1 The business environment in emerging economies Prof. Olivier Cadot Spring Semester, 2014

2 S EMINAR OBJECTIVES Get the big picture o How is the world economy evolving? What is the role of emerging economies o Basic differences between industrial and emerging economies o What do we know about economic development? Understand to anticipate Learn to analyze data o Do and present descriptive statistics o Do and interpret basic regression analysis o Understand indices Learn to present and discuss your ideas o Select what you communicate o Give a «narrative» to your analysis o Provide constructive comments to others

3 S EMINAR EVALUATION Hands-on data analysis exercise o Get data o Organize it (cleaning, formatting) o Analyse it (descriptive statistics, econometric analysis) o Present your results Group project o Topic to be agreed with instructor/assistant o Original contribution (not just review of the literature) o Data analysis Discussion of group projects Optional: In-class case presentation and discussion

4 S EMINAR F ORMAT AND SCHEDULE Six introductory sessions February 20, 27; March 6, 13, 20, 27 Group work, phase I (topic determination & data gathering): April Group meetings with professor/asssistant, round I: Week of April 15 Group work, phase II (analysis and preliminary draft): May Group meetings with professor/assistant, round II: Week of May 12 Assignment of «discussant» roles Presentations and discussion: May 15, 22, 29

5 S UGGESTIVE LIST OF PAPER TOPICS o Governance in extractive industries o Country competitiveness analysis o Measuring «logistics friendliness» o Export entrepreneurship o Statistical analysis of competitiveness and other indices o Public-private partnerships in public utilities, with a focus on water privatization o Free-trade agreements o Product standards, technical regulations, and competition o NGO management & accountability o Project impact analysis

6 U NDERSTANDING GLOBALIZATION

7 T RADE GROWS FASTER THAN PRODUCTION Openness ratio Trade growth vs. GDP growth

8 G LOBAL TRADE PATTERNS ’ Source: Adapted from The Economist, A Survey of Logistics, 17 June 2006, p. 5. Million US dollars

9 S HIFTING PATTERNS, SHIFTING CENTER OF GRAVITY Source: JM Grether and N Mathys (2006), “Is the World’s Economic Center of Gravity Already in Asia?”, mimeo, Univ. of Lausanne 2015

10 T HE DECLINE OF THE RICH COUNTRIES Share of high-income countries in trade in goods In current USDAt PPP

11 T HE RISE OF A SIAN PLAYERS Service exports: India,

12 T HE INTERNATIONALIZATION OF COMPANIES Inward and outward FDI flows Inward Outward

13 D IFFERENCES IN VALUES ( I ): H OFSTEDE (1980) Power acceptance Individualism “Masculinity” (competitiveness) Risk aversion Source :

14 D IFFERENCES IN VALUES ( II ): A CULTURAL DISTANCE INDEX Intra-country fragmentation index Inter-country distance index (Thoenig et al. 2009)

15 H AS CULTURAL DISTANCE SHRUNK ?

16 D ETERMINANTS OF CULTURAL DISTANCE

17 T HE TRANSPORTATION REVOLUTION Share of U.S. trade shipped by air, Source: Feyrer (2009)

18 G LOBALIZATION : STYLIZED FACTS

19 G LOBALIZATION : STYLIZED FACTS The developing world’s debt burden

20 S UMMING UP Source: Sala i Martin 2002 Income distribution over time: World,

21 S UMMING UP Source: Sala i Martin 2002 Income distribution over time: World

22 S UMMING UP Poverty: tide turning? Headcount of individuals living on less than $1 a day worldwide Source: World Bank (2002),"Globalization, Growth and Poverty: Building an Inclusive World Economy" million individuals

23 What is globalization? o Rising openness to trade/reduced trade protection  Goods  Services o Rising mobility of capital/internationalization of firms  FDI  Speculative flows o Reduced global incidence of poverty  Uneven across continents  Halted by global financial crisis S UMMING UP