THE GLOBAL BUSINESS ENVIRONMENT:

INTERNATIONAL MACROECONOMICS AND FINANCE

Professor Daniel Diamond

CASE ASSIGNMENT

There is one cases assigned in this course. It constitutes 30 percent of your first grade. It provides the opportunity for students in a team environment to apply the analytical tools, models and concepts of the course to significant developments in the globalized business environment.

Students will be assigned to appropriate sized teams by the second week of the course. As indicated below the first case is due at the beginning of class of the sixth week.

It is understood that all members of a team are expected to contribute an equal share of the work. Any difficulties in this regard should be worked out by team members. If this fails, however, the matter should be brought to the attention of the instructor who will try to resolve the situation. Any students who fail to provide their proportional share of the work will have points deducted from their case grades.

Team grades will be based on both the written submissions and oral discussions, with the greatest weight being given to the former.

All submissions should be in a typed double spaced format. A report of five to seven pages excluding graphs and tables for each case should suffice.

THE SINGAPORE CASE

Due on the sixth week of the course at the start of class.

There has been a lot of interest in the economies of Asia for many years, particularly Taiwan, South Korea, the city states of Hong-Kong and Singapore and more recently in Malaysia, Indonesia, Thailand and the Philippines. For a number of years these economies experienced sustained and rapid growth, although things changed dramatically beginning in 1997. Other countries have looked to Asia for models for their own development. The more advanced economies have looked to Asia for business opportunities but are also concerned with competition from the area. For a while, there was much speculation that these countries had discovered a new recipe for successful capitalist development that stresses state directed, export oriented industrial policies. It has also been argued by some including Robert Reich, the former Secretary of Labor, that such policies might serve as a model for industrialized nations.

The purpose of this case is to gain a better understanding of the Asian experience and economic growth in general by examining the experiences of Singapore. For more than twenty five years Singapore achieved virtually unprecedented levels of real economic growth. Governed closely by Lee Kuan Yew, Singapore benefited from an unusual mix of macroeconomic and microeconomic policies. However, the island nation is now faced with competitive pressures, changing regional conditions and social concerns that make it difficult to sustain growth. In this case, we will examine what has been achieved and how. In addition, we will ask whether such high growth can be sustained. Finally, what can other countries learn form the success of Singapore and its recent problems?

Each team should submit a case write-up that addresses the above issues and answers the questions below. In addition, be prepared to present your answers in class and to participate in the class discussion.

In formulating your answers keep in mind that the main objective is to gain facility in applying the models, basic concepts and tools of analysis of the course. Graphs and equations should be utilized where appropriate. To facilitate your team's participation in the class discussion each member of your team should have a copy of your case submission. Also you may wish to orchestrate in advance which team members will respond to particular questions.

Case Materials and References:

"Singapore," Harvard Business School case 9-793-096 and Supplement - available at the bookstore

Paul Krugman, "The Myth of Asia's Miracle," Foreign Affairs, Nov./Dec. 1994. (to be distributed in class)

Nouriel Roubini’s Home Page Stern Web Site – see internet link for Week 6, Data Sources and Links in the syllabus.

Economist’s Intelligence Unit (EIU) Reports and Profiles – available online from the Bobst Library Business Database Page at http://www.nyu.edu/library/bobst /database/d_bus.htm. Note – there are also additional international databases at this site. Also, if you do not access this site via a NYU computer account you must go through a proxy server. To do this, you should go to http://www.nyu.edu/library/bobst/database/proxy.htm

Case Questions:

1. What were the major sources of rapid economic growth since 1965? How does Singapore's growth compare with that of developed nations like the U.S. in the same time period?

2. Briefly analyze Singapore's monetary and fiscal policies during the 1965-1997 period.

3. What are the growth prospects for Singapore for the next ten years? Can it return to its earlier "miraculous" experience?

4. What, if any, lessons are there from Singapore's experiences for both developing and developed economics?

1