Topics in Development Economics: Country Risk Analysis
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Transcript of Topics in Development Economics: Country Risk Analysis
Topics in Development Economics:Country Risk Analysis
By Novella Bottini
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.