ROLE OF NATIONAL GOVERNMENTS BA 447 Day 5 & 6. Virgin of Guadalupe statue made in China Contrast...
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Transcript of ROLE OF NATIONAL GOVERNMENTS BA 447 Day 5 & 6. Virgin of Guadalupe statue made in China Contrast...
Virgin of Guadalupestatue made in China
• Contrast three countries: what is the significance of the Virgin of Guadalupe statue being made in China– Mexico– China– Egypt
• What makes one country succeed faster than another?
Exercise
• As we go through each type of reform . . . • “wholesale” reform• “retail” reform
• Let us know if your article is related . . .– Brief description– Country – Your thoughts? questions?
Reform
• Macro-economic approach to reform– Privatization– Deregulate financial markets
• Entry of foreign banks• Allow repatriation of foreign company earnings
– Float currency– Encourage FDI– Shrink subsidies, force competition– Reduce tariff barriers– Flexible labor laws
IFC/WB prescription
• Simplify and deregulate, allow market forces to “manage” economy
• Enhance property rights• Use ICT, including internet, to implement
regulation. One benefit: reduces human interference and therefore corruption
• Reduce court involvement• Continuous process• Lately, reduce corruption
Discussion
• Privatization: benefits, social issues– Example: Japan Post, Callao port (Peru)– Opportunities for global business
• Shrink subsidies, reduce tariff barriers– Impact on domestic economy– Opportunities
• Others?
Success stories
• Mexico to some extent, although he really forgets that 40% of the revenues of the Mexican government comes from oil
• India, but is development limited to pockets?
• Reduction in poverty rates in China; however the numbers are still staggering – discuss numbers on p 315
Infrastructure issues
• Roads, bridges, electricity
• Communications facilities
• Access to computers and internet
• Government issues:– Priorities -
• Availability of support industries, including educational facilities
Reforming regulatory institutions
• Sources of “rent”– Those who work within these agencies– Politicians, etc.
• Large, e.g. 11,000 employed in Philippine IRS
• Person oriented rather than system
• Find a way to “work” with the system
Reform “retail”
• Micro-enterprise development• Visit from Mercy Corps
– Focus on facilitating enterprise in devastated areas– Reducing or removing bottlenecks, etc.
• Idea is to facilitate or encourage the formation of enterprises, which in turn creates jobs– Infrastructure– Regulatory institutions– Education– Culture
Reform “retail”
• How easy is it to start a business?– Number of steps– Number of days, e.g. 168 days in Jakarta, 19 days in
Panama, 2 days in Australia
• Ability to hire and fire, e.g. more than a year in UAE, company usually lost under a particular Labor secretary in the Philippines
• Enforce a contract, e.g. collection procedures, bribe sheriffs, etc.
In class writing
• Would “reform wholesale and retail” have been sufficient for a country like China to be the manufacturing power house it is now?
Discussion
• Examples of how these governments actually work? – Egypt (based on student reports)– Mexico (based on student reports)– Additional notes on India– Myth of China, Inc.– HongKong as Chinese economy evolved
Egypt
• 4.95% growth rate• Perceptions of corruption: state capture• WB/IFC ranking on ease of doing business
– Hiring and firing workers: 165th
– Ease of doing business: worst among Middle east countries
• Some hope: Egyptian Education Initiative, a partnership between public and private sector
Mexico
• Maquiladoras – Refers to a miller’s portion of flour as payment
for grinding the wheat– Manufacturing plants along Mexico-US border
• in general wholly owned by US corporations• exporting to the US
• Started in the 1960s– By mid ’80s, 2nd largest export next to oil– NAFTA (1994) accelerated this growth
Mexico
• Recession in 2000 affected growth• Attempt by Mexican government to induce
relocation of these factories to south• 20% of maquiladoras closed around this
period– A third relocated to china
• 2006: China overtook Mexico as US second largest trading partner (next to Canada)
Mexico
• Oil remains a major export
• New president wants to focus on tourism
• Rules and regulations have changed at the expense of maquiladoras
• Labor practices –– Child labor, long hours, hazardous conditions– Lack of regulatory protection– “a godsend to Mexico”, meaning jobs
India article
• Role of multinationals in pushing development of India outsourcing
• Role of government– End regulation, e.g. satelite dishes require
presence of government official– Allow foreign investment
• Some evidence of overheating– Lack of infrastructure– Inflation pressures
Discussion
• Examples of how these governments actually work? – Egypt (based on student reports)– Mexico (based on student reports)– Additional notes on India– Myth of China, Inc.– HongKong as Chinese economy evolved
Focus on China
• Prior to accession to WTO ’95
• 1970s: mechanisms to allow foreign investments - Foreign Invested Enterprises
• 1980/1990s: Special Economic Zones– Shenzhen, Guangdong, Pudong
• Initial request to enter GATT(WTO): 1986
• 1992: US – PROC Trade Agreement
Tank Man and Friedman
• Reconcile conclusions in Friedman with those in Tank Man– Role of the Berlin Wall? In relation to
Tienamen Square and Tank Man– Reason for China opening up– Issues not raised or papered over in
Friedman, for example, poverty? Freedom and justice?
• Implications for global business?
China Info
BBC News on China
Reforms in China
Current HK facts and figures (I)• Population = 7 million• Age structure: median age 39
– Under 15 (14%), 65+ (12%) • Male:female ratio = 921:1000• Nationalities: 95% Chinese descent
– Philippines 130,000; Indonesia 114,000; US 28,000; Canada 22,000; Australia 16,000; UK 13,000
• Religions mainly Buddhism and Taoism • Employment = 3.4 million• Average Wages = HK$10,797 (US$1400) per month• Unemployment rate = 4.4%• Economic growth = 6.8%• 98% = Small and Medium Enterprises (<50 Non-manuf’g or
<100 Manuf’g people)
Hong Kong’s History & Economic Milestones
1843 June 26th Hong Kong declared British Crown Colony
1898 June 9th Convention of Peking : Extension of the Hong Kong Territory
1841 - 1949 Hong Kong declared a Free Port; healthy and active entrepôt
1950 – 1980 Industrialization of Hong Kong
1978 – PRC’s Open Door Policy
1980 – De-industrialization
1997 June 30th Expiration of 99 year lease and end of Colonial rule
1997 July 1st Establishment of Hong Kong Special Administrative Region, and reunification with China : One country, two systems
1997/1998 Set-back : Economic impact of the Asian Financial Crisis
2001 Set-back : Economic impact of 9/11
2003 Set-back : Severe Acute Respiratory Syndrome (SARS)
From a presentation byMolly Loomis
Andrew StephensMike Radic
Brain Westerberg
African Global CompetitivenessInitiative
Introduction• U.S. Government spent over $19 Billion in
Foreign Aid in 2004*• USAID is the primary agency to administer
foreign aid– Managed $12.65 Billion in 2004*
• Outline– USAID and AGCI in Kenya– 2 projects that are in progress– What the Kenyans think about aid– Conclusion: Is aid helping? *Source: CRS Report for
Congress, 2004
USAID
• ObjectivesEconomic, agriculture and trade
growth– Global health– Promoting democracy, conflict
prevention– Humanitarian assistance
African Global Competitiveness Initiative
• Established 3 hubs throughout Sub-Saharan Africa to increase trade competitiveness
• $200 million, 5-year project
• 2 main projects– Customs Software Interface – COMESA Regional Customs Transit
Guarantee
Customs Software Interface
• Form trade relationships between border countries.
• In 2005, telecommunications survey of customs border posts.
Lunga Lunga, Kenya
• 22 customs officers
• No landline
• No internet
• No computers
• Totally manual process
Revenue Authorities Digital Data Exchange (RADDEx)
• RADDEx Committee- KRA and URA
• Communication is key!
- Customs data will be communicated instantly from point of transit
• Two tier approach
Transport Infrastructure• Essential for economic and
social growth – Improved transportation
spreads knowledge and goods alike
• Kenya is the key – Development of
Infrastructure pivotal to region
• Problems and Potential – Kenyan roadways– Mombasa Sea Port
COMESA Regional Transit Customs Guarantee
• Common Market of Eastern and Southern Africa – Made up of 18 African countries
• Large area for foreign investment
• Regional Transit Customs Guarantee – Focus on reducing security issues of goods in
transit within COMESA