National Institutions and Development Course Module in Business, Government, and the International Economy Course Modules help faculty select and sequence HBS Publishing titles for use in segments of a course. Each module represents subject matter experts’ thinking about the best materials to assign and how to organize them to facilitate learning. In making selections, we’ve received guidance from faculty at Harvard Business School and other major academic institutions. Each module recommends four to six items. Whenever possible at least one alternative item for each main recommendation is included. Cases form the core of many modules, but we also include readings from Harvard Business Review, HBS background notes, and other course materials. 1. Overview of suggested contents (HBS case unless otherwise noted) Title 1. Introduction Country Analysis: A Framework to Identify and Evaluate the National Business Environment (HBS note) Possible supplement: Note on Analyzing BGIE Data (HBS note) Alternative: National Economic Accounting: Past, Present, and Future 2. Foundations and Challenges of Capitalism Constructing a Nation: The United States and Their Constitution, 1763-1792 And Money and Banking in America (HBS video) Alternative: French Pension System: On the Verge of Retirement? (Abridged)
Author
Product Number
Publication Year
Pages
Teaching Note
Dyck
797092
1997
10p
--
Rukstad
383094
1983, Rev.1998
8p
--
Moss
703026
2002
28p
--
Moss
795063
1994, Rev.1996
25p
796047
Koehn
805088
2004
25 min.
805089
Moss
799143
1999
23p
701027
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National Institutions and Development: An HBSP Course Module 3. New Europe? Spain: Straddling the Atlantic
Di Tella
705006
2004, Rev.2005 2005
24p
705016
Haider
KEL141
8p
--
Dyck
795060
1994, rev.1996
23p
796037
Alternative 1: Japan: The Miracle Years
Wells
702014
2001, rev.2002
27p
--
Alternative 2: Singapore Inc.
Vietor
703040
2003, Rev.2006
27p
703049
Enright
HKU430
2005
22p
HKU431
Alternative 1: India on the Move
Vietor
703050
2003, Rev.2006
29p
703054
Alternative 2: Russia: The End of a Time of Troubles?
Abdelal
701076
2001
27p
701078
B case: 703053
2003
4p
same
Alternative: Ireland: Celtic Tiger (Kellogg case) 4. National Development Strategies The USSR 1988: The Search for Growth
5. Changes in National Institutions China and Its Neighbors in 2005 (HKU case)
II. Rationale for selection and sequencing the items in this module The inspiration for this course module comes from Harvard Business School’s MBA-level course on business, government, and the international economy (BGIE), in which a series of cases on nations and national-level analysis follows an introductory unit on macroeconomics and precedes a concluding unit on international issues and institutions. This HBSP course module contains only a small fraction of the “country cases” that BGIE professors have written in recent years, all of which are available from HBS Publishing. The module opens with a pair of readings recommended to introduce the national perspective. The note on country analysis explains strategic components (national goals and policies) and contextual components (resources, key players, and rules that determine allocation of resources), and identifies key measures of economic, social, and political health. Consider using as a supplemental piece the note on analyzing BGIE data; this provides guidance as well as numerous basic formulas for analyzing data exhibits. A mild note of caution: The note references a case on the inauguration of FDR to provide a great many examples, which may be a less than optimal narrative aid for students who have not read that case.
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National Institutions and Development: An HBSP Course Module Segment 2 begins national analysis with a look at the United States, but professors teaching outside the U.S. might wish to start with a different case, as the point here is to begin with a country with which students are at least somewhat familiar. Finally, the cases in segments 3-5 examine countries whose policies and performance have changed notably – in some cases drastically – in the recent past. The cases are chosen to show students an array of influences, ranging from moderate shifts in economic development strategy to fundamental change in political institutions. III. Detailed description of recommended items 1. Introduction Country Analysis: A Framework to Identify and Evaluate the National Business Environment Alexander Dyck (HBS background note) A manager's ability to build profitable firms depends upon the business environment within which firms interact. This note presents a framework to help understand, anticipate, and perhaps foster changes in the business environment. Describes building a picture of the business environment as country analysis. The country analysis framework has three interdependent components of strategy, context, and performance. Focuses on identifying and evaluating the national and international context. In particular, clarifies the role state actors, nonfirm organizations, and "rules of the game" can play in firm decision making. Learning Objective: Can be used to introduce a course or module that focuses on the national and international business environment. Subjects: Business conditions; Country analysis; Government policy. And (as a possible supplement) Note on Analyzing BGIE Data Michael Rukstad (HBS background note) Introduces students to the process of data analysis in Business, Government, and the International Economy (BGIE) cases. Uses examples from Selected U.S. Statistics: Part I. Subjects: Business government relations; Case method; Economic analysis; Macroeconomics; Statistical analysis. Alternative: National Economic Accounting: Past, Present, and Future David A. Moss Presents the fundamentals of GDP accounting (including definitions, etc.), examines the history of national accounting, and surveys the international debate over "Green GDP." The first section explains the basic rules and definitions of national economic accounting and the meaning of GDP versus NDP. The second section provides historical context for the development of national income estimates, 1886 to 1940, culminating in the creation of GNP by the U.S. Department of Commerce in the 1940s. The third and final section discusses the standard imputations currently made to reflect nonprice economic activity (e.g., for owner-occupied housing and government services) and explores the debate over imputations for natural resources and environmental quality. Learning Objective: To understand the meaning of GDP, its strengths and weaknesses, and the fundamentals of national economic accounting. Subjects: Accounting; Business government relations; GNP. 2. Foundations and Challenges of Capitalism Constructing a Nation: The United States and Their Constitution, 1763-1792 David A. Moss
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National Institutions and Development: An HBSP Course Module Examines the founding of the United States of America during the second half of the eighteenth century. Focuses on: 1) the reasons why the American colonists rebelled against Britain (1763-1774); 2) the problems the new nation confronted during the War of Independence and under the Articles of Confederation (1775-1788); 3) the main issues taken up at the Constitutional Convention in Philadelphia (1787); and 4) the enormous challenges facing Alexander Hamilton as Secretary of the Treasury in the first Washington Administration (1789-1792). A complete version of the Constitution (including the first 10 amendments) is attached as an appendix. Learning Objective: To expose students to the early history of the United States and to encourage them to grapple with fundamental issues of political economy, including the economic role of the state and the nature of property rights. Subjects: Business history; Federal government; Politics. And Money and Banking in America Nancy Koehn (HBS Video) Provides a concise overview of the critical role that money and the nation's banking system have played in the development of the U.S. economy. Tells the story of money and banking in the United States, from the earliest settlements in the colonial era through the 20th century. Focuses in particular on the importance of paper money in the colonial era, the central role that banks played in issuing and regulating the money supply in the 19th century, and the transition to a national money supply in the years after the Civil War. Learning Objective: To provide a historical context for understanding the many different, dramatic changes in the money supply that have taken place in the United States from the colonial era to the present. Subjects: Banking; Business history; Monetary policy; Money; Political risk. Alternative: French Pension System: On the Verge of Retirement? (Abridged) David A. Moss Surveys the French pension system, its particular institutional characteristics, and some of the critical challenges and opportunities facing French reformers. Like almost every other industrialized country, France has a large pay-as-you-go public pension system that is beginning to run into serious financial trouble. Ever-increasing longevity, the impending retirement of the baby boomers, and intense public pressure for a lower retirement age are all placing great strain on the existing system. The case emphasizes that in contemplating proposals for reform, the French are being required to weigh two different social objectives that appear to be in conflict--economic growth and economic security. Their choices will end up exerting an enormous impact not only on their welfare state but also on the structure of French labor and capital markets. Subjects: Baby boomers; Capital markets; Pension funds; Privatization; Retirement. 3. New Europe? Spain: Straddling the Atlantic Rafael DiTella Provides a broad overview of economic and political developments in Spain from the 1940s to the present day. Examines the emergence of Spain from the Franco dictatorship and its convergence into a vibrant democracy, as reflected in the surprising election results of 2004. Also describes the economic transformation of Spain and permits discussion of the interrelationships between the economic and political dynamics. Highlights the role the European Union (EU) played as an inspirational goal and institutional constraint on how Spain developed both economically and politically. Discuses in greater detail the Spanish labor market and the evolution of unemployment levels in Spain. Also looks at the role
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National Institutions and Development: An HBSP Course Module of terrorism in a society such as Spain's, with reference to both the Basque separatist terrorism of ETA and the international terrorism associated with the Atocha station bombings in 2004. Learning Objective: To serve three main purposes: First, as a country study, to provide a broad overview of economic and political developments in Spain, the fourth largest economy in the euro area. Second, to develop an analysis of how the EU has shaped economic and political development in Spain over the last three decades, which is of particular importance in the context of EU expansion into the former communist countries of central and Eastern Europe. Finally, through an analysis of the causes and consequences of the high levels of unemployment in many continental European economies to be developed, to prompt students to assess the implications of such high levels of unemployment and possible solutions to the problem. Subjects: Economic development; Politics; Unemployment. Alternative: Ireland: Celtic Tiger Don Haider (Kellogg School Case) Reviews Ireland's economic development over the past hundred years and how the government turned this small island's economy around. Ireland's population had dropped from eight million in the late 19th century to three million by 1990. It was considered the poorest European Union country, known for its extreme poverty, high unemployment, and bleak economic future. Through increased linkage to Europe, Ireland became a global trading economy. Its overall success stemmed from a low tax rate, a welleducated population, and a skilled and flexible workforce. Explores all of these aspects of Ireland's "economic miracle." Subjects: Country analysis; Economic analysis; Economic development; Economics; Globalization; International trade; Strategic planning. 4. National Development Strategies The USSR 1988: The Search for Growth Alexander Dyck For decades after the revolution of 1917, Communist Party leaders claimed that the socialist economic system was superior to the capitalist system on both moral and economic grounds. By 1985, when Mikhail Gorbachev became general secretary of the Communist Party of the Soviet Union, the economic claim had been increasingly contradicted by the facts. Soviet per-capita income remained significantly below western levels, and Soviet growth rates had declined steadily since the 1960s. Gorbachev searched for a way out of this economic deterioration announcing a policy of perestroika and glasnost. Had Gorbachev misdiagnosed the problem? Should other options have been pursued? This case outlines the starting conditions for any attempts at economic reform of a socialist system. Describes the economic strategy of allocating resources by command channels rather than allowing resources to be allocated by markets and firms. This clear example of planning leads to deeper understanding of the forms of planning seen in other countries. Successes and failures of this system are noted, with particular attention to the information aggregation and processing demands made on central planners. Subject: Centralization. Alternative 1: Japan: The Miracle Years Louis T. Wells Japan experienced rapid growth in the 1950s and 1960s while following a set of policies that differ from current policies in fashion. Although some observers believe that Japanese growth occurred in spite of the policies rather than because of them, several countries have looked to Japan's approach during this period as a way to accelerate their own growth. This case provides data on performance and describes the important institutions, policies, and control tools that were used in Japan. A rewritten version of two earlier cases.
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National Institutions and Development: An HBSP Course Module Learning Objective: Students are asked to understand how the Japanese model worked and to explore the ways that the model supported the generation of resources (investment), improvements in technology and management (performance of firms), and reallocation of resources from less productive uses to more productive uses. Students are asked whether they believe the policies led to the growth and, if so, whether they think other countries can copy parts of the Japanese model. This encourages a discussion of the importance of domestic and international context in which Japan operated at the time. Also sets the stage for later analysis of the problems of modern-day Japan, with a focus on the difficulties facing a country when it has to shift from a successful strategy that is no longer useful. Subjects: Balance of payments; Country analysis; Exports; Imports; Inflation. Alternative 2: Singapore Inc. Richard H.K. Vietor In early 2003, Prime Minister Goh Chok Tong is assessing Singapore's development strategy--tax cutting combined with an industrial policy focused on six "clusters," including biomedical sciences. After 36 years of stupendous growth, Singapore has slowed down and faces intense competition in exports and foreign direct investment, especially from China. Is its new strategy the right choice? This case examines several key aspects of Singapore's growth, including organizational/cultural arrangements, the savings/investment balance, and total factor productivity growth. Subjects: Country analysis; Economic development; Globalization; Industrial policy; Macroeconomics; Productivity. 5. Changes in National Institutions China and Its Neighbors in 2005 Michael J. Enright (Hong Kong University case) Explores the interactions between China and its neighbors, and considers how those interactions will change as China emerges on the world economic stage in the coming years. Subjects: Business & government; Foreign direct investment; Foreign investment; Globalization; International business; International trade; Macroeconomics. Alternative 1: India on the Move Richard H.K. Vietor By 2003, India had been growing at almost 6% annually since 1992, after it suffered a financial collapse, abandoned import substitution, and moved gradually to adopt the Washington Consensus. Now, financial controls and competition barriers are less burdensome, inflation is lower, and the current account is balanced. However, the finance minister faces difficulties with massive fiscal deficits and continuing disturbances with Pakistan that seem to deter foreign direct investment (FDI). The question facing him is whether India can reduce these deficits (in the face of a 2004 election) or whether to let them slide, hoping that India's entrepreneurs and high-tech southern states will carry the day. Subjects: Budgeting; Economic development; Foreign investment; Imports; Macroeconomics. Alternative 2: Russia: the End of a Time of Troubles? Rawi Abdelal Describes Russia's troubled economic transition since 1991, highlights the problem of institutional development, and surveys the challenges President Vladimir Putin faced in 2000. The first section provides a brief synopsis of liberalization, stabilization, and privatization under President Boris Yeltsin. The second section describes the economic difficulties Russia experienced during the 1990s involving demonetization, federalism, taxes, contract enforcement, the legal system, the 1998 financial crisis, and public health. Concludes with President Putin's political and economic plans.
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National Institutions and Development: An HBSP Course Module Learning Objective: To explore the relationship between economic and political institutions during economic transition. Subjects: Business government relations; Country analysis; Economic development; Emerging markets; Government policy; Policy making; Privatization.
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