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MDE course outlines
Major issues in
economic development
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Course reference number
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Course name
Major issues in Economics of Development |
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Course leaders
Nguyen
Van Ngai
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Start
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Student
workload (hrs)
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Notional ECTS
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1.0
INTRODUCTION
Economic
development continues to make headlines. Selecting development strategies is a
major task of policymakers, especially in developing countries. In recent years,
Vietnam has pursued economic reform. The essence of this reform has been the
transition of the centrally-planned economy to a market-based economy, named the “socialist-oriented market economy”
by Vietnamese politicians.
Learning and applying development strategies in Vietnam are always emphasized.
The
"Major Issues in Economics of Development" course must be included in the
curriculum of the MA in Economics Development. It aims to enhance Vietnamese
students' understanding of major issues in economics of development and experiences
from other countries (particularly East and Southeast Asia), and selected lessons for Vietnam
are considered. The course is concerned with both the characteristics of, and
policies that can be employed to improve, development performance.
2.0
LEARNING OUTCOMES
For
every issue in the course, the student is required to understand the analytical
framework, experiences of other countries in the world and lessons for Vietnam. By the
end of the course the student is expected to systematically understand:
1.
Fundamental theories of development and patterns of growth.
2. The role of human and capital resources in economic development, and how
to use them effectively.
3. The links between production, trade and economic development; and
comments on development strategies.
4.
Market versus planned economies, including the transition to a market
economy in Vietnam.
3.0
READING ASSIGNMENTS
Textbook
Gillis,
M., Perkins, D., Roemer, M. and Snodgrass, D.(1996) Economics of Development, Fourth Edition, Norton and Company, New
York. (Hereafter called GPRS)
References
(to be announced for each topic)
4.0
TEACHING METHOD
Teaching
consists of the following:
Formal
five hour lecture per week focusing on the analytical framework and literature
review.
Follow
up informal
seminars conducted by students, in order to deepen understanding of particular topics and
improve presentation skills (30 minutes each). Attending the seminars is
compulsory for all students. Students are allowed to ask their classmate
presenters any questions related to
the topic, but the presentation will be assessed by the
course leader.
Two
2000 word essays, of which the topic of Assignment 2
will be the presentation topic. The essays will be assessed by the
course leader.
A
final two hour exam aimed at evaluating the understanding of the course.
5.0
TEACHING PROGRAM
Lecture
1: Theories of economic development
GPRS
(1996) Chapter 2.
Todaro,
M. (1997) Economic Development,
Addison, Wesley, Chapter 3.
Lecture
2: Patterns of growth
GPRS
(1996) Chapter 3.
Chenery,
H., Robinson, S. and Syrquin, M. (1986) Industrialisation
and Growth: A comparative study, Oxford University Press, pp 11-14.
Lecture
3: Population growth
GPRS,
1996. Chapter 8.
Sage,
C., 1994. ‘Population, consumption and sustainable development’, in Strategies
for Sustainable Development: Local agendas for the South, M. Redclift and C.
Sage (eds.), John Wiley and Sons.
Myint,
H., 1984. ‘Population pressure and aggregate capital requirements’, in The
Economics of Developing Countries, Hutchisnson, page 70-85.
UNDP,
1990. Human Development Report 1990,
An overview.
World
Bank, 1995. World Development Report 1995, World Bank, pp 1-47.
Lecture
4: Rural-urban migration and urbanization
GPRS,
1996. Chapters 9.
Harris,
J.R and Todaro, M.P., 1970. ‘Migration, unemployment and development’, American
Economic Review, 60(1):126-42.
Corden,
W.M., 1974. Trade Policy and Economic
Welfare, Clarendon Press, Oxford, Chapter 6 (Employment and
Industrialisation).
Djajic,
S., 1985. ‘Human capital, minimum wage and employment: A Harris-Todaro model
of a developed open economy’, Economica 52:491-508.
Amano,
M., 1983. ‘On the Harris-Todaro model with the intersectoral migration of
labour’, Economica 50:311-23.
Todaro,
M.P., 1969. ‘A model of labor migration and urban unemployment in less
developed countries”, American Economic Review, LIX(1):138-48.
Lewis,
A. W., 1954. ‘Economic development with unlimited supplies of labor’, Manchester
School of Economic and Social Studies, 22:139-91.
Dang
Duc Dam, 1995. Vietnam’s Economy: 1986-95, The Gioi Publishers, Hanoi.
Lecture
5: Capital and saving
GPRS,
1996. Chapter 12.
Napziger,
E.W., 1997. The Economics of Developing Countries. Prentice Hall, Chapters 14
and 15.
Hogendorn,
J. S., 1987. Economic of Development, Harper and Row, Cambridge,
Chapter 4.
Swan,
T.W., 1956. ‘Economic growth and capital accumulation’, Economic
Records, November, pp 334-61.
Lecture
6: Agriculture and development
GPRS,
1996. Chapter16.
Rosegrant,
M. and Hazell, P., 1999. Rural Asia
Transformed: The quiet revolution, Asian Development Bank.
Timmer,
C. P.,1991. ‘The role of the state in agricultural development’, in C.
P.Timmer (ed), Agriculture and the State, Cornell University Press, New York..
Bautista,
R. and Valdes, A., 1993. ‘The relevance of trade and macroeconomic policies
for agriculture’, in C.P.Bautista and A.Valdes (eds), The
Bias against Agriculture: Trade and
macroeconomic policies in developing countries, Institute for Contemporary
Studies Press, San Francisco, Chapter 1.
Krueger,
A., 1992. The Political Economy of Agricultural Pricing, Volume 5: A synthesis of
the political economy in developing countries, Johns Hopkins Press,
Baltimore, Chapter 7.
Lecture
7: Primary exports
GPRS,
1996. Chapter 17.
Duncan,
R., ‘A fresh look at some long-held beliefs about primary commodities’, Pacific
Economic Bulletin.
Lecture
8: Trade and industrialization
GPRS,
1996. Chapter 19.
Krueger,
A., 1980. ‘Trade policy as a input to development’,
American Economic Review, May.
Krueger,
A., 1983. ‘The effects of trade strategies on growth’, Finance
and Development, June.
Krueger,
A., 1995. ‘The role of trade in growth and development: theory and lessons
from experiences’, in R. Garmaut, E. Grilli and J. Riedel (eds) Sustaining Export-Oriented Development: Ideas from East Asia, Cambridge
University Press, Cambridge.
Riedel,
J., 1984. Trade as the engine of
growth in developing countries, Revisited, Economic
Journal, 94:56-73.
Bruton,
H., 1970. ‘The import-substitution strategy of economic development: a
survey’, The Pakistan Development Review,
10:123-46.
Meier,
G., 1989. Leading Issues in Economic Development, Oxford University Press,
Oxford, pp 312-41.
Lecture
9: Markets versus controls
GPRS,
1996. Chapter 5.
Rana,
P.B., 1995. ‘Introduction: the Asian approach to reforming transitional
economies’ in Rana, P,B. and Hamid, N. (eds), From Centrally-Planned to Market Economies: The Asian
approach, Volume 1: An overview, Oxford University Press, Oxford.
Perkins,
D., 1994. ‘Completing China’s move to markets’,
Journal of Economic Perspectives, pp 23-46.
Pomfret,
R., 1995. Asian Economies in Transition: reforming centrally planned economies, Edward
Elgar, Cheltenham.
Rigg,
J., 1997. Southeast Asia: the human landscape of modernisation and development,
Routledge, London.
Lecture
10: Transition to the market economy: The case of Vietnam
Monetary
International Fund (IMF), 1996a. Vietnam:
Recent economic development, The IMF Report, No.SM/96/289, Washington DC.
Monetary
International Fund, 1996b. Vietnam:
Transition to a market economy, The IMF Occasional Paper, No.135, Washington
DC.
World
Bank, 1993: Vietnam: Transition to a
market economy, World Bank, An Economic Report, Washington DC.
6.0
ASSESSMENT
·
Assignment 1
15
·
Assignment 2
15
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Presentation
10
·
Final exam 60
Satisfactory:
greater than 50
Unsatisfactory:
less
than 50
Go
to bottom
INTERNATIONAL
FINANCE
back
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Course reference number
?
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Course name International
Finance
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Course leaders
Nguyen
Huu Loc
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Start |
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Student
workload (hrs)
90
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Notional ECTS |
1.0
Introduction
In
the past few decades, LDCs have become increasingly integrated into the world economy
through channels of trade and finance. Global financial markets have expanded
enormously and the access of emerging markets to international finance has
increased, but these markets are also increasingly volatile and unstable with
detrimental effects on the weaker markets of the emerging economies (for
example, the international debt crisis in the 1980s and the Asian crisis in
1997). Recent findings show that it is very difficult to keep host countries'
economies on a stable path of economic development when there are
substantial inflows of external finance, because the macroeconomic impacts of aid
and other capital inflows are quite complicated. Thus for many developing
countries, external finance seems to have become a major policy problem rather
than a catalyst for development.
Vietnam
is a poor developing transition economy with an income per capita of about 350 USD
(1998). Since policy reforms began in the 1980s, Vietnam has become more
integrated into international trade and financial markets. Capital inflows
are large relative to GDP and are dominated by aid and direct foreign investment.
Commercial and concessionary
borrowing is amounting to a substantial external debt. In Vietnam, the
rapidly growing debt is public sector debt and thus the debt crisis of the 1980s
is still relevant.
When
the Soviet Union collapsed, there was no foreign aid of any type available
for Vietnam. The government saw the clarification of relations with the IMF and
World Bank as essential, since only with their support could there be a
settlement of old debts and integration into the international
financial system.
The recent Asian
crisis affected Vietnam only indirectly, as its
underdeveloped financial system and capital controls protected the country from
a more immediate impact. On the road to financial integration,
however, Vietnam has been
attracting inflows of new capital. A problem is that its underdeveloped
financial system and capital controls will scarce off foreign investors.
Given
this background, it is necessary to increase the understanding of the
position of Vietnam and other developing
countries in the international
financial market. The course addresses these issues from both a theoretical and empirical perspective, the later concentrating on the
current financial crisis. Discussions focus on the policy issues
arising for LDC governments and, in particular, on the international finance
policy issues relevant to Vietnam.
2.0 Learning Objectives:
Students
will have a clear knowledge of:
1. the workings of international financial markets
2. the causes of financial crises;
3. the role of institutions in governing financial flows;
4.
options for managing international finance through existing and new
institutional and regulatory frameworks.
The
course will provide students with both theoretical skills and experience in the
use of different instruments for empirical policy analysis, as well as the
application of these to the case of Vietnam.
3.0
Teaching methods
The
course consists of eight lectures, which introduce issues of international finance, relevant theories, the realities
and lessons for Vietnam. Some questions are also discussed.
Each lecture will require student to
discuss relevant topics in teams in separate debates, in order to improve their
ability to
argue and analyse international
financial issues. Each group will be expected to present their arguments, and will
receive feedback from fellow participants and the tutor.
The role of the tutor in these debates will be to check the student’s
understanding of that lecture, as well as to provide relevant arguments for student’s empirical
policy analysis
At the end of the course, students will prepare a seminar paper
on policy. The
focus of these papers will be on international finance policy issues relevant to Vietnam. The role of the lecturer
is to
facilitate a student-led process in which each student can apply what they have learnt in the
course to the analysis of issues
they are interested in. Students may be helped to upgrade these papers into theses.
To increase the practicality of the course, there may be a seminar at
which a government official presents the reality of financial issues in Vietnam
or Ho Chi Minh City
4.0
Student work load
Lecture
hours =
6 lectures @ 5 hours/lecture and 2 lectures @ 10
hours/lecture =
50
Tutorial
hours =
7 tutorials @ 3 hours/tutorial
=
21
Seminars
= 2 seminars @ 5 hours/seminar
=
10
Preparation
and writing of assignments
=
10
Reading
= 700 pages @ 4 pp/hour =
175
Total student work load hours
= 266
Number of MA calendar hours =
90
5.0
Assessment method
The
student will be expected to complete :
1.
Seven group papers = 35%
2.
Final paper (individual) = 65%
While individual
debate activities are not assessed, they will
be considered necessary.
6.0
Teaching Programme
Lecture
1 International
capital flows: introduction
Learning
objective:
to understand the
determinants of international capital flows to LDCs and their impact. The lecture will concentrate on different types
of flows, the purpose and trend of flows, and relevant theories such as
the neoclassical approach, profile diversification,
institutional approach and aid literature
.
Key
concepts:
internal balance, current account
BOP , capital account BOP, net long term loans, concessionary loans, non-concessionary
loans, net short term loans, trade credits, FDI, PFI, ODA, official transfers,
exogenous and endogenous capital flow, speculative, external shock, bilateral
aid, multilateral aid, private flow,
non-debt creating flow, portfolio diversification, risk premium, loan pushing,
default, insolvency, non-liquidity, repudiation.
Topic:
Vietnam’s trade and current accounts have shown large negative balances since
1993. Discuss how the trade deficit is financed.
Readings
Caprio, G. et.al (1997) The Role of
Long Term Finance: Theory and Evidence, Policy Research Department, the
World Bank.
Jansen, K. (1997) “External Finance, Investment and Growth” in
Jansen, J and Vos, R (eds) External Finance and Adjustment Failure and Success in the Developing
World, ISS, The Hague
Kokko, A. (1997) Vietnam 1997: Managing the Transition to Free Trade: Vietnamese Trade
Policy for the 21st Century, SIDA, Stockholm
Levi, M.A. (1996) International Finance, the Markets and Financial Management of
Multinational Business, McGraw-Hill, New York, chapter 18
Solomon, R. (1999) Money on the Move, Princeton University Press, New Jersey, chapter
5 and 6
Stiglitz, J. (1998) The Role of the Financial System in Development (see: http://www.worldbank.org/html/extdr/extme/jssp062998.htm)
Lecture
2
Foreign Direct Investment
Learning objective: to
facilitate understanding of the role of foreign direct investment, trends and
patterns of FDI in LDC's and Vietnam, determinants of FDI, and
impacts on LDC's. Finally,
the lecture will focus on ten years of FDI in Vietnam.
Key
concepts: receipts and payments of royalties, license
fees, outsourcing investment, barrier-circumventing investing, joint ventures,
foreign-owned projects, contractual co-operation business, BOT, horizontal integration, vertical integration, risks of licensing,
trade-oriented, anti-trade-oriented, ownership advantage, location advantage, internalisation
advantage, natural assets, created asset, mergers and
acquisitions (M&As), strategic business alliances (SBAs), non-equity of
co-operation, inward FDI, outward FDI, net outward investment, IS FDI, orderly
transfer of technology, reverse-order transfer of technology
Questions
1.
Which stage of development
is Vietnam's economy in? Analyse forms of Vietnamese government intervention at
the current stage and suggest policy recommendations.
2.
Government intervention during the first
stage of the IDP path will normally be a variety of economic and social
policies, which affect the structures of markets (for instance import
protection). Does this intervention contradict free trade policy? Discuss for
the case of Vietnam.
Topics
1.
Much of the rapid growth in FDI
to Vietnam can be attributed to the availability
of low-cost labour but experiences of many regional countries show that when
production processes in many industries become more sophisticated, the provision
of low cost labour with limited skills will not ensure the future success of that country as
a choice site of
manufacturing foreign investors (Khan 1991). Discuss the advantage of Vietnam
in locational competition and suggest policy to develop Vietnam’s human
resources in the long-run.
2. Discuss the institutional environment for FDI
in Vietnam and ASEAN.
3. The economic impact of FDI is at the centre of
continuing controversy over the role of FDI in the economic transformation of
LDCs. Some economists see FDI as having a number of negative effects which need
to be guarded against. Do you agree? Discuss in terms of Vietnam.
4. According to location theory, a country can
attract FDI if it possesses certain location advantages.
These advantages include the following factors: size of markets,
labour costs and productivity, openness, societal and infrastructure provision
incentives and operating conditions. Analyse
these factors in Vietnam's economy from 1988-1998 and explain why Vietnam can
attract FDI. Develop policy recommendations for the promotion of FDI in
Vietnam
5. According to Kojima, there are two types of technology
transfer: the “orderly transfer of technology” in which
the technological gap among all industries between donor and recipient countries is
small. In contrast, “reverse-order transfer of technology” occurs where the
technological gap between the two countries is large
among all other industries. Discuss the impacts of raising productivity to
evaluate the gains from transfer of technology in Vietnam.
Reading
Blomstrom, M. and Kokko, A. (1996) ‘The Impact of Foreign Investment on
Host Countries: A Review of the Empirical Evidence’ World Bank Working Paper
1745
Dunning, J.H and Hamdani,
(1997) The New Globalism and LDCs Chapter 1, pp 12-47 and Chapter
3, pp 79-123
Dooley, M. P. (1996) ‘A survey of Literature on Controls over
International Capital Transactions’ IMF
Staff Papers Vol .43. No.4
December 1996
Estanislao J. (1996) ‘The Institutional Environment for Investments in
China and ASEAN: Current Situation and Trends’ , in Investing
in Asia, OECD
Kojima, K. (1978) Direct Foreign Investment, A Japanese Model of Multinational Business
Operations, Croom Helm, London, Chapter 4, pp 83-99 and Chapter 7, pp
134-150.
IMF (1999) “ Large Capital Flows: A Survey of the Causes, Consequences,
and Policy Responses” IMF Working Paper
Lizondo,J.S. (1996) ‘ Foreign Direct Investment’ , in Determinant
and Systematic Consequences of International Capital Flows, IMF
Occasional Paper no 77, Washington DC
Narula, R (1996) Multinational Investment and Economic Structure, Globalisation and
Competitiveness, Routle, London, Chapter 2, pp 11-36
Mallampally, M and Sauvant, K.P (1999) ‘ Foreign Direct Investment’ Finance
&Development, Vol 36 (March)
Luiz, R. De Mello, Jr.(1997) Foreign
Direct Investment in LDCs and Growth: A Selective Survey, Frank Cass, London
Singh, H. and Jun, K. W. (1995) “Some New Evidence on Determinants of
Foreign Direct Investment in LDCs”, Policy
Research Working Paper No. 1513, World Bank, Washington D.C
World Bank (1993) Vietnam: Transition to the Market- An Economic Report Report
No.11902, September
Lecture
3 AID
Learning
objective : (i) to understand types of aid,
determinants of aid, allocation of aid and its effectiveness, (ii) to evaluate the
reality of aid and Vietnamese economy
Key concepts: project aid, programme aid, technical assistance, programme food aid,
financial programme aid, balance of payment support, debt relief, import
support, debt overhang, counterpart funds,
budget aid, non-project aid, administrative schemes, market-based schemes,
Open General License (OGL), system
negative list, disincentives, a price effect, labour market effect, policy
effect.
Questions
1.
Should any aid be given to countries with low income per capita, even though
their outlook for successful development is less promising?
2.
Does aid reduce poverty?
Topics
1.
Can aid be an important determinant of growth in a good policy environment?
How should donors improve aid to strengthen its effectiveness? Discuss the
case of Vietnam.
2. Discuss the
allocation of aid to basic education,
and its benefits.
3.
What kinds of reform are needed to minimise the risk of aid dependence and
ensure that Vietnam becomes a strong and self-reliant nation?
Reading
Burnell, P. (1997) Foreign Aid in a Changing World, Open University Press, London,
chapter 1 pp3-19 and chapter 10 pp187-210
Mosley, P. and Hulme, D. (1996) Finance
Against poverty, Routledge, London
Mosley, P., Harrigan, J. and Toye, J. (1991) Aid
and Power,the World Bank and policy based lending, chapter 2
White, H. (1998) Aid
and Macroeconomic Performance, Macmillan Press LTD, London, chapter 1 pp3-16
and chapter 4 pp69-89
World Bank (1997) Aid, Policies and Growth Research Working Paper no
1777, Washington DC
lecture
4 Macroeconomic
impacts of aid and other capital inflows
Learning
objective: to understand what happens to an
economy that receives capital flows from abroad
Key
concepts: Dutch disease, structuralism, demand
displacement effect, categorical fungibility, aggregate fungibility , structural
effects, demand response, supply response
Topic:
The impact of capital inflows and regional economic growth is at the
centre of a continuing controversy about the effect of “growth first and distribution later” or “distribution
first and growth later” policies. In the case of Vietnam, a recent high economic growth
rate has improved the living standard of a
largely proportion of the population, but benefits of economic growth have not
been spread over the population equally. Discuss.
Reading
Bhaduri, A. and Skartien, R. (1996) ‘Short-period macroeconomic aspects
of Foreign Aid’ Cambridge
Jansen, K. & Vos, R (eds) (1997), External
Finance and Adjustment, Macmillan, London and New York: Macmillan and St.
Martin’s Press. Chapter 4
Jansen, K (1997) External Finance in Thailand’s Development,
Macmillan and St. Martin’s Press. Chapter 6
White H (1998) Aid and Macroeconomic Performance, Macmillan Press LTD, London,
chapter 2 pp19-45
Mello, R. de, Jr (1997) ‘Foreign Direct Investment in LDCs and Growth:
a Selective Survey, in Journal of Development Studies, vol34, no1, 1-34
Vos, R (1993) “Prospects of Financial Flows to LDCs in the 1990s:
Global Macroeconomic Trade-Offs” in International
Monetary and Financial Issues for the 1990s, United
Nations, New York
Lecture
5
International Financial System and the International Financial
Institutions
Learning
objective: to understand: (i) the
period of the Bretton Woods system, and its collapse in the 1970s, the
international money system of the 1970s/1980s, which resulted in the debt
crisis. (ii) goals and functions, sources of finance, decision making and
economic ideology of the IMF and the WB and (iii) the structural adjustment
program of the IMF and WB in Vietnam.
Key concepts: gold standard, gold exchange standard, Bretton Woods, liquidity,
confidence, Special Drawing Rights (SDR), General Agreements to Borrow (GABs),
dirty floating, currency boards, Compensatory Financing Facility (CFF),
Compensatory and Contingency Financing Facility (CCFF), Buffer Stock Financing
Facility (BSFF),. Trust Fund Extended Fund Facility (EFF), Structural Adjustment
Facility (SAF), Extended Structural Adjustment Facility (ESAF), Policy Framework
Paper (PFP), Structural Adjustment Loans (SALs), Enhanced Structural Adjustment
Facility (ESAF)
Topics
1. Many economists now consider the era of
floating exchange rates to have outlived its usefulness. Do you agree?
2.
Analyse contradictions between stabilisation
and economic adjustment components.
3. Discuss the role of
the recent exchange rate
regime in the Vietnamese economy
4. One of the major failures in the discussion of
the Policy Framework Paper for the period 1997-99 between the IMF, WB and the Vietnamese government
was the reduction of protection of state-owned
enterprises. According to many economists this reduction is necessary in the context of globalisation,
particularly when Vietnam is a member of AFTA. Do
you agree?
Reading
Atish, R. G. , Gulde, A. M. and Wolf, H. C. (1996) “Does the Exchange
Rate Regime Matter for Inflation and Growth?” , Economic
Issues, No. 2, IMF Washington D. C
Binh
Minh, D. T. et.al (1999) “Problems with the Control of Exchange
Rate at the Present Period” in Economic
Development March, 1999, HCMC
Kenen, P. (ed) (1994) Managing the
World Economy: Fifty years after Breeton Woods , Longmans, London
Mussa, M and Eichengreen, B. (1998) ‘Capital Account Liberalization and
the IMF’ Finance
& Development Vol 35, December
Pilbeam, K. (1992) International Finance, chapter 11, Macmillan, London, (in the
library)
IMF (1998) What is the International Monetary Fund? Http://www.imf.org/external/pubs/ft/exrp/what.htm
Tarp, F. (1993) Stabilization and Structural Adjustment Macroeconomic frameworks for
analysing the crisis in sub-Saharan Africa, Chapters 2,3,4,5; Routledge
London
Lecture
6 Debt
Problems
Learning objective: to
understand: (i) the origins, consequences and strategies to resolve
international debt crisis and (ii) the problem debt of Vietnam
Key concepts:
sovereign debt, debt service, amortization, the London Interbank Offer
Rate (LIBOR), real debt-service ratio, petro-dollars, recycling, capital flight,
austerity, the Paris club
Topics
1.
Analyse the debate on the causes of the debt crisis
2.
The debt crisis of the 1980s was a public sector debt. In Vietnam the rapidly
growing debt is a public sector debt and thus the story of the 1980s is still
relevant. What lessons might Vietnam learn from Latin American governments and
what reform should the government take to prevent its international
debt affecting economic growth.
Reading
Vos, R.(1994) Debt and Adjustment in the World Economy Macmillan, London,
chapter 5
Solomon, R. (1999) Money on the Move, Princeton University Press, New Jersey, chapter
2
Hughes, J. (1990) ‘Latin
America’ in Lindsay, M (eds) The Global
Debt Crisis: Forecasting for the Future’ Pinter Publishers, London
Branford, S. and Kucinski, B. (1988) The
Debt Squads Zed Books Ltd, London New Jersey, chapter 3 pp24-33,
chapter 4 pp35-44 and chapter 6 pp55-62
Singer, H. W. (1989) ‘The Relationship Between Debt Pressures Adjustment
Policies and Deterioration of Terms of Trade for LDCs’ Working
Paper, ISS, The Hague
Pilbeam, K. (1992) International Finance, chapter 15, Macmillan, London
Lecture
7 The Asian Crisis
Learning objective: (i)
to understand the origins, consequences and strategies to resolve the
Asian crisis and (ii) to evaluate the indirect effects of the Asian crisis on
Vietnam
Key concepts: bond,
share, price-earning ratio, currency speculation, long position, short position,
bullish, bearish, twin crises, contagion effect, first-generation model,
second-generation model, pure expectation, herding behaviour, asset price bubbles
Topics
1.
What factors explain the on-going currency and
financial market turmoil in East Asia? What
policies (both national
and international) could be adopted to remedy the situation?
2.
Asian financial crisis and the IMF
3.
Analyze relationship between Asian crisis and
FDI in Asian. Discuss for Vietnamese economy
4.
Vietnam has escaped the direct impact of the Asian crisis because
there is no capital mobility, but indirect effects through trade and investment
are being felt. Discuss.
Reading
Agenor, P.R. & R.P. Flood (1994) ‘Macroeconomic Policy, Speculative
Attacks, and Balance of Payments Crises’, in F. van der Ploeg (eds) Handbook
of International Macroeconomics, Blackwell, London.pp224-50
Delhaise, P. (1998) Asia in Crisis The Implosion of the Banking and Finance System, John
Wiley & Sons (Asia) Pte Ltd, Singapore
Esquivel, G. & F. Larrain (1998) ‘ Explaining Currency Crisis’ ,
(www.hiid.harvard.edu/pub/other/expainfinal.pdf)
Martinez, G.O. (1998) ‘the Asian Crisis: What does the Mexican
Crisis’ Finance & Development
vol 35 (June)
Jansen, K. (1999) Financial
Crisis: A survey of Recent Literature
Krugman, P. R. (1998) Currencies
and Crisis, the MIT Press, Massachusetts
Shigehara, K. (1999) “Cause and Implications of East Asian Financial
Crisis” in Brooks, H. et.al (eds) (1999)
Financial
Liberalisation in Asia Analysis and Prospects, OECD Paris
World Bank (1998) East Asia: The Road to Recovery, World Bank Paperback Stock No
14299.
Young, S. (1999) “Korea’s Financial Crisis: Causes and Prospects” in
Brooks, H. et.al (eds) (1999) Financial
Liberalisation in Asia Analysis and Prospects, OECD Paris
Yoshitomi, M. (1999) “The Asian Capital Account Crisis” in Brooks, H.
et.al (eds) (1999) Financial Liberalisation in Asia Analysis and Prospects, OECD Paris
Lecture
8 Capital
Controls and the Distribution of Benefits
Learning
objective: (i) to understand the costs and
benefits of capital controls, and (ii) to discuss the question: should Vietnam
maintain its capital control?
Key concepts: portfolio choice, footloose, debt-creating, optimal tax rate,
Fundamental Equilibrium Real Effective Exchange Rate (FEREER), Tobin tax,
soft-edged band
Topics
1. Recent financial turmoil in
LDCs strengthens the case for the imposition of selective capital controls.
Discuss.
2.
The reason for the sharp decline in the crisis countries is the enormous outflow
of funds once the crisis started. Could capital controls have prevented this?
Should Vietnam maintain its capital controls?
Reading
Dooley, M. P. (1996) ‘A survey of Literature on Controls over
International Capital Transactions’ IMF
Staff Papers Vol .43. No.4
December1996
IMF (1998) “Sequencing Capital Account Liberalisation” in
Finance & Development, 1998, Vol 35, No 4
IMF (1999) “ Large Capital Flows: A Survey of the Causes, Consequences,
and Policy Responses” IMF Working Paper.
Sikorski, T. M. (1996) Financial
Liberation in LDCs, chapter 5, Edward Elgar, UK
IBRD (1995) “Managing Capital Flows in East Asia” http://www.worldbank.org/html/extpb/manage/manage.htm
McKinon, R. I. (1993) The Order of Economic Liberalization Financial Control in the
Transition to a Market Economy, chapters 1,2,3,7 The John Hopkins University
Press, Baltimore
back
Industrial
Economics in Developing Countries
back
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Course reference number ?
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Specialisation
Industrialisation and Economic Development
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Course name
Industrial Economics in Developing Countries |
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Course leader
Dr A Haroon Akram-Lodhi
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Start Block 4 (1998-2000) |
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Student
workload (hrs)
223
|
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Notional ECTS
8.4
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1.
INTRODUCTION
In
Vietnam industrialisation has been a key policy objective since unification in
1975. However, the efficiency of
the industrialisation process in the period following 1975 can be questioned,
largely because the capacity of government to efficiently allocate resources in
complex economic systems is problematic. Therefore,
since 1986 markets have been increasingly relied upon to allocate resources,
determine prices, and impose competitive discipline upon industrial enterprises,
whether they be in the state sector or whether they be in the private sector.
In
order to understand these processes, it is necessary for students to enhance
their capacity to understand and analyse individual firms, markets and
industries, as well as the impact of the institutional setting within which
firms operate. This area of the economics discipline, focusing as it does upon
applied microeconomics in an industrial setting, is called ‘industrial
economics’ in Europe and ‘industrial organisation’ in North America.
Industrial economics examines the structure of product and labour
markets, the nature of competition amongst industrial enterprises in markets,
the ways in which competition may be regulated, the development of new
capacities by enterprises, and the levels of efficiency that are achieved by
enterprises.
This
course therefore seeks to develop the capacity amongst students to undertake the
analysis of industrial firms, while recognising the specificities of industrial
firms in developing economies such as Vietnam.
The course seeks to foster an analytical understanding of the
relationships linking market structure, enterprise decision making, and
corporate performance. In so doing,
it endeavors to enhance the abilities of students to apply the insights of
economics to a complex range of enterprise decisions.
Moreover, it seeks to promote awareness amongst students into the
corporate growth process, and the economic choices governing the strategic
options available to the enterprise.
2.
Learning outcomes
This
course will enhance the capacity of students to investigate the economics of a
range of operating and strategic decisions undertaken by industrial enterprises,
and will equip students with the ability to examine the constraints and
opportunities created by the regulatory environment within which industrial
firms are located. This will be
achieved by cultivating students’ analytical understanding of:
A.
the causal relationships linking market structure, decision making
conduct and corporate performance;
B.
the complex range
of enterprise decision making and the influences upon them, including the
effects of state economic policy;
C.
the corporate growth process and the choice of strategic options
available to the firm.
3.
Teaching Methods
Teaching
will have four components:
a)
formal three hour lectures focused on student learning requirements will
be used to develop analytical frameworks and survey the relevant literature;
b)
informal two hour
workshops directed by students will follow up, develop and discuss issues raised
in the lectures through the preparation and presentation of pre-assigned
teamwork. Team workshops take place on 24
and 25 September, and each team will be expected to prepare a presentation of no
more than 40 minutes. The presentation
will be assessed by the workshop as a whole;
c)
informal one hour seminars conducted by students will follow up, develop
and discuss themes raised in the lectures through the preparation
and presentation of individual assignments. Seminars
will take place on 4, 7, 8 and 9 October. Each
student will be expected to prepare a presentation of no more than 30 minutes.
The presentation will form the basis of an essay, which will be no more
than 2500 words, and which will be submitted no later than 18 October 1999 at
09.00. The essay will be assessed by the course leader;
d) a final two hour examination will take place on 25 October 1999 at 08.00
and will be used to evaluate the extent to which student capacities have been
enhanced.
4.
Student work load
This
course carries a weight of 90 MA Calendar hours.
However, the average student seeking to achieve an average performance
should be prepared to devote a minimum of 230 hours of work to it.
The breakdown of this minimum workload is as follows:
Lectures =
14 lectures @ 3 hours per lecture
=
42 hours
Workshops =
2 workshops @ 2 hours per workshop
=
4 hours
Seminars =
12 seminars @ 1 hours per seminar
=
12 hours
Assignments
=
20 hours
Reading =
737 pages @ 6 pages per hour
= 123 hours
Examination
revision
=
20 hours
Examination
=
2 hours
=
2 hours
Total
= 233 hours
5.
Assessment method
The
course is assessed by individual and team work.
Students will be expected to complete:
1. a team assignment
=
15 %
this
will be presented during workshops on 24 and 25 September and will be assessed
by the workshop as a whole;
2. an individual
assignment
=
35 %
this
will be based upon individual seminars presented during the week commencing 4
October. The assignment can be no
more than 2500 words and is due on 18 October 1999 at 09.00.
It will be assessed by the course leader;
3. a two hour final
examination
=
50 %
the
examination will take place on 25 October at 08.00.
6.
Teaching programme
6.1 Monday, 6 September 1999:
The theory of the firm
Learning
objective: to critically
distinguish alternative explanations for the existence of the firm
Key concepts: exchange,
specialisation and the division of labor; markets, prices and equilibrium;
Marshall’s theory of the firm; theories of imperfect competition; critiquing
neo-classical theory; behavioural theory; transactions costs; hierarchical and
entrepreneurial structures of the firm; institutions, specific assets and the
maximisation of productivity.
Required
reading
Moschandreas,
M (1994) Business Economics,
London: Routledge, pp 59-79.
6.2 Thursday, 9 September 1999:
Ownership and control of the firm
Learning objectives: to
critically analyse the significance of the separation of ownership from control
in the economic activities of firms
Key concepts: oligopoly in the developed market economies;
oligopolistic interdependence; sole proprietorships, partnerships and joint
stock companies; ownership versus control of the enterprise; managerial theories
of the firm; stock options and profitability; interlocking corporate
directorships.
Required
reading
Moschandreas,
M (1994) Business Economics,
London: Routledge, pp
269-323.
6.3 Friday, 10 September 1999:
Introducing the S-C-P framework
Learning objectives: 1.
to critically assess the structure-conduct-performance model
2. to critically understand patterns of structural change in developed
market and developing economies
Key concepts: the
structure-conduct-performance model; components of market structure; assessing
corporate conduct; defining corporate performance; defining the industry;
standard industrial classifications; industry life cycles; sectoral development
and structural change.
Required
reading
Ferguson,
P R and Ferguson, G J (1994) Industrial
Economics: Issues and Perspectives
(Second edition), London: MacMillan,
pp 13-37 and 230-258.
Weiss,
J (1988) Industry in Developing Countries:
Theory, Policy and Evidence, London:
Routledge, pp 1-25.
6.4 Saturday, 11 September 1999:
Market structure
Learning objective: to
critically distinguish determinants of market concentration
Key concepts: seller market concentration; concentration curves; concentration
ratios; economies of scale; absolute cost advantages; capital requirements;
limit pricing; product differentiation; barriers to entry; contestable markets.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 204-268 and 532-561.
Ferguson,
P R and Ferguson, G J (1994) Industrial
Economics: Issues and Perspectives
(Second edition), London: MacMillan,
pp 38-59.
6.5 Monday, 13 September 1999:
Competition and market structure
Learning objective: to
critically evaluate alternative theories of competition
Key concepts: perfect
competition; Austrian economic theory; uncertainty; monopoly profits; the
market-making entrepreneur; classical economic theory; profit seeking; creative
destruction; rivalry and collusion; game theory; the prisoner’s dilemma;
dominant strategy; corporate stratification; organic growth; inorganic growth;
contested profits; equalisation of
the profit rate.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 58-101.
6.6 Thursday, 16 September 1999:
Corporate strategy and growth
Learning objective: to
critically understand the relationship between corporate strategy and corporate
growth
Key concepts: behavioural
theory; stakeholders; corporate culture; x-inefficiency; satisfying behaviour; competitive advantage; cost leadership; differentiation;
focus; sources of firm growth; financial constraints; demand constraints;
managerial constraints; firm growth and firm size; firm size and firm
profitability; firm gorwth and firm profit.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 327-374.
6.7 Friday, 17 September 1999:
The organisation of the firm and the production process
Learning objective: to
critically evaluate alternative modes of organising intra-firm relationships
Key concepts: inter- and
intra-firm relationships; production chains; economies of scale;
entrepreneurship; overbounded systems; functional groups and U-form firms;
M-form firms; matrix organisations; globally integrated networks; corporate
hierarchies; horizontal co-ordination; managerial power; choice of technique;
the labour process; technical efficiency; allocative efficiency; unit labour
costs and profitability; co-operation; simple divisions of labour; machine
production; integrated machine production; Taylorism; Fordism; post-Fordism;
team working; economies of scope.
Required
reading
Moschandreas,
M (1994) Business Economics,
London: Routledge, pp 80-97.
6.8 Saturday, 18 September 1999:
Vertical relationships
Learning objective: to
critically evaluate alternative modes of organising inter-firm relationships
Key concepts: market-driven
co-ordination; the prisoner’s dilemma; subcontracting; principal-agent
relations; hierarchical co-ordination and internal markets; associational
co-ordination and transactions costs; forward and backward vertical integration;
asymmetrical information; consultative co-operation; flexible manufacturing
systems and incremental technical change; segmented labour markets; new
industrial districts; strategic alliances.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 152-169.
6.9 Monday, 20 September 1999:
Mergers and acquisitions
Learning objective: to
critically review the economic costs and benefits of corporate mergers
Key concepts: internalisation
and transactions costs; inorganic growth; horizontal mergers; Cournot oligopoly;
synergy; undervaluation; growth maximisation; uncertainty; vertical integration;
barriers to entry; barriers to exit; market failure; conglomerate
diversification; risk; specific asset utilisation; growth maximisation; asset
stripping; product life cycles.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 496-531.
6.10 Thursday, 23 September 1999:
Investment and technical change
Learning objective: to
critically analyse the process of technical change within enterprises
Key concepts: investment;
internal financing; retained profits; external financing; share issues and
debentures; process development; product development; invention; innovation;
diffusion; uncertainty; moral hazard; non-excludability; non-rivalness;
temporary royalties; Schumpeter and monopoly innovation.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 433-495.
6.11 Friday, 24 September 1999:
Workshop: industrial and
market structure
Learning objective: to
critically investigate the changing structure of sectors and industry in Vietnam
Team
1: Using recent data, describe the changing sectoral structure of
the Vietnamese economy. Does the
trend in structural change indicate a transition towards an industrial economy?
Team
2: Using recent data, describe the changing structure of the
industrial sector in Vietnam. Does
the trend indicate a transition towards a more ‘modern’ industrial
structure?
6.12 Saturday, 25 September 1999:
Workshop: types of firms
and profitability
Learning objective: to
critically investigate the changing structure of industrial enterprises and
their profitability in Vietnam
Team
3: Using recent data, describe the changing structure of
enterprises in Vietnam. Does the
trend indicate an irreversible transition towards a private sector-led market
economy?
Team
4: Using recent data, describe the changing structure of profitability
of the corporate sector in Vietnam. Does
the trend indicate that a private sector-led market economy is sustainable?
6.13 Monday, 27 September 1999:
Product differentiation
Learning objective: to
critically evaluate alternative product differentiation strategies
Key concepts: attribute
compression; cost minimisation; segmented preferences; broad and narrow
differentiation; barriers to entry; advertising; marginal costs and marginal
revenues; oligopolistic rivalry; elasticity; search; experience; information;
consumer goods and convenience goods; innovation; advertising intensity and
market concentration; the creation of wants.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 102-151.
6.14 Thursday, 30 September 1999:
State intervention in the private sector
Learning objective: to
critically examine the way in which the state regulates corporate conduct
Key concepts: macroeconomic stabilisation; business cycles; fiscal
policy; monetary policy; competition policy; market-enabling environment; second
best; anti-trust; trading standards; restrictive practices; resale price
maintenance; asymmetrical information; public interest; merger regulation;
industrial policy; regional policy; training policy; small enterprise policy;
crowding out and crowding in; de-nationalisation; privatisation; compulsory
competitive tendering; private provision.
Required
reading
Ferguson,
P R and Ferguson, G J (1994) Industrial
Economics: Issues and Perspectives
(Second edition), London: MacMillan,
pp 136-229.
6.15 Friday, 1 October 1999:
Price formation
Learning objective: to
critically evaluate alternative ways of deciding output price
Key concepts: fixed costs; variable costs; average costs; marginal
costs; revenue; marginal cost pricing; full cost pricing; markup pricing; degree
of monopoly; administered pricing; predatory pricing; transfer pricing; limit
pricing; price discrimination; level pricing; price fixing; price elasticity of
demand.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 170-203.
6.16 Saturday, 2 October 1999:
Corporate performance
Learning objective: to
critically compare alternative measures of corporate performance
Key concepts: issues in indicator selection; comparing indicators;
stakeholders’ objectives; rates of change; ratios of change; accounting
profit; economic profit; return on sales; return on equity; return on assets;
earnings per share; price-earnings ratio; dividend yield; debt to assets; debt
to equity; current liability ratio; the acid test; partial productivity; total
factor productivity; technical efficiency; allocative efficiency; economic
efficiency; net social benefits.
Required
reading
Hay,
D A and Morris, D J (1991) Industrial
Economics and Organization: Theory
and Evidence (Second edition), Oxford:
Oxford University Press, pp 375-432.
Moschandreas,
M (1994) Business Economics,
London: Routledge, pp
98-120.
6.17 Monday, 4 October 1999:
Seminars
Question
1: The managerial and
organisational structure of small and large firms is different.
Critically examine whether the managerial and organisational structure of
small firms or large firms would be more suitable in promoting economic growth
in Vietnam. Use examples in
explaining your answer.
Question
2: Critically evaluate
the theory of the separation of ownership from control in ‘modern’ firms.
In light of your analysis, assess whether in the future stock options
should be used for the managers of Vietnamese joint stock companies.
Question
3: In neo-classical
economic theory the objective of the firm is profit maximisation.
Using economic logic and relevant examples, critically assess whether
industrial enterprises in Vietnam pursue profit maximisation or growth
maximisation.
6.18 Thursday, 7 October 1999:
Seminars
Question
4: Using examples and
giving economic reasons, explain which is more binding on Vietnamese industrial
enterprises: the demand constraint,
the financial constraint or the managerial constraint.
Question
5: Critically review the
economic logic of the Cournot equilibrium, and evaluate the extent to which it
explains corporate conduct within the Vietnamese soft drinks industry.
Question
6: Use product
differentiation and advertising theory to explain why Unilever Vietnam produces
products that compete with each other.
6.19 Friday, 8 October 1999:
Seminars
Question
7: Using merger theory,
critically examine the economic benefits of strategic alliances.
In light of your analysis, discuss current developments in strategic
alliances within the international airline industry and evaluate whether Vietnam
Airlines should join a strategic alliance.
Question
8: Critically review the
costs of benefits of conglomerate diversification.
In light of your analysis, discuss and evaluate the current restructuring
being undertaken in Vietnam and elsewhere by the South Korean firm Daewoo.
Question
9: Microsoft is currently
being prosecuted by the US Government for violating anti-trust law. Use economic theory to evaluate whether the Vietnamese
Government should prosecute Microsoft on anti-trust grounds.
6.20 Saturday, 9 October 1999:
Seminars
Question
10: Present the economic arguments
for and against the privatisation of Petrolimex.
On the basis of your analysis, should Petrolimex be privatised?
Why?
Question
11: Using price theory, explain why
Vietnam Breweries produces three different types of beer—Heineken, Tiger and
Bivina. Does Vietnam Breweries
engage in predatory pricing? Explain
your answer.
Question
12: Compare and contrast alternative
measures of corporate performance. Using
economic logic, explain which measure is most suitable for industrial
enterprises in Vietnam.
back
International
Firms and Economic Development
back
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Course reference number ?
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Specialisation
Industrialisation and Economic Development
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|
Course name
International Firms and Economic Development
|
|
Course leader
Ann Bartholomew
|
|
Start
Block 4 (1998-2000)
|
|
Student
workload (hrs)
230
|
|
Notional ECTS
8.6
|
1.
INTRODUCTION
The
aim of this course is to consider the way in which the economic development of
less developed countries is affected by the activities of international firms.
The course of lectures will identify the extent to which developing countries
are integrated into the global economy through foreign direct investment and the
impact that this has on the economy at a sectoral level and also at the
macroeconomic level.
In
particular, the theories that seek to explain why foreign investment occurs will
be critically analysed in order to understand the rationale behind the
activities of transnational companies and provide a critique of accepted
theories. The effect of foreign investment on technology, employment, industrial
structure, trade patterns and economic growth will also be considered, in order
to provide an understanding of how international firms can either enhance or
hold back the development process in the countries in which they operate. The
relationship between the state and host country governments, and particularly
aspects of bargaining power, will be explored to further student’s knowledge
of the interaction between international firms and governments in both their
aims and objectives.
In
addition, industry and country case studies will be used to objectify the
theoretical issues of concern and indicate how they relate to the situation of
East Asia and Vietnam. This will aid students’ awareness of the potential
advantages and drawbacks of FDI for Vietnam, and provide an insight into the
policies and options available for the governments of countries that wish to
encourage investment by international firms.
This
course therefore aims to enhance students understanding of the rationale behind
the operational decisions and activities of international firms and recognise
the effect that the behaviour of these firms can have on host country economies.
As a result, students will develop an awareness of the link between
international firms and the development process and the corresponding economic
choices available to governments in developing economies when considering the
strategic options available to them.
2.
Learning Outcomes
By
the end of the course the student will be in a position to:
1.
Understand and
apply methods of economic analysis to international firms and their operations;
2.
Appreciate the
multidisciplinary nature of the strategic decisions facing international firms;
3.
Understand the
effect that the operations of international firms can have on different sectors
of the economies of developing countries;
4.
Appreciate the
relationship between the activities of international firms and economic growth;
5.
Understand the
dynamics of the relationship between host governments and international firms;
6.
Assess the
likely impact of the activities of international firms on the economies of East
Asian countries in general and Vietnam in particular.
3.
Teaching Methods
Teaching
will have the following four components:
1.
Formal three hour
lectures focused on developing analytical frameworks and surveying the relevant
literature;
2.
Informal workshops conducted by students that will apply and develop the
themes of the lecture course to the situation in Vietnam, through preparation
and presentation of pre-assigned team work. These will take place in sessions 10
and 11. Each team will be expected to prepare a presentation of no more than 40
minutes. The presentation will be assessed by the workshop as a whole;
3.
Informal one hour seminars conducted by students will follow-up, develop
and discuss themes raised in the lectures through the preparation and
presentation of individual assignments. Seminars
will take place in session 14, 15, 16 and 17. Each student will be expected to
prepare a presentation of no more than thirty minutes. The presentation will
form the basis of an essay, which will be no more than 4000 words, and which
will be submitted no later than 5 January at 09.00. This essay will be assessed
by the course leader.
4.
A final two hour examination which will take place on 14 January and will
be used to evaluate the extent to which student capacities have been enhanced.
4.
Student Work Load
This
course carries a weight of 90 MA calendar hours. However, the average student
seeking to achieve an average performance should prepare to devote a minimum of
230 hours to it. The breakdown of the minimum workload is as follows:
Lectures
= 1
@ 3 hours per lecture
= 33 hours
Workshops =
6 hours
Seminars
=
4 @
3 hour seminars
= 12 hours
Assignments
=
= 20 hours
Reading
= 137 hours
Examination
Revision
= 20 hours
Examination
=
=
2 hours
Total
=
= 230 hours
5.
Assessment Method
The
course is assessed by individual and team work. Students will be expected to
complete:
1.
a team assignment
= 15%
2.
an individual assignment
= 35%
this
will be based upon the seminar questions in the unit guide. The assignment will
be no longer than 3,500 words and is due in on 7 January 2000. Advice and help
relating to the assignment will be given during the lecture programme and the
assignment will be assessed by the course leader.
3.
a two hour examination
= 50%
6.
Teaching Programme
6.1
Monday, 6
December 1999: The Historical Perspective of International Business
Learning
Objective: to
examine the historical evolution of international firms and understand how and
why they rose to significance
Key
Concepts:
new International division of
labour, internationalisation of economic activities,
foreign direct investment, the emergence of transnational business and
their relationship with developing countries, current trends in foreign direct
investment, the significance of international production
Required
reading
Dicken,
P. (1998) Global Shift (Third Edition),
part one.
Van
Hoa, T. (ed.)(1997) Economic Development
and Prospects in the ASEAN: foreign investment and growth in Vietnam, Thailand,
Indonesia and Malaysia, Ch. 1 and 2.
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, Ch.1.
6.2 Tuesday,
7 December 1999: The Neoclassical and Macroeconomic Approaches to International `
Production
Learning
Objective: to critically analyse early theories that sought to
explain the reasons why a company may choose to operate internationally
Key
Concepts:
Hymer’s Critique, market imperfections, transaction costs and internalisation
(Coase), technology gaps (Posner), the product life-cycle (Vernon).
Required
reading
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, pp. 78-109.
Dicken,
P. (1998) Global Shift (Third Edition),
pp. 182-184.
6.3
Wednesday, 8
December 1999: Dunning’s Eclectic Theory of International Production
Learning
Objective: to critically analyse more recent theories of
foreign direct investment and assess their relevance to current investment
decisions by international firms
Key
Concepts:
Dunning’s
eclectic theory; ownership, locational and internalisation advantages
Required
reading
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, pp. 120-124 and 128-135.
Dicken,
P. (1998) Global Shift (Third Edition),
pp. 184-188.
6.4
Thursday, 9
December 1999: Market Structure and Marxist Approaches to International Production
Learning
Objectives: to critically assess Marxist explanations of international production
Key
Concepts: theories
of imperialism and underdevelopment, concentration of production, imperialism
and colonialisation, division of labour, monopoly capital, the internationalist
approach, recent Marxist approaches. oligopolistic structure and international
investment (Hymer), aggressive and defensive investment,
Required
reading
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, pp. 45-75.
Dicken,
P. (1998) Global Shift (Third Edition),
pp. 179-80
Jenkins,
R. (1987) Transnational Companies and
Uneven Development: Internationalization of Capital and the Third World, Ch.
2
6.5.
Friday, 10
December 1999: The Economic
Characteristics of International Firms and Forms of Internationalisation
Learning
Objective: to understand the strategies of international firms and the alternative
methods of
market entry and development
Key
Concepts:
Global
organisation, modes of organisation, internal and external relationships, joint
ventures and strategic alliances, vertical and horizontal integration,
production chains, subcontracting, business networks; dynamic and flexible.
Required
reading
Dicken,
P. (1998) Global Shift (Third Edition),
Ch 7.
6.6.1
Saturday, 11
December 1999: International Firms, Capital and Industrial Structure in Developing
Countries
Learning
Objective: to
evaluate the extent to which international firms transfer capital to host
economies and to evaluate the effect of internal firms activities on the
industrial structure of developing economies
Key
concepts: the differing impacts of modes of entry of foreign firms; inflows of
capital, repatriation of profit, transfer pricing; intra-firm trade; location of
foreign production; forward and backward linkages; degree of competition and
monopoly in host economies; squeezing out of local competition comparative
performance of foreign and national firms; truncation and hollowing out of host
economies; problem of industrial dependence on foreign capital.
Required
reading
Dickens,
P. (1998) Global Shift (Third Edition), pp.
245-248, pp. 251-157 and pp. 262-264.
Jenkins,
R. (1987) Transnational Companies and
Uneven Development: Internationalization of Capital and the Third World, Ch.
5 and 7.
6.7
Monday, 13 December 1999: The International
Firm and Technology
Learning
Objective: to understand the ways in which technology can be transferred to
developing economies and evaluate the extent to which this is likely to happen.
Key
Concepts: appropriateness
of technology; extent of technology transfer; cost of technology to host
countries; demonstration effects of new technology on local industry; technology
licensing
Required
reading
Dicken,
P. (1998) Global Shift (Third Edition),
pp. 248-251
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, pp. 170-4
Jenkins,
R. (1987) Transnational Companies and
Uneven Development: Internationalization of Capital and the Third World, Ch.
4.
6.8
Tuesday, 14 December 1999:
The International Firm and Labour
Learning
Objectives: to evaluate the effect of international firms on the labour force in
developing
economies
Key
Concepts: direct and
indirect employment creation; horizontal and vertical employment linkages and employment; the impact on levels of wages, training and
skills; labour relations.
Required
reading
Dickens,
P. (1998) Global Shift (Third Edition),
pp. 257-262
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, Ch 14 and 15
Jenkins,
R. (1987) Transnational Companies and
Uneven Development: Internationalization of Capital and the Third World, Ch.
6.
6.9
Wednesday, 15 December 1999: International
Production and Trade
Learning
Objectives: to
critically assess the relationship between international firms and trade policy
in developing economies
Key
concepts: effects of
foreign investment on the trade balance and import and export patterns;
intra-firm and intra-industry trade; export orientation of firms; regional
trading arrangements and international production.
Required
reading
Dickens,
P. (1998) Global Shift (Third Edition),
pp. 257-262.
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, pp. 164-170 and pp. 202-206.
Jenkins,
R. (1987) Transnational Companies and
Uneven Development: Internationalization of Capital and the Third World, Ch.
5.
6.10
and 6.11 Thursay,
16 December 1999 and Friday, 17 December 1999: Workshops
Students
will be divided into teams of three. One
team will have four students. Each
team will be expected to choose a different sub-sector of the Vietnamese
economy. From within the
sub-sector, each team will select an international firm.
The choice of the international firm must be approved by the course
leader in advance of the workshop. The team will then prepare a presentation of
no more than 40 minutes which answers the following question:
Using
Dunning’s eclectic framework, examine the reasons why the international firm
that you have selected has invested in their particular sub-sector of the
Vietnamese economy. In particular,
assess the locational advantages of Vietnam, the ownership advantages of the
firm, and the possibilities for internalisation. Critically evaluate the impact
of this investment on the sub-sector, and on the Vietnamese macroeconomy as a
whole.
The
presentation will be assessed by the workshop as a whole.
6.12
Saturday, 18
December 1999: International Firms
and States
Learning
Objective: to understand the relationship between international firms and host
governments and critically assess the bargaining relationship between
the
two actors
Key
Concepts: host country policies
to attract foreign investment; competitive bidding; bargaining relationships and
negotiation power; attempts at regulating international firms activities.
Required
reading
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, pp. 180-182
Dicken,
P. (1998) Global Shift (Third Edition),
Ch. 13.
6.13
Monday, 20
December 1999: International
Production, Economic Growth and the Process of Late Industrialisation in Asia
Learning
Objectives: to
evaluate the impact that foreign investment has on levels of economic growth in
host economies and in the economies of East Asia and assess the extent to which
this path can be followed by other developing economies in the region
Key
concepts: links between
foreign investment and economic growth; welfare effects of foreign investment on
host economies; empirical evidence; the ‘flying geese’ pattern of
development and foreign investment; trends in foreign investment in Asia and
Vietnam; the impact of the Asian Crisis; the future role of international firms
in the South Asian region.
Required
reading
Ietto-Gilles,
G. (1992) International Production:
Trends, Theories, Effects, pp. 182-189
Jenkins,
R. (1987) Transnational Companies and
Uneven Development: Internationalization of Capital and the Third World, Ch.
8.
Dicken
P. (1998) Global Shift (Third Edition),
pp. 121-143
Van
Hoa, T. (ed.)(1997) Economic Development
and Prospects in the ASEAN: foreign investment and growth in Vietnam, Thailand,
Indonesia and Malaysia, Ch.2 and 7
6.14
Tuesday, 21
December 1999: Student-led seminars
1.
To what extent were Marxist theories of imperialism able to predict the
role played by international firms in the world economy today?
2.
Does the neoclassical theory of the firm provide an adequate foundation
for an understanding of the internalisation of production?
3.
Critically evaluate theories that use oligopolistic markets to explain
the growth of international production and firms. Use examples (that are
different from those used in Seminar 4) to illustrate your answer.
6.15
Wednesday, 22
December 1999: Student-led seminars
4.
Critically evaluate theories that use oligopolistic markets to explain
the growth of international production and firms. Use examples (that are
different from those used in Seminar 3) to illustrate your answer.
5.
With reference to a country of your choice (that is different from that
used in Seminar 6), critically assess the impact of international firms on the
industrial structure of developing countries.
6.
With reference to a country of your choice (that is different from that
used in Seminar 5), critically assess the impact of international firms on the
industrial structure of developing countries.
6.
16
Thursday, 23 December 1999: Student-led seminars
7.
Using examples
(that are different from those used in Seminar 8), critically evaluate the role
of international firms in technology transfer. To what extent can host
developing countries benefit from technology transfer by international firms?
8.
Using examples
(that are different from those used in Seminar 7), critically evaluate the role
of international firms in technology transfer. To what extent can host
developing countries benefit from technology transfer by international firms?
9.
'Transnational
companies have profound effects on labour'. Discuss with reference to a
developing country of your choice that is different from the country selected
for Seminar 10.
10.
'Transnational companies have profound effects on labour'. Discuss with
reference to a developing country of your choice that is different from the
country selected for Seminar 9.
6.16
Friday, 24
December 1999: Student-led seminars
11.
Evaluate the difficulties encountered by the government of Vietnam in regulating
the activities of international firms operating within Vietnam. Assess ways in
which these difficulties may be overcome.
12.
Critically assess the link between economic growth and foreign investment. To
what extent has FDI encouraged economic growth in the Asian region?
13.
Evaluate the reasons for the growth of international firms from Asian countries.
To what extent
to
they differ from international firms based in industrialised countries and what
has been the effect of their
activities on other countries in the region?
back
theories
of development
back
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Course reference number ?
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Course name
Theories of development
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Course leader
Ta Thi Bich Thuy
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Start
Block 2 (1999 – 2000)
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Student
workload (hrs)
150
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Notional ECTS
5.6
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1.
INTRODUCTION
Every
student of development economics can expect to encounter a
number of different perceptions of the processes of development and
underdevelopment. The fact that this is so widens the area of debate and the
scope for disagreement among students of evidently the same range of problems.
Some of these perceptions of the nature and process of development and or
underdevelopment have received widespread support for varying lengths of time, and have consequently both generated significant theoretical developments and
informed various types of more practical activity, for example, economic
planning and policy formation.
In
order to help students to understand this process, this course provides the
basic economic analysis necessary for the understanding of development policies
and strategies. It reviews the conceptual and theoretical foundations of
development processes in the perspective of the evolution of development
thinking since the end of World War II. Throughout the course,
basic theory is combined with applications to underdeveloped countries. In other
words, the course studies the interactions between the relevant issues at
certain points in time with the concepts and theories in the development process
of developing countries.
The
course will focus on discussing concepts and theories upon various issues
currently debated in the field of development economics, such as foreign
assistance, economic policy and strategies. As a result, it leaves
technicalities in solving development problems to presentations and discussions
in other courses.
2.
Learning Outcomes
This
course will enhance the capacity of students to analyse and apply theories of
development in practice. It will equip students with the ability to examine and critically
evaluate development strategies generated by the country in different
periods of time, in order to learn useful lessons for policy makers in the
future. The learning outcomes will be achieved by refining student’s
analytical understanding of:
1.
Theories of development; arguments pro and contra are reviewed.
2.
The causal relationships between development theories and alternative
development strategies available to the country.
3.
Lessons for developing countries in
economic planning and policy formation.
3.
TEACHING METHOD
Teaching
will have 3 components:
1.
Weekly formal lectures focused on student learning requirements will be
used to develop analytical frameworks and survey the relevant literature.
2.
Seminars every two weeks to facilitate students to discuss issues raised
in the lectures through the preparation and presentation of pre-assigned
teamwork. The class will be divided into three
groups of up to 10 persons each. In the seminars, every group will be
required to make a short presentation in turn and lead a discussion based on the
readings of the week. Asterisked items are available in the Library and provided
by lecturer. It is important that
readings selected for class discussion, i.e. asterisked items, must be read by
everyone in preparation for the seminar, and other readings are suggestions
for those writing the essay. A copy of the summary of what every group will
present (minimum length one page, hand-written accepted) will be given to the
lecturer at the beginning of the class.
3.
A final two-hour examination will be used to evaluate the extent to which
student capacities have been enhanced.
4.
Student work load
This
course carries a weight of 60 MA calendar hours. However, the average student
seeking to achieve an average performance should be prepared to devote a minimum
of 150 hours of work to it. The breakdown of this minimum workload is as
follows:
Lectures
=
8 lectures @ 3 hours per lecture
=
24 hours
Seminars =
12 hours
Essay
=
=
16 hours
Reading
=
480 pages @ 6 pages per hour
= 80
hours
Examination
revision
=
16 hours
Examination
=
2 hours
Total
=
150 hours
5.
Assessment Method
The
course will be assessed through individual and teamwork. Students will be
expected to complete:
Essay
=
35%
Examination
=
50%
Class participation and discussion
= 15%
Total
=
100%
Students
should be advised to choose one of
six essay topics mentioned. The deadline will be 11 May 2000. Essays submitted more than 1 week late shall be
penalised 50%, those submitted more than 2 weeks late will receive zero marks.
6.
Teaching Program
6.1.
Week 3: Monday, 28 February
and Thursday, 2 March 2000
1.
Topic1: The World Economy and Developing Countries
Learning objective:
to
briefly introduce the key features of the global economic
panorama.
Key
concepts: Globalization, integration, developing
countries, dependence burdens, liberalization, unemployment and underemployment,
absolute poverty, subsistence incomes, substantial dependency, creditworthiness
ratings, tariffs, low income, lower-middle and upper-middle income, high income
countries.
Readings:
1*
World Bank, Global Economic Prospects and
the Developing Countries, Washington: World Bank, 1996, summary and chapters
1,2,3.
2.
United Nations, The World Economy at the
Start of 1995, New York 1994.
3.
M. Todaro, ED, chapter 1, or Todaro, EDW, chap.5.
4*
Keith Griffin, Alternative Strategies for
Economic Development, London: Macmillan, 1989, chap.1.
ESSAY TOPIC 1:
Evaluate the impact on developing countries of their increased integration in
the world economy.
6.2.
Week 4+5: Thursdays, 9 and 16 March
2000
Topic 2: Theoretical Foundation of
Development Strategies
Learning
objective:
to provide the key terminology related to development and underdevelopment. It
focuses on development strategies, which are characterized by Griffin in the
above-mentioned book. They are the
Monetarist Strategy, the Open Economy Strategy (OES),
Industrialization, Green Revolution Strategy, Redistributive Strategies and
Socialist Strategies of Development.
Key
concepts:
Development, underdevelopment, poverty, inequality, life-sustenance,
self-esteem, freedom from servitude, development strategy, OES, ISI, EOI, IOCR,
economies of scale, economic rents, self-reliance, pole growth, big-push
strategy.
Readings:
1.
Seers, D. “The meaning of Development” in Charles K. Wilbert, The
Political Economy of Development and underdevelopment, New York: Random
House, 1973, pp.6-14.
2*.
Ingham, B. “The Meaning of Development: Interactions Between ‘New’ and
‘Old’ Ideas”, in World Development,
vol. 21(1993), n.11, pp. 1803-1821
3.
Lewis, WA, “Reflections on Development” in Gustav Ranis and T. Paul Schultz
(eds.), The State of Development
Economics, London: Basil Blackwell, 1988, chap. 1, pp. 13-30.
4.
Gillis, et al., Economics of Development,
3rd edition New York: W. W. Norton and Company, chap.2, pp. 18-35.
5*
Keith Griffin, Alternative Strategies for
Economic Development, London: Macmillan, 1989, chap.2, pp. 24-35.
6.
Currie, L. “The Objectives of Development”, World
Development, vol. 6 (1978),
n. 1, pp. 1-10.
ESSAY TOPIC 2:
“Measuring development is difficult because of the complexity of the
concept of development”. Discuss.
6.3.
Week 6+7: Thursdays, 23 & 30
March 2000
Topic 3: Precursors and Theoretical
Heritage
Learning
objective:
to provide a brief overview of the main elements of dynamic theory (accumulated in economic literature by the mid-twentieth
century)
concerned
with the causes of, and constraints to, long-run economic growth .
Key
concepts:
terms of trade, liquidity trap, rentiers, marginal cost, marginal product of
capital, marginal utility, imperfect competition, schools of thought of sources
and dynamics of growth, maximization utility.
Readings:
1*.
Hunt, D. “ The Theoretical Heritage” in Economic
Theories of Development: Analysis of Competing Paradigms, New York, London:
Harvester Wheatsheaf, 1989, chap.2.
2*.
Ben Fine, Marx’s Capital, London:
The Macmillan Press LTD, 2nd Edition, 1984, chapters 1-14.
3.
Dean, P., The Evolution of Economic Ideas,
London: Cambridge University Press, 1978, chapter 3, pp.29-33.
ESSAY TOPIC 3:
From the Marxist framework, capitalism is considered ‘progressive’. Explain
what this means and its implications for the process of development.
6.4.
Week 8+9: Thursdays, 6 & 13 April
2000
Topic 4: Markets and Efficiency
Learning
objective:
to outline free market (or neoclassical) theory and show how it allocates
resources via the price mechanism, and
promotes growth in an economy. It considers
the approaches and models that comprise the central mechanisms by which
unregulated markets are claimed to ensure efficient resource allocation.
Key
concepts:
individualism, free market/unregulated market, resources, resource allocation,
utilitarianism, Pareto – Optimal.
Readings:
1*.
Andrew Schotter, Free Market Economics,
Oxford: Basil Blackwell, 1990 (second edition), chapters 1,2,3,4,5.
2*.
M. Mackintosh, et. al., Economics and
Changing Economies, London: International Thomson Business Press, 1996,
chapters 3,4,7.
3.
Todaro, EDW, chapters 1,2,3,4.
4.
World Bank, World Development Report 1992, Oxford: Oxford University Press,
1992, chap.1.
ESSAY
TOPIC 4: Present the theoretical argument that unregulated markets produce
results which are efficient in terms of resource allocation. Briefly evaluate
the argument.
6.5.
Week 10+11: Thursdays 20& 27
April 2000
Topic
5: The Capital-Shortage and Industrialization Model: Saving, Investment and
Industrialization.
Learning
objective: (1) to outline the core
of the capital-shortage and industrialization model with the concepts and
theories (2) to examines how savings and investment are mobilized and used to
promote economic growth as well as
the main determinants of,
and constraints
to,
saving, investment and growth.
Key
concepts: capital accumulation,
capital stock, normal rates of protection or NRP, effective rates of production
or NRP, warranted rate of growth, Harrod-Domar model, Two-Gap model.
Readings:
1*
Gillis, M. et al. Economics of
Development (3rd edition), New York: W.W Norton & Company,
1992, chapter3, pp. 36-69 OR chapters
15, 16 & 17: pages 413-484 (Doctor Luu’s reading materials)
2*
Hunt, D. Economics of Development,
New York: Harvester Wheatsheaf, 1989, chapter3, pp. 41-85.
3.
Cassen, Robert and associates, “Summary: Conclusions and Recommendations” Does
Aid Work? Report to an Intergovernmental Task Force, Oxford: Clarendon
Press, 1987.
4.
Bauer, Peter “Foreign Aid: Central Component of World Development?” The
Development Frontier, Essays in Applied Economics, London, Sydney, Singapore
Harvester Wheatsheaf, 1991.
ESSAY
TOPIC 5: Can development aid help developing countries develop? Discuss.
6.6.
Week 12+13: Thursdays, 4 &
11 May 2000
Topic
6: Dualism: Inter-sectoral Relations and Development Strategy.
Learning
objective: The topic focuses on
the Lewis-Fei-Ranis model, which highlights the need to distinguish the agricultural
and industrial sectors in the dual economy- i.e., one characterized by two
separated sectors such as agriculture and industry-and the problem of labor
movements between them.
Key
concepts: Dualism, sociological
dualism, technological dualism, dualism in closed economy, dualism in the opened
economy, capitalist sector and traditional sector, dynamic dualism, Lewis model,
Ranis and Fei model.
Readings:
1*
Lewis, WA” Economic Development with Unlimited Supplies of Labor”, in A.N.
Agarwala and S.P. Singh, The Economics of
Underdevelopment, London: Oxford University Press, 1969, pp.400-449.
2*
Hunt. D. Economic Theories of Development,
New York: Harvester Wheatsheaf, 1989, chapter 4.
3.
Ranis, G. “Analysis of Development: Dualism, in Hollis Chenery and T.N.
Srinivasan (eds.) Handbook of Development
Economics, Amsterdam: North Holland, 1988, chapter 4, pp.73-92.
ESSAY
TOPIC 6: “Lewis’ central problem is to identify the causes of, and
constraints to, growth. The fundamental constraint to growth in output is, for
Lewis, the lack of accumulation of productive capital, and the overriding constraint
to capital accumulation is, in his view, as in that of classical economists, the
rate of savings”. Discuss.
SEMINARS
6.7.
Week 3: Thursday, 2 February 2000:
Seminars
6.8.
Week 5: Thursday, 16 February 2000:
Seminars
6.9.
Week 7: Thursday, 30 March 2000: Seminars
6.10.
Week 9: Thursday, 13
April 2000: Seminars
6.11.
Week 11: Thursday, 27
April 2000:
Seminars
6.12.
Week 13: Thursday, 11
May 2000:
Seminars
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