EUP426 Business, Government & Global Economy

Faculty of Social Studies
Autumn 2010
Extent and Intensity
1/1/0. 8 credit(s). Type of Completion: zk (examination).
Teacher(s)
Prof. Jack High, PhD. (lecturer), PhDr. Petr Suchý, Ph.D. (deputy)
doc. Mgr. et Mgr. Oldřich Krpec, Ph.D. (seminar tutor)
Guaranteed by
PhDr. Petr Suchý, Ph.D.
Department of International Relations and European Studies – Faculty of Social Studies
Contact Person: Olga Cídlová, DiS.
Prerequisites (in Czech)
SOUHLAS
Course Enrolment Limitations
The course is only offered to the students of the study fields the course is directly associated with.

The capacity limit for the course is 3 student(s).
Current registration and enrolment status: enrolled: 0/3, only registered: 0/3
fields of study / plans the course is directly associated with
Course objectives
To understand the modern system of international commerce. The system is shaped by national policies, international agreements, and business activity, which together form the subject matter of the course.
Syllabus
  • Schedule: Class Date Subject Assignment Case # #1 6/24 Introduction: Economic & Policy Lecture #2 6/24 National Accounts National Strategy National Income Accounting How to Read Data Exhibits Brazil Under Lula 9-797-075 9-383-094 9-707-031 #3 6/25 Monetary Policy Financial Crisis of 1931 Data Supplement on the Great Depression Money and Monetary Policy 9-384-115 9-798-093 9-797-094 #4 6/28 Balance of Payments Kennedy and the Balance of Payments Balance of Payments: Accounting & Presentation Balance of Payments: Exercise Worksheet Post-War U.S. Economic Statistics, Data Supplement 9-383-073 9-384-005 9-384-006 9-700-070 #5 6/29 Exchange Rates The Decline of the Dollar, 1978 Exchange Rate Determination Exchange Rate Terminology and Analytics Exchange Rate Exercise 9-384-116 9-384-171 9-701-121 9-701-122 #6 6/29 Government Deficits The Reagan Plan Post-War Economic Statistics, Data Supplement 9-381-173 9-700-070 #7 6/30 Trade The World Trade Organization Note on WTO Disputes: Five Major Cases (pp. 5-8) 9-703-015 9-703-016 #8 6/30 National Strategy Rwanda: National Economic Transformation Clusters and the New Economics of Competition 9-706-491 98609 #9 7/1 Oil & Development Saudi Arabia: Modern Reform Dubai: Global Economy 9-709-042 9-709-043 #10 7/2 Past & Future of Capitalism Lecture Class #1: Lecture on economics and government policy. Presents the policy views of Adam Smith, David Ricardo, Karl Marx, Joseph Schumpeter, Ludwig von Mises, Frierich Hayek, John Maynard Keynes and other prominent economists. Class #2: Aldo Mussachio, Brazil under Lula: Off the Yellow BRIC Road? 9-707-031 Michael Rukstad, Analyzing Data, 9-383-094 Robert Kennedy, National Income Accounting, 9-797-075 Introduction to the basic accounts. Moss: Macroeconomics, pp. 7-10 and Ch. 5—GDP Accounting (pp. 99-112). Optional. With a population of 186 million persons and an area of 8.6 million square kilometers, Brazil is South America’s largest country. Since its independence, Brazil has been governed by monarchy, by military dictatorship, and by democracy, the last of which has been in place since 1985. Brazil’s economy has been characterized by erratic growth, extreme income inequality, and periods of rampant inflation. In 1994 Brazil undertook monetary reform and elected the architect of that reform, Henrique Cardoso, as president. Cardoso served until 2002, when Brazilians elected Luis Inacio da Silva, popularly known as Lula, founder of the Workers’ Party. Lula was re-elected in 2006. During his second term, Lula’s goal is to simultaneously increase GDP growth and reduce income inequality. 1. How did Brazil perform under President Cardoso? 2. Evaluate Lula’s strategy during his first term in office. 3. Will Brazil “grow over 5% a year,” during Lula’s second term? Why or why not? Class #3: Rukstad, U.S. Financial Crisis of 1931, 9-384-115 Moss, Note on Money and Monetary Policy, 9-797-094 Emmons, Data Supplement on the Great Depression, 1-798-093 Moss, Macroeconomics, Ch. 2—Money (pp. 33-66). Optional. These materials introduce the underlying economic concepts of the money creation process, the banking system, and how the money supply affects aggregate demand. We also explore the monetary policies, tools, and role of the Federal Reserve System, and its performance during the early years of the Great Depression. 1. What is money? 2. How is money created? 3. Evaluate the goals of the Federal Reserve in the 1920s and in the 1930s. 4. How did the money supply change between 1929 and 1933 and why? Did the Fed's actions create the Depression? 5. What actions might you yourself have taken as a member of the Fed? When? Why? Class #4: Yoffie, Kennedy and the Balance of Payments, 9-383-073 Yoffie, Balance of Payments: Accounting & Presentation, 9-384-005 Yoffie, Balance of Payments: Exercise Worksheet, 9-384-006 Moss, Macroeconomics, pp. 11-18 and Ch. 6—Reading Balance of Payments (pp. 115-123). Optional. Our objective in this session is to introduce balance of payments analysis, an important tool in for understanding international trade and policy. A technical note and exercise provide analytical tools. The case setting is the Kennedy Administration's attempt to achieve satisfactory tradeoffs among the competing goals of world political and military leadership, commercial and industrial supremacy, and avoidance of balance of payments deficits. 1. Calculate and analyze the U.S. payment balances for 1960 using the work sheet and Exhibits 1 and 2 of the Kennedy case. 2. What are Kennedy's balance of payments problems and how are they reflected in the statistics? 3. What policy options are available to Kennedy? Class #5: Kennedy, Exchange Rate Terminology and Analytics, 9-701-121 Kennedy, Exchange Rate Exercise, 9-701-122 Ruckstad, The Decline of the Dollar, 9-384-116 Moss, Ch. 7—Exchange Rates (pp. 125-131). Optional. In this session we examine factors that affect the exchange rate for a nation’s currency. What is an exchange rate? A real exchange rate? What determines the value of one currency against another? How do currency fluctuations affect profit margins and investment returns. What should governmental policy towards exchange rates be? All these questions confront President Carter in 1978, as he tries to decide whether to strengthen the dollar by more active intervention. 1. Calculate the exchange rates, profit margins, and investment returns in the exchange rate exercise. 2. What were the primary forces accounting for the decline of the dollar during 1977 and 1978? How flexible was the exchange rate system during this period? 3. Why did the Carter administration face an “inescapable dilemma” between a strong dollar and a “robust economy,” while Germany and Japan had both a strong economy and a strong currency? 4. As an adviser to the Carter administration, be prepared to evaluate the strengths and weaknesses of the options available to the President for dealing with decline of the dollar in late October of 1978. Class #6: George C. Lodge The Reagan Plan, 9-381-173 Julio Rotemberg Post War Data Supplement 9-700-070 In 1981 President Reagan is a new manager confronting a set of problems that seem more intractable than ever. This case allows for an analysis of Reagan's program, and especially the economic assumptions that underlie particular policy measures. We also introduce concepts in supply-side economics. 1.Evaluate the situation facing President Reagan in February 1981. 2.How was the Reagan strategy supposed to work, in theory? Does it address the causes of U.S. economic problems? 3.What assumptions -- economic, social, political and international -- did the President make in his speech? To what extent are they valid? Class #7: David Moss, The World Trade Organization, 9-703-015 David Moss, Note on WTO Disputes: Five Major Cases, 9-703-016 Note: For Note on WTO Disputes: Five Major Cases, focus on disputes 3, 4, and 5 (on pp. 5-8). The first two disputes (on pp. 1-4) need only be skimmed. This case surveys the origins and workings of the World Trade Organization (WTO), focusing particular attention on the special challenges of trade liberalization at the dawn of the twenty-first century. In attempting to overhaul the global trade regime and improve access to national markets, international officials increasingly found themselves impinging on the authority of national governments in the most sensitive of areas, from health and environmental standards to competition policy and intellectual property rules. Their decisions, moreover, often seemed to pit developed against developing countries, on everything from minimum wages and working conditions to trade in agricultural and pharmaceutical products. But somehow the WTO had to build a system – and a set of rules – that would accommodate everyone. With so much at stake, the question remained whether the WTO was up to the task. 1. What is the purpose of the WTO? Do you think the WTO exercises too much or too little power in the global economy? 2. Why did global negotiators replace GATT with the WTO during the Uruguay Round? Was this really necessary? 3. Consider disputes 3, 4, and 5 in the “Note on the WTO Disputes.” In each dispute, which side do you support? Why? What are the implications of these disputes for the broader global trading system? 4. Over the long term, are you optimistic or pessimistic about the WTO and its mission? What do you view as its greatest strengths? Weaknesses? Class # 8: Michael Porter, Rwanda: National Economic Transformation, 9-706-491 Michael Porter, Clusters and the New Economics of Competition, 98609 On April 7, 2004, Rwanda, a small country in east Africa, commemorated the 10th anniversary of a genocide in which roughly 1 million people, or almost 11% of the population, had been killed. This case discusses the economic strategy of the country after the genocide and its prospects for the future. 1. Assess Rwanda’s economic position at the end of the genocide in 1994/1995. 2. (a) What steps did the Government of National Unity take between 1994 and 2000 to restore the economy? (b) What are the strengths and weaknesses of its initial development strategy? 3. Evaluate President Kagame’s economic strategy for the country over the 2000–2003 period. 4. What are the issues facing the Rwandan economy in early 2004? What recommendations would you make to the President and his team? Be specific. 5. What role have international aid organizations played in Rwanda, both positive and negative? How could foreign aid add more value in economic development? Class #9: Richard Vietor, Saudi Arabia: Modern Reform, Enduring Stability 9-709-042 Richard Vietor, Dubai: Global Economy, 9-709-043 This case explores Islamic developmental and political issues circa 2009. In the past three and a half years as King of Saudi Arabia, Abdullah bin Abdul Aziz Al Saud has led unprecedented changes in the Kingdom. At 84 years of age, he has been active in advancing the country’s position internationally and securing its foundation domestically. However, dramatic swings in the price of crude oil present a major challenge to economic planning. King Abdullah also faces political challenges, including a conservative clergy, exploding population growth, and a volatile Middle East. Formulating economic strategy in these conditions is far from easy. 1. How has the Saudi economy performed over the past decade? What role did oil play? 2. Is the Saudi regime politically stable? 3. In light of Dubai’s policies and performance, what strategy for economic development should King Saud adopt? 4. In foreign policy, how should the Crown Prince position his country vis a vis the United States? Israel and Palestine? The Gulf Cooperation Council? Class #10: Lecture on Past and Future of Capitalism. Presents the main policy developments in the 20th century and speculates on the shape of capitalism in the 21st century.
Teaching methods
Pedagogy: Instruction will be by the case method, which requires everyone to come to each class fully prepared to discuss the issues raised by the assigned reading material. The quality of learning depends in large measure on student preparation for and participation in the case discussions.
Assessment methods
Required Texts: Cases and notes from the Harvard Business School, as enumerated below. Recommended Text: David Moss, A Concise Guide to Macroeconomics (2007). Examinations: There will be one essay examination at the end of the course. Grading: Grades will depend on contributions to case discussions (30%) and the final examination (70%).
Language of instruction
English
Further comments (probably available only in Czech)
The course is taught only once.
The course is taught: in blocks.
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