Long Term Prospects/Short Term Macroeconomic Risk
As a project for this course, your team will use information from the various modules to quantitatively score or rate a country along two dimensions: (a) A potential for long-term growth and (b) Likelihood of a financial crisis.
First, choose CHINA to audit. You should write CHINA accounting for the availability of da-ta by which you can evaluate the risk attributes on which your team shall base their evalu-ation. For example, for the country you are evaluating, you may want to download from the Economist Intelligence Unit (EIU) site the "Country Profile". This document will provide useful background information for your report. You might also start looking at the economic data (including Country Commerce and Country Finance) that is available at various sites including some country institutions like the central bank of the country, the Treasury, the EIU, the IMF or the World Bank.
The scoring of each economic attribute should be done on the indicated scale below. Thus, if the scale goes between 0 and 5, then 0 is best and 5 is worst. Selecting and justifying the appropriate benchmark for each attribute will likely be the most difficult part for the entire country audit. For instance, in assessing your selected country savings rate, what is a high saving rate? It is best to compare it relative to that achieved by other nations within the region of the world, or should this rate be evaluated relative to the average savings ratio for all nations in the world? In most cases, the answer may be both. Additionally, what should be the time frame for the comparison? Should it be the past 10, 20, or 30 years or the last 1-2 years? A critical part of your project is your team formulating (and explaining in the report) your method for selecting benchmarks for evaluation. You may also rely on some of my discussion criteria during each module.
Once, you have scores for all attributes identified below, you will need to come up with two overall scores, one for Growth and one for Risk. Thus the overall score for Growth will be the sum of the individual Growth attributes. The overall score for Risk would be the sum of the Risk attributes.
Require Question:
Prepare a written report with your findings. The report should contain:
A description and analysis of each measured attribute. Your narrative should include an explanation of why the attribute is important for growth or risk and any useful information you have come across in your background reading research.