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. oMust 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

oFree Market Implementation vs. Government Control

oExternally Oriented vs. Internally OrientedoProducer Oriented vs. Consumer Oriented

  

Economic Policies

• Fiscal Policies: o Quantity of Government Spending as a share of GDPo Strategy of Tax Collectiono Budget Deficits

• Monetary Policieso Inflation Targetso Exchange Rate Policy

• Income Policieso Minimum Wage

• Educational Policies  • Foreign Trade and Investment

oTariffs and Capital ControlsoExport Industry Policieso  Attract FDI

• Industrial Policieso  Targeted Industries : Fiscal/tax

subsidiesoAntitrustoRegulatory Policies

Noneconomic Policies

• Social PoliciesoPopulation PoliciesoCrime Policies

•  National Security PoliciesoDefense SpendingoDiplomacy & 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

• Resourceso Natural Resourceso Capital Resourceso Human Capital Resourceso Social Resources

• Players of the Gameo Firms: Corporate Sectoro Government Actorso Non-state Actors

• Rules of the Gameo Formal Rules o Informal Rules

• International Dimension

Context

• Resources• The Game

o Rules of the Gameo Players

• International Context

Resources

• Natural Resources• Capital Resources• Human Capital Resources• Social Resources

The game

• Players of the Gameo Firms: Corporate Sectoro Government Actorso Non-state Actors

• Rules of the Gameo Formal Rules o Informal Rules

The International Dimension

 

Performance Indicators

• Before the analysis, we should choose which is the scope in terms of time.oLong-TermoMedium-TermoShort-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 GDPoHistorical Returns on Capital 

stock returns, 5 Year ICOR - Inflation Adjusted GDP Growth Rate/Investment%

Real Real 5 YearGDP GFCF Growth (I/Y)_-1 ICOR Average

1980 411,941 114,395 1981 450,617 124,971 9.4% 27.8% 0.34 1982 464,058 127,326 3.0% 27.7% 0.11 1983 491,530 116,860 5.9% 27.4% 0.22 1984 540,216 119,966 9.9% 23.8% 0.42 1985 544,080 120,037 0.7% 22.2% 0.03 0.22 1986 604,127 127,393 11.0% 22.1% 0.50 0.25 1987 685,115 145,444 13.4% 21.1% 0.64 0.36 1988 742,971 157,232 8.4% 21.2% 0.40 0.40 1989 759,480 163,353 2.2% 21.2% 0.10 0.33 1990 789,088 176,685 3.9% 21.5% 0.18 0.36 1991 834,022 193,314 5.7% 22.4% 0.25 0.31 1992 884,840 210,684 6.1% 23.2% 0.26 0.24 1993 938,313 216,908 6.0% 23.8% 0.25 0.21 1994 994,738 249,541 6.0% 23.1% 0.26 0.24 1995 1,017,550 266,969 2.3% 25.1% 0.09 0.22 1996 1,060,215 295,382 4.2% 26.2% 0.16 0.21 1997 1,113,824 335,981 5.1% 27.9% 0.18 0.19 1998 1,046,700 310,404 -6.0% 30.2% -0.20 0.10 1999 1,073,453 258,398 2.6% 29.7% 0.09 0.06 2000 1,158,807 278,835 8.0% 24.1% 0.33 0.11 2001 1,164,568 286,223 0.5% 24.1% 0.02 0.08 2002 1,186,008 272,799 1.8% 24.6% 0.07 0.06 2003 1,221,659 275,329 3.0% 23.0% 0.13 0.13 2004 1,325,091 282,173 8.5% 22.5% 0.38 0.19 2005 1,418,935 293,610 7.1% 21.3% 0.33 0.19 2006 1,518,541 314,534 7.0% 20.7% 0.34 0.25 2007 1,615,431 325,349 6.4% 20.7% 0.31 0.30 2008 1,653,636 323,820 2.4% 20.1% 0.12 0.29

HK ICOR (5 Year Rolling Averages)

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Long Term Indicators

• Societal Restructuring - QualitativeoDemographic  ChangesoSectoral Reform

(Liberalization/Nationalization)o Infrastructure Modernizationo 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.