BA 447 – day 4 & 5

Overview of development reform Review ch 9 Reiterate questions raised Other countries in outsourcing list

Virgin of Guadalupe statue made in China Contrast three countries –Mexico –China –Egypt What makes one country succeed faster than another? –China

Reform Macro-economic approach to reform –Privatization –Deregulate financial markets Entry of foreign banks Allow repatriation of foreign company earnings –Float currency –Encourage FDI –Shrink subsidies, force competition –Reduce tariff barriers –Flexible labor laws

Discussion Privatization: benefits, social issues –Example: Japan Post, Callao port (Peru) –Opportunities for global business Shrink subsidies, reduce tariff barriers –Impact on domestic economy –Opportunities Others?

Success stories Mexico to some extent, although he really forgets that 40% of the revenues of the Mexican government comes from oil India, but is development limited to pockets? Reduction in poverty rates, although the numbers are still staggering (p 315)

Discussion Examples of how these governments actually work? –Myth of China, Inc. –Elections in Pakistan

Reform “retail” Visit from Mercy Corps –Focus on facilitating enterprise in devastated areas –Reducing or removing bottlenecks, etc. Idea is to facilitate or encourage the formation of enterprises, which in turn creates jobs –Infrastructure –Regulatory institutions –Education –Culture

Infrastructure issues Roads, bridges, electricity Communications facilities Access to computers and internet Government issues: –Priorities - Availability of support industries, including educational facilities

Reforming regulatory institutions Sources of “rent” –Those who work within these agencies –Politicians, etc. Large, e.g. 11,000 employed in Philippine IRS Person oriented rather than system Find a way to “work” with the system

Reform “retail” How easy is it to start a business? –Number of steps –Number of days, e.g. 168 days in Jakarta, 19 days in Panama, 2 days in Australia Ability to hire and fire, e.g. more than a year in UAE, company usually lost under a particular Labor secretary in the Philippines Enforce a contract, e.g. collection procedures, bribe sheriffs, etc.

Reform “retail” Get credit Close a business

IFC prescription Simplify and deregulate, allow market forces to “manage” economy Enhance property rights Use ICT, including internet, to implement regulation. One benefit: reduces human interference and therefore corruption Reduce court involvement Continuous process

Summary of Ch 9 Macro-economic reforms Reform “retail” Facilitate entry of “3 billion” into global economy Global company perspective - identify –opportunities, e.g. growth prospects in selected countries or industries within –threats or lack of opportunities, e.g. structural impediments to business

Reform Macro-economic approach to reform –Privatization –Deregulate financial markets Entry of foreign banks Allow repatriation of foreign company earnings –Float currency –Encourage FDI –Shrink subsidies, force competition –Reduce tariff barriers –Flexible labor laws

Reform “retail” Idea is to facilitate or encourage the formation of enterprises, which in turn creates jobs –Infrastructure –Regulatory institutions, e.g. labor –Education –Culture –Get Credit –Open and close businesses

Exercise Title and source (name and date) Topic: –“wholesale” reform –“retail” reform Country Brief description of example Thoughts?? (We will compile and post titles and source)