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Country Analysis
Mode of Analysis
• View country as a unit much like a firm with
goals, comparative advantages and
measurable outcomes.
• More complicated as the goals are less
obvious, constituencies more varied, and
decision making less clear.
• Examine past & present and project into the
future.
o Must choose time frame of analysis to guide
focus.
• No perfect system for describing a
country’s situation.This system offers a
straight-forward, easily comparable
framework.
• Country-level approach may also be
questioned. Any country has many
individual actors which will each have their
own objectives, strategies and
performance measures.
Three Parts
• Strategy
• Context
• Performance
Strategy
• Vision - Overall view of society
• Goals
• Policies
Vision
Guiding vision of the country as a place at the
very longest term level.
Goals: What and why?
• Economic Goals
•
• Political Goals
•
• Social Goals
•
Economic Policies
• Economic Policies: Obviously of Greatest Interest
Dimensions of Analysis
o Free Market Implementation
vs.
Government Control
o Externally Oriented vs. Internally Oriented
o Producer Oriented vs. Consumer Oriented
Economic Policies
• Fiscal Policies:
o
o
o
Quantity of Government Spending as a share of GDP
Strategy of Tax Collection
Budget Deficits
• Monetary Policies
o
o
Inflation Targets
Exchange Rate Policy
• Income Policies
o
Minimum Wage
• Educational Policies
• Foreign Trade and Investment
o Tariffs and Capital Controls
o Export Industry Policies
o Attract FDI
• Industrial Policies
o Targeted Industries : Fiscal/tax
subsidies
o Antitrust
o Regulatory Policies
Noneconomic Policies
• Social Policies
o Population Policies
o Crime Policies
• National Security Policies
o Defense Spending
o Diplomacy & Alliances
• Political Reform Policies
Context
Context includes the constraints on policy
actions and the resources available to the
country.
Dimensions of Analysis
• Domestic vs. International Constraints
• Human vs Natural Resources
Context
• Resources
o Natural Resources
o Capital Resources
o Human Capital Resources
o Social Resources
• Players of the Game
o Firms: Corporate Sector
o Government Actors
o Non-state Actors
• Rules of the Game
o Formal Rules
o Informal Rules
• International Dimension
Context
• Resources
• The Game
o Rules of the Game
o Players
• International Context
Resources
•
•
•
•
Natural Resources
Capital Resources
Human Capital Resources
Social Resources
The game
• Players of the Game
o Firms: Corporate Sector
o Government Actors
o Non-state Actors
• Rules of the Game
o Formal Rules
o Informal Rules
The International Dimension
Performance Indicators
• Before the analysis, we should choose
which is the scope in terms of time.
o Long-Term
o Medium-Term
o Short-Term
• Purpose will drive the choice of scope.
Scope will drive the choice of performance
indicators.
Short-term Indicators
• Financial Market & Exchange Rate Volatility
• Balance of Payments (Trade Balance and
Investment Flows)
• Likelihood of Financial Crisis
• Unemployment & Business Cycles
• Interest Rates
Medium Term Indicators
• Inflation Rates & Longer Term Interest Rates
• Prospects for Medium Term Economic Growth
o Investment & R & D as Share of GDP
o Historical Returns on Capital
stock returns,
5 Year ICOR - Inflation Adjusted GDP
Growth Rate/Investment%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Real
Real
GDP
GFCF
Growth
411,941 114,395
450,617 124,971
9.4%
464,058 127,326
3.0%
491,530 116,860
5.9%
540,216 119,966
9.9%
544,080 120,037
0.7%
604,127 127,393 11.0%
685,115 145,444 13.4%
742,971 157,232
8.4%
759,480 163,353
2.2%
789,088 176,685
3.9%
834,022 193,314
5.7%
884,840 210,684
6.1%
938,313 216,908
6.0%
994,738 249,541
6.0%
1,017,550 266,969
2.3%
1,060,215 295,382
4.2%
1,113,824 335,981
5.1%
1,046,700 310,404
-6.0%
1,073,453 258,398
2.6%
1,158,807 278,835
8.0%
1,164,568 286,223
0.5%
1,186,008 272,799
1.8%
1,221,659 275,329
3.0%
1,325,091 282,173
8.5%
1,418,935 293,610
7.1%
1,518,541 314,534
7.0%
1,615,431 325,349
6.4%
1,653,636 323,820
2.4%
(I/Y)_-1 ICOR
27.8%
27.7%
27.4%
23.8%
22.2%
22.1%
21.1%
21.2%
21.2%
21.5%
22.4%
23.2%
23.8%
23.1%
25.1%
26.2%
27.9%
30.2%
29.7%
24.1%
24.1%
24.6%
23.0%
22.5%
21.3%
20.7%
20.7%
20.1%
0.34
0.11
0.22
0.42
0.03
0.50
0.64
0.40
0.10
0.18
0.25
0.26
0.25
0.26
0.09
0.16
0.18
-0.20
0.09
0.33
0.02
0.07
0.13
0.38
0.33
0.34
0.31
0.12
5 Year
Average
0.22
0.25
0.36
0.40
0.33
0.36
0.31
0.24
0.21
0.24
0.22
0.21
0.19
0.10
0.06
0.11
0.08
0.06
0.13
0.19
0.19
0.25
0.30
0.29
HK ICOR (5 Year Rolling Averages)
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
20
06
20
08
20
00
20
02
20
04
19
96
19
98
19
90
19
92
19
94
19
86
19
88
0
Long Term Indicators
• Societal Restructuring - Qualitative
o Demographic Changes
o Sectoral Reform
(Liberalization/Nationalization)
o Infrastructure Modernization
o Institutional Political Changes
Diagnoses
• If performance has not captured goals, analysis might offer
some additional information about what sort of reasons may
have lead to the short-comings.
Synthesis
• Construct a story that uses the different elements
to describe the situation faced by the country.