1

Objective. To master the skills of designing and analyzing regulations.
You work as an advisor to a government. (If this helps, you might want to think of some specific country; however, this is not necessary.) Your task it to solve the gender-gap problem in the labor market. (Focus on private sector and assume that the problem is non-existent in the government sector.)

1. Women have lower wages than men.
2. The percentage of women who work is lower than that of men.

Your task is two-fold.

1. Design a policy that would (i) increase the average salary of female employees in the private sector and (ii) increase the number of women working in the private sector. Be innovative
2. Analyze the policy designed in (a). To make the task a bit simpler, consider two markets – female labor market and male labor market. At equilibrium, the female market has a lower wage and lower quantity. Next, you should explain how your policy from (a) affects the two markets (female and male): that is, which curve (supply or demand) is going to shift, in which direction, and why. Do not forget to conclude (what happens with prices and quantities). Your answer should consist of graphical analysis (two graphs: female and male) in tandem with explanation of the graphs.

2

Objective. To get “your hands dirty” with data searching, cleaning, and presenting.
By definition, GDP = C + G + I + X – M, where C is personal consumption, G government expenditures, I investments, X exports, and M imports. In the table below, you can find an example of USA GDP in 2018 divided by its components.

Your task is to find data on GDP and its components for 3 (three) distinct countries; one of them must be Saudi Arabia, none of them is to be USA. You do not need to provide times series; a snapshot from one year is enough.
Essentially, for each country, you should replicate the above table. Try to find the most recent data. You should find data for nominal and real GDP. Compute each component of GDP as % of GDP. As in the table above, include definitions, sources, and methodology.
Note. Use only the reliable sources of data: government agencies (e.g. GASTAT), World Bank.

3

Objective. To think about big questions.
What does it mean for a company to be called a Saudi company? In some cases, the answer is obvious: Aramco or Al Baik are, clearly, Saudi companies. Yet, it is not always a case that the answer is so clear.  In this exercise, you are supposed to think about the nationality of corporations. This is an important topic especially from the government perspective: a government of nation X desires to help firms from nation
X rather than those from nation Y. To that end, it is necessary to be able to determine a firm’s nationality.

1. You shall start with the case study “Nike versus New Balance – Trade Policy in a World of Global Value Chains” and ponder whether Nike and New Balance are American firms. This would help with providing a mental structure that allows to address the nationality question in a rigorous way.
2. What determines and how to determine whether a company is Saudi, German, or American?

Here, you need to provide arguments and examples.
 

4

Objective. To think about big questions.
Exercise 4 is rather unusual: you need to pick one topics from the two very different topics that I propose. Whatever you choose, you need to write an essay that covers all the points mentioned in an exercise. I am looking for clarity and depth. The problems in this exercise are serious and I expect serious essays. Put effort, mind, and heart into your answer.
At the beginning of your essay, clearly indicate which option – A or B – you choose.
 

Option A

What does it mean for a price to be fair? This is rather a deep. Naturally, it is unlikely for everyone in the world to agree on a definition of fair price. However, in this exercise, I care only about your view.

1. Explain what a “fair price” means to you. Be specific and include examples with numbers. As a reader, I need to understand your definition of “fair price.” That is, I must be able to determine (compute) a fair price for various goods and services like bread, gasoline, manicure service, etc. Hence, your definition must not be too vague. You shall think globally and locally. That is, imagine a good or service and ask yourself whether it is fair for people from various countries to pay the same price (global perspective) and whether people in the same country or city should pay the same price (local perspective).
2. You shall also provide clear arguments explaining what constitutes “fairness” in your definition of “fair price.” A reader should feel convinced by your arguments to adapt your definition of “fair price.”
3. I also would like you to analyze the price problem explained in the case study “Bayer in India: Intellectual Property Expropriation?” Here, we learn about Bayer’s entrance to the Indian market with Nexavar. In 2011, this drug was priced by Bayer at $5,500 per month. Is that a fair price? I would like you to look at the problem from two perspectives: social (i.e., Indian society) and business (i.e., Bayer’s). You can also offer an alternative view.

Option B

According to OECD, knowledge-based economy (KBE) is defined as an economy that is “directly based on the production, distribution and use of knowledge and information.” (On Blackboard, I uploaded the document, “The Knowledge-Based Economy” prepared by OECD, from which the definition comes. This document might help with the exercise. Naturally, you should expand your references if this is what you desire.)
Typical sectors of KBE are high-tech, communications, finance/banking, education, and business services (e.g., consulting). The main components of a KBE are human capital and infrastructure. Here, you might want to think of human capital as what is in the hearts and minds: motivations and skills of people. It is argued that KBE is an attractive type of economy as knowledge is a long-term driver of economic growth.  Importantly, a transformation that Saudi Arabia is going through is a transformation from an oil-based to a knowledge-based economy. And this is precisely the topic of this exercise.

1. a) Explain how Saudi Arabia is transforming and planning to transform into a knowledge-based economy. Here, you should discuss the relevant elements of the relevant policies. This is about a journey of the country and society. (Make sure you provide all the references.)
2. Reflect upon and explain how the transformation has affected you at the professional and personal level. This is about your individual journey.
3. In the case study “Assessing Hong Kong’s Human Resources in Its Transition to a Knowledge-Based Economy,” we learn about Hong Kong’s focus on developing human capital in order to transform their economy into KBE. What lessons – if any – from Hong Kong’s experience are relevant for the Saudi transformation into KBE?

5
You might want to think of this exercise as a prequel to Exercise 1.
During our 13^th session (February 12), we looked at the labor statistics in Saudi Arabia. Our focus was on the gender gap: (i) the average female salary is lower than the average male salary (in various sectors and occupations), and (ii) the percentage of Saudi females who work is lower than the percentage of Saudi males who work.
In this exercise, your task is to provide a plausible explanation of (i) and (ii). In other words, you need to answer the “why” question: why do we observe (i) and (ii) in the data?
Please keep in mind that you need to provide arguments (data, facts), not just opinions.

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