Spring Semester, 2003  International Commerce and Policy Program School of Public Policy  Arlington Campus  George Mason University 3401 N. Fairfax Dr. Arlington, VA  22201

Desmond Dinan Jean Monnet Professor and ICP Program Director Office hours:  Wed. 6-7 pm and by appointment Room 207, Arlington Campus (703) 993-4973 ddinan *at* gmu.edu ITRN 500.001 Wed. 7:20-10:00 p.m.  Room 251

Todd M. La Porte  Associate Professor  Office hours: Thurs. 6-7 pm and by appointment Room 248, Arlington Campus  (703) 993-3351 (202) 686-7115 (home) tlaporte *at* gmu.edu (preferred contact) ITRN 500.002 Thurs 7:20-10:00 p.m. Room 245

Revised January 23, 2003

Course Description

OVERVIEW:  Welcome to the Spring 2003 session of ITRN 500.  This course may be somewhat different from most courses you took at the undergraduate level.  It is taught in part using the case method, which originated at the Harvard Business School, as modified to suit the needs of the ICP program.

This means that you will be expected to review carefully in advance the material assigned for each class and be prepared to discuss the important aspects of the case in class.  Our role in this process will be to get the discussion started, assist the class in laying out the facts of the case, pose questions, and help the class to discover general principles running through the case that might be applicable in other situations.

Grades and Examinations

This is not a lecture course.  You, the students, will be uncovering the key lessons from each case. One third of your grade will be derived from your oral participation in class.

The other two thirds of your grade will be from a mid-term and from a final exam.  These will be in-class, open note exams that emphasize mastery of the materials in the cases, particularly your ability to synthesize and analyze.  Active participation is a fundamental component of the course.

Texts

Class sessions are based on two course texts, and a set of cases contained in a course reader:

1)  Globalization and the Challenges of a New Century, edited by Ptrick O'Meara, Howard Mehlinger and Matthew Krain (Bloomington:  Indiana University Press, 2000) -- available at the Arlington Campus Bookstore

2)  Daniel Yergin and Joseph Stanislaw, The Commanding Heights:  The Battle Between Government and the Marketplace That Is Remaking the Modern World, (New York:  Simon & Schuster, 1998) --  -- available at the Arlington Campus Bookstore.  

3)  Harvard Business School Cases -- available at the GMU Arlington Campus Copy Center in the Law School Building, Main Floor, inside the Law Library

Other readings will also be assigned, some of which are on the Web, and linked through this syllabus, and others that will be handed out in class.  Students are expected to have access to all reading materials.

For those of you who have had little or no economics at the undergraduate level, we recommend that you purchase Understanding U.S. and Global Economic Trends by Daniel Gaske, also at the Arlington Campus Bookstore.  The syllabus for this course contains recommended readings from this book to aid in comprehension of our cases.  Another worthwhile book is The Economist's Guide to Economic Indicators, also available at the bookstore.

In addition, Yergin and Stanislaw's The Commanding Heights was adapted very successfully as a 6-hour PBS broadcast, rebroadcast locally from time to time,  and available in video.  It may also be viewed on the Web with a fast Internet connection.   http://www.pbs.org/wgbh/commandingheights/

After choosing your connection speed ("Got broadband?"), click on "Storyline" to view the broadcast segment by segment.  The low speed version doesn't have the broadcast, but does have transcripts, timelines, short histories, data and explanations, and essays that explain key ideas.  Recommended, particularly for those students with little economics background. 

Professors Dinan and La Porte are teaching the same course in the same sequence--all students are assigned the same material at the same time, though each of us approach the material a little bit differently.  Nevertheless, we encourage you to join with students either from either class in study groups to discuss the material.  Student contact information will be distributed at the first or second session to facilitate this important activity.

Writing help

Writing exams can be difficult for some students.  If you would like help with learning about how to compose your arguments or write more clearly, please contact the University Writing Center (http://writingcenter.gmu.edu ) or see the instructors.

Plagiarism

All work must be your own. Although the exams for this course are to be taken in-class, care still must be taken not to misrepresent your efforts.  In general, where the work of others is used, even in paraphrased form, it must appropriately referenced.  When in doubt, cite!  Plagiarism is an Honor Code violation.  If you have any questions about proper referencing practice, read the information at:  http://www.indiana.edu/~wts/wts/plagiarism.html .

Let us know if you have any additional questions or concerns about plagiarism.

In the first class session we will outline the key concepts in Thomas Friedman's The Lexus and the Olive Tree.  This book introduces some important economic concepts and current global economic trends that will be relevant throughout the course.  In our second class, we will examine some of the leading ideas about globalization from a variety of viewpoints, and will look at
the tradeoffs between economic growth, employment, and income inequality.

The second section of the course deals with national economic strategies.  You will be introduced to the approaches used in a variety of countries to promote economic growth and development and to overcome economic instability.  Class discussions will focus on explaining why states chose particular strategies and assessing the effectiveness of strategies in producing desired results and minimizing unintended negative consequences.  You will also be encouraged to compare strategies with the objective of drawing generic conclusions about the effectiveness of strategies under certain conditions.

We will spend two class sessions discussing the relationship of market capitalism to democracy, particularly as it has arisen in the context of developing countries, and we will discuss the emergence of the "New Global Economy."  You will take a mid-term examination upon completion of this section.

In the third section of the course, we will discuss several key issues in the ongoing debates about globalization and its consequences.  First we will compare the strategies that China and Russia have used to transform their centrally planned economies to market economies.  Critiques and defenses of the international institutions that buttress the global financial and trading systems, such as the International Monetary Fund and the World Trade Organization, are the focus of the next session. Next we will look at the special situation of the Islamic world in the global system, and will touch briefly on the politics of energy, which in particular links the Arab states to the advanced industrial economies of the West and Asia.

The next sections of the course are dedicated to regional and multilateral trading arrangements, and to current issues that have a significant impact on the world economy.  This year, we will look at concerns about global climate change and how environmental issues affect international trade and international institutions.

We will then study the response of companies and states to increasing economic interdependence.  We will read cases about the consequences for states and industries of the globalization of production.  We will also discuss how states incorporate economic values (e.g. efficiency, aggregate growth) and non-economic values (e.g., environmental quality, culture, security, autonomy, differentiated development) into arrangements designed to facilitate and regulate international transactions.

The final regular class discussion will be focused on biotechnology and its impacts on the international market and the prospects for economic development.

Our last class meeting will be devoted to a review of all of the cases presented during the semester.

You will take an in-class exam at the end of the semester to assess your ability to integrate the insights from the course into a coherent analysis of international trade and economic issues.

Introductory lecture covering the main points in Friedman, The Lexus and the Olive Tree.  Basic economic concepts, such as balance of payments will be discussed.

Paul Kennedy, "Preparing for the 21st Century:  Winners and Losers," in O'Meara, et al., Globalization and the Challenges of a New Century, part 8, pp. 323-354.

Daniel Yergin and Joseph Stanislaw, The Commanding Heights:  the Battle Between Government and the Marketplace That Is Remaking the Modern World, (New York:  Simon and Schuster, 1998):

"At the Frontier," Introduction, pp. ix-xvii,
"The Age of Globalization," chapter 13, pp. 379-398.

Thomas Friedman, The Lexus and the Olive Tree, (New York:  Farrar, Straus, Giroux, 1999, 2001).
Daniel Gaske, Understanding U.S. and Global Economic Trends, chapters 1, 2, 3.

Global Order and Disorder:  Speculations, parts 1 and 2 in O'Meara:

Samuel P. Huntington, "The Clash of Civilizations?" pp. 3-22.
Benjamin R. Barber, "Jihad vs. McWorld," pp. 23-33.
Robert D. Kaplan, "The Coming Anarchy," pp. 34-60.
Fouad Ajami, "The Summoning," pp. 63-70.
Eisuke Sakakibara, "The End of Progressivism:  A Search for New Goals," pp. 71-78.
John R. Bowen, "The Myth of Global Ethnic Conflict," pp. 79-90.

Yergin and Stanislaw, "Tryst with Destiny," chapter 3, pp. 49-73.

Harvard Business School case:  "Unemployment in France:  'Priority Number One'".

"A Divided Self:  A Survey of France," The Economist, November 14, 2002, http://www.economist.com/surveys/showsurvey.cfm?issue=20021116

Browse The Economist Country Surveys on "France": http://www.economist.com/countries

For instructions on how to access Economist surveys or articles through the University Library's website, click on this short explanation.

"Gini says: measuring income inequality," a Left Business Observer report, October 18, 1993,
http://www.panix.com/~dhenwood/Gini_supplement.html

United Nations Development Programme, Human Development Report Indicators, 2001, http://www.undp.org/hdr2001/indicator/

Browse items under (pretty far down on the menu):
4-...TO HAVE ACCESS TO THE RESOURCES NEEDED FOR A DECENT STANDARD OF LIVING, especially tables on "Share of income" and "Inequality measures."

The Gini Index is a widely used measure of inequality that we will be discussing briefly later in the semester.  Note how the Gini index or shares of GDP that go to various income levels relate to the Human Development Index, which ranks countries based on a variety of indicators of human and social well-being.

1. Why is double-digit unemployment of such great concern in France?
2. What are the primary causes of French unemployment?
3. What are the best policy options for dealing with the problem? Assess, using economic, social, and political objectives.

Yergin and Stanislaw, "Beyond the Miracle," chapter 6, pp. 139-184.

Jeffrey Sachs, "International Economics:  Unlocking the Mysteries of Globalization," in O'Meara, pp. 217-226.

James L. Rowe, "In the Money:  What Goes on Behind the Doors of the Federal Reserve," Washington Post, Feb. 10, 1999, p. H1.

David Landes, Japan:  "And the Last Shall Be First," chapter 22, Wealth and Poverty of Nations, pp. 350-391.

Available on Electronic Reserves at:  http://oscr.gmu.edu/cgi-bin/ers/OSCRgen.cgi .  Select course or instructor in drop-down box; password is "lemon" (no quotes).

Harvard Business School case:   "Search for the New Japan".

Gaske, chapters 5, 6, 7, 11.

"No More Tears:  A Survey of Business in Japan," The Economist, November 25, 1999, http://www.economist.com/surveys/showsurvey.cfm?issue=19991127

Browse The Economist Country Surveys on "Japan":  http://www.economist.com/countries

1. How did the "bubble economy" come about?
2. Why did it burst?
3. What policies has the Japanese government pursued to rekindle economic growth?
4. Are the problems that Japan faces due to its basic economic and political structures, or its economic policies?

Yergin and Stanislaw:

"Thirty Glorious Years:  Europe's Mixed Economy," chapter 1, pp. 1-27, and
"The Predicament:  Europe's Search for a New Social Contract," pp. 309-337.

"Europe's Magnetic Attraction:  A Survey of European Enlargement," The Economist, May 17, 2001, http://www.economist.com/surveys/showsurvey.cfm?issue=20010519

Harvard Business School case:

"Italy:  From Welfare State to Market Economy"

1. How did Italy's welfare state come into being?
2. What effect has the Maastricht Treaty had on Italy?
3. Why is Italy's unemployment rate so high?
4. How would you evaluate Berlusconi's proposed reforms?  Are they feasible? Will they work?
5. Are industrial clusters part of Italy's problem, or part of the solution?
6. What was the game plan for European economic integration?
7. Describe the Single Market program and discuss factors that supported the program and factors that impeded progress.
8. What are the arguments for and against economic and monetary union?
9. Why is the new Europe so difficult to manage?

"An Uncertain Place:  A Survey of Germany," The Economist, December 5, 2002, http://www.economist.com/surveys/showsurvey.cfm?issue=20021207

"What a Lovely Odd Place!  A Survey of Italy," The Economist, July 7, 2001, http://www.economist.com/surveys/showsurvey.cfm?issue=20010707

Browse The Economist Country Survey on "Italy":  http://www.economist.com/countries

Globalization and the Evolution of Democracy, part 5 in O'Meara:

Francis Fukuyama, "The End of History?" pp. 161-180.
Fareed Zakaria, "The Rise of Illiberal Democracy," pp. 181-195.
Robert D. Kaplan, "Was Democracy Just a Moment?" pp. 196-214.

Yergin and Stanislaw, "Crisis of Confidence:  The Global Critique," chapter 5, pp. 107-138.

Yergin and Stanislaw, "Playing by the Rules:  The New Game in Latin America," chapter 9, pp. 231-269.

Harvard Business School cases:

"Brazil Confronts an Interdependent World" and
"1-800 Buy Ireland".

"World Economic Outlook," most recent edition, International Monetary Fund, http://www.imf.org/external/pubs/ft/weo/2002/01/index.htm

"The Devaluing of a Presidency:  A Survey of Brazil," The Economist, March 25, 1999, http://www.economist.com/surveys/showsurvey.cfm?issue=19990327

"How the Bug Can Spread," The Economist, July 21, 2001, p. 20.

If handout is not available, see Library collection or use Library database services at http://library.gmu.edu/resources/databases.html to access Dow Jones Interactive.

Browse The Economist Country Surveys on "Ireland" and "Brazil": http://www.economist.com/countries

1. How did Brazil get into the situation it faced in the early 1990s? (look at Brazil's historical/political/economic/social context and past development strategies).
2. What steps did Cardoso take (as finance minister and president) to deal with Brazil's problems?
3. What were the results of his efforts, and what still needs to be done?
4. Update, especially the IMF program and subsequent economic performance.
5. What context items and past development strategies help explain Ireland's economic difficulties in the first 50 years of independence?
6. How has membership in the EU affected Ireland?
7. What was Ireland's "economic miracle" strategy of 1987 and how successful was it? (use data exhibits)
8. What are the factors working against sustaining Ireland's miracle?

Dani Roderick, "Sense and Nonsense in the Globalization Debate," in O'Meara, pp. 227-239.
Lester C. Thurow, "New Rules:  the American Economy in the Next Century," in O'Meara, pp. 244-252.

Yergin and Stanislaw:

"The Curse of Bigness:  America's Regulatory Capitalism," chapter 2, pp. 28-48,
"The Mad Monk:  Britain's Market Revolution," chapter 4, pp. 74-106,
"The Delayed Revolution:  America's New Balance," chapter 12, pp. 338-378.

Guidelines to prepare for an exam in the course, click here.

IN-CLASS MIDTERM EXAM (OPEN BOOKS AND NOTES)

Yergin and Stanislaw:

"The Color of the Cat," chapter 7, pp. 185-211, and
"Ticket to the Market:  The Journey After Communism," chapter 10, pp. 270-308.

Harvard Business School cases:

"China:  The Great Awakening" and
"Russia:  The End of a Time of Troubles?"

"Now Comes the Hard Part:  A Survey of China," The Economist, April 6, 2000, http://www.economist.com/surveys/showsurvey.cfm?issue=20000408

"Putin's Choice:  A Survey of Russia," The Economist, July 21, 2001, http://www.economist.com/surveys/showsurvey.cfm?issue=20010721

Browse The Economist Country Surveys "China" and "Russia": http://www.economist.com/countries

1. What was Deng's strategy for reform? Why did it succeed?
2. Why has China's performance been more successful than Russia's?
3. What are Zhu's problems in 1993?
4. Update since 1993:  What still has to be done?
5. Russia's transition to capitalism did not go as planned. What went wrong?
6. Who is to blame?
7. What is to be done?

"Time for Another Round:  A Survey of World Trade," The Economist, October 1, 1998,
http://www.economist.com/surveys/showsurvey.cfm?issue=19981003

Benjamin M. Friedman, "Globalization: Stiglitz's Case," The New York Review of Books, August 15, 2002,
http://www.nybooks.com/articles/15630

Tina Rosenberg, "The Free Trade Fix," New York Times Magazine, August 18, 2002, pp. 28ff.

Carefully browse the following websites:

International Monetary Fund:  http://www.imf.org
World Bank for Reconstruction and Development:   http://www.worldbank.org
World Trade Organization:  http://www.wto.org

Oxfam International, "8 Broken Promises:  Why the WTO Isn't Working for the World's Poor," http://www.oxfam.org.uk/policy/papers/8broken/8broken.html

Gaske, chapters 9, 10.

1. What were the big institutional changes instituted in the transition from the GATT to the WTO, and why are they so important?
2. What steps did China take to qualify for membership in the WTO? Were these steps adequate?
3. What did the United States want to get from China in the discussions? Did they get it?
4. What are the likely effects on China of becoming a member of the WTO? Do these effects differ from sector to sector?

David Landes,  "History Gone Wrong?" chapter 24, Wealth and Poverty of Nations, pp. 392-421.

Carl Solberg, Oil Power, chapter 7, "To the Middle East and Back," (New York:  Mason/Charter, 1976), pp. 173-196.

Edward L. Morse and James Richard, "The Battle for Energy Dominance," Foreign Affairs, March-April, 2002, vol. 81, no. 2, pp. 16.

The Landes, Solberg, and Morse & Richard texts are available on Electronic Reserves at:  http://oscr.gmu.edu/cgi-bin/ers/OSCRgen.cgi .  Select course or instructor in drop-down box; password is "lemon" (no quotes).

Bernard Lewis, "The Roots of Muslim Rage," The Atlantic Monthly, September 1990,
http://www.theatlantic.com/issues/90sep/rage.htm part 1 and
http://www.theatlantic.com/issues/90sep/rage2.htm part 2

United Nations Development Programme, "Overview," Arab Human Development Report 2002:  Creating Opportunities for Future Generations, (Cairo:  United Nations Development Programme, 2002), http://www.undp.org/rbas/ahdr/Overview.pdf

"How Many Planets?  A Survey of the Global Environment," The Economist, July 6, 2002, http://www.economist.com/surveys/showsurvey.cfm?issue=20020706

"Think Global, Act Local":  The Environment, part 9 of O'Meara:

Vinod Thomas and Tamara Belt, "Growth and the Environment:  Allies or Foes?" pp. 377-382.
Bill McKibben, "A Special Moment in History," pp. 383-405.
Eugene Linden, "The Exploding Cities of the Developing World," pp. 406-416.

Harvard Business School case:   "Global Climate Change".

1. What steps, if any, should national governments be taking on the issue of global climate change?
2. Should business leaders play any role in formulating their countries' policies on global climate change? If so, what role should it be?
3. Which of the policy options available to policymakers strike the best balance between the competing interests? What are those interests, anyway?

Yergin and Stanislaw, "After the Permit Raj:  India's Awakening," chapter 8, pp. 212-230.

Harvard Business School cases:

"Enron Development Corp.: The Dabhol Power Project (A) and (B)" and
"Nike and International Labor Practices".

Gary Trudeau, Doonesbury Nike Comic Strips, May-June, 1997,
http://www.geocities.com/Athens/Acropolis/5232/comicmay97.htm

1. Is Dabhol a good project for Enron? For India? For Maharashtra? Why or why not?
2. Evaluate Enron's strategy with respect to Dabhol and its implementation
3. Current status of project and power situation in India
4. What are the charges against Nike, and how did Nike respond to them?
5. How well did Nike handle the issue? What would you have done differently?
6. What are Nike's options for going forward? How does the company position itself for the future?

"Getting Better All the Time:  A Survey of Technology and Development," The Economist, November 8, 2001,
http://www.economist.com/surveys/showsurvey.cfm?issue=20011110

David Hosansky, "Biotech Foods," CQ Researcher, March 30, 2001.

Available online through Library electronic database go to "http://library.gmu.edu," click on "Databases:  Alphabetical List,"  click on the letter "C", then on "CQ Researcher" or "Click for EZ Off Campus Access" and enter your student i.d. number.  When you enter the site, click on "Search," and type in "biotech foods."  Click on "Biotech Foods" from the resulting list.   Either download and print the PDF file, or read the linked sections online.

Volker Lehmann, "From Rio to Johannesburg and  Beyond: Globalizing Precaution for Genetically Modified Organisms," report for the Heinrich Böll Foundation, Washington Office, April 2002, http://www.boell.org/docs/PrecautioninWTOandRIO.pdf

Rick Weiss, "Starved for Food, Zimbabwe Rejects U.S. Biotech Corn, Washington Post, July 31, 2002, p. A12,
http://www.washingtonpost.com/ac2/wp-dyn/A23728-2002Jul30?language=printer

Yergin and Stanislaw, "The Balance of Confidence:  The World After Reform," chapter 14, pp. 399-418.

Gaske, chapter 12.

Week 15

IN-CLASS FINAL EXAMINATION