Research Objective: Students will conduct an in-depth country analysis of an emerging market economy to determine its suitability for foreign direct investment. An emerging market is a country with a Gross National Income (GNI) of $10,00.00 per capita (or with the potential for the 10K milestone) such as India, the Czech Republic, United Arab Emirates, Egypt, Turkey, Mexico, Thailand, Indonesia, Chile, Republic of Ireland, Israel, Romania, Brazil, South Africa, Vietnam, Russia, Malaysia, Israel, Bulgaria, Ghana, Poland, etc.
A sample table of contents for the paper is presented as follows:
State the name of the country, the region of the world where the country is located, languages spoken, number of states in the country, date of independence, and name of current President/Prime Minister. Alternatively, give a brief introduction of the MNC that you have selected for research.
2. Political Risk:
Form of government: Examples are the presidential system and the parliamentary system with a prime minister, or a monarchy.
Living standards and income distribution. Based on your research, is there a strong middle class with the purchasing power in your assigned country that can buy MNC products and/or services?
Orderliness of leadership succession: Is there a peaceful change of government like we have in the United States and the rest of the western world, or there is violent change of government through military coup, in your selected country?
Cultural and demographic characteristics of the population. Based on your research and analysis, which state or region in the country possess the best locational characteristics for FDI?
Integration within the international economic system: Does your country do a lot of business with the rest of the world? Look at the trade and investment data for the country in the Balance of Payments document.
Security risk: Is there any small conflict in your country that can grow into a much bigger problem for the government and business firms? Acts of terrorism and expropriation of property by a foreign government are also examples of security risk.
3. Economic Risk:
Size of external debt: What is the size of the external debt and the related interest payments (debt service)? If a country has a large stock of external debt, its monthly debt service may be burdensome to the point where the government may not be able to take good care of its citizens since most of its revenue would be spent on servicing its external debt.
Structure of the current account: What is the trade balance of your country? Does it have a trade surplus, or trade deficit, and if so, why?
Resource endowment, level of development and economic diversification. What natural resources does the country have, that it can export to earn hard ciurrencies? And what is its level of development as classified by the World Bank (low-income, middle income, or an upper income economy), and how diversified is its economy?
Size and composition of savings and investment. This section is referring to household savings rate in the country.
Rate and pattern of economic growth. What is the current GDP growth rate for your country? Has the GDP growth rate been consistent over the years, or it changes from time to time? If so, why?
Effectiveness of fiscal and monetary policies. How effective is the tax and expenditure policies (fiscal policy) of the country? And how about its monetary policy that may focus on money supply levels and inflation targeting as the key instruments for monetary policy management? Inflation targeting is the exclusive use of interest rates to control inflation.
Structural economic reforms: Privatization (selling government owned companies to private investors) and liberalization of the economy are good examples of structural reforms.
Long-term economic projections. What is the coutry’s central bank and the International Monetray Fund saying (forecasting) about the future GDP growth of the company?
State and discuss a minimum of six factors why the country is good, or not a good candidate for foreign direct investment.
Summarize sections 1 through 4 and highlight the key points in your paper, including lessons learned.
The Relationship Between Class Assignments including Examinations and the Student Learning Objectives (SLOs)
The midterm exam relates to SLOs #1 & 2
The country risk analysis research paper relates to SLO #3
The final exam relates to SLO #4
Additional Research Resources for the Research Paper
www.cia.gov (Links to an external site.)
www.undp.org (Links to an external site.)
www.state.gov (Links to an external site.)
www.worldbank.org (Links to an external site.)
www.unido.org (Links to an external site.)
www.bis.org (Links to an external site.)
www.imf.org (Links to an external site.)
www.oecd.org (Links to an external site.)
Centers for International Business & Education Research at George Washington University and UCLA.
The Kennedy School of Government at Harvard University
The Library of Congress
Petersen Institute for International Economics
Asian Development Bank
African Development Bank
European Bank for Reconstruction & Development
Inter-American Development Bank
And many more, including the class text, and articles from credible sources.
The grading rubric for the research paper is attached with this syllabus.
The research paper should be typed and doubled spaced with a minimum of twenty (20) pages excluding the cover, table of contents and reference pages. Wikepedia and About.Com are not credible research resources and should not be used.