Global Economic Issues: Analyzing Key Questions and Answers

Discussion Questions and Answers:

1.Why is growth slowing in East Asia and the Pacific?  How does growth in high income countries affect the region?  What does this imply about the global economy

2.Discuss the export-oriented model that has sustained East Asia and the Pacific for so many years.  Is the model still viable?  Why or why not?

3.Reflect on the changes in China.  What does a more prosperous China mean for East Asia?  What does it mean for the world?

4.How can companies in high income countries like the United States capitalize on the newly prosperous China and East Asia?  How should companies approach the market?

5. Discuss how after 1991, Ethiopia’s political and economic environment has changed. What  hampered economic and social development before 1991?

6. Which are some of the economic development challenges Ethiopia still faces?

7. To what extent are personal and political networks important in Ethiopia?

CRITICAL THINKING AND DISCUSSION QUESTIONS

1.QUESTION 1:  Free market economies stimulate greater economic growth, whereas state-directed economies stifle growth. Discuss.

2.QUESTION 2:  A democratic political system is an essential condition for sustained economic progress. Discuss.

3.QUESTION 3:  What is the relationship between corruption in a country (i.e., bribe- taking by government officials) and economic growth? Is corruption always bad?

4.QUESTION 4:  You are the CEO of a company that has to choose between making a $100 million investment in Russia or Poland. Both investments promise the same long-run return, so your choice is driven by risk considerations. Assess the various risks of doing business in each of these nations. Which investment would you favor and why?

5.QUESTION 5: Read the Country Focus on Venezuela under the leadership of Hugo Chávez, then answer the following questions:

a.Under Chávez’s leadership, what kind of economic system was put in place in Venezuela?  How would you characterize the political system?  

b.How do you think that Chávez’s unilateral changes to contracts with foreign oil companies will impact upon future investment by foreigners in Venezuela?  

c.How will the high level of public corruption in Venezuela impact future growth rates?

d.Currently Venezuela is benefitting from a boom in oil prices.  What do you think might happen if oil prices retreat from their current high level?

e.In your estimation, what is the long run prognosis for the Venezuelan economy?  Is this a country that is attractive to international businesses?

At times of economic crisis what are the advantages and disadvantages of the French model of social protection?

Given that the leading French companies are more active internationally than domestically, why do you think the French state still holds shares in them? How would you characterize the role of the state in the French economy?

Do you think that the French social model can survive without radical structural reform? Please give your reasons.

From the perspective of international business what factors might attract investors to France and what factors might dissuade investors?

Discussion Questions and Answers

1.Discuss the impact of the recession in Europe on the U.S. economy.  What do the European Union’s troubles mean for the United States?

2.Reflect on the economic and monetary discord in Europe.  Should U.S. companies be concerned?  Does your response change if a company does not have any direct interests in Greece?  Why or why not?

3.Why are voters in Greece and in some other countries so opposed to the austerity programs that have been put in place to help restore the bloc’s economic stability?   How, if at all, do the conservative fiscal policies affect other European Union countries?

4.Consider the threats to the future of the euro and the role of Greece in particular.  What might European leaders learn from the current situation?  How might this affect future members of the European Union?

What is the relationship between property rights, corruption, and economic progress?  How important are anticorruption efforts in the effort to improve a country’s level of economic development?

You are a senior manager at a U.S. automobile company with the job of deciding whether to invest in production facilities in China, Russia, or Germany.  These facilities will serve local market demand.  Evaluate the benefits, costs, and risks associated with doing business in each nation.  Given your answer here, which country seems to be the most attractive target for foreign direct investment?  Why?

Reread the Country Focus feature on India and answer the following questions:

a.What kind of economic system did India operate during 1947 to 1990?  What kind of system is it moving toward today?  What are the impediments to completing this transformation?

b.How might widespread public ownership of business and extensive government regulations have impacted (i) the efficiency of state and private businesses, and (ii) the rate of new business formation in India during the 1947 to 1990 time frame?  How do you think these factors affected the rate of economic growth in India during this time frame?

c.How would privatization, deregulation, and the removal of barriers to foreign direct investment affect the efficiency of business, new business formation, and the rate of economic growth in India during the post-1990 time period?

d.India now has pockets of strengths in key high-technology industries such as software and pharmaceuticals.  Why do you think India is developing strength in these areas?

How might success in these industries help to generate growth in other sectors of the Indian economy?

Given what is now occurring in the Indian economy, do you think the country represents an attractive target for inward investment by foreign multinationals selling consumer products?  Why?

What were the underlying causes, economic and political, of the collapse of the Mubarak regime?

What do you think the Egyptian government needs to do in order to get the economy growing again and to attract foreign capital? What are the risks to the government of taking such actions?

What dangers do you see in the current trajectory of the Egyptian economy? What are the implications of these dangers for foreign companies considering doing business in Egypt? What do you think it would take to encourage more foreigners to visit, invest, and do business in Egypt? Would such inward investment be good for the Egyptian economy?