internaonal economics - 京都大学ialnazov/leaders/introduction.pdf · 2014-04-09 · imf, wb,...
TRANSCRIPT
Dimiter Ialnazov Graduate School of Studies in Human Survivability
(GSAIS)
h=p://www.econ.kyoto‐u.ac.jp/~ialnazov/
InternaGonal Economics Spring – summer 2014
Introductory class
8 April 2014
Introductory class
• Self‐introducGon by the lecturer • Self‐introducGons by the students • General descripGon of the course: (1) what are we going to study; (2) why is it important to study about InternaGonal Economics (IE) with a focus on emerging and developing economies
• Course requirements and evaluaGon criteria • Course schedule, textbook and other readings
What are we going to study?
• Basic economic theory about: a) internaGonal trade; b) internaGonal capital flows (FDI,
porYolio investment and cross‐border lending); c) the balance of payments (the current and financial accounts) and exchange rate regimes; d) financial crises
• Applica5on of the theory to emerging and developing economies:
can the economic theory help us understand what’s going on in the real world (for example, the recent financial crises)?
• Case studies of individual emerging and developing economies
Key concept: emerging economies (EEs) or emerging markets
• The concept dates back to the 1980s but not very clear ‐ many definiGons
• Defini5on #1: countries that are in a transiGonal phase between developing and developed status (middle‐income economies; catching up with advanced economies)
• Defini5on #2: countries that are growing faster than advanced ones and therefore may offer potenGal investors higher returns, but are also known for higher volaGlity and risk
• In 2012, the IMF classified 24 countries as EEs (among them, 10 former socialist countries)
Emerging economies grow faster
Main acronyms/groups of EEs
• BRICs (Goldman Sachs, 2003)*: Brazil, Russia, India and China
* transformed into BRICS aeer South Africa joined • N‐11 (Goldman Sachs, 2005): Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam
• MSCI (Morgan Stanley Capital InternaGonal) emerging market index (since 1988): 21 countries
• CIVETS (HSBC, 2011): 6 countries (Columbia, Indonesia, Vietnam, Egypt, Turkey, South Africa)
• NIEs/NICs (terms used mostly in the 1970s‐1980s)
Main characterisGcs of EEs • 1. Rapid growth of GDP per capita the rise of a new middle class out of a large and relaGvely young populaGon
• 2. Free market reforms such as SOE privaGzaGon, as well as opening to internaGonal trade and foreign investment since 1990s
• 3. Accession to internaAonal organizaAons like the IMF, WB, WTO, and the EU adopGon of internaGonal rules and standards, which are oeen a reflecGon of advanced countries’ interests
• 4. ParAcipaAon in rewriAng the rules of the global game: the G‐20, reform of the IMF’s voGng system, calls for a new global currency, etc.
Why should we study about IE and EEs? Part I
Why should we study about IE and EEs? Part II
Expected future trends • EEs will account for an increasing share of world’s economic output
• The impact of the global financial crisis (2008‐2009) in 2009, the GDP of advanced economies declined by – 3.2%, while that of China and India grew by 8.7% and 5.7% respecGvely
• “Decoupling theory”: most of the EEs will not anymore catch a cold when the US sneezes?
• The rise of outward FDI from the EEs will conGnue
Why should we study about IE and EEs? Part III
• However, the future does not always meet our expectaGons
• EEs are also known for higher volaGlity and risk vulnerability to external shocks
• Opening to internaGonal trade and foreign investment has both merits and demerits
• Let’s suppose that A (an emerging economy) is strongly dependent on exports to and foreign investment from B (an advanced economy)
• An economic recession in B may lead to a fall of A’s exports and withdrawal of foreign capital from A the possibility of a financial crisis in A
Major financial crises in EEs in recent history (since 1980s)
• 1980s: the debt crises in LaGn America • 1990s: the Mexican currency crisis (1994), the East Asian financial crisis (1997), the Russian financial crisis (1998), the Brazilian currency crisis (1999)
• 2001‐2002: the crises in Turkey and ArgenGna • 2008‐2009: the impact of the global financial crisis on EEs varied according to countries and regions
The impact of the 2008‐2009 crisis: cross‐country and cross‐regional variaGons
• The degree to which an individual EE or a region was affected by the 2008‐2009 crisis varied
• For example, European emerging economies were much more severely affected by the economic crisis than those in LaGn America and Asia (IMF, 2010)
• Among the Eastern European countries, the most heavily hit were the 3 BalGc countries (Latvia, Estonia, Lithuania), Hungary, Romania, Russia and Ukraine
CEE and CIS countries were more severely affected by the 2008‐2009 crisis
• GDP growth (%) in CEE (Central and Eastern Europe) and CIS (Commonwealth of Independent States)
Some CEE and CIS countries have experienced deeper GDP declines
Among the goals of this course is:
• to understand why some countries and regions are more vulnerable to external shocks than others
Some quesGons that will be discussed: • Are there any lessons that EEs could learn from the recent crises?
• What are the reasons for the variaGon in vulnerabiliGes among the EEs? Does the speed and/or the pa=ern of a country’s integraGon in the global economy ma=er?
• Could the EE governments do something to reduce their vulnerabiliGes?
Course requirements and evaluaGon
I. Course requirements • (1) AEendance: missing more than 4 classes without a
jusGfiable reason leads automaGcally to failing the course
• (2) Class parIcipaIon: wri=en assignments, assignment‐related presentaGons, as well as parGcipaGon in the discussions
• (3) Term project: research on a topic related to the course from mid‐April to mid‐July; Powerpoint presentaGon on the term project during the last class (22 July); submission of a paper on the term project unGl 4 August 2014
II. EvaluaGon (1) 20%, (2) 30%, (3) 50% of the student’s grade
Class parGcipaGon
• from mid‐April to mid‐July • Before each class students will receive: (1) a copy of the
textbook chapter(s) to read in advance and be ready to discuss in class; (2) a wri=en assignment
• The students in charge of (1) should prepare a short summary and discussion quesGons
• About (2) : six wriEen case studies on a country of your choice • avoid wriGng about the same country • submit your text before the deadline by e‐mail • prepare a short presentaGon on your case study
Next class and readings For the next class on 15 April • a wri=en assignment (see the next slide) • read chapters 2, 3 and 4 from the textbook I. Required readings • the textbook (“An IntroducGon to InternaGonal Economics” by
Kenneth Reinert) II. Other readings • other textbooks (for example, “InternaGonal Economics” by
Paul Krugman and Maurice ObsYeld) • books and papers on topics related to the course (like “This
Time Is Different” by Carmen Reinhart and Kenneth Rogoff) • arGcles on current issues related to the course from Financial
Times, The Economist, The Wall Street Journal, etc.
A wri=en assignment for 15 April
• Find the following data about the trade of a country of your choice during the past 3 years (source: WTO or UNCTAD)
• (1) The value of its exports and imports in US dollars and as percentage of the country’s GDP. Have its exports and imports grown/declined and why? The trade balance in US dollars and as percentage of the country’s GDP.
• (2) Its top 3 export and import products (are they agricultural products, fuels, other commodiGes, or manufactured products?). The shares of commodiGes and manufactured goods in total merchandise exports.
• (3) Its top 3 export and import partners. What percentage of the country’s exports goes to/ imports comes from each of these partners?
• E‐mail me the file (doc, docx, pdf, odt) unGl 1 pm on 14 April (Mon.) and prepare a short presentaGon during the class