Class Meetings, Readings and Assignments:

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1 SYLLABUS FOR POLICIES FOR COMPETITIVENESS PED 131M Course Description: The course provides an overview of policies that can mobilize business and investment for sustainable growth and employment. The course is based on the Organization for Economic Cooperation and Development (OECD) and other international good practices. It will introduce students to key microeconomic policies and practical approach to policy reform such as investment policy, investment promotion, human capital development, agriculture policy, financial sector development policies, innovation and entrepreneurship policy. The course will also address tools for policy measurement and evaluation. It will draw extensively on specific case studies and role plays. The overarching questions addressed in this course include: What are the key economic and institutional components of competitive countries and regions? What are the appropriate questions policy makers should ask in order to evaluate and design effective policies to enhance competitiveness? How can policy makers best evaluate current policy and define priorities for policy reform? What can policy makers do to make sure that difficult reforms are implemented? Prerequisites: There are no formal prerequisites, but familiarity with basic year 1 economics is recommended. Class participation: The course will build significantly on the case studies approach, role plays and actual challenges faced by policy makers to enhance competitiveness. Policy makers may be invited to intervene in the course to provide more context related to a specific case. The participation of students in case studies discussions, role plays and exercises is an essential part of the course. Exams: No written exams Grading: 50% class participation, 50% final group case study Textbook: OECD (2006), Policy Framework for Investment (Paris: OECD) Class Meetings, Readings and Assignments: Class #1 Course Introduction and Methodology Overall introduction to the Introduction to Public Policies course including definitions, framework, scope and instruments. The module will focus on the policy reform process and an applied case study using access to finance instruments. What are key levers of competitiveness? Why and how are policies for competitiveness put in place? What type of outcomes can be expected? Role Play: Kazakhstan 1 - Prioritizing competitiveness policies in the agri-business sector Problem Set 1 Public Policies framework and recommendations Group case study

2 Required reading: OECD (2006), Policy Framework for Investment (Paris: OECD) Armendáriz, Beatriz and Jonathan Morduch (2005), The Economics of Microfinance. MIT Press, Cambridge. Beck, Thorsten, and Asli Demirguc-Kunt (2006). Small and Medium-Size Enterprises: Access to Finance as a Growth Constraint, Journal of Banking and Finance, 30 (11): Berger, Allen N., and Gregory F. Udell (2005), A More Complete Conceptual Framework for SME Finance, World Bank Policy Research Working Paper 3795, World Bank, Washington, December Fraser, Stuart, Finance for Small and Medium-Sized Enterprises: A Report on the 2004 UK Survey of SME Finances, Centre for Small and Medium-Sized Enterprises, University of Warwick, Warwick. OECD (2004), Promoting SMEs for Development, Background Report for the 2nd OECD Conference of Ministers Responsible for SMEs, Istanbul, Turkey, 3-5 June, (2004), Financing Innovative SMEs in a Global Economy, Background Report for the 2nd OECD Conference of Ministers Responsible for SMEs, Istanbul, Turkey, 3-5 June, (2004) A Framework for the Development and Financing of Dynamic Small and Medium Sized Enterprises in Turkey, OECD, Paris. (2006), The SME Financing Gap (Vol. I): Theory and Evidence, OECD, Paris. (2006), Policy Brief: Financing SMEs and Entrepreneurs. OECD, Paris. (2009), Agricultural Policies in Emerging Economies 2009: Monitoring and Evaluation, OECD, Paris, Stiglitz, J. and A. Weiss (1981) Credit Rationing in Markets with Incomplete Information, American Economic Review, vol. 71, No. 3, pp Storey, DJ, and J. Thompson, (1995) The Financing of New and Small Enterprises in OECD Countries, OECD, Paris. World Bank (2007), Finance for All? Polices and Pitfalls in Expanding Access, World Bank, Washington. Class #2 Investment Policy and Promotion Investment policy and promotion can be an effective way to further encourage investment if it is structured in the right manner. The quality of investment policy has direct impact on the decision of investors. Investment policy includes national treatment, transparency, investor and property protection. Investment Promotion includes not only demand generation for investors but also targeted customer service in helping investors go through all the different steps of their investment project from pre-establishment to post-establishment. What is the role of Investment Policy in supporting competitiveness? Should countries restrict foreign direct investment to protect their interests? Why should a country promote itself? What can be done to make promotion effective? Should a government use tax incentives to encourage investment? When might it be appropriate? How should an investment promotion strategy be developed? How to align institutions to support it?

3 Case study: Kazakhstan 2 - Developing an investment promotion strategy Required reading: OECD Policy Framework for Investment User s Toolkit on Investment Policy: ( OECD Code of Liberalisation of Capital Movements and the Code of Liberalisation of Current Invisible Operations: Update OECD Declaration on International Investment and Multinational Enterprises. OECD (2008), International Investment Law: Understanding Concepts and Tracking Innovations (Paris: OECD). OECD (2007), International Investment Perspectives 2007: Freedom of investment in a changing world (Paris: OECD). OECD (2005), International Investment Law: A Changing Landscape (Paris: OECD). OECD (2004), Indirect Expropriation and the Right to Regulate. Working Papers on International Investment; Number 2004/4. OECD (2004), Fair and Equitable Treatment Standard in International Investment Law. Working Papers on International Investment; Number 2004/3. OECD (2004), Most-Favoured-Nation Treatment in International Investment Law. Working Papers on International Investment; Number 2004/2. OECD (2003), Checklist for FDI Incentive Policies (Paris: OECD). OECD (2003), Framework on Investment Policy Transparency (Paris: OECD). OECD (2002), Foreign Direct Investment for Development: Maximising Benefits, Minimising Costs (Paris: OECD). Rodrik, Dani (2007), One Economics, Many Recipes: Globalisation, Institution, and Economic Growth (Princeton University Press). Morisset, Jacques and Kelly Andrews-Johnson (2004), The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment? (FIAS Occasional Paper, 16.). Torfinn Harding and Beata Smarzynska Javorcik (2008), Developing Economies and International Investors: Do Investment Promotion Agencies Bring Them Together? (World Bank Policy Research Working Paper 4339). Class #3: Human Capital Development Human capital is a composite concept involving components of knowledge, skills and attitudes that has a strong impact on competitiveness. A large research literature has shown that a country s human capital endowment is closely related to its economic growth. For instance, recent research on mainly OECD economies suggests that a country able to attain literacy scores 1 per cent higher than the international average will achieve levels of labour productivity and GDP per capita that are 2.5% and 1.5% higher, respectively, than those of other countries (Coulombe et al 2004). How to measure Human Capital Development? Which instruments can help address it effectively? What are the potential benefits and limitations of such policies? What is the role of foreign investment? Role Play: Regional collaboration on Education in the Western Balkans

4 OECD (2008b), Education at a Glance 2008: OECD Indicators, OECD, Paris, OECD (2008c), The Sources of Economic Growth in OECD Countries, OECD, Paris, Class #4: SMEs, Innovation and Economic Zones Policies Small and Medium Enterprises account to 99% of companies in OECD countries and contribute to 2/3 of its GDP. They also account for the vast majority of companies in emerging markets. However policies to support their competitiveness differ widely. Some countries promote innovation as others focus further on access to finance, skills development or economic zones. Do SMEs really need specific policies to support their development? Why? What are the most effective policies to support SMEs? What are the least effective? What are the conditions for these policies to work? What is the role of economic zones in attracting FDI and supporting SMEs? Exercises: Developing an economic zones; Defining an SME policy Required reading: OECD (2007) Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes, OECD, Paris. Audretsch, D.B, Isabel Grilo and A. Roy Thurik (eds) (2007), Handbook of Research o Entrepreneurship Policy, Edward Elgar Publishing. Beck, T., A. Demirgüç-Kunt, R. Levine (2003), Small and Medium Enterprises, Growth, and Poverty: Cross-Country Evidence, World Bank Policy Research Working Paper No. 3178, World Bank, Washington, December Birch, David L. (1979), The Job Generation Process, Cambridge, MA: MIT Program on Neighborhood and Regional Change. Lundström, Anders and Lois Stevenson (2005), Entrepreneurship Policy: Theory and Practice, Birkhäuser, Chapter 2. Storey, D.J. (1994), Understanding the Small Business Sector, Routledge, London. OECD (2003) High Growth SMEs and Employment, OECD, Paris. (2005), SME and Entrepreneurship Outlook, OECD, Paris. (2007) Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes, OECD, Paris. (2007) Enhancing the role of SMEs in Global Value Chains, OECD, Paris 8. FIAS (2008), Special Economic Zones: Performance, Lessons Learned, and Implications for Zone Development (Washington DC: World Bank Group) 7. OECD (2007), Export Processing Zones: Past and Future Role in Trade and Development (OECD Trade Policy Working Paper No. 53: TD/TC/WP(2006)39/FINAL). Schwartz Center for Economic Policy Analysis (2007), Export Processing Zones, Industrial Upgrading and Economic Development: A Survey (SCEPA Working Paper ). UNCTAD (2004), FDI in Services A growing business for EPZs (UNCTAD Investment Brief No 2, 2004). Ge, Wei (1999), Special Economic Zones and the Opening of the Chinese Economy: Some Lessons for Economic Liberalisation (World Development Vol. 27, No. 7, pp ).

5 Madani, D. (1999), A Review of the Role and Impact of Export Processing Zones. (World Bank Development Research Group Policy Research Working Paper 2238). World Bank (1992), Export Processing Zones (Policy and Research Series, Volume 20, Industry Development Division). Oborne, M (1986) China's Special Economic Zone. (Paris: OECD, Development Centre). Class #5: Making reforms happen Making reforms happen is a key component of public policies including measuring and evaluating policies. However different indicators can give a biased view of real outputs and outcomes. How to make reforms happen? How best to assess the impact of reforms? Which reform indicators work, which ones don t? Who should be performing policy evaluations? Exercise: Making reforms happens in Latin America Class #6: Recommendations to the Prime Minister Group presentations of Problem Set 1 in the form of recommendations based on evidence and policy positions. One or two senior policy makers may be invited to participate in this session to discuss policy recommendations made by the students.

Syllabus for PS : Government, Business, and Public Policy Tufts University, Spring 2012 Thursdays, 9:00-11:30 a.m.

Syllabus for PS : Government, Business, and Public Policy Tufts University, Spring 2012 Thursdays, 9:00-11:30 a.m. Syllabus for PS 139-04: Government, Business, and Public Policy Tufts University, Spring 2012 Thursdays, 9:00-11:30 a.m. Braker Hall 226 Professor Nimah Mazaheri Packard Hall 306 Email: nimah.mazaheri@tufts.edu