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EOG ECON113 Project Topics: August 2018

1. Industrial Policy and Economic Competitiveness: The Development of the Banking


and Financial Sector in Singapore
a. The banking and financial sector in Singapore has undergone major structural changes since
1998. What do are these key changes and how have they changed Singapore’s position as a
regional financial center? How much of the change could be attributed to the impact of global
market forces and how much to the active use of industrial policy by the government?
b. How do you think Singapore’s comparative advantage in the banking and financial sector in
Singapore will evolve in the next 10 years? Do you see a role for active industrial policy in
steering these future changes?
c. What lessons can you draw from the use of industrial policy in the banking and financial
sector in Singapore over the past two decades? How relevant do you think these experiences
are in developing the comparative advantage of other industries/sectors in Singapore?

2. Singapore and “Brexit”: Understanding Cross-Border Labor Mobility


a. Many analysts attribute the UK’s decision to leave the EU in 2016 to its citizens’
unhappiness over the influx of foreign workers and immigrants. How do you think the influx
of foreign workers and immigrants has affected the UK economy and why do you think it has
led to such a drastic change in UK’s foreign economic policy?
b. Singapore has long been known for its liberal policy on foreign workers and immigration.
However, the policy has seen some major changes since the early 2000s. Explain why these
changes happened and how they have affected the growth and development of the Singapore
economy, from both the “efficiency” and the “equity” perspectives. Do you expect to see a
“Brexit” moment in Singapore in future?
c. What lessons can you draw from the different experiences of Singapore and the UK on
labor mobility policy? What recommendations would you provide to other European countries
such as Hungary and Italy that are trying to re-set their labor mobility policies?

3. Regional Economic Integration in Asia-Pacific: CPTPP, RCEP and ASEAN


a. The momentum of regional economic integration in Asia is currently dominated by two
economic groupings: the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). How
do you think these two groupings will evolve over time? Do you foresee any tensions in
regional trade relationships that arise out of the competing interests of the two groupings?
b. Both Indonesia and Vietnam are members of ASEAN and as such, both are part of RCEP.
Yet, they have made different decisions with regard to the CPTPP membership. Explain what
their key considerations are. If you were the economic advisor for these two countries, would
you advise them to change their decisions?
c. How relevant do you think the ASEAN Economic Community (AEC) is in the presence of
CPTPP and RCEP? If you were the advisor to ASEAN, how would you advise the grouping to
change its strategy and direction for regional economic integration?

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4. Understanding the China-US Trade War
a. The US has engaged in a high profile trade wars with China since the beginning of 2018.
Explain how the trade war came about, how it will affect the growth momentum of these two
economies and that of the global economy. How do you think the trade war is likely to evolve
over time?
b. How do you think the trade war, if it persists, will affect the effectiveness of rule-based
global trading arrangements such as the World Trade Organization? Would the trade war
encourage the emergence of more bilateral and other preferential trading arrangements in the
world? How would it affect the leadership position of China and the US in the global economy?
c. Both China and the US are major trading partners of the 10-member ASEAN group. How
would the trade war affect the leadership position of China and the US in ASEAN? How do
you think ASEAN should respond to the trade war?

5. The Turkish Lira (TRY): Where is it Heading?


a. The Turkish Lira (TRY) has depreciated sharply over the past one year against the US
Dollar (USD). What were the key drivers behind these exchange rate movements? Do you
think the movements could be adequately explained by the Asset Market Approach?
b. Do you think the Turkish central bank, TCMB, should have allowed the TRY to slide
continuously? What options do you think TCMB might have to stop the TRY’s slide? Would
such attempts have been effective?
c. Would you go long on TRY in the next 12 months? What do you think would be the key
drivers for the future TRY/USD movements?

6. US Monetary Policy and Its Impact


a. Over the past 2 years, the US Federal Reserve has raised the Fed fund rate six times by
150bp. The pace of interest rate normalization has however been slower than what the market
had expected initially. Explain why the Fed has been more cautious in its rate hike decisions
than what many had expected? Do you think the Fed has made the right decisions so far?
b. Do you expect to see a faster pace of interest rate normalization in the US in the next 12
months? What do you think would be the key drivers for the Fed’s decision? How important is
the strength of the US dollar in the Fed’s decision-making process?
c. How do you think the rise in the US interest rates will affect the capital flows in the
emerging market economies (EMEs)? In your view, how much of the current exchange rate
and economic problems in Argentina can be attributed to the US rate hikes? What advice
would you give to the Argentine government to manage the impact of the Fed’s rate hikes?

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7. Managing the Impossible Trinity: Hong Kong and Singapore
a. Hong Kong and Singapore share many common characteristics as a small open city state
economy. However, they have adopted very different exchange rate systems. What are their key
considerations in the choice of exchange rate system? Do you think both economies have been
well served by the exchange rate system they adopted? What do you think are the key challenges
they face in managing their exchange rate systems?
b. Do you expect to see major changes in the exchange rate systems of the two economies in the
next five years, and if so, what are these changes? What do you think are the key drivers for such
changes? What role do you think the evolving economy of China will play in changing the two
exchange rate systems?
c. What lessons do you think the experiences of Hong Kong and Singapore provide for other small
open economies in choosing their exchange rate systems?

8. Germany and the Eurozone


a. Germany has been a strong advocate for preserving the integrity of the Euro over the past 10
years. Why do you think this is the case? How effective has it been? What are the key challenges
Germany faces in its efforts to preserve the common currency?
b. Do you think sufficient reforms have been carried out so far by the Eurozone countries to
significantly reduce the risk of a break-up of the common currency? What do you think are the
likely tensions in the Eurozone in the next three years? How critical is the leadership of Germany
in resolving these tensions?
c. Do you see any potential for a common currency among some Asian economies? If so, what
lessons so you think Asia can draw from the experiences of the Eurozone? Which countries do you
expect to play the key leadership role in promoting such a common currency in Asia?