CIN:400004459 September 24, 2019 BUS5026 Professor Drost 1.World economy is like a huge machine, everyday create billions of cash flow and capital. ‘Research on the existence and importance of a political business cycle has largely focused on a select group of developed countries.’ When I doing research, I find out there are five different level of country risk tier (CRT). USA and Norway belong to CRT-1, Saudi Arabia and China belong to CRT-3, Brazil, India, Vietnam, Guatemala and Russia. Ghana is the only one country in the CRT-5. To compare database from the risk report, the fast economy growth country is India and Vietnam, the 2nd is China, the 3th is Ghana. The world economy is benefit for those country in CRT-3. In the CRT-1 both USA and Norway is developed country, economy and political are stable. Even economy grow slow, there are no chance to be negative. Different as USA and Norway, developing country have more opportunity, risk and space. Let’s look at 2019 index of economic freedom, USA reach the highest record since 2011. Which means major regulatory destination is right and economy is growing stable. I put world(red), Russia(blue), Brazil(yellow), China(gray) and India(pink) in to a graph, to see how is the world economy affect those countries. We can see China and Russia have a huge jump during 2016 to 2017. According to China president Xi “China 2025”, a revolution of China economy. “China 2025” is a program that update China’s manufacturing base by rapidly in 10 years. Russia became the biggest beneficiary in this program, they use petroleum to exchange for food and construction. At the same time, Brazil and India aren’t doing well. There is a common problem that they have, which is corruption. Each president and major position of government are trying to get as much as they can. It causes both country’s economy decrease straightly. Guatemala also has huge corruption problem; the other important thing is political unstable. New president Jimmy Morales promise to change medical, education and security, it doesn’t CIN:400004459 September 24, 2019 BUS5026 Professor Drost work well then. There are half of people in Guatemala below the national poverty line. It became a big problem for president Jimmy to solve those problem. From the outside, Ghana is a stable country, for domestic people, there is “long- running conflict between famers and herders.” The most income for Ghana is diamond and oil, which is it will be affect by oil and diamond’s price. It is a seriousness problem for Ghana. Like the most Asian country, Vietnam is a communist dictatorship country. In 1986, Vietnam decide to focus on industry and marketing economy. This strategy is similar to China, since both countries have low cost labor. President Nguyen Tan Dung realize tourism and export are the advantage in the world. With high inflation, Vietnam still have competitive advantage on those two areas. Saudi Arabia is a absolute monarchy ruled by King Salman bin Abdulaziz Saud. Since they are the largest exporter of petroleum and a leader in OPEC. Most of income is belong to government. Political control most of capital, it accrues gap between rich and poor. Norway is the one of the world’s most prosperous, there are 20% income comes from oil and gas export. Government deposited most income into sovereign wealth fund, seek to balance the budget for government. USA is the leader in the research and development. Even service account has 80% of GDP, the government still proposition let free market control the market. 2. During the economy globalization, most country realize is time to release economy chains, let free market control economy. This strategy has spread around except Asian area. China, a country open half of market, those critical demand resources control by government. China think if outside capital want inflow into China, should find a partner, it is call joint venture enterprise. Government use price to control realty market to receive revenue. In 2018, Chinese government decide to use tax replace realty become the major income. Vietnam, a country in CIN:400004459 September 24, 2019 BUS5026 Professor Drost Asian, can’t skip communist dictatorship, domestic people have to listen to government. Like China, Vietnam use realty market to assimilate outside capital. But with the troubled armed forces, only few cities can be chosen by major economy center. India has competitive advantage in language, domestic people speak English. “Banking authorities in both China and India have attempted to limit most forms of informal finance by regulating them, banning them, and allowing certain types of microfinance institutions.” Russia’s economy base on his natural gas and oil, government control those two things means control economy. But Russia’s weakness is weather and capital. Occupation drugs and violence are words to describe Guatemala. Each president seeks for more benefit, economy is hard to develop. Ghana government encourages small area business better than large-scale business, since it is easy to control. But ore resource in Ghana is limiting, force update again and again for those resource. Occupation is a word repeat several times in Brazil, demotic looking for economic freedom. Government seeks to benefit; it is hard to find a balance point for economy and political. Saudi Arabia’s economy strategy is simple, control the oil means control everything. Those important resource is already been control by royal people. Norway combine economy and political together, political become a machine that work for economy. USA is the largest economy system around the world, also is the country achieve free market goal. It owns the top technology and science. Use those resource to develop economy. Reference Thorsten Beck, George Clarke, Alberto Groff, Philip Keefer, Patrick Walsh The World Bank Economic Review, Volume 15, Issue 1, June 2001 Ghana’s economy index https://www.heritage.org/index/country/ghana KELLEE S. TSAI Imperfect substitutes: the local political economy of informal finance and microfinance in rural China and India 01 June 2004 https://www.cbd.int/doc/articles/2004/A00170.pdf
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