set of theories, which maintained that third world countries fail to attain adequate and sustainable levels of development as a result of their dependence on the advanced capitalist economies. (Scott and Marshall, 2005). Built upon Lenin's theories of imperialism, the theory focused upon the economic penetration of the third world particularly Latin America by the large capitalist economies. (Lievesley, 2003). Dependency theory was developed in 1960 and called into question the structural developmentalism associated with Raul Presbish as well as the United Nations Economic Commission for Latin America (ECLA), which emerged in 1948 in Santiago, Chile. (Lievesley, 2003). According to the ECLA, the world was regarded as divided into center (the developed, industrialized North) and the periphery (the underdeveloped agricultural South) and the relationship between them was determined by the structure of the world economy. (Lievesley, 2003). The economy of Latin America concentrated on the production of primary inputs for export to the developed industrialized North. Presbish later discovered that instead of a mutually advantageous relationship between North and South, there was an unequal exchange with Latin American economies facing a long-term secular decline in their terms of trade thereby resulting in a chronic balance of payment deficits with the periphery having to export more and more in order to maintain the same levels of manufactured imports. (Lievesley, 2003). The figure in the following page represents the relationship between the developed industrialized North and the underdeveloped agricultural south. Figure 1. Dependency Theory Core/Metropolitan Centre Power Development Unequal Exchange Periphery Under development Marginal = Dependency Theory Source: Lecture Notes. Frank, a German Economist of development was the major contributor to dependency theory who in his book Capitalism and Underdevelopment in Latin America (1967), concentrated upon the external mechanisms of control exerted by the centre (or metropole) upon the periphery (or satellite). (Lievesley, 2003; Scott and Marshal, 2005). The centre maintained the periphery in a state of underdevelopment for