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Advice on Case Papers: Examples from Past Students The main aim of the case papers is to link theory

with practice in a meaningful way to provide advice for policy-makers. This is done through the application of key analytic frameworks and theories from the lectures to the provided case study. In general, cases tend to be decision-forcing or retrospective in that they require the student to either (i) come up with some options/solutions for the decision maker or (ii) analyse decisions already made and suggest alternative courses of action that could have been taken. There is no single way to write your case paper and students can adopt different approaches. Some people prefer a conventional essay style, whilst others favour report-style approach with subheadings. You will see from the examples here that a high grade comes from good work, not specific style. Regardless of style make sure you include the key parts required: (i) (ii) (iii) (iv) (v) Introduction to the case A key problem or issue in the case; Theoretically informed alternative solutions to the problem; A single proposal drawn from the alternatives identified in part (iii) and a clear rationale for this decision; and Reference list

In 2009 I asked several students if we could keep their papers to show students how to present their work in a convincing fashion. These examples come from our best students. Note the different styles. Introduction The introduction should situate the case in the relevant literature and set the scene for the remainder of the case paper. The introduction does not need to be very long, especially given the word limit for the papers. It is important to note that people take different approaches. Here are a few based on the cases we did in 2009.

Example A In its Ninth Malaysia Plan Mid-Term Review (2008), Malaysias Economic Planning Unit highlighted Malaysias open economy and strong, ongoing real GDP per capita growth as did Bank Negara Malaysia (2008), the World Bank (2008), the Asian Development Bank (2008) and the World Economic Forum (2008) in their own reports on aspects of Malaysias economy. Jajri (2007) attributes this growth to a mobilisation of inputs with insignificant inputs from technical change and that Malaysias openness to trade explains most of any total factor productivity (TFP) (joint effectiveness of all inputs in producing outputs) increase. While acknowledging Malaysias notable business environment reforms, the World Bank (2008), pointed to a slowing economy (mainly decreasing exports) and Bank Negara (2008) indicated all increases in savings had not translated into increased investment over the last decade. Malaysian Deputy Prime Minister Razak (2009) stated, with regard to the global financial crisis, in the fourth quarter of 2008 Malaysian exports and industrial outputs

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deteriorated, investment declined...real GDP growth in 2009 is projected to fall between 0.1 per cent to 0.1 per cent. The Malaysian Development Institute (Ghazali, 2008) states Vision 2020 cannot be met even with annual GDP growth strengthened to and sustained at seven per cent from now on and that increased government expenditure on education has not delivered expected returns. The World Banks analysis of labour productivity (2005) and Knowledge for Development: Malaysia Education Index (2006) also highlights Malaysias critical skills and knowledge shortage. In short, on its present path, Malaysia cannot achieve its 2020 goals. Example B: Introduction The Biofuel Law passed last month supports locally-produced biofuels as a scientific solution for clean, renewable energy and greenhouse gas reductions, a provider of rural employment and income, an import-substitute to reduce foreign oil dependency, and development of a new, competitive product for international trade. These are among the key justifications for biofuel industries (Demirbas, 2008, p.2106, 2114-15). However, based on analysis (considerations outlined in Nagel, 2002, pp. 75, 78-79), it has created new dimensions for the Philippine government to consider to create win-win outcomes, namely: (i) (ii) (iii) cost efficiency, entrepreneurship, and innovation; availability and affordability of crops for food and fuel for consumers; support for the biofuel industry with ready infrastructure, a steady corresponding supply of feedstock and labour, while being steered towards cost efficiency, entrepreneurship, and innovation; farmers to receive sufficient remuneration for either food or feedstock, and access to farming inputs a reasonable cost; pollution and other negative externalities must be controlled, land development balanced with habitat conservation, and natural resources managed to ensure sustainability for the community at large.

(iv)

(v)

Identifying a Key Issue In this section of the paper you need to identify the issue that you will address. All cases will have multiple issues and this is to be expected when we examine complex policy issues. In any case, especially when we are considering complex policy issues. But in 1000 words these cannot all be addressed, and we dont expect you to. A good strategy is to acknowledge in the introduction there are many complex issues but tell us which one you are going to focus on and why: what is it that makes this the most important issue? Issues can be broader or narrower, but framing the issue more broadly will help you to connect to the conceptual material more easily. Remember that your task in the remainder of the paper is to address this specific issue; if it is not clearly stating here then this will make it difficult to present a coherent argument. Many students find it very helpful to include a Prepared by Janine O'Flynn 2010 Page 2

sentence in this section along the lines of: the key issue to be addressed in this paper is . This will force you to explicitly state the issue. Example A: Identifying a Key Issue Key Issue: The fixed target for uptake of ethanol fuel mandated in the Biofuels Law risks increases in food prices due to scarcity of feedstocks. The Biofuels Law, introduced by the Philippines government in 2007, sets out a fixed target for the introduction of ethanol to gasoline (E5 by 2009 and E10 by 2011), creating a strong demand for ethanol. The government is also providing strong incentives for local investment in ethanol production (rather than import), to drive demand in feedstock and rural jobs. This strong growth in feedstock demand runs the risks of inflated food prices due to resource scarcity. Two of the key feedstock industries sugar and corn - are currently largely selfsufficient, meeting the domestic demand for food with only modest import and export (BAS 2009). However, in order to supply the ethanol target these industries need a significant expansion in production, in the order of 30-40% (Figure 1), requiring large expansion in areas harvested and/or improvements in yield. While some additional land and increases in yield appear likely (Figure 2 and Figure 3), the risk remains significant that the rapid increase in demand will put pressure on supply and increase prices. As seen in the US (Smith 2007, p.7), these price rises can rapidly spread across the food market, affecting indirect products (through animal feed, additives etc), partial substitutes (wheat, soy) and wider other crops from land diverted. Import prices for ethanol, as the alternative to local production, may provide a safety cap on feedstock prices (Figure 4) however this safety cap may be limited depending on contractual arrangements, international market conditions and the governments production incentives. Ethanol demand in international markets is likely to remain volatile over time, driven by oil prices and international schemes However, the real risk to food prices is not resource scarcity but the fixed nature of the target which does not respond to market prices. The Biofuel Law is inflexible as companies must meet the target dates for mandated E5 and E10 with the defined technology (ethanol) regardless of changes in the market or technology options. The targets were set based on the Governments analysis of the information it had at the time. Should ethanol or feedstock become scarce locally or internationally (for example due to crop failures, difficulties in expanding feedstocks or new countries setting targets) the fixed nature of the target will result in impacts on food prices. Example B: Identifying a Key Issue Economic growth theory and empirical research, beginning with the late 1950s neoclassical Solow Growth Model, demonstrates higher investment levels and lower population growth rates allow higher capital accumulation per worker resulting in higher productivity and higher economic growth (increase in real GDP per person). Unless technological progress (exogenous, or given, in the basic model) occurs however, diminishing marginal productivity causes growth to slow and eventually stop (steady state). Technological progress offsets diminishing returns on capital and increases TFP allowing an ongoing increase in GDP per capita (Jones, 2001). In other words, convergence of economies is not

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inevitable high savings and investment rates may lead to rapid economic growth temporarily but will not be sustained without technological progress. An extended Solow model that allowed for differences in human capital and further work by new growth theorists, who dealt with technology as endogenous (implying it could be affected by policy) and saw knowledge and innovation as growth drivers (Romer, 1994), led Helpman (2004 pp. 19-33) to conclude the relationship between TFP and ongoing economic growth is significant. What can be done? While Malaysias current economic growth, as opposed to equity, strategies reflect economic growth thinking, the Tenth Malaysia Plan must concentrate explicitly on growth drivers. Institutional and policy changes designed to achieve higher TFP through higher savings and investment in physical and human capital, including infrastructure and education, greater sectoral efficiency and further opening the economy to expand rapid technology transfer and diffusion, foreign investment, trade and exports are essential. Malaysia must increase knowledge, skills and capacity for innovation and direct resources into competitive areas, increasing TFP, thus ongoing economic growth. Key Issue Shortage of knowledge, skills and capacity for innovation Example C: Identifying a Key Issue Key Issue: Obamas new Plan for a Healthy America faces very similar foes as the 1993 Clinton Healthcare proposal and is already beginning to suffer the same fate of divide and conquer lobby action. Obamas new plan contains many of the key contentious aspects of the previous Clinton plan (Obama 2008) including: an employer mandate which was strongly opposed by small business associations; universal coverage which creates large new costs; and mechanisms to increase competition and transparency in insurance which will be strongly opposed by the health insurance giants. The key decision makers are also very similar. There is a similar level of democratic majority in both houses of Congress. Both bills considered by at least five different committees, each with their own agenda and who are influenced by different stakeholder groups. Already several leading Democrats have publicly split on the role of the public insurance provider (Pear 2009). The impact on state based systems will also be a concern for individual party members and reduce unity. This wide veto structure and weak party system inherently makes major reforms very difficult to pass (MacIntyre 2003, p33). Fundamentally the key problem in passing both Obama and Clintons scheme is that those who will benefit the most visibly from the health reforms consumers, particularly those who currently have limited or no coverage have the largest collective action problem (Olson 1965), with limited lobbying influence. By electing Obama on a strong health platform these consumers have already provided some level of mandate for reform but they will generally be less effective (due to the free-rider effect and problems of coordination) and underrepresented in the upcoming battle of political negotiation to pass the bill. At the other extreme those with the most to lose the largest health insurers and some health providers such as pharmaceuticals have small numbers, deep pockets and strong traditional political allies, all of which have allowed extensive rent seeking to date in the existing system. Recognising the risks of real reform these groups are now offering some concessions to help

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them manage these risks - including voluntary cost reductions (of $2 trillion over 10 years) and support for universal coverage if mandated (to reduce the risk of coverage only when you need it). However these cost reductions are vague and unenforceable (Pear 2009). These concessions aim at gaining them a seat at the table to influence the reforms. At the same time these health giants are also supporting (indirectly) a negative advertising campaign closely following the Harry and Louise ads vilifying government-run health coverage which helped defeat Clinton (Krugman 2009, Scott 2000a). However there are key stakeholders to influence who have changed position since the Clinton case. Business, particularly small business who are less likely to provide health coverage to employees, opposed Clintons plan largely due to the employer mandate proposed as the mechanism to pay for the reforms. Small business proved to be effective lobbyists against the Clinton scheme despite being a naturally diverse group because of a small number of effective industry associations (Scott 2000). However business, as employers, generally stands to gain in the long term from lower health costs as they are the key purchaser of health schemes. Business groups are beginning to recognise this, alarmed by growth in health insurance costs, and are now among the advocates for change (Pear 2009). Universal access and transportability of health funds will also provide them benefits as it will help decouple existing links between staffing decisions and health costs (CEA 2009 p5 and p36-28). Importantly their key concern the mechanism of paying for new services is necessary but indirect to the main objectives of the scheme and hence has a wide range of possible approaches and capacity to negotiate. The second group to influence is the majority of Americans who already have good coverage and are largely concerned about losing existing benefits and quality of care, or being impacted by the costs of new services. Obamas scheme, unlike Clintons, seeks to address these concerns as existing health schemes continue (but compete against a new public provider (Obama 2008) and consumer choice is improved through increased transparency, accreditation and portability. However consumers will still need to strong engagement to prevent mis-information and will have strong concerns over long term quality of service and any new taxes. Clinton was also defeated by the wider idea that Big Government should be minimised in favour of free market approaches. Many of the counter advertisements focused purely on the evils of the government controlling the health system. The Republicans used this fear to help take control of Congress in the mid-term 1994 elections (Pear 2009). However changes in wider global thinking about the limitations of market approaches (Quiggin 2005) and Obamas election on mandate of change means that this broader fear of Big Government may get less traction this time around.

Options/Alternatives In this section of the paper you need to provide some alternatives or options for addressing the key issue that you have identified. These need to be informed options, linked to theory. Ensure there is a clear and meaningful link between these sections. In your option try to do things: tell us what you will do (the actual action); why (a justification); and identify pros and cons (the potential positive and negative effects). Doing this allows you to weigh up the options. There is never a perfect solution, and part of giving high quality advice is the ability to recognize that there are both benefits and costs from any action. For example, subsidies can encourage desired behaviours (i.e. plant

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specific crops), but they can pervert markets (i.e. oversupply) and lead to long-term lock-in (i.e. it is hard to remove subsidies once they are in place). Example A: Options/Alternatives Option 1: the reactive/monitoring approach The government may chose to do nothing at this point and only put in place a monitoring regime to track any impacts on food prices and intervene only if necessary address a scarcity issue through further farming incentives or support. This has the benefit of a minimal response but may lead to high-costs for both government and investors in market intervention. Option 2: the pre-emptive risk management approach The government could provide additional incentives to support feedstocks, including: subsidies to kick-start new feedstock industries such as sorghum which may struggle to gain critical mass behind established industries such as corn and sugar; making additional land more available or affordable; and incentives to invest in development and commercialisation of second generation biofuels (as prioritised by CGIAR 2008, p.1). Additionally the government should introduce measures to put downward pressure on the growth of transport fuel demand such as vehicle efficiency targets and alternatives to road transport such rail. This approach could reduce the risk of feedstock scarcity and could put downward pressure on prices. However it does not provide a safety cap on food prices. Option 3: the price-cap approach Brazil provides a strong example where a potentially more efficient feedstock manioc root which is native to South America was never developed due to the strong existing infrastructure an interests of the already established sugar industry (Cordonnier 2009). A major outcome of the approach in Brazil to 100% ethanol vehicles has been the lack of development in car-alternatives such more efficient vehicles or rail (Cordonnier 2009). This approach supports fuel security but may limit greenhouse benefits as emissions in ethanol production remain high and contentious (CARB 2009; CGIAR 2008, p.3 & Looker 2009). 5 Using a penalty as a price cap is a common in uptake measures with targets for example Australias mandatory renewable energy target. The government could amend the Biofuel Law to include a price-cap, explicitly valuing how much price increase in feedstocks they are willing to bare to meet the target. For example, rather than completely ban the sale of non-E5 and non-E10 fuels, the government could introduce a price penalty (such as a tax) for selling these fuels. The price-differential should be set at the equivalent cost of the feedstock for the highest price the government believes the food market should bare. Should feedstock scarcity drive up the price of ethanol above this point, fuel companies would pay the penalty rather than continue to buy increasingly expensive ethanol, limiting the pressure on feedstock demand. The benefit of this scheme is it explicitly limits the risk to feedstock prices and flow on effects to food. It also provides a long term signal to the market of the value the government puts on the objectives of the scheme and reduces the risk of government intervention due to price spikes. The downside of this scheme is that under some circumstances the target of 100% E10 fuel by 2011 may not be reached, but that will be because the cost to food prices was greater than the government would accept. Any funds collected in this instance could be re-invested into measures to bring the prices down, such as those under Option 2.

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Example B: Options/Alternatives Alternative Solution 1: Subsidise feedstock to entice distillers Feedstock cost is the biggest proportion of ethanol production costs, and its availability is crucial as it is the primary raw material. Costs and availability of feedstock would pose the biggest concern to distilleries, and may deter them from setting up. To minimise fluctuations, the DOA can stabilise prices to guarantee feedstock quantities for distilleries. As farmers want high crop prices to induce production, while distillers seek cheap feedstock to minimise production costs, the DOA will inevitably provide the costly role of subsidising feedstock production to ensure the initial success of the local biofuel industry. This is a costly scheme which must be carefully weighed against the benefits. It is also saddled with other social costs arising from the creation of market intervention. The DOA recognises sugarcane, sugarbeet, corn, cassava, sweet sorghum and coconut as the current feedstock options. Each receives different support from different interest groups. Furthermore, distillery technology today does not allow interchanging of feedstock. If we have to select crops to subsidise, there is opportunity for collective action by interest groups, rent-seeking behaviours and corruption, which will perpetuate inefficient markets (Bennett, 2009, Keefer, 2004, pp. 248). Subsidies to encourage biofuel feedstock production have also been linked to inflationary pressures on food prices and animal feed prices (Smith, pp. 7, Tyner, pp.647, Runge & Senauer, pp.42-43), which is not desirable. Lastly, price distortions may potentially prevent the market from using new and more effective crops that are being developed and tested. Hence, this alternative, though potentially useful to the industry, is not advised. Alternative Solution 2: Facilitate development of alternative feedstock sources Food and biofuel compete for the energy-rich crops, many of which are traditional food staples. Increased demand raises prices, and reduces the short run market equilibrium quantity when producers have insufficient time to react. To secure stable prices for both food and biofuel, we can delink the demand obtaining biofuel feedstock from non-staple crops (Domingo, 2007). Segregating demand and creating a new product market can reduce minimise demand and hence inflationary pressures on traditional food crops, while diversifying feedstock sources to encourage greater competition. The DOA therefore needs to accelerate its research to develop and test cost-competitive and energy-rich feedstock suitable for the Philippines. Recently, a new plant species, Jatropha, is being researched and touted as a highly promising feedstock (Barta, 2007, Rajagopal, 2008). If the option is viable, we can devote financial resources to incentivise and support use of this feedstock, after weighing all the costs in benefits. While this solution has a longer term approach than the previous one, the profit-maximising market already has incentive to select new, non-staple crops as feedstock if they meet production criteria in terms of costs and predictable quantity supplied. Given that supporting the biofuel industry incurs costs, the DOA can seek a more holistic alternative that spreads out benefits to more parties and over time. Proposal In the final proposal you need to clearly state which if the options you have set out in the options/alternatives section should be adopted, and why. Doing this forces you to weigh up the pros and cons of different suggestions but also demands that you identify some criteria against which

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you will judge them. If you have set out pros and cons in the options section, then the proposal section is much easier. Remember, there is never a perfect approach, but some are better than other in the specific context and circumstances. Because of this saying that a blended approach of all your options is problematic, and will not meet the criteria for the assessment task i.e. you will not have chosen a single option to take forward. By the same token, it is not the time to dismiss the options and come up with a new one. There is no expectation that you will go into incredible detail with the criteria, but at least state them. This demonstrates understanding and also that you have some basis for making your decision.

Example A: Proposal Assessment Criteria: the degree to which options encourage investment building capital stock and delivering productivity gains Option 1 provides the potential for the most effective mix of incentives needed to increase investment and productivity in the long term by increasing all forms of capital and infrastructure; taking account of the real value of environmental benefits and costs; reducing market distortions; and providing pressure for innovation. Clearly articulated property rights will facilitate a properly functioning property market. The option is politically difficult and will encounter significant opposition. The public, however, is likely to strongly support measures to capture revenue from the elite. Option 2 will build the biofuels industry and bring short term economic benefits to a small group in the sector but exacerbate existing structural problems with less likelihood of building sorely needed capital stocks or increasing productivity. Recommendation That you argue for the adoption of Option 1. Example B: Proposal The BAR recommends Option Two as the most desirable for the Philippines. By maintaining the mandated targets for bioethanol at 5% and encouraging research and development into sustainable renewable energy sources, the Philippines will reduce the likelihood of food security issues that could arise from land conversion to sugarcane to meet increased targets and position itself at the forefront of biofuels research and development. Option One may commit the Philippines to economically undesireable and environmentally unsustainable techniques in the production of biofuels. In the long run current firstgeneration biofuels production on cultivated land is not tenable as the worlds limited arable land resources are essential to meet future food demand (OFID 2009: 34). Hence it is important for the Philippines to position itself to make a fast transition to producing secondgeneration biofuels. Increasing the bioethanol target to 10% this year, as per the Biofuels Law, would make this transition more difficult. While Option Three emphasizes environmentally-centred targets, it must be recognized that most biofuel policies are new and it is not clear which measures are most effective in achieving the mix of objectives such as lower fossil fuel dependence or less greenhouse gas emissions, not to mention domestic support for farmers (OECD/FAO 2007: 31). Although large-scale deployment of second-generation biofuels may not occur for another 10 years and may not replace food-crop ethanol systems altogether (CGIAR 2008: 20), the Philippines

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should position itself to consider the needs and opportunities that will arise through second generation biofuel technologies. The Philippine Government requires more information to support the effective implementation of coherent bioenergy policies and strategies with a multi-sectoral perspective (agriculture, trade, environment and energy) in the context of food security and environmental safeguards. We need to ensure our decisions on energy security today will not lead to unintended consequences in the future through the aggressive support of one type of biofuel production.

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