Country Analysis

Strategy, Structure (Context), Performance

Country Analysis

A Harvard Business School framework to analyze countries

Economics + business

Economics
The big picture The sum total of all economic activity Longer term view

Business
An angle to look at economic activity
Industries Firms

Country Analysis

Strategy
A nations implicit and explicit goals and the policies designed to achieve these goals

Structure/context
Resources at the nations disposal Players Rules of the game

Performance
Economic performance Political performance Social performance

Strategy

Economic growth

Goals (What do we want to achieve?)

Export oriented growth Income substitution industrialization

Improve income distribution Balance Social security Avoid another Great Depression Reduce inflation Reduce unemployment

Tax the rich Trickle down economics Promote savings (Japan post WWII)

Policies (How we plan to achieve our goals: implementation of strategy)

Structure/Context

Resources
Natural resources Infrastructure
Roads Technology infrastructure (e.g., high speed internet access) Educated workforce

Players
Role of government
% of active population who are public employees

Business Unions Civil society

Structure/Context

Rules of the game

Legal system
Common Law countries Napoleonic code Administrative rules Bureaucracy Ability to enforce laws

Real power distribution within a country

Government Businesses Powerful individuals Economic sectors

Performance

Performance assessment is based upon comparisons

Against prior indicators of the same country As compared with other countries of a similar level of development
World Bank classification

As compared with other countries of the same region

Geographic region (e.g., other Latin American countries) Trade group (MERCOSUR, NAFTA)

Contingent factors
Economic cycles 2007-2008 financial crisis

Performance

GDP growth Per capita GDP/GNP Unemployment Youth unemployment (Europe) Income distribution

Economic indicators

Health

Social indicators
Life expectancy Literacy rates School drop out rates % of girls in schools

Education

Human Development Index (UNDP)

Performance: the Balance of Payments

The BOP reports transactions of their residents with those of the rest of the world All countries have reserves (gold, holdings of foreign currencies, SDRs, etc.) As a result of transactions with foreign parties over a certain period of time (e.g., a year), reported by the BOP..
Reserves increase Reserves decrease Reserves remain the same

Performance: the Balance of Payments

Balance of Payments
Current Account
Balance of trade Balance of Services Gifts (unilateral transfers) Income

Capital Account Reserves

Portfolio investment (usually short-term capital flows) Foreign Direct Investment (long-term) Changes reflect the sum of surpluses and deficits in the current account and capital account balances