You are on page 1of 30

:+<,6$)5,&$3225"

'DURQ$FHPRJOXDQG-DPHV$5RELQVRQ

Downloaded At: 20:07 21 September 2010

$%675$&7
,QWKLVSDSHUZHWDNHIRUJUDQWHGWKDWWKHSRYHUW\RI6XE6DKDUDQ$IULFDLVWRDODUJH
SDUWH[SODLQHGE\LWVSROLWLFDODQGHFRQRPLFLQVWLWXWLRQV$VFLWL]HQV$IULFDQVGRQRW
KDYHWKHLQFHQWLYHVWRVDYHDQGLQYHVWDVSROLWLFLDQVWKH\GRQRWKDYHWKHLQFHQWLYHWR
SURYLGHSXEOLFJRRGV:HIRFXVRQWKHLVVXHRIKRZ$IULFDGHYHORSHGVXFKLQVWLWXWLRQV
+LVWRULFDOO\ QR VRFLHW\ KDG WKH W\SHV RI LQVWLWXWLRQV UHTXLUHG IRU PRGHUQ HFRQRPLF
JURZWKWKRXJKDIHZKDGHOHPHQWVRIWKHPIRUTXLWHORQJSHULRGV*URZWKDURVHZKHQ
LQVWLWXWLRQDOWUDQVLWLRQVWRRNSODFH:HDUJXHWKDWWKHKLVWRULFDOG\QDPLFVRILQVWLWXWLRQV
LQ$IULFDKDYHEHHQGLIIHUHQW3URFHVVHVRIVWDWHIRUPDWLRQVHHPWRKDYHEHHQGHOD\HG
UHODWLYHWR(XUDVLDDQGVWDWHLQVWLWXWLRQVDSSHDUWRKDYHEHHQLQWHQVHO\DEVROXWLVWDQG
SDWULPRQLDO7KHVHLQLWLDOLQVWLWXWLRQVLQWHUDFWHGLQDSHUYHUVHZD\ZLWKDVHULHVRIVKRFNV
WKDWKLW$IULFDLQSDUWLFXODUWKHVODYHWUDGHLQWKHHDUO\PRGHUQSHULRGDQGFRORQLDOLVPLQ
WKHWKDQGWKFHQWXULHV$IULFDFRXQWULHVHPHUJHGDWLQGHSHQGHQFHZLWKDFRPSOH[
SDWK GHSHQGHQW VHW RI LQVWLWXWLRQV WKDW ZHUH SUREDEO\ HYHQ ZRUVH WKDQ WKRVH ZKLFK
WKH\ KDG DW WKH WLPH RI FRORQL]DWLRQ ,W ZDV WKHVH WKDW SUHFLSLWDWHG DXWKRULWDULDQLVP
VXVWDLQHGHFRQRPLFGHFOLQHDQGUHLQIRUFHGWKHSRYHUW\ZHVHHLQ$IULFDWRGD\
.H\ZRUGVLQVWLWXWLRQVSROLWLFVSDWKGHSHQGHQFH
-(/FODVVLFDWLRQ1122



,1752'8&7,21

7RGD\ 6XE6DKDUDQ$IULFD KHQFHIRUWK$IULFD LV WKH SRRUHVW SDUW RI WKH SODQHW )RU
WKHUVWWLPHLQ:RUOGKLVWRU\GXHWRWKHVXVWDLQHGHFRQRPLFJURZWKZKLFK&KLQDDQG
,QGLDKDYHH[SHULHQFHGRYHUWKHSDVW\HDUVWKHPDMRULW\RIWKHZRUOGVSRRU OLYLQJ
RQDGD\RUOHVV DUHLQ$IULFD7KHLQFRPHSHUFDSLWDRIWKHSRRUHVWFRXQWULHVVXFK
DV(WKLRSLDRU6LHUUD/HRQHGLIIHUIURPWKRVHRISURVSHURXV2(&'FRXQWULHVE\DIDFWRU





:HKDYHJUHDWO\EHQHWWHGIURPLQQXPHUDEOHGLVFXVVLRQVRQWKHWRSLFRIWKLVUHVHDUFKZLWK5REHUW
%DWHVDQG1HLO3DUVRQV:HDOVRWKDQNWKHHGLWRUDQGDQDQRQ\PRXVUHIHUHHIRUWKHLUFRPPHQWV
0DVVDFKXVHWWV ,QVWLWXWH RI7HFKQRORJ\ 'HSDUWPHQW RI (FRQRPLFV (  0HPRULDO 'ULYH
&DPEULGJH0$HPDLOGDURQ#PLWHGX
+DUYDUG8QLYHUVLW\'HSDUWPHQWRI*RYHUQPHQW,466&DPEULGJH6WUHHW1&DPEULGJH
0$HPDLOMURELQVRQ#JRYKDUYDUGHGX

(FRQRPLF+LVWRU\RI'HYHORSLQJ5HJLRQV9RO  
,6613ULQW2QOLQH
(FRQRPLF+LVWRU\6RFLHW\RI6RXWKHUQ$IULFDSS
'2,



Downloaded At: 20:07 21 September 2010

'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

RIDERXW7KHVHLQFRPHGLIIHUHQFHVFRPHDORQJZLWKKXJHGLIIHUHQFHVLQZHOIDUH
KHDOWKHFRQRPLFRSSRUWXQLWLHVDQGOLIHFKDQFHV
,QWKLVHVVD\ZHSURYLGHDQLQWHUSUHWDWLRQRIZK\$IULFDLVSRRU2XUEDVLFDSSURDFK
LV LQVWLWXWLRQDO:H DUJXH WKDW WKH PDLQ UHDVRQV WKDW$IULFDQ QDWLRQV DUH SRRU WRGD\
LV WKDW WKHLU FLWL]HQV KDYH YHU\ EDG LQWHUORFNLQJ HFRQRPLF DQG SROLWLFDO LQFHQWLYHV
3URSHUW\ULJKWVDUHLQVHFXUHDQGYHU\LQHIFLHQWO\RUJDQL]HGPDUNHWVGRQRWIXQFWLRQ
ZHOOVWDWHVDUHZHDNDQGSROLWLFDOV\VWHPVWRQRWSURYLGHSXEOLFJRRGV7KHHPSLULFDO
HYLGHQFHRQWKHSULPDF\RIHFRQRPLFLQVWLWXWLRQVLQH[SODLQLQJFRPSDUDWLYHHFRQRPLF
GHYHORSPHQWLVRYHUZKHOPLQJ $FHPRJOX-RKQVRQDQG5RELQVRQE 
,QFRQWUDVWRWKHUSRWHQWLDODSSURDFKHVWR$IULFDQSRYHUW\ZKLFKHPSKDVL]HJHRJUDSKLFDO
IDFWRUV VXFK DV LQWULQVLFDOO\ ORZ DJULFXOWXUDO SURGXFWLYLW\ WKH FOLPDWH RU WKH GLVHDVH
HQYLURQPHQW 6DFKV DQG :DUQHU   KDYH VR IDU QRW ZLWKVWRRG FORVH HPSLULFDO
VFUXWLQ\ )RU LQVWDQFH PRUH FDUHIXO DWWHPSWV WR LQYHVWLJDWH ZKHWKHU SRRU KHDOWK
RXWFRPHVDUHUHVSRQVLEOHIRUSRRUHFRQRPLFGHYHORSPHQW UDWKHUWKDQDFRQVHTXHQFH
RILW QGOLWWOHHIIHFW $FHPRJOXDQG-RKQVRQ DQGRWKHUVWXGLHVKDYHVKRZQWKDW
WKHHVWLPDWHGDJJUHJDWHHIIHFWVRIKHDOWKRQGHYHORSPHQWDUHFRPSOHWHO\LQFRQVLVWHQW
ZLWK WKH PXFK PRUH FUHGLEOH PLFUR HYLGHQFH :HLO  :HLO$VKUDI DQG /HVWHU
 0RUHSODXVLEOHPD\EHFXOWXUDOH[SODQDWLRQVRI$IULFDQGHYHORSPHQW3ODWWHDX
  IRU LQVWDQFH DUJXHV WKDW VRFLDO QRUPV ZKLFK IRUFH VKDULQJ UHGXFH HFRQRPLF
LQFHQWLYHVLQ$IULFD6RIDUZHKDYHOLWWOHV\VWHPDWLFHYLGHQFHRQVXFKLGHDVWKRXJKDV
ZHGLVFXVVEHORZLQWKHFRQWH[WRIWKH*KDQDFRFRDERRPDQGWKHUHVSRQVHRI$IULFDQV
LQWKH7UDQVNHLLQWKHWKFHQWXU\WRHFRQRPLFLQFHQWLYHVWKHUHDUHSOHQW\RIVLJQV
RIG\QDPLFLQGLJHQRXVFDSLWDOLVPDQGHQWUHSUHQHXUVKLSLQ$IULFD VHH,OOLIHIRU
DEURDGGLVFXVVLRQ 2XUYLHZLVWKDWWKLVKDVEHHQKHOGLQFKHFNE\WKHLQVWLWXWLRQDO
HQYLURQPHQW(YHQLIRQHDOORZVIRUDJUHDWHUUROHIRUJHRJUDSK\DQGFXOWXUHWKDQZH
WKLQNWKHHYLGHQFHFDQVXVWDLQLWVHHPVXQGHQLDEOHWKDWLQVWLWXWLRQVPXVWSOD\DYHU\
VLJQLFDQWUROH
,QVWHDG RI UHKHDUVLQJ WKLV ZHOO NQRZQ GHEDWH DQG HYLGHQFH LQ WKLV HVVD\ ZH
XQGHUWDNHDGLIIHUHQWDQGPRUHVSHFXODWLYHWDVN:HSURYLGHRQHVHWRIDUJXPHQWVDERXW
ZK\$IULFDQLQVWLWXWLRQVKDYHGHYHORSHGLQWKHZD\WKH\KDYHGRQH7KLVLVQHFHVVDULO\
DKLVWRULFDOTXHVWLRQDQGLQDQVZHULQJWKLVZHDOVRDWWHPSWWRDGGUHVVWKHTXHVWLRQRI
ZKHWKHU$IULFDKDVDOZD\VEHHQSRRUUHODWLYHWRRWKHUSDUWVRIWKHZRUOG
7KHEDVLFFRQFOXVLRQVRIWKHSDSHUDUHDVIROORZV7KRXJKWKHUHDUHSDUWVRI$IULFD
VXFKDVQRUWKHUQ(WKLRSLDGXULQJWKHKHLJKWRI$NVXPLQRULQWKH6DKHOGXULQJ
WKH0HGLHYDOSHULRGZKHUHVRFLHWLHVRXULVKHGZKLFKZHUHSUREDEO\DVGHYHORSHGDV
WKHLUFRQWHPSRUDULHVDQ\ZKHUHLQWKHZRUOGZHEHOLHYHWKDWWKHHYLGHQFHVXJJHVWVWKDW
KLVWRULFDOO\$IULFDKDVEHHQUHODWLYHO\SRRU VHH7KRUQWRQIRUDGLIIHUHQWDUJXPHQW
IRU $NVXP*KDQD6RQJKD\0DOLRU*UHDW=LPEDEZHZHUHWKHH[FHSWLRQQRW
WKHUXOH7KRXJKZHNQRZOLWWOHRIKLVWRULFDOLQFRPHVRUHYHQSRSXODWLRQZHGRNQRZ
WKDW$IULFDODJJHGWKHUHVWRIWKHZRUOGLQWHUPVRIWHFKQRORJ\7KHZKHHOZDVQRWXVHG
VRXWK RI WKH 6DKDUD DQG RXWVLGH RI (WKLRSLD$IULFDQ VRFLHWLHV GLG QRW LQQRYDWH VXFK
EDVLFWHFKQRORJLHVDVZULWLQJRUWKHSORZ $XVWHQDQG+HDGULFN ,QDGGLWLRQSULRU
WR WKH HDUO\ PRGHUQ SHULRG WKH G\QDPLFV RI VWDWH IRUPDWLRQ DQG LQVWLWXWLRQ FUHDWLRQ
RXWVLGHRIDIHZSRFNHWVDQGWUDQVLWRU\HSRFKVDSSHDUWRKDYHODJJHGWKRVHLQ(XUDVLD


Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

LIQRWWKH$PHULFDV:HDUJXHWKDWWKLVZDVEHFDXVHDVWRGD\PRVW$IULFDQVRFLHWLHV
ZHUHFDXJKWLQDVHWRIHFRQRPLFDQGSROLWLFDOLQVWLWXWLRQVZKLFKZDVQRWFRQGXFLYH
WRHFRQRPLFSURJUHVV7KLVZDVLQWZRVHQVHVFHQWUDOL]HGSROLWLHVHPHUJHGODWHUDQG
OHVV IUHTXHQWO\ LQ$IULFD WKDQ HOVHZKHUH 6HFRQG ZKHQ WKH\ GLG WKH\ ZHUH KLJKO\
DEVROXWLVWDQGSDWULPRQLDOSROLWLHVZKLFKFRXOGQRWFUHDWHWKHFLUFXPVWDQFHVQHFHVVDU\
IRUHFRQRPLFGHYHORSPHQW:HLOOXVWUDWHWKLVUVWLVVXHE\H[DPLQLQJWKHIRUPDWLRQRI
WKH.XEDVWDWHLQWKH&RQJRLQWKHWKFHQWXU\:HLOOXVWUDWHWKHODWWHUYLDWKHORQJXH
GXUpHLQ(WKLRSLDWKH$IULFDQVRFLHW\ZHNQRZPRVWDERXWSULRUWRWKHPRGHUQSHULRG
7R JHQHUDWH VXVWDLQHG HFRQRPLF GHYHORSPHQW UHTXLUHV QRW MXVW WKH IRUPDWLRQ RI
FHQWUDOL]HGSROLWLHVEXWDOVRWKHUHPRYDORIWKHDEVROXWLVWDQGSDWULPRQLDOWHQGHQFLHVRI
VXFKSROLWLHV7KLVZDVDSURFHVVWKDWSOD\HGRXWLQ:HVWHUQ(XURSHSDUWLFXODUO\%ULWDLQ
LQWKHHDUO\PRGHUQSHULRGFXOPLQDWLQJLQWKH*ORULRXV5HYROXWLRQRI7KHIDFW
WKDWWKLVSURFHVVKDSSHQHGLQ(XURSHDQGQRW$IULFDFDQEHH[SODLQHGE\GLIIHUHQFHV
LQWKHVKRFNVZKLFKKLWWKHVHGLIIHUHQWFRQWLQHQWVDQGGLIIHUHQFHVLQWKHZD\VRFLHWLHV
UHDFWHG WR WKHVH VKRFNV VRPHWKLQJ ZKLFK GHSHQGHG RQ WKHLU LQLWLDO LQVWLWXWLRQV7KLV
EHFDPH SDUWLFXODUO\ LPSRUWDQW DIWHU  1RW RQO\ GLG WKH UHODWLYH EDFNZDUGQHVV
RI $IULFD LQ  PHDQ WKDW PLVVHG RXW RQ GLUHFWO\ SDUWLFLSDWLQJ LQ WKH HFRQRPLF
RSSRUWXQLWLHVFUHDWHGE\WKHGLVFRYHU\RIWKH$PHULFDVEXWWKHIRUPRIWKHLULQVWLWXWLRQV
PHDQWWKDWWKH\JRWLQGLUHFWO\LQYROYHGWKURXJKH[SRUWLQJVODYHV7KLVFUHDWHGDYHU\
SHUYHUVH LQVWLWXWLRQDO G\QDPLF ZKLFK IXUWKHU SUHFOXGHG PDQ\ VRFLHWLHV LQ :HVW DQG
&HQWUDO$IULFDIURPWDNLQJDGYDQWDJHRIDOOWKHLQQRYDWLRQVLQHFRQRPLFLQVWLWXWLRQV
DQGWHFKQRORJ\WKHQWDNLQJSODFH
7KHVHG\VIXQFWLRQDOG\QDPLFVZHUHWKHQIXUWKHUUHLQIRUFHGE\FRORQLDOLVPZKLFK
QRWRQO\WKUHZLQWRUHYHUVHQDVFHQWHFRQRPLFPRGHUQL]DWLRQLQWKHWKFHQWXU\LQSDUWV
RI6RXWKHUQ$IULFDEXWDOVRFXWRIIDQ\SRVVLELOLW\RIHQGRJHQRXVLQVWLWXWLRQDOUHIRUP
7KLVPHDQWWKDWHYHQRXWVLGHRIWKHDUHDVOLNHWKH&RQJRZKHUHWKHUHZDVDJUHDWGHDO
RISOXQGHULQJRU0DGDJDVFDU1DPLELDDQG7DQ]DQLDZKHUHWKHUHZDVPDVVGLVUXSWLRQ
DQG PXUGHU WKHUH ZDV OLWWOH FKDQFH IRU$IULFD WR FKDQJH LWV LQVWLWXWLRQDO SDWK (YHQ
ZRUVHWKHVWUXFWXUHVRIFRORQLDOUXOHIURPWKH FUHDWLRQRI GXDO HFRQRPLHV 3DOPHU
DQG3DUVRQV%XQG\ JDWHNHHSHUVWDWHV &RRSHU WKURXJKLQGLUHFW
UXOH 0DPGDQL WRWKHDGKRFFRQVWUXFWLRQRILQGHSHQGHQWSROLWLHV (QJHOEHUW
 OHIW$IULFDZLWKDPRUHFRPSOH[LQVWLWXWLRQDOOHJDF\LQWKHVWKDQLWKDGKDG
DWWKHVWDUWRIWKHFRORQLDOSHULRG7KHSROLWLFDOLQFHQWLYHVWKHVHVWUXFWXUHVFUHDWHGOHG
WRDVW\OHRISROLWLFVZKLFKUHSURGXFHGWKHKLVWRULFDOSDWWHUQVRILQVHFXUHDQGLQHIFLHQW
SURSHUW\ ULJKWV DQG DEVROXWLVW ZHDN VWDWHV ZLWK OLWWOH DELOLW\ RU LQWHUHVW LQ SURYLGLQJ
SXEOLFJRRGV(FRQRPLFLQFHQWLYHVLQ$IULFD ZHUH WHUULEOH DQG LQ FRQVHTXHQFHWKHUH
ZDVZLGHVSUHDGGHFOLQH2QO\%RWVZDQDHVFDSHGWKLVJHQHUDOSDWWHUQDQGLWWVYHU\
ZHOOLQWRWKHPRGHO:KDWLVGLVWLQFWDERXWWKHFRXQWU\LVWKHSURFHVVRILQVWLWXWLRQDO
PRGHUQL]DWLRQ LQ WKH WK FHQWXU\ DQG WKH IDFW WKDW SRVW FRORQLDO OHDGHUV ZHUH DEOH
WR FRQWLQXH WKLV SURMHFW 7KLV ZDV EHFDXVH WKH FRXQWU\ HVFDSHG WKH ZRUVW HIIHFWV RI
FRORQLDOLVPDQGWKHFRXQWU\DWLQGHSHQGHQFHKDGDFRKHUHQFHWKDWPRVWRWKHUVGLGQRW



'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ



3
 2/,7,&$/&(175$/,=$7,21$1'67$7(
)250$7,21

7KRXJK$IULFDVXIIHUVIURPDUHODWLYHGHDUWKRIDUFKDHRORJLFDOVWXGLHVDQGDQDEVHQFH
RIOLWHUDU\VRXUFHVRXWVLGHDIHZDUHDVSULRUWRWKH(DUO\0RGHUQSHULRGZKDWZHGR
NQRZ VXJJHVWV WKDW LQ JHQHUDO SROLWLFDO FHQWUDOL]DWLRQ HYROYHG PXFK ODWHU LQ $IULFD
WKDQHOVHZKHUHDQGLQDPRUHIUDJPHQWHGZD\7KHFUHDWLRQRIFHQWUDOL]HGVWDWHVLVD
SROLWLFDOSURFHVVRILQVWLWXWLRQEXLOGLQJ7KLVSURFHVVDQGLWVLPSDFWRQWKHHFRQRP\
FDQEHYLYLGO\LOOXVWUDWHGE\WKHFRPSDULVRQPDGHE\'RXJODVLQWKHVEHWZHHQ
WKH%XVKRQJWKHGRPLQDQWJURXSLQWKH.XEDVWDWHDQGWKH/HOHHIIHFWLYHO\DVWDWHOHVV
VRFLHW\7KHVHWZRSHRSOHVIDFHGHDFKRWKHUDFURVVWKH.DVDL5LYHULQZKDWLVQRZWKH
'HPRFUDWLF5HSXEOLFRIWKH&RQJR$V'RXJODV S KHUVHOISXWLW

Downloaded At: 20:07 21 September 2010

7KH/HOHDQGWKH%XVKRQJDUHVHSDUDWHGRQO\E\WKH.DVDL5LYHU7KHWZRWULEHVUHFRJQL]HD
FRPPRQRULJLQWKHLUKRXVHVFORWKHVDQGFUDIWVDUHVLPLODULQVW\OHWKHLUODQJXDJHVDUHFORVHO\
UHODWHG<HWWKH/HOHDUHSRRUZKLOHWKH%XVKRQJDUHULFK(YHU\WKLQJWKDWWKH/HOHKDYHRUFDQ
GRWKH%XVKRQJKDYHPRUHDQGFDQGREHWWHU

6RPHRIWKHUHDVRQVIRUWKLVUHODWLYHSRYHUW\ZHUHREYLRXVWR'RXJODV)RUH[DPSOH
WKH/HOHXVHGLQIHULRUWHFKQRORJ\WKH\GLGQRWXVHQHWVIRUKXQWLQJDQG'RXJODVQRWHG
WKHDEVHQFHRIQHWVLVFRQVLVWHQWZLWKDJHQHUDO/HOHWHQGHQF\QRWWRLQYHVWWLPHDQG
ODERULQORQJWHUPHTXLSPHQW S +RZHYHUVKHDOVRDUJXHG S 
WKDW7KHLUHDJHUSXUFKDVHRIUHDUPV6KRZVWKHLUFXOWXUHGRHVQRWUHVWULFWWKHPWR
LQIHULRUWHFKQLTXHVZKHQWKHVHGRQRWUHTXLUHORQJWHUPFROODERUDWLRQDQGHIIRUW,Q
FRPSDULVRQDJULFXOWXUDOSURGXFWLYLW\LQWKH.XEDVWDWHZDVPXFKKLJKHU S
7KH%XVKRQJSODQWYHFURSVLQVXFFHVVLRQLQDV\VWHPRIURWDWLRQWKDWFRYHUVWZR\HDUV7KH\
JURZ\DPVVZHHWSRWDWRHVPDQLRFEHDQVDQGJDWKHUWZRDQGVRPHWLPHVWKUHHPDL]HKDUYHVWV
D\HDU7KH/HOHSUDFWLFHQRURWDWLRQDQGUHDSRQO\RQHDQQXDOPDL]HKDUYHVW

'RXJODV DUJXHG WKDW ,I ZH ZLVK WR XQGHUVWDQG ZK\ WKH /HOH ZRUN OHVV ZH QHHG WR
FRQVLGHU ZKHWKHU DQ\ VRFLDO IDFWRUV LQKLELW WKHP IURP H[SORLWLQJ WKHLU UHVRXUFHV WR
WKH XWPRVW  S   ,QGHHG VKH FODLPHG WKDW WKH /HOH ZHUH WUDSSHG LQWR DQ
LQHIFLHQWVRFLDOHTXLOLEULXP7KHUHZDVQRSURFHVVRISROLWLFDOFHQWUDOL]DWLRQ HDFK
YLOODJHLVFRPSOHWHO\LQGHSHQGHQWS DQG7KRVHZKRKDYHDQ\WKLQJWRGR
ZLWKWKH/HOHPXVWKDYHQRWLFHGWKHDEVHQFHRIDQ\RQHZKRFRXOGJLYHRUGHUVZLWKD
UHDVRQDEOHKRSHRIEHLQJREH\HG7KLVODFNRIDXWKRULW\JRHVDORQJZD\WRH[SODLQLQJ
WKHLUSRYHUW\ 'RXJODVS 6RFLHW\ZDVEDVHGRQDVHOIUHSURGXFLQJV\VWHPRI
GRPLQDQFHRI\RXQJPHQE\ROGPHQ2OGPHQPRQRSROL]HGHFRQRPLFDFWLYLWLHVDQG
UHVRXUFHVWRH[WUDFWUHQWVZKLOH\RXQJPHQZHUHGLYHUWHGLQWRUDLGLQJDQGDEGXFWLQJ
DQGVXFKLQVHFXULW\LVREYLRXVO\LQLPLFDOWRWUDGH S 
7KH TXHVWLRQ RI ZK\ WZR VXFK FORVHO\ UHODWHG VRFLHWLHV VKRXOG GHYHORS VXFK
GLIIHUHQW LQVWLWXWLRQV ZDV DGGUHVVHG E\ 9DQVLQD   +H FRQFOXGHG WKDW IRU WKH
%XVKRQJ S
$VWDUWLQJSRLQWIRUHFRQRPLFGHYHORSPHQWDSSHDUVZLWKWKHUHLJQRI6K\DDP7HFKQRORJLFDO
LQQRYDWLRQV HVSHFLDOO\ LQ DJULFXOWXUH EHJDQ WR VSUHDG WKURXJKRXW WKH FRXQWU\  7KH VWDSOH


:K\LV$IULFD3RRU"
FURSVZHUHUHSODFHGE\$PHULFDQFURSVZKLFKKDGKLJKHU\LHOGV7KHPDLQLQQRYDWLRQZDV
WKHLQWURGXFWLRQRIDGRXEOHHYHQDWULSOHDQQXDOKDUYHVWRIPDL]H

'XULQJ WKLV SHULRG ZKLFK 9DQVLQD GXEEHG WKH $JH RI .LQJV DJULFXOWXUDO RXWSXW
SHUKHDG DOVR GRXEOHG 7R DFKLHYH WKLV WKH ZKROH DJULFXOWXUDO FDOHQGDU KDG WR EH
UHRUJDQL]HGLQFOXGLQJWKHGLYLVLRQRIODERUE\VH[ S DQG

Downloaded At: 20:07 21 September 2010

7KHUVWVWHSLQUDLVLQJSURGXFWLYLW\ZDVIRUWKHPHQWRZRUNPRUHLQWKHHOGV6HFRQGWKH
DJHRIPDUULDJHZDVORZHUHGEULQJLQJ\RXQJPHQ,QWRWKHDJULFXOWXUDOODERUIRUFH<RXQJ
PHQGLGQRWZRUNLQWKHHOGVDWDOOXQWLOPDUULDJH%\WKHQLQHWHHQWKFHQWXU\WKHUHVXOWZDV
WKDWER\VPDUULHG\RXQJDWOHVVWKDQWZHQW\\HDUVRIDJHUDWKHUWKDQDWWZHQW\YHRUVHYHQDV
DPRQJWKH/HOHWKLUW\YHWKXVDGGLQJDVL]DEOHSRUWLRQWRWKHODERUDYDLODEOHIRUDJULFXOWXUH
9DQVLQDS

:KDW OHG WR WKLV UHRUJDQL]DWLRQ RI VRFLHW\ DQG LQFUHDVH LQ DJULFXOWXUDO SURGXFWLYLW\"
9DQVLQDQRWHV S 7KHFDOOIRUDVXUSOXVFDPHIURPDERYHIURPWKHSROLWLFDO
DXWKRULWLHV,WZDVLPSRVHGRQWKHSHRSOH S ,WZDVDURXQGWKH\HDUWKDW
6K\DDPLQLWLDWHGDSROLWLFDOUHYROXWLRQDQGFUHDWHGWKH.XEDNLQJGRPZLWKKLPVHOIDV
.LQJ7KHGLIIHUHQFHVEHWZHHQWKH%XVKRQJDQGWKH/HOHHPHUJHGDVDFRQVHTXHQFH
RIWKHZD\6K\DDPUHRUJDQL]HGWKHVRFLHW\+HEXLOWDVWDWHDQGDS\UDPLGRISROLWLFDO
LQVWLWXWLRQVZKHUHRIFLDOVZHUHHOHFWHGDVZHOODVDSSRLQWHGDQGOHDGHUVZHUHFKHFNHG
E\FRXQFLOVZKRWKH\KDGWRFRQVXOWZLWKWRPDNHGHFLVLRQV6K\DDPDQGKLVVXFFHVVRUV
FUHDWHGDEXUHDXFUDF\WRUDLVHWD[HVDQGDOHJDOV\VWHPDQGSROLFHIRUFHWRDGPLQLVWHU
WKHODZ7KH\HYHQLQWURGXFHGWULDOE\MXU\DQDSSDUHQWO\XQLTXHHYHQWLQ$IULFDSULRUWR
(XURSHDQFRORQLDOLVP7KHFRQQHFWLRQEHWZHHQWKHSROLWLFDODQGHFRQRPLFUHYROXWLRQ
ZDVVLPSOH.LQJ6K\DDPDQGWKRVHWKDWVXSSRUWHGKLPZDQWHGWD[HVDQGZHDOWKDQG
WKLVKDGWREHSURYLGHGE\WKH.XEDSURGXFLQJDVXUSOXVDERYHZKDWWKH\FRQVXPHG
WKHPVHOYHV
:HGRQRWNQRZZKDWDOORZHG6K\DDPWRFUHDWHWKLVSROLWLFDOUHYROXWLRQRUZK\
SUHYLRXV UXOHUV KDG QRW EHHQ DEOH RU KDG QRW ZDQWHG WR DFKLHYH D VLPLODU RXWFRPH
7KHPRYHIURPDVWDWHOHVVVRFLHW\WRRQHZLWKDVWDWHDQGSROLWLFDOFHQWUDOL]DWLRQLVD
NH\SURFHVVZKLFKLVUHTXLUHGWRJHQHUDWHPRGHUQHFRQRPLFJURZWK:LWKRXWDVWDWH
LWLVLPSRVVLEOHIRUDVRFLHW\WRFUHDWHWKHSXEOLFJRRGVVXFKDVODZDQGRUGHUDOHJDO
V\VWHPDQGHGXFDWLRQZKLFKDUHQHHGHG:KDWLVUHPDUNDEOHDERXWWKLVLQFLGHQWLVWKDW
LWKDSSHQHGRQO\DURXQGZKLFKLVJUHDWO\GHOD\HGFRPSDUHGWR(XUDVLDDQGWKH
VLWXDWLRQZDVVLPLODUHOVHZKHUHLQ&HQWUDO$IULFD VHH9DQVLQDIRUDQRYHUYLHZ 
,QDGGLWLRQWKHVWDWHWKDW6K\DDPFRQVWUXFWHGWKRXJKLWJHQHUDWHGDVLJQLFDQWLQFUHDVH
LQWKHOHYHORILQFRPHFRXOGQRWKDYHJHQHUDWHGVXVWDLQHGHFRQRPLFJURZWKEHFDXVHLW
ZDVVWLOODEVROXWLVW



9DQVLQD  H[WHQGVWKHVWRU\RIWKH.XEDLQWRWKHFRORQLDOSHULRG



'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

Downloaded At: 20:07 21 September 2010



(1'85,1*$%62/87,606

7KHZRUGDEVROXWLVPLVXVHGE\KLVWRULDQVWRUHIHUWRDW\SHRI(XURSHDQVWDWHZKHUH
WKHSRZHURIWKHUXOHULVDEVROXWHDQGLVXQFRQVWUDLQHGE\LQVWLWXWLRQVRUFRXQWHUYDLOLQJ
IRUFHV ,Q (XURSHDQ HFRQRPLF KLVWRU\ WKH VLJQLFDQFH RI WKH WHUP LV WKDW WKH VHW RI
HFRQRPLFLQVWLWXWLRQVZKLFKDEVROXWLVPFUHDWHGZHUHGHVLJQHGWRLQFUHDVHWKHZHDOWK
DQGSRZHURIWKHUXOHUDQGWKLVXVXDOO\FDPHDWWKHH[SHQVHRIVRFLHW\PRUHJHQHUDOO\
7KHUHZDVQRWKLQJWRVWRSDEVROXWLVWUXOHUVSUHGDWLQJRQSURSHUW\ULJKWVRUVWUXFWXULQJ
WKHP LQ ZD\V ZKLFK FUHDWHG UHQWV 7KH VWUDWHJ\ RI UXOH RI DEVROXWLVW UXOHUV LV DOVR
VLJQLFDQW7KLVZDVGHVFULEHGE\:HEHUDVSDWULPRQLDORULQWKHH[WUHPHVXOWDQLVWLF
DWHUPZKLFKQHYHUFDXJKWRQDPRQJVWVRFLDOVFLHQWLVWV ZKLFKLVDVLWXDWLRQZKHUH
WKH VWDWH LV DVVRFLDWHG ZLWK WKH SHUVRQ RI WKH UXOHU VR WKDW WKHUH LV QR GLVWLQFWLRQ
EHWZHHQ ZKDW LV WKH UXOHUV DQG ZKDW LV WKH VWDWHV VHH :HEHU  SS 
IRUKLVGHQLWLRQRISDWULPRQLDOLVP $SDWULPRQLDOVWDWHLVDOVRRQHZKHUHWKHUHDUH
IHZ LQVWLWXWLRQDOL]HG UXOHV DQG XQLYHUVDOLVWLF FULWHULD DUH QRW HPSOR\HG 5LJKWV DQG
UHVSRQVLELOLW\DUHGHWHUPLQHGE\WKHUXOHUZKRHQGRZVWKHPFRQGLWLRQDOO\RQSHRSOHLQ
H[FKDQJHIRUVXSSRUW
:KHQ SROLWLFDO FHQWUDOL]DWLRQ WRRN SODFH KLVWRULFDOO\ WKRXJK LW ZDV DVVRFLDWHG
ZLWKHFRQRPLFJDLQVSRZHUWHQGHGWREHH[HUFLVHGLQDEVROXWLVWDQGSDWULPRQLDOZD\V
ZKLFKEORFNHGIXUWKHUHFRQRPLFFKDQJH$NH\IDFWRUEHKLQGWKHWUDQVLWLRQWRVXVWDLQHG
HFRQRPLFJURZWKLQ(DUO\0RGHUQ(XURSHZDVWKHUHIRUPRIWKHVWDWHLQDQRQDEVROXWLVW
QRQSDWULPRQLDOGLUHFWLRQ7KLVWUDQVLWLRQKDVQHYHUKDSSHQHGLQODUJHSDUWVRI$IULFD
DQGWKHHYLGHQFHVXJJHVWVWKDWZKLOHWKHWUDQVLWLRQZDVWDNLQJSODFHLQ:HVWHUQ(XURSH
DEVROXWLVPDQGSDWULPRQLDOLVPZHUHSHUVLVWLQJLQ$IULFDDQGPD\EHHYHQLQWHQVLI\LQJ
$QH[DPSOHRIWKLVFRPHVIURPWKHKLVWRU\RI(WKLRSLD(WKLRSLDQHFRQRPLFDQG
SROLWLFDOKLVWRU\LVSDUWLFXODUO\LQWHUHVWLQJVLQFHWKHVWDWHGHYHORSHGIURPWKHNLQJGRP
RI$NVXPZKLFKZDVIRXQGHGLQWKHQRUWKRIWKHFRXQWU\DURXQG%& 3KLOOLSVRQ
IRUDQRYHUYLHZ $NVXPZDVDUHODWLYHO\GHYHORSHGNLQJGRPIRULWVWLPHDQG
HQJDJHGLQLQWHUQDWLRQDOWUDGHZLWK,QGLD$UDELD*UHHFHDQGWKH5RPDQ(PSLUH-XVW
DV5RPHGHFOLQHGVRGLG$NVXPDQGWKHKLVWRULFDOGHFOLQHRI$NVXPIROORZHGDSDWWHUQ
FORVHWRWKDWRIWKH:HVWHUQ5RPDQ(PSLUH7KHUROHSOD\HGE\WKH+XQVDQG9DQGDOVLQ
WKHGHFOLQHRI5RPHZDVWDNHQRQE\WKHH[SDQVLRQRIWKH$UDEVLQWKHWKFHQWXU\LQWR
WKH5HG6HDDQGGRZQWKH$UDELDQSHQLQVXOD$NVXPORVWLWVFRORQLHVLQ$UDELDDQGLWV
WUDGHURXWHV7KLVSUHFLSLWDWHGHFRQRPLFGHFOLQHPRQH\VWRSSHGEHLQJFRLQHGXUEDQ
SRSXODWLRQIHOODQGWKHUHZDVDUHIRFXVLQJRIWKHVWDWHLQWRWKHLQWHULRURIWKHFRXQWU\
DQGXSLQWRWKHKLJKODQGVRIPRGHUQ(WKLRSLD
7KHVHSURFHVVHVDUHUHPDUNDEO\OLNHWKRVHRXWOLQHGE\3LUHQQH  IRU(XURSH
DQGMXVWDVLQ(XURSHIHXGDOLVPHPHUJHGIROORZLQJWKHFROODSVHRIFHQWUDOVWDWHDXWKRULW\
LQWKH'DUN$JHVVRLWGLGLQ(WKLRSLD7KHPDLQYDOXDEOHUHVRXUFHZDVODQG7KHUH
ZHUHGLIIHUHQWZD\VLQZKLFKODQGZDVKHOGEXWWKHPDLQZDVDV\VWHPFDOOHGJXOWZKLFK




7KHUH LV GLVSXWH DPRQJVW VFKRODUV DERXW ZKHWKHU WKH ZRUG IHXGDOLVP UHDOO\ DSSOLHG WR$IULFDQ
LQVWLWXWLRQV VHH*RRG\ EXW,DJUHHZLWK&UXPPH\  WKDWLILWLVXVHIXODQ\ZKHUHLWLV
XVHIXOLQ(WKLRSLD

Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

LQYROYHGDJUDQWRIODQGE\WKH(PSHURU7KHLQVWLWXWLRQLVPHQWLRQHGLQWKFHQWXU\
PDQXVFULSWVWKRXJKLWPD\KDYHRULJLQDWHGPXFKHDUOLHU7KHWHUPJXOWLVGHULYHGIURP
DQ$PKDULFZRUGZKLFKPHDQVKHDVVLJQHGDHIDQGVLJQLHGWKDWLQH[FKDQJHIRUWKH
ODQGWKHJXOWKROGHUKDGWRSURYLGHVHUYLFHVWRWKH(PSHURUSDUWLFXODUO\PLOLWDU\RQHV
,QWXUQWKHJXOWKROGHUKDGWKHULJKWWRH[WUDFWWULEXWHIURPWKRVHZKRIDUPHGWKHODQG
$YDULHW\RIKLVWRULFDOVRXUFHVVXJJHVWWKDWJXOWKROGHUVH[WUDFWHGEHWZHHQRQHKDOIDQG
WKUHHTXDUWHUVRIWKHDJULFXOWXUDORXWSXWRISHDVDQWV7KLVV\VWHPZDVSUREDEO\HYHQ
PRUHH[WUDFWLYHWKDQ(XURSHDQIHXGDOLVP3RVWDQ  IDPRXVO\FDOFXODWHGWKDWLQ
WKHWKFHQWXU\DWWKHKHLJKWRI(QJOLVKIHXGDOLVPYLOOHLQVKDGORVWDERXWRQHKDOIRI
WKHLURXWSXWWRORUGVLQRQHIRUPRUDQRWKHU7KLQJVZHUHHYHQZRUVHIRUWKRVHDWWKH
ERWWRPRIWKHVRFLDOVFDOHLQ(WKLRSLD
$IWHU .LQJ (]DQD RI $NVXP FRQYHUWHG WR &KULVWLDQLW\ WKH (WKLRSLDQV VWD\HG
&KULVWLDQDQGE\WKHWKFHQWXU\KDGEHFRPHWKHIRFXVRIWKHP\WKRI.LQJ3UHVWHU
-RKQ3UHVWHU-RKQZDVD&KULVWLDQNLQJZKRKDGEHHQFXWRIIIURP(XURSHE\WKHULVHRI
,VODPLQWKH0LGGOH(DVW7KHNLQJRI(WKLRSLDVLQFHKHZDVD&KULVWLDQWKHQEHFDPH
DQDWXUDOWDUJHWIRUWKHP\WK(WKLRSLDQNLQJVLQIDFWWULHGKDUGWRIRUJHDOOLDQFHVZLWK
(XURSHDQPRQDUFKVDJDLQVW$UDELQYDVLRQVVHQGLQJGLSORPDWLFPLVVLRQVWR(XURSHDW
OHDVWIURPRQZDUGVDQGHYHQSHUVXDGHGWKH3RUWXJXHVHNLQJWRVHQGWKHPVROGLHUV
7KHVH VROGLHUV DORQJ ZLWK GLSORPDWV -HVXLWV DQG WUDYHOOHUV ZLVKLQJ WR PHHW 3UHVWHU
-RKQOHIWPDQ\DFFRXQWVRI(WKLRSLD6RPHRIWKHPRVWLQWHUHVWLQJIURPDQHFRQRPLF
SRLQW RI YLHZ DUH E\ )UDQFLVFR$OYDUHV D FKDSODLQ ZKR DFFRPSDQLHG D 3RUWXJXHVH
GLSORPDWLF PLVVLRQ  D -HVXLW 0DQRHO GH$OPHLGD ZKR OLYHG LQ (WKLRSLD
IURPDQG-RKQ%UXFHDWUDYHOHUZKRZDVLQWKHFRXQWU\EHWZHHQDQG
7KHZULWLQJVRIWKHVHSHRSOHJLYHDULFKDFFRXQWRISROLWLFDODQGHFRQRPLFLQVWLWXWLRQV
DWWKHWLPHLQ(WKLRSLDDQGWKH\GHVFULEHWKHSROLWLFDOV\VWHPDVDEVROXWLVW7KHUHZHUH
QRUHSUHVHQWDWLYHLQVWLWXWLRQVRIDQ\NLQGRUFKHFNVDQGFRQVWUDLQWVRQWKHSRZHURI
WKHHPSHURUZKRFODLPHGWKHULJKWWRUXOHRQWKHEDVLVRIVXSSRVHGGHVFHQWIURPWKH
OHJHQGDU\6RORPRQDQGWKH4XHHQRI6KHED
7KHFRQVHTXHQFHRIDEVROXWLVPZDVJUHDWLQVHFXULW\RISURSHUW\ULJKWVZKLFKZDV
GULYHQE\WKHSROLWLFDOVWUDWHJ\RIWKH(PSHURU7KHYLVLWRU-RKQ%UXFHIRUH[DPSOH
QRWHGLQWKHWKFHQWXU\WKDW
$OOWKHODQGLVWKH.LQJVKHJLYHVLWWRZKRPKHSOHDVHVGXULQJSOHDVXUHDQGUHVXPHVLWZKHQ
LWLVKLVZLOO$VVRRQDVKHGLHVWKHZKROHODQGLQWKHNLQJGRPLVDWWKHGLVSRVDORIWKH&URZQ
DQG QRW RQO\ VR EXW E\ GHDWK RI WKH SUHVHQW RZQHU KLV SRVVHVVLRQV KRZHYHU ORQJ HQMR\HG
UHYHUWWRWKH.LQJDQGGRQRWIDOOWRWKHHOGHVWVRQ TXRWHGLQ3DQNKXUVWS 

$OYDUHVFODLPHGWKHUHZRXOGEHPXFKPRUHIUXLWDQGWLOODJHLIWKHJUHDWPHQGLGQRW
LOOWUHDWWKHSHRSOH$ODPHLGDVDFFRXQWRIKRZWKHVRFLHW\ZRUNHGLVYHU\FRQVLVWHQW
+HREVHUYHG
,WLVVRXVXDOIRUWKH(PSHURUWRH[FKDQJHDOWHUDQGWDNHDZD\WKHODQGVHDFKPDQKROGVHYHU\
WZRRUWKUHH\HDUVVRPHWLPHVHYHU\\HDUDQGHYHQPDQ\WLPHVLQWKHFRXUVHRID\HDUWKDWLW
FDXVHVQRVXUSULVH2IWHQRQHPDQSORZVWKHVRLODQRWKHUVRZVLWDQGDQRWKHUUHDSV+HQFH
LWDULVHVWKDWWKHUHLVQRRQHZKRWDNHVFDUHRIWKHODQGKHHQMR\VWKHUHLVQRWHYHQDQ\RQHWR
SODQWDWUHHEHFDXVHKHNQRZVWKDWKHZKRSODQWVLWYHU\UDUHO\JDWKHUVWKHIUXLW)RUWKH.LQJ


'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

Downloaded At: 20:07 21 September 2010

KRZHYHULWLVXVHIXOWKDWWKH\VKRXOGEHVRGHSHQGHQWXSRQKLP TXRWHGLQ3DQNKXUVW
SS

2WKHUDVSHFWVRIHFRQRPLFLQVWLWXWLRQVDOVRIROORZHGWKH(XURSHDQSDWWHUQRIDEVROXWLVP
IRULQVWDQFHLQWHUQDWLRQDOWUDGHLQFOXGLQJWKHOXFUDWLYHVODYHWUDGHZDVFRQWUROOHGE\
WKHPRQDUFK8QOLNH(XURSHDQDEVROXWLVPKRZHYHUWKDWLQ(WKLRSLDUHSURGXFHGLWVHOI
UHPDUNDEO\RYHUWLPH7KHUHZDVQR3DUOLDPHQWLQ(WKLRSLDXQWLODQGHYHQWKHQLW
KDGOLWWOHSRZHU7KHODVW(PSHURURI(WKLRSLD5DV7DIDULZDVFURZQHG+DLOH6HODVVLH
LQ$SDUWIURPWKHEULHISHULRGRI,WDOLDQFRORQL]DWLRQEHWZHHQDQG+DLOH
6HODVVLHUXOHGXQWLOKHZDVRYHUWKURZQLQDFRXSE\WKH'HUJWKHFRPPLWWHHD
JURXSRI0DU[LVWDUP\RIFHUV:KDWLVPRVWQRWDEOHIRURXUSXUSRVHVKHUHLVWKDWWKH
EDVLFH[WUDFWLYHHFRQRPLFLQVWLWXWLRQVRIWKHDEVROXWLVW(WKLRSLDQ(PSLUHVXFKDVJXOW
ODVWHGXQWLOWKH\ZHUHDEROLVKHGDIWHUWKHUHYROXWLRQ
7KH (WKLRSLDQ H[SHULHQFH VXJJHVWV D YHU\ LQWHUHVWLQJ PRGHO RI ORQJUXQ XQGHU
GHYHORSPHQW LQ $IULFD  \HDUV DJR QHLWKHU (XURSH QRW $IULFD KDG SROLWLFDO RU
HFRQRPLF LQVWLWXWLRQV RI D VRUW WKDW FRXOG FUHDWH SURVSHULW\ %XW (XURSH OHG E\ WKH
1HWKHUODQGVDQG%ULWDLQWUDQVLWLRQHGDZD\IURPWKHVHLQVWLWXWLRQVZKLOH$IULFDGLGQRW
$VWKHWKFHQWXU\KLVWRULDQRIWKH5LVHDQG'HFOLQHRIWKH5RPDQ(PSLUH(GZDUG
*LEERQQRWHG
(QFRPSDVVHGRQDOOVLGHVE\WKHHQHPLHVRIWKHLUUHOLJLRQWKH$HWKLRSLDQVVOHSWQHDUDWKRXVDQG
\HDUVIRUJHWIXORIWKHZRUOGE\ZKRPWKH\ZHUHIRUJRWWHQ

7KH(WKLRSLDQH[SHULHQFHLVWHOOLQJEXWQRWFRPSOHWHO\UHSUHVHQWDWLYHLQWKHVHQVHWKDW
WKH VWDWH DURVH HDUO\ DQG PDQDJHG WR FRQVROLGDWH LWVHOI LQ D ZD\ ZKLFK ZDV UDUH LQ
$IULFD(OVHZKHUHVWDWHVZHUHPXFKOHVVVWDEOH%XWWKLVLVHQWLUHO\ZKDW\RXZRXOG
H[SHFWZLWKDEVROXWLVWLQVWLWXWLRQV7KHVHFUHDWHDORWRIUHQWVDWWKHFHQWHUIRUUXOHUVDQG
HOLWHVDQGWKLVFUHDWHVFRQLFWVRYHUWKHVHUHQWVFRQLFWVZKLFKFDQGHVWUR\WKHVWDWHDV
KDVEHHQEULOOLDQWO\GRFXPHQWHGIRUWKH.RQJRE\7KRUQWRQ  



6/$9(5<$1',167,787,21$/3(56,67(1&(

1RWRQO\GRHV$IULFDVHHPWRKDYHODJJHGLQWHUPVRIVWDWHIRUPDWLRQDQGRQFHWKLV
KDGKDSSHQHGWRKDYHKDGIDUPRUHHQGXULQJDEVROXWLVWVWUXFWXUHVWKDQ(XUDVLDLQWKH
(DUO\0RGHUQSHULRGLWZDVKLWE\DYHU\SHUYHUVHVKRFNLQWKHWDNHRIIRIWKH$WODQWLF
VODYH WUDGH 6ODYHU\ KDV EHHQ HQGHPLF LQ ZRUOG KLVWRU\ ,Q$QFLHQW$WKHQV SRVVLEO\
RIWKHDGXOWSRSXODWLRQZHUHVODYHV 0RUULVDQG3RZHOO LQWKHODWH5RPDQ
(PSLUH PD\EH  +DUULV   DQG DFFRUGLQJ WR WKH 'RRPVGD\ %RRN RI 
DURXQGRIWKHDGXOWSRSXODWLRQRI(QJODQGZHUHVODYHV (QJHUPDQ <HWDV
(QJHUPDQ  SRLQWVRXWDIWHU(XURSHDQVGLGQRWHQVODYHHDFKRWKHU:HGR
QRWKDYHUHOLDEOHGDWDRQWKHH[WHQWRIVODYHU\ZLWKLQ$IULFDSULRUWRWKHWKFHQWXU\
EXWZHNQRZWKDW$IULFDZDVORQJWKHVRXUFHRIVODYHVDQGWKDWWKHUHKDGEHHQDQDFWLYH
VODYHWUDGHDFURVVWKH6DKDUDDQGWRWKH3HUVLDQ*XOIDQG0LGGOH(DVWIRUDWOHDVW
\HDUVEHIRUHWKH$WODQWLFVODYHWUDGHWRRNRII7KH$WODQWLFWUDGHKRZHYHUVZDPSHG
LQLQWHQVLW\WKHVHRWKHUWUDGHVDQGWKLVH[SRUWWUDGHVHHPVWRKDYHJUHDWO\LQFUHDVHGWKH


Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

LPSRUWDQFHRIVODYHU\ZLWKLQ$IULFDLWVHOI,QWKHWKFHQWXU\SUREDEO\DERXW
VODYHVZHUHWUDGHGLQWKH$WODQWLF7KHVHFDPHPRVWO\IURP&HQWUDO$IULFDZLWKKHDY\
LQYROYHPHQW RI WKH .RQJR DQG WKH 3RUWXJXHVH EDVHG IXUWKHU VRXWK LQ /XDQGD QRZ
WKHFDSLWDORI$QJROD'XULQJWKLVWLPHWKHWUDQV6DKDUDQVODYHWUDGHZDVVWLOOODUJHU
ZLWKSUREDEO\DERXW$IULFDQVPRYLQJQRUWKDVVODYHV,QWKHWKFHQWXU\WKH
VLWXDWLRQUHYHUVHG$ERXW$IULFDQVZHUHVROGDVVODYHVLQWKH$WODQWLFWUDGH
WKHPDMRULW\QRZEHLQJVKLSSHGWRWKH$PHULFDV7KHQXPEHUVLQYROYHGLQWKH6DKDUDQ
WUDGHZDVUHODWLYHO\XQFKDQJHG7KHWKFHQWXU\VDZDQRWKHUGUDPDWLFLQFUHDVHZLWK
DERXWVODYHVEHLQJVKLSSHGDFURVVWKH$WODQWLFDQGPD\EHDFURVV
WKH6DKDUD$GGLQJXSRYHUSHULRGVDQGSDUWVRI$IULFDZHOORYHU$IULFDQV
ZHUHVKLSSHGRXWRIWKHFRQWLQHQWDVVODYHV VHH/RYHMR\7DEOH 
7KHDSSHDUDQFHRI(XURSHDQVDOODURXQGWKHFRDVWRI:HVWHUQDQG&HQWUDO$IULFD
HDJHU WR EX\ VODYHV KDG D ODUJH LPSDFW RQ$IULFDQ VRFLHWLHV 0RVW VODYHV WKDW ZHUH
VKLSSHGWRWKH$PHULFDVZHUHZDUFDSWLYHVVXEVHTXHQWO\WUDQVSRUWHGWRWKHFRDVW7KH
KXJHDPRXQWRIPRQH\WREHPDGHFDSWXULQJDQGVHOOLQJVODYHVOHGWRDQLQWHQVLFDWLRQ
RIZDUIDUHDFURVVWKHFRQWLQHQWIXHOOHGE\KXJHLPSRUWVRIJXQVDQGDPPXQLWLRQZKLFK
WKH (XURSHDQV H[FKDQJHG IRU VODYHV /RYHMR\  S   HVWLPDWHV WKDW E\ 
SUREDEO\  JXQV ZHUH EHLQJ LPSRUWHG HYHU\ \HDU MXVW DORQJ WKH:HVW$IULFDQ
FRDVWDQG,QLNRUL  FDOFXODWHGWKDWEHWZHHQDQGWKHHDUO\WKFHQWXU\WKH
%ULWLVKDORQHVROGEHWZHHQDQGJXQVD\HDU%HWZHHQDQG
WKH %ULWLVK VROG DQ H[WUDRUGLQDU\  WRQV RI JXQSRZGHU PDNLQJ DQ DYHUDJH RI
DERXWNLORJUDPVDQQXDOO\DORQJZLWKNLORJUDPVRIOHDGSHU\HDU VHH
/RYHMR\  S   )XUWKHU WR WKH VRXWK WKH WUDGH ZDV MXVW DV YLJRURXV$V WKH
'XWFK'LUHFWRU*HQHUDORI(OPLQD&DVWOHRQWKHFRDVWRIPRGHUQ*KDQDQRWHGLQ
7KHJUHDWTXDQWLW\RIJXQVDQGSRZGHUZKLFKWKH(XURSHDQVKDYHEURXJKWKDYHFDXVHGWHUULEOH
ZDUVEHWZHHQWKH.LQJVDQG3ULQFHVDQG&DERFHHUVRIWKHVHODQGVZKRPDGHWKHLUSULVRQHUVRI
ZDUVODYHVWKHVHVODYHVZHUHLPPHGLDWHO\ERXJKWXSE\(XURSHDQVDWVWHDGLO\LQFUHDVLQJSULFHV
ZKLFKLQLWVWXUQDQLPDWHVDJDLQDQGDJDLQWKHVHSHRSOHWRUHQHZWKHLUKRVWLOLWLHVDQGWKHLUKRSH
RIELJDQGHDV\SURWVPDNHVWKHPIRUJHWDOOODERXUXVLQJDOOVRUWVRISUHWH[WVWRDWWDFNHDFK
RWKHURUUHYLYLQJROGGLVSXWHV TXRWHGLQ5LFKDUGVS

$OOWKLVZDUIDUHFRQLFWDQGVODYLQJKDGDSHUYHUVHHIIHFWRQSROLWLFDODQGHFRQRPLF
LQVWLWXWLRQVLQ$IULFD VHH/DZIRUDVHPLQDOVWXG\WKHZRUNRI/RYHMR\EURXJKW
WRJHWKHULQKLVERRNDQG,QLNRUL :LWKUHVSHFWWRHFRQRPLFLQVWLWXWLRQVWKH\
REYLRXVO\LQWHQVLHGVODYHU\ZKLFKZDVDOUHDG\DPDVVLYHVRXUFHRILQHIFLHQF\LQWKH
DOORFDWLRQRIUHVRXUFHV7KH\DOVRLQFUHDVHGWKHH[WHQWRIVKHHUODZOHVVQHVV$SDUWIURP
ZDUIDUHVODYHVZHUHDOVRNLGQDSSHGDQGFDSWXUHGE\VPDOOVFDOHUDLGLQJ7KHODZDOVR
EHFDPHDWRRORIHQVODYHPHQW1RPDWWHUZKDWFULPH\RXFRPPLWWHGWKHSHQDOW\ZDV
VODYHU\7KH(QJOLVKPHUFKDQW)UDQFLV0RRUHREVHUYHGWKHFRQVHTXHQFHVRIWKLVDORQJ
WKH6HQHJDPELDFRDVWRI:HVW$IULFDLQWKHV
6LQFHWKLVVODYHWUDGHKDVEHHQXVGDOOSXQLVKPHQWVDUHFKDQJHGLQWRVODYHU\WKHUHEHLQJDQ
DGYDQWDJHRQVXFKFRQGHPQDWLRQVWKH\VWUDLQIRUFULPHVYHU\KDUGLQRUGHUWRJHWWKHEHQHWRI
VHOOLQJWKHFULPLQDO1RWRQO\PXUGHUWKHIWDQGDGXOWHU\DUHSXQLVKHGE\VHOOLQJWKHFULPLQDOIRU
VODYHEXWHYHU\WULLQJFDVHLVSXQLVKHGLQWKHVDPHPDQQHU TXRWHGLQ/RYHMR\S


Downloaded At: 20:07 21 September 2010

'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

,QVWLWXWLRQV EHFDPH SHUYHUWHG E\ WKH GHVLUH WR FDSWXUH DQG VHOO VODYHV 7KLV HYHQ
H[WHQGHGWRUHOLJLRXVLQVWLWXWLRQV VHHWKHGLVFXVVLRQE\/RYHMR\SSRI
KRZWKHRUDFOHDW$UR&KXNZDLQHDVWHUQ1LJHULDZDVXVHGWRHQVODYHSHRSOH 7KRXJK
WKHPDLQLPSDFWRIWKHVODYHWUDGHZDVWRGLVWRUWLQVWLWXWLRQDOGHYHORSPHQWRI$IULFDQ
VRFLHWLHVLQVRPHSODFHVLWGLGOHDGWRWKHULVHRISRZHUIXOVWDWHV%XWWKHVHZHUHVWDWHV
ZKRVHPDLQUDLVRQGrWUHZDVUDLGLQJDQGVODYLQJ7KLVZDVWUXHRIWKH.LQJGRPRI
WKH .RQJR ZKLFK HPHUJHG LQ WKH WK FHQWXU\ DQG RWKHU VODYLQJ VWDWHV DURVH PRVW
SURPLQHQWO\ LQ :HVW $IULFD DQG LQFOXGHG 2\R LQ 1LJHULD 'DKRPH\ LQ %HQLQ DQG
VXEVHTXHQWO\$VDQWH LQ *KDQD 7KH H[SDQVLRQ RI WKH VWDWH RI 2\R LQ WKH PLGGOH RI
WKHWKFHQWXU\LVFHUWDLQO\UHODWHGWRWKHLQFUHDVHRIVODYHH[SRUWVRQWKHFRDVW VHH
/DZRQ2\RDQG'DKRPH\ ,QWKHSHULRGEHWZHHQDQGZKHQ2\R
HVWDEOLVKHGLWVPRQRSRO\LQWKHLQWHULRURIZKDWFDPHWREHNQRZQDVWKH6ODYH&RDVW
SUREDEO\WRSHUFHQWRIWKHVODYHVVROGRQWKHFRDVWZHUHWKHUHVXOWRILWVFRQTXHVWV
$ VLPLODU GUDPDWLF FRQQHFWLRQ EHWZHHQ ZDUIDUH DQG VODYH VXSSO\ FDPH IXUWKHU ZHVW
LQ WKH WK FHQWXU\ *ROG &RDVW WKH DUHD WKDW LV QRZ *KDQD$IWHU  WKH VWDWH
RI$VDQWHH[SDQGHGIURPWKHLQWHULRULQPXFKWKHVDPHZD\DV2\RKDGGRQH
\HDUVSUHYLRXVO\'XULQJWKHUVWKDOIRIWKHWKFHQWXU\WKLVH[SDQVLRQWULJJHUHGWKH
VRFDOOHG$NDQZDUVDV$VDQWHGHIHDWHGRQHLQGHSHQGHQWVWDWHDIWHUDQRWKHU7KHODVW
*\DPDQZDVFRQTXHUHGLQ7KHSUHSRQGHUDQFHRIWKHVODYHVH[SRUWHG
IURPWKH*ROG&RDVWEHWZHHQDQGZHUHFDSWLYHVWDNHQLQWKHVHZDUV /RYHMR\
S 
7KH PRVW REYLRXV LPSDFW RI WKLV PDVVLYH H[WUDFWLRQ RI KXPDQ EHLQJV ZDV
GHPRJUDSKLF,WLVGLIFXOWWRNQRZZLWKDQ\FHUWLWXGHZKDWWKHSRSXODWLRQRI$IULFD
ZDV EHIRUH WKH PRGHUQ SHULRG EXW VFKRODUV KDYH PDGH YDULRXV SODXVLEOH HVWLPDWHV
RI WKH LPSDFW RI WKH VODYH WUDGH RQ WKH SRSXODWLRQ 0DQQLQJ   HVWLPDWHV WKDW
WKH SRSXODWLRQ RI WKRVH DUHDV RI :HVW DQG :HVW&HQWUDO$IULFD WKDW SURYLGHG VODYHV
IRU H[SRUW ZDV DURXQG  PLOOLRQ LQ WKH HDUO\ WK FHQWXU\ 2Q WKH FRQVHUYDWLYH
DVVXPSWLRQWKDWGXULQJWKHWKDQGHDUO\WKFHQWXULHVWKHVHDUHDVZRXOGH[SHULHQFH
D UDWH RI SRSXODWLRQ JURZWK RI DERXW KDOI D SHUFHQW D \HDU ZLWKRXW WKH VODYH WUDGH
0DQQLQJHVWLPDWHGWKDWWKHSRSXODWLRQRIWKLVUHJLRQRXJKWWRKDYHEHHQDWOHDVWDERXW
WRPLOOLRQLQ,QIDFWLWZDVDERXWRQHKDOIRIWKLV7KLVPDVVLYHGLIIHUHQFH
LVQRWRQO\EHFDXVHDERXWPLOOLRQSHRSOHZHUHH[SRUWHGDVVODYHVIURPWKLVUHJLRQ
EHWZHHQDQGEXWSUREDEO\PLOOLRQVZHUHOLNHO\NLOOHGE\FRQWLQXRXVLQWHUQDO
ZDUIDUHDLPHGDWFDSWXULQJVODYHV6ODYHU\DQGVODYHWUDGHLQ$IULFDIXUWKHUGLVUXSWHG
IDPLO\DQGPDUULDJHVWUXFWXUHVDQGPD\KDYHDOVRUHGXFHGIHUWLOLW\
7KH HQGLQJ RI WKH VODYH WUDGH E\ WKH %ULWLVK DIWHU  UHGXFHG WKH H[WHUQDO
GHPDQGIRUVODYHVIURP$IULFDEXWWKLVGLGQRWVLPSO\PRYH$IULFDEDFNWRZKHUHLW
KDGEHHQSULRUWRWKHWUDGH6WDWHVKDGVSHFLFLQYHVWPHQWVLQVODYLQJDQGVODYHU\KDG
DOPRVWFHUWDLQO\EHFRPHPRUHSUHYDOHQWLQ$IULFD,QWKHSODFHRIWKHVODYHWUDGHFDPH
OHJLWLPDWHFRPPHUFHDSKUDVHFRLQHGWRWKHH[SRUWIURP$IULFDRIQHZFRPPRGLWLHV
QRWWLHGWRWKHVODYHWUDGH7KHVHJRRGVLQFOXGHGSDOPRLODQGNHUQHOVSHDQXWVLYRU\
UXEEHUDQGJXPDUDELF7KH,QGXVWULDO5HYROXWLRQLQ(XURSHFUHDWHGQHZFRPPHUFLDO
RSSRUWXQLWLHVLQ$IULFDDIWHUDQGMXVWDV$IULFDQVRFLHWLHVKDGWDNHQDJJUHVVLYH
DGYDQWDJHRIWKHHFRQRPLFRSSRUWXQLWLHVSUHVHQWHGE\WKHVODYHWUDGHWKH\GLGWKHVDPH


Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

ZLWKWKHOHJLWLPDWHFRPPHUFH%XWWKH\GLGVRLQDSHFXOLDUFRQWH[WZKHUHVODYHU\KDG
EHFRPHDZD\RIOLIHEXWWKHH[WHUQDOGHPDQGIRUVODYHVKDGVXGGHQO\GULHGXS,QVWHDG
RIVHOOLQJWKHVODYHVWR(XURSHDQVPDQ\RIWKHPZHUHQRZSURWDEO\SXWWRZRUNLQ
$IULFDSURGXFLQJWKHQHZLWHPVRIOHJLWLPDWHFRPPHUFH
2QHRIWKHEHVWGRFXPHQWHGH[DPSOHVRIWKLVLVLQ$VDQWH $XVWLQ 
3ULRUWRWKH$VDQWH(PSLUHKDGEHHQKHDYLO\LQYROYHGLQWKHFDSWXULQJDQGH[SRUW
RIVODYHVEULQJLQJWKHPGRZQWRWKHFRDVWWREHVROGDWWKHJUHDWVODYLQJFDVWOHVRI&DSH
&RDVWDQG(OPLQD$IWHUZLWKWKLVRSWLRQFORVHGRIIWKH$VDQWHSROLWLFDOHOLWHUH
RUJDQL]HGWKHLUHFRQRP\6ODYLQJDQGVODYHU\GLGQRWHQG5DWKHUVODYHVZHUHVHWWOHGLQ
ODUJHSODQWDWLRQVLQLWLDOO\DURXQGWKHFDSLWDOFLW\RI.XPDVHEXWODWHUVSUHDGWKURXJKRXW
WKHHPSLUH FRUUHVSRQGLQJWRPRVWRIPRGHUQLQWHULRU*KDQD 7KH\ZHUHHPSOR\HGLQ
WKHSURGXFWLRQRIJROGDQGNRODQXWVIRUH[SRUWVEXWDOVRJUHZODUJHTXDQWLWLHVRIIRRG
DQGZHUHLQWHQVLYHO\XVHGDVSRUWHUVVLQFH$VDQWHGLGQRWXVHZKHHOHGWUDQVSRUWDWLRQ
)XUWKHUHDVWVLPLODUDGDSWDWLRQVWRRNSODFH,Q'DKRPH\IRUH[DPSOHWKH.LQJKDG
ODUJHSDOPRLOSODQWDWLRQVQHDUWKHFRDVWDOSRUWVRI:K\GDKDQG3RUWR1RYRDOOEDVHG
RQVODYHODERU
(YHQLIWKHWUDGHRXWVLGHRI$IULFDQLVKHGWKDWGLGQRWDOWHUPDQ\RIWKHSROLWLFDO
LQVWLWXWLRQVLWKDGZURXJKWLQWKHSUHYLRXVWZRFHQWXULHVDQGGLGQRWUHVWRUHLQFHQWLYHV
WR SURGXFH DQG LQYHVW LQ WKHVH VRFLHWLHV $V D UHVXOW RI WKHVH GHYHORSPHQWV UDWKHU
WKDQFRQWUDFWLQJWKHH[WHQWRIVODYHU\DSSHDUVWRKDYHH[SDQGHGLQ$IULFDWKURXJKRXW
WKHWKFHQWXU\7KRXJKDFFXUDWHJXUHVDUHKDUGWRFRPHE\DQXPEHURIH[LVWLQJ
DFFRXQWVZULWWHQE\WUDYHOOHUVDQGPHUFKDQWVGXULQJWKLVWLPHVXJJHVWWKDWLQWKH:HVW
$IULFDQNLQJGRPVRI$VDQWHRU'DKRPH\DQGLQWKH<RUXEDFLW\VWDWHVZHOORYHUKDOI
RIWKHSRSXODWLRQZHUHVODYHV /RYHMR\S 0RUHDFFXUDWHGDWDH[LVWIURP
HDUO\)UHQFKFRORQLDOUHFRUGVIRUWKH:HVWHUQ6XGDQDODUJHVZDWKHRI:HVWHUQ$IULFD
VWUHWFKLQJIURP6HQHJDOYLD0DOLDQG%XUNLQD)DVRWR1LJHUDQG&KDG,QWKLVUHJLRQ
SHUFHQWRIWKHSRSXODWLRQZHUHVODYHVLQ VHH/RYHMR\S -XVWDV
WKH HPHUJHQFH RI OHJLWLPDWH FRPPHUFH WKH DGYHQW RI IRUPDO FRORQL]DWLRQ DIWHU WKH
6FUDPEOH IRU$IULFD IDLOHG WR GHVWUR\ VODYHU\ LQ$IULFD7KRXJK D ODUJH DPRXQW RI
(XURSHDQSHQHWUDWLRQLQWR$IULFDZDVMXVWLHGRQWKHJURXQGVWKDWVODYHU\KDGWREH
FRPEDWWHG DQG DEROLVKHG WKH UHDOLW\ ZDV GLIIHUHQW ,Q PRVW SDUWV RI FRORQLDO$IULFD
VODYHU\FRQWLQXHGZHOOLQWRWKHWKFHQWXU\,Q6LHUUD/HRQHIRUH[DPSOHLWZDVRQO\
LQWKDWVODYHU\ZDVQDOO\DEROLVKHG *UDFH 7KHYHU\ODWHGDWHLVLQVSLWH
RIWKHIDFWWKDWWKHFDSLWDOFLW\RI)UHHWRZQKDGRULJLQDOO\EHHQHVWDEOLVKHGLQWKHODWH
WKFHQWXU\DVDKDYHQIRUVODYHVUHSDWULDWHGIURPWKH$PHULFDV,WWKHQEHFDPHDQ
LPSRUWDQWEDVHIRUWKH%ULWLVKDQWLVODYHU\VTXDGURQDQGDQHZKRPHIRUIUHHGVODYHV
UHVFXHGIURPVODYHVKLSVFDSWXUHGE\WKH%ULWLVKQDY\(YHQZLWKWKLVV\PEROLVPDQG
WKHSUHVHQFHRIWKHDQWLVODYHU\VTXDGURQLQ)UHHWRZQVODYHU\OLQJHUHGLQ6LHUUD/HRQH
IRU\HDUV7KHFRXQWU\RI/LEHULDMXVWVRXWKRI6LHUUD/HRQHZDVOLNHZLVHIRXQGHG
IRU IUHHG$PHULFDQ VODYHV LQ WKH V<HW WKHUH WRR VODYHU\ OLQJHUHG LQWR WKH WK
FHQWXU\DQGDVODWHDVWKHVLWZDVHVWLPDWHGWKDWRQHTXDUWHURIWKHODERUIRUFHZHUH
FRHUFHGOLYLQJDQGZRUNLQJLQFRQGLWLRQVFORVHWRVODYHU\ 'DOWRQ 



'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

Downloaded At: 20:07 21 September 2010



8
 1'(567$1',1*7(&+12/2*,&$/
%$&.:$5'1(66

)RUODUJHSDUWVRI:HVWHUQDQG&HQWUDO$IULFDWKHLQWHQVLHGVODYHWUDGHERWKGHVWUR\HG
VWDWHV DQG FUHDWHG RWKHUV ZKRVH UDLVRQ GHWUH ZDV VODYLQJ 6ODYLQJ OHG WR GLVWLQFW
GHWHULRUDWLRQLQHFRQRPLFLQVWLWXWLRQVLQ$IULFDDWSUHFLVHO\WKHWLPHZKHQLWZDVIDOOLQJ
YHU\VLJQLFDQWO\EHKLQGUDSLGO\LQGXVWULDOL]LQJ%ULWDLQDQG:HVWHUQ(XURSH VHH1XQQ
IRUHFRQRPHWULFHYLGHQFHRQWKHORQJUXQDGYHUVHLPSDFWRIWKHVODYHWUDGHRQ
$IULFD 
%XWHYHQSULRUWRWKH$WODQWLFVODYHWUDGHWHFKQRORJ\ZDVEDFNZDUGLQ$IULFD7KRXJK
ZKHHOHGWUDQVSRUWDWLRQZDVQRWXVHGLWZDVFHUWDLQO\NQRZQDERXWDQGXQGHUVWRRG/DZ
 GRFXPHQWVPDQ\FDVHVZKHUH(XURSHDQVJDYHJLIWVRIZKHHOHGWUDQVSRUWDWLRQ
WRGLIIHUHQW$IULFDQNLQJVDQGZKHHOHGFDUULDJHVZHUHLQXVHLQ'DKRPH\IURPDWOHDVW
WKHWKFHQWXU\DQGZHUHHYHQSURGXFHGWKHUH1HYHUWKHOHVVZKHHOHGYHKLFOHVGLGQRW
VSUHDGRXWRIFHUHPRQLDOXVHVZLWKWKHH[FHSWLRQRIDVPDOODPRXQWRIPLOLWDU\XVH
7KH.LQJGRPRIWKH.RQJRDWWKHPRXWKRIWKH&RQJR5LYHULQWKHPRGHUQ'HPRFUDWLF
5HSXEOLFRIWKH&RQJRFDPHLQWRLQWHQVHFRQWDFWZLWKWKH3RUWXJXHVHIURPWKHODWHWK
FHQWXU\RQZDUGV7KH.RQJROHVHNQHZDERXWWKHSORZDQGWKH3RUWXJXHVHZLWKWKH
EOHVVLQJRIWKH.LQJRIWKH.RQJRHYHQHQFRXUDJHGWKHLUDGRSWLRQZLWKDJULFXOWXUDO
PLVVLRQVLQDQG%XWDOOWKHVHLQLWLDWLYHVIDLOHG:K\"&OHDUO\WKH.RQJROHVH
ZHUHIDUIURPDYHUVHWR:HVWHUQWHFKQRORJLHV/LNHWKH/HOHWKH\ZHUHYHU\TXLFNWR
DGRSWUHDUPVZKLFKWKH\XVHGWRFDSWXUHVODYHVDQGVHOOWKHPWRWKH(XURSHDQV
([LVWLQJ YHU\ VSDUVH KLVWRULRJUDSK\ RQ WKHVH WHFKQRORJLFDO SX]]OHV VHH$XVWHQ
DQG+HDGULFN HPSKDVL]HVWKDWWKHQRQDGRSWLRQRIDSSDUHQWO\KLJKO\SURGXFWLYH
WHFKQRORJLHVVWHPVIURPWKHIDFWWKDWWKHVHWHFKQRORJLHVZHUHQRWUHDOO\DSSURSULDWH
WRWKH$IULFDQFRQWH[W $FHPRJOXDQG=LOLERWWLIRUDWKHRUHWLFDOGLVFXVVLRQRI
WKLVLVVXH )RUWKHZKHHOWKLVDUJXPHQWGDWHVWR0F3KHH  ZKRDUJXHGWKDWWKH
DEVHQFHRIGUDXJKWDQLPDOVLQWKHWVHWVH\]RQHPHDQWWKDWZKHHOHGWUDQVSRUWDWLRQ
ZDVXQHFRQRPLFDODQGWKLVDUJXPHQWFDQEHH[WHQGHGWRWKHSORZDOVR,WLVDOVRDUJXHG
WKDW$IULFDQ VRLOV DUH QRW VXLWDEOH IRU WKH SORZ WKRXJK HYHQ DGYRFDWHV RI WKLV YLHZ
DUJXHWKDWLWRQO\DSSOLHVWR:HVW$IULFDDQGSDUWVRIWKH6DKHO+RSNLQV  DOVR
DUJXHGLQWKH:HVW$IULFDQFDVHWKDWLWZDVQRWHFRQRPLFDOWREXLOGURDGVEHFDXVHRIWKH
IRUHVWDQGZLWKRXWURDGVZKHHOHGWUDQVSRUWDWLRQZDVQRWYLDEOH
7KHUH DUH PDQ\ SUREOHPV ZLWK WKHVH DUJXPHQWV KRZHYHU ([LVWLQJ HVWLPDWHV LQ
WKH HDUO\ FRORQLDO SHULRG WKRXJK WKH\ PXVW EH WUHDWHG ZLWK FDXWLRQ LQ IDFW VXJJHVW
WKDW ZKHHOHG WUDQVSRUWDWLRQ ZDV PXFK FKHDSHU WKDQ KXPDQ SRUWHUDJH *RXOG 
S   IRU LQVWDQFH XVHV YDULRXV VRXUFHV WR PDNH FDOFXODWLRQV DERXW WKH FRVW SHU WRQ
PLOH RI GLIIHUHQW IRUPV RI WUDQVSRUWDWLRQ 8VLQJ D KDQG FDUW FRVWV DERXW RQH KDOI RI
KHDGSRUWHUDJHDQGXVLQJDUDLOZD\DERXW 6HHDOVR/XJDUGSS 
7KHIDFWWKDWKXPDQSRUWHUDJHZDVYHU\FRVWO\LVQRWYHU\VXUSULVLQJJLYHQWKDWLWLV
WKHFRQYHQWLRQDOZLVGRPWKDWODERUZDVYHU\VFDUFHLQ$IULFDDQGZDJHVZHUHKLJK
7KHDUJXPHQWWKDWLWZDVWRRFRVWO\WRFXWGRZQWKHIRUHVWDOVRKDVSUREOHPV)RURQH
DV:LONV  VKRZVWKH$VDQWH(PSLUHEXLOWDQH[WHQVLYHV\VWHPRIURDGVRITXLWH
GHFHQWTXDOLW\WKURXJKWKHIRUHVW]RQHRI*KDQD+RZHYHUWKH\GLGQRWXVHZKHHOHG


Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

WUDQVSRUWDWLRQ$OVRDV*RXOGVFDOFXODWLRQVDQGGLVFXVVLRQVKRZRQHFRXOGXVHKDQG
FDUWVWRWUDQVSRUWJRRGVIRUZKLFKRQO\UXGLPHQWDU\URDGVZRXOGKDYHEHHQQHFHVVDU\
7KRXJKZHWKHUHIRUHODFNVDWLVIDFWRU\DQVZHUVWRWKHVHSX]]OHVDERXWWHFKQRORJ\
DGRSWLRQ VRPH KLQWV FDQ EH GUDZQ DERXW ZK\ .RQJROHVH IDUPHUV PLJKW KDYH EHHQ
UHOXFWDQW WR DGRSW EHWWHU WHFKQRORJ\ 7KH .RQJR ZDV JRYHUQHG E\ D .LQJ LQ 6mR
6DOYDGRU DQG DQ HOLWH ZKR SOD\HG WKH UROHV RI JRYHUQRUV RI GLIIHUHQW SDUWV RI WKH
NLQJGRP7KHDEVROXWLVWLQVWLWXWLRQVRIWKH.RQJRZHUHVXSSRUWHGE\WKHDUP\ZKLFK
NHSWWKLVV\VWHPLQSODFH7KH.LQJKDGDVWDQGLQJDUP\RIWURRSVLQWKHPLG
WK FHQWXU\ ZLWK D FRUH RI  PXVNHWHHUV 7KH ZHDOWK RI WKLV HOLWH ZDV EDVHG RQ
VODYHSODQWDWLRQVDURXQG6mR6DOYDGRUDQGWKHH[WUDFWLRQRIWD[HVIURPWKHUHVWRIWKH
FRXQWU\&HQWUDOWRWKHHFRQRP\ZDVVODYLQJ7KLVZDVSUDFWLFHGE\WKHHOLWHERWKWR
VXSSO\ WKHLU RZQ SODQWDWLRQV DQG DOVR WR VXSSO\ (XURSHDQV DW WKH FRDVW7D[HV ZHUH
DUELWUDU\DQGRQHZDVHYHQFROOHFWHGHYHU\WLPHWKH.LQJVEHUHWIHOORII 7KRUQWRQ
 S   ,QVWHDG RI LQYHVWLQJ WR LQFUHDVH WKHLU SURGXFWLYLW\ DQG WU\LQJ WR DFFHVV
WKHPDUNHWZLWKWKHLUSURGXFWVWKH.RQJROHVHPRYHGWKHLUYLOODJHVDVIDUDZD\IURP
WKHURDGVDVSRVVLEOHLQRUGHUWRUHGXFHWKHLQFLGHQFHRISOXQGHUDQGHVFDSHWKHUHDFK
RIVODYHWUDGHUV 7KRUQWRQS ,WLVFOHDUIURPH[LVWLQJKLVWRULFDODFFRXQWV
WKDW SURSHUW\ DQG KXPDQ ULJKWV ZHUH KLJKO\ LQVHFXUH LQ WKH .RQJR WKXV FRPSOHWHO\
XQGHUPLQLQJ WKH LQFHQWLYH RI DQ\RQH WR DGRSW EHWWHU WHFKQRORJLHV H[FHSW UHDUPV 
7KH SUREOHPV RI WHFKQRORJ\ DGRSWLRQ LQ WKH .RQJR RI WKH WK DQG WK FHQWXULHV
WKHUHIRUHVHHPUDWKHUVLPLODUWRWKRVHZKLFKIDFHGWKHFLWL]HQVRIWKH&RQJRGXULQJWKH
UHLJQRI.LQJ/HRSROGDQGWKH%HOJLDQFRORQLDOVWDWHDQGLQGHHGWKHFLWL]HQVRI=DLUH
GXULQJWKHORQJUHLJQRI-RVHSK0REXWXLQWKHWKFHQWXU\



7+(,03$&72)(8523($1&2/21,$/,60

7KHFRORQL]DWLRQRI$IULFDWKDWWRRNSODFHLQWKHWKFHQWXU\IXUWKHUUHLQIRUFHG$IULFDV
SDWKRILQVWLWXWLRQV,WGLGWKLVLQVHYHUDOZD\V(YHQZKHUH(XURSHDQUXOHGLGQRWLQYROYH
WKHW\SHRISOXQGHUDQGORVVRIOLIHWKDWLWGLGLQWKH&RQJRLWEORFNHGDQ\SRVVLELOLW\
RIHQGRJHQRXVLQVWLWXWLRQDOUHIRUPVDORQJWKHOLQHVWKDW-DSDQLPSOHPHQWHGWRFKDQJH
LWVGHYHORSPHQWSDWK$QLQWHUHVWLQJFRPSDULVRQKHUHLVZLWK/DWLQ$PHULFD7KRXJK
/DWLQ$PHULFD VXIIHUHG D KLJKO\ H[WUDFWLYH IRUP RI FRORQL]DWLRQ E\ WKH 6SDQLVK DQG
3RUWXJXHVHLWZDVDWOHDVWLQGHSHQGHQWDIWHU7KLVGLGDOORZLWWRLPSOHPHQWPDQ\
LQVWLWXWLRQDOUHIRUPVLQWKHODWHWKFHQWXU\ VHH'\H 7KRXJKWKLVKDSSHQHG
LQ D YHU\ SDWK GHSHQGHQW ZD\ JXDUDQWHHLQJ WKDW /DWLQ$PHULFD GLG QRW FRQYHUJH WR
WKHOLYLQJVWDQGDUGVRI1RUWK$PHULFDRU:HVWHUQ(XURSH LQ WKHWK FHQWXU\ LWGLG
HQVXUHWKDW/DWLQ$PHULFDQFRXQWULHVDUHPXFKPRUHSURVSHURXVWKDQ$IULFDWRGD\%XW
WKHVLWXDWLRQLQ$IULFDZDVZRUVHWKDQVLPSO\VWLLQJFKDQJHEHFDXVHLQPDQ\FDVHVLW
OHGWRHFRQRPLFUHRUJDQL]DWLRQZKLFKPDGHWKHSRWHQWLDOIRUHFRQRPLFJURZWKZRUVH
DIWHULQGHSHQGHQFHWKDQLWKDGEHHQEHIRUHFRORQLDOLVPWRRNSODFH7KLVLVSDUWLFXODUO\
HYLGHQWLQ6RXWKHUQ$IULFDZKHUH'XDO(FRQRPLHVZHUHFUHDWHG 3DOPHUDQG3DUVRQV
DQG%XQG\IRUVHPLQDODQDO\VHV 7KHGXDOHFRQRP\H[DPSOHVKRZVWKDW
MXVWDVLPSRUWDQWDVWKHIRUFHVZKLFKLQXHQFHGHFRQRPLFJURZWKGXULQJFRORQL]DWLRQ
ZHUHWKHRQHVWKDWVKDSHGZKDWKDSSHQHGDIWHUFRORQLDOUXOH


'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

Downloaded At: 20:07 21 September 2010

 0DNLQJD'XDO(FRQRP\
7KH 'XDO (FRQRP\ SDUDGLJP RULJLQDOO\ SURSRVHG E\ /HZLV   VWLOO VKDSHV
WKHZD\WKDWPDQ\HFRQRPLVWVWKLQNDERXWWKHHFRQRPLFSUREOHPVRIOHVVGHYHORSHG
FRXQWULHV $FFRUGLQJ WR /HZLV PDQ\ OHVVGHYHORSHG RU XQGHUGHYHORSHG HFRQRPLHV
KDYH D GXDO VWUXFWXUH DQG DUH GLYLGHG LQWR D PRGHUQ VHFWRU DQG D WUDGLWLRQDO VHFWRU
7KHPRGHUQVHFWRUZKLFKFRUUHVSRQGVWRWKHPRUHGHYHORSHGSDUWRIWKHHFRQRP\LV
DVVRFLDWHGZLWKXUEDQOLIHPRGHUQLQGXVWU\DQGWKHXVHRIDGYDQFHGWHFKQRORJLHV7KH
WUDGLWLRQDOVHFWRULVDVVRFLDWHGZLWKUXUDOOLIHDJULFXOWXUHDQGEDFNZDUGLQVWLWXWLRQV
DQGWHFKQRORJLHV%DFNZDUGDJULFXOWXUDOLQVWLWXWLRQVLQFOXGHWKHFRPPXQDORZQHUVKLS
RIODQGZKLFKLPSOLHVDEVHQFHRISULYDWHSURSHUW\ ULJKWV RQ ODQG /RZ SURGXFWLYLW\
LQWKHWUDGLWLRQDOVHFWRUUHVXOWVEHFDXVHZRUNHUVWKHUHDUHDOVRXVHGYHU\LQHIFLHQWO\
WR VXFK DQ H[WHQW WKDW /HZLV WKRXJKW WKH\ PLJKW EH FRPSOHWHO\ XQSURGXFWLYH )RU
JHQHUDWLRQVRIGHYHORSPHQWHFRQRPLVWVEXLOGLQJRQ/HZLVVLQVLJKWVWKHSUREOHPRI
GHYHORSPHQW KDV FRPH WR PHDQ PRYLQJ SHRSOH DQG UHVRXUFHV RXW RI WKH WUDGLWLRQDO
VHFWRUDJULFXOWXUHDQGWKHFRXQWU\VLGHLQWRWKHPRGHUQVHFWRULQGXVWU\DQGFLWLHV
/HZLVDQGWKHGHYHORSPHQWHFRQRPLVWVEXLOGLQJRQKLVZRUNZHUHFHUWDLQO\ULJKW
LQ LGHQWLI\LQJ GXDO HFRQRPLHV DURXQG WKHP 6RXWK $IULFD ZDV RQH RI WKH FOHDUHVW
H[DPSOHV VHSDUDWHG EHWZHHQ D WUDGLWLRQDO EDFNZDUG DQG SRRU SDUW DQG D PRGHUQ
YLEUDQWDQGSURVSHURXVSDUW(YHQWRGD\WKHGXDOHFRQRP\IHDWXUHVRIWKHVRUW/HZLV
LGHQWLHGDUHHYHU\ZKHUHLQ6RXWK$IULFD7DNHIRUH[DPSOHWKHFRQWUDVWLQ6RXWK$IULFD
EHWZHHQ1DWDODQGWKH7UDQVNHLVHSDUDWHGRQO\E\WKH*UHDW.HLULYHU,Q1DWDOZHKDYH
SULYDWHSURSHUW\ULJKWVIXQFWLRQLQJOHJDOV\VWHPVPDUNHWVFRPPHUFLDODJULFXOWXUHDQG
LQGXVWU\ 7KH 7UDQVNHL KDG FRPPXQDO SURSHUW\ LQ ODQG DQG DOO SRZHUIXO WUDGLWLRQDO
FKLHIVXQWLOUHFHQWO\/RRNHGDWLWWKURXJKWKHOHQVHVRI/HZLVVWKHRU\RIGXDOHFRQRP\
WKHFRQWUDVWRIWKH7UDQVNHLDQG1DWDOLOOXVWUDWHWKHSUREOHPVRI$IULFDQGHYHORSPHQW
(FRQRPLFGHYHORSPHQWLVWKHQMXVWDERXWHQVXULQJWKDWWKH7UDQVNHLHYHQWXDOO\WXUQV
LQWR1DWDO
%XWWKHEDFNZDUGQHVVRIWKH7UDQVNHLLVQRWMXVWDKLVWRULFUHPQDQWRIWKHQDWXUDO
EDFNZDUGQHVVRI$IULFD,WZDVFUHDWHGE\WKH6RXWK$IULFDQZKLWHHOLWHVLQRUGHUWR
FUHDWHDUHVHUYRLURIFKHDSODERUIRUWKHLUEXVLQHVVHVDQGUHGXFHFRPSHWLWLRQIURPEODFN
$IULFDQV,WLVDQH[DPSOHRIXQGHUGHYHORSPHQWFUHDWHGQRWRIXQGHUGHYHORSPHQWDV
LWQDWXUDOO\HPHUJHGDQGSHUVLVWHGRYHUFHQWXULHV VHH$FHPRJOXDQG5RELQVRQ
&KDSWHUIRUPRUHH[DPSOHV 
7KH GHYHORSPHQW RI WKH (XURSHDQ HFRQRP\ LQ WKH LQWHULRU RI 6RXWK $IULFD
SDUWLFXODUO\ DIWHU WKH GLVFRYHU\ RI GLDPRQGV LQ .LPEHUO\ LQ  DQG RI JROG LQ
-RKDQQHVEXUJ LQ  FUHDWHG GHPDQG IRU IRRG DQG RWKHU DJULFXOWXUDO SURGXFWV DQG
FUHDWHGQHZHFRQRPLFRSSRUWXQLWLHVERWKLQDJULFXOWXUHDQGWUDGHIRUQDWLYH$IULFDQV
7KH;KRVDLQWKH&LVNHLDQG7UDQVNHLUHDFWHGTXLFNO\
7KH&LYLO&RPPLVVLRQHU-RKQ+HPPLQJVGHVFULSWLRQRIKLVYLVLWWR)LQJRODQGLQ
WKH&LVNHLLQLVUHYHDOLQJ+HZURWHWKDWKHZDV
VWUXFNZLWKWKHYHU\JUHDWDGYDQFHPHQWPDGHE\WKH)LQJRHVLQDIHZ\HDUV:KHUHYHU,ZHQW
,IRXQGVXEVWDQWLDOKXWVDQGEULFNRUVWRQHWHQHPHQWV,QPDQ\FDVHVVXEVWDQWLDOEULFNKRXVHV
KDGEHHQHUHFWHGDQGIUXLWWUHHVKDGEHHQSODQWHGZKHUHYHUDVWUHDPRIZDWHUFRXOGEHPDGH


:K\LV$IULFD3RRU"
DYDLODEOHLWKDGEHHQOHGRXWDQGWKHVRLOFXOWLYDWHGDVIDUDVLWFRXOGEHLUULJDWHGWKHVORSHVRI
WKHKLOOVDQGHYHQWKHVXPPLWVRIWKHPRXQWDLQVZHUHFXOWLYDWHGZKHUHYHUDSORXJKFRXOGEH
LQWURGXFHG7KHH[WHQWRIWKHODQGWXUQHGRYHUVXUSULVHGPH,KDYHQRWVHHQVXFKDODUJHDUHDRI
FXOWLYDWHGODQGIRU\HDUV TXRWHGLQ%XQG\S 

$VLQRWKHUSDUWVRI6XE6DKDUDQ$IULFDWKHXVHRIWKHSORZZDVQHZLQDJULFXOWXUHEXW
ZKHQJLYHQWKHRSSRUWXQLW\$IULFDQIDUPHUVVHHPHGWRKDYHEHHQTXLWHUHDG\WRDGRSW
WKHWHFKQRORJ\7KH\ZHUHDOVRSUHSDUHGWRLQYHVWLQZDJRQVDQGLUULJDWLRQZRUNV VHH
%XQG\S 
$VWKHDJULFXOWXUDOHFRQRP\GHYHORSHGWKHULJLGWULEDOLQVWLWXWLRQVVWDUWHGWRJLYH
ZD\7KHUHLVDJUHDWGHDORIHYLGHQFHWKDWFKDQJHVLQSURSHUW\ULJKWVWRODQGWRRNSODFH
,QWKHPDJLVWUDWHLQ8P]LPNXOXRI*ULTXDODQG(DVWLQWKH7UDQVNHLQRWHG

Downloaded At: 20:07 21 September 2010

WKHJURZLQJGHVLUHRIWKHSDUWRIQDWLYHVWREHFRPHSURSULHWRUVRIODQGWKH\KDYHSXUFKDVHG
DFUHV TXRWHGLQ%XQG\S 

7KUHH \HDUV ODWHU KH UHFRUGHG WKDW DURXQG $IULFDQ IDUPHUV LQ WKH GLVWULFW KDG
ERXJKWDQGVWDUWHGWRZRUNRQDFUHVRIODQG
3ULYDWH SURSHUW\ LQ ODQG KDG ZHDNHQHG WKH FKLHIV DQG HQDEOHG QHZ PHQ WR EX\
ODQGDQGPDNHWKHLUZHDOWK7KLVQHZHFRQRPLFG\QDPLVPQRWVXUSULVLQJO\GLGQRW
SOHDVHWKHWUDGLWLRQDOFKLHIVZKRVDZWKLVDVHURGLQJWKHLUZHDOWKDQGSRZHU&KLHIV
DOVRUHVLVWHGLPSURYHPHQWVPDGHRQWKHODQGVVXFKDVWKHGLJJLQJRILUULJDWLRQGLWFKHV
RUWKHEXLOGLQJRIIHQFHV7KH\UHFRJQL]HGWKDWWKHVHLPSURYHPHQWVZHUHMXVWDSUHOXGH
WRLQGLYLGXDOSURSHUW\ULJKWVWRWKHODQGWKHEHJLQQLQJRIWKHHQGIRUWKHP(XURSHDQ
REVHUYHUVHYHQQRWHGWKDWFKLHIVDQGRWKHUWUDGLWLRQDODXWKRULWLHVVXFKDVZLWFKGRFWRUV
DWWHPSWHG WR SURKLELW DOO (XURSHDQ ZD\V ZKLFK LQFOXGHG QHZ FURSV WRROV VXFK DV
SORZVDQGLWHPVRIWUDGH %XQG\S %XWWKHLQWHJUDWLRQRIWKH&LVNHLDQG
WKH7UDQVNHLLQWRWKH%ULWLVKFRORQLDOVWDWHZHDNHQHGWKHSRZHURIWKHWUDGLWLRQDOFKLHIV
DQGDXWKRULWLHVDQGWKHLUUHVLVWDQFHZRXOGQRWEHHQRXJKWRVWRSWKHQHZHFRQRPLF
G\QDPLVPLQ6RXWK$IULFD,Q)LQJRODQGLQD(XURSHDQREVHUYHUQRWHGWKDWWKH
SHRSOHKDG
WUDQVIHUUHGWKHLUDOOHJLDQFHWRXV7KHLUFKLHIVKDYHEHHQFKDQJHGWRDVRUWRIWLWOHGODQGRZQHU
ZLWKRXWSROLWLFDOSRZHU1RORQJHUDIUDLGRIWKHMHDORXV\RIWKHFKLHIRURIWKHGHDGO\ZHDSRQ
 WKH ZLWFKGRFWRU ZKLFK VWULNHV GRZQ WKH ZHDOWK\ FDWWOH RZQHU WKH DEOH FRXQVHOORU WKH
LQWURGXFWLRQRIQRYHOFXVWRPVWKHVNLOIXODJULFXOWXUDOLVWUHGXFLQJWKHPDOOWRWKHXQLIRUPOHYHO
RIPHGLRFULW\QRORQJHUDSSUHKHQVLYHRIWKLVWKH)LQJRFODQVPDQLVDSURJUHVVLYHPDQ
6WLOOUHPDLQLQJDSHDVDQWIDUPHUKHRZQVZDJRQVDQGSORXJKVKHRSHQVZDWHUIXUURXJKVIRU
LUULJDWLRQKHLVWKHRZQHURIDRFNRIVKHHS TXRWHGLQ%XQG\SS 

%HWZHHQDQGWKLV$IULFDQHFRQRPLFERRPZRXOGFRPHWRDQHQGDQGJR
LQWRUHYHUVH'XULQJWKLVSHULRGWZRIRUFHVZRUNHGWRGHVWUR\WKHUXUDOSURVSHULW\DQG
G\QDPLVPWKDW$IULFDQVKDGFUHDWHGLQWKHSUHYLRXV\HDUV7KHUVWZDVDQWDJRQLVP
E\(XURSHDQVIDUPHUVZKRZHUHFRPSHWLQJZLWK$IULFDQV6XFFHVVIXO$IULFDQIDUPHUV
GURYHGRZQWKHSULFHRIFURSVWKDW(XURSHDQVDOVRSURGXFHG7KHUHVSRQVHRI(XURSHDQV
ZDV WR GULYH WKH$IULFDQV RXW RI EXVLQHVV7KH VHFRQG IRUFH ZDV WKDW WKH (XURSHDQV
ZDQWHG D FKHDS ODERU IRUFH WR HPSOR\ LQ WKH EXUJHRQLQJ PLQLQJ HFRQRP\ DQG WKH\


'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

FRXOG RQO\ HQVXUH WKLV FKHDS VXSSO\ E\ LPSRYHULVKLQJ WKH $IULFDQV 7KLV WKH\ GLG
PHWKRGLFDOO\LQWKHQH[WVHYHUDOGHFDGHV
7KHWHVWLPRQ\RI*HRUJH$OEXWKHFKDLUPDQRIWKH$VVRFLDWLRQRI0LQHV
JLYHQWRD&RPPLVVLRQRI,QTXLU\SLWKLO\GHVFULEHVWKHORJLFRILPSRYHULVKLQJ$IULFDQV
VRDVWRREWDLQFKHDSODERU+HH[SODLQHGKRZKHSURSRVHGWRFKHDSHQODERUE\VLPSO\
WHOOLQJWKHER\VWKDWWKHLUZDJHVDUHUHGXFHG+LVWHVWLPRQ\JRHVDVIROORZV
&RPPLVVLRQ6XSSRVHWKHNDIUV>EODFN$IULFDQV@UHWLUHEDFNWRWKHLUNUDDO>FDWWOHSHQ@":RXOG
\RXEHLQIDYRURIDVNLQJWKH*RYHUQPHQWWRHQIRUFHODERXU"
$OEX&HUWDLQO\,ZRXOGPDNHLWFRPSXOVRU\:K\VKRXOGDQLJJHUEHDOORZHGWRGRQRWKLQJ"
,WKLQNDNDIUVKRXOGEHFRPSHOOHGWRZRUNLQRUGHUWRHDUQKLVOLYLQJ
&RPPLVVLRQ,IDPDQFDQOLYHZLWKRXWZRUNKRZFDQ\RXIRUFHKLPWRZRUN"
$OEX7D[KLPWKHQ

Downloaded At: 20:07 21 September 2010

&RPPLVVLRQ7KHQ\RXZRXOGQRWDOORZWKHNDIUWRKROGODQGLQWKHFRXQWU\EXWKHPXVWZRUN
IRUWKHZKLWHPDQWRHQULFKKLP"
$OEX+HPXVWGRKLVSDUWRIWKHZRUNRIKHOSLQJKLVQHLJKERXUV
TXRWHGLQ)HLQVWHLQS

%RWKRIWKHJRDOVRIUHPRYLQJFRPSHWLWLRQZLWKZKLWHIDUPHUVDQGGHYHORSLQJDODUJH
ORZZDJHODERUIRUFHZHUHVLPXOWDQHRXVO\DFFRPSOLVKHGE\WKH1DWLYH/DQG$FWRI
 7KH $FW DQWLFLSDWLQJ /HZLVV QRWLRQ RI GXDO HFRQRP\ GLYLGHG 6RXWK $IULFD
LQWRWZRSDUWVDPRGHUQSURVSHURXVSDUWDQGDWUDGLWLRQDOSRRUSDUW([FHSWWKDWWKH
SURVSHULW\DQGSRYHUW\ZHUHDFWXDOO\EHLQJFUHDWHGE\WKH$FWLWVHOI,WVWDWHGWKDW
SHUFHQWRIWKHODQGZDVWREHJLYHQWRWKH(XURSHDQVZKRUHSUHVHQWHGDERXWSHUFHQW
RIWKHSRSXODWLRQ7KHUHPDLQLQJSHUFHQWZDVWRJRWRWKH$IULFDQV7KH/DQG$FW
KDG PDQ\ SUHGHFHVVRUV RI FRXUVH EHFDXVH JUDGXDOO\ (XURSHDQV KDG EHHQ FRQQLQJ
$IULFDQVRQWRVPDOOHUDQGVPDOOHUUHVHUYHV%XWLWZDVWKH$FWRIWKDWGHQLWLYHO\
LQVWLWXWLRQDOL]HGWKHVLWXDWLRQDQGVHWWKHVWDJHIRUWKHIRUPDWLRQRIWKH6RXWK$IULFDQ
$SDUWKHLGUHJLPH7KH$FWVSHFLHGWKDWVHYHUDOODQGUHVHUYHVLQFOXGLQJWKH7UDQVNHL
DQGWKH&LVNHLZHUHWREHFRPHWKH$IULFDQ+RPHODQGV/DWHUWKHVHZRXOGEHFRPH
NQRZQDVWKH%DQWXVWDQVDQRWKHUSDUWRIWKHUKHWRULFRIWKH$SDUWKHLGUHJLPHLQ6RXWK
$IULFDVLQFHLWFODLPHGWKDWWKH$IULFDQSHRSOHVRI6RXWKHUQ$IULFDZHUHQRWQDWLYHVRI
WKHDUHDEXWZHUHGHVFHQGHGIURPWKH%DQWXSHRSOHZKRKDGPLJUDWHGRXWRI(DVWHUQ
1LJHULDDERXW\HDUVDJR7KH\WKXVKDGQRPRUHDQGRIFRXUVHLQSUDFWLFHOHVV
HQWLWOHPHQWWRWKHODQGWKDQWKH$IULNDQHUVHWWOHUV
7KH GXDO HFRQRP\ ZDV QRW QDWXUDO RU LQHYLWDEOH ,W ZDV FUHDWHG E\ (XURSHDQ
FRORQLDOLVP <HV WKH +RPHODQGV ZHUH SRRU DQG WHFKQRORJLFDOO\ EDFNZDUG DQG WKH
SHRSOHZHUHXQHGXFDWHG%XWDOORIWKLVZDVDQRXWFRPHRIJRYHUQPHQWSROLF\ZKLFK
KDGIRUFLEO\VWDPSHGRXWWKH$IULFDQHFRQRPLFUHQDLVVDQFHDQGFUHDWHGWKHUHVHUYRLURI
FKHDSXQHGXFDWHG$IULFDQODERUWREHHPSOR\HGLQ(XURSHDQFRQWUROOHGPLQHVDQGODQGV
,WZDVQRWRQO\WKHHFRQRPLFLQFHQWLYHVWKDWZHUHGHVWUR\HG7KHSROLWLFDOFKDQJHVWKDW
KDGVWDUWHGWRWDNHSODFHDOVRZHQWLQUHYHUVH7KHSRZHURIFKLHIVDQGWUDGLWLRQDOUXOHUV


Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

ZKLFKKDGSUHYLRXVO\EHHQLQGHFOLQHZDVVWUHQJWKHQHGEHFDXVHSDUWRIWKHSURMHFW
RIFUHDWLQJDFKHDSODERUIRUFHZDVWRUHPRYHSULYDWHSURSHUW\LQODQG6RWKHFKLHIV
FRQWURORYHUODQGZDVUHDIUPHG7KHDYDLODEOHHYLGHQFHGHPRQVWUDWHVWKHUHYHUVDOLQ
OLYLQJVWDQGDUGVLQWKH+RPHODQGVDIWHUWKH1DWLYH/DQG$FWRI7KH7UDQVNHLDQG
WKH&LVNHLZHQWLQWRDSURORQJHGHFRQRPLFGHFOLQH7KHHPSOR\PHQWUHFRUGVIURPWKH
JROGPLQLQJFRPSDQLHVFROOHFWHGE\WKHKLVWRULDQ)UDQFLV:LOVRQVKRZWKDWWKLVGHFOLQH
ZDVZLGHVSUHDGLQWKH6RXWK$IULFDQHFRQRP\DVDZKROH)ROORZLQJWKH1DWLYH/DQG
$FWDQGRWKHUOHJLVODWLRQVPLQHUVZDJHVIHOOE\SHUFHQWEHWZHHQDQG,Q
GHVSLWHUHODWLYHO\VWHDG\JURZWKLQWKH6RXWK$IULFDQHFRQRP\WKHVHZDJHVZHUH
VWLOOSHUFHQWORZHUWKDQWKH\KDGEHHQLQ :LOVRQS 1RZRQGHUWKDW
RYHUWKLVSHULRG6RXWK$IULFDEHFDPHWKHPRVWXQHTXDOFRXQWU\LQWKHZRUOG
,Q6RXWKHUQ$IULFDZKHUHWKHUHZDVODUJHVFDOH(XURSHDQPLJUDWLRQWKHH[SORLWDWLYH
VWUXFWXUHRIWKHFRORQLDOHFRQRP\ZDVYHU\HYLGHQW,QWKH$SDUWKHLGUHJLPHRI6RXWK
$IULFD QR$IULFDQ ZDV DOORZHG WR RZQ SURSHUW\ RU VWDUW D EXVLQHVV LQ WKH (XURSHDQ
SDUWRIWKHHFRQRP\WKHSHUFHQWDQGWKHPRUHSURVSHURXVSDUWRIWKHFRXQWU\7KH
$SDUWKHLG UHJLPH DOVR UHDOL]HG WKDW HGXFDWHG$IULFDQV FRPSHWHG ZLWK ZKLWHV UDWKHU
WKDQVXSSO\LQJFKHDSODERUWRWKHPLQHVDQGWRZKLWHRZQHGDJULFXOWXUH$VHDUO\DV
DV\VWHPRIMREUHVHUYDWLRQIRU(XURSHDQVZDVLQWURGXFHGLQWKHPLQLQJHFRQRP\
1R$IULFDQZDVDOORZHGWREHDQDPDOJDPDWRUDQDVVD\HUDEDQNVPDQDEODFNVPLWK
DERLOHUPDNHUDEUDVVQLVKHUDEUDVVPRXOGHUDEULFNOD\HUDQGWKHOLVWZHQWRQDQG
RQDOOWKHZD\WRZRRGZRUNLQJPDFKLQLVW VHHYDQGHU+RUVWS $IULFDQV
ZHUHEDQQHGIURPRFFXS\LQJDQ\VNLOOHGMRELQWKHPLQLQJVHFWRU7KLVZDVWKHUVW
LQFDUQDWLRQ RI WKH IDPRXV &RORXU %DU RQH RI WKH VHYHUDO UDFLVW LQYHQWLRQV RI WKH
6RXWK$IULFDVUHJLPH7KH&RORXU%DUZDVH[WHQGHGWRWKHHQWLUHHFRQRP\LQDQG
ODVWHGXQWLO,WLVQRWVXUSULVLQJWKDWEODFN$IULFDQVZHUHXQHGXFDWHGWKH6RXWK
$IULFDQ VWDWH QRW RQO\ UHPRYHG WKH SRVVLELOLW\ RI$IULFDQV EHQHWWLQJ HFRQRPLFDOO\
IURPDQHGXFDWLRQEXWDOVRUHIXVHGWRLQYHVWLQEODFNVFKRROVDQGGLVFRXUDJHGEODFN
HGXFDWLRQ 7KLV SROLF\ UHDFKHG LWV SHDN LQ WKH V ZKHQ XQGHU WKH OHDGHUVKLS RI
+HQGULN9HUZRHUGRQHRIWKHDUFKLWHFWVRIWKH$SDUWKHLGUHJLPHWKDWZRXOGWKHQODVW
XQWLOWKHJRYHUQPHQWSDVVHGWKH%DQWX(GXFDWLRQ$FW7KHSKLORVRSK\EHKLQG
WKLVDFWZDVEOXQWO\VSHOOHGRXWE\9HUZRHUGKLPVHOILQDVSHHFKLQ
7KH%DQWXPXVWEHJXLGHGWRVHUYHKLVRZQFRPPXQLW\LQDOOUHVSHFWV7KHUHLVQRSODFHIRU
KLPLQWKH(XURSHDQFRPPXQLW\DERYHWKHOHYHORIFHUWDLQIRUPVRIODERXU)RUWKDWUHDVRQ
LWLVWRQRDYDLOWRKLPWRUHFHLYHDWUDLQLQJZKLFKKDVDVLWVDLPDEVRUEWLRQLQWKH(XURSHDQ
FRPPXQLW\ZKLOHKHFDQQRWDQGZLOOQRWEHDEVRUEHGWKHUH TXRWHGLQ)HLQVWHLQS

7KH W\SH RI GXDO HFRQRP\ DUWLFXODWHG LQ9HUZRHUGV VSHHFK LV UDWKHU GLIIHUHQW IURP
/HZLVV GXDO HFRQRP\ WKHRU\ ,Q 6RXWK$IULFD WKHUH ZRXOG QRW EH D SURFHVV RI WKH
XQVNLOOHGZRUNHUVIURPWKHWUDGLWLRQDOVHFWRUJUDGXDOO\EHFRPLQJHGXFDWHGDQGVNLOOHG
,QIDFWWKHEODFNZRUNHUVZHUHSXUSRVHIXOO\NHSWXQVNLOOHGDQGEDUUHGIURPKLJKVNLOO
RFFXSDWLRQVVRWKDWVNLOOHGZKLWHZRUNHUVZRXOGQRWIDFHFRPSHWLWLRQDQGFRXOGHQMR\
KLJK ZDJHV ,Q 6RXWK$IULFD EODFN$IULFDQV ZHUH LQGHHG WUDSSHG LQ WKH WUDGLWLRQDO
HFRQRP\LQWKH+RPHODQGV%XWWKLVZDVQRWWKHSUREOHPRIGHYHORSPHQWWKDWHFRQRPLF
JURZWKZRXOGVROYH


'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

Downloaded At: 20:07 21 September 2010

 7KH&DVHRIWKH*KDQDLDQ&RFRD)DUPHUV
,QFRORQLHVZKLFKODFNHGODUJHSRSXODWLRQVRIZKLWHVHWWOHUVWKHW\SHRIKLJKO\H[WUDFWLYH
ODERU DQG ODQG PDUNHW LQVWLWXWLRQV ZKLFK JRW VHW XS LQ 6RXWKHUQ $IULFD RU .HQ\D
ZHUHDEVHQW*KDQDVUVWSULPHPLQVWHUVXEVHTXHQWO\SUHVLGHQW.ZDPH1NUXPDK
UHPDUNHGLQWKDWDIWHULQGHSHQGHQFHKHZDVJRLQJWRHUHFWDVWDWXWHRIDPRVTXLWR
LQGRZQWRZQ$FFUDVLQFHLWZDVWKHPRVTXLWRZKLFKKDGVDYHG*KDQDIURP(XURSHDQ
VHWWOHPHQW7KH DEVHQFH RI FRPSHWLWLRQE\ (XURSHDQV JDYH$IULFDQV PRUH VFRSH IRU
LQGLJHQRXVFDSLWDOLVPRIZKLFKWKHUHDUHPDQ\H[DPSOHV2QHRIWKHEHVWGRFXPHQWHG
LVWKHFRFRDERRPLQ*KDQD
,QKHUEULOOLDQWERRN+LOO  VWXGLHGWKHGHYHORSPHQWDQGQDWXUHRIWKHERRP
7KHERRPWRRNSODFHQRWRQO\ZLWKRXWWKHDVVLVWDQFHRIWKHFRORQLDOVWDWHRUWKHKHOSRI
LQVWLWXWLRQVFUHDWHGE\WKHFRORQLDOVWDWH,WGLGVRLQWKHIDFHRIDFWLYHGLVFRXUDJHPHQW
IURP WKH FRORQLDO VWDWH 0RUHRYHU WKH %ULWLVK FRORQLDO VWDWH XOWLPDWHO\ VHW XS DQ
LQVWLWXWLRQ WKH &RFRD 0DUNHWLQJ %RDUG WKDW QHDUO\ REOLWHUDWHG WKH SURVSHULW\ RI WKH
FRFRDIDUPHUV
7KH ERRP VWDUWHG ZKHQ IDUPHUV IURP$NZDSLP VDZ WKH FRPPHUFLDO SURVSHFWV
IRUFRFRDDQGEHJDQWRSODQWLWRQWKH$NZDSLPULGJH+LOOVKRZVWKDWVWDUWLQJIURP
QRWKLQJLQE\FRFRDZDVGRPLQDWLQJH[SRUWVDQGLQYHVWPHQWLQWKH*ROG
&RDVWFRORQ\,QRUVRPHRIWKHVHIDUPHUVEHJDQEX\LQJIRUHVWODQGVWRWKH
ZHVWLQ$NLP$EXDNZDDQDUHDZLWKYHU\VSDUVHSRSXODWLRQ7KH\FRPELQHGWRGRWKLV
6RPHZHUHJURXSVRIXQUHODWHGSHRSOHZKRSRROHGUHVRXUFHVDQGEDUJDLQLQJSRZHU
ZKDW+LOOFDOOV&RPSDQLHV2QFHD&RPSDQ\KDGERXJKWODQGLWGLYLGHGLWEHWZHHQ
WKHPHPEHUVZLWKHDFKJHWWLQJDVKDUHZKLFKGHSHQGHGRQWKHLULQYHVWPHQW7KHRWKHU
W\SHRIJURXSVZHUHDOOUHODWLYHVZKRDJDLQSRROHGUHVRXUFHV+LOOFDOOVWKHVHJURXSV
)DPLOLHV3ULRUWR%ULWLVKFRORQLDOLVP$NLP$EXDNZDZDVDVPDOOVWDWHZKLFKKDG
SDLGWULEXWHWRWKH$VDQWH(PSLUH7KHODQGZDVVROGE\ORFDOFKLHIV7KLVSURFHVVZDV
QRWQHZDQGSUHGDWHG%ULWLVKFRORQLDOLVP:ULWWHQGRFXPHQWVZHUHQRWH[FKDQJHG
LWZDVRQHRIWKHOHDGHUVIXQFWLRQVWRNHHSUHFRUGVUHODWLQJWRWKHPRQHWDU\WUDQVDFWLRQVHWF
XVXDOO\LQKLVKHDG7KHUHLVRIWHQDORQJGHOD\EHIRUHSODQWLQJVWDUWVDQGLWLVDFRPPRQ
FRPSODLQWRIFRPSDQ\PHPEHUVWKDWODQGVKDYHEHHQORVWRZLQJWRWKHGHDWKRIWKHOHDGHUDQG
WKHFRQVHTXHQWLPSRVVLELOLW\RIHVWDEOLVKLQJWKHSXUFKDVHUVLGHQWLW\ +LOOS

7KHUHZHUHQRSURSHUODQGVXUYH\VEXWWKLVGLGQRWVWRSWKHVDOHVWDNLQJSODFH
7KHERXQGDULHVRIWKHODQGWREHSXUFKDVHGZLOOEH[HGWKLVZLOOEHGRQHE\SLOODUVERWWOHVRU
RWKHUREMHFWVSODFHGDWFRUQHUVDQGRWKHUVWUDWHJLFSRLQWVLIWKHUHDUHLQVXIFLHQWQDWXUDOIHDWXUHV
VXFKDVODUJHWUHHVRUERXOGHUV7KHSRLQWWRQRWHLVWKDWFRPSDQLHVDOZD\VEX\DGHQDWHDUHD
RIODQGGHWHUPLQHGLQDGYDQFHDQGQRWLQDQ\GHJUHHGHSHQGHQWRQWKHVSHHGRIFOHDULQJRU
SODQWLQJ +LOOSS 

$OOWKLVZHQWRQZLWKRXWDQ\KHOSIURPWKHFRORQLDOVWDWH7KHSXUFKDVHRIODQGZDVQRW
QDQFHGE\%ULWLVKEDQNVRULQGHHGDQ\W\SHRIQDQFLDOLQVWLWXWLRQV7KHUHVRXUFHVWR
EX\WKHODQGFDPHIURPLQFRPHDFFXPXODWHGIURPWKHSUHYLRXVSURGXFWLRQDQGVDOHRI
SDOPRLODQGSHRSOHERXJKWWKHODQGE\SURPLVLQJLQWKHIXWXUHWRXVHWKHUHWXUQVIURP


:K\LV$IULFD3RRU"

VHOOLQJFRFRDWRSD\EDFNZKDWZDVRZHG+RZ ZDV WKLV FRQWUDFWHQIRUFHG" 1RW E\


WKHWKUHDWRIOHJDOVDQFWLRQVEXWLWVHHPVUDWKHUWKHSURPLVHRIPRUHODQGLQWKHIXWXUH
3HRSOHUHSDLGEHFDXVHWKH\ZDQWHGWRNHHSWKHFKLHIVKDSS\DQGJHWWKHPWRVHOOWKHP
PRUHODQG7KHUHZDVQRXVHRIWKHFRORQLDOFRXUWV\VWHP+LOOREVHUYHV S

Downloaded At: 20:07 21 September 2010

7KHQHZFLUFXPVWDQFHVUHVXOWLQJIURPWKHSXUFKDVHRIODQGRQVXFKDYDVWVFDOHE\LQGLYLGXDO
PLJUDQW FRFRDIDUPHUV PRUH WKDQ KDOI D FHQWXU\ DJR KDYH UHFHLYHG OLWWOH H[DPLQDWLRQ IRU
WKHYHU\JRRGUHDVRQWKDWIHZGLVSXWHVLQYROYLQJIDUPHUVHDFKRIZKRPRZQVDIDUPZLWKD
SDUWLFXODUFRPSDQ\RUIDPLO\ODQGKDYHUHDFKHGWKHFRXUWV

+LOO DUJXHG WKDW ERWK WKH PLJUDWLRQ GHFLVLRQ DIWHU WKH LQLWLDO SKDVH SHRSOH EHJDQ WR
PLJUDWHKHUHIURPDOORYHUVRXWKHUQ*KDQD DQGWKHSODQWLQJRIFRFRDWUHHVZKLFKWRRN
DORQJWLPHWRPDWXUHVKRZVDUHDOZLOOLQJQHVVWRLQYHVWDQGUHDOHQWUHSUHQHXUVKLS
'LGWKH%ULWLVKFRORQLDOVWDWHIDFLOLWDWHWKHHPHUJHQFHRISULYDWHSURSHUW\"4XLWH
WKHRSSRVLWHWKHSROLF\RILQGLUHFWUXOHZKHUHE\WKHFRORQLDOVWDWHUXOHGYLDWKHFKLHIV
OHG WKH %ULWLVK FRORQLDO VWDWH WR DFWLYHO\ GLVFRXUDJH ODQG VDOHV 3HUKDSV LQVWHDG WKH
FRQVWUXFWLRQRILQIUDVWUXFWXUHKHOSHGWKHFRFDIDUPHUVWRH[SRUW1RWWUXHHLWKHU,QIDFW
WKHFRFRDIDUPHUVUDLVHGPRQH\WREXLOGURDGVDQGEULGJHVQHFHVVDU\WRJHWWKHFURS
WRPDUNHWDQGWKH\VROGLWWR%ULWLVKPHUFKDQWVLQ$FFUD:KHQWKHIDUPHUVSHWLWLRQHG
WKHFRORQLDOVWDWHWREXLOGIHHGHUURDGVIURPWKHPDLQKLJKZD\IURP$FFUDWR.XPDVH
WRKHOSWKHPWKH\ZHUHWXUQHGGRZQDSSDUHQWO\EHFDXVHWKHVWDWHZDQWHGWRIRUFHWKH
IDUPHUVWRXVHWKHJRYHUQPHQWUDLOZD\WRNHHSLWVSURWVXS
7KH%ULWLVKJRYHUQPHQWGLGOLWWOHWRLQGXFHRUIDFLOLWDWHWKLVERRPEXWWKH\GLGDORW
WRNLOOLW,QSDUWLFXODULQWKH\VHWXSWKHFRFRDPDUNHWLQJERDUGWRZKLFKIDUPHUV
ZHUHIRUFHGWRVHOOWKHLUFRFRD LWZDVDPRQRSVRQ\ 7KHFRFRDPDUNHWLQJERDUGZDV
VRRQSD\LQJWKHIDUPHUVIDUEHORZWKHZRUOGSULFHIRUWKHLUFRFRD$IWHULQGHSHQGHQFH
LQWKHJRYHUQPHQWRI.ZDPH1NUXPDKWRRNRYHUWKHPDUNHWLQJERDUGDQGMXVW
OLNHWKH%ULWLVKXVHGLWWRWD[WKHIDUPHUV %DWHVIRUWKHVHPLQDODQDO\VLV 



$)5,&$6,1&(,1'(3(1'(1&(

0DQ\ $IULFDQ FRXQWULHV DUH SRRUHU QRZ WKDQ WKH\ ZHUH DW LQGHSHQGHQFH DQG KDYH
H[SHULHQFHG VHYHUH HFRQRPLF GHFOLQH SDUWLFXODUO\ DIWHU WKH V :H KDYH DOUHDG\
VHHQVRPHPHFKDQLVPVWKDWFDQDFFRXQWIRUWKLV&RORQLDOLVPGLGQWMXVWIUHH]H$IULFD
DQG UHPRYH WKH SRVVLELOLW\ IRU HQGRJHQRXV UHIRUP LW FUHDWHG VWUXFWXUHV ZKLFK KDYH
VXEVHTXHQWO\LQKLELWHGHFRQRPLFJURZWK7KLVLVPRVWREYLRXVO\WKHFDVHRIWKHGXDO
HFRQRP\RIVRXWKHUQ$IULFD%XWWKHFRORQLDOSHULRGFUHDWHGRWKHUOHJDFLHVZKLFKPD\
KDYH JUHDWO\ LPSHGHG $IULFDQ SURVSHULW\ )LUVW WKH RUJDQL]DWLRQ RI FRORQLDO VWDWHV
WKRXJK LW W\SLFDOO\ EXLOW RQ DEVROXWLVW VWUXFWXUHV RIWHQ LQWHQVLHG WKHVH VWUXFWXUHV
7KLVPD\KDYHSDUWLFXODUO\EHHQWKHFDVHZLWKWKHSUDFWLFHRILQGLUHFWUXOHLQ%ULWLVK
FRORQLHV 0LJGDO  /DQJH   DQG PRUH JHQHUDOO\ WKH DXWKRULWDULDQ ZD\ WKH
FRORQLDOVWDWHRSHUDWHG <RXQJ $UJXPHQWVKHUHDOVRH[WHQGWRWKHDUFKLWHFWXUH
RIWKHFRORQLDOVWDWHZKDW&RRSHU  KDVFDOOHGWKH*DWH.HHSHUVWDWHZKLFKZDV
GHVLJQHGIRUH[WUDFWLRQDQGRUGHUEXWQRWIRUGHYHORSPHQWRUWKHSURYLVLRQRISXEOLF
JRRGV$OORIWKHVHLGHDVUHVWRQVRPHIRUPRISDWKGHSHQGHQFHOLQNLQJWKHLQVWLWXWLRQDO


'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

Downloaded At: 20:07 21 September 2010

DQGSROLWLFDOVWUDWHJLHVRIFRORQLDOLVPZLWKWKRVHRISRVWFRORQLDOVWDWHV6HFRQGWKH
DUELWUDU\ZD\LQZKLFKWKH(XURSHDQFRORQLDOSRZHUVSXWWRJHWKHUYHU\GLIIHUHQWHWKQLF
JURXSVLQWRWKHVDPHSROLWLHVFUHDWHGFRXQWULHVZKLFKZRXOGEHGLIFXOWWRJRYHUQDQG
YHU\FRQLFWSURQHDIWHULQGHSHQGHQFH&RORQLDOLVPLWVHOISUREDEO\LQWHQVLHGQRWLRQV
RI HWKQLFLW\ DQG PDGH WKHP PRUH ULJLG VHH$QGHUVRQ YRQ GHU 0HKGHQ DQG<RXQJ
SSIRUWKHIDPRXVLQYHQWLRQRIWKH%DQJDODLQWKH&RQJRDQG5DQJHU
IRUDQDQDO\VLVRIKRZWKHLQFHQWLYHVFUHDWHGE\FRORQLDOLVPLQ5KRGHVLDVKDSHG
SHRSOHVHWKQLFLGHQWLWLHV 
0DQ\RIWKHVHGLIIHUHQWLGHDVDUHPHUJHGWRJHWKHULQWKHOLWHUDWXUHRQWKHSROLWLFDO
HFRQRP\ RI $IULFD LQ WKH DUJXPHQW WKDW WKH PDLQ UHDVRQ ZK\ $IULFDQ HFRQRPLF
SHUIRUPDQFH KDV EHHQ VR SRRU VLQFH LQGHSHQGHQFH LV WKDW$IULFDQ SROLWLFV KDV EHHQ
QHRSDWULPRQLDODPRGHUQYHUVLRQRI:HEHUVWHUPZHPHWHDUOLHU7KLVSKHQRPHQRQ
LVZHOOGHQHGE\%UDWWRQDQGYDQGHU:DOOH S
WKH ULJKW WR UXOH LQ QHRSDWULPRQLDO UHJLPHV LV DVFULEHG WR D SHUVRQ UDWKHU WKDQ WR DQ RIFH
GHVSLWH WKH RIFLDO H[LVWHQFH RI D ZULWWHQ FRQVWLWXWLRQ 2QH LQGLYLGXDO  GRPLQDWHV WKH VWDWH
DSSDUDWXVDQGVWDQGVDERYHLWVODZV5HODWLRQVKLSVRIOR\DOW\DQGGHSHQGHQFHSHUYDGHDIRUPDO
SROLWLFDODQGDGPLQLVWUDWLYHV\VWHPDQGRIFLDOVRFFXS\EXUHDXFUDWLFSRVLWLRQVOHVVWRSHUIRUP
SXEOLFVHUYLFHWKDQWRDFTXLUHSHUVRQDOZHDOWKDQGVWDWXV$OWKRXJKVWDWHIXQFWLRQDULHVUHFHLYH
DQRIFLDOVDODU\WKH\DOVRHQMR\DFFHVVWRYDULRXVIRUPVRILOOLFLWUHQWVZKLFKFRQVWLWXWH
DQHQWLWOHPHQWRIRIFH7KHFKLHIH[HFXWLYHDQGKLVLQQHUFLUFOHXQGHUPLQHWKHHIIHFWLYHQHVVRI
WKHQRPLQDOO\PRGHUQVWDWHDGPLQLVWUDWLRQE\XVLQJLWIRUV\VWHPDWLFSDWURQDJHDQGFOLHQWHOLVW
SUDFWLFHVLQRUGHUWRPDLQWDLQSROLWLFDORUGHU

7KHYLHZWKDWLWLVWKHQHRSDWULPRQLDOQDWXUHRIWKHSROLWLFDOHTXLOLEULXPLQ$IULFDZKLFK
LVSULPDULO\UHVSRQVLEOHIRUWKHYHU\SRRUHFRQRPLFSHUIRUPDQFHLVDYHU\SODXVLEOHRQH
DPRQJWKHPDQ\LPSRUWDQWZRUNVDUH%DWHV%D\DUG6DQGEURRN 
DQGWKHPHFKDQLVPVDUHFORVHO\OLQNHGWRWKRVH,GLVFXVVHGHDUOLHUXQGHUDEVROXWLVP
DQGSDWULPRQLDOLVP &DOODJK\IRUDQH[SOLFLWFRPSDULVRQEHWZHHQQHZDQGROG
DEVROXWLVPV 
7KH KLVWRU\ RI 6LHUUD /HRQH ZHOO LOOXVWUDWHV PDQ\ RI WKH PDQLIHVWDWLRQV RI
QHRSDWULPRQLDO ZKLFK KDYH LPSRYHULVKHG $IULFD VLQFH LQGHSHQGHQFH 6LHUUD /HRQH
ZDVQDOO\LQFRUSRUDWHGLQWRWKH%ULWLVK(PSLUHLQHYHQWKRXJKWKHFDSLWDOFLW\
)UHHWRZQ KDG EHHQ IRXQGHG LQ WKH ODWH WK FHQWXU\ DV D KRPH IRU UHSDWULDWHG DQG
IUHHG VODYHV DQG PDGH D %ULWLVK FRORQ\ LQ $W WKDW SRLQW WKH LQWHULRU RI 6LHUUD
/HRQHZDVVWLOOPDGHXSRIPDQ\VPDOOLQGHSHQGHQW$IULFDQNLQJGRPV*UDGXDOO\LQ
WKH VHFRQG KDOI RI WKH WK FHQWXU\ WKH %ULWLVK H[WHQGHG WKHLU UXOH LQWR WKH LQWHULRU
WKURXJKDORQJVHULHVRIWUHDWLHVZLWK$IULFDQUXOHUV2Q$XJXVWWKH%ULWLVK
JRYHUQPHQWGHFODUHGD3URWHFWRUDWHLQWKHLQWHULRURI6LHUUD/HRQHRQWKHEDVLVRIWKHVH
WUHDWLHV7KH%ULWLVKLGHQWLHGLPSRUWDQWNLQJVDQGJDYHWKHPDQHZWLWOH3DUDPRXQW
&KLHI7KRXJKNLQJVPD\KDYHVLJQHGDWUHDW\ZLWKD%ULWLVKDGPLQLVWUDWRUWKH\KDG
QRWXQGHUVWRRGWKDWLWZRXOGEHLQWHUSUHWHGDVDFDUWHEODQFKHWRVHWXSDFRORQ\:KHQ
WKH%ULWLVKWULHGWROHY\DKXWWD[DWD[RIVKLOOLQJVWREHUDLVHGIURPHYHU\KRXVH
LQ-DQXDU\WKHFKLHIVURVHLQDFLYLOZDUWKDWEHFDPHNQRZQDVWKH+XW7D[
5HEHOOLRQ7KRXJKWKLVUHEHOOLRQVWDUWHGLQWKH1RUWKLWZDVVWURQJHVWDQGODVWHGORQJHU


:K\LV$IULFD3RRU"

LQ WKH 6RXWK SDUWLFXODUO\ LQ 0HQGHODQG GRPLQDWHG E\ WKH 0HQGH HWKLF JURXS 7KH
+XW7D[5HEHOOLRQZDVVRRQGHIHDWHGEXWLWZDUQHGWKH%ULWLVKDERXWWKHFKDOOHQJHV
RIFRQWUROOLQJWKH6LHUUD/HRQHDQKLQWHUODQG7KH%ULWLVKKDGDOUHDG\VWDUWHGWREXLOG
D UDLOZD\ IURP )UHHWRZQ LQWR WKH LQWHULRU:RUN EHJDQ LQ 0DUFK  DQG WKH OLQH
UHDFKHG6RQJR7RZQLQ'HFHPEHULQWKHPLGVWRIWKH+XW7D[5HEHOOLRQ%ULWLVK
3DUOLDPHQWDU\3DSHUVIURPUHFRUGHGWKDW

Downloaded At: 20:07 21 September 2010

,QWKHFDVHRIWKH6LHUUD/HRQH5DLOZD\VWKH1DWLYH,QVXUUHFWLRQWKDWEURNHRXWLQ)HEUXDU\
KDGWKHHIIHFWRIFRPSOHWHO\VWRSSLQJWKHZRUNVDQGGLVRUJDQL]LQJWKHVWDIIIRUVRPHWLPH
7KHUHEHOVGHVFHQGHGXSRQWKHUDLOZD\ZLWKWKHUHVXOWWKDWWKHHQWLUHVWDIIKDGWREHZLWKGUDZQ
WR)UHHWRZQ5RWLIXQNQRZVLWXDWHGXSRQWKHUDLOZD\VDWPLOHVIURP)UHHWRZQZDVDWWKDW
WLPHFRPSOHWHO\LQWKHKDQGVRIWKHUHEHOV

,QIDFW5RWLIXQNZDVQRWRQWKHSODQQHGUDLOZD\OLQHLQ7KHURXWHZDVFKDQJHG
DIWHU WKH VWDUW RI WKH UHEHOOLRQ VR WKDW LQVWHDG RI JRLQJ WR WKH 1RUWK (DVW LW ZHQW
6RXWKYLD5RWLIXQNDQGRQWR%RLQWR0HQGHODQG7KH%ULWLVKZDQWHGTXLFNDFFHVVWR
0HQGHODQGWKHKHDUWRIWKHUHEHOOLRQ7KH%ULWLVKFRORQLDOVWDWHZDVPRUHLQWHUHVWHGLQ
UXOLQJ6LHUUD/HRQHWKDQLWZDVLQGHYHORSLQJLWDQGWKLVPHDQWWKDWWKH\VKRXOGEHDEOH
WRXVHWKHUDLOZD\VWRUHDFKWKHKLQWHUODQGLIRWKHUUHEHOOLRQVZHUHWRVWDUWWKHUH
:KHQ6LHUUD/HRQHEHFDPHLQGHSHQGHQWLQWKH%ULWLVKKDQGHGSRZHUWR6LU
0LOWRQ 0DUJDL DQG KLV 6LHUUD /HRQH 3HRSOHV 3DUW\ 6/33  ZKLFK DWWUDFWHG VXSSRUW
SULPDULO\LQWKH6RXWKSDUWLFXODUO\0HQGHODQGDQGWKH(DVW6LU0LOWRQZDVIROORZHG
DV3ULPH0LQLVWHUE\KLVEURWKHU6LU$OEHUW0DUJDLLQ,QWKH6/33QDUURZO\
ORVWDKRWO\FRQWHVWHGHOHFWLRQWRWKHRSSRVLWLRQWKH$OO3HRSOHV&RQJUHVVSDUW\ $3& 
OHG E\ 6LDND 6WHYHQV (YHQ WKRXJK 6WHYHQVV IDWKHU ZDV 1LJHULDQ KLV PRWKHU ZDV
/LPEDIURPWKH1RUWKDQGWKH$3&JRWPRVWRIWKHLUVXSSRUWIURPQRUWKHUQHWKQLF
JURXSVWKH/LPEDWKH7HPQHDQGWKH/RNR%HIRUHKHFRXOGDVVXPHSRZHU6WHYHQV
ZDVDUUHVWHGE\DJURXSRI0HQGHRIFHUVZKRODXQFKHGDFRXS7KH\IRUPHGDVKRUW
OLYHGPLOLWDU\MXQWDZKLFKZDVLQWXUQRYHUWKURZQRQHPRQWKODWHUE\DFRXQWHUFRXS
E\ORZHUUDQNHGVROGLHUVSULPDULO\QRUWKHUQHUV7KH\UHVWRUHGGHPRFUDF\DQG6WHYHQV
WRRNSRZHU
7KRXJKWKHUDLOZD\WRWKHVRXWKZDVLQLWLDOO\GHVLJQHGE\WKH%ULWLVKWRUXOH6LHUUD
/HRQHE\LWKDGEHFRPHWKHIRFXVRIPRVWRIWKHFRXQWU\VH[SRUWV$ORQJWKH
UDLOZD\FDPHFRIIHHDQGFRFRDH[SRUWVDQGDOVRGLDPRQGV%XWWKHIDUPHUVZKRJUHZ
WKHVH FURSV ZHUH 0HQGH DQG WKH UDLOZD\ ZDV 0HQGHODQGV ZLQGRZ WR WKH ZRUOG
0HQGHODQGKDGYRWHGKXJHO\IRU$OEHUW0DUJDLLQWKHHOHFWLRQ6LDND6WHYHQVZDV
PXFKPRUHLQWHUHVWHGLQKROGLQJRQWRSRZHUWKDQ0HQGHODQGVH[SRUWVVRKHGHFLGHG
WRSXOOXSWKHUDLOZD\OLQHWR0HQGHODQG+HWKHQZHQWDKHDGDQGVROGRIIWKHWUDFN
DQGUROOLQJVWRFNWRPDNHWKHFKDQJHDVLUUHYHUVLEOHDVSRVVLEOH WKHLQWHUSUHWDWLRQRI
WKLVHYHQWLVFRQWHVWHGEXWWKLVLVWKHVDOLHQWRQHVHH$EUDKDPDQG6HVD\S
5LFKDUGVSS'DYLHVSS 6WHYHQVVGUDVWLFDFWLRQIDWDOO\
GDPDJHGVRPHRIWKHPRVWYLEUDQWVHFWRUVRI6LHUUD/HRQHVHFRQRP\%XWOLNHPDQ\RI
$IULFDVSRVWLQGHSHQGHQFHOHDGHUVZKHQWKHFKRLFHZDVEHWZHHQFRQVROLGDWLQJSRZHU
DQGHQFRXUDJLQJHFRQRPLFJURZWK9LROHQFHDQGWKHFRHUFLRQRISROLWLFDORSSRQHQWVLI
QRWRQWKHVFDOHRI2PDU$O%DVKLU,GL$PLQ6DPXHO'RH0HQJLVWX+DLOH0LULDPRU


Downloaded At: 20:07 21 September 2010

'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

&KDUOHV7D\ORUZDVDUHJXODUIHDWXUHRIOLIHDQGFULWLFLVPZDVQRWWROHUDWHG$QRWRULRXV
H[DPSOHEHLQJWKHPXUGHULQE\GHIHQHVWUDWLRQIURPDWRSRRURIFHZLQGRZRI
6DP%DQJXUDWKHJRYHUQRURIWKHFHQWUDOEDQN 5HQRSS 7KLVZDV
SROLWLFVRIWKHEHOO\ZULWODUJH %D\DUW 7KHUHJLPHDOVRIHDWXUHGWKHGRPLQDQFH
RI)UHHWRZQRYHUWKHUHVWRIWKHFRXQWU\DQGDQXUEDQELDV /LSWRQ%DWHV 
ZKLFKLQYROYHGWKHUHYHUVDORIGHFHQWUDOL]DWLRQDQGWKHDEROLWLRQRIGLVWULFWFRXQFLOVLQ

&DVXDO HPSLULFLVP VXJJHVWV WKDW EDUHO\ DQ\ SXEOLF JRRGV ZHUH SURYLGHG LQ WKH
FRXQWU\ LQ WKH  \HDUV SULRU WR WKH HQG RI WKH FLYLO ZDU DQG UHGHPRFUDWL]DWLRQ LQ
7KHURDGVIHOOWRSLHFHVDQGVFKRROVGLVLQWHJUDWHG1DWLRQDOWHOHYLVLRQEURDGFDVWV
VWRSSHGLQZKHQWKHWUDQVPLWWHUZDVVROGE\WKH0LQLVWHURI,QIRUPDWLRQDQGLQ
 D UDGLR WRZHU ZKLFK UHOD\HG UDGLR VLJQDOV RXWVLGH )UHHWRZQ IHOO GRZQ HQGLQJ
WUDQVPLVVLRQV RXWVLGH WKH FDSLWDO 5HQR  S  IRU WKHVH VWRULHV  7KH 6LHUUD
/HRQH3URGXFH0DUNHWLQJ%RDUGFUHDWHGE\WKH%ULWLVKLQDQGLQKHULWHGE\WKH
LQGHSHQGHQW QDWLRQ KDG D PRQRSVRQ\ RYHU DOO H[SRUW FURSV DQG SDLG IDUPHUV YHU\
ORZ SULFHV %DWHV   DV ORZ DV  RI WKH ZRUOG OHYHO E\ WKH V 'DYLHV
S 7KHH[FKDQJHUDWHZDVPDVVLYHO\RYHUYDOXHGFUHDWLQJDEODFNPDUNHW
DQG D VFDUFH UHVRXUFH ZKLFK 6WHYHQV DOORFDWHG WKURXJK ZKDW 5HQR   GXEEHG
WKH VKDGRZ HFRQRP\ $FFRUGLQJ WR 0DGGLVRQV GDWD *'3 SHUFDSLWD IHOO DOPRVW
PRQRWRQLFDOO\IURPWKHHDUO\VRQZDUGVDQGGHFOLQHGWRDERXWRIWKHOHYHO
UHFRUGHGDWLQGHSHQGHQFHE\WKHHQGRIWKHFLYLOZDU
7KHHFRQRPLFGHFOLQHRI6LHUUD/HRQHVKDUHVPDQ\IHDWXUHVZLWKHFRQRPLFGHFOLQH
HOVHZKHUHLQ$IULFD 1NXUXQ]L]DDQG1JDUXNRIRUDIDVFLQDWLQJDQDO\VLVRIWKH
%XUXQGLDQ FDVH  )HZ QDWLRQV ZHUH DEOH WR DJUHH RQ D VHW RI SROLWLFDO LQVWLWXWLRQV WR
SHDFHIXOO\UHVROYHWKHLUGLVDJUHHPHQWV7KLVPD\EHEHFDXVHWKHKHWHURJHQHLW\RIWKH
FRXQWULHVPDGHGLVDJUHHPHQWVYHU\LQWHQVH,QDGGLWLRQWRFRXQWULHVEHLQJFRPSRVHG
RI PDQ\ GLIIHUHQW HWKQLF JURXSV PDQ\ FRXQWULHV ZHUH DOVR SRODUL]HG LQ WKH VHQVH
RI(VWHEDQDQG5D\  )RUH[DPSOHLQ6LHUUD/HRQHWKH0HQGHDQGWKH7HPQH
HDFK ZLWK DERXW  RI WKH SRSXODWLRQ IRUPHG WKH EDVLV RI WKH WZR PDLQ SROLWLFDO
SDUWLHV ZKLFK PD\ KDYH EHHQ YHU\ FRQGXFLYH WR FRQLFW7KH FRQVHTXHQFH ZDV WKDW
SROLWLFDO LQVWLWXWLRQV ZHUH QRW VWDEOH DQG SROLWLFV EHFDPH D ZLQQHU WDNHV DOO JDPH
(DUO\JRYHUQPHQWVUHZURWHWKHUXOHVLQWKHLUIDYRUVXVSHQGLQJWKHFRQVWLWXWLRQDQG
GHPRFUDF\FRQFHQWUDWLQJSROLWLFDOSRZHUDWWKHFHQWHUDQGPRYLQJIURPSULPHPLQLVWHULDO
WRSUHVLGHQWLDOJRYHUQPHQW 5RELQVRQDQG7RUYLN 7KLVSURFHVVZDVYHU\HYLGHQW
LQ6LHUUD/HRQH7KHVHJRYHUQPHQWVZHUHQHRSDWULPRQLDOLQWKHZD\WKH\RUJDQL]HGWKH
VWDWHDQGFRQVROLGDWHGWKHLUSRZHU7KH\PDLQWDLQHGSRZHUE\GLVSHQVLQJSDWURQDJHIRU
VXSSRUWVRPHWKLQJZKLFKDV%DWHV  UVWXQGHUVWRRGELDVHVSROLF\DJDLQVWWKH
SURYLVLRQRISXEOLFJRRGV3XEOLFJRRGVFDQQRWEHWDUJHWHGWRRQHVIULHQGVDQGWKH\
FDQQRWEHZLWKKHOGIURPRQHVIRHV3ULYDWHJRRGVOLNHMREVDUHPXFKPRUHSROLWLFDOO\
DWWUDFWLYH(PSOR\PHQWLQWKHSXEOLFVHFWRUEHFDPHDZD\RIUHZDUGLQJVXSSRUWHUVDQG
HFRQRPLFSROLF\ZDVXVHGDVDZD\RIUHGLVWULEXWLQJLQFRPHDQGFRQVROLGDWLQJSROLWLFDO
SRZHU .LOOLFNIRUDEULOOLDQWDQDO\VLVRIWKH*KDQDLDQFDVH 7KLVVWUDWHJ\RIUXOH
ZDVQRWFRQGXFLYHWRWKHFUHDWLRQRIJRRGHFRQRPLFLQVWLWXWLRQV,QGHHGGLVWRUWLQJWKH
HFRQRP\IRULQVWDQFHE\RYHUYDOXLQJWKHH[FKDQJHUDWHEHFDPHDZD\RIFUHDWLQJ


Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

DUWLFLDOO\VFDUFHUHVRXUFHVZKLFKFRXOGWKHQEHXVHGDVDZD\RIGLVWULEXWLQJUHQWV
,QH[WUHPHFDVHVVXFKDV0REXWXV=DLUHRU$PLQV8JDQGDWKLVVWUDWHJ\FXOPLQDWHG
LQVHYHUHLQVHFXULW\RISURSHUW\ULJKWV,QWKHPRUHFRPPRQFDVHLQHIFLHQWSURSHUW\
ULJKWVZHUHFUHDWHGRUIDFLOLWDWHG2QHRIWKHPRVWREYLRXVLVODQGLQUXUDODUHDVZKHUH
WKH IDFW WKDW DFFHVV WR ODQG GHSHQGV RQ ORFDO SROLWLFDO SRZHU ZLHOGHG E\ WUDGLWLRQDO
DXWKRULWLHVLPSHGHVLQYHVWPHQWDQGWKHHIFLHQWDOORFDWLRQRIUHVRXUFHV *ROGVWHLQDQG
8GU\IRUHYLGHQFHRQ*KDQD 
7KHFRQFHQWUDWLRQRISRZHUFRPELQHGZLWKSDWULPRQLDOLVPGLGQWMXVWLPSHGHWKH
IXQFWLRQLQJRIWKHVWDWHDQGWKHHFRQRP\DQGWKHFUHDWLRQRIJRRGHFRQRPLFLQVWLWXWLRQV
,WDOVRFUHDWHGSROLWLFDOLQVWDELOLW\EHFDXVHLWUDLVHGWKHVWDNHVIURPSROLWLFV:KHQWKH
VWDWH FUHDWHV SULYDWH JRRGV UDWKHU WKDQ SXEOLF JRRGV WKH GLIIHUHQFH EHWZHHQ EHLQJ LQ
SRZHU DQG EHLQJ RXW RI SRZHU EHFRPHV ODUJHU7KLV QDWXUDOO\ LQFUHDVHV FRQLFW DQG
SROLWLFDO LQVWDELOLW\ DQRWKHU VRXUFH RI SRRU HFRQRPLF SHUIRUPDQFH 0XFK RI WKHVH
SKHQRPHQDPD\KDYHGHHSURRWVLQ$IULFDQKLVWRU\:HKDYHDOUHDG\DUJXHGWKDWWKH
GHOD\HG QDWXUH RI VWDWH IRUPDWLRQ DQG WKH SHUVLVWHQW DEVROXWLVP DQG SDWULPRQLDOLVP
LQ PRVW RI WKH FRQWLQHQW UHGXFHG WKH SRVVLELOLWLHV IRU HFRQRPLF JURZWK SULRU WR WKH
WKFHQWXU\+HQFHWKHQHRSDWULPRQLDOLVPRISRVWLQGHSHQGHQW$IULFDFDQEHVHHQDVD
GLUHFWVXFFHVVRUWRWKLV+HUEVW  PDNHVWKLVDUJXPHQWLQSDUWLFXODUO\GRZQSOD\LQJ
WKHLPSRUWDQFHRIWKHFRORQLDOLQWHUOXGH:HZRXOGDUJXHKRZHYHUWKDWWKHFRORQLDO
V\VWHPPXVWKDYHSOD\HGDVLJQLFDQWUROHLQPDNLQJ$IULFDQLQVWLWXWLRQVZRUVHDQG
SHUYHUVHSROLWLFDOLQFHQWLYHVPRUHLQWHQVH7KHH[WHQWRIFRQWLQXLW\EHWZHHQFRORQLDO
DQGLQGHSHQGHQW6LHUUD/HRQHLVUHPDUNDEOH7KH%ULWLVKFUHDWHGWKHPDUNHWLQJERDUGV
DQGXVHGWKHPWRWD[IDUPHUV3RVWFRORQLDOJRYHUQPHQWVGLGWKHVDPHH[WUDFWLQJDWHYHQ
KLJKHUUDWHV7KH%ULWLVKFUHDWHGWKHV\VWHPRILQGLUHFWUXOHWKURXJKSDUDPRXQWFKLHIV
,QGHSHQGHQFHJRYHUQPHQWVGLGQWUHMHFWWKLVFRORQLDOLQVWLWXWLRQUDWKHUWKH\XVHGLWWR
JRYHUQWKHFRXQWU\VLGHDVZHOO7KH%ULWLVKVHWXSDGLDPRQGPRQRSRO\DQGWULHGWR
NHHS$IULFDQPLQHUVRXW,QGHSHQGHQFHJRYHUQPHQWVGLGWKHVDPHWKLQJ,WLVWUXHWKDW
WKH%ULWLVKWKRXJKWEXLOGLQJUDLOZD\VZDVDJRRGZD\WRUXOH0HQGHODQGZKLOH6LDND
6WHYHQVWKRXJKWWKHRSSRVLWH%XWWKLVZDVEHFDXVHWKH%ULWLVKFRXOGWUXVWWKHLUDUP\
DQGNQHZWKDWWKH\FRXOGVHQGWKHPWR0HQGHODQGLIDUHEHOOLRQDURVH6WHYHQVRQWKH
RWKHUKDQGFRXOGQRWGRVR/LNHLQPDQ\RWKHU$IULFDQQDWLRQVDVWURQJDUP\ZRXOG
EHFRPHDWKUHDWWR6WHYHQVVUXOHDQG6WHYHQVNQHZWKLV+HHPDVFXODWHGWKHDUP\
FXWWLQJLWGRZQDQGSULYDWL]LQJYLROHQFHWKURXJKVSHFLDOO\FUHDWHGSDUDPLOLWDU\XQLWV
OR\DORQO\WRKLP)LUVWFDPHWKH,QWHUQDO6HFXULW\8QLWWKH,68ZKLFK6LHUUD/HRQHV
ORQJVXIIHULQJSHRSOHNQHZDV,6KRRW87KHQFDPHWKH6SHFLDO6HFXULW\'LYLVLRQ
WKH66'ZKLFKWKH\NQHZDV6LDND6WHYHQV'RJV -DFNVRQS.HHQ
SRQWKHVHDFURQ\PV ,QWKHHQGWKHDEVHQFHRIDQDUP\VXSSRUWLQJWKHUHJLPH
ZRXOGDOVREHLWVXQGRLQJ,WZDVDJURXSRIRQO\VROGLHUVOHGE\&DSWDLQ9DOHQWLQH
6WUDVVHUWKDWSLWFKHGWKH$3&UHJLPHIURPSRZHURQ$SULO
,Q HVVHQFH WKHQ WKH SROLWLFDO HFRQRP\ RI SRVWLQGHSHQGHQFH $IULFD ZDV D
FRPELQDWLRQRISROLWLFDOLQVWLWXWLRQVZKLFKODFNHGFRQVWUDLQWVRQWKHH[HUFLVHRISRZHU


2I FRXUVH WKHUH LV YDULDWLRQ LQ WKLV ,Q *KDQD ZKHUH WKH FKLHIV ZHUH WRR FORVHO\ DOLJQHG ZLWK WKH
RSSRVLWLRQWR1NUXPDKKHWULHGWRUHGXFHWKHLUSRZHUV VHH5DWKERQH 



'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

DQGFRQFHQWUDWHGWKLVSRZHUDWWKHFHQWHU7KRVHZKRH[HUFLVHGSRZHUFUHDWHGHFRQRPLF
LQVWLWXWLRQV DQG SROLFLHV WR SHUSHWXDWH WKLV SRZHU DQG WKLV XQGHUPLQHG HFRQRPLF
GHYHORSPHQW 3URSHUW\ ULJKWV KDYH EHHQ LQVHFXUH DQG YHU\ LQHIFLHQWO\ RUJDQL]HG
PDUNHWVKDYHQRWIXQFWLRQHGZHOOVWDWHVKDYHEHHQZHDNDQGSROLWLFDOV\VWHPVKDYH
QRWSURYLGHGSXEOLFJRRGV7KLVYHFWRURIV\QGURPHVFDQEHVHHQWREHWKHUHVXOWRIWKH
QHRSDWULPRQLDOSROLWLFDOHTXLOLEULXP

Downloaded At: 20:07 21 September 2010

 7KH&DVHRI%RWVZDQD
7KLV FKDUDFWHUL]DWLRQ RI$IULFDQ HFRQRPLF GHFOLQH LV PDGH HYHQ PRUH SODXVLEOH E\
DQDO\]LQJWKHRQHFDVHRIYHU\UDSLGHFRQRPLFJURZWKVLQFHLQGHSHQGHQFH%RWVZDQD
$V$FHPRJOX-RKQVRQDQG5RELQVRQ  DQG/HLWK  SRLQWRXW%RWVZDQDKDV
QRWVXIIHUHGIURPWKHV\PSWRPVRIQHRSDWULPRQLDOLVP7KHUHKDVEHHQQRFHQWUDOL]DWLRQ
RISROLWLFDOSRZHUDQGGLVPDQWOLQJRIGHPRFUDF\DQGFKHFNVDQGEDODQFHV7KHVWDWH
KDV SURYLGHG SXEOLF JRRGV DQG VHFXUH DQG HIFLHQW SURSHUW\ ULJKWV ,Q FRQVHTXHQFH
WKHUHKDVEHHQVXVWDLQHGJURZWK7KRXJKPXFKRIWKLVLVGXHWRGLDPRQGVGLDPRQG
ZHDOWKZDVQRWVRPHWKLQJWKDWDLGHGHFRQRPLFJURZWKLQ6LHUUD/HRQH
7KHULJKWZD\WRWKLQNDERXWWKHHFRQRPLFVXFFHVVRI%RWVZDQDLVWRVHHWKDWLW
H[SHULHQFHGDYHU\GLIIHUHQWSDWKRILQVWLWXWLRQDOGHYHORSPHQWWKDQKDVEHHQWKHQRUP
LQ$IULFD7KLVZDVWUXHSULRUWRWKHFRORQLDOSHULRGGXULQJDQGFRORQLDOSHULRGDQG
DIWHUZDUGVDVZHOO7KUHHFRPSOHPHQWDU\IDFWRUVKDYHEHHQLPSRUWDQWLQ%RWVZDQDV
VXFFHVV VHH5RELQVRQ 7KHUVWLVWKDWWKHLQGHSHQGHQWVWDWHEHQHWHGIURP
D ORQJ SURFHVV RI VWDWH DQG LQVWLWXWLRQ IRUPDWLRQ LQKHULWHG IURP WKH 7VZDQD VWDWHV
6FKDSHUD  LV WKH VHPLQDO VWXG\ VHH DOVR 3DUVRQV  7KLV ZDV FUXFLDO IRU
GHYHORSLQJFKHFNVDQGEDODQFHVRQSROLWLFLDQVDQGGLVSXWHUHVROXWLRQDQGFUHDWLQJJRRG
JRYHUQDQFH 6FKDSHUDIRUGHVFULSWLRQ 7KHLQWHJUDWLYHVWUXFWXUHRI7VZDQDVWDWHV
DOVROLPLWHGUHJLRQDOLVPDQGIDFLOLWDWHGWKHHPHUJHQFHRIDQDWLRQDOLGHQWLW\'HFLVLRQV
DWWKHIRUPDWLRQRIWKHPRGHUQVWDWHLQWKHVEXLOWRQWKLVOHJDF\)RUH[DPSOHWKH
SUHLQGHSHQGHQFHQHJRWLDWLRQVRIWKHVVWULSSHGFKLHIVRIPDQ\RIWKHLUSRZHUVWR
GHWHUPLQHWKHORFDODOORFDWLRQRIUHVRXUFHVVXFKDVWKHULJKWWRDOOVWUD\FDWWOHDQGWR
XQSDLGODERUVHUYLFHVIURPWKHLUWULEHVPHQ
7KHVHFRQGLVWKDWE\KLVWRULFDOFKDQFHWKH7VZDQDVWDWHVHQGHGXSFRQWUROOLQJ
DVLQJOHLQGHSHQGHQWQDWLRQVRWKDWWKHLULQVWLWXWLRQVFRXOGKHOSWRGHWHUPLQHQDWLRQDO
LQVWLWXWLRQVZLWKRXWFRPLQJLQWRFRQLFWZLWKRWKHUVHWVRILQVWLWXWLRQVRULQWHUHVWVDV
KDSSHQHG LQ PRVW RWKHU 6XE6DKDUDQ$IULFDQ FRXQWULHV 7KH FRPSDUDWLYH QHJOHFW RI
WKHFRORQ\E\WKH%ULWLVKDGPLQLVWUDWLRQDOORZHGWKHVHLQVWLWXWLRQVQRWRQO\WRSHUVLVW
EXWWRGHYHORSIXUWKHULQPDUNHGFRQWUDVWWRRWKHUH[SHULHQFHVZLWKLQGLUHFWUXOH,WLV
LPSRUWDQWWRQRWHKRZWKHVHUVWWZRSRLQWVLQWHUDFW,WLVQRWMXVWWKDWWKHLQVWLWXWLRQV
RIWKHWUDGLWLRQDOVWDWHSHUVLVWHGEXWWKDWWKH\ZHUHGLIIHUHQW7KHUHDUHRWKHUSROLWLHVLQ
$IULFDVXFKDV%XUXQGL/HVRWKRRU5ZDQGDZKLFKFRUUHVSRQGTXLWHFORVHO\WRSUH
FRORQLDOSROLWLHV%XW%XUXQGLDQG5ZDQGDKDGYHU\GLIIHUHQWVWDWHLQVWLWXWLRQVWKDQWKH
7VZDQDGLG VHH9DQVLQDIRUWKH5ZDQGDQFDVH ZKLOHWKRVHRI/HVRWKRZHUH
KHDYLO\GLVWRUWHGE\WKHQHHGWRPRELOL]HZRUNHUVIRUWKHPLQHVLQWKH5DQG


Downloaded At: 20:07 21 September 2010

:K\LV$IULFD3RRU"

)LQDOO\ HOLWH LQWHUHVWV ZHUH SRZHUIXOO\ UHSUHVHQWHG LQ HDUO\ LQGHSHQGHQFH


JRYHUQPHQWV 6LQFH HOLWHV ZHUH KHDYLO\ LQYHVWHG LQ UDQFKLQJ WKLV OHG WR D VRFLDOO\
HIFLHQWGHYHORSPHQWRIWKHUDQFKLQJLQGXVWU\DQGVHFXUHSURSHUW\ULJKWVZKLFKJUHDWO\
IDFLOLWDWHGWKHHDUO\JURZWKRIWKHHFRQRP\7KLVODVWSRLQWLVFOHDUO\GULYHQKRPHE\WKH
SHUIRUPDQFHRIWKH%RWVZDQD0HDW&RUSRUDWLRQWKHFDWWOHPDUNHWLQJERDUG7KLVDFWHG
WRGHYHORSWKHUDQFKLQJHFRQRP\VRPHWKLQJZKLFKWKHHOLWHZHUHKHDYLO\LQYHVWHGLQ
7KLVZDVDYHU\GLIIHUHQWVLWXDWLRQIURP*KDQDVD\ZKHUHWKHFRFRDIDUPHUVPDQ\LQ
WKH$VDQWHUHJLRQGLGQRWVXSSRUWWKHJRYHUQPHQWRI1NUXPDK:HEHOLHYHKRZHYHU
WKDWWKLVHIIHFWLVPXFKOHVVLPSRUWDQWWKDQWKH KLVWRULFDO HYROXWLRQ RI LQVWLWXWLRQV LQ
%RWVZDQD,QWKH&{WHG,YRLUHSRVWLQGHSHQGHQFHSROLWLFVZDVFRQWUROOHGE\VRXWKHUQ
HOLWHVZLWKDODUJHLQWHUHVWLQWKHFRFRDHFRQRP\VWDUWLQJULJKWDWWKHWRSZLWK+RXSKRXsW
%RLJQ\ :LGQHU %XWZKLOHWKLVFUHDWHGDSHULRGRILQLWLDOVWDELOLW\DQGSURVSHULW\
LWGLGQRWVWRSWKHVRFLHW\GHFOLQLQJLQWRQHRSDWULPRQLODLVPDQGFLYLOZDU
7KHLPSDFWRI%ULWLVKFRORQLDOLVPLQ%RWVZDQDLVYHU\UHYHDOLQJO\GLVFXVVHGE\
0DVLUH  ,QWKHV0DVLUHSUHVLGHQWRI%RWVZDQDIURPWRZDVDQ
HQWHUSULVLQJIDUPHUZKRGHYHORSHGQHZFXOWLYDWLRQWHFKQLTXHVIRUVRUJKXPDQGIRXQGD
FXVWRPHULQ9U\EXUJ0LOOLQJDFRPSDQ\LQ6RXWK$IULFD+HZHQWWRWKHVWDWLRQPDVWHU
DW/REDWVHDQGDVNHGWRUHQWWZRUDLOWUXFNVWRPRYHKLVFURSWR9U\EXUJ7KHVWDWLRQ
PDVWHUUHIXVHG7KHQKHJRWDZKLWHIULHQGWRLQWHUYHQHWKHVWDWLRQPDVWHUDJUHHGDW
WLPHVWKHUDWHIRUZKLWHV+HJDYHXS
,WZDVWKHSUDFWLFHRIWKHZKLWHVQRWMXVWWKHODZVSURKLELWLQJ$IULFDQVIURPRZQLQJIUHHKROG
ODQGRUKROGLQJWUDGLQJOLFHQVHVWKDWNHSWEODFNVIURPGHYHORSLQJHQWHUSULVHVLQ%HFKXDQDODQG
0DVLUH S 

/XFNLO\%RWVZDQDZDVVDYHGWKHZRUVWH[FHVVHVRIWKLV
,WDSSHDUVWREHWKHKLVWRULFDOHYROXWLRQRISROLWLFDOLQVWLWXWLRQVZKLFKFDQH[SODLQ
ZK\%RWVZDQDKDVQRWUHJUHVVHGLQWRWKHW\SHRISDWULPRQLDOSROLWLFDOHTXLOLEULXPZKLFK
KDVEHHQVRSUHYDOHQWDQGUHVLOLHQWHOVHZKHUHLQ$IULFD7KH%RWVZDQDSDWKLQGLFDWHV
ZKDWFRXOGKDYHKDSSHQHGLQWKHDEVHQFHRIFRORQLDOUXOHDQGKDG$IULFDQSROLWLHVEHHQ
DEOHWRRUJDQL]HWKHPVHOYHVLQWRPRUHFRKHUHQWWHUULWRULHV



&21&/86,216

,QWKLVSDSHUZHKDYHWDNHQIRUJUDQWHGWKDWWKHFXUUHQWSRYHUW\RI$IULFDQVRFLHWLHVLV
H[SODLQHGE\WKHQDWXUHRIWKHLULQVWLWXWLRQVQRWWKHLUJHRJUDSK\RUFXOWXUHV2EYLRXVO\
DORWPRUHUHVHDUFKQHHGVWREHGRQHRQWKHVHWRSLFV7KHZRUNRQJHRJUDSK\WHQGVWREH
YHU\FUXGHDQGV\VWHPDWLFHPSLULFDOUHVHDUFKRQFXOWXUHKDVKDUGO\EHJXQ1HYHUWKHOHVV
LQVWHDGRIJHWWLQJLQWRWKLVGHEDWHRUEHODERULQJWKHSULPDF\RILQVWLWXWLRQVZHKDYHWDNHQ
IRUJUDQWHGWKHLPSRUWDQFHRILQVWLWXWLRQVDQGDWWHPSWHGDYHU\VSHFXODWLYHGLVFXVVLRQ
RIZK\$IULFDQLQVWLWXWLRQVGHYHORSHGLQWKHZD\WKH\GLGRYHUWLPHDQGZKHQDQGZK\
$IULFDGLYHUJHGIURPWKHUHVWRIWKHZRUOG+LVWRULFDOO\QRSDUWRIWKHZRUOGKDGWKH
W\SHRIHFRQRPLFLQVWLWXWLRQVUHTXLUHGIRUVXVWDLQHGHFRQRPLFSURJUHVVWKRXJKVRPH
SODFHVVXFKDVWKH*UHHNFLW\VWDWHV 0RUULV RU$QFLHQW5RPH 6DOOHU GLG
KDYHHQRXJKRIWKHPWRSURVSHUIRUTXLWHVXVWDLQHGSHULRGVRIWLPH7KLVZDVHYHQWUXH


Downloaded At: 20:07 21 September 2010

'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ

LQ$IULFDLQ$NVXPIRULQVWDQFHZKLFKZDVSUREDEO\DVSURVSHURXVDVDQ\SODFHLQWKH
ZRUOGLQ$'<HWRYHUWKHODVW\HDUV$IULFDGLGQRWH[SHULHQFHWKHVDPHW\SHV
RILQVWLWXWLRQDOG\QDPLFVDV:HVWHUQ(XURSHGLGHYHQLIWKHSRVW$NVXPLWHSROLW\LQ
(WKLRSLDH[SHULHQFHGDYHU\(XURSHDQOLNHIHXGDOLVP
$EVROXWLVWDQGSDWULPRQLDOSROLWLFDOV\VWHPVDQGWKHUHVXOWLQJHFRQRPLFLQVWLWXWLRQV
DUH KLJKO\ SHUVLVWHQW RYHU WLPH HYHU\ZKHUH ,W LV SRVVLEOH WKDW VRPH HQGRJHQRXV
G\QDPLFV FDQ OHDG WR LQVWLWXWLRQDO FKDQJH DV SHUKDSV RFFXUUHG ZLWK WKH 7VZDQD
VRFLHWLHVKLVWRULFDOO\EXWVXFKLQVWDQFHVDUHUDUH,QGHHGLQWKH(XURSHDQFDVHLWVHHPV
WRKDYHEHHQODUJHVKRFNVZKLFKOHGWRLQVWLWXWLRQDOFKDQJH7KH%ODFN'HDWKKHOSHG
WRSUHFLSLWDWHWKHFROODSVHRIVHUIGRPLQ:HVWHUQ(XURSHDQGWKHGHIHDWRIDEVROXWLVP
LQ%ULWDLQDQGWKHFKDQJHWRDQRQSDWULPRQLDOVWDWHWRRNSODFHLQWKHFRQWH[WRIUDSLG
HFRQRPLFFKDQJHLQGXFHGE\WKHGLVFRYHU\RIWKH$PHULFDV7KRXJKZHNQRZOLWWOH
DERXW ZKDW KDSSHQHG LQ $IULFD GXULQJ WKH %ODFN 'HDWK ZKLFK PD\ DFWXDOO\ KDYH
HPDQDWHGIURP(WKLRSLD WKH$IULFDQSDWKRILQVWLWXWLRQVVWURQJO\UHVHPEOHVWKDWZKLFK
%UHQQHU  VXJJHVWHGIRU(DVWHUQ(XURSH,QWKLVFDVHWKHVKRFNRIWKH%ODFN'HDWK
LQWHUDFWHGZLWKLQLWLDOO\VWURQJDEVROXWLVWSROLWLFDOLQVWLWXWLRQVWRFUHDWHDQLQWHQVLFDWLRQ
RIVHUIGRPUDWKHUWKDQWKHUHYHUVH/DWHU$FHPRJOX-RKQVRQDQG5RELQVRQ D 
SRLQWHG RXW VRPHWKLQJ VLPLODU LQ WKH FDVH RI$WODQWLF WUDGH H[SDQVLRQ:KHUH LQLWLDO
LQVWLWXWLRQVZHUHUHODWLYHO\EHWWHUDVLQ%ULWDLQWKH\VXEVHTXHQWO\LPSURYHG%XWZKHUH
LQVWLWXWLRQVZHUHZRUVHDVLQ6SDLQWKH\GHWHULRUDWHG,QWKLVZD\ZKDWPLJKWSHUKDSV
KDYHEHHQUHODWLYHO\VPDOOGLIIHUHQFHVLQLQVWLWXWLRQVJHWPDJQLHGRYHUWLPH7KRVH
WKDW ZHUH LQLWLDOO\ D OLWWOH EHWWHU EHFRPH PXFK EHWWHU RYHU WLPH EHFDXVH RI WKH ZD\
WKH\LQWHUDFWZLWKVKRFNVZKLOHWKRVHZKLFKPD\KDYHEHHQRQO\DOLWWOHZRUVHWRVWDUW
ZLWKJHWVXEVWDQWLDOO\ZRUVH1RUPDOO\WKHUHFDQEHIHHGEDFNVLQWKLVSURFHVVWKDWOLPLW
ZKDWFDQKDSSHQ%XW$IULFDZDVPRUHLVRODWHGIURPWKHVHDQGH[SHULHQFHGPXFKPRUH
SHUQLFLRXV LQVWLWXWLRQDO G\QDPLFV HVSHFLDOO\ ZLWK UHVSHFW WR VODYHU\ DQG LWV OHJDFLHV
DQGVXEVHTXHQWO\FRORQL]DWLRQ$IULFDLVSRRUWRGD\EHFDXVHLWKDVH[SHULHQFHGDORQJ
YLFLRXVFLUFOHRIWKHGHYHORSPHQWRISROLWLFDODQGHFRQRPLFLQVWLWXWLRQV

5()(5(1&(6
$EKDUDP$UWKXU DQG +DELE 6HVD\   5HJLRQDO 3ROLWLFV DQG 6RFLDO 6HUYLFH 3URYLVLRQ VLQFH
,QGHSHQGHQFHLQ&0DJEDLO\)\OHHG7KH6WDWHDQGWKH3URYLVLRQRI6RFLDO6HUYLFHVLQ6LHUUD
/HRQHVLQFH,QGHSHQGHQFH2[IRUG&RGHVDULD
$FHPRJOX 'DURQ DQG 6LPRQ -RKQVRQ   'LVHDVH DQG 'HYHORSPHQW 7KH (IIHFW RI /LIH
([SHFWDQF\RQ(FRQRPLF*URZWK-RXUQDORI3ROLWLFDO(FRQRP\
$FHPRJOX 'DURQ 6LPRQ -RKQVRQ DQG -DPHV $ 5RELQVRQ   7KH &RORQLDO 2ULJLQV RI
&RPSDUDWLYH 'HYHORSPHQW $Q (PSLULFDO ,QYHVWLJDWLRQ $PHULFDQ (FRQRPLF 5HYLHZ 

$FHPRJOX'DURQ6LPRQ-RKQVRQDQG-DPHV$5RELQVRQ  5HYHUVDORI)RUWXQH*HRJUDSK\
DQG,QVWLWXWLRQVLQWKH0DNLQJRIWKH0RGHUQ:RUOG,QFRPH'LVWULEXWLRQ4XDUWHUO\-RXUQDO
RI(FRQRPLFV
$FHPRJOX'DURQ6LPRQ-RKQVRQDQG-DPHV$5RELQVRQ  $Q$IULFDQ6XFFHVV%RWVZDQD
LQ'DQL5RGULNHG,Q6HDUFKRI3URVSHULW\$QDO\WLF1DUUDWLYHVRQ(FRQRPLF*URZWK3ULQFHWRQ
3ULQFHWRQ8QLYHUVLW\3UHVV


:K\LV$IULFD3RRU"
$FHPRJOX'DURQ6LPRQ-RKQVRQDQG-DPHV$5RELQVRQ D 7KH5LVHRI(XURSH$WODQWLF
7UDGH,QVWLWXWLRQDO&KDQJHDQG(FRQRPLF*URZWK$PHULFDQ(FRQRPLF5HYLHZ
$FHPRJOX'DURQ6LPRQ-RKQVRQDQG-DPHV$5RELQVRQ E ,QVWLWXWLRQVDVD)XQGDPHQWDO
&DXVH RI 'HYHORSPHQW LQ 3KLOLSSH $JKLRQ DQG 6WHYHQ 'XUODXI HGV 7KH +DQGERRN RI
(FRQRPLF*URZWK$PVWHUGDP1RUWK+ROODQG
$FHPRJOX'DURQDQG-DPHV$5RELQVRQ  :K\1DWLRQV)DLOIRUWKFRPLQJ1HZ<RUN&URZQ
$FHPRJOX 'DURQ DQG )DEUL]LR =LOLERWWL   3URGXFWLYLW\ 'LIIHUHQFHV 4XDUWHUO\ -RXUQDO RI
(FRQRPLFV
$QGHUVRQ &KDUOHV : )UHG 5 YRQ GHU 0HKGHQ DQG &UDZIRUG <RXQJ   ,VVXHV RI 3ROLWLFDO
'HYHORSPHQWQG(GLWLRQ(QJOHZRRG&OLIIV3UHQWLFH+DOO
$XVWHQ5DOSK$DQG'DQLHO+HDGULFN  7KH5ROHRI7HFKQRORJ\LQWKH$IULFDQSDVW$IULFDQ
6WXGLHV5HYLHZ
$XVWLQ*DUHWK  %HWZHHQDEROLWLRQDQGMLKDGWKH$VDQWHUHVSRQVHWRWKHHQGLQJRIWKH$WODQWLF
VODYHWUDGHLQ5RELQ&/DZHG)URP6ODYH7UDGHWR/HJLWLPDWH&RPPHUFH
1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV

Downloaded At: 20:07 21 September 2010

$XVWLQ*DUHWK  /DERXU/DQGDQG&DSLWDOLQ*KDQD)URP6ODYHU\WR)UHH/DERXULQ$VDQWH


5RFKHVWHU8QLYHUVLW\RI5RFKHVWHU3UHVV
$XVWLQ *DUHWK   5HVRXUFHV WHFKQLTXHV DQG VWUDWHJLHV VRXWK RI WKH 6DKDUD UHYLVLWLQJ WKH
IDFWRU HQGRZPHQWV SHUVSHFWLYH RQ $IULFDQ HFRQRPLF GHYHORSPHQW  (FRQRPLF
+LVWRU\5HYLHZ
%DWHV5REHUW+  0DUNHWVDQG6WDWHVLQ7URSLFDO$IULFD%HUNHOH\8QLYHUVLW\RI&DOLIRUQLD
3UHVV
%D\DUW-HDQ)UDQoRLV  7KHVWDWHLQ$IULFDWKHSROLWLFVRIWKHEHOO\1HZ<RUN/RQJPDQ
%UDWWRQ 0LFKDHO DQG 1LFRODV YDQ GH :DOOH   'HPRFUDWLF ([SHULPHQWV LQ $IULFD 5HJLPH
WUDQVLWLRQVLQFRPSDUDWLYHSHUVSHFWLYH1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
%UHQQHU 5REHUW   $JUDULDQ &ODVV 6WUXFWXUH DQG (FRQRPLF 'HYHORSPHQW LQ 3UHLQGXVWULDO
(XURSH3DVWDQG3UHVHQW
%XQG\ &ROLQ   7KH 5LVH DQG )DOO RI WKH 6RXWK $IULFDQ 3HDVDQWU\ %HUNHOH\ 8QLYHUVLW\ RI
&DOLIRUQLD3UHVV
&DOODJK\7KRPDV0  7KH6WDWH6RFLHW\6WUXJJOH=DLUHLQ&RPSDUDWLYH3HUVSHFWLYH1HZ
<RUN&ROXPELD8QLYHUVLW\3UHVV
&RRSHU )UHGHULFN   $IULFD VLQFH  7KH 3DVW RI WKH 3UHVHQW 1HZ <RUN &DPEULGJH
8QLYHUVLW\3UHVV
&UXPPH\'RQDOG  $E\VVLQLDQ)HXGDOLVP3DVWDQG3UHVHQW
'DOWRQ *HRUJH +   +LVWRU\ 3ROLWLFV DQG (FRQRPLF 'HYHORSPHQW LQ /LEHULD -RXUQDO RI
(FRQRPLF+LVWRU\
'DYLHV9LFWRU$%  6LHUUD/HRQHVHFRQRPLFJURZWKSHUIRUPDQFHLQ%HQQR-
1GXOXHWDOHGV7KH3ROLWLFDO(FRQRP\RI*URZWKLQ$IULFD9ROXPH1HZ<RUN
&DPEULGJH8QLYHUVLW\3UHVV
'RXJODV0DU\  /HOH(FRQRP\FRPSDUHGWRWKH%XVKRQJLQ3DXO%RKDQQDQDQG*HRUJH
'DOWRQHGV0DUNHWVLQ$IULFD(YDQVWRQ1RUWKZHVWHUQ8QLYHUVLW\3UHVV
'RXJODV0DU\  7KH/HOHRI.DVDL1HZ<RUN2[IRUG8QLYHUVLW\3UHVV
'\H$ODQ  7KH,QVWLWXWLRQDO)UDPHZRUNLQ9LFWRU%XOPHU7KRPDV-RKQ&RDWVZRUWKDQG
5REHUWR&RUWpV&RQGHHGV7KH&DPEULGJH(FRQRPLF+LVWRU\RI/DWLQ$PHULFD9ROXPH,,7KH
/RQJ7ZHQWLHWK&HQWXU\1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV


'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ
(QJHUPDQ 6WDQOH\ /   6ODYHU\ (PDQFLSDWLRQ DQG )UHHGRP &RPSDUDWLYH 3HUVSHFWLYHV
%DWRQ5RXJH/RXLVLDQD6WDWH8QLYHUVLW\3UHVV
(QJOHEHUW3LHUUH  6WDWH/HJLWLPDF\DQG'HYHORSPHQWLQ$IULFD%RXOGHU/\QQH5LHQQHU
(VWHEDQ -RDQ DQG 'HEUD\ 5D\   2Q WKH 0HDVXUHPHQW RI 3RODUL]DWLRQ (FRQRPHWULFD 

)HLQVWHLQ&KDUOHV+  $Q(FRQRPLF+LVWRU\RI6RXWK$IULFD&RQTXHVW'LVFULPLQDWLRQDQG
'HYHORSPHQW1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
*ROGVWHLQ0DUNXVDQG&KULVWRSKHU8GU\  7KH3URWVRI3RZHU/DQG5LJKWVDQG$JULFXOWXUDO
,QYHVWPHQWLQ*KDQD-RXUQDORI3ROLWLFDO(FRQRP\
*RRG\-DFN  7HFKQRORJ\7UDGLWLRQDQGWKH6WDWHLQ$IULFD1HZ<RUN&DPEULGJH8QLYHUVLW\
3UHVV
*RXOG3HWHU5  7UDQVSRUWDWLRQLQ*KDQD1RUWKZHVWHUQ8QLYHUVLW\6WXGLHVLQ*HRJUDSK\
1R

Downloaded At: 20:07 21 September 2010

*UDFH-RKQ  6ODYHU\DQG(PDQFLSDWLRQDPRQJVWWKH0HQGHLQ6LHUUD/HRQH


LQ60\HUVDQG,.RS\WRIIHGV6ODYHU\LQ$IULFD0DGLVRQ8QLYHUVLW\RI:LVFRQVLQ3UHVV
+DUULV:LOOLDP9  7KH/DWH5HSXEOLFLQ:DOWHU6FKHLGHO,DQ0RUULVDQG5LFKDUG6DOOHU
HGV 7KH &DPEULGJH (FRQRPLF +LVWRU\ RI WKH *UHFR5RPDQ :RUOG 1HZ <RUN &DPEULGJH
8QLYHUVLW\3UHVV
+HUEVW-HIIUH\,  6WDWHVDQG3RZHULQ$IULFD3ULQFHWRQ3ULQFHWRQ8QLYHUVLW\3UHVV
+LOO3ROO\  7KH0LJUDQW&RFRD)DUPHUVRI6RXWKHUQ*KDQD$6WXG\LQ5XUDO&DSLWDOLVP
1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
+RSNLQV $QWKRQ\ *   $Q (FRQRPLF +LVWRU\ RI :HVW $IULFD 1HZ <RUN $GGLVRQ :HVOH\
/RQJPDQ
,OLIIH -RKQ   7KH (PHUJHQFH RI $IULFDQ &DSLWDOLVP 0LQQHDSROLV 8QLYHUVLW\ RI 0LQQHVRWD
3UHVV
,QLNRUL -RVHSK (   7KH ,PSRUW RI )LUHDUPV LQWR :HVW $IULFD  $ TXDQWLWDWLYH
DQDO\VLV-RXUQDORI$IULFDQ+LVWRU\
,QLNRUL -RVHSK (   7KH &KDLQLQJ RI D &RQWLQHQW WKH H[SRUW GHPDQG IRU &DSLYHV DQG WKH
+LVWRU\RI$IULFD6RXWKRIWKH6DKDUD0RQD8QLYHUVLW\RIWKH:HVW,QGLHV
-DFNVRQ0LFKDHO  ,Q6LHUUD/HRQH'XUKDP'XNH8QLYHUVLW\3UHVV
.HHQ'DYLG  &RQLFW &ROOXVLRQLQ6LHUUD/HRQH1HZ<RUN3DOJUDYH
.LOOLFN7RQ\  'HYHORSPHQW(FRQRPLFVLQ$FWLRQ/RQGRQ+HLQHPDQQ
/DQJH 0DWWKHZ   /LQHDJHV RI 'HVSRWLVP DQG 'HYHORSPHQW %ULWLVK &RORQLDOLVP DQG 6WDWH
3RZHU&KLFDJR8QLYHUVLW\RI&KLFDJR3UHVV
/DZ5RELQ&  :KHHOHG7UDQVSRUWDWLRQLQ3UH&RORQLDO:HVW$IULFD$IULFD
/DZ5RELQ&  7KH6ODYH&RDVWRI:HVW$IULFD7KH,PSDFWRIWKH$WODQWLF6ODYH
7UDGHRQDQ$IULFDQ6RFLHW\2[IRUG7KH&ODUHQGRQ3UHVV
/HLWK&ODUN-  :K\%RWVZDQD3URVSHUHG0RQWUHDO0F*LOO8QLYHUVLW\3UHVV
/HZLV : $UWKXU   (FRQRPLF 'HYHORSPHQW ZLWK 8QOLPLWHG 6XSSOLHV RI /DERXU 7KH
0DQFKHVWHU6FKRRO
/LSWRQ0LFKDHO  :K\3RRU3HRSOH6WD\3RRU8UEDQ%LDVLQ:RUOG'HYHORSPHQW&DPEULGJH
+DUYDUG8QLYHUVLW\3UHVV
/RYHMR\3DXO(  7UDQVIRUPDWLRQVLQ6ODYHU\$+LVWRU\RI6ODYHU\LQ$IULFDQG(GLWLRQ
1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV


:K\LV$IULFD3RRU"
/XJDUG)UHGHULFN  7KH'XDO0DQGDWHLQ%ULWLVK7URSLFDO$IULFD/RQGRQ:LOOLDP%ODFNZRRG
DQG6RQV
0DPGDQL 0DKPRRG   &LWL]HQ DQG 6XEMHFW &RQWHPSRUDU\ $IULFD DQG WKH /HJDF\ RI /DWH
&RORQLDOLVP3ULQFHWRQ3ULQFHWRQ8QLYHUVLW\3UHVV
0DQQLQJ3DWULFN  6ODYHU\DQG$IULFDQ/LIH1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
0DVLUH4XHWW.-  9HU\%UDYHRU9HU\)RROLVK"0HPRLUVRIDQ$IULFDQ'HPRFUDW*DERURQH
0DFPLOODQ
0F3KHH$OODQ  7KH(FRQRPLF5HYROXWLRQLQ%ULWLVK:HVW$IULFD/RQGRQ*HRUJH5RXWOHGJH
6RQV
0LJGDO-RHO6  6WURQJ6RFLHWLHVDQG:HDN6WDWHV1HZ<RUN&DPEULGJH8QLYHUVLW\3UHVV
0RUULV,DQ  (FRQRPLF*URZWKLQ$QFLHQW*UHHFH-RXUQDORI,QVWLWXWLRQDODQG7KHRUHWLFDO
(FRQRPLFV

Downloaded At: 20:07 21 September 2010

0RUULV ,DQ DQG %DUU\ % 3RZHOO   *UHHNV +LVWRU\ &XOWXUH DQG 6RFLHW\ (QJOHZRRG &OLIIV
3UHQWLFH+DOO
1NXUXQ]L]D -DQYLHU DQG )ORULEHUW 1JDUXNR   ([SODLQLQJ *URZWK LQ %XUXQGL 
LQ E\ %HQQR - 1GXOX 6WHSKHQ $ 2&RQQHOO -HDQ3DXO $]DP DQG 5REHUW + %DWHV HGV
7KH 3ROLWLFDO (FRQRP\ RI *URZWK LQ $IULFD  &RXQWU\ &DVH 6WXGLHV 1HZ<RUN
&DPEULGJH8QLYHUVLW\3UHVV
1XQQ 1DWKDQ   7KH /RQJ 7HUP (HFWV RI $IULFDV 6ODYH 7UDGHV 4XDUWHUO\ -RXUQDO RI
(FRQRPLFV
3DOPHU5RELQDQG41HLO3DUVRQVHGV  7KH5RRWVRI5XUDO3RYHUW\LQ&HQWUDODQG6RXWKHUQ
$IULFD/RQGRQ+HLQHPDQQ(GXFDWLRQDO
3DQNKXUVW5LFKDUG  $Q,QWURGXFWLRQWRWKH(FRQRPLF+LVWRU\RI(WKLRSLDIURPHDUO\WLPHVWR
/RQGRQ6LGJZLFNDQG-DFNVRQ/WG
3DUVRQV41HLO  $Q(FRQRPLF+LVWRU\RI.LQJ.KDPDV&RXQWU\LQ5RELQ3DOPHUDQG
4 1HLO 3DUVRQV HGV 7KH 5RRWV RI 5XUDO 3RYHUW\ LQ &HQWUDO DQG 6RXWKHUQ $IULFD /RQGRQ
+HLQHPDQQ(GXFDWLRQDO
3KLOLSSVRQ 'DYLG :   $QFLHQW (WKLRSLD $NVXP ,WV $QWHFHGHQWV DQG 6XFFHVVRUV /RQGRQ
%ULWLVK0XVHXP3UHVV
3LQFXV6WHYHQ&$  7KH)LUVW0RGHUQ5HYROXWLRQ1HZ+DYHQ<DOH8QLYHUVLW\3UHVV
3LUHQQH+HQUL  0RKDPPHGDQG&KDUODPDJQH1HZ<RUN%DUQHVDQG1REOH
3ODWWHDX-HDQ3KLOLSSH  ,QVWLWXWLRQV6RFLDO1RUPVDQG(FRQRPLF'HYHORSPHQW$PVWHUGDP
+DUZRRG$FDGHPLF3XEOLVKHUV
3RVWDQ00  0HGLHYDO$JUDULDQ6RFLHW\LQLWV3ULPH(QJODQGLQ003RVWDQHG7KH
$JUDULDQ/LIHRIWKH0LGGOH$JHV9ROXPHRIWKH&DPEULGJH(FRQRPLF+LVWRU\RI(XURSH
&DPEULGJH8QLYHUVLW\3UHVV1HZ<RUNSS
5DQJHU7HUHQFH2  7KH,QYHQWLRQRI7ULEDOLVPLQ=LPEDEZH*ZHUX0DPER3UHVV
5DWKERQH 5LFKDUG   1NUXPDK  WKH &KLHIV 3ROLWLFV RI &KLHIWDLQF\ LQ *KDQD 
&ROXPEXV2KLR6WDWH8QLYHUVLW\3UHVV
5HQR :LOOLDP   &RUUXSWLRQ DQG 6WDWH 3ROLWLFV LQ 6LHUUD /HRQH 1HZ <RUN &DPEULGJH
8QLYHUVLW\3UHVV
5HQR:LOOLDP  3ROLWLFDO1HWZRUNVLQD)DLOLQJ6WDWH7KH5RRWVDQG)XWXUHRI9LROHQW&RQLFW
LQ6LHUUD/HRQH,3*
5LFKDUGV3DXO  )LJKWLQJIRUWKH5DLQIRUHVW:DU<RXWKDQG5HVRXUFHVLQ6LHUUD/HRQH2[IRUG
-DPHV&XUUH\


'DURQ$FHPRJOXHDQG-DPHV$5RELQVRQ
5LFKDUGV:$  7KH,PSRUWRI)LUHDUPVLQWR:HVW$IULFDLQWKHHLJKWHHQWKFHQWXU\-RXUQDO
RI$IULFDQ+LVWRU\
5RELQVRQ -DPHV$   %RWVZDQD DV D 5ROH 0RGHO IRU &RXQWU\ 6XFFHVV:,'(5:RUNLQJ
3DSHU
5RELQVRQ-DPHV$DQG5DJQDU7RUYLN  (QGRJHQRXV3UHVLGHQWLDOLVP1%(5:RUNLQJ3DSHU

6DFKV-HIIUH\'DQG:DUQHU$QGUHZ0  6RXUFHVRI6ORZ*URZWKLQ$IULFDQ(FRQRPLHV
-RXUQDORI$IULFDQ(FRQRPLHV
6DQGEURRN 5LFKDUG   7KH 3ROLWLFV RI$IULFDV (FRQRPLF 6WDJQDWLRQ 1HZ<RUN &DPEULGJH
8QLYHUVLW\3UHVV
6DOOHU5LFKDUG  )UDPLQJWKH'HEDWHRYHUWKH$QFLHQW(FRQRP\LQ-RVHSK*0DQQLQJDQG
,DQ 0RUULV HGV 7KH$QFLHQW (FRQRP\ (YLGHQFH DQG 0RGHOV 6WDQIRUG 6WDQIRUG 8QLYHUVLW\
3UHVV
6FKDSHUD,VDDF  7KH1JZDWRLQ0H\HU)RUWHVDQG(GZDUG((YDQV3ULWFKDUGHGV$IULFDQ
3ROLWLFDO6\VWHPV1HZ<RUN2[IRUG8QLYHUVLW\3UHVV

Downloaded At: 20:07 21 September 2010

6FKDSHUD,VDDF  7ULEDO,QQRYDWRUV7VZDQD&KLHIVDQG6RFLDO&KDQJH/RQGRQ


$WKORQH3UHVV
7KRUQWRQ-RKQ  7KH.LQJGRPRI.RQJR0DGLVRQ8QLYHUVLW\RI:LVFRQVLQ3UHVV
7KRUQWRQ-RKQ  3UH&RORQLDO$IULFDQ,QGXVWU\DQGWKH$WODQWLF7UDGH$IULFDQ
(FRQRPLF+LVWRU\5HYLHZ
YDQGHU+RUVW6KHLOD  1DWLYH/DERXULQ6RXWK$IULFD/RQGRQ2[IRUG8QLYHUVLW\3UHVV
9DQVLQD-DQ  .LQJGRPVRIWKH6DYDQQDK0DGLVRQ8QLYHUVLW\RI:LVFRQVLQ3UHVV
9DQVLQD-DQ  7KH&KLOGUHQRI:RRW$+LVWRU\RIWKH.XED3HRSOHV0DGLVRQ8QLYHUVLW\RI
:LVFRQVLQ3UHVV
9DQVLQD-DQ  $QWHFHGHQWVWR0RGHUQ5ZDQGD0DGLVRQ8QLYHUVLW\RI:LVFRQVLQ3UHVV
9DQVLQD-DQ  %HLQJ&RORQL]HG7KH.XED([SHULHQFHLQ5XUDO&RQJR0DGLVRQ
8QLYHUVLW\RI:LVFRQVLQ3UHVV
:HEHU0D[  (FRQRP\DQG6RFLHW\9ROXPH%HUNHOH\8QLYHUVLW\RI&DOLIRUQLD3UHVV
:HLO 'DYLG 1   $FFRXQWLQJ IRU WKH (IIHFW RI +HDOWK RQ (FRQRPLF *URZWK 4XDUWHUO\
-RXUQDORI(FRQRPLFV
:HLO 'DYLG 1 4XDPUXO$VKUDI DQG$VKOH\ /HVWHU   :KHQ 'RHV ,PSURYLQJ +HDOWK 5DLVH
*'3"1%(50DFURHFRQRPLFV$QQXDO
:LGQHU -HQQLIHU$   7KH 2ULJLQV RI$JULFXOWXUDO 3ROLF\ LQ WKH &{WH G,YRLUH -RXUQDO RI
'HYHORSPHQW6WXGLHV
:LONV,YRU  $VDQWHLQWKH1LQHWHHQWK&HQWXU\QG(GLWLRQ1HZ<RUN&DPEULGJH8QLYHUVLW\
3UHVV
:LOVRQ)UDQFLV  /DERXULQWKH6RXWK$IULFDQJROGPLQHV&DPEULGJH&DPEULGJH
8QLYHUVLW\3UHVV
<RXQJ&UDZIRUG  7KH$IULFDQFRORQLDOVWDWHLQFRPSDUDWLYHSHUVSHFWLYH1HZ+DYHQ<DOH
8QLYHUVLW\3UHVV



You might also like