You are on page 1of 42



,QGLD
(FRQRPLF'HYHORSPHQWDQG6RFLDO2SSRUWXQLW\


,QGLD
(FRQRPLF'HYHORSPHQWDQG
6RFLDO2SSRUWXQLW\
-($1'5(=(

DQG

$0$57<$6(1

35()$&(
:HKDYHWULHGLQWKLVPRQRJUDSKWRDQDO\VHWKHWDVNRIHFRQRPLFGHYHORSPHQWLQ,QGLDLQDEURDG
SHUVSHFWLYHLQZKLFKVRFLDODVZHOODVHFRQRPLFRSSRUWXQLWLHVKDYHFHQWUDOUROHV:HFRQVLGHU
WKHUHIRUH QRW RQO\ WKH IDFLOLWLHV RIIHUHGLPSRUWDQW DV WKH\ DUHE\ ZHOOIXQFWLRQLQJ PDUNHWV DQG
EHQHILFLDOH[FKDQJHVEXWDOVRWKHIXQGDPHQWDOUROHRIKXPDQFDSDELOLWLHVDQGWKHLUGHSHQGHQFHRQ
EDVLFHGXFDWLRQKHDOWKVHUYLFHVRZQHUVKLSSDWWHUQVVRFLDOVWUDWLILFDWLRQJHQGHUUHODWLRQVDQGWKH
RSSRUWXQLW\RIVRFLDOFRRSHUDWLRQDVZHOODVSROLWLFDOSURWHVWDQGRSSRVLWLRQ9DULDWLRQVLQVRFLDO
RSSRUWXQLWLHV QRW RQO\ OHDG WR GLYHUVH DFKLHYHPHQWV LQ WKH TXDOLW\ RI OLIH EXW DOVR LQIOXHQFH
HFRQRPLFSHUIRUPDQFHDQGLQSDUWLFXODUWKHH[WHQWWRZKLFKWKHIDFLOLWLHVRIIHUHGE\IXQFWLRQLQJ
PDUNHWVFDQEHXVHGE\WKHFLWL]HQVLQJHQHUDO

7KLV JHQHUDO DSSURDFK LV H[SORUHG IDLUO\ H[WHQVLYHO\ GUDZLQJ RQ HPSLULFDO ILQGLQJV IURP
GLIIHUHQWSDUWVRI,QGLDDQGDOVRRQLQWHUQDWLRQDOFRPSDULVRQV:HRXWOLQHLQSDUWLFXODUZKDWFDQEH
OHDUQHGIURPWKHH[SHULHQFHVRIRWKHUFRXQWULHVVXFFHVVIXODVZHOODVXQVXFFHVVIXORQHVDQGDOVR
IURP WKH YDULHWLHV RI H[SHULHQFHV ZLWKLQ ,QGLD 6SHFLDO DWWHQWLRQ LV SDLG WR WKH UROH RI EDVLF
HGXFDWLRQ LQ VRFLDO WUDQVIRUPDWLRQ DV ZHOO DV HFRQRPLF H[SDQVLRQ 7KH LPSRUWDQFH RI ZRPHQ
V
DJHQF\LQEULQJLQJDERXWPDMRUFKDQJHVLVDQRWKHUFHQWUDODUHDRILQYHVWLJDWLRQLQWKLVZRUN7KHUH
LV DOVR FRQVLGHUDEOH GLVFXVVLRQ RI WKH UROH RI SROLWLFDO DQG VRFLDO PRYHPHQWV SDUWLFXODUO\ LQ
FRQIURQWLQJGHHSVHDWHGLQHTXDOLWLHV

$W WKH HQG RI WKH PRQRJUDSK ZH SUHVHQW D VXEVWDQWLDO 6WDWLVWLFDO $SSHQGL[ SDUWO\ DV D
VXSSOHPHQWWRWKHHPSLULFDODUJXPHQWVSUHVHQWHGKHUHEXWDOVRDVJHQHUDOLQIRUPDWLRQZKLFKPLJKW
EHRILQWHUHVWWRWKHUHDGHU6LQFHZHGRGLVFXVVLQUHDVRQDEOHGHWDLOWKHQDWXUHRIWKHHFRQRPLF
FKDOOHQJH IDFHG LQ ,QGLD DW WKLV WLPH WKHUH LV VRPH SRVVLELOLW\ RI WUHDWLQJ WKLV ERRN DOVR DV DQ
LQWURGXFWLRQWRDVSHFWVRIWKH,QGLDQHFRQRP\ XVDEOHHYHQE\WKRVHUHDGHUVWKRVHGUHDGIXORQHV
ZKRDUHXQLQWHUHVWHGLQWKHPDLQWKHVHVRIWKLVPRQRJUDSK 

7KH EURDG SHUVSHFWLYH SUHVHQWHG KHUH ZH EHOLHYH KDV VRPH UHOHYDQFH LQ XQGHUVWDQGLQJ WKH
REVWDFOHV WR HFRQRPLF GHYHORSPHQW LQ ,QGLD DQG WKH EDVLF IDLOXUH RI SXEOLF SROLFLHV WR UHPRYH
WKHP (YHQ WKRXJK WKH H[SDQVLRQ RI VRFLDO RSSRUWXQLWLHV ZDV YHU\ PXFK WKH FHQWUDO WKHPH LQ WKH
YLVLRQ WKDW WKH OHDGHUV RI WKH ,QGLDQ LQGHSHQGHQFH PRYHPHQW KDG SUHVHQWHG WR WKH FRXQWU\ DW WKH
WLPHWKH%ULWLVKOHIWUDWKHUOLWWOHDWWHPSWKDVLQIDFWEHHQPDGHWRWXUQWKDWYLVLRQLQWRDQ\NLQGRI
UHDOLW\ $Q RSSRUWXQLW\ IRU D EUHDN IURP WKH SDVW LQ WKLV UHVSHFW FRXOG KDYH EHHQ VHL]HG ZKHQ
HFRQRPLF UHIRUPV ZHUH LQLWLDWHG LQ  EXW WKH IRFXV RI DWWHQWLRQ LQ WKDW SURJUDPPH KDV EHHQ
DOPRVW H[FOXVLYHO\ RQ WKH RSHQLQJ XS RI WKH ,QGLDQ HFRQRP\ DQG RQ EURDGHQLQJ WKH UHDFK RI WKH
PDUNHWV7KRVHDUHFHUWDLQO\ZRUWK\JRDOVDQGWKHQHHGIRUUHIRUPKDGEHHQVWURQJIRUDORQJWLPH
LQ WKH RYHUUHJXODWHG ,QGLDQ HFRQRP\ EXW WKH ODFN RI DQ\ LQLWLDWLYH WRZDUGV D UDGLFDO FKDQJH LQ
VRFLDOSROLFLHVLQFOXGLQJWKRVHLQEDVLFHGXFDWLRQDQGHOHPHQWDU\KHDOWKFDUHLVDPDMRUIDLOXUH
ZLWKGHHSO\QHJDWLYHLPSOLFDWLRQVRQWKHSURVSHFWVRILPSURYLQJOLYLQJFRQGLWLRQVDQGHYHQRQWKH
FKDQFHV RI VXFFHVV RI WKH PDUNHW UHIRUPV WKHPVHOYHV :KLOH WKLV ERRN LV QRW SULPDULO\ D
FRPPHQWDU\RUDFULWLTXHRIFRQWHPSRUDU\HFRQRPLFSROLFLHVLQ,QGLDWKDWVXEMHFWUHFHLYHVVRPH
DWWHQWLRQ LQ WKH JHQHUDO FRQWH[W RI GLDJQRVLQJ WKH URRWV RI ,QGLD
V HFRQRPLF DQG VRFLDO
EDFNZDUGQHVV

7KHVWXG\GUDZVRQFRPSDULVRQVRI,QGLD
VDFKLHYHPHQWVZLWKWKRVHRIRWKHUFRXQWULHVLQFOXGLQJ
WKHRQHVWKDWKDYHVNLOIXOO\XVHGPDUNHWRSSRUWXQLWLHVDQGLQWHUQDWLRQDOHFRQRPLFLQWHJUDWLRQVXFK
DV 6RXWK .RUHD DQG RWKHU HFRQRPLHV RI HDVW $VLD DQG VRXWKHDVW $VLD DQG PRUH UHFHQWO\ SRVW
UHIRUP&KLQD,QWHUPVRIVRFLDORSSRUWXQLWLHVHDFKRIWKHVHFRXQWULHVKDGGRQHPXFKPRUHDOUHDG\
DWWKHWLPHZKHQWKH\ZHUHLQLWLDWLQJWKHLUPDMRUHFRQRPLFFKDQJHVWKDQ,QGLDKDVDFKLHYHGHYHQE\
QRZ IRUH[DPSOHHDFKRIWKHPKDGDPXFKKLJKHUOHYHORIOLWHUDF\DOUHDG\WKHQWKDQ,QGLDVWLOO
KDOI LOOLWHUDWHKDV QRZ  ,QGLD LV LQ VRPH GDQJHU RI HPXODWLQJ WKH GLYLVLYH SDWWHUQ RI HFRQRPLF
JURZWKH[SHULHQFHGLQFRXQWULHVVXFKDV%UD]LOZLWKPXFKVRFLDOLQHTXDOLW\UDWKHUWKDQWKHPRUH
SDUWLFLSDWRU\GHYHORSPHQWVHHQLQVD\6RXWK.RUHD

([SDQVLRQVRIEDVLFKXPDQFDSDELOLWLHVLQFOXGLQJVXFKIUHHGRPVDVWKHDELOLW\WROLYHORQJWR
UHDGDQGZULWHWRHVFDSHSUHYHQWDEOHLOOQHVVHVWRZRUNRXWVLGHWKHIDPLO\LUUHVSHFWLYHRIJHQGHU
DQGWRSDUWLFLSDWHLQFROODERUDWLYHDVZHOODVDGYHUVDULDOSROLWLFVQRWRQO\LQIOXHQFHWKHTXDOLW\RI
OLIHWKDWWKH,QGLDQSHRSOHFDQHQMR\EXWDOVRDIIHFWWKHUHDORSSRUWXQLWLHVWKH\KDYHWRSDUWLFLSDWH
LQHFRQRPLFH[SDQVLRQ$QLOOXVWUDWLRQRIWKHFRPSDUWPHQWDOL]HGQDWXUHRIRIILFLDO,QGLDQWKLQNLQJ
RQ WKLV VXEMHFW LV SURYLGHG E\ WKH VWDWHPHQW PDGH RQ EHKDOI RI WKH *RYHUQPHQW RI ,QGLD WR WKH
C*URXSRI
LQLWVPHHWLQJDWWKH8QLWHG1DWLRQVLQ1HZ<RUNODVW6HSWHPEHUDVVHUWLQJWKDWCWKH
FRQFHSWV RI VXVWDLQDEOH KXPDQ GHYHORSPHQW DQG RI KXPDQ VHFXULW\
 LQYROYH D CFRQFHSWXDO
GHUDLOPHQWRIRXUEDVLFSXUSRVHRIGHYHORSPHQWFRRSHUDWLRQ
7KHVWDWHPHQWZDVPDGHSUHFLVHO\DW
DWLPHZKHQWKHPLQLHSLGHPLFRISODJXHLQ,QGLDZDVIULJKWHQLQJIRUHLJQWRXULVWVDQGEXVLQHVVPHQ
DZD\IURP,QGLDDQGWKHFRQVHTXHQFHVRIQHJOHFWLQJCVXVWDLQDEOHKXPDQGHYHORSPHQWDQGKXPDQ
VHFXULW\
 ZHUH SDLQIXOO\ DSSDUHQW QRW RQO\ LQ OLYLQJ FRQGLWLRQV LQ ,QGLD EXW DOVR LQ LWV LPSDFW RQ
,QGLD
VSXWDWLYHDWWHPSWDWLQWHJUDWLRQZLWKWKHZRUOGHFRQRP\

7KHSROLF\OLPLWDWLRQVUHODWHQRWRQO\WRJRYHUQPHQWDOGHFLVLRQVEXWDOVRWRWKHQDWXUHRISXEOLF
GLVFXVVLRQ SDUWLFXODUO\ WKH SRWHQWLDO IRU FULWLFL]LQJ WKHVH GHFLVLRQV 6R PXFK HQHUJ\ DQG ZUDWK
KDYH EHHQ VSHQW RQ DWWDFNLQJ RU GHIHQGLQJ OLEHUDOL]DWLRQ DQG GHUHJXODWLRQ WKDW WKH PRQXPHQWDO
QHJOHFW RI VRFLDO LQHTXDOLWLHV DQG GHSULYDWLRQV LQ SXEOLF SROLF\ KDV UHFHLYHG DVWRQLVKLQJO\ OLWWOH
DWWHQWLRQ LQ WKHVH GHEDWHV 7KH LVVXHV XQGHUO\LQJ OLEHUDOL]DWLRQ DUH QRW RI FRXUVH WULYLDO EXW
HQJDJHPHQWRQWKHVHPDWWHUVLQRSSRVLWLRQRULQGHIHQFHFDQQRWMXVWLI\WKHFRQIRUPLVWWUDQTXLOOLW\
RQWKHQHJOHFWHGSURYLVLRQVRISXEOLFHGXFDWLRQKHDOWKFDUHDQGRWKHUGLUHFWPHDQVRISURPRWLQJ
EDVLF KXPDQ FDSDELOLWLHV ,Q IDFW VRPHWLPHV FRQWHQWLRXV UHJXODWLRQDO PDWWHUV VHHP WR JHW
DVWRQLVKLQJSULRULW\LQSROLWLFDOGLVFXVVLRQVRYHUPRUHIRXQGDWLRQDOFRQFHUQVUHODWHGGLUHFWO\WRWKH
ZHOOEHLQJDQGIUHHGRPRIWKHPDVVRI,QGLDQFLWL]HQV'HEDWHVRQVXFKTXHVWLRQVDVWKHGHWDLOVRI
WD[ FRQFHVVLRQV WR EH JLYHQ WR PXOWLQDWLRQDOV RU ZKHWKHU ,QGLDQV VKRXOG GULQN &RFD &ROD RU
ZKHWKHUWKHSULYDWHVHFWRUVKRXOGEHDOORZHGWRRSHUDWHFLW\EXVHVWHQGWRCFURZGRXW
WKHWLPHWKDW
LV OHIW WR GLVFXVV WKH DE\VPDO VLWXDWLRQ RI EDVLF HGXFDWLRQ DQG HOHPHQWDU\ KHDOWK FDUH RU WKH
SHUVLVWHQFH RI GHELOLWDWLQJ VRFLDO LQHTXDOLWLHV RU RWKHU LVVXHV WKDW KDYH D FUXFLDO EHDULQJ RQ WKH
ZHOOEHLQJ DQG IUHHGRP RI WKH SRSXODWLRQ ,Q D PXOWLSDUW\ GHPRFUDF\ WKHUH LV VFRSH IRU
LQIOXHQFLQJWKHDJHQGDRIWKHJRYHUQPHQWWKURXJKV\VWHPDWLFRSSRVLWLRQDQGWKHQHHGWRH[DPLQH
WKH SULRULWLHV RI SXEOLF FULWLFLVP LV DV VWURQJ DV LV WKH QHFHVVLW\ WKDW WKH JRYHUQPHQW VKRXOG
VFUXWLQL]HLWVRZQUHODWLYHZHLJKWVDQGFRQFHUQV

7KHLQWHUVWDWHFRPSDULVRQVSUHVHQWHGLQWKLVPRQRJUDSKGUDZRQPRUHFRPSUHKHQVLYHVWXGLHVRI
WKH ,QGLDQ GHYHORSPHQW H[SHULHQFH IRFXVLQJ LQ SDUWLFXODU RQ WKUHH ,QGLDQ VWDWHV .HUDOD :HVW
%HQJDODQG8WWDU3UDGHVK SUHVHQWHGLQDFRPSDQLRQYROXPHHGLWHGE\XVDQGSUHSDUHGIRUWKH
:RUOG ,QVWLWXWH IRU 'HYHORSPHQW (FRQRPLFV 5HVHDUFK
 7KH .HUDOD VWXG\ KDV EHHQ SUHSDUHG E\
9. 5DPDFKDQGUDQ WKH :HVW %HQJDO VWXG\ E\ 6XQLO 6HQJXSWD DQG +DULV *D]GDU DQG WKH 8WWDU
3UDGHVK VWXG\ E\ MHDQ 'UH]H DQG +DULV *D]GDU :H DUH H[WUHPHO\ JUDWHIXO WR 5DPDFKDQGUDQ
6HQJXSWDDQG*D]GDUIRUWKHLUFRQWULEXWLRQV3DUWVRI&KDSWHURIWKLVERRNDOVRGUDZRQUHFHQW
UHVHDUFKXQGHUWDNHQE\-HDQ'UH]HLQFROODERUDWLRQZLWK0DPWD0XUWKLDQG$QQH&DWKHULQH*XLR

7KHZRUNIRUWKHSUHVHQWPRQRJUDSKZDVGRQHDWWKH'HOKL6FKRRORI(FRQRPLFVDW67,&(5'
/RQGRQ6FKRRORI(FRQRPLFV DQGDW+DUYDUG8QLYHUVLW\ SDUWLFXODUO\WKH&HQWHUIRU3RSXODWLRQ
DQG 'HYHORSPHQW 6WXGLHV  DQG ZH ZRXOG OLNH WR DFNQRZOHGJH WKH IDFLOLWLHV RIIHUHG E\ WKHVH
LQVWLWXWLRQV :H ZRXOG DOVR OLNH WR WKDQN WKH ,QWHUQDWLRQDO 'HYHORSPHQW 5HVHDUFK &HQWUH ,'5&
&DQDGD IRUVXSSRUWLQJRXUFROODERUDWLYHZRUN

)RUFRPPHQWLQJRQSDUWVRIWKHPDQXVFULSWDQGIRUH[WHQVLYHGLVFXVVLRQVZHDUHPRVWJUDWHIXO
WR 6XGKLU $QDQG 5RELQ %XUJHVV 5REHUW &DVVHQ %KDVNDU 'XWWD +DULV *D]GDU $WKDU +XVVDLQ
$.6KLYD.XPDU3HWHU/DQMRXZ0DPWD0XUWKL-HQQ\2OVRQ/DQMRXZ9.5DPDFKDQGUDQ&DUO
5LVNLQ 0HHUD 6DPVRQ 6XQLO 6HQJXSWD $PULW 6LQJK DQG /LPLQ :DQJ :H KDYH EHHQ JUHDWO\
KHOSHGE\WKHLQIRUPDWLRQDQGDQDO\VHVSURYLGHGWRXVE\WKH5HJLVWUDU*HQHUDO$PXO\D1DQGD
DQG KLV FROOHDJXHV 0DGDQ 0RKDQ -KD DQG .6 1DWDUDMDQ :H KDYH DOVR EHQHILWHG IURP KHOSIXO
GLVFXVVLRQVZLWK%LQD$JDUZDO6DWLVK$JQLKRWUL6DQMD\$PEDWNDU'DYLG$UFKHU5ROL$VWKDQD
599DLG\DQDWKD$\\DU$PL\D%DJFKL.DXVKLN%DVX%HOD%KDWLD%LSXO&KDWWRSDGK\D\/LQFROQ
&KHQ0DUW\&KHQ$QVOH\&RDOH0D[&RUGHQ0RQLFD'DV*XSWD*DXUDY'DWW$QJXV'HDWRQ6
0DKHQGUD'HY7LP'\VRQ)DQJ-LDQTXQ0LFKHO*DUHQQH$UXQ*KRVK'HEDVLVK*KRVK$QQH
&DWKHULQH*XLR6WHSKHQ+RZHV3UDYHHQ-KD6KLNKD-KD,QJH.DXO6WXWL.KHPDQL6XQLWD.LVKRU
6WHSKDQ.ODVHQ$WXO.RKOL-RKQ.XULDQ&KULV/DQJIRUG-DPHV0DQRU*HRUJH0DWWKHZ660
ƒHQDNVKLVXQGDUDP 1LGKL 0HKURWUD $GLWL 0HKWD $MD\ 0HKWD 6XPD
L 0HKWD .DLYDQ 0XQVKL
1LUPDOD0XUWK\6DUPLVWKD3DO663DQQDU;L]KH3HQJ5LWX3UL\D$MLW5DQDGH6KDUDG5DQMDQ
1LQD 5DR -RQ 5RKGH 3DXO 5RPHU (PPD 5RWKVFKLOG 'HQ]LO 6DOGDQKD 6XGLSWD 6DUDQJL 6.
6KHWW\$PDUMHHW6LQKD ( 6RPDQDWKDQ 5RKLQL 6RPDQDWKDQ 39 6ULQLYDVDQ 71 6ULQLYDVDQ .
6XQGDUDP 6XUHVK 7HQGXONDU 6DURMLQL 7KDNXU -%* 7LODN DQG -RKQ :LOOLDPVRQ )RU UHVHDUFK
DVVLVWDQFH DW GLIIHUHQW VWDJHV RI WKLV ZRUN ZH DUH LQGHEWHG WR -DVRQ )XUPDQ -DFNLH /RK 3LD
0DODQH\6KDQWL5DELQGUDQDQG6QLJGKD6ULYDVWDYD:HZRXOGDOVROLNHWRWKDQN0HHUD6DPVRQ
DQG $QRPLWD *RVZDPL IRU LQYDOXDEOH HGLWRULDO DGYLFH -DFNLH -HQQLQJV NHSW WUDFN RI WKH
RUJDQL]DWLRQDO WDVNV DW WKH /RQGRQ 6FKRRO RI (FRQRPLFV DV GLG $QQD 0DULH 6YHGURIVN\ DW
+DUYDUGDQGWRERWKRIWKHPZHDUHPRVWJUDWHIXO

-'

$.6


&217(176

/LVWRI)LJXUHVDQG7DEOHV[LLL

,QWURGXFWLRQ

,QGLDVLQFH,QGHSHQGHQFH

2Q/HDUQLQJIURP2WKHUV

6RFLDO2SSRUWXQLW\DQG3XEOLF3ROLF\

(FRQRPLF'HYHORSPHQWDQG6RFLDO2SSRUWXQLW\

'HYHORSPHQW)UHHGRPDQG2SSRUWXQLWLHV

2Q(GXFDWLRQDQG+HDOWK

7KH*RYHUQPHQWWKH6WDWHDQGWKH0DUNHW

,QWHUGHSHQGHQFHEHWZHHQ0DUNHWVDQG*RYHUQDQFH

0DUNHWH[FOXGLQJDQG0DUNHWFRPSOHPHQWDU\,QWHUYHQWLRQV

$3RVLWLYH)RFXV

,QGLDLQ&RPSDUDWLYH3HUVSHFWLYH

,QGLDDQGWKH:RUOG

/HVVRQVIURP2WKHU&RXQWULHV

(DVW$VLDDQG*URZWKPHGLDWHG3URJUHVV

+XPDQ&DSLWDODQG0RUH%DVLF9DOXHV

,QWHUQDO'LYHUVLWLHV

6WXG\LQJ,QGLDQ6WDWHV

,QGLDDQG&KLQD

3HUFHSWLRQVRI&KLQD
&RQGLWLRQVRI/LIHDQG'HDWK

&RQWUDVWVLQ%DVLF(GXFDWLRQ

3UHUHIRUP$FKLHYHPHQWV

3RVWUHIRUP5HFRUGV

3UHUHIRUPDQG3RVWUHIRUP3HUIRUPDQFHV

$XWKRULWDULDQLVP)DPLQHVDQG9XOQHUDELOLW\

&RHUFLRQ3RSXODWLRQDQG)HUWLOLW\

7KH5HDO/HVVRQVIRU,QGLDIURP&KLQD

3XEOLF$FWLRQDQG6RFLDO,QHTXDOLW\

7KH3XEOLFDQGLWV5ROH

7KH5HDFKRI,QHTXDOLWLHV

6RFLDO,QHTXDOLW\DQG(FRQRPLF5HIRUP

%DVLF(TXDOLW\6RFLDO6HFXULW\DQG+HDOWK&DUH

/RFDO*RYHUQDQFHDQG6RFLDO5HIRUP

%DVLF(GXFDWLRQDVD3ROLWLFDO,VVXH

(GXFDWLRQDQG6RFLDO&KDQJH

7KH6WDWHRI6FKRRO(GXFDWLRQ

%LDVHVDQG&RQIRXQGHG6WUDWHJLHV

7KH5ROHRI([SHQGLWXUH

3ULRULWLHVDQG&KDOOHQJHV

3URYLVLRQ8WLOL]DWLRQDQG&RPSXOVLRQ
2Q)HPDOH(GXFDWLRQ

(GXFDWLRQDQG3ROLWLFDO$FWLRQ

*HQGHU,QHTXDOLW\DQG:RPHQ
V$JHQF\

)HPDOH'HSULYDWLRQDQG0LVVLQJ:RPHQ

2QWKH)HPDOH0DOH5DWLR

:RPHQ
V$JHQF\DQG&KLOG6XUYLYDO

)HUWLOLW\DQG:RPHQ
V(PDQFLSDWLRQ

:LGRZKRRGDQG*HQGHU5HODWLRQV

*HQGHU(TXDOLW\DQG6RFLDO3URJUHVV

:HOO%H\RQG/LEHUDOL]DWLRQ

:KDWLVWKH&DJH"

3HRSOHDV(QGVDQGDV0HDQV

5DGLFDO1HHGVDQG0RGHUDWH5HIRUPV

*RYHUQDQFHDQG3XEOLF$FWLRQ

:RPHQ
V$JHQF\DQG6RFLDO&KDQJH

&RPSDUDWLYH3HUVSHFWLYHV

$&RQFOXGLQJ5HPDUN

6WDWLVWLFDO$SSHQGL[

5HIHUHQFHV
1DPH,QGH[

6XEMHFW,QGH[


),*85(6

,QGLDQ6WDWHV3RYHUW\DQG&KLOG0RUWDOLW\

$GXOW/LWHUDF\LQ,QGLDQ6WDWHVDQG&KLQHVH3URYLQFHV  

$GXOW/LWHUDF\LQ,QGLDQ6WDWHVDQG&KLQHVH3URYLQFHV  

5DWLRRI)HPDOHWR0DOH&KLOG0RUWDOLW\DPRQJ+LQGXVDQG0XVOLPVLQ'LIIHUHQW6WDWHV


)HPDOH0DOH5DWLRLQ,QGLD
7$%/(6

,QGLDDQG6XE6DKDUDQ$IULFD6HOHFWHG&RPSDULVRQV  

$GXOW/LWHUDF\5DWHVLQ6HOHFWHG$VLDQ&RXQWULHV

6HOHFWHG,QGLFDWRUVIRU0DMRU,QGLDQ6WDWHV

,QGLD8WWDU3UDGHVKDQG.HUDOD&RQWUDVWVLQ$FFHVVWR3XEOLF6HUYLFHV

,QGLD&KLQDDQG.HUDOD6HOHFWHG&RPSDULVRQV

/LWHUDF\LQ,QGLD&KLQDDQG.HUDOD

0RUWDOLW\'HFOLQHLQ&KLQDDQG6HOHFWHG(FRQRPLHV

,QGLDDQG&KLQD(FRQRPLF*URZWKDQG3RSXODWLRQ*URZWK

)HUWLOLW\5DWHVLQ&KLQD.HUDODDQG7DPLO1DGX

%DVLF(GXFDWLRQLQ,QGLD$FKLHYHPHQWVDQG'LYHUVLWLHV
7KH&KLOG7HDFKHU5DWLRLQ,QGLD

$VSHFWVRI*RYHUQPHQW([SHQGLWXUHRQ(OHPHQWDU\(GXFDWLRQ

'HFRPSRVLWLRQRIWKH'HFOLQHRI,QGLD
V)HPDOH0DOH5DWLR

)HPDOH0DOH5DWLRDQG&DVWHLQ8WWDU3UDGHVKDQG

%DVLF5HVXOWVRID&URVVVHFWLRQ$QDO\VLVRIWKH'HWHUPLQDQWVRI&KLOG0RUWDOLW\)HUWLOLW\DQG
*HQGHU%LDVLQ,QGLDQ'LVWULFWV

(IIHFWVRI6HOHFWHG,QGHSHQGHQW9DULDEOHV )HPDOH/LWHUDF\0DOH/LWHUDF\DQG3RYHUW\ RQ&KLOG


0RUWDOLW\)HPDOH'LVDGYDQWDJHDQG)HUWLOLW\

$(FRQRPLFDQG6RFLDO,QGLFDWRUVLQ,QGLDDQG6HOHFWHG$VLDQ&RXQWULHV

$,QGLDLQ&RPSDUDWLYH3HUVSHFWLYH

$6HOHFWHG,QGLFDWRUVIRU,QGLDQ6WDWHV

3DUW3HUFDSLWDLQFRPHDQGUHODWHGLQGLFDWRUV

3DUW0RUWDOLW\DQGIHUWLOLW\

3DUW/LWHUDF\DQGHGXFDWLRQ

3DUW6FKRRODWWHQGDQFHDQGHQUROPHQW

3DUW2WKHUJHQGHUUHODWHGLQGLFDWRUV
3DUW0DWHUQDOKHDOWKDQGUHODWHGPDWWHUV

3DUW3XEOLFVHUYLFHVDQGVRFLDOLQIUDVWUXFWXUH

$7LPH7UHQGVIRU6HOHFWHG,QGLFDWRUV ,QGLD 



,1752'8&7,21

,QGLDVLQFH,QGHSHQGHQFH

,WLVQHDUO\KDOIDFHQWXU\QRZVLQFH,QGLDDFKLHYHGLQGHSHQGHQFH2QWKHHYHRIWKHGHSDUWXUHRI
WKH%ULWLVKRQ$XJXVW-DZDKDUODO1HKUXGHFODUHGC/RQJ\HDUVDJRZHPDGHDWU\VWZLWK
GHVWLQ\ DQG QRZ WKH WLPH FRPHV ZKHQ ZH VKDOO UHGHHP RXU SOHGJH
 C7KH DFKLHYHPHQW ZH
FHOHEUDWHWRGD\
1HKUXZHQWRQCLVEXWDVWHSDQRSHQLQJRIRSSRUWXQLW\WRWKHJUHDWWULXPSKVDQG
DFKLHYHPHQWV WKDW DZDLW XV
 +H UHPLQGHG WKH FRXQWU\ WKDW WKH WDVN DKHDG LQFOXGHG CWKH HQGLQJ RI
SRYHUW\DQGLJQRUDQFHDQGGLVHDVHDQGLQHTXDOLW\RIRSSRUWXQLW\,WLVZLWKWKDWWDVNWKDWWKLVERRN
LVFRQFHUQHG

,W LV QRW KDUG WR QRWLFH WKDW WKH WDVN WKDW 1HKUX KDG LGHQWLILHG UHPDLQV DODV ODUJHO\
XQDFFRPSOLVKHG7KLVLVQRWWRGHQ\WKDWSURJUHVVKDVFHUWDLQO\EHHQPDGHLQSDUWLFXODUILHOGV2QH
H[DPSOH LV WKH HOLPLQDWLRQ RI VXEVWDQWLDO IDPLQHV WKDW FRQWLQXHG WR ZUHFN WKH FRXQWU\ ULJKW XS WR
LQGHSHQGHQFH WKHODVWPDMRUIDPLQHZDVWKH%HQJDOIDPLQHLQZKLFKNLOOHGEHWZHHQDQG
PLOOLRQ SHRSOH  7KDW DFKLHYHPHQW LV IDU IURP QHJOLJLEOH VLQFH PDQ\ RWKHU FRXQWULHV LQ $VLD DQG
$IULFDKDYHKDGODUJHIDPLQHVRYHUWKLVSHULRG)DPLQHKDVEHHQIRUH[DPSOHDFRQWLQXLQJFXUVH
LQ VXE6DKDUDQ $IULFDQ FRXQWULHV 6XGDQ 6RPDOLD (WKLRSLD 1LJHULD 0R]DPELTXH DQG RWKHUV 
DQGHYHQ&KLQDVXIIHUHGIURPDPDMRUIDPLQHGXULQJLQZKLFKDURXQGWRPLOOLRQ
SHRSOHGLHG7KHUHDUHDOVRRWKHUDFKLHYHPHQWVWRZKLFKRQHFDQSRLQWYDU\LQJIURPVXFFHVVIXO
IXQFWLRQLQJ RI D PXOWLSDUW\ GHPRFUDWLF V\VWHP WR WKH HPHUJHQFH RI D ODUJH VFLHQWLILF FRPPXQLW\
7KHUHDUHLQGHHGPDQ\DUHDVRIHFRQRPLFDQGVRFLDOGHYHORSPHQWLQZKLFK,QGLD
VDFKLHYHPHQWV
KDYHEHHQTXLWHFUHGLWDEOH

+RZHYHU WKH RYHUDOO VXFFHVV LQ WKH WDVN LGHQWLILHG E\ 1HKUX RI CHQGLQJ RI SRYHUW\ DQG
LJQRUDQFHDQGGLVHDVHDQGLQHTXDOLW\RIRSSRUWXQLW\
KDVEHHQTXLWHOLPLWHG7KHLQWHQVLWLHVRIPDQ\
RI WKH GHSULYDWLRQV RI ZKLFK 1HKUX VSRNH KDYH EHHQ FRQVLGHUDEO\ UHGXFHG EXW WKHUH LV
QHYHUWKHOHVVDYHU\ORQJZD\WRJREHIRUH1HKUX
VREMHFWLYHVFDQEHVHHQDVDQ\ZKHUHQHDUEHLQJ
DFKLHYHG)RUH[DPSOHZKLOHWKHUHKDYHEHHQVXEVWDQWLDOGHFOLQHVLQDJHVSHFLILFPRUWDOLW\UDWHV
DQGWKHH[SHFWDWLRQRIOLIHDWELUWKLQ,QGLDWRGD\ MXVWDERXW\HDUV LVFHUWDLQO\DORWKLJKHUWKDQ
DWWKHWLPHRILQGHSHQGHQFHLQ DURXQG\HDUV PDQ\RWKHUGHYHORSLQJFRXQWULHVWKDWZHUH
LQ D FRPSDUDEOH SRVLWLRQ WR ,QGLD QRW ORQJ DJR KDYH PHDQZKLOH VXUJHG DKHDGZLWK OLIH
H[SHFWDQFLHVDURXQGRUDERYH\HDUVLQPDQ\FDVHV6LPLODUUHPDUNVFDQEHPDGHDERXWRWKHU
DVSHFWV RI OLYLQJ FRQGLWLRQV GHDOLQJ ZLWK HOHPHQWDU\ HGXFDWLRQ QXWULWLRQDO FKDUDFWHULVWLFV
SURWHFWLRQIURPLOOQHVVVRFLDOVHFXULW\DQGFRQVXPSWLRQOHYHOV,QGLD
VSURJUHVVRYHUWKHGHFDGHV
ZKLOH IDU IURP WKH ZRUVW KDV EHHQ VXEVWDQWLDOO\ DQG V\VWHPDWLFDOO\ RXWFODVVHG E\ PDQ\ RWKHU
GHYHORSLQJFRXQWULHV

2QHLPSRUWDQWSRLQWWRQRWHKHUHLVWKDWWKHVHPRUHVXFFHVVIXOFRXQWULHVZKLFKKDYHOHIW,QGLD
EHKLQG KDYH SXUVXHG YHU\ GLYHUVH HFRQRPLF SROLFLHV IURP PDUNHWRULHQWHG FDSLWDOLVP 6RXWK
.RUHD7DLZDQ 7KDLODQG  WR FRPPXQLVWSDUW\OHG VRFLDOLVP &XED 9LHWQDP SUHUHIRUP &KLQD 
DQGDOVRYDULRXVPL[HGV\VWHPV &RVWD5LFD-DPDLFD6UL/DQND $VIDUDVHFRQRPLFJURZWKLV
FRQFHUQHG WKHLU UHFRUGV KDYH EHHQ H[WUHPHO\ GLYHUVH DQG \HW DOO RI WKHP KDYH EHHQ DEOH WR
DFKLHYHDUDGLFDOUHGXFWLRQLQKXPDQGHSULYDWLRQDQGLQVHFXULW\'HVSLWHVXEVWDQWLDOGLIIHUHQFHVLQ
HFRQRPLF SROLF\ WKHVH HFRQRPLFDOO\ GLYHUVH FRXQWULHV KDYH KDG PXFK LQ FRPPRQ LQ WHUPV RI
VRFLDOSROLFLHVSDUWLFXODUO\WKRVHUHODWLQJWRWKHH[SDQVLRQRIEDVLFHGXFDWLRQDQGKHDOWKFDUHDQG
,QGLD FRQWUDVWV ZLWK DOO RI WKHP LQ WKLV IXQGDPHQWDO UHVSHFW 7KHUH LV PXFK WR OHDUQ IURP WKHVH
GLYHUVH FRXQWULHV DQG WKH FRPPRQDOLW\ RI WKHLU DFKLHYHPHQWV HYHQ ZKHQ ZH PLJKW KDYH JRRG
UHDVRQWRVKXQHPXODWLQJWKHPLQRWKHUUHVSHFWV:HVKDOOKDYHPRUHWRVD\RQWKLVJHQHUDOFRQWUDVW
LQWKLVPRQRJUDSK

7KHUHLVRQHILHOGLQZKLFK,QGLDFOHDUO\KDVGRQHZRUVHWKDQHYHQWKHDYHUDJHRIWKHSRRUHVW
FRXQWULHV LQ WKH ZRUOG DQG WKDW LV HOHPHQWDU\ HGXFDWLRQ 7KH UDWH RI DGXOW OLWHUDF\ IRU ,QGLD KDV
UHDFKHGRQO\DERXWSHUFHQWZKLFKLVORZQRWRQO\LQFRPSDULVRQZLWK&KLQD
VSHUFHQWEXW
HYHQFRPSDUHGZLWKWKHDYHUDJHILJXUHRISHUFHQWIRUDOOCORZLQFRPHHFRQRPLHV
H[FOXGLQJ
&KLQD DV ZHOO DV ,QGLD
 ,QGLD KDV EHHQ OHIW ZD\ EHKLQG LQ WKH ILHOG RI EDVLF HGXFDWLRQ HYHQ E\
FRXQWULHVZKLFKKDYHQRWGRQHEHWWHUWKDQ,QGLDLQPDQ\RWKHUGHYHORSPHQWDODFKLHYHPHQWVVXFKDV
*KDQD,QGRQHVLD.HQ\D0\DQPDU %XUPD 3KLOLSSLQHV=LPEDEZHDQG=DPELD

7KH FRPSDUDWLYH SHUVSHFWLYHV DUH LPSRUWDQW LQ DVVHVVLQJ ,QGLD


V SHUIRUPDQFH 7KH PRUH
HIIHFWLYHSHUIRUPDQFHV RIVD\&KLQD6UL/DQND7KDLODQGRU6RXWK.RUHD LQGLFDWHZKDWKDVRU
KDV QRW EHHQ IHDVLEOH HOVHZKHUH DQG SURYLGH VRPH JXLGDQFH DERXW WKH \DUGVWLFN RQ WKH EDVLV RI
ZKLFK,QGLD
VUHFRUGPLJKWEHVFUXWLQL]HG7KHSRLQWLVQRWWKDWWKHUHKDVEHHQQRSURJUHVVLQ,QGLD
QRU WKDW RWKHU FRXQWULHV DUH DOO GRLQJ EHWWHU EXW VSHFLILFDOO\ WKDW ,QGLD
V VXFFHVV LQ UHPRYLQJ
CSRYHUW\LJQRUDQFHGLVHDVHDQGLQHTXDOLW\RIRSSRUWXQLW\
KDVEHHQPDUNHGO\OHVVVXEVWDQWLDOWKDQ
WKDWRIPDQ\RWKHUFRXQWULHV$QGLQRQHSDUWLFXODUILHOGWKDWRIHOHPHQWDU\HGXFDWLRQ,QGLDVWDQGV
FRQVLGHUDEO\EHKLQGHYHQWKHDYHUDJHRIWKHSRRUHVWFRXQWULHVLQWKHZRUOG7KLVSDUWLFXODUIDLOXUH
ZLOOUHFHLYHFRQVLGHUDEOHDWWHQWLRQLQWKLVPRQRJUDSKERWKEHFDXVHOLWHUDF\LVDQLPSRUWDQWVRFLDO
DFKLHYHPHQW DQG DOVR EHFDXVH LW KDV DQ LPSRUWDQW LQVWUXPHQWDO UROH LQ IDFLOLWDWLQJ RWKHU
DFKLHYHPHQWV

7KLVPRQRJUDSKLVDQDWWHPSWWRXQGHUVWDQGZKDWKDVEHHQGRQHDQGZKDWSROLF\SULRULWLHVPLJKW
EHKHOSIXOLQDWWHPSWLQJDPRUHUDSLGHOLPLQDWLRQRIWKHGHSULYDWLRQVLGHQWLILHGE\1HKUXDWWKHWLPH
RI LQGHSHQGHQFH -XVW DV WKH \DUGVWLFN RI DFKLHYHPHQW FDOOV IRU DQ LQWHUQDWLRQDO SHUVSHFWLYH VR
GRHVDQ\GLVFXVVLRQRISROLF\SULRULWLHVVLQFHWKHUHLVVRPXFKWREHOHDUQHGIURPWKHH[SHULHQFH
RIVXFFHVVHVDQGIDLOXUHVHOVHZKHUH
$QRWKHULPSRUWDQWLVVXHFRQFHUQVOHDUQLQJIURP,QGLDLWVHI2QHRIWKHPRVWLQWHUHVWLQJDVSHFWV
RI ,QGLD
V GHYHORSPHQW UHFRUG LV LWV UHPDUNDEOH UHJLRQDO GLYHUVLW\ LQ WKH HOLPLQDWLRQ RI EDVLF
GHSULYDWLRQV)RUH[DPSOHZKLOH,QGLD
VOLIHH[SHFWDQF\ILJXUHRIDURXQG\HDUVFRPSDUHVTXLWH
XQIDYRXUDEO\ZLWK&KLQD
V\HDUV.HUDOD
VOLIHH[SHFWDQF\DERXW\HDUVDSSHDUVRQWKHRWKHU
VLGHRI&KLQD
VDFKLHYHPHQW6LPLODUO\WKHLQIDQWPRUWDOLW\UDWHRISHUWKRXVDQGOLYHELUWKVLQ
,QGLDLVYHU\KLJKLQGHHGLQFRPSDULVRQZLWK&KLQD
VEXW.HUDOD
VUDWHRILVPXFKEHWWHUWKDQ
&KLQD
V $JDLQ ZKLOH ,QGLD
V OLWHUDF\ UDWH LV PXFK ORZHU WKDQ WKDW RI &KLQD .HUDOD
V LV
VXEVWDQWLDOO\KLJKHUWKDQ&KLQD
V,QIDFW.HUDOD
VIHPDOHOLWHUDF\UDWHLVKLJKHUWKDQWKDWRIHYHU\
LQGLYLGXDO SURYLQFH LQ &KLQD VHH FKDSWHU   2Q WKH RWKHU VLGH VRPH RI WKH ,QGLDQ VWDWHV IRU
H[DPSOH8WWDU3UDGHVK5DMDVWKDQ0DGK\D3UDGHVK%LKDU KDYHPXFKORZHUDFKLHYHPHQWVWKDQ
HYHQWKHORZ,QGLDQDYHUDJH

7KHVHFRQWUDVWVZLWKLQ,QGLDDUHLPSRUWDQWWRVWXG\IRUWKHLURZQLQWHUHVW%XWWKHUHLVDOVRPXFK
WREHOHDUQHGZHDUJXHIURPWKHOLJKWWKDWLVWKURZQE\WKHVHFRPSDUDWLYHH[SHULHQFHVRQZKDWFDQ
RUFDQQRWEHDFKLHYHGHOVHZKHUHLQWKHFRXQWU\7KLVDSSOLHVWROHDUQLQJIURPKLJKDFKLHYHPHQWVLQ
VRPHILHOGV DVLQ.HUDOD DVZHOODVIURPORZRQHVLQWKRVHYHU\ILHOGV DVLQ8WWDU3UDGHVK DQG
DOVRIURPWKHUDWKHUPL[HGFDVHV DVLQ:HVW%HQJDO 2QHRIWKHPDLQWKHPHVRIWKLVZRUNLVWKH
LPSRUWDQFHRIWKHOHVVRQVWREHOHDUQHGE\,QGLDIURP,QGLDDQGWKLVFDQEHMXVWDVLPSRUWDQWDV
OHDUQLQJIURPWKHDFKLHYHPHQWVRIRWKHUFRXQWULHV

2Q/HDUQLQJIURP2WKHUV

,QWHUQDWLRQDOFRPSDULVRQVKDYHEHHQPXFKXVHGUHFHQWO\WRPRWLYDWHDQGGHIHQGDSURJUDPPHRI
HFRQRPLF UHIRUPV LQYROYLQJ OLEHUDOL]DWLRQ RI WUDGH GHUHJXODWLRQ RI VRPH JRYHUQPHQWDO
UHVWULFWLRQV HQFRXUDJHPHQW RI SULYDWH HQWHUSULVH DQG VR RQ  FLWLQJ WKH DFKLHYHPHQWV RI 6RXWK
.RUHD +RQJ .RQJ 6LQJDSRUH 7KDLODQG DQG RWKHU FRXQWULHV WKDW KDYH PDGH VSOHQGLG XVH RI
PDUNHWEDVHGHFRQRPLFRSSRUWXQLWLHV6XFKFRPSDULVRQVDUHLQGHHGLOOXPLQDWLQJEXWWKHH[HUFLVH
FDQQRWEHVHQVLEO\FRQILQHGRQO\WRDIHZSUHVHOHFWHGDVSHFWVRISROLFLHVWKHUHUHODWHGRQO\WRRQH
W\SHRILQVWLWXWLRQDOUHIRUP1RWHKDVWREHWDNHQRIZKDWWKHEHWWHUSHUIRUPLQJFRXQWULHVGLGLQWKH
ILHOGVRIHGXFDWLRQKHDOWKVHUYLFHVVRFLDOVHFXULW\ODQGUHIRUPJHQGHUUHODWLRQVDQGJHQHUDOO\LQ
WKH YDULRXV DUHDV RI SXEOLF DFWLRQ WKDW EHDU RQ WKH LGHQWLILHG VRFLDO JRDOV 7KH FRQWUDVW EHWZHHQ
WKHVHFRXQWULHVDQG,QGLDLQWHUPVRIZKDWKDVEHHQGRQHLQWKHVHILHOGVLVQROHVVVWULNLQJWKDQWKH
FRQWUDVWVUHODWLQJWRHFRQRPLFJURZWKDQGPDUNHWLQVWLWXWLRQV

7KHVH LQWHUQDWLRQDO FRPSDULVRQV DOVR UDLVH DQ LPSRUWDQW JHQHUDO TXHVWLRQ DERXW WKH
FRPSOHPHQWDULW\EHWZHHQWKHRSHQLQJXSRIHFRQRPLFRSSRUWXQLWLHVDQGWKHVRFLDOFRQGLWLRQVWKDW
IDFLOLWDWHWKHXVHRIWKRVHRSSRUWXQLWLHV HJZLGHVSUHDGOLWHUDF\ 7KHUHLVLQIDFWVRPHHPSLULFDO
HYLGHQFHVXJJHVWLQJWKDWWKHUHWXUQVWRHGXFDWLRQDOH[SDQVLRQWHQGWRLQFUHDVHZLWKWKHH[SDQVLRQRI
PDUNHW RSSRUWXQLWLHV DQG VXFK D FRPSOHPHQWDULW\ LV QDWXUDO WR H[SHFW RQ WKH EDVLV RI JHQHUDO
HFRQRPLF UHDVRQLQJ (GXFDWLRQ KDV GRQH PXFK IRU WKH TXDOLW\ RI OLIH LQ VD\ 6UL /DQND ZLWKRXW
GRLQJTXLWHVRPXFKIRUHFRQRPLFJURZWKDVVXFK

6LPLODUO\.HUDOD
VSRRUJURZWKSHUIRUPDQFHGHVSLWHKLJKHGXFDWLRQDODQGVRFLDODFKLHYHPHQWV
LQGLFDWHV WKDW VRPHWKLQJ PRUH WKDQ MXVW HGXFDWLRQ DQG RWKHU VRFLDO LQSXWV PD\ EH QHHGHG WR
DFFRPSOLVK UDSLG JURZWK RI WKH NLQG WKDW FRXQWULHV VXFK DV 6RXWK .RUHD RU 7KDLODQG DQG QRZ
&KLQD DV ZHOO  KDYH EHHQ H[SHULHQFLQJ .HUDOD
V KXPDQ UHVRXUFHV KDYH IRXQG SOHQWLIXO PDUNHWV
RXWVLGH,QGLDVHL]LQJUHPXQHUDWLYHZRUNLQWKH*XOIDQGLQRWKHUFRXQWULHVDEURDG7KHVFRSHIRU
XVLQJ WKHVH KXPDQ UHVRXUFHV DW KRPH FDQ FHUWDLQO\ EH LQFUHDVHG WR D JUHDW H[WHQW E\ H[SDQGLQJ
HFRQRPLFRSSRUWXQLWLHVZLWKLQWKHERUGHUVRI,QGLD

+RZHYHUWKHUHLVDOVRWKHRWKHUVLGHRIWKHFRPSOHPHQWDULW\EHWZHHQHFRQRPLFRSSRUWXQLWLHV
DQGVRFLDOFRQGLWLRQV7KHHIIHFWLYHQHVVRIWKHRSHQLQJXSRIQHZHFRQRPLFRSSRUWXQLWLHVDQGRI
H[SDQGLQJWKHSRVVLELOLW\RIJRRGXVHRIODERXUDQGVNLOOPD\GHSHQGJUHDWO\RQEDVLFHGXFDWLRQDO
IDFLOLWLHV DQG UHODWHG FLUFXPVWDQFHV 7KLV LV ZKHUH D IXOOHU UHDGLQJ RI WKH H[SHULHQFHV RI WKH
UDSLGO\JURZLQJFRXQWULHVLQ$VLDLVEDGO\QHHGHG$VZLOOEHSUHVHQWO\GLVFXVVHG LQFKDSWHU 
,QGLD
VFXUUHQWOHYHORIOLWHUDF\LVQRWRQO\HQRUPRXVO\ORZHUWKDQWKDWRI6RXWK.RUHDRU&KLQD
,QGLD
V OLWHUDF\ DFKLHYHPHQWV WRGD\ DUH DOVR YHU\ PXFK ORZHU WKDQ ZKDW 6RXWK .RUHD 7KDLODQG
DQG WKH RWKHU QHZO\ LQGXVWULDOL]LQJ $VLDQ FRXQWULHV KDG DOUHDG\ DFKLHYHG E\  ZKHQ WKH\
PRYHG DKHDG ZLWK WKHLU UDSLG HFRQRPLF JURZWK 6LQFH EURDGEDVHG HFRQRPLF JURZWK LQ WKHVH
FRXQWULHVLQYROYHGXVLQJDUDQJHRIPRGHPLQGXVWULHVDQGPDGHFRQVLGHUDEOHGHPDQGRQZLGHO\
VKDUHG VNLOOV DQG HGXFDWLRQ WKH LQVWUXPHQWDO UROH RI EDVLF HGXFDWLRQ LQ WKHVH GHYHORSPHQW
H[SHULHQFHV FDQ KDUGO\ EH RYHUORRNHG $ VLPLODU SRLQW FDQ EH PDGH DERXW &KLQD
V UHFHQW
H[SHULHQFHRIPDUNHWEDVHGUDSLGHFRQRPLFJURZWKVLQFH&KLQDWRRZDVVWDUWLQJDWWKHWLPHRILWV
HFRQRPLFUHIRUPVIURPDPXFKKLJKHUEDVHRIHOHPHQWDU\HGXFDWLRQWKDQ,QGLDKDVDFKLHYHGVRIDU
VHH FKDSWHU   7R XQGHUVWDQG ZKDW KDSSHQHG LQ WKHVH FRXQWULHV LW LV QHFHVVDU\ WR WDNH D IDLUO\
FRPSUHKHQVLYHYLHZRIWKHLUHFRQRPLFDQGVRFLDOFRQGLWLRQVUDWKHUWKDQMXVWSURSRVLQJWRLPLWDWH
DVSHFLILFDVSHFWRIWKHLUSHUIRUPDQFHQDPHO\WKHLUXVHRIPDUNHWEDVHGLQFHQWLYHV/HDUQLQJIURP
DQLQWHJUDWHGH[SHULHQFHKDVWREHGLVWLQJXLVKHGIURPVLPSO\FRS\LQJVRPHSDUWLFXODUIHDWXUHVRILW

6RFLDO2SSRUWXQLW\DQG3XEOLF3ROLF\

1HKUX
V YLVLRQDU\ VWDWHPHQW RQ WKH HOLPLQDWLRQ RI GHSULYDWLRQ KDG LGHQWLILHG CLQHTXDOLW\ RI
RSSRUWXQLW\
DVRQHRIWKHSULQFLSDOGHILFLHQFLHVWKDWQHHGHGWREHDGGUHVVHG7KHDSSURDFKXVHGLQ
WKLVVWXG\LVPXFKFRQFHUQHGZLWKWKHRSSRUWXQLWLHVWKDWSHRSOHKDYHWRLPSURYHWKHTXDOLW\RIWKHLU
OLYHV DQG ZLWK WKH IDLOXUHV WKDW UHODWH ERWK WR WKH ORZ DYHUDJH OHYHO DQG WKH KLJK LQHTXDOLW\ RI
RSSRUWXQLWLHVWKDWFLWL]HQVHQMR\7KHZRUGCVRFLDO
LQWKHH[SUHVVLRQCVRFLDORSSRUWXQLW\
ZKLFK
ILJXUHV HYHQ LQ WKH WLWOH RI WKLV ERRN LV PDLQO\ D UHPLQGHU QRW WR YLHZ LQGLYLGXDOV DQG WKHLU
RSSRUWXQLWLHV LQ LVRODWHG WHUPV 7KH RSWLRQV WKDW D SHUVRQ KDV GHSHQG JUHDWO\ RQ UHODWLRQV ZLWK
RWKHUVDQGRQZKDWWKHVWDWHDQGRWKHULQVWLWXWLRQVGR:HVKDOOEHSDUWLFXODUO\FRQFHUQHGZLWKWKRVH
RSSRUWXQLWLHVWKDWDUHVWURQJO\LQIOXHQFHGE\VRFLDOFLUFXPVWDQFHVDQGSXEOLFSROLF\

7KH XVH RI WKH WHUP CVRFLDO


 LV QRW LQWHQGHG DV D FRQWUDVW ZLWK CHFRQRPLF
 ,QGHHG LW ZLOO EH
DUJXHG WKDW YDULRXV HFRQRPLF DUUDQJHPHQWV LQFOXGLQJ WKH PDUNHW PHFKDQLVP  DUH RI FHQWUDO
LPSRUWDQFHWRWKHSUHVHQFHRUDEVHQFHRICVRFLDORSSRUWXQLWLHV
DQGWKHUHLVWKXVDGHHSVHDWHG
FRPSOHPHQWDULW\KHUH2QWKHRQHKDQGWKHRSSRUWXQLWLHVRIIHUHGE\DZHOOIXQFWLRQLQJPDUNHWPD\
EHGLIILFXOWWRXVHZKHQDSHUVRQLVKDQGLFDSSHGE\VD\LOOLWHUDF\RULOOKHDOWK2QWKHRWKHUKDQG
DSHUVRQZLWKVRPHHGXFDWLRQDQGILQHKHDOWKPD\VWLOOEHXQDEOHWRXVHKLVRUKHUDELOLWLHVEHFDXVH
RI WKH OLPLWDWLRQ RI HFRQRPLF RSSRUWXQLWLHV UHODWHG WR WKH DEVHQFH RI PDUNHWV RU RYHU]HDORXV
EXUHDXFUDWLFFRQWURORUWKHODFNRIDFFHVVWRILQDQFHRUVRPHRWKHUUHVWUDLQWWKDWOLPLWVHFRQRPLF
LQLWLDWLYHV6RFLDORSSRUWXQLWLHVDUHWKXVLQIOXHQFHGE\DYDULHW\RIIDFWRUVDPRQJRWKHUWKLQJVWKH
VWDWHRIHGXFDWLRQDODQGKHDOWKVHUYLFHV DQGSXEOLFSROLFLHVWKDWGHDOZLWKWKHP WKHQDWXUHDQG
DYDLODELOLW\ RI ILQDQFH DQG SROLFLHV WKDW DIIHFW WKHP  WKH SUHVHQFH RU DEVHQFH RI PDUNHWV DQG
SROLFLHVWKDWSURPRWHRUUHVWULFWWKHP DQGWKHIRUPDQGUHDFKRIEXUHDXFUDWLFFRQWUROLQJHQHUDO
LQFOXGLQJWKHEDUULHUVWRHQWHUSULVHLPSRVHGE\VXFKFRQWURO ,WLVULJKWWRUDLODJDLQVWEXUHDXFUDWLF
FRQWUROV DQG RWKHU EDUULHUV WKDW VWLIOH HFRQRPLF DFWLYLW\ DQG LQGLYLGXDO LQLWLDWLYH EXW WKDW OLQH RI
UHDVRQLQJZKLFKKDVEHHQULJKWO\DLUHGDJUHDWGHDOLQ,QGLDUHFHQWO\KDVWREHVHHQDVRQHSDUWRI
D PXFK ELJJHU VWRU\ DERXW WKH GHWHUPLQDWLRQ RI VRFLDO RSSRUWXQLWLHV WKDW LQGLYLGXDOV HQMR\ ,Q
IRFXVLQJRQVRFLDORSSRUWXQLWLHVZHSURSRVHD SHUVSHFWLYH WKDW LV VXEVWDQWLDOO\ EURDGHU WKDQ WKH
QDUURZ YLHZ WKDW FRQFHQWUDWHV VLPSO\ RQ SURPRWLQJ PDUNHWV DQG FRPSHWLWLRQ DV ZHOO DV WKH
VLPLODUO\QDUURZCFRQWUDU\
YLHZWKDWMXVWZDQWVWRGHEXQNOLEHUDOL]DWLRQ

(FRQRPLF GHYHORSPHQW FDQ LQ IDFW EH VHHQ LQ WHUPV RI H[SDQVLRQ RI RSSRUWXQLWLHV WKDW WKH
LQGLYLGXDOV LQ WKH VRFLHW\ HQMR\ DQG WKLV DSSURDFK ZLOO EH EULHIO\ GLVFXVVHG LQ WKH QH[W FKDSWHU
7KDWZLOODOVREHWKHRFFDVLRQWRGLVWLQJXLVKEHWZHHQ  WKHLQWULQVLFLPSRUWDQFHRIRSSRUWXQLWLHV
RQH RI WKH PDLQ REMHFWLYHV RI HFRQRPLF GHYHORSPHQW LV WR H[SDQG WKH HIIHFWLYH IUHHGRP WKDW
GLIIHUHQWLQGLYLGXDOVHQMR\ DQG  WKHH[WHQVLYHLQVWUXPHQWDOUROHRILQGLYLGXDORSSRUWXQLWLHVLQ
WKHSURPRWLRQRIRWKHUREMHFWLYHV2SSRUWXQLWLHVWKXVKDYHERWKGLUHFWDQGLQGLUHFWVLJQLILFDQFH

:KLOH1HKUX
VSRLQWHUWRWKHXOWLPDWHREMHFWLYHVUHPDLQVUHOHYDQWDQGPRPHQWRXVZHFDQQRWVHH
WKH FKDOOHQJH RQO\ LQ WHUPV RI WKHVH XOWLPDWH JRDOV 0XFK RI HFRQRPLF GHYHORSPHQW FRQVLVWV LQ
EULQJLQJWKHVH DFKLHYHPHQWV ZLWKLQ WKH UHDOP RI SRVVLELOLW\ DQG WKDW UHTXLUHV PRUH LQVWUXPHQWDO
UHDVRQLQJ:HKDYHWRSD\SDUWLFXODUDWWHQWLRQWRDFFRPSOLVKLQJWKRVHLQWHUPHGLDWHWDVNVWKDWZRXOG
EULQJ WKH PRUH EDVLF GHVWLQDWLRQV ZLWKLQ ,QGLD
V UHDFK :KLOH ZH FDQ VFDUFHO\ GR EHWWHU WKDQ
VWDUWLQJRIIIURPZKHUH1HKUXZDQWHG,QGLDWRJR WRZLWCWKHHQGLQJRISRYHUW\DQGLJQRUDQFHDQG
GLVHDVHDQGLQHTXDOLW\RIRSSRUWXQLW\
ZHDUHQRWUHTXLUHGQRUSDUWLFXODUO\ZHOODGYLVHGWRIROORZ
H[DFWO\WKHVWUDWHJLFSDWKWKDW1HKUXKLPVHOIFKRVH7KDWSDWKKDVOHGWRVRPHVXFFHVVHVEXWDOVR
VXEVWDQWLDOIDLOXUHVWKRXJKWKHVRXUFHVRIWKRVHIDLOXUHVDUHRIWHQPLVLGHQWLILHG

7KHEODPHIRULQGHSHQGHQW,QGLD
VSDVWIDLOXUHVLVRIWHQSXWRQWKHLQVXIILFLHQWGHYHORSPHQWRI
PDUNHWLQFHQWLYHV:HVKDOODUJXHWKDWZKLOHWKHUHLVFRQVLGHUDEOHWUXWKLQWKDWGLDJQRVLVLWLVTXLWH
LQDGHTXDWH DV DQ DQDO\VLV RI ZKDW KDV JRQH ZURQJ LQ WKLV FRXQWU\ 7KHUH DUH PDQ\ IDLOXUHV
SDUWLFXODUO\ LQ WKH GHYHORSPHQW RI SXEOLF HGXFDWLRQDO IDFLOLWLHV KHDOWK FDUH SURYLVLRQV VRFLDO
VHFXULW\ DUUDQJHPHQWV ORFDO GHPRFUDF\ HQYLURQPHQWDO SURWHFWLRQ DQG VR RQ DQG WKH VWLIOLQJ RI
PDUNHWLQFHQWLYHVLVRQO\RQHSDUWRIWKDWODUJHUSLFWXUH7KH IDLOXUHV FDQ WKXV EH VFDUFHO\ VHHQ
VLPSO\DVWKHUHVXOWRIDQCRYHUDFWLYH
JRYHUQPHQW:KDWFDQEHMXVWLILDEO\VHHQDVRYHUDFWLYLW\LQ
VRPHILHOGVKDVEHHQLQVHSDUDEO\DFFRPSDQLHGE\WKRURXJKJRLQJXQGHUDFWLYLW\LQRWKHUV

,WLVQRWDVLPSOHTXHVWLRQZHDUJXHRICPRUH
RUCOHVV
JRYHUQPHQW5DWKHULWLVDTXHVWLRQRI
WKHW\SHRIJRYHUQDQFHWRKDYHDQGRIVHHLQJWKHUROHRISXEOLFSROLFLHVLQSURPRWLQJDVZHOODV
UHSUHVVLQJ VRFLDO RSSRUWXQLWLHV ,QGHHG WKH LQWHUUHODWLRQV EHWZHHQ WKH VWDWH WKH SXEOLF DQG WKH
PDUNHWKDYHWREHVHHQLQDODUJHUIUDPHZRUNZLWKLQIOXHQFHVRSHUDWLQJLQGLIIHUHQWGLUHFWLRQV7KH
UHFRJQLWLRQ RI WKDW EURDGHU IUDPHZRUN GRHV QRW OHQG LWVHOI WR WKH GHULYDWLRQ RI VLPSOH IRUPXODH
XVHG E\ GLIIHUHQW VLGHV LQ WKH FRQWHPSRUDU\ GHEDWHV VHOOLQJ OLEHUDOL]DWLRQ RYHU DOO HOVH RU
UXEELVKLQJLWIRUFHIXOO\ %XWWKDWORVVRIVLPSOLFLW\LVDJDLQDVZHOO

,QVRIDUDVDJHQHUDOOHVVRQHPHUJHVIURPWKHGLYHUVHLQYHVWLJDWLRQVXQGHUWDNHQLQWKLVERRNLW
PD\ZHOOEHWKHQHFHVVLW\WRJHWWKHGHEDWHVRQFRQWHPSRUDU\,QGLD
VSROLWLFDOHFRQRP\EH\RQGWKH
IDPLOLDUEDWWOHOLQHVDURXQGWKHLVVXHVRIHFRQRPLFUHIRUPOLEHUDOL]DWLRQDQGGHUHJXODWLRQ7KHUH
DUHRIFRXUVHWKLQJVWREHGLVFXVVHGWKHUHDQGSURVDQGFRQVWREHDVVHVVHGEXWWKHPDLQSUREOHP
ZLWK IRFXVLQJ RQ WKDW TXHVWLRQ LV WKH UHVXOWLQJ QHJOHFW RI RWKHU SXEOLF SROLF\ PDWWHUV GHDOLQJ LQ
SDUWLFXODU ZLWK HGXFDWLRQ KHDOWK DQG VRFLDO VHFXULW\ %RWK WKH YLJRURXV GHIHQFHV RI HFRQRPLF
UHIRUPVDQGWKHVSLULWHGDWWDFNVRQLWFRQWULEXWHWRKLGLQJRWKHUEDVLFDQGXUJHQWLVVXHV

,IWKHFHQWUDOFKDOOHQJHRIHFRQRPLFGHYHORSPHQWLQ,QGLDLVXQGHUVWRRGLQWHUPVRIWKHQHHGWR
H[SDQG VRFLDO RSSRUWXQLWLHV WKHQ OLEHUDOL]DWLRQ PXVW EH VHHQ DV RFFXS\LQJ RQO\ RQH SDUW RI WKDW
ODUJHVWDJH%\VSRWOLJKWLQJWKDWRQHSDUWWKHUHVWRIWKHVWDJHLVOHIWREVFXUH7KHOLPLWDWLRQVRIWKH
,QGLDQH[SHULHQFHLQSODQQLQJOLHDVPXFKLQRPLVVLRQDOHUURUVLQWKHGDUNSDUWRIWKHVWDJHDVLW
GRHV LQ WKH FRPPLVVLRQLQJ PLVWDNHV LQ WKH VSRWOLW VHFWLRQ 7KDW XQHYHQ FRQFHQWUDWLRQ H[WUDFWV D
KHDY\ SULFH 7KH ILUVW VWHS LV WR EULQJ WKH GDUNHU SDUW RI WKH VWDJH PRUH LQWR FRQVLGHUDWLRQ 7KH
DWWHQWLRQQHHGHGDVWKHERRNDUJXHVLVQRWMXVWIURPWKHJRYHUQPHQWEXWDOVRIURPWKHSXEOLFDW
ODUJH



(&2120,&'(9(/230(17$1'
62&,$/23325781,7<

'HYHORSPHQW)UHHGRPDQG2SSRUWXQLWLHV

:KHQWKHVXEMHFWRIGHYHORSPHQWHFRQRPLFVHPHUJHGDVDGLVWLQFWILHOGRIVWXG\VKRUWO\DIWHUWKH
VHFRQG ZRUOG ZDU LW DSSHDUHG WR EH VRPHWKLQJ RI D EDVWDUG FKLOG RI JURZWK HFRQRPLFV 6RPH
LQIOXHQFH RWKHU WKDQ JURZWK HFRQRPLFV ZDV FOHDUO\ LQYROYHG LQ WKH RULJLQ RI GHYHORSPHQW
HFRQRPLFV EXW LW ZDV QRW DOWRJHWKHU FOHDU ZKDW IRUP WKLV LQIOXHQFH KDG WDNHQ ,Q RQH UHVSHFW DW
OHDVW WKH RIIVSULQJ GLG QRW GLIIHU IURP ZKDW FRXOG EH H[SHFWHG IURP D JHQXLQH CVRQ RI JURZWK
HFRQRPLFV
QDPHO\DQRYHUDUFKLQJSUHRFFXSDWLRQZLWKWKHJURZWKRIUHDOLQFRPHSHUKHDG

,DQ/LWWOHUHIOHFWHGWKLVXQGHUVWDQGLQJYHU\ZHOOLQKLVGHSLFWLRQRICGHYHORSPHQWHFRQRPLFV
 LQ
7KH)RQWDQD'LFWLRQDU\RI0RGHUQ7KRXJKW DVDILHOGWKDWCLQDEURDGVHQVHFRPSULVHVDOOZRUNRQ
WKHJURZWKRILQFRPHVSHUKHDGLQFOXGLQJWKDWRIWKHFODVVLFDOHFRQRPLFWKHRULVWVIURP6PLWKWR
0LOO7KHIRFXVRIGHYHORSPHQWHFRQRPLFVKHUHLVXQFRPSURPLVLQJO\RQWKHJURZWKRILQFRPHV
+RZHYHUZKLOHWKHWZRFODVVLFDODXWKRUVFLWHGE\/LWWOHQDPHO\6PLWKDQG0LOOGLGLQGHHGZULWH
DJUHDWGHDORQWKHJURZWKRIUHDOLQFRPHSHUKHDGWKH\VDZLQFRPHDVRQHRIVHYHUDOGLIIHUHQW
PHDQVWRLPSRUWDQWHQGVDQGWKH\GLVFXVVHGH[WHQVLYHO\WKHQDWXUHRIWKHVHHQGVYHU\GLIIHUHQWDV
WKH\DUHIURPLQFRPH

7KHVHFODVVLFDODXWKRUVZHUHGHHSO\FRQFHUQHGZLWKWKHUHFRJQLWLRQWKDWZHKDYHUHDVRQVWRYDOXH
PDQ\WKLQJVRWKHUWKDQLQFRPHDQGZHDOWKZKLFKUHODWHWRWKHUHDORSSRUWXQLWLHVWROHDGWKHNLQGRI
OLIHZHZRXOGYDOXHOLYLQJ,QWKHZULWLQJVRI6PLWK0LOODQGRWKHUFODVVLFDOSROLWLFDOHFRQRPLVWV
WKHUHLVPXFKLQWHUHVWLQWKHIRXQGDWLRQDOLPSRUWDQFHRIRXUDELOLW\WRGRWKHWKLQJVZHYDOXHVRWKDW
WKH\VDZWKHIUHHGRPWROHDGYDOXDEOHOLYHVDVLQWULQVLFDOO\LPSRUWDQWQRWPHUHO\LQVWUXPHQWDOO\VR
7KH\GLGFRPPHQWIDLUO\H[WHQVLYHO\RQWKHFRQQHFWLRQEHWZHHQWKHVHPDWWHUVRQWKHRQHKDQGDQG
LQFRPH ZHDOWK DQG RWKHU HFRQRPLF FLUFXPVWDQFHV RQ WKH RWKHU DQG WKH\ KDG PXFK WR VD\ RQ
HFRQRPLFSROLFLHVWKDWSURPRWHWKHPRUHEDVLFHQGV1HLWKHU6PLWKQRU0LOOZRXOGKDYHKDGDQ\
TXDUUHOZLWKWDNLQJDPXFKEURDGHUYLHZRIWKHFKDQJHVWKDWDUHLQYROYHGLQWKHSURFHVVZHQRZFDOO
HFRQRPLFGHYHORSPHQWHYHQZLWKSXWWLQJLQWRWKDWFDWHJRU\1HKUX
VOLVWRIWKLQJVWRGR

,Q UHFHQW \HDUV WKH SURIHVVLRQ RI GHYHORSPHQW HFRQRPLFV KDV DOVR PRYHG LQFUHDVLQJO\ LQ WKDW
GLUHFWLRQWDNLQJDPXFKPRUHLQFOXVLYHYLHZRIWKHQDWXUHRIHFRQRPLFGHYHORSPHQW
2QHZD\RI
VHHLQJ GHYHORSPHQW LV LQ WHUPV RI WKH H[SDQVLRQ RI WKH UHDO IUHHGRPV WKDW WKH FLWL]HQV HQMR\ WR
SXUVXHWKHREMHFWLYHVWKH\KDYHUHDVRQWRYDOXHDQGLQWKLVVHQVHWKHH[SDQVLRQRIKXPDQFDSDELOLW\
FDQEHEURDGO\VHHQDVWKHFHQWUDOIHDWXUHRIWKHSURFHVVRIGHYHORSPHQW

7KH CFDSDELOLW\
 RI D SHUVRQ LV D FRQFHSW WKDW KDV GLVWLQFWO\ $ULVWRWHOLDQ URRWV
 7KH OLIH RI D
SHUVRQFDQEHVHHQDVDVHTXHQFHRIWKLQJVWKHSHUVRQGRHVRUVWDWHVRIEHLQJKHRUVKHDFKLHYHV
DQG WKHVH FRQVWLWXWH D FROOHFWLRQ RI CIXQFWLRQLQJV
GRLQJV DQG EHLQJV WKH SHUVRQ DFKLHYHV
C&DSDELOLW\
UHIHUVWRWKHDOWHUQDWLYHFRPELQDWLRQVRIIXQFWLRQLQJVIURPZKLFKDSHUVRQFDQFKRRVH
7KXVWKHQRWLRQRI FDSDELOLW\ LV HVVHQWLDOO\ RQH RI IUHHGRPWKH UDQJH RI RSWLRQV D SHUVRQ KDV LQ
GHFLGLQJ ZKDW NLQG RI D OLIH WR OHDG 3RYHUW\ RI D OLIH LQ WKLV YLHZ OLHV QRW PHUHO\ LQ WKH
LPSRYHULVKHGVWDWHLQZKLFKWKHSHUVRQDFWXDOO\OLYHVEXWDOVRLQWKHODFNRIUHDORSSRUWXQLW\JLYHQ
E\VRFLDOFRQVWUDLQWVDVZHOODVSHUVRQDOFLUFXPVWDQFHVWRFKRRVHRWKHUW\SHVRIOLYLQJ(YHQWKH
UHOHYDQFHRIORZLQFRPHVPHDJUHSRVVHVVLRQVDQGRWKHUDVSHFWVRIZKDWDUHVWDQGDUGO\VHHQDV
HFRQRPLF SRYHUW\ UHODWHV XOWLPDWHO\ WR WKHLU UROH LQ FXUWDLOLQJ FDSDELOLWLHV WKDW LV WKHLU UROH LQ
VHYHUHO\UHVWULFWLQJWKHFKRLFHVSHRSOHKDYHWROHDGYDOXDEOHDQGYDOXHGOLYHV 3RYHUW\LVWKXV
XOWLPDWHO\DPDWWHURICFDSDELOLW\GHSULYDWLRQ
DQGQRWHKDVWREHWDNHQRIWKDWEDVLFFRQQHFWLRQQRW
MXVWDWWKHFRQFHSWXDOOHYHOEXWDOVRLQHFRQRPLFLQYHVWLJDWLRQVDQGLQVRFLDORUSROLWLFDODQDO\VHV

7KLVEURDGHUDQGPRUHIRXQGDWLRQDOYLHZRISRYHUW\KDVWREHNHSWLQYLHZZKLOHFRQFHQWUDWLQJDV
ZHRIWHQZRXOGLQWKLVPRQRJUDSKRQWKHGHSULYDWLRQRIVXFKEDVLFFDSDELOLWLHVDVWKHIUHHGRPWR
OHDGQRUPDOVSDQVRIOLIH XQGLPLQLVKHGE\SUHPDWXUHPRUWDOLW\ RUWKHIUHHGRPWRUHDGRUZULWH
ZLWKRXWEHLQJFRQVWUDLQHGE\LOOLWHUDF\ :KLOHWKHWHUPCSRYHUW\
ZLOOW\SLFDOO\QRWEHH[SOLFLWO\
LQYRNHG LQ VXFK FRQWH[WV WKH XQGHUO\LQJ FRQFHUQ LV RQH RI GHSULYDWLRQ DQG LPSRYHULVKHG OLYHV
(YHQ ZKHQ ZH IRFXV RQ HFRQRPLF SRYHUW\ LQ WKH PRUH FRQYHQWLRQDO VHQVH LQ WKH IRUP RI
LQVXIILFLHQW LQFRPHV  WKH EDVLF PRWLYDWLRQ ZLOO EH LWV UHOHYDQFH DV D VXEVWDQWLDO LQIOXHQFH RQ
FDSDELOLW\GHSULYDWLRQ
7KH EDVLF REMHFWLYH RI GHYHORSPHQW DV WKH H[SDQVLRQ RI KXPDQ FDSDELOLWLHV ZDV QHYHU
FRPSOHWHO\RYHUORRNHGLQWKHPRGHUQGHYHORSPHQWOLWHUDWXUHEXWWKHIRFXVKDVEHHQPDLQO\RQWKH
JHQHUDWLRQ RI HFRQRPLF JURZWK LQ WKH VHQVH RI H[SDQGLQJ JURVV QDWLRQDO SURGXFW DQG UHODWHG
YDULDEOHV
 7KH H[SDQVLRQ RI KXPDQ FDSDELOLWLHV FDQ FOHDUO\ EH HQKDQFHG E\ HFRQRPLF JURZWK
HYHQLQWKHOLPLWHGVHQVHRIJURZWKRIUHDOLQFRPHSHUKHDG EXW  WKHUHDUHPDQ\LQIOXHQFHV
RWKHUWKDQHFRQRPLFJURZWKWKDWZRUNLQWKDWGLUHFWLRQDQG  WKHLPSDFWRIHFRQRPLFJURZWKRQ
KXPDQFDSDELOLWLHVFDQEHH[WUHPHO\YDULDEOHGHSHQGLQJRQWKHQDWXUHRIWKDWJURZWK IRUH[DPSOH
KRZHPSOR\PHQWLQWHQVLYHLWLVDQGZKHWKHUWKHHFRQRPLFJDLQVIURPJURZWKDUHFKDQQHOOHGLQWR
UHPHG\LQJWKHGHSULYDWLRQVRIWKHPRVWQHHG\ 

:KDWLVFUXFLDOLQDOOWKLVLVWKHQHHGWRMXGJHWKHGLIIHUHQWSROLFLHVXOWLPDWHO\E\WKHLULPSDFW
RQ WKH HQKDQFHPHQW RI WKH FDSDELOLWLHV WKDW WKH FLWL]HQV HQMR\ ZKHWKHU RU QRW WKLV FRPHV DERXW
WKURXJK WKH JURZWK RI UHDO LQFRPHV  7KLV GLIIHUV VKDUSO\ IURP WKH PRUH VWDQGDUG SUDFWLFH RI
MXGJLQJHFRQRPLFSROLFLHVE\WKHLUFRQWULEXWLRQWRWKHJURZWKRIUHDOLQFRPHVVHHQDVDPHULWLQ
LWVHOI7RGLVSXWHWKDWSUDFWLFHPXVWQRWEHVHHQDVDQLQYLWDWLRQWRLJQRUHWKHLPSRUWDQWLQVWUXPHQWDO
UROHRIHFRQRPLFJURZWKLQHQKDQFLQJEDVLFREMHFWLYHVVXFKDVKXPDQFDSDELOLWLHVLWLVPDLQO\D
PDWWHURIEHLQJFOHDUDERXWHQGVDQGPHDQV

7KH UHFHQW DWWHPSWV LQ ,QGLD DQG HOVHZKHUH WR RSHQ XS PDUNHW RSSRUWXQLWLHV ZLWKRXW EHLQJ
WKZDUWHGE\EXUHDXFUDWLFEDUULHUVKDVEHHQMXVWLILHGSULPDULO\LQWHUPVRIWKHH[SHFWHGLPSDFWRI
WKLVFKDQJHRQHFRQRPLFH[SDQVLRQHQKDQFLQJRXWSXWVDQGLQFRPHVLQWKHHFRQRP\7RTXRWHWKH
VHPLRIILFLDO DQG GLVWLQFWO\ DXWKRULWDWLYH UHSRUW E\ %KDJZDWL DQG 6ULQLYDVDQ   CWKHVH
VWUXFWXUDOUHIRUPVZHUHQHFHVVDU\EHFDXVHZHKDGHYLGHQWO\IDLOHGWRJHQHUDWHDGHTXDWHUDWHVRI
JURZWKRILQFRPHDQGRISHUFDSLWDLQFRPH
 S 7KLVLVLQGHHGDVLJQLILFDQWGLUHFWLRQRIFDXVDO
DQDO\VLV2QWKHRWKHUVLGHWKHMXVWLILFDWLRQIRUIRFXVLQJRQRXWSXWVDQGLQFRPHVOLHVXOWLPDWHO\LQ
WKHLPSDFWWKDWWKHLUDXJPHQWDWLRQPD\KDYHRQWKHIUHHGRPVWKDWSHRSOHDFWXDOO\HQMR\WROHDGWKH
NLQGRIOLYHVWKH\KDYHUHDVRQWRYDOXH7KHDQDO\VLVRIHFRQRPLFGHYHORSPHQWPXVWWDNHQRWHRI
ERWKWKHFDXVDOFRQQHFWLRQVDQGDOVRRIRWKHUSROLFLHVDQGLQVWLWXWLRQDOFKDQJHVWKDWFRQWULEXWHWR
WKHHQKDQFHPHQWRIKXPDQFDSDELOLWLHV7KHVXFFHVVRIGHYHORSPHQWSURJUDPPHVFDQQRWEHMXGJHG
PHUHO\ LQ WHUPV RI WKHLU HIIHFWV RQ LQFRPHV DQG RXWSXWV DQG PXVW DW D EDVLF OHYHO IRFXV RQ WKH
OLYHVWKDWSHRSOHFDQOHDG7KLVDSSOLHVDVPXFKWRWKHDVVHVVPHQWRIHFRQRPLFUHIRUPVDQGFXUUHQW
HFRQRPLFSROLFLHVLQ,QGLDWRGD\DVLWGRHVWRHYDOXDWLRQVRIGHYHORSPHQWSURJUDPPHVDQ\ZKHUH
HOVHLQWKHZRUOG

2Q(GXFDWLRQDQG+HDOWK

,PSRUWDQFHKDVWREHDWWDFKHGWRWKHGLVWLQFWLQIOXHQFHVWKDWSURPRWHRUFRQVWUDLQWKHIUHHGRPVWKDW
LQGLYLGXDOVKDYHLQFOXGLQJWKHLUDELOLW\WRPDNHXVHRIHFRQRPLFRSSRUWXQLWLHV$VZDVGLVFXVVHG
LQWKHODVWFKDSWHUHGXFDWLRQDQGKHDOWKFDQEHLPSRUWDQWCSURPRWLQJ
IDFWRUV7KHUROHRIWKHVHVR
FDOOHGCVRFLDO
YDULDEOHVLQWKHIRVWHULQJRIHFRQRPLFSURJUHVVKDVUHFHQWO\UHFHLYHGPXFKDWWHQWLRQ
LQ WKH GHYHORSPHQW OLWHUDWXUH %XW RI FRXUVH WKH VXEMHFW LV RI VRPH DQWLTXLW\ DQG FODVVLFDO
SROLWLFDOHFRQRPLVWVVXFKDV6PLWKRU7XUJRWRU&RQGRUFHWRU0LOORU0DU[ZRXOGKDYHVHHQWKH
UHFRJQLWLRQRIWKLVUROHDVTXLWHQRQFRQWURYHUVLDO

7KH UHPDUNDEOH QHJOHFW RI HOHPHQWDU\ HGXFDWLRQ LQ ,QGLD LV DOO WKH PRUH VWULNLQJ JLYHQ WKH
ZLGHVSUHDG UHFRJQLWLRQ LQ WKH FRQWHPSRUDU\ ZRUOG RI WKH LPSRUWDQFH RI EDVLF HGXFDWLRQ IRU
HFRQRPLF GHYHORSPHQW 6RPHKRZ WKH HGXFDWLRQDO DVSHFWV RI HFRQRPLF GHYHORSPHQW KDYH
FRQWLQXHG WR EH RXW RI WKH PDLQ IRFXV DQG WKLV UHODWLYH QHJOHFW KDV SHUVLVWHG GHVSLWH WKH UHFHQW
UDGLFDO FKDQJHV LQ HFRQRPLF SROLF\ 6LPLODU UHPDUNV DSSO\ WR KHDOWK FDUH (YHQ %KDJZDWL DQG
6ULQLYDVDQ
V  OXFLGGLVFXVVLRQRIWKHFKDOOHQJHRIHFRQRPLFUHIRUPVLVHQWLUHO\VLOHQWRQWKH
VXEMHFW RI HGXFDWLRQ DQG KHDOWK DQG WKHLU SRVVLEOH UROHV LQ SURPRWLQJ WKH XVH RI WKH HFRQRPLF
RSSRUWXQLWLHV WKDW PD\ EH FUHDWHG E\ WKH UHIRUPV 7KHLU GLVFXVVLRQ RI WKH SUREOHP RI

LQIUDVWUXFWXUH
ILQH HQRXJK DV IDU DV LW JRHVLV FRQILQHG HIIHFWLYHO\ WR WUDQVSRUW DQG SRZHU
JHQHUDWLRQ SS   $Q RSSRUWXQLW\ LV PLVVHG KHUH WR TXHVWLRQ DQ ROG LPEDODQFH LQ ,QGLDQ
SODQQLQJHIIRUWV7KHLVVXHUHODWHVWRWKHWHQGHQF\ZKLFKZDVGLVFXVVHGLQWKHODVWFKDSWHUWRVHH
WKHHFRQRPLFUHIRUPVDVVWDQGLQJRQWKHLURZQZLWKRXWOLQNLQJWKHFDVHIRUUHIRUPLQWHUDOLDWRWKH
IDLOXUHV LQ VRFLDO SROLFLHV GHPDQGLQJ UDGLFDO FKDQJHV LQ VRFLDO SURJUDPPHV SDUWLFXODUO\ EDVLF
HGXFDWLRQDORQJZLWKPRUHQDUURZO\HFRQRPLFFKDQJHV 

(GXFDWLRQ DQG KHDOWK FDQ EH VHHQ WR EH YDOXDEOH WR WKH IUHHGRP RI D SHUVRQ LQ DW OHDVW ILYH
GLVWLQFWZD\V

 ,QWULQVLFLPSRUWDQFH%HLQJHGXFDWHGDQGKHDOWK\DUHYDOXDEOHDFKLHYHPHQWVLQWKHPVHOYHVDQG
WKHRSSRUWXQLW\WRKDYHWKHPFDQEHRIGLUHFWLPSRUWDQFHWRDSHUVRQ
VHIIHFWLYHIUHHGRP

 ,QVWUXPHQWDOSHUVRQDOUROHV$SHUVRQ
VHGXFDWLRQDQGKHDOWKFDQKHOSKLPRUKHUWRGRPDQ\
WKLQJVRWKHUWKDQMXVWEHLQJHGXFDWHGDQGKHDOWK\WKDWDUHDOVRYDOXDEOH7KH\FDQIRULQVWDQFHEH
LPSRUWDQW IRU JHWWLQJ D MRE DQG PRUH JHQHUDOO\ IRU PDNLQJ XVH RI HFRQRPLF RSSRUWXQLWLHV 7KH
UHVXOWLQJ H[SDQVLRQ LQ LQFRPHV DQG HFRQRPLF PHDQV FDQ LQ WXUQ DGG WR D SHUVRQ
V IUHHGRP WR
DFKLHYHIXQFWLRQLQJVWKDWKHRUVKHYDOXHV

  ,QVWUXPHQWDO VRFLDO UROHV *UHDWHU OLWHUDF\ DQG EDVLF HGXFDWLRQ FDQ IDFLOLWDWH SXEOLF
GLVFXVVLRQ RI VRFLDO QHHGV DQG HQFRXUDJH LQIRUPHG FROOHFWLYH GHPDQGV HJ IRU KHDOWK FDUH DQG
VRFLDOVHFXULW\ WKHVHLQWXUQFDQKHOSH[SDQGWKHIDFLOLWLHVWKDWWKHSXEOLFHQMR\VDQGFRQWULEXWHWR
WKHEHWWHUXWLOL]DWLRQRIWKHDYDLODEOHVHUYLFHV

 ,QVWUXPHQWDOSURFHVVUROHV7KHSURFHVVRIVFKRROLQJFDQKDYHEHQHILWVHYHQDVLGHIURPLWV
H[SOLFLWO\DLPHGREMHFWLYHVQDPHO\IRUPDOHGXFDWLRQ)RUH[DPSOHWKHLQFLGHQFHRIFKLOGODERXU
LVLQWLPDWHO\FRQQHFWHGZLWKQRQVFKRROLQJRIFKLOGUHQDQGWKHH[SDQVLRQRIVFKRROLQJFDQUHGXFH
WKH GLVWUHVVLQJ SKHQRPHQRQ RI FKLOG ODERXU VR SUHYDOHQW LQ ,QGLD 6FKRROLQJ DOVR EULQJV \RXQJ
SHRSOH LQ WRXFK ZLWK RWKHUV DQG WKHUHE\ EURDGHQV WKHLU KRUL]RQV DQG WKLV FDQ EH SDUWLFXODUO\
LPSRUWDQWIRU\RXQJJLUOV

  (PSRZHUPHQW DQG GLVWULEXWLYH UROHV *UHDWHU OLWHUDF\ DQG HGXFDWLRQDO DFKLHYHPHQWV RI


GLVDGYDQWDJHGJURXSVFDQLQFUHDVHWKHLUDELOLW\WRUHVLVWRSSUHVVLRQWRRUJDQL]HSROLWLFDOO\DQGWR
JHW D IDLUHU GHDO 7KH UHGLVWULEXWLYH HIIHFWV FDQ EH LPSRUWDQW QRW RQO\ EHWZHHQ GLIIHUHQW VRFLDO
JURXSV RU KRXVHKROGV EXW DOVR ZLWKLQ WKH IDPLO\ VLQFH WKHUH LV HYLGHQFH WKDW EHWWHU HGXFDWLRQ
SDUWLFXODUO\ IHPDOH HGXFDWLRQ  FRQWULEXWHV WR WKH UHGXFWLRQ RI JHQGHUEDVHG LQHTXDOLWLHV VHH
FKDSWHUEHORZ 

7KHVH LQIOXHQFHV QHHG QRW ZRUN RQO\ IRU WKH SHUVRQ ZKR UHFHLYHV HGXFDWLRQ RU KHDOWK FDUH
7KHUHDUHDOVRLQWHUSHUVRQDOHIIHFWV)RUH[DPSOHRQHSHUVRQ
VHGXFDWLRQDODELOLW\FDQEHRIXVHWR
DQRWKHU HJ WR JHW D SDPSKOHW UHDG RU WR KDYH D SXEOLF DQQRXQFHPHQW H[SODLQHG  7KH
LQWHUSHUVRQDOFRQQHFWLRQVFDQEHRISROLWLFDOVLJQLILFDQFHDVZHOOIRUH[DPSOHDFRPPXQLW\PD\
EHQHILWJHQHUDOO\IURPWKHFLYLFDWWHQWLRQLWUHFHLYHVWKURXJKWKHHGXFDWHGDFWLYLVPRIDSDUWLFXODU
JURXS ZLWKLQ WKDW FRPPXQLW\ $OVR WKH XVH RI HFRQRPLF RSSRUWXQLW\ E\ RQH SHUVRQ FDQ LQ PDQ\
FLUFXPVWDQFHVRSHQXSIXUWKHURSSRUWXQLWLHVIRURWKHUVWKURXJKEDFNZDUGDQGIRUZDUGOLQNDJHVLQ
VXSSO\DQGGHPDQG,WLVKDUGWRHYDOXDWHWKHFRQWULEXWLRQVRIHGXFDWLRQH[FHSWWKURXJKDEURDG
CVRFLDOFKRLFH
DSSURDFKO7KHUHDUHVLPLODULQWHUFRQQHFWLRQVLQPDWWHUVRIKHDOWKEHFDXVHRIWKH
REYLRXV LPSRUWDQFH RI H[WHUQDOLWLHV LQ PRUELGLW\ SUHYHQWLYH FDUH DQG FXUDWLYH WUHDWPHQW
([SDQVLRQRIKHDOWKDQGHGXFDWLRQFDQKDYHLQIOXHQFHVWKDWJRPXFKEH\RQGWKHLPPHGLDWHSHUVRQDO
HIIHFWV

7KURXJKWKHVHYDULRXVLQWHUFRQQHFWLRQVHGXFDWLRQDQGKHDOWKFDQEHYDULDEOHVRIJUHDWVWUDWHJLF
LPSRUWDQFHLQWKHSURFHVVRIHFRQRPLFGHYHORSPHQW5,QGLD
VIDLOXUHWRKDYHDQDGHTXDWHSXEOLF
SROLF\ LQ HGXFDWLRQDO DQG KHDOWK PDWWHUV FDQ EH WKXV RI SURIRXQG VLJQLILFDQFH LQ DVVHVVLQJ WKH
OLPLWHG VXFFHVV RI ,QGLDQ GHYHORSPHQW HIIRUWV RYHU WKH ODVW KDOI D FHQWXU\ $ SROLF\ UHIRUP WKDW
FRQFHQWUDWHVMXVWRQOLEHUDOL]DWLRQDQGGHUHJXODWLRQFDQQRWGHDOZLWKWKLVSDUWRIWKHIDLOXUHRISDVW
SODQQLQJ

7KHUHPRYDORIFRXQWHUSURGXFWLYHJRYHUQPHQWFRQWUROVPD\LQGHHGH[SDQGVRFLDORSSRUWXQLWLHV
IRU PDQ\ SHRSOH +RZHYHU WR FKDQJH WKH FLUFXPVWDQFHV VXFK DV LOOLWHUDF\ DQG LOO KHDOWK  WKDW
VHYHUHO\FRQVWUDLQWKHDFWXDOVRFLDORSSRUWXQLWLHVRIDODUJHSDUWRIWKHSRSXODWLRQWKHVHSHUPLVVLYH
UHIRUPVKDYHWREHVXSSOHPHQWHGE\DUDGLFDOVKLIWLQSXEOLFSROLF\LQHGXFDWLRQDQGKHDOWK,IZH
VHH HFRQRPLF GHYHORSPHQW LQ WKH SHUVSHFWLYH RI VRFLDO RSSRUWXQLWLHV LQ JHQHUDO ERWK IRU WKHLU
LQWULQVLFLPSRUWDQFHDQGIRUWKHLULQVWUXPHQWDOYDOXHZHFDQQRWDIIRUGWRPLVVWKLVFUXFLDOOLQNDJH

7KH*RYHUQPHQWWKH6WDWHDQGWKH0DUNHW

7KH FRPSHWLQJ YLUWXHV RI WKH PDUNHW PHFKDQLVP DQG JRYHUQPHQWDO DFWLRQ KDYH EHHQ PXFK
GLVFXVVHGLQWKHOLWHUDWXUH%XWWKHFRPSDUDWLYHPHULWVRIWKHWZRIRUPVRIHFRQRPLFGHFLVLRQDUH
VRWKRURXJKO\FRQWH[WGHSHQGHQWWKDWLWPDNHVOLWWOHVHQVHWRHVSRXVHDJHQHUDOCSURVWDWH
RUCSUR
PDUNHW
YLHZ7RLOOXVWUDWHWKHSRLQWDWWKHPRVWREYLRXVOHYHOZHFRXOGQRWHWKHVLPSOHIDFWWKDW
ZKDW D JRYHUQPHQW FDQ GR DQG ZLOO LQ IDFW GR PXVW GHSHQG RQ WKH QDWXUH RI WKDW JRYHUQPHQW
8QIRUWXQDWHO\WKHKLVWRU\RIWKHPRGHUQZRUOGLVQROHVVIXOORIWDOHVRIW\UDQQLHVDQGWRUWXUHVWKDQ
WKH PHGLHYDO FKURQLFOHV RI WKH EDUEDULW\ RI WKRVH WLPHV 7KH WHUULI\LQJ VXFFHVV WKDW WKH .KPHU
5RXJHKDG LQ &DPERGLD LQ TXLFNO\ GLVSRVLQJ RII D PLOOLRQ SHRSOH RQ H[WUDRUGLQDU\ LGHRORJLFDO
JURXQGVLVDQREYLRXVH[DPSOH,GL$PLQ
V8JDQGDSURYLGHVDQLOOXVWUDWLRQRIEUXWDOLW\RIDQRWKHU
NLQGOHVVLGHRORJLFDOEXWQRWPXFKOHVVYLFLRXV7KDWWKLVLVQRWDVLPSOHCWKLUGZRUOG
SKHQRPHQRQ
LV HDVLO\ LOOXVWUDWHG E\ WKH HQRUPLW\ RI WKH 1D]L DWURFLWLHV DQG JHQRFLGH LQ WZHQWLHWKFHQWXU\
*HUPDQ\7KHLPSOLFLW EHOLHI H[SUHVVHG LQ VRPH ZULWLQJV WKDW JRYHUQPHQW LQWHUYHQWLRQV DUH E\
DQGODUJHJXLGHGE\WKHGHPDQGVRIVRFLDOSURJUHVVLVVXUHO\DJLJDQWLFIROO\

(YHQZKHQWKHJRYHUQPHQW
VREMHFWLYHVDUHQRWDVYLFLRXVDVWKH\ZHUHLQ3RO3RW
V&DPERGLD
RULQ$PLQ
V8JDQGDRULQ1D]L*HUPDQ\WKHUHLVVWLOODTXHVWLRQDVWRZKRLVWU\LQJWRDFKLHYH
ZKDWWKURXJKWKHPHFKDQLVPRIJRYHUQPHQWDODFWLYLWLHV7KHLPSOLFLWIDLWKLQWKHJRRGQHVVDQGWKH
JRRGVHQVHRIWKHJRYHUQPHQWWKDWXQGHUOLHVPXFKUHDVRQLQJLQIDYRXURIJRYHUQPHQWOHGHFRQRPLF
GHYHORSPHQWFDQQRWIUHTXHQWO\VWDQGXSWRVFUXWLQ\

7KH GLVWLQFWLRQ EHWZHHQ WKH VWDWH DQG WKH JRYHUQPHQW PD\ EH RI VRPH VLJQLILFDQFH LQ WKLV
FRQWH[W7KHVWDWHLVLQPDQ\ZD\VDEURDGHUFRQFHSWZKLFKLQFOXGHVWKHJRYHUQPHQWEXWDOVRWKH
OHJLVODWXUHWKDWYRWHVRQSXEOLFUXOHVWKHSROLWLFDOV\VWHPWKDWUHJXODWHVHOHFWLRQVWKHUROHWKDWLV
JLYHQ WR RSSRVLWLRQ SDUWLHV DQG WKH EDVLF SROLWLFDO ULJKWV WKDW DUH XSKHOG E\ WKH MXGLFLDU\ $
GHPRFUDWLF VWDWH PDNHV LW WKDW PXFK KDUGHU IRU WKH UXOLQJ JRYHUQPHQW WR EH XQUHVSRQVLYH WR WKH
QHHGVDQGYDOXHVRIWKHSRSXODWLRQDWODUJH7KHQDVWLQHVVRIWKH.KPHU5RXJH
VJRYHUQDQFHZDV
VXVWDLQDEOHEHFDXVH3RO3RWGLGQRWKDYHWRIDFHHOHFWLRQVRUFDWHUWRRSSRVLWLRQSDUWLHVDQGLWLV
WKH PLOLWDULVW XQGHPRFUDWLF VWDWH WKDW PDGH WKH JHQRFLGDO SROLF\ RI WKH .KPHU 5RXJH SROLWLFDOO\
IHDVLEOH 6R ZH KDYH WR DVN TXHVWLRQV QRW PHUHO\ DERXW WKH QDWXUH RI WKH DFWXDO JRYHUQPHQW LQ
RIILFHEXWJRLQJEH\RQGWKDWDOVRDERXWWKHQDWXUHRIWKHVWDWHRIZKLFKWKHUXOLQJJRYHUQPHQWLV
RQO\RQHSDUW

7KHUHLVDVLPLODUTXHVWLRQDERXWWKHFRQWH[WGHSHQGHQFHRIWKHUROHRIWKHPDUNHWPHFKDQLVPDV
ZHOO :KDW NLQGV RI PDUNHWV DUH ZH WDONLQJ DERXW" 0RVW RI WKH WKHRU\ RI HIILFLHQF\ RU
HIIHFWLYHQHVV RI WKH PDUNHW PHFKDQLVP UHODWHV WR FRPSHWLWLYH PDUNHWV LQ HTXLOLEULXP ,W LV QRW
XQUHDVRQDEOH WR DVVXPH WKDW VPDOO YLRODWLRQV RI WKRVH FRPSHWLWLYH FRQGLWLRQV QHHG QRW DOWHU WKH
UHVXOWVYLROHQWO\ VRPHNLQGRI/HLEQL]LDQEHOLHILQWKHCFRQWLQXLW\RIQDWXUH
LVFOHDUO\LQYROYHGLQ
WKLV LPSOLFLW IDLWK  EXW DFWXDO PDUNHWV FDQ WDNH YHU\ GLIIHUHQW IRUPV LQGHHG )RU H[DPSOH WKH
FRUQHULQJ E\ D IHZ RSHUDWRUV RI JRRGV LQ VKRUW VXSSO\OHDGLQJ WR D PDVVLYH DFFHQWXDWLRQ RI
VKRUWDJHDQGVXIIHULQJKDVKDSSHQHGWRRRIWHQWREHGLVPLVVHGDVLPDJLQDU\QLJKWPDUHV7KHUHFHQW
KLVWRU\ RI $VLD DQG $IULFD SURYLGHV SOHQWLIXO H[DPSOHV RI PDUNHW H[FKDQJHV EHLQJ XVHG WR PDNH
SURILWVRXWRIWKHPLVHULHVRIPLOOLRQV

7KHUHDUHDOVRFDVHVZKHUHWKHPDUNHWPDQDJHVWRPLVMXGJHWKHH[WHQWRIDVKRUWDJHTXLWHEDGO\
DQG FDXVHV VXIIHULQJHYHQ FKDRVDV D UHVXOW ZLWKRXW WKLV EHLQJ WKH UHVXOW RI PXFK ZLOIXO
PDQLSXODWLRQ 7KLV KDSSHQHG IRU H[DPSOH LQ WKH %DQJODGHVK IDPLQH RI  ZKHQ PLVJXLGHG
VSHFXODWLRQRQWKHSDUWRIWUDGHUVFRQWULEXWHGWRDQHQRUPRXVKLNLQJRIULFHSULFHVIROORZHGODWHU
E\ D VKDUS IDOO WRZDUGV SUHKLNH SULFHV PHDQZKLOH WKH IDPLQH KDG WDNHQ LWV WROO  7R WDNH D
JHQHUDOCSURPDUNHW
YLHZZLWKRXWFRQGLWLRQVDWWDFKHGLVQROHVVSUREOHPDWLFWKDQWDNLQJDJHQHUDO
CSURJRYHUQPHQW
YLHZ

7KHFRQWUDVWEHWZHHQPDUNHWEDVHGDQGJRYHUQPHQWEDVHGHFRQRPLFGHFLVLRQVWKXVUHTXLUHVD
FOHDUHUXQGHUVWDQGLQJRIWKHQDWXUHRIWKHPDUNHWVDQGWKHJRYHUQPHQWVLQYROYHG7KHVHDUHQRWRI
FRXUVHDOORUQRQHTXHVWLRQV7KHUHDUHYDULDWLRQVLQPDUNHWIRUPVLQWKHH[WHQWRIFRPSHWLWLRQLQ
WKHRSHQQHVVRIHQWU\LQWKHDFWXDOVFRSHIRUPDQLSXODELOLW\DQGVRRQ$QGWKHUHDUHGLYHUVLWLHVLQ
WKHQDWXUHRIJRYHUQPHQWVGHSHQGLQJRQWKHSROLWLFDOV\VWHPXQGHUO\LQJWKHVWDWHWKHOHJDOV\VWHP
WKDWVXVWDLQVSROLWLFDOIUHHGRPWKHSRZHURIUXOLQJSROLWLFDOJURXSVWKHWUHDWPHQWRIRSSRVLWLRQDQG
GLVVHQW DQG VR RQ 7KH DVVHVVPHQW RI WKH UHVSHFWLYH PHULWV RI PDUNHWEDVHG GHFLVLRQV DQG
JRYHUQPHQWDOSROLFLHVFDQQRWEXWEHWKRURXJKO\GHSHQGHQWRQWKHUHDGLQJRIWKHPDUNHWVDQGRIWKH
JRYHUQPHQWVLQYROYHG

,QWHUGHSHQGHQFHEHWZHHQ0DUNHWVDQG*RYHUQDQFH

,Q DVVHVVLQJ WKH UHODWLYH PHULWV RI WKH PDUNHW DQG WKH JRYHUQPHQW QRWH KDV WR EH WDNHQ RI WKHLU
WKRURXJKJRLQJLQWHUGHSHQGHQFH,QSDUWLFXODUWKHRSHUDWLRQDQGVXFFHVVHVRIWKHPDUNHWPHFKDQLVP
FDQEHGHHSO\LQIOXHQFHGE\WKHQDWXUHRIJRYHUQPHQWDFWLRQVWKDWJRZLWKLW7KLVLVVRIRUYDULRXV
UHDVRQVVRPHPRUHREYLRXVWKDQRWKHUV
)LUVWLWLVIDLUO\VWUDLJKWIRUZDUGWRUHFRJQL]HWKDWPDUNHWVFDQKDUGO\IXQFWLRQLQWKHDEVHQFHRI
OHJDO EDFNLQJ RI FRQWUDFWV DQG SDUWLFXODU ULJKWV :KLOH VRPH RI WKHVH REOLJDWLRQV DUH FDUULHG RXW
DXWRPDWLFDOO\ DQGEXVLQHVVHWKLFVFDQSOD\DQLPSRUWDQWSDUWLQWKHIXOILOPHQWRIFRQWUDFWXDOPDUNHW
H[FKDQJHV  WKH SRVVLELOLW\ RI OHJDO DFWLRQ LQ WKH DEVHQFH RI VXFK FRPSOLDQFH LV DQ LPSRUWDQW
EDFNJURXQG FRQGLWLRQ IRU WKH VPRRWK RSHUDWLRQ RIV\VWHPV RI H[FKDQJH DQG SURGXFWLRQ ,W LV QRW
VXUSULVLQJWKDWWKHGHYHORSPHQWRIWKHPDUNHWPHFKDQLVPGXULQJWKHLQGXVWULDOUHYROXWLRQLQ(XURSH
FORVHO\ IROORZHG WKH HVWDEOLVKPHQW RI ODZ DQG RUGHU WKDW FRXOG SURYLGH VHFXULW\ WR EXVLQHVV DQG
HFRQRPLFRSHUDWLRQV7RWDNHDGLIIHUHQWW\SHRIH[DPSOHLWLVLPSRVVLEOHWRXQGHUVWDQGZK\WKH
PDUNHWPHFKDQLVPLVVRZHDNLQVD\FRQWHPSRUDU\6RPDOLDZLWKRXWVHHLQJLWLQWKHFRQWH[WRIWKH
EUHDNGRZQRIODZDQGRUGHUWKHIRUPWKDWWKHCFRPHXSSDQFH
RIWKHPLOLWDULVWUHJLPHKDVWDNHQLQ
WKDW FRXQWU\ ,QGHHG WKH 6RPDOLDQ IDPLQH RI  ZDV WR D JUHDW H[WHQW WKH UHVXOW RI WKH
EUHDNGRZQRIWKHPDUNHWPHFKDQLVPZKLFKLQWXUQKDGUHVXOWHGIURPWKHEUHDNGRZQRIJRYHUQDQFH

6HFRQG WKH JRYHUQPHQW PD\ KDYH D PDMRU UROH LQ LQLWLDWLQJ DQG IDFLOLWDWLQJ PDUNHWUHOLDQW
HFRQRPLF JURZWK 7KLV KDV EHHQ VWXGLHG D JUHDW GHDO LQ WKH KLVWRU\ RI VXFK VXFFHVVIXO FDSLWDOLVW
FRXQWULHV DV *HUPDQ\ DQG -DSDQ 0RUH UHFHQWO\ WKH UROH RI WKH JRYHUQPHQW KDV UHFHLYHG PXFK
DWWHQWLRQ LQ LQWHUSUHWLQJ WKH VRFDOOHG C(DVW $VLDQ PLUDFOH
WKH WUHPHQGRXV VXFFHVV RIWKH QHZO\
LQGXVWULDOL]LQJFRXQWULHVLQHDVW$VLD LQSDUWLFXODU6RXWK.RUHD7DLZDQ+RQJ.RQJ6LQJDSRUH
DQGPRUHUHFHQWO\&KLQDDQG7KDLODQG 


7KLVUROHLVHDV\WRXQGHUVWDQGLQWKHOLJKWRIHFRQRPLF
WKHRU\SDUWLFXODUO\UHODWHGWRGLIILFXOWLHVRILQLWLDWLRQFRQQHFWHGZLWKVXFKIDFWRUVDVGLIILFXOWLHVRI
CWDWRQQHPHQW
 SUHH[FKDQJHQHJRWLDWLRQVDERXWPDUNHWSULFHVOHDGLQJWRVLPXOWDQHRXVSURGXFWLRQ
GHFLVLRQV  HFRQRPLHV RI ODUJH VFDOH LPSRUWDQFH RI WHFKQRORJLFDO H[WHUQDOLWLHV DQG WKH LQWHJUDO
QDWXUHRIVNLOOIRUPDWLRQ7KHQXUWXULQJRIDQHDUO\PDUNHWPHFKDQLVPE\DQDFWLYHVWDWHGRHVQRWRI
FRXUVHSUHFOXGHDPRUHVHOIVXIILFLHQWUROHRIWKHPDUNHWODWHURQ

7KLUG HYHQ WKH IRUPDO WKHRU\ RI DFKLHYHPHQWV RI WKH PDUNHW PHFKDQLVP LV LPSOLFLWO\ PXFK
GHSHQGHQW RQ JRYHUQPHQWDO DFWLRQ &RQVLGHU WKH VRFDOOHG IXQGDPHQWDO WKHRUHPV RI ZHOIDUH
HFRQRPLFV

7KHILUVWWKHRUHPZKLFKVKRZVWKDWJLYHQVRPHVWDQGDUGFRQGLWLRQVDQ\FRPSHWLWLYH
HTXLOLEULXP LV 3DUHWR HIILFLHQW LV WKRXJKW WR EH OHVV LQWHUHVWLQJ WKDQ WKH VHFRQG VLQFH D 3DUHWR
HIILFLHQWDOORFDWLRQFDQEHWHUULEO\XQHTXDODQGWKRURXJKO\UHYROWLQJ7KHVHFRQGWKHRUHPRQWKH
RWKHU KDQG VKRZV WKDW XQGHU VRPHUDWKHU PRUH VWULQJHQWDVVXPSWLRQV LQFOXGLQJ WKH DEVHQFH RI
VLJQLILFDQWHFRQRPLHVRIODUJHVFDOH DQ\3DUHWRHIILFLHQWDOORFDWLRQLVDFRPSHWLWLYHHTXLOLEULXP
IRUVRPHVHWRISULFHVDQGVRPHLQLWLDOGLVWULEXWLRQRIUHVRXUFHV,I3DUHWRHIILFLHQF\LVUHJDUGHGDV
DQHFHVVDU\FRQGLWLRQIRURYHUDOOVRFLDORSWLPDOLW\WKLVHQWDLOVWKDWDVRFLDOO\RSWLPXPDOORFDWLRQ
FDQEHJLYHQ WKH DVVXPHG IUDPHZRUNVXVWDLQHG WKURXJK D FRPSHWLWLYH HTXLOLEULXP SURYLGHG WKH
LQLWLDOGLVWULEXWLRQRIUHVRXUFHVLVDSSURSULDWHO\IL[HG

7KHTXHVWLRQLVZKRZRXOGIL[WKHLQLWLDOGLVWULEXWLRQRIUHVRXUFHVLQWKLVZD\"+HUHDJDLQWKH
DJHQF\ RI WKH JRYHUQPHQW ZRXOG JHQHUDOO\ EH UHTXLUHG 7KXV WKH VLJQLILFDQFH RI WKH VRFDOOHG
CIXQGDPHQWDO WKHRUHP RI ZHOIDUH HFRQRPLFV
 LV GHHSO\ GHSHQGHQW RQ JRYHUQPHQWDO DFWLRQ 7KHUH
PD\ EH JRRG UHDVRQV IRU VFHSWLFLVP UHJDUGLQJ WKH SROLWLFDO VFRSH LQ PDQ\ VRFLHWLHV IRU
UHGLVWULEXWLQJLQLWLDOHQGRZPHQWVLQWKLVZD\FHUWDLQO\WRWKHH[WHQWWKDWZRXOGEHQHHGHGIRUVRFLDO
RSWLPDOLW\ZLWKDQHTXLW\VHQVLWLYHVRFLDOZHOIDUHIXQFWLRQ%XWZKDWFDQEHPDGHDFKLHYDEOHE\
WKHPDUNHWLQWKHGLUHFWLRQRIHTXLW\ YLDWKHVHFRQGWKHRUHP ZRXOGEHFRQGLWLRQDORQDSSURSULDWH
JRYHUQPHQWDODFWLYLVP

7KHLQWHUGHSHQGHQFHEHWZHHQPDUNHWDQGJRYHUQPHQWZRUNVLQIDFWLQWKHRWKHUGLUHFWLRQDOVR
,W LV KDUG WR WKLQN RI D JRYHUQPHQW DFKLHYLQJ DQ\WKLQJ OLNH DQ DFFHSWDEOH VRFLDO DUUDQJHPHQW LI
FLWL]HQV DUH SURKLELWHG IURP H[FKDQJLQJ FRPPRGLWLHV RU SURGXFLQJ JRRGV DQG VHUYLFHV RQ WKHLU
RZQ LQLWLDWLYH 7KHVH DFWLYLWLHVLQYROYLQJ WUDQVDFWLRQV DQG FRPSDFWVIRUP LQWHJUDO SDUWV RI WKH
PDUNHWPHFKDQLVPQRPDWWHUKRZUXGLPHQWDU\WKDWPHFKDQLVPPLJKWEH

7KHUHFHQWGHYHORSPHQWVLQHFRQRPLFWKHRU\WKDWKDYHVWUHVVHGWKHLPSRUWDQFHRIHFRQRPLHVRI
ODUJHVFDOHDQGRIHQGRJHQRXVJURZWKKDYHGRQHPXFKWRFODULI\WKHUROHRIPDUNHWVDQGWUDGH
,QGHHG DV $GDP 6PLWK   KDG DUJXHG PDUNHWV SURYLGH JUHDW RSSRUWXQLWLHV IRU DFTXLULQJ
EHQHILWV IURP WUDGH EDVHG RQ VSHFLDOL]DWLRQ DQG GLYLVLRQ RI ODERXU DQG WKH UHFHQW GHSDUWXUHV LQ
JURZWKWKHRU\DQGWUDGHWKHRU\KDYHLQYROYHGZKDW%XFKDQDQDQG<RRQ  KDYHDSWO\FDOOHG
CWKHUHWXUQWRLQFUHDVLQJUHWXUQV


7KLVOLQHRIDQDO\VLVKDVDOVREURXJKWRXWWKHH[WHQWWRZKLFKWKHSDWWHUQRILQWHUQDWLRQDOGLYLVLRQ
RI ODERXU LV QRW JLYHQ VLPSO\ E\ QDWXUDO EOHVVLQJV DQG FRPSDUDWLYH DGYDQWDJHV EXW LV DOVR
VXEVWDQWLDOO\LQIOXHQFHGE\WKHDFWXDOKLVWRU\RISDVWH[SHULHQFHVDQGVSHFLDOL]DWLRQV7KXVSXEOLF
SROLF\ FDQ KDYH D ODVWLQJ UROH LQ WKH ZD\ WKH PDUNHWV DUH XVHG 7KH LVVXH RI LQWHUGHSHQGHQFH LV
LQGHHGRIHYHQJUHDWHUVLJQLILFDQFHWKDQDKLVWRU\IUHHDQDO\VLVPLJKWVXJJHVW:KLOHPDUNHWVPXVW
EHLQWKLVDQDO\VLVDQHVVHQWLDOYHKLFOHRIUHDOL]LQJHFRQRPLFSRWHQWLDOVWKHORQJUXQLQIOXHQFHRI
DFWLYHSXEOLFSROLF\IRUH[DPSOHLQLQLWLDWLQJSDUWLFXODULQGXVWULHVDQGLQSURYLGLQJDZLGHEDVHRI
SXEOLFHGXFDWLRQ DVRFFXUUHGVD\LQ-DSDQRU6RXWK.RUHD FDQEHPRUHHDVLO\LQWHUSUHWHGDQG
XQGHUVWRRGLQWKLVOLJKW

7KH ZLGHU LQWHUGHSHQGHQFHV GLVFXVVHG KHUH FDOO IRU D FOHDUHU XQGHUVWDQGLQJ RI WKH UHODWLRQ
EHWZHHQJRYHUQPHQWSROLF\DQGPDUNHWRSHUDWLRQV,QSDUWLFXODULWLVTXLWHLPSRUWDQWWRGLVWLQJXLVK
EHWZHHQPDUNHWH[FOXGLQJDQGPDUNHWFRPSOHPHQWDU\JRYHUQPHQWLQWHUYHQWLRQV

0DUNHWH[FOXGLQJDQG0DUNHWFRPSOHPHQWDU\,QWHUYHQWLRQV

7KHFRQWULEXWLRQVDQGIDLOXUHVRIDQ\VRFLDODUUDQJHPHQWLQYROYHERWKFRPPLVVLRQ ZKDWLWGRHV
DQGRPLVVLRQ ZKDWLWIDLOVWRGR 7KHPDUNHWVGRFHUWDLQWKLQJVDQGDEVWDLQIURPGRLQJRWKHUV
$CIDLOXUH
FDQDULVHIURPHLWKHUSRVLWLYHO\GRLQJVRPHWKLQJWKDWZRXOGKDYHKDUPIXOFRQVHTXHQFHV
RU IURP QRW GRLQJ VRPHWKLQJ WKDW ZRXOG KDYH WR EH GRQH IRU JRRG UHVXOWV 7R LOOXVWUDWH IURP D
GLIIHUHQW ILHOG RI HWKLFDO MXGJHPHQW PXUGHULQJ ZRXOG EH DQ H[DPSOH RI KDUPIXO FRPPLVVLRQ
ZKHUHDVIDLOLQJWRVWRSDSUHYHQWDEOHPXUGHUZRXOGEHDFDVHRIRPLVVLRQ

7KHPDUNHWOLNHRWKHULQVWLWXWLRQVGRHVFHUWDLQWKLQJVDQGDEVWDLQVIURPGRLQJRWKHUV7KHUHLV
D UHDO DV\PPHWU\ KHUH ZKLFK LV KLGGHQ E\ XQFOHDU FRQWUDVWV EHWZHHQ WKH PDUNHW PHFKDQLVP DQG
CQRQPDUNHW
V\VWHPV$QHFRQRPLFDUUDQJHPHQWFDQEHCQRQPDUNHW
LQWKHVHQVHWKDWPDUNHWVDUH
QRW DOORZHG WR RSHUDWH IUHHO\ RU HYHQ WR RSHUDWH DW DOO 7KLV FDQ EH FDOOHG D CPDUNHWH[FOXGLQJ

DUUDQJHPHQW2ULWFDQEHCQRQPDUNHW
LQWKHVHQVHWKDWPDQ\WKLQJVDUHGRQHVD\E\WKHVWDWHWKDW
WKH PDUNHW ZRXOG QRW GR 6XFK VXSSOHPHQWDU\ RSHUDWLRQV GR QRW KDYH WR SURKLELW PDUNHWV DQG
H[FKDQJHV7KLVFDQEHFDOOHGDCPDUNHWFRPSOHPHQWDU\
DUUDQJHPHQW

2EYLRXVO\ LW LV SRVVLEOH IRU D V\VWHP WR KDYH D PL[WXUH RI PDUNHWH[FOXGLQJ DQG PDUNHW
FRPSOHPHQWDU\ LQWHUYHQWLRQV 7KH UHVSHFWLYH LPSOLFDWLRQV RI WKH WZR W\SHV RI CQRQPDUNHW

DUUDQJHPHQWVPD\EHYHU\GLIIHUHQWLQGHHG7KHQDWXUHRIWKHLVVXHFDQEHXVHIXOO\LOOXVWUDWHGZLWK
FRQFUHWH H[DPSOHV IURP D SDUWLFXODU DUHD RI FRQWHPSRUDU\ FRQFHUQ QDPHO\ WKH WHUULEOH
SKHQRPHQRQ RI IDPLQH ZKLFK FRQWLQXHV WR SODJXH WKH PRGHP ZRUOG )DPLQHV KDYH RI FRXUVH
RFFXUUHGLQQRQPDUNHWVRFLDOLVWHFRQRPLHVDVZHOODVLQPDUNHWEDVHGV\VWHPV %XW ORRNLQJ IRU
WKHPRPHQWDWIDPLQHVLQPDUNHWHFRQRPLHVZHFDQDVNZK\KDVWKHPDUNHWV\VWHPQRWEHHQDEOH
WRDYRLGWKHP"

,WKDVRIWHQEHHQDUJXHGWKDWWKHPDUNHWVFDQDQGGRGLVWRUWIRRGWUDGH&HUWDLQO\H[DPSOHVRI
PDUNHWV EHLQJ PDQLSXODWHG E\ RUJDQL]HG WUDGHUV DUH QRW KDUG WR ILQG 7KHVH PDQLSXODWLRQV KDYH
VRPHWLPHV KHLJKWHQHG WKH VXIIHULQJ DQG PLVHU\ DVVRFLDWHG ZLWK IDPLQHV 2Q WKH RWKHU KDQG LW LV
KDUGWRILQGHYLGHQFHWRVXJJHVWWKDWDFWLYHWUDGHGLVWRUWLRQKDVEHHQDSULPDU\FDXVHRIIDPLQHVLQ
PDUNHWHFRQRPLHV7KHPRVWREYLRXVIDLOXUHRIWKHPDUNHWPHFKDQLVPOLHVLQWKLVFRQWH[WLQWKH
WKLQJV WKDW WKH PDUNHW OHDYHV XQGRQH ,I VRPH JURXSV ORVH WKHLU SXUFKDVLQJ SRZHU DQG WKHLU
HQWLWOHPHQWWRIRRGVD\GXHWRHPSOR\PHQWORVVDVDUHVXOWRIDGURXJKWRUDIORRGWKHPDUNHWPD\
QRWGRPXFKWRUHJHQHUDWHLQFRPHVRUWRUHFUHDWHWKHLUORVWFRPPDQGRYHUIRRG7KDWLVDQHUURURI
RPLVVLRQZKLFKKDV WR EH GLVWLQJXLVKHG IURP WKH SRVLWLYHO\ EDG WKLQJV WKDW WKH PDUNHW PLJKW GR
7KHUHPHG\LQWKLVFDVHQHHGQRWEHVRXJKWLQCPDUNHWH[FOXGLQJ
LQWHUYHQWLRQV

,W LV QRW EHLQJ DUJXHG KHUH WKDW DOO WKH SUREOHPV DVVRFLDWHG ZLWK WKH PDUNHW PHFKDQLVP LQ WKH
FRQWH[WRIDIDPLQHDUHLQYDULDEO\RIWKHCRPLVVLRQ
W\SHWKDWLVWKHUHVXOWRIZKDWWKHPDUNHWVGR
QRWGRUDWKHUWKDQRIWKHLUDFWLYHSUHVHQFH7KHZRUNLQJRIWKHPDUNHWFDQSRVLWLYHO\ZRUVHQWKH
VLWXDWLRQRISDUWLFXODUJURXSVRISHRSOHE\PDNLQJWKLQJVZRUVHWKURXJKLWVRSHUDWLRQ$QH[DPSOH
LV WKH UROH RI WKH PDUNHW LQ WKH GHFLPDWLRQ RI SDVWRUDOLVWV ZKHQ WKH SULFH RI DQLPDOV DQG DQLPDO
SURGXFWV IDOO LQ UHODWLRQ WR WKH FRVW RI FKHDSHU VWDSOH IRRG DV LV FRPPRQ LQ PDQ\ IDPLQHV IRU
UHDVRQV ZKLFK KDYH EHHQ GLVFXVVHG HOVHZKHUH VHH 6HQ  FKDSWHUV  DQG   3DVWRUDOLVWV
VXIIHU LQ WKLV ZD\ EHFDXVH WKHLU HFRQRPLF H[LVWHQFH KDV FRPH WR GHSHQG RQ WKH ZD\ WKH PDUNHW
IXQFWLRQVGXHWRFRPPHUFLDOL]DWLRQ6LPLODUO\WKHGHFOLQHLQWKHUDWLRRIZDJHVWRIRRGSULFHVWKDW
RFFXUV ZKHQ WKH GHPDQG IRU ODERXU IDOOV GXH WR D GURXJKW RU D IORRG WKDW DIIHFWV DJULFXOWXUDO
DFWLYLWLHV FDQFHUWDLQO\ZRUVHQWKHSRVLWLRQRIWKHODERXUHULQDQDFWLYHZD\DQGWKLVYXOQHUDELOLW\
LVUHODWHGWRGHSHQGHQFHRQPDUNHWH[FKDQJH

(YHQ ZKHQ WKHUH LV D SUREOHP RI PDUNHWGULYHQ FRPPLVVLRQ KRZHYHU WKH WKUHDW RI IDPLQH
FDQQRWEHHOLPLQDWHGE\RXWODZLQJWKHPDUNHWWKDWLVE\DGRSWLQJDQ\JHQHUDOCPDUNHWH[FOXGLQJ

LQ WHUYHQWLRQCIL ,QGHHG ZKDW LV KDSSHQLQJ LQ WKHVH FDVHV LV WKDW WKH EHQHILWV WKH LQGLYLGXDOV
UHFHLYHIURPSDUWLFLSDWLQJLQWKHPDUNHW HJE\VHOOLQJODERXUSRZHUDQGEX\LQJIRRGZLWKRQH
V
ZDJH RU E\ VHOOLQJ DQLPDO SURGXFWV DQG EX\LQJ FKHDS IRRG  FDQ VXGGHQO\ EH VHYHUHO\
FRPSURPLVHGE\FKDQJHGHFRQRPLFFLUFXPVWDQFHV7KHSURFHVVWKXVZRUNVWKURXJKDUHGXFWLRQRI
WKH DGYDQWDJHV RI PDUNHW WUDQVDFWLRQDGYDQWDJHV WKDW PD\ EH YLWDO IRU VXUYLYDO DQG RQ ZKLFK
SHRSOHPD\KDYHFRPHWRUHO\7KHSURFHVVRIGHVWLWXWLRQLVVXVWDLQHGE\WKHIDLOXUHRIWKHPDUNHW
PHFKDQLVPWRSURYLGHVHFXULW\RIWKHVHH[FKDQJHDUUDQJHPHQWVDQGWHUPVRIWUDGH

/DFN RI FODULW\ DERXW WKH GLVWLQFWLRQ EHWZHHQ PDUNHWH[FOXGLQJ DQG PDUNHWFRPSOHPHQWDU\
LQWHUYHQWLRQVKDVEHHQUHVSRQVLEOHIRUVRPHPLVDQDO\VLVDQGPLVLQWHUSUHWDWLRQ)RUH[DPSOH$GDP
6PLWK
V  GHIHQFHRISULYDWHWUDGHLQIRRGJUDLQVDQGFULWLFLVPRISURKLELWRU\UHVWULFWLRQVE\
WKHVWDWHKDYHRIWHQEHHQLQWHUSUHWHGDVDSURSRVLWLRQWKDWVWDWHLQWHUIHUHQFHFDQRQO\PDNHDIDPLQH
ZRUVH%XW6PLWK
VGHIHQFHRISULYDWHWUDGHWRRNWKHIRUPRIGLVSXWLQJWKHEHOLHIWKDWIRRGWUDGHV
SURGXFHVHULRXVHUURUVRIFRPPLVVLRQ7KDWGLVSXWDWLRQGRHVQRWGHQ\LQDQ\ZD\WKHQHHGIRUVWDWH
DFWLRQ LQ WDFNOLQJ D WKUHDWHQLQJ IDPLQH WR VXSSOHPHQW WKH RSHUDWLRQV RI WKH PDUNHW E\ FUHDWLQJ
LQFRPHV HJWKURXJKZRUNSURJUDPPHV EHFDXVHWKHPDUNHWRPLWVWRGRWKLV6PLWK
VLVDUHMHFWLRQ
RIPDUNHWH[FOXGLQJV\VWHPVEXWQRWRISXEOLFLQWHUYHQWLRQIRUPDUNHWFRPSOHPHQWDU\DUUDQJHPHQWV

,QGHHG 6PLWK
V IDPLQH DQDO\VLV LV FRQVLVWHQW ZLWK DUJXLQJ IRU D GLVFULPLQDWLQJO\ DFWLYLVW
JRYHUQPHQW WKDW ZRXOG FUHDWH LQFRPHV DQG SXUFKDVLQJ SRZHU IRU WKH GLVHQWLWOHG SRSXODWLRQ DQG
WKHQOHDYHWKHVXSSO\RIIRRGWRUHVSRQGWRWKHQHZO\FUHDWHGGHPDQGWKURXJKSULYDWHWUDGH7KHUH
LV HYLGHQFHERWK IURP VRXWK $VLD DQG IURP VXE6DKDUDQ $IULFDWKDW WKLV FRPELQDWLRQ RI 
XQGHUWDNLQJVWDWHDFWLRQWRJHQHUDWHLQFRPHVDQGSXUFKDVLQJSRZHURIWKHSRWHQWLDOIDPLQHYLFWLPV
DQG   OHWWLQJ SULYDWH PDUNHWV UHVSRQG WKHQ WR WKRVH LQFRPHV DQG GHPDQGV RIWHQ ZRUNV
UHPDUNDEO\ ZHOO LQ SUHYHQWLQJ IDPLQHV
 7KDW FRPELQDWLRQ ZDV H[SOLFLWO\ GLVFXVVHG E\ 6PLWK
V
IULHQG&RQGRUFHWDQG6PLWK
VRZQDQDO\VLVLVHQWLUHO\FRQVLVWHQWZLWKWDNLQJWKDWURXWHC5

6PLWKGLGSURYLGHDVWURQJGHIHQFHRIWKHFRPPLVVLRQLQJDVSHFWVRIWKHPDUNHWPHFKDQLVP+LV
IDPRXVVWDWHPHQWDERXWJDLQVIURPWUDGHEHWZHHQWKHEXWFKHUWKHEUHZHUDQGWKHEDNHURQWKHRQH
KDQGDQGWKHFRQVXPHURQWKHRWKHUSRLQWVWRWKHDGYDQWDJHVWKDWWKHPDUNHWSRVLWLYHO\SURGXFHV
IRUDOOWKHSDUWLHVLQYROYHGLQWKHH[FKDQJH,WGRHVQRWGHQ\WKDWLIZHODFNWKHPHDQVWREX\PHDW
EHHU RU EUHDG WKH EXWFKHU WKH EUHZHU DQG WKH EDNHU ZRQ
W GR PXFK IRU XV 6WLIOLQJ WKDW WUDGH
ZRXOG KH DUJXHG EH DQ DFWLYH PLVWDNH EXW ZDLWLQJ ZLWK KRSHIXO SDVVLYLW\ IRU LQFRPHV WR EH
JHQHUDWHGWKDWZRXOGVHWWKHEDNHUHWDOWRVXSSO\WKHQHHG\FDQDOVREHDFRVWO\HUURU

7KH GLVWLQFWLRQ EHWZHHQ RPLVVLRQ DQG FRPPLVVLRQ LV LPSRUWDQW LQ XQGHUVWDQGLQJ WKH GLYLVLRQ
EHWZHHQWKHUHVSHFWLYHUROHVRIWKHPDUNHWDQGRIQRQPDUNHWLQVWLWXWLRQVLQPRGHUQHFRQRPLHV,Q
IDFWLWLVSRVVLEOHWRDUJXHDWWKHVDPHWLPHERWK  IRUPRUHPDUNHWLQVWLWXWLRQVDQG  IRUJRLQJ
PRUH EH\RQG WKH PDUNHW ,QGHHG LQ WKH FRQWH[W RI WKH FKDOOHQJHV RI ,QGLDQ SODQQLQJ VXFK D
FRPELQDWLRQPD\EHH[DFWO\ZKDWLVQHHGHG7KHIDFWWKDWWKHIRUPRIWKH,QGLDQSROLWLFDOGHEDWHV
KDV WHQGHG WR EH TXLWH WUDGLWLRQDO
SUR
 RU CDJDLQVW
 WKH PDUNHW  KDV FHUWDLQO\ FRQWULEXWHG WR
FRQIRXQGLQJWKHQDWXUHRIWKHLVVXHV7KHQHHGIRUPRUHDFWLYHXVHRIWKHPDUNHWLQVD\LQGXVWULDO
SURGXFWLRQ DQG WUDGH GRHV QRW GR DZD\ ZLWK WKH QHHG IRU PRUH VWDWH DFWLYLW\ LQ UDLVLQJ ,QGLD
V
DE\VPDOOHYHORIEDVLFHGXFDWLRQKHDOWKFDUHDQGVRFLDOVHFXULW\6LPLODUO\RQWKHRWKHUVLGHWKH
UHFRJQLWLRQ RI WKH ODWWHU QHHG GRHV QRWKLQJ WR UHGXFH WKH LPSRUWDQFH RI UHIRUPLQJ WKH RYHU
EXUHDXFUDWL]HG,QGLDQHFRQRP\

7KH PDUNHWFRPSOHPHQWDU\ DUUDQJHPHQWV QHHGHG WR HOLPLQDWH IDPLQHV KDYH RQ WKH ZKROH
ZRUNHG TXLWH ZHOO LQ SRVWLQGHSHQGHQW ,QGLD +RZHYHU WKH SUREOHP RI RPLVVLRQ UHPDLQV D
FHQWUDO RQH LQ WKH FRQWH[W RI WKH FRQWHPSRUDU\ ,QGLDQ HFRQRP\QRW LQ WHUPV RIYXOQHUDELOLW\ WR
IDPLQH EXW LQ WKH IRUP RIUHJXODU XQGHUQRXULVKPHQW ZLGHVSUHDG LOOLWHUDF\ DQG KLJK UDWHV RI
PRUELGLW\ DQG PRUWDOLW\ 7KHVH DUH GHQLDOV RI EDVLF IUHHGRPV WKDW KXPDQ EHLQJV KDYH UHDVRQV WR
YDOXH )XUWKHUPRUH WKHVH GHSULYDWLRQV FDQ DOVR EH LQVWUXPHQWDOO\ VLJQLILFDQW E\ VHYHUHO\
FRQVWUDLQLQJWKHRSSRUWXQLW\WRSDUWLFLSDWHLQWKHSURFHVVRIHFRQRPLFH[SDQVLRQDQGVRFLDOFKDQJH
,Q WU\LQJ WR JXDUDQWHH WKHVH IUHHGRPV FRPELQLQJ WKH IXQFWLRQLQJV RI PDUNHWV DQG WKRVH RI
JRYHUQPHQWV FDQ EH FULWLFDOO\ LPSRUWDQW ,Q WKHVH FLUFXPVWDQFHV PDUNHWFRPSOHPHQWDU\
LQWHUYHQWLRQVFDQKDYHIDYRXUDEOHHIIHFWVLQDZD\WKDWQHLWKHUPDUNHWH[FOXGLQJLQWHUYHQWLRQQRU
QRQLQWHUYHQWLRQFDQDFKLHYH

$3RVLWLYH)RFXV

7KHOLWHUDWXUHRQIUHHGRPLQSROLWLFDOSKLORVRSK\LVIXOORIGLVFXVVLRQVWKDWWXUQRQWKHGLVWLQFWLRQ
EHWZHHQ CQHJDWLYH
 DQG CSRVLWLYH
 OLEHUWLHV 7KDW GLVWLQFWLRQ FDQ EH LQWHUSUHWHG LQ PDQ\ GLIIHUHQW
ZD\VEXWRQHZD\RIVHHLQJWKHFRQWUDVWLVWRLGHQWLI\CQHJDWLYH
OLEHUW\ZLWKQRWEHLQJSUHYHQWHG
IURPGRLQJFHUWDLQWKLQJVZKLOHCSRVLWLYH
OLEHUW\DOVRLQFOXGHVWKRVHVXSSRUWLYHLQIOXHQFHVZKLFK
DFWXDOO\ KHOS D SHUVRQ WR GR WKH WKLQJV WKDW VKH ZDQWV WR GR :KLOH OLEHUWDULDQV KDYH EHHQ
LQFOLQHG WR VWUHVV QHJDWLYH OLEHUW\ DGYRFDWHV RI SXEOLF VXSSRUW KDYH WHQGHG WR FRQFHQWUDWH RQ
SRVLWLYHYHUVLRQVRILW

$ VLPLODUWKRXJK QRW LGHQWLFDOGLVWLQFWLRQ FDQ EH PDGH DERXW WKH UHDGLQJV RI WKH JRYHUQPHQW
V
CGXWLHV
 YLVDYLV WKH FLWL]HQV 7KH QHJDWLYH UROHV FRQVLVW LQ SUHYHQWLQJ ZKDW DUH WDNHQ WR EH EDG
GHYHORSPHQWV IRU H[DPSOH RXWODZLQJ PRQRSROLVWLF DUUDQJHPHQWV  ZKHUHDV SRVLWLYH UROHV
FRQFHUQ VXSSRUWLQJ FRQVWUXFWLYHO\ WKH HIIRUWV RI WKH FLWL]HQV WR KHOS WKHPVHOYHV IRU H[DPSOH E\
DUUDQJLQJSXEOLFHGXFDWLRQE\UHGLVWULEXWLQJODQGE\SURWHFWLQJWKHOHJDOULJKWVRIGLVDGYDQWDJHG
JURXSV /HDYLQJRXWH[WUHPLVWDGYRFDFLHVPRVWSROLWLFDOWKHRULHVWHQGWRSURYLGHURRPIRUERWK
SRVLWLYH DQG QHJDWLYH UROHV RI WKH JRYHUQPHQW EXW WKH UHODWLYH LPSRUWDQFH WKDW LV JLYHQ WR WKH
UHVSHFWLYHVSKHUHVFDQYDU\JUHDWO\

0XFK RI WKH GHEDWH RQ OLEHUDOL]DWLRQ DQG GHUHJXODWLRQ LV FRQFHUQHG ZLWK UHPRYLQJ ZKDW LV
GLDJQRVHG WR EH WKH FRXQWHUSURGXFWLYH QDWXUH RI QHJDWLYH RSHUDWLRQV RI WKH JRYHUQPHQW 7KLV
SRVLWLRQ KDV EHHQ IRUFHIXOO\ SUHVHQWHG E\ WKH FHQWUDO JRYHUQPHQW DQG WKH VXSSRUWHUV RI WKH QHZ
SROLFLHV2QWKHRWKHUKDQGRSSRVLWLRQWRWKHVHW\SHVRIUHIRUPVWHQGVWRFRPHIURPWKRVHZKRVHH
EHQHILFLDOFRQVHTXHQFHVRIWKHVHQHJDWLYHJRYHUQPHQWDOIXQFWLRQV7KHGHEDWHRQFXUUHQWSROLF\LQ
,QGLDKDVEHHQSUHRFFXSLHGZLWKWKLVEDWWOH

7KHUHDUHFHUWDLQO\LVVXHVWREHVRUWHGRXWLQWKLVCQHJDWLYH
VSKHUHEXWZKDWWKHGHEDWHQHJOHFWV
DOWRJHWKHU LV WKH LPSRUWDQFH RI SRVLWLYH IXQFWLRQV VXFK DV SURYLVLRQ RI SXEOLF HGXFDWLRQ KHDOWK
VHUYLFHVDQGDUUDQJHPHQWVIRUVRFLDOVHFXULW\7KHUHLVVFRSHIRUGHEDWHLQWKLVILHOGDVZHOO IRU
H[DPSOH RQ KRZ DQG KRZ PXFK DQG KRZ VRRQ  EXW QRWKLQJ LV VRUWHG RXW LQ WKHVH PDWWHUV E\
FRQFHQWUDWLQJDOPRVWFRPSOHWHO\RQWKHSURVDQGFRQVRIQHJDWLYHUROHVRIWKHJRYHUQPHQW DQGWKH
FRUUHVSRQGLQJ DGYDQWDJHV DQG GLVDGYDQWDJHV RI OLEHUDOL]DWLRQ DQG GHUHJXODWLRQ  :KDW LV QHHGHG
PRVWRIDOODWWKLVWLPHLVDEURDGHQLQJRIIRFXV

You might also like