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emerging case 1 - Septembe Fall r 17 2008 08 Siming...

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September 17, 200 08 Fall Case Analysis: Angola’s M Siming Zhu (sz86) AEM 4420 – Emerging Markets Case Study Analysis #1
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Problem The political system that emerged from Angola’s lengthy civil war is one that is corrupt and oppressive, with government officials abusing their powers to gain financially at the expense of Angolan citizens. The main problem surrounding Angola’s development is the corrupt political system and its deceitful leaders, who have maintained almost no transparency in government operations and financial reporting; thus making it much too easy for dishonest officials to embezzle the State’s natural resource revenues for personal gains. The result of this politically corrupt system has been an ongoing impoverishment of the Angolan people, with more than 70% of the country now living on less than $1 a day and per capita GDP steadily decreasing from $5000 in 1973 to just $500 in 2002. Situation Analysis Political: Decades of civil war has left Angola with an unstable and corrupt governmental body, whose primary objective is not to improve the life of citizens, but self-enrichment. Embezzlement of billions in State oil revenues by top officials is a common practice that has become much too easy with “secrecy laws” that permit almost no financial transparency, essentially allowing corrupt officials to launder large sums of public money. While political instability and government corruption has resulted in a decline in public trust, the prospects for reform are slim since oppressive laws threatens to punish those that oppose the current government. Furthermore, Angola’s political risks can deter foreign investments that can help the country rebuild its deteriorating infrastructures and progress towards economic growth. Economic: Angola lacks a separation of power between those that control its economy and those holding political power. The corrupt officials controlling Angola’s government are the same officials instating economic policies that only work to benefit their own personal wealth. Angola’s ever expanding fiscal deficit, along with its heavy reliance on foreign investments and imports, have resulted in extreme inflation and a staggering per capita GDP; indicating that the poor will only get poorer as inflation and GDP progress in opposite directions. However, Angola possesses great potentials for economic growth due to its large quantities of natural resources.
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