Topic 5

Policies to improve competitiveness and development

In the first four topics we have set the scene and discussed the current state of the global economy, drivers of growth and indicators of competitiveness.  Our Topic 5 is module 3, study unit 4 in the ITRISA file. This study unit looks at policy as a way to improve competitiveness and development. The file’s content is concerned with the SARB’s monetary policy stance and what it means for interest rates and exchange rates. The links between monetary and fiscal policy are also examined.

Since much of this was covered in the ECON311 course, we will not repeat the basics, but rather focus on the key policy issues of the day: The Euro crisis in the EU and the slow recovery and looming fiscal cliff in the US.

To get you up to speed I have Scooped 15 articles on the Euro crisis from The Economist. Last week’s issue also presented a “special report” on the possible break-up of the EU. But we’ll talk about the details in class.

Your assignment is two-fold:

  • Prepare for class by having a look at the background reading.
  • In each group one person has to write a post for this blog. The topic for this week is:

Write about historic debt and/or currency crises and identify the lessons for the EU. There are a number of examples from all over the world. You need to briefly explain:

  • How did the particular country get into the crisis.
  • How did the crisis strike.
  • What was the policy response.
  • What were the consequences.
  • What are the implications that you draw for the breakup (or not) of the EU.

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