Topics in Development Economics:Country Risk Analysis

By Novella Bottini

How to contact me:

Office Hour: Check on liuc.it Tower building 4th floor

E-Mail: nbottini@liuc.it

Course Structure (1)

7 Lectures: Class Attendance is required (min 5/7); Lively Class Participation is expected; The Economist: 10 minutes

presentation;

Course Structure (2)

Course Material: Book: Country Risk Assessment

Authors: Bouchet, Clark and Groslambert

Eds. Wiley, 2003. Additional readings references are

provided by the lecturer; Slides available on line after the lesson.

Final Evaluation: individual essay + class participation

Individial Assignment:

Choose a Developing Country; Country risk analysis using both the

qualitative and quantative methodologies.

2000 words (Excluding graphs and charts);

Submission by email: 17th May 2010 (not accepted earlier or later submission!).

Course Structure (2)

Lecture I-II Why this course? Trends in global market and emerging markets features;

Lecture III Definition of Risk;

Lecture IV-VI The Qualitative Approach to Country Risk Analysis and its Economic Foundation;

Lecture VII CRA: Ratings Agencies Approach;

Lecture 1:Why this course?

Trends in global market.

Why a Course on “Country Risk Analysis”?

What does ‘Country Risk Analysis’ mean?

Who could be interested in this analysis?

Why a Course on “Country Risk Analysis”?

Is it an ‘hot topic’? Why are we interested in other

countries’ risk level? Why is it linked to Development

Issues? Does it regard only Developing

Countries?

Globalisation: def and features

What is Globalisation? Which elements are involved in the

globalisation process?“Process whereby domestic product,

capital and labour markets become more integrated across borders”

Is it a new phenomenon?

Globalisation:main drivers

Technological Change: Speed of transportation and communication; New tradable goods;

Political changes: China’s economic reform; Fall of Berlin Wall; Collapse of Soviet Union;

Economic Policy choice; Export-oriented policies; WTO; Bilateral and regional agreements.

Globalisation’s Elements

GOODS

Trade Exposure

Trade and Transaction Costs

Phone Calls

Composition of World Trade

Offshoring – Production Relocation

Intermediate Goods

Offshoring: Definition

Not only Goods……

Service Sector

Service Sector

Globalisation’s Elements

CAPITAL

Capital: an heterogeneous identity

Capital Flows from the Major Industrialized Countries (Billions of U.S. Dollars)

1975 1995

Portfolio Investment (Capital Markets) 12.4 330.0

Direct Investment (Multinational Companies) 34.7 215.0

Bank Loans (Commercial Banks) 46.2 55.0

Foreign Aid* (Governments/Multinational Institutions) 13.3 58.9

Source: Global Public Policy, Wolfgang H Reinicke * OECD Data. Only includes flows from OECD countries to developing countries.

International Capital Flows: Trends

International Capital Flows & Developing Countries

International Capital Flows and emerging markets

References

OECD (2007):“Economic Outlook – Making the Most of Globalisation”.

World Bank (2007): “Global Economic Prospects – Managing the Next Wave of Globalisation”, chapter 1-2.

WTO (2008):”World Trade Report: Trade in a Globalizing World”.

Bottini, Ernst, Luebker (2007): ”Offshoring and the labour market: what are the issues?”, ILO working paper.