World Economy and the BRICS

Introduction

The modern world is truly interconnected and most economic and social challenges do not remain
within national boundaries. This course will provide an introduction to the basic concepts and
methods used by economists to understand and explain the features of the world economy today.
The course aims to familiarise students with key concepts, facts and factors underpinning growth
and development and to develop the analytical ability to students to engage with real world growth
and development issues. This course will combine theory and empirics but will maintain a strong
applied focus.

What caused the 2008 Global Financial Crisis and what was the policy response? How can we design
policies to tackle the widening inequalities observes within countries, the challenge of climate
change and to save other global commons? What is the role of the state? The rise of emerging
economies like the BRICS and how do these countries play their role in the world economy today?
Who are the winners and losers of globalisation and international trade? Economics considers
broad-ranging real world issues such as these.

This course explores both micro and macro foundations of growth and development. The course will
discuss economic growth, capital markets, labour markets and inequalities, trade and emergence of
Global Value Chains, environment and climate change, outlook for the world economy in the near
term. What determines the decisions of households, firms and the state in developed and emerging
countries? What constraints do they face? Is there scope to improve quality of life, productivity
through the actions of governments, international organisations and market participants? What
policies have been tried and how have they fared?

Course objectives:

- Understanding of core economic policy challenges in the contemporary global economy.

- Understanding the role played by BRICS in the global economy.
- Understanding some of the micro and macro factors which determine the pace and nature
of economic growth.
- Understanding some of the micro and macro policies that have been implemented to solve
global economic challenges.
- Equipping students with applied skills necessary to evaluate policy debates and challenges
and contemplate policy responses and solutions to such challenges.

Week 1: Course introduction, the world economy since 1990

Concepts to be covered include GDP, GDP at PPP and at current dollars exchange rates, share of
countries in world GDP, poverty lines, historical evolution of world GDP, divergence and
convergence in world economy, policies to manage an economy and raise the size of the economy,
integration in the world economy. Data on size of world economy, historical growth of per capita
GDP of major regions, GDP per capita in relation to world population, individual consumption per
capita indices, changes in global and regional poverty trends will be introduced to gauge the size of
the world economy.

Readings:

Angus Maddison (2006) Introduction and summary: the World economy. OECD, Paris.
Week 2: Globalisation and international trade

Concepts to be covered will include advantages and disadvantages of international trade and FDI
including their impact on employment, global value chains, services trade, tariffs and non-tariff
barriers, trade facilitation, SMEs and trade, trade and environment. Data on decomposition of world
exports, average tariffs along the value chain, services trade restrictive index to understand the
challenges and growth potential of international trade and investment.

Readings:

Parker, George (2022) Negative impact of Brexit is clear, claims EU. FT 30 June

Foster, Peter (2022) UK-EU trade relationships tumble after Brexit. FT 26 April

Week 3: Financial Markets

Concepts to be covered will include global fixed income and equity issuance, liquid financial assets,
evolution of the global financial system, competition, securitisation, consolidation in the financial
industry, Asian financial crisis and global financial crisis. Data on global capital markets including
fixed income issuance, equity issuance, distribution of household financial assets to understand the
evolution of the financial system.

Readings:

The global financial crisis

https://www.rba.gov.au/education/resources/explainers/the-global-financial-crisis.html

A decade after the global financial crisis: what has and has not changed?
https://www.mckinsey.com/industries/financial-services/our-insights/a-decade-after-the-global-
financial-crisis-what-has-and-hasnt-changed

Week 4: Labour Markets and inequalities

Concepts to be covered will include how the labour market is defined, participation rates,
unemployment and employment rates, labour productivity, the relationship between
unemployment, aggregate demand, monetary and fiscal polices, labour markets and distribution of
income, income inequalities, gini coefficient and how the global labour market is evolving. Data on
total labour force, employment rate, employment rate according to age groups, educational level,
part time employment, temporary employment rate, self-employment rate, hours worked, GDP per
hour worked, labour compensation per hour worked, unemployment rate, unemployment rate
according to age group and educational level, gender wage gap, labour market insecurity, incidence
of collective bargaining will provide a picture how the labour market is evolving and how wages have
not kept pace with labour productivity increases.

Readings:

Office, hybrid or home? Businesses ponder future of work, the Guardian, 18 June 2021.
https://www.theguardian.com/business/2021/jun/18/office-hybrid-or-home-businesses-ponder-
future-of-work
Jacobs, Emma (2021) The future of work, FT December 2021.

Week 5: Brazil and South Africa

A look at the sizes of these economies and their share in the world economy, their challenges and
road ahead for these economies.

Readings:

Rachman, Gideon (2022) South Africa’s fear of state failure, FT August 2022.

Harris, Bryan and Michael Pooler (2022) Brazil’s election and the search for an economic revival, FT,
25 September 2022.

Week 6: China and India

A look at the sizes of these economies and their share in the world economy, their challenges and
road ahead for these economies.

O’connor, Sarah (2022). Most people don’t know what GDP growth is. FT, 11 October.

White, Edward (2022). Xi Jinping’s last chance to revive the Chinese economy. FT October.

Parkin, Benjamin and Jyotsna Singh (2022). India’s uneven economic rebound creates winners and
losers, FT March.

Sharma, Ruchir (2022). At 75, India is finally ready to join the global party. FT August.

Week 7: Russia, Human capital and other social indicators of the world economy

A look at the size of the Russian economies and its share in the world economy, its economy since
the war and imposed sanctions, its challenges and road ahead for the Russian economy. Concepts
related to human capital, and its relation to incomes, welfare, and quality of life. Data on PISA, PIAAC
to understand relative endowments of human capital in different economies.

Week 8: Final term presentations

Groups in the class will make presentations on a topic of their choice analysing either a current issue
or a country related topic by incorporating concepts learnt during the lectures. 10 min presentation
followed by 5 min Q&A.

Week 9: Environmental sustainability

A look at the challenges of climate change and its impact on global economy, the lecture will include
topics related to renewable energy.

Week 10: World Economic outlook

The last lecture will look at outlook for the next 2-3 years for the world economy and its pressing
challenges, and their implications.
Course evaluation:

1. Continuing evaluation: attendance and class participation, 30% of the final evaluation.
2. Mid-term evaluation: individual assignment, 30% of the final evaluation.
3. Final presentation: group presentation, 40% of the final evaluation.