Political Economy of Economic Reforms

Political Economy of Economic Reforms

Meelis Kitsing

Associate Professor in International Economics at the Estonian Business School and Adviser at Strategy Unit of the Estonian Government Office


Course Description:

Political economy describes a variety of perspectives in political science and economics that deal with the intersection of economics and politics. The course applies political economy perspectives to economic reforms by introducing key theories and relating these perspectives to concrete case studies of successful reforms.
The course begins with the discussion of main theoretical perspectives. It then introduces some general themes concerning political economy of economic reforms by comparing Estonia and Ukraine. It will be followed by more detailed analyses of economic reforms in the areas of trade, fiscal, monetary, privatization and innovation policies. Each of these policy areas are illustrated by concrete case studies. In addition to case studies, an experiment based on the model of Cournot competition will be carried out in the course. Although the course takes seriously the conceptual issues in the discussion of political economy of economic reforms, its emphasis is not on the technical and theoretical detail of these analyses. The primary focus of the course is to gain an understanding of how concrete reforms have been carried out in practice.

Main goals:

To provide a critical and informed understanding of the political economy of economic reforms with particular emphasis on successful post-socialist transitions such as Estonia.

Instruction Language:

English.

Course Length and Structure:

Course I duration is one week and it is composed of four interactive sessions. Each session is three hours long with one fifteen minutes break in-between. The course includes presentations, interactive discussions, case studies and simulations.

Lecture 1. Introduction to economic reforms. Harvard case studies on Estonia and Ukraine.

Students will learn:

What is political economy? How do economic reforms in different countries differ? How do political economy perspectives explain the nature and speed of economic reforms? What are similarities and differences between economic reforms in Estonia and Ukraine?

Lecture 2. Trade policy reforms. Case study on Estonian trade policy reforms prior to the EU membership.

Students will learn:

What are costs and benefits of free trade? What is comparative advantage? What are advantages and disadvantages of unilateral vs multilateral trade liberalization? How did Estonia carry out unilateral trade policy and what were benefits of this approach?

Lecture  3. Fiscal Policy. Monetary and Tax Policy. Public administration and electronic services. Case studies on Estonian macroeconomic policy reform, Tax and Customs Board and e-services.

Students will learn:

What is monetary policy? What is fiscal policy? Why are these policies important in economic transition? What is the connection between fiscal policy and state’s capability to offer electronic tax collection services and implement effective tax collection?

Lecture 4. Privatization and Competition Policy. Evolution of Business Environment. Cournot experiment. Insead Case Study on Skype.

Students will learn:

Why does privatization matter for economic development? Why competition policy is needed? What are different market structures? What is Cournot model of competition and what can we learn from it? What is game theory and why is it relevant for competition? How do high-tech companies emerge and how can business environment support them?

Topics:
Lecture 1. Introduction to economic reforms. Harvard case studies on Estonia and Ukraine.
Lecture 2. Trade policy reforms. Case study on Estonian trade policy reforms prior to the EU membership.
Lecture 3.Fiscal Policy. Monetary and Tax Policy. Public administration and electronic services. Case studies on Estonian macroeconomic policy reform, Tax and Customs Board and e-services.
Lecture 4.Privatization and Competition Policy. Evolution of Business Environment. Cournot experiment. Insead Case Study on Skype.

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