Disinvestment and reinvestment Essay Example | Topics and Well Written Essays - 1500 words

Disinvestment and reinvestment - Essay Example Disinvestment refers to the use of a concerted economic boycott, with specific emphasis on liquidating stock, to pressure a government towards policy or regime change. Ronald Reagan, the former American President during his regime the disinvestment movement was at its peak, also opposed it, instead favoring a policy of "constructive engagement" These principles called for corporations doing business in South Africa to adhere to strict standards of non-discrimination in hiring and promotions to set a positive example. The most frequently-encountered method of "disinvesting" was to persuade state, county and municipal governments to sell their stock in companies which had a presence in South Africa, such shares having been previously placed in the portfolio of the state's, county's or city's pension fund. Several states and localities did pass legislation ordering the sale of such securities, most notably the city of San Francisco. The Sudan Divestment Task Force collaborates with Amne sty International, International Crisis Group, a variety of international NGO's, and most of the major socially responsible investing firms in the US. Calvert, the largest socially responsible mutual fund company in the US, has explicitly endorsed the targeted divestment approach as one that exerts maximum influence on the Sudanese government while minimizing unintended consequences, such as the important development role basic commerce in Sudan plays in improving general living standards for all. In simple words Disinvestment takes place when proprietors or people stop investing in the community, building or neighborhoods and thus to end up with slum areas. Disinvestment hampers economic growth of a nation as a barrier of Urbanization. Demographically, the Urbanization denotes redistribution of populations from rural to urban settlements in a process associated with development of civilization. Since disinvestment phase of an economy yields zero to the social and even cultural enhancement of the people, I would feel empathy for the people and the locality during such dark time. From a philanthropic point of view, it curbs the birthright of the populace to live a better life for certain political or demographic reasons. If opportunity prevails, I would love to motivate the populace to work hard in order to attract investors for the welfare and development of the region. 2. Reinvestment as the etymology suggests stands for the economic period when investors foresee dividend in certain area of production and desire to sustain growth with their inputs. When a community or proprietor see value in the land and begin to rehabilitate an area that has lost value over the years and worth fixing such as water front properties paves the way to reinvestment. Remarkably, it is a product or urbanization. There are two major types of reinvestments; Capital Reinvestment and Manpower cohesion. Investors usually accumulate such funds from dividends, interest and capital gains earned in an investmentor mutual fundto purchase additional shares or units, rather than receiving the distributions in cash. Therefore, in terms of stocks, it is the reinvestment of dividends topurchase additional shares. On the other hand, in terms of mutual funds, it is the reinvestment of distributions and dividends to purchase additional units of that fund. Similarly, in terms of tax gain or loss harvesting, it is the realization of losses to offset a capital gains over liability. This is definitely a