informal networks, produced an environment of mutual trust and co operation ...... Above this, every time co operation succeeds, trust .... investments is broken.
7KLV DUWLFOH ZDV SXEOLVKHG DV %XWWHU )$* GHQ DQG 5+- 0RVFK 7KH 'XWFK PLUDFOH LQVWLWXWLRQVQHWZRUNVDQGWUXVW-RXUQDORI,QVWLWXWLRQDODQG7KHRUHWLFDO(FRQRPLFVSS
7KH'XWFKPLUDFOHLQVWLWXWLRQVQHWZRUNVDQGWUXVW E\ )5$1.$*'(1%877(5$1'52%(57+-026&+
%HWZHHQ DQG 7KH 1HWKHUODQGV H[SHULHQFHG D UHPDUNDEOH HFRQRPLF UHFRYHU\ 0XWXDO WUXVW DPRQJ WKH SDUWLFLSDQWV LQ WKH VRFLDOHFRQRPLF SROLF\ SUHSDUDWLRQ SURFHVV ZDV RQH RI WKH PDLQ GULYLQJ IRUFHV RI WKLV UHFRYHU\ 7KH LQVWLWXWLRQDO IUDPHZRUN LQ ZKLFK JRYHUQPHQW XQLRQV HPSOR\HU
RUJDQLVDWLRQV FHQWUDO EDQN DQG DGYLVRU\ ERGLHV IUHTXHQWO\ PHHW HDFK RWKHU LQ IRUPDO DQG LQIRUPDO
QHWZRUNV HQKDQFHG WKLV WUXVW 7KH UHVXOWLQJ FRRSHUDWLYH PRRG OHG WR DQ HIIHFWLYH GHDOLQJ ZLWK WKH FROOHFWLYH DFWLRQ SUREOHPV 7KH IUDPHZRUN WKXV IXQFWLRQHG DV D PHFKDQLVP WKDW WUDQVIRUPHG LQWHUSHUVRQDODQGLQWHURUJDQLVDWLRQDOWUXVWLQWRSRVLWLYHPDFURHFRQRPLFHIIHFWV-(/'-=
,QWURGXFWLRQ
,QWKH'XWFKHFRQRP\LVLQDPLVHUDEOHVKDSH+RZ FRXOGWKLVKDSSHQ"7KHSRVWZDU SHULRG XQWLO LV D SHULRG RI VWURQJ *'3 JURZWK IXOO HPSOR\PHQW DQG EHFDXVH RI
JRYHUQPHQWZDJHFRQWUROPRGHVWZDJHLQFUHDVHV+RZHYHUWKHV\VWHPRIJRYHUQPHQWZDJH
FRQWUROVWRSVIXQFWLRQLQJDIWHUWKH JUDGLHQWUHOHDVHRIZDJHVHWWLQJ FRPHVDWWKHVDPH WLPH DV WKH WUDQVLWLRQ WR D PRGHUQ ZHOIDUH VWDWH 7KLV WUDQVODWHV LQWR D YHU\ JHQHURXV H[SDQVLRQ RI WKH VRFLDO VHFXULW\ V\VWHP 7KH GLVFRYHU\ DQG H[SORLWDWLRQ RI ODUJH VWRFNV RI
QDWXUDO JDV FRQWULEXWH WR WKH SROLWLFDO EHOLHI WKDW VXFK D JHQHURXV DQG H[WHQVLYH V\VWHP LV VXVWDLQDEOH DQGFDQ EH ILQDQFHG 7KH RLO VKRFN RI PDUNV WKH HQG RI WKLV SHULRG 7KH VKRFN OHDGV WR KLJK HQHUJ\ SULFHV DQG WKURXJK WKH DXWRPDWLF SULFH FRPSHQVDWLRQ WR D
SURSRUWLRQDO ULVH LQ ZDJHV DQG EHQHILW OHYHOV 7KH JXLOGHU UHPDLQV VWURQJ EHFDXVH RI WKH
UHYHQXHVIURPWKHH[SRUWRIJDVZKLFKKLQGHUVH[SRUWVDQGGHSUHVVHVWKHH[SRVHGVHFWRU7KH HFRQRPLFSUREOHPVLQWKLVSHULRGKDYHEHFRPHNQRZQDVWKH'XWFKGLVHDVH3ULFHVDQGZDJHV
,Q SUHSDULQJ WKLV SDSHU ZH EHQHILWWHG IURP GLVFXVVLRQV ZLWK -DDS :ROGHQGRUS 6XVDQQD /XQGVWU|P DQG
RWKHUSDUWLFLSDQWVRIWKH(&35-RLQW6HVVLRQVLQ7XULQ DQG WKH 6SULQJ 0HHWLQJ RI @ ,QWKHVH
VLWXDWLRQV WUXVWZRUWKLQHVV LV WKH FKDUDFWHULVWLF RI WKH SDUW\ WKDW UHIUDLQV IURP RSSRUWXQLVWLF
EHKDYLRXU7UXVWLVWKHH[SHFWDWLRQRIDSDUW\WKDWWKHRWKHUSDUW\ZLOOEHKDYHLQDWUXVWZRUWK\ PDQQHU
7KHOLWHUDWXUHRQVRFLDOFDSLWDORYHUODSVWRDPDMRUH[WHQWZLWKWKHOLWHUDWXUHRQWUXVWDQG
QHWZRUNV7KHDELOLW\WRWUXVWLVRIWHQVHHQDVDQLPSRUWDQWHOHPHQWRIVRFLDOFDSLWDO1HWZRUNV
DUHUHJDUGHGDVDQHVVHQWLDOIUDPHZRUNIRUWKHGHYHORSPHQWRIWUXVWDQGVRFLDOFDSLWDOVHHHJ WKHUHYLHZVE\1227(%220 >@DQG62%(/ >@ 6HPLQDOFRQWULEXWLRQVLQWKLVILHOGDUH %285',(8 >@&2/(0$1 >@WKHFROOHFWLRQRISDSHUVLQ'$6*837$$1' 6(5$*(/',1
>@DQG3871$0¶6 >@HPSLULFDOZRUNRQVRFLDOFDSLWDOLQ ,WDO\DQGWKH8QLWHG
6WDWHV.1$&.$1'.(()(5 >@DQG/$3257$/23(='(6,/$1(66+/(,)(5$1' 9,6+1
@SURYLGHHYLGHQFHIRUVHYHUDOFRXQWULHVWKDWWUXVWOHDGVWRKLJKHUDJJUHJDWHHFRQRPLF DFWLYLW\ DQG EHWWHU VRFLHWDO SHUIRUPDQFH&$0(5(5 >@ )(+5 $1' *b&+7(5 >@ DQG
267520 >@SUHVHQWHYLGHQFHRQWKHH[LVWHQFHRIWUXVWLQJDQGUHFLSURFDWLQJ EHKDYLRXUE\
KXPDQ EHLQJV EDVHG RQ PLFURHFRQRPLF JDPH H[SHULPHQWV 7KH\ DOVR GHWHUPLQH ZKLFK
FLUFXPVWDQFHVDUHIDYRXUDEOHIRUWKHGHYHORSPHQWRIWUXVW$ERYHDOOWKH\HVWDEOLVKWKHOLQN EHWZHHQ ³PRUH WUXVW´ DQG ³KLJKHU LQGLYLGXDO DQG FROOHFWLYH SD\RIIV´ WKDW DSSHDUV LQ WUXVW JDPHVSULVRQHUV¶GLOHPPDJDPHVDQGRWKHUW\SHVRIFRRUGLQDWLRQJDPHV
2XU SDSHU FDQ EH SRVLWLRQHG VRPHZKHUH LQ EHWZHHQ WKHVH PDFUR DQG PLFUR VWUDQGV RI
HPSLULFDO UHVHDUFK .1$&.
$1'
.(()(5 >@ VKRZ WKH SRVLWLYH HIIHFWV RI WUXVW RQ
PDFURHFRQRPLFYDULDEOHVEXWWKH\GRQRWUHDOO\ H[SODLQ KRZWKHLU WUXVW YDULDEOH ZKLFK LV
PHDVXUHG DW WKH PLFUR OHYHO WUDQVODWHV LQWR SRVLWLYH PDFURHFRQRPLF RXWFRPHV 7KH UHODWLRQVKLS EHWZHHQ WKH LQSXW RI WUXVW DW WKH PLFUR OHYHO DQG WKH RXWSXW LQ WHUPV RI
PDFURHFRQRPLF SHUIRUPDQFH UHPDLQV D EODFN ER[ LQ WKHLU UHVHDUFK 7KH PLFURHFRQRPLF UHVHDUFKUHIHUUHGWRDERYHDFWXDOO\WULHVWRORRNLQWRWKLVEODFNER[EXWEHFDXVHWKLVUHVHDUFK LVVHYHUHO\OLPLWHGE\YHU\VWULFWDQGIRUPDOODERUDWRU\FRQGLWLRQVRQHFDQQRWHDVLO\OLQNLWV RXWFRPHV WR ³UHDO OLIH´ VLWXDWLRQV ,W LV HYHQ D KDUGHU WDVN WR OLQN WKHVH UHVXOWV WR
PDFURHFRQRPLF ILQGLQJV :KDW ZH WU\ WR GR LQ WKLV SDSHU LV WR FRPELQH WKH EHVW RI ERWK
HPSLULFDO ZRUOGV :H ZDQW WR H[SODLQ ZKDW KDSSHQV ZLWKLQ WKH EODFN ER[ DQG UHODWH WKLV WR
PDFURHFRQRPLFRXWFRPHV7KHEODFNER[ZHFKRVHWRSHHULQLVWKHRQHRIPDFURHFRQRPLF SROLF\ PDNLQJ LQ 7KH 1HWKHUODQGV LQ WKH SHULRG :H XVH WKH ILQGLQJV RI WKH
PLFURHFRQRPLF EDVHG UHVHDUFK WR H[SODLQ KRZ WUXVW GHYHORSHG EHWZHHQ WKH SOD\HUV LQ WKH
'XWFKLQVWLWXWLRQDOIUDPHZRUNZKLFKZHUHIHUUHGWRDVVWHSRQH $IWHUWKLVZHDQDO\VHKRZ WKLVWUXVWUHVXOWHGLQEHWWHURXWFRPHVRIFROOHFWLYHDFWLRQSUREOHPV7KHVHEHWWHURXWFRPHVFDQ
EH XQGHUVWRRG DV EHWWHU PDFURHFRQRPLF SROLFLHV ZKLFK LQ WKHLU WXUQ OHG WR EHWWHU PDFURHFRQRPLFUHVXOWVVWHSWZR
,QWKLVZD\ZHVKRZLQDFDVHVWXG\IRURQHVSHFLILFFRXQWU\DQGIRURQHVSHFLILFSHULRG
KRZ WKH LQVWLWXWLRQDO IUDPHZRUN FDQ RSHUDWH DV D PHFKDQLVP WKDW WUDQVIRUPV WUXVW EHWZHHQ SHUVRQVDQGRUJDQLVDWLRQVDWWKHPLFUROHYHOWRSRVLWLYHPDFURHFRQRPLFHIIHFWV:HDGPLWWKDW LW LV KDUG WR JHQHUDOLVH WKH ILQGLQJV RI D FDVH VWXG\ WR D WKHRU\ RQ WKH ZRUNLQJ RI WKH
UHODWLRQVKLS EHWZHHQ WUXVW IRUPDWLRQ DW WKH PLFUR OHYHO DQG HFRQRPLF SHUIRUPDQFH DW WKH PDFUR OHYHO :H GR QRW SUHWHQG WR GR VR EXW ZH UHPDUN WKDW WKH FDVH FRQVLGHUHG E\ XV WKH 'XWFKSROGHUPRGHOKDVREWDLQHGDPSOHDWWHQWLRQLQLQWHUQDWLRQDOSROLF\UHVHDUFK
,QRXURSLQLRQDPDMRUUHDVRQWKDWFROOHFWLYHDFWLRQSUREOHPV\LHOGEHWWHURXWFRPHVZKHQ
WKH SDUWLHV LQYROYHG VKDUH D KLJK OHYHO RI WUXVW DPRQJVW HDFK RWKHU LV WKDW LW PLWLJDWHV WKH
HIIHFWV RI KROGXS SUREOHPV 7ZR GHFDGHV RI FRRSHUDWLRQ EHWZHHQ XQLRQV DQG HPSOR\HU IHGHUDWLRQV LQ 7KH 1HWKHUODQGV KDYH FU\VWDOOLVHG LQWR D VXVWDLQHG FRPELQHG VWUDWHJ\ RI ORZHULQJ ZDJH FRVWV LQFUHDVHG ODERXU PDUNHW IOH[LELOLW\ DQG LQYHVWPHQW LQ HPSOR\PHQW $OWKRXJK WKLV VWUDWHJ\ LQYROYHG WZHQW\ \HDUV RI ZDJH PRGHUDWLRQ GXULQJ ZKLFK ILUPV UHVWRUHGWKHLUSURILWV VRFLDOXQUHVWLQWKHIRUPRIVWULNHDFWLYLW\KDVEHHQQHJOLJLEOH$OWKRXJK
VRPHREVHUYHUVFRQVLGHUZDJHPRGHUDWLRQLQ7KH1HWKHUODQGVMXVWDVWKH3KLOOLSVFXUYHHIIHFW LQ UHDFWLRQ WR KLJK XQHPSOR\PHQW D PDMRU DUJXPHQW RI RXU SDSHU LV WKDW WKLV VXVWDLQHG FR
RSHUDWLYHVWDQFHFDQRQO\EHH[SODLQHGLQWHUPVRIKLJKPXWXDOWUXVWEHWZHHQWKHQHJRWLDWLQJ SDUWLHVRIODERXUVWDQGDUGV
7KHFRQWHQWRIWKHUHPDLQGHURIWKHSDSHULVDVIROORZV7KHPDLQLQVWLWXWLRQVDQGWKHLUUROH
LQWKH³SROGHUPRGHO´DUHGLVFXVVHGLQVHFWLRQ6HFWLRQGLVFXVVHVKRZWUXVWPLWLJDWHVWKH
KROGXSSUREOHPLQFRUSRUDWLVWHFRQRPLHV$IWHUWKHLQWURGXFWLRQRIWKHWKHRUHWLFDOPRGHOZH VKRZ WKH DSSURSULDWHQHVV RI WKH PRGHO IRU WKH 'XWFK ODERXU PDUNHW ,Q VHFWLRQ ZH
FRQIURQW WKH ILQGLQJV RI WKH HDUOLHU VHFWLRQV ZLWK WKH DFWXDO RXWFRPHV RI WKH SROLF\ PDNLQJ SURFHVV7KH:DVVHQDDUDJUHHPHQWDQGWKHPDLQSROLF\PHDVXUHVWKDWDUHKHOGUHVSRQVLEOHIRU
WKH HFRQRPLF UHFRYHU\ DUH DQDO\VHG LQ WKH OLJKW RI WUXVW DQG FROOHFWLYH DFWLRQ SUREOHPV 6HFWLRQFRQFOXGHV
,QVWLWXWLRQVFRQVXOWDWLRQVWUXFWXUHDQGHIIHFWVRQWUXVW
7KLVVHFWLRQHODERUDWHVWKHILUVWVWHSRIRXUDQDO\VLVQDPHO\WKHWUXVWHQKDQFLQJIHDWXUHVRIWKH
LQVWLWXWLRQDOFRQWH[WLQZKLFK'XWFKHFRQRPLFSROLF\SUHSDUDWLRQWDNHVSODFH,QRXURSLQLRQ
WKLVVSHFLILF'XWFKLQVWLWXWLRQDOIUDPHZRUNFRQWULEXWHGVXEVWDQWLDOO\WRWKHHFRQRPLFUHFRYHU\ EHWZHHQ DQG 7KLV VHFWLRQ FRQVLGHUV WKUHH DVSHFWV RI WKH LQVWLWXWLRQDO VHWWLQJ QDPHO\L WKH³GULYHIRUFRQVHQVXV´DQG³SLOODULVDWLRQ´ LL WKHPDMRUSOD\HUVLQSROLF\
SUHSDUDWLRQDQGWKHRUJDQLVDWLRQRIWKHLQWHUDFWLRQEHWZHHQWKHP DQGLLL VRPHVSHFLILF OHJLVODWLRQ DERXW ODERXU VWDQGDUGV QHJRWLDWLRQV )LQDOO\ VHFWLRQ DQDO\VHV KRZ WKHVH
WKUHHDVSHFWV RI WKH LQVWLWXWLRQDO IUDPHZRUN FRQWULEXWH WR WKH IRUPDWLRQ RI WUXVW EHWZHHQ WKH SDUWLHVLQYROYHG
6RFLDOFKDUDFWHULVWLFV
7KH GULYH IRU FRQVHQVXV LV RIWHQ FRQVLGHUHG DV D GRPLQDQW VRFLDO FKDUDFWHULVWLF LQ 7KH 1HWKHUODQGV,WVRULJLQLVRIWHQDWWULEXWHGWRWKH'XWFKKLVWRULFFRQWH[WRIWKHVWUXJJOHDJDLQVW
WKHZDWHU$OUHDG\LQWKHWZHOIWKFHQWXU\SXEOLFERDUGVFDPHLQWREHLQJWRRUJDQLVHSURWHFWLRQ
DJDLQVWWKHVHD DQGLQLWLDWHODQGZLQQLQJSURFHGXUHV7KLVFRPPRQLQWHUHVWIRUFHGSHRSOHWR
FRRSHUDWHZLWKHDFKRWKHUDQGWRUHDFKDFRPSURPLVHRUSUHIHUDEO\DFRQVHQVXDODJUHHPHQW LQ RUGHU WR EH DEOH WR GHIHQG WKHPVHOYHV DJDLQVW WKH GDQJHU RI IORRGV LQ DOO FLUFXPVWDQFHV 0RUHRYHUDJUHHPHQWLVQHHGHGRQWKHOHYHORIWKHJURXQGZDWHUDQGRQJRRGPDLQWHQDQFHRI WKHGLNHVDQGGLWFKHVWRPDNHIDUPLQJLQWKH³SROGHUV´SRVVLEOH
7KLV SUDFWLFH RI FRQVHQVXV IRUPDWLRQ DV D GRPLQDQW VRFLDO FKDUDFWHULVWLF ZDV LQ D
SRUWHQWRXV ZD\ FRPELQHG ZLWK DQRWKHU SHFXOLDULW\ RI WKH 'XWFK VRFLHW\ QDPHO\ LWV
³SLOODULVDWLRQ´ 'XULQJ WKH WZHQWLHWK FHQWXU\ XQWLO WKH VHYHQWLHV WKH 'XWFK VRFLHW\ ZDV
VHSDUDWHGLQWRIRXU³VSKHUHVRILQIOXHQFH´LHLQWRIRXUVHSDUDWH³SLOODUV´QDPHO\DFDWKROLFD
SURWHVWDQWDVRFLDOLVWDQGDOLEHUDORQH7KHVHIRXUSLOODUVKDGWKHLURZQVFKRROVQHZVSDSHUV
EURDGFDVWLQJFRPSDQLHVVSRUWFOXEVVKRSVDQGSROLWLFDOSDUWLHV)RUDODUJHSDUWSHRSOHRQO\ FRPPXQLFDWHG ZLWK SHRSOH ZKR EHORQJHG WR WKH VDPH SLOODU $W WKH OHYHO RI JRYHUQPHQW
KRZHYHU WKH OHDGHUV RI WKH GLIIHUHQW SLOODUV GLG QRW KHVLWDWH WR FRQWDFW HDFK RWKHU DQG IRUP FRDOLWLRQ JRYHUQPHQWV 7KHVH FRDOLWLRQ JRYHUQPHQWV DUH D QHFHVVLW\ LQ 7KH 1HWKHUODQGV
ZKHUHWKHSROLWLFDOSDUWLHVRULJLQDOO\UHSUHVHQWHGWKHYDULRXVSLOODUV,WKDVQHYHUKDSSHQHGWKDW DVLQJOHSDUW\REWDLQHGDPDMRULW\LQSDUOLDPHQW7KLVV\VWHPRIFRDOLWLRQJRYHUQPHQWVIRUFHV WKH GLIIHUHQW SROLWLFDO VWUHDPV WR ZRUN WRJHWKHU UHDFK FRPSURPLVHV DQG HYHQ EHWWHU FRQVHQVXV
2UJDQLVDWLRQVLQYROYHGLQWKHSROLF\PDNLQJSURFHVV
0DQ\RUJDQLVDWLRQVDQGVWDNHKROGHUVDUHLQYROYHGLQWKHHFRQRPLFSROLF\PDNLQJSURFHVVLQ
7KH 1HWKHUODQGV +HUH ZH IRFXV RQ WKH SURPLQHQW SOD\HUV DQG HODERUDWH WKH UROH RI WZR RI WKHPZKLFKZHFRQVLGHUPRVWGLVWLQFWLYHLQWKHLQVWLWXWLRQDOVHWWLQJRIWKHSROGHUPRGHO7KH ILUVWLVWKH&HQWUDO3ODQQLQJ%XUHDX,WVKLVWRU\LOOXVWUDWHVWKHVWUXJJOHWRILQGDQDSSURSULDWH ZD\WR FRPELQH WKH FKDUDFWHULVWLFV RI ³GULYH IRU FRQVHQVXV´ DQG ³SLOODULVDWLRQ´ LQ D VXLWDEOH
IRUP LQ RUGHU WR DGYLVH WKH JRYHUQPHQW RQ PDWWHUV RI HFRQRPLF SROLF\ )XUWKHUPRUH WKH
PRGHOEDVHGDQGVSHFLILFTXDQWLWDWLYHHFRQRPLFDQDO\VLVRIWKH&3%LVVWLOODEDVLVIRUHYHU\
GLVFXVVLRQRQHFRQRPLFSROLFLHVLQ7KH1HWKHUODQGV7KHVHFRQGLQVWLWXWLRQWKDWPHULWVVRPH GHHSHU DQDO\VLV LV WKH 6RFLDO (FRQRPLF &RXQFLO 7KH VRFLDO GLVFRXUVH LQ WKH 6(5LV RIWHQ
UHIHUUHG WR DV WKH ³KHDUW RI WKH SROGHU PRGHO´ $IWHU WKLV ZH GLVFXVV WKH RWKHU LPSRUWDQW LQVWLWXWLRQVLQWKHILHOG
&HQWUDO3ODQQLQJ%XUHDX7KH'XWFK&HQWUDO3ODQQLQJ%XUHDX&3% SOD\VD FUXFLDOUROHLQ
WKHLQVWLWXWLRQDOVHWXS,WKDVQRZUHQDPHGLWVHOILQ(QJOLVKDVWKH&3%1HWKHUODQGV%XUHDX IRU3ROLF\$QDO\VLV&3% DVLWGRHVQRWZDQWWREHDVVRFLDWHGZLWKHFRQRPLFSODQQLQJLQWKH VHQVHRIWKHVRFLDOLVWHFRQRPLHV@ 7KH DQDO\VHV RI WKH &3% DUH ZLGHO\ XVHG DV
LQSXWIRUVRFLDOHFRQRPLFSROLF\GLVFXVVLRQV+RZHYHULQWKHILUVWIHZ\HDUVRIWKH&3%WKHUH
ZDVDILHUFHLQWHUQDOGLVFXVVLRQLQWKH&3%DERXWWKHZD\WKHEXUHDXVKRXOGJLYHVKDSHWRLWV DGYLVHVVHH9$1'(1 %2*$$5' >@ 2QWKHRQHVLGHZDV9DQ&OHHIIZKRKDGWKHYLHZ
WKDW WKH &3% VKRXOG IROORZ D QRUPDWLYH DSSURDFK ZKLOH RQ WKH RWKHU VLGH 7LQEHUJHQ VXSSRUWHG WKH LGHD RI GLVHQWDQJOLQJ WKH SRVLWLYH DQG QRUPDWLYH HOHPHQWV RI WKH DQDO\VHV
&UXFLDO LQ WKLV FRQWURYHUV\ ZDV ZKLFK W\SH RI HFRQRPLF SROLF\ DGYLFH ZRXOG EH WKH PRVW VXFFHVVIXO LQ WKH ³SLOODULVHG´ HFRQRP\ 9DQ &OHHII WULHG WR GHYHORS DQ DOOHPEUDFLQJ
QRUPDWLYHWKHRU\ZKLFKZRXOGLQWHJUDWHWKHLGHDVRIWKHGLIIHUHQWSLOODUV7LQEHUJHQZDQWHG WRGHYHORSDPHWKRGWKDWZRXOGJLYHWKHPRVWREMHFWLYHGHVFULSWLRQRIUHDOLW\7KHGLIIHUHQFHV
EHWZHHQWKHSLOODUVZRXOGWKHQEHPLQLPLVHGWRWKHLUGLIIHUHQWQRUPDWLYHSURSRUWLRQV,QRWKHU ZRUGVKHZDQWHGWRPDNHDFOHDUGLVWLQFWLRQEHWZHHQWKHZRUNLQJVRIWKHHFRQRP\PRGHO DQGWKHSROLF\JRDOVZHOIDUHIXQFWLRQV DQGWKHQ³WU\WRDJUHHRQWKHILUVWDQGFRPSURPLVHRQ
WKHVHFRQGLVVXH7LQEHUJHQZRQWKLVEDWWOH6LQFHWKHQHFRQRPLFSROLF\SUHSDUDWLRQLQ7KH 1HWKHUODQGV LV RUJDQLVHG LQ WKUHH DXWRQRPRXV SDUWV GDWD PRGHO DQG QRUPV7KH GDWD DQG
VWDWLVWLFV DUH FROOHFWHG E\ WKH &HQWUDO %XUHDX IRU 6WDWLVWLFV &%6 WKH ZRUNLQJV RI WKH HFRQRP\DUHGHVFULEHGE\WKHPRGHOVRIWKH&3%DQGWKHEDODQFLQJRIWKHGLIIHUHQWSRLQWVRI YLHZ LV GRQH E\ WKH JRYHUQPHQW LQ GLDORJXH ZLWK XQLRQV HPSOR\HU RUJDQLVDWLRQV DQG RWKHU
DVVRFLDWLRQVRIRUJDQLVHGLQWHUHVW7KLVPHWKRGRIVSOLWWLQJIDFWVDQGSROLWLFVVHHPVWREHWKH EHVWLQFUHDWLQJFRQVHQVXVLQD³SLOODULVHG´VRFLHW\
$PDMRUDQGXQLTXHH[DPSOHRIWKLVIXQFWLRQLQJRIWKH&3%LQSROLF\FRQVHQVXVRUUDWKHU
FRPSURPLVH IRUPDWLRQRFFXUVLQ\HDUVLQZKLFKJHQHUDOHOHFWLRQVIRUSDUOLDPHQWWDNHSODFH 7KH PDMRU SROLWLFDO SDUWLHV WKHQ DVN WKH &3% WR FDOFXODWH WKH HIIHFWV RI WKHLU HOHFWLRQ
SURJUDPPHVRQHFRQRPLFJURZWKHPSOR\PHQWLQFRPHGLVWULEXWLRQDQGVRRQ7KHUHVXOWVIRU WKHGLIIHUHQWSROLWLFDOSDUWLHVDUHZLGHO\VSHOOHGRXWLQQHZVSDSHUVDQGWHOHYLVLRQSURJUDPPHV 6HHPLQJO\LWLVDOPRVWDUHDOLVDWLRQRI7LQEHUJHQ¶VGUHDPWRVHSDUDWHWKHNQRZOHGJHRQWKH
ZRUNLQJ RI WKH HFRQRP\ ZKLFK LV FRQWDLQHG LQ WKH PRGHOV XVHG E\ WKH &3% DQG WKH
QRUPDWLYHSUHIHUHQFHVRQWUDGHRIIVEHWZHHQSROLF\JRDOVZKLFKZLOOGLIIHUIRUHDFKSROLWLFDO SDUW\ RU SLOODU ,Q IDFW WKLV SURFHGXUH KDV SURRIHG EHQHILFLDO LQ WKH IRUPDWLRQ RI FRDOLWLRQ JRYHUQPHQWV DQG LQ GUDIWLQJ WKH ³JRYHUQPHQW DJUHHPHQW´ WKDW LV VLJQHG E\ WKH YDULRXV
SROLWLFDO SDUWLHV ZKR FRRSHUDWH LQ WKH FRDOLWLRQ JRYHUQPHQW 7KH SROLF\ PHDVXUHV ZLWK WKH ODUJHVWIDYRXUDEOHHIIHFWVRQWKHPDMRUSROLF\JRDOVDFFRUGLQJWRWKHFDOFXODWLRQVRIWKH&3% KDYHWKHEHVWFKDQFHWREHLQFOXGHGLQWKHJRYHUQPHQWDJUHHPHQW
+RZHYHUWKLVSURFHGXUHPD\EULQJDERXWVRPHTXHVWLRQDEOHVLGHHIIHFWV)LUVWO\WKH&3%
ZLOO QRW LQFOXGH WKH YDULRXV SROLF\ SURSRVDOV E\ WKH SROLWLFDO SDUWLHV DW IDFH YDOXH LQ WKHLU
PRGHO FDOFXODWLRQV ,QVWHDG WKHUH LV DPSOH LQWHUDFWLRQ DQG GLVFXVVLRQ EHWZHHQ WKH SDUW\ RIILFLDOVZKRZULWHWKHHFRQRPLFVHFWLRQVLQWKHLUSROLWLFDOSURJUDPPHVDQGWKHVWDIIRIWKH
&3%ZKRLPSOHPHQWWKHSURSRVDOVLQWKHLUPRGHOV7KHUHIRUHWKLVH[HUFLVHRIWKH&3%PD\ OHDG WR UHYLVLRQV RI WKH SURSRVDOV E\ WKH SROLWLFDO SDUWLHV EHIRUH WKH\DUH SXEOLVKHG LQ WKHLU
ILQDOSURJUDPPHV$VHFRQGHYHQPRUHTXHVWLRQDEOHVLGHHIIHFWLVWKDWWKHHFRQRPLVWVRIWKH
SROLWLFDOSDUWLHVKDYHEHFRPHIDPLOLDUZLWKWKHSURSHUWLHVRIWKHPRGHOVRIWKH&3%DQGVHHWR LWWKDWWKHLUSROLF\SURSRVDOVDUHHIIHFWLYHLQWHUPVRIWKH&3%PRGHOV$EDGSHUIRUPDQFHLQ
WKH&3%FDOFXODWLRQVHVSHFLDOO\ZLWKUHVSHFWWRHPSOR\PHQWFDQOHDGWRDODUJHORVVRIYRWHV
LQWKHHOHFWLRQV7KHUHVXOWLVWKDWWKLVSURFHGXUH PDNHV WKH SROLF\ SURSRVDOV RI WKH SROLWLFDO SDUWLHVWREHYHU\PXFKLQOLQHZLWKSURSRVDOVWKDWDUHEHQHILFLDODFFRUGLQJWRWKHPRGHOVRI WKH&3%7KLVKDVOHGWRDUHPDUNDEOHFRQYHUJHQFHRISROLF\SODQV0RUHRYHUWKHUHLVDULVN
WKDW WKH ZD\ WKH &3% PRGHOV GHVFULEH HFRQRPLF UHDOLW\ LV QRW FRUUHFW VR WKDW DOO SROLWLFDO SDUWLHVDUHEHJJLQJIRUWKHZURQJKRUVHLQWKHGHVLJQRIWKHLUSURJUDPPHV7KLVZRXOGLPSO\ DQH[WUDRUGLQDU\H[DPSOHRIDSROLWLFDOORFNLQVHHDOVR'(1%877(5>@
)RXQGDWLRQRI/DERXUDQG6RFLDO(FRQRPLF&RXQFLO ,WLVW\SLFDOIRUWKH'XWFKSROGHUPRGHO
WKDWWKHVRFLDOSDUWQHUVDUHDWWKHKHDUWRIWKH FRQVXOWDWLRQVWUXFWXUHIRUHFRQRPLF DQGVRFLDO
SROLF\ 7KH ³)RXQGDWLRQ RI /DERXU´ 67$5 LV WKH IRUPDO SODWIRUP ZKHUH HPSOR\HHV DQG HPSOR\HUV PHHW HDFK RWKHU RQ D VWUXFWXUDO EDVLV ,W ZDV IRXQGHG LQ DV D SULYDWH
RUJDQLVDWLRQDQGDFWVDVDELODWHUDOIRUXPRIGLVFXVVLRQIRUXQLRQVDQGHPSOR\HUDVVRFLDWLRQV LQWKHILHOGRIODERXUVWDQGDUGV7KHVHDWVDUHHTXDOO\GLYLGHGEHWZHHQWKHWZRDQGERWKVLGHV GHOLYHURQHRIWKHWZRFKDLUPHQ7KHUHVXOWVRIWKHGLVFXVVLRQVDUHVWDWHGLQVRFDOOHG³FHQWUDO DJUHHPHQWV´7KLVRFFXUVDERXWRQFHLQWZRRUWKUHH\HDUV
@ RQ WKH
RFFDVLRQ RI WKH WK DQQLYHUVDU\ RI WKH 6(5 .ODPHU SRVHG WKH IROORZLQJ TXHVWLRQ WR -DQ
6WHNHOHQEXUJ DW WKDW WLPH WKH FKDLUPDQ RI )19 WKH ODUJHVW WUDGH XQLRQ µ0\ LPSUHVVLRQ LV WKDW\RXDQG9DQ/HGH±FKDLUPDQRIWKHODUJHVWHPSOR\HUVRUJDQLVDWLRQ±DUHYHU\PXFKRQ
VSHDNLQJWHUPVDQGWKDW \RXDUHPRUHIULHQGO\WRHDFKRWKHUWKDQWKHRXWVLGHZRUOGEHOLHYHV \RXDUH¶6WHNHOHQEXUJ¶VDQVZHULVµ1RQRWKDWLVQRWWUXH,WLVFHUWDLQO\QRWWUXHWKDWZH¶UH
FRQVWDQWO\ILJKWLQJZLWKHDFKRWKHUEXWDWWKHPRPHQWRIFRQIOLFWLWLVFOHDUDQGDSSDUHQWDQG ZH GRQ¶W HDVH WKH SUREOHP ZKHQ ZH DUH WRJHWKHU¶ 7KHQ.ODPHU DVNHG µ'LG LW KDSSHQ WKDW \RX ZHUH UHDOO\ DQJU\ ZLWK 9DQ/HGH"¶ 6WHNHOHQEXUJ UHSOLHG µ@ 7KH ELJJHVW IHGHUDWLRQ RI WUDGH XQLRQV
WKH )19 XVHV WKH PDFURHFRQRPLF IRUHFDVWV RI WKH &3% WR FDOFXODWH WKH ³ZDJH EDUJDLQLQJ VSDFH´7KLVFRQFHSWGHVFULEHVWKHUHDVRQDEOHZDJHFRVWLQFUHDVHDQGLVXVXDOO\FDOFXODWHGDV
WKH VXP RI LQIODWLRQ DQG FKDQJH LQ ODERXU SURGXFWLYLW\ 1RWH WKDW LW LV QRW GHILQHG LQ ZKDW
GHILQLWLYH IRUP WKLV ZDJH VSDFH VKRXOG EH UHDOLVHG ZDJH LQFUHDVH ODERXU WLPH UHGXFWLRQ VFKRROLQJ IULQJH EHQHILWV 7RJHWKHU ZLWK RWKHU ZLVKHV WKLVLV ZULWWHQ GRZQ LQ D GRFXPHQW
DQGFRQVHTXHQWO\GLVFXVVHGZLWKWKHFKDLUPHQRIDOOPHPEHUXQLRQV7KHRWKHUELJIHGHUDWLRQ
&19 IROORZVDVLPLODUSURFHGXUH$SDUWIURPWKLVFRQVHQVXVDQGFRQVXOWDWLRQDSSURDFKWKH FHQWUDO VWULNH IXQG VHUYHV DV D ZD\ WR SURPRWH XQLW\ LQ XQLRQ IHGHUDWLRQV 2QO\ XQLRQV WKDW VWULNH LQ OLQH ZLWK IHGHUDWLRQ EDUJDLQLQJ SRVLWLRQV DUH HQWLWOHG WR UHFHLYH VXSSRUW IURP WKLV
FHQWUDO VWULNH IXQG ,Q WKLV VWUXFWXUH WKHUH DUH WZR LQKHUHQW LQFHQWLYHV WR SUHVHUYH XQLW\ RI SROLFLHVEHWZHHQWKHPHPEHUXQLRQVDQGWKHIHGHUDWLRQ
(PSOR\HU RUJDQLVDWLRQV DOVR FRRUGLQDWH WKHLU EDUJDLQLQJ SRVLWLRQV IRU WKH QHZ ZDJH
QHJRWLDWLRQV7KH&RPPLWWHHIRUWKH3UHSDUDWLRQRI:DJH3ROLFLHVSUHSDUHVWKHIXQGDPHQWDO SULQFLSOHV IRU WKH QHJRWLDWLRQV $ JHQHUDO VWULNH IXQG LV RSHQ IRU PHPEHUV WKDWDUH KLW E\ VWULNHVWKDWGHDODERXWIXQGDPHQWDOLVVXHVGLVFXVVHGE\WKH&RPPLWWHH
,QFHQWLYHVIRUFRRSHUDWLRQDUHDOVRSUHVHQWLQQHJRWLDWLRQVDWWKHLQGXVWU\DQGILUPOHYHO
7RPDNHWKLVFOHDUZHILUVWKDYHWRORRNDOLWWOHFORVHUDWWKH UHJXODWLRQRI FROOHFWLYHODERXU
DJUHHPHQWV7ZRODZVUHJXODWHWKHFRPSOHWLRQRIFROOHFWLYHODERXUDJUHHPHQWV)LUVWWKH/DZ RQ WKH &ROOHFWLYH $JUHHPHQW RI VWLSXODWHV WKDW WKH WHUPV RI D FROOHFWLYH DJUHHPHQW DUH ELQGLQJ IRU DOO ZRUNHUV LQ WKH ILUP QRW MXVW WKH PHPEHUV RI WKH XQLRQ WKDW VLJQHG WKH
DJUHHPHQW6HFRQGWKH/DZRQ0DQGDWRU\([WHQVLRQRIJLYHVWKHULJKWWRWKH0LQLVWHU
RI6RFLDO$IIDLUVWRH[WHQGDFROOHFWLYHDJUHHPHQWWRWKHHQWLUHLQGXVWU\7RJHWH[WHQVLRQRQH
RIWKHEDUJDLQLQJSDUWLHVPXVWVHQGDUHTXHVWWRWKH0LQLVWHUZKRFKHFNVVRPHIRUPDOFULWHULD 7KHPRVWLPSRUWDQWLVWKDWWKHFROOHFWLYHDJUHHPHQWPXVWFRYHUDVXEVWDQWLDOPDMRULW\RIWKH LQGXVWU\7KHPD[LPXPGXUDWLRQRIDQH[WHQVLRQLVWZR\HDUV
7KHUHDUHVHYHUDOIHDWXUHVLQWKHV\VWHPRIZDJHEDUJDLQLQJWKDW JLYHLQFHQWLYHVWRL DOO
XQLRQVWRVLJQDQDJUHHPHQWDQGLL WKHHPSOR\HUVWRVLJQDQDJUHHPHQWZLWKDOOXQLRQVVHH DOVR 9,66(5 $1' +(0(5,-&. >@ %\ PDNLQJ LW IDYRXUDEOH IRU DOO SDUWLHV WR UHDFK DQ
DJUHHPHQW WKHVH LQFHQWLYHV VWLPXODWH WKH IRUPDWLRQ RI FRQVHQVXV DQG WUXVW %HFDXVH DQ DJUHHPHQW FDQ RQO\ EH UHDFKHG ZKHQ WKH GLIIHUHQW VWDQGSRLQWV KDYH FRPH WRJHWKHU WKLV
LQFHQWLYH VWUXFWXUH DOVR IDYRXUV WKH PRGHUDWLRQ RI GHPDQGV DQG ZLVKHV RI WKH SDUWLHV DQG WKHUHE\SURPRWHV³UHDVRQDEOH´RXWFRPHV
$Q LPSRUWDQW LQFHQWLYH FRPHV IURP WKH IDFW WKDW HPSOR\HUV DUH IUHH WR VWDUW QHJRWLDWLRQV
ZLWKDQ\XQLRQEXWDUHQRWREOLJHGWRGRVR)LUPVDUHQRWOHJDOO\ERXQGWRDFNQRZOHGJHDQ\ XQLRQ 7KH ODZ RI IXUWKHU VWDWHV WKDW LQ FDVH DQ HPSOR\HU VLJQV DQ DJUHHPHQW ZLWK D XQLRQ WKLV DJUHHPHQW IXQFWLRQV DV DQ DJUHHPHQW IRU DOO HPSOR\HHV UHJDUGOHVV RI WKHLU
HYHQWXDOPHPEHUVKLSRIWKHVLJQLQJRUDQ\RWKHUXQLRQ6RDWDQ\PRPHQWDQ\RQHFDQVWDUWD
XQLRQ RI KLV RZQ DQG DQ\ XQLRQ FDQ WU\ WR JHW LQ QHJRWLDWLRQV ZLWK WKH HPSOR\HU ,Q IDFW
XQLRQVDUHDOORZHGE\FRXUWWRVWULNHWRUHDFKWKLVSXUSRVH7KLVPHDQVWKDWXQLRQVDOZD\VUXQ WKH ULVN RIEHLQJ H[FOXGHG IURP ODERXU QHJRWLDWLRQV E\ WKH HPSOR\HU 7KLV VRPHWLPHV HYHQ
RFFXUVWRWKHPRVWLPSRUWDQWXQLRQVVRLWLVDFUHGLEOHWKUHDW7KHPDLQUHDVRQVZK\XQLRQV ZDQWWREHLQYROYHG LQ WKH QHJRWLDWLRQV DUH WKUHHIROG 7KH ILUVW UHDVRQ LV RI FRXUVH WKDW WKH\ ZDQWWRUHDFKVRPHWKLQJIRUWKHLUPHPEHUV7KH\KDYHQRUHDVRQRIH[LVWHQFHLIWKH\DUHQRW WKH VSDUULQJ SDUWQHU RI WKH HPSOR\HU 7KH VHFRQG UHDVRQ LV WKDW RQO\ WKH XQLRQV WKDW KDYH
VLJQHGWKHDJUHHPHQWDUHHQWLWOHGWRWKHULJKWVWKDWFRPHIRUWKRXWRIWKHDJUHHPHQW7KHWKLUG UHDVRQLVWKDWWKHXQLRQVWKDWKDYHVLJQHGWKHDJUHHPHQWUHFHLYHDIL[HGDPRXQWRIPRQH\SHU ZRUNHULQWKHILUPLQGXVWU\WREHGLYLGHGEHWZHHQWKHGLIIHUHQWXQLRQVLQSURSRUWLRQWRWKHLU
UHVSHFWLYH DPRXQW RI PHPEHUV 7KH FRPELQDWLRQ RI WKHVH WKUHH UHDVRQV WRJHWKHU ZLWK WKH SRVVLELOLW\RIH[FOXVLRQJLYHVXQLRQVSRVLWLYHLQFHQWLYHVWRIRUPFRDOLWLRQVZLWKRWKHUXQLRQV DQG PRGHUDWH WKHLU FODLPV 7KH\ DUH YHU\ ZHOO DZDUH WKDW WKH SDUW\ ZLWK WKHPRVW H[WUHPH FODLPVEHDUVWKHKLJKHVWULVNWREHH[FOXGHG
7KHHPSOR\HUVIDFHDQLQFHQWLYHWRLQFOXGHDVPDQ\DVSRVVLEOHXQLRQVLQWKHQHJRWLDWLRQV
&ROOHFWLYH ODERXU DJUHHPHQWV XVXDOO\ FRQWDLQ D FODXVH WKDW IRUELGV WKH XQLRQV WR RUJDQLVH RU
VXSSRUWVWULNHVGXULQJWKHSHULRGWKHDJUHHPHQWLVYDOLG6LQFHRIFRXUVHRQO\WKHXQLRQVWKDW VLJQHG WKH DJUHHPHQW KDYH WR REH\ WKLV FODXVH WKH HPSOR\HUV KDYH DQ LQFHQWLYH WR JHW WKH DJUHHPHQWVLJQHGE\DVPDQ\XQLRQVDVSRVVLEOH
7UXVWHYDOXDWLRQ
/RRNLQJ DW WKH 'XWFK LQVWLWXWLRQDO IUDPHZRUN IRU VRFLDOHFRQRPLF SROLF\ SUHSDUDWLRQ ZH
QRWLFHWKDWLWKDVVHYHUDOFKDUDFWHULVWLFVWKDWIDYRXUWKHIRUPDWLRQRIWUXVWDQGFRRSHUDWLRQ7R
EHJLQZLWKWKHUHVHHPVWREHDFKDUDFWHUWUDLWRUFXOWXUHSUHYDOHQWLQ7KH1HWKHUODQGVWKDWLV IDYRXUDEOHWRFRRSHUDWLRQDQGFRQVHQVXVSRVVLEO\GHVFHQGLQJIURPDMRLQWILJKWDJDLQVWWKH
ZDWHU:LWKRWKHUZRUGVWKHUHVHHPVWREHDVRUWRI³EDVLFWUXVW´XSRQZKLFKDFWXDOPXWXDO WUXVW FDQ EH GHYHORSHG 7KLVFDQ DOVR EH UHODWHG WR WKH LGHD RI WKH SDWKGHSHQGHQF\ RI WUXVW
VHHIRUH[DPSOH3871$0 >@ *LYHQWKHIDFWWKDWPRVWSHRSOHLQDVRFLHW\IHHOLQFOLQHGWR
DFW LQ WUXVWZRUWK\ ZD\V LW LV EHQHILFLDO IRU DOO SHRSOH WR NHHS WR WKLV ZD\ RI WUDQVDFWLQJ
EHFDXVHLWZLOOUDLVHH[WUDEHQHILWVIRUWKHLQYROYHGSDUWLHVE\EHLQJDEOHWRVROYHFRRUGLQDWLRQ W\SH RI JDPHV +RZHYHU ZKHQ PRVW SHRSOH LQ D VRFLHW\DUH XVHG WR DFW LQ XQFRRSHUDWLYH
ZD\VHYHU\LQGLYLGXDOPXVWGLVWUXVWRWKHUSHRSOHLQRUGHUQRWWREHH[SORLWHG,QWKLVZD\WKH
OHYHORIWUXVWDWDJLYHQGDWHLQDVRFLHW\KDVLWVHIIHFWVIRUWUXVWLQWKHIXWXUH7KHLQKHUHQWFR RSHUDWLYHVWDQFHRIWKH'XWFKWKXVIDYRXUVWKHIRUPDWLRQRIWUXVW
$ VHFRQG FKDUDFWHULVWLF LV WKDW SHRSOH DUH DZDUH RI DQ H[WHUQDO WKUHDW DQG WKHLU RZQ
YXOQHUDELOLW\7KLVH[WHUQDOWKUHDWXVHGWREHWKHZDWHUEXWQRZDGD\VVHHPVWREHUHSODFHGE\
IRUHLJQFRPSHWLWLRQ7KHLQKDELWDQWVRIVPDOORSHQHFRQRPLHVKDYHWRILQGZD\VWRGHDOZLWK WKLVZLWKRXWWKHRSWLRQRISURWHFWLRQLVP7KLVGHPDQGVFRRSHUDWLRQRIDOOLQWHUHVWVLQVRFLHW\
7KLVLVUHIOHFWHGLQWKHZD\SROLF\SUHSDUDWLRQLVRUJDQLVHG7KHVWUXFWXUHFDQEHUHJDUGHG
DV FRUSRUDWLVW LQ ZKLFK JRYHUQPHQW DQG RUJDQLVHG LQWHUHVW WRJHWKHU VHDUFK IRU VROXWLRQV
³>2@UJDQLVHG LQWHUHVW GRHV QRW KDYH WR OREE\ WKH\ DUH ZHOFRPH SDUWQHUV LQ WKH FRQIHUHQFH URRP´+$572* >@ 7KHIUDPHZRUNRILQVWLWXWLRQDOLVHGFRQWDFWVEHWZHHQJRYHUQPHQW
VRFLDO SDUWQHUV FHQWUDO EDQN &%6 &3% DQG DGYLVRU\ ERDUGV WKXV IRUPV WKH WKLUG
FKDUDFWHULVWLF 7KH UHSUHVHQWDWLYHV RI DOO WKHVH JURXSV IUHTXHQWO\ PHHW HDFK RWKHU ERWK DW
IRUPDO PHHWLQJV RI WKH 6(5 67$5 VSULQJ DQG DXWXPQFRQVXOWDWLRQ &(& 5($ DQG LQIRUPDORFFDVLRQVUHFHSWLRQVIDUHZHOOSDUWLHVHWFHWHUD 7KHVHIUHTXHQWFRQWDFWVFXOPLQDWH LQWREHWWHULQIRUPDWLRQH[FKDQJHDQGWKHUHE\SUHYHQWPLVXQGHUVWDQGLQJV7KLVQHWZRUNZLWKD UHODWLYHO\ORZQXPEHURISOD\HUVDQGDKLJKPHHWLQJIUHTXHQF\LVDOVRYHU\IDYRXUDEOHIRUWKH
IRUPDWLRQRIWUXVW7KH'XWFKLQVWLWXWLRQDOIUDPHZRUNVHHPVWRFRUUHVSRQGDOPRVWFRPSOHWHO\ ZLWK PLFUR ILQGLQJV RQ KRZ WR EXLOG WUXVWHQKDQFLQJ QHWZRUNV 7KH JURXS RI SOD\HUV LV UHODWLYHO\ VPDOO $V ZH KDYH VHHQ IURP WKH LQWHUYLHZ E\./$0(5 >@ WKHUH LV D ORW RI
UHSHDWHG FRQWDFWV EHWZHHQ WKH SOD\HUV $ VXEVWDQWLDO SDUW RI LW LV IDFHWRIDFH DQG LQIRUPDO 267520 $1' :$/.(5 >@ IRXQG LQ WKHLU VWXG\ RI SXEOLF JRRG JDPHV WKDW IDFHWRIDFH
FRPPXQLFDWLRQ OHDGV WR VXEVWDQWLDO LQFUHDVHV LQ FRRSHUDWLRQ )XUWKHUPRUH HYHU\ SOD\HU EHORQJV WR DQ RUJDQLVDWLRQ VR UHSXWDWLRQV FDQ EH VPRRWKO\ WUDQVIHUUHG IURP WKH RQH
UHSUHVHQWDWLYHRIDQRUJDQLVDWLRQWRWKHRWKHU,QRWKHUZRUGVDUHSXWDWLRQRIWUXVWZRUWKLQHVV GRHVQRWGLVDSSHDUZKHQLQGLYLGXDOSHUVRQVDUHUHSODFHG5HSXWDWLRQVDUHLPSRUWDQWEHFDXVH
SROLF\PDNLQJLVDG\QDPLFSURFHVV2UJDQLVDWLRQVUHSHDWHGO\PHHWHDFKRWKHUDQGNQRZWKDW WKLV ZLOO QRW FKDQJH LQ WKH FRPLQJ \HDUV 7RJHWKHU ZLWK WKH DVSHFW RI WKH VPDOO JURXS WKLV OHDGVWRWKHIDFWWKDWWKHSRVVLELOLWLHVIRUOHDUQLQJDQGFRQWURODUHVXEVWDQWLDO
)RU WKH VLWXDWLRQ LQ ZKLFK UHSHDWHG LQWHUDFWLRQV EHWZHHQ DJHQWV WDNH SODFH%86.(16
>@GLVWLQJXLVKHVWZRW\SHVRIHIIHFWVRQWKHEHKDYLRXURIWKHWUXVWLQJSDUW\OHDUQLQJDQG FRQWURO³/HDUQLQJLQGLFDWHVWKH H[WHQWWRZKLFKDWUXVWRUFDQPRGLI\KHUH[SHFWDWLRQVDERXW
FKDUDFWHULVWLFVRIDWUXVWHHIURPREVHUYLQJKLVEHKDYLRXULQSDVWWUDQVDFWLRQV&RQWUROLQGLFDWHV WKHH[WHQWWRZKLFKWKHWUXVWRUFDQLQIOXHQFHWKHWUXVWHH¶VEHKDYLRXUYLDVDQFWLRQVDQWLFLSDWHG E\ WKH WUXVWHH´ %86.(16 > @ /HDUQLQJ DQG FRQWURO EHFRPH PRUH SRZHUIXO ZKHQ
UHSHDWHGWUDQVDFWLRQVDUHQRWRQO\WDNLQJSODFHRQDELODWHUDOEDVLVEXWDUHDOVRREVHUYHGE\ RWKHUDJHQWVZKR DFW DV SRWHQWLDO WUDQVDFWLRQSDUWQHUV 6RFLDO QHWZRUNV DQG UHSXWDWLRQV DUH
LPSRUWDQWLQWKLVVLWXDWLRQ,QWKH'XWFKIUDPHZRUNZLWKVPDOOJURXSVDQGKLJKIUHTXHQF\RI
FRQWDFWVZHVHHWKDWSHRSOHOHDUQTXLFNO\DERXWWKHEHKDYLRXURIRWKHUV5HSXWDWLRQVVSUHDG IDVW:KHQDSDUW\DFWVDJDLQVWWKHQRUPVLWFDQEHSXQLVKHGTXLFNO\ ERWK ZLWKLQ WKH JURXS QHZV WUDYHOV IDVW LQ VPDOO JURXSV ZLWK IUHTXHQW FRQWDFWV DQG LQ SXEOLF ZLWK KHOS RI WKH
SUHVV ,Q WKLV ZD\ D JRRG UHSXWDWLRQ EHFRPHV YDOXDEOH IRU RUJDQLVDWLRQV 2QFH REWDLQHG D
UHSXWDWLRQRIWUXVWZRUWKLQHVVWKH\ZLOOEHHDJHUWRNHHSLWIRULWHQDEOHVWKHPWRSDUWLFLSDWHLQ PXWXDOO\EHQHILFLDOWUDQVDFWLRQVLQWKHIXWXUH
7KHIRXUWKFKDUDFWHULVWLFLVWKHVSHFLILFOHJLVODWLRQRQFROOHFWLYHODERXUDJUHHPHQWVZKLFK
DV ZDV DQDO\VHG DERYH JLYHV LQFHQWLYHV WR ERWK HPSOR\HUV DQG HPSOR\HHV WR EHKDYH FR RSHUDWLYHO\ERWKDWFHQWUDOLQGXVWU\DQGVLQJOHILUPOHYHOV
$VDODVWFKDUDFWHULVWLFZHREVHUYHDWHQGHQF\WRGHOHJDWLRQ6LQFHWKHJRYHUQPHQW
KDV ZLWKGUDZQ LWVHOI IURP GLUHFW LQWHUYHQWLRQ LQ ZDJH QHJRWLDWLRQV WKHUHE\ SODFLQJ WKH ILUVW
UHVSRQVLELOLW\IRUDVRXQGZDJHGHYHORSPHQWLQKDQGVRIVRFLDOSDUWQHUV7KLVIRUPVDWULJJHU
PHFKDQLVP IRU VRFLDO SDUWQHUV WR FRRSHUDWH %RWK XQLRQ DQG HPSOR\HU IHGHUDWLRQV ZDQW WKH JRYHUQPHQW WR VWD\ RXW RI ³WKHLU UHDOP´ 7KH\ NQRZ KRZHYHU WKDW WKH JRYHUQPHQW KDV WKH
SRZHUWRLQWHUYHQHZKHQWKH\GRQRWVXFFHHGLQQHJRWLDWLQJUHDVRQDEOHODERXUVWDQGDUGV7KLV IRUPVDQRWKHULQFHQWLYHIRUFRRSHUDWLRQ$ERYHWKLVHYHU\WLPHFRRSHUDWLRQVXFFHHGVWUXVW JURZVEHWZHHQWKHSDUWLHVZKLFKPDNHVFRRSHUDWLRQHYHQPRUHOLNHO\LQWKHIXWXUH
/DERXUPDUNHWWKHRULHVDQGWUXVW
7KH SUHYLRXV VHFWLRQ VKRZV KRZ WKH VSHFLILF 'XWFK LQVWLWXWLRQDO IUDPHZRUN SURPRWHV FR
RSHUDWLRQ DQG WUXVW EHWZHHQ WKH HFRQRPLF SROLF\ PDNHUV :H QRZ FRPH WR VWHS WZR RI RXU
WZRVWHSDSSURDFKZKHUHZHGLVFXVVKRZWUXVWEHWZHHQWKHPDLQDFWRUVJRYHUQPHQWVRFLDO SDUWQHUV FHQWUDO EDQN DQG DGYLFH DJHQFLHV OHDGV WR EHWWHU PDFURHFRQRPLF SROLFLHV DQG
SHUIRUPDQFH+RZHYHUZHEDVHRXUDQDO\VLVRQDFDVHVWXG\ZLWKRQHFDVHRQO\VRWKDWZHGR
QRWSUHWHQGWREHDEOHWRSURYHWKDWFRUSRUDWLVWDQGFRQVHQVXVEDVHGSROLFLHVZLOOOHDGWREHWWHU HFRQRPLF SHUIRUPDQFH XQGHU DOO FLUFXPVWDQFHV 2XU FODLP LV WKDW WKH QHFHVVDU\ SROLF\ PHDVXUHV WKDW ZHUH UHVSRQVLEOH IRU WKH FKDQJH IURP GLVHDVH WR PLUDFOH LQ 7KH 1HWKHUODQGV KDYHJUHDWO\EHQHILWHGIURPWKHKLJKPXWXDOWUXVWDPRQJWKHVHDFWRUV
:H KDYH WZR PDLQ DUJXPHQWV IRU RXU SURSRVLWLRQ WKDW WKH KLJK WUXVW EHWZHHQ HFRQRPLF
SROLF\PDNHUVOHGWRWKH'XWFKPLUDFOH7KHILUVWDQGPRVWREYLRXVRQHLVWKDWPRUHWUXVWOHDGV
WR PRUH FRRSHUDWLRQ DQG EHWWHU VROYLQJ RI FROOHFWLYH DFWLRQ SUREOHPV ,Q VHFWLRQ ZH
HODERUDWH WKLV DUJXPHQW E\ DQDO\VLQJ WKH SROLFLHV WKDW ZHUH DFWXDOO\ GHYLVHG 7KH VHFRQG
DUJXPHQWFRQVLGHUVDVSHFLILFW\SHRIFRRUGLQDWLRQSUREOHPVWKDWDSSHDUVLQWKHZDJHVHWWLQJ
SURFHVVDQGZKLFKZHFRQVLGHURIPDMRULPSRUWDQFHLQWKLVUHVSHFW,WLVWKHKROGXSSUREOHP $OWKRXJK LW LV MXVW D VXEW\SH RI WKH IDPLO\ RI FRRUGLQDWLRQ SUREOHPV WKDWLV UHJDUGHG LQ
VHFWLRQZHGHYRWHWKLVHQWLUHVHFWLRQWRLW2XUDUJXPHQWLVWKDWLWKDVDVHYHUHLQIOXHQFH
RQWKHZRUNLQJVDQGRXWFRPHVRIWKHODERXUPDUNHW'HOHJDWLQJWKHDXWKRULW\WRGHFLGHRQWKH \HDUO\ ULVH RI WKH ZDJHV WR KLJKHU FRUSRUDWLVW OHYHOV PLWLJDWHV WKH KROGXS SUREOHPV
FRQQHFWHGWRWKH ZDJHVHWWLQJSURFHVV+RZHYHU WKLV GHOHJDWLRQ LV RQO\ VXFFHVVIXO ZKHQ DOO SDUWLHVLQYROYHGWUXVWHDFKRWKHU
+ROGXSSUREOHPLQWKHZDJHVHWWLQJSURFHVV
7KH KROGXS SUREOHP LV DV WKH UHVXOW RI D FRPELQDWLRQ RI ERXQGHG UDWLRQDOLW\ VFDUFLW\ RI
LQIRUPDWLRQ DQG XQFHUWDLQW\ 7KHVH DVSHFWV PDNH LW LPSRVVLEOH WR ZULWH GRZQ FRPSOHWH DQG OHJDOO\ELQGLQJFRQWUDFWVZKLFKRSHQVWKHZD\ IRURSSRUWXQLVPSHRSOHFDQJDLQVKRUWWHUP
EHQHILWVE\FKHDWLQJ7KHFRPELQDWLRQRIRSSRUWXQLVPDQGVSHFLILFLQYHVWPHQWVOHDGVWRKROG XSSUREOHPV:,//,$0621 >@ 6SHFLILFLW\RIDQ LQYHVWPHQW PHDQV WKDW WKH YDOXH RI DQ
LQYHVWPHQWLVGLUHFWO\GHSHQGHQWRIWKHFRQWLQXDWLRQRIWKHUHODWLRQVKLS$QH[DPSOHLVDILUP LQYHVWLQJ LQ WKH VNLOOV RI DQ HPSOR\HH ZKLOH WKHVH VNLOOV DUH RQO\ YDOXDEOH LQ WKLV SDUWLFXODU ILUP7KHHIIHFWRIWKLVLQYHVWPHQWLVWKDWWKHODERXUSURGXFWLYLW\RIWKHHPSOR\HHLQWKLVILUP
ULVHV$VORQJDVWKHHPSOR\HHVWD\VZLWKLQWKHILUPWKHLQYHVWPHQWOHDGVWRH[WUDUHQWVWREH GLYLGHGEHWZHHQILUPDQGHPSOR\HH :KHQWKHHPSOR\HHOHDYHVWKHILUPWKHVHJDLQVDUHORVW
7KLVJLYHVDGGLWLRQDOEDUJDLQLQJSRZHUWRWKHHPSOR\HHEHFDXVHKHFDQWKUHDWHQWROHDYHWKH ILUP7KHODFNRIFRPSOHWHFRQWUDFWVKLQGHUVPXWXDOO\DGYDQWDJHRXVLQYHVWPHQWVLQWKLVFDVH 7KRXJKWKHUHDUHSURILWDEOHLQYHVWPHQWVWREHPDGHSRWHQWLDOLQYHVWRUVUHIUDLQIURPGRLQJVR EHFDXVHWKH\DUHDIUDLGWKDWWKHLUWUDQVDFWLRQSDUWQHUZLOOKROGWKHPXS
$ VROXWLRQ IRU WKLV SUREOHP LV WR DOORFDWH H[SRVW DIWHU WKH LQYHVWPHQW KDV EHHQ GRQH
EDUJDLQLQJSRZHUWRWKHSDUW\WKDWFDUULHVRXWWKHLQYHVWPHQW7KHREYLRXVZD\WRGRVRLVE\ LQWHUQDOLVLQJ WKH WUDQVDFWLRQ /DERXU KRZHYHU FDQQRW EH LQWHUQDOLVHG WKDW ZRXOG PHDQ
VODYHU\ 7KH VHFRQG EHVW VROXWLRQ VHHPV WR EH WKH DJUHHPHQW RQ D ORQJWHUP FRQWUDFW 7KH
ZDJH LQ VXFK D FRQWUDFW VKRXOG EH EHWZHHQ WKH RXWVLGH RSWLRQV IRU ILUP DQG HPSOR\HH 7KH RXWVLGHRSWLRQIRUWKHZRUNHULVKLVIDOOEDFNSRVLWLRQRXWVLGHWKHILUP ,W LV WKH ZDJH ZKLFK RWKHU ILUPV ZRXOG ZDQW WR SD\ IRU KLV VHUYLFHV 6LQFH WKH VSHFLILF LQYHVWPHQW UDLVHV WKH
SURGXFWLYLW\RIWKHZRUNHURQO\LQWKLVVSHFLILFILUPWKLVRXWVLGHZDJHLVXVXDOO\ORZHUWKDQ KLV LQVLGH ZDJH 7KLV RXWVLGH ZDJH RU PDUJLQDO SURGXFWLYLW\ RI WKH ZRUNHU EHIRUH WKH
LQYHVWPHQW IRUPVWKH ORZHU ERXQGDU\ RI WKH LQVLGH ZDJH 7KH RXWVLGH RSWLRQ RI WKH ILUP LV
HTXDOWRWKHFRVWWRKLUHDQHZHPSOR\HHDQGWRWUDLQKLPXQWLOKHKDVWKHVDPHSURGXFWLYLW\ OHYHODVWKHLQFXPEHQWHPSOR\HH7KHFRVWRIDQHZHPSOR\HHWKHPDUJLQDOSURGXFWLYLW\DIWHU WKHLQYHVWPHQW IRUPVWKHXSSHUERXQGDU\RIWKHZDJH$VORQJDVWKHZDJHLVEHWZHHQWKHVH
RXWVLGH RSWLRQV LW LV HIILFLHQW IRU ERWK SDUWLHV WR FRQWLQXH WKH UHODWLRQVKLS 7KLV VLWXDWLRQ LV FDOOHG³PXWXDOKROGXS´+$6+,0272 >@ %RWKSDUWLHVDUHQRWFUHGLEOHLQWKHLUWKUHDWVWR
OHDYH WKH UHODWLRQVKLS ZKHQ WKH ZDJH LV LQ WKLV FRUULGRU EHWZHHQ WKH RXWVLGH RSWLRQV ,W LV HIILFLHQWIRUERWKSDUWLHVWRFRQWLQXHWKHUHODWLRQVKLS
$ VROXWLRQ IRU WKH KROGXS SUREOHP LV WKDW SDUWLHV ZULWH QRPLQDO FRQWUDFWV RQ WKH
GLVWULEXWLRQ RI WKH UHWXUQV D SULRUL :LWK RWKHU ZRUGV SDUWLHV IL[ LQ D FRQWUDFW WKH QRPLQDO ZDJHOHYHOLQWKHFRUULGRUEHWZHHQWKHRXWVLGHRSWLRQV0$&/(2'$1' 0$/&20621 >@
7R SUHYHQW WKH DSSHDUDQFH RI KROGXS SUREOHPV SDUWLHV VWLSXODWH WKDW WKHUH ZLOO EH QR
UHQHJRWLDWLRQVDERXWWKHZDJHOHYHOLQILUVWLQVWDQFH7KHUHZLOOEHRQO\UHQHJRWLDWLRQVZKHQ RQHRIWKHRXWVLGHRSWLRQVEHFRPHVELQGLQJ,QWKLVZD\LQHIILFLHQWVHSDUDWLRQVDUHSUHYHQWHG ZKLOHWKHKROGXSSUREOHPLVVXSSUHVVHG
$SUREOHPZLWKWKLVPRGHOLVWKDWLWUHOLHVRQWKHDVVXPSWLRQWKDWERWKSDUWLHVNQRZHDFK
UHVSHFWLYH RXWVLGH RSWLRQV $OWKRXJK WKLV XQUHDOLVWLF DVVXPSWLRQ UHVWULFWV WKH PRGHO WKHUH LV VRPH HYLGHQFH WKDW WKH PRGHO GHVFULEHV UHDOLW\ WR VRPH H[WHQW%($8'5 @ ,W LV WRR FRVWO\ WR DUUDQJH D FRQWUDFW WKDW
LQFOXGHV DOO HYHQWXDOLWLHV DQG WKHLU UHPHGLHV H[ DQWH EXW LW LV DOZD\V SRVVLEOH WR DGMXVW WKH FRQWUDFWDIWHUVRPHSDUWLFXODUVKRFNRFFXUUHG
7ZRW\SHVRIODERXUXQLRQV
7KLVZD\RIFRQWUDFWDGMXVWPHQWE\GHOHJDWLRQWRRUJDQLVDWLRQVDWDKLJKHUOHYHOLQYROYHVWKDW
ERWKXQLRQVDQGHPSOR\HURUJDQLVDWLRQVDUHWU\LQJWRPD[LPLVHWKHMRLQWVXUSOXVRIERWKVLGHV ,Q WKH VWDQGDUG QHRFODVVLFDO PRGHOV RI XQLRQ EHKDYLRXU XQLRQV RQO\ WU\ WR PD[LPLVH WKH
XWLOLW\RIWKHLUPHPEHUV7KLVPD\GHVFULEHWKHVLWXDWLRQLQGHFHQWUDOLVHGHFRQRPLHVYHU\ZHOO EXWFHUWDLQO\QRWLQHFRQRPLHVZLWKDFRUSRUDWLVWGHVLJQ7(8/,1*6$1' +$572* >@ ,Q
GHFHQWUDOLVHGHFRQRPLHVLQZKLFKQREDUJDLQLQJDWDFHQWUDOOHYHOWDNHVSODFHXQLRQVKDYHDQ LQFHQWLYH WR RSHUDWH LQ DQWDJRQLVWLF ZD\V 7KH\ VWULYH WR JHW WKH KLJKHVW SRVVLEOH ZDJHV IRU
WKHLUPHPEHUV2QWKHVKRUWWHUPWKLVIXOILOVEHVWWKHZLVKHVRIWKHLUPHPEHUV0HPEHUVKLS RIDXQLRQLVWKXVLQWHUHVWLQJIRUZRUNHUV7KHVHNLQGRIXQLRQVKDYHDQLQFHQWLYHWRUDLVHWKHLU PHPEHUVKLS OHYHO LQ ILUPV LQ ZKLFK WKH\ DUH DOUHDG\ DFWLYH VLQFH WKLV LQFUHDVHV WKHLU
EDUJDLQLQJSRZHU7KUHDWVRIVWULNHVRURWKHUREVWUXFWLRQVRIWKHZRUNSURFHVVEHFRPHPRUH FUHGLEOHZLWKKLJKHUUDWHVRIPHPEHUVKLS)LUPVUHDFWLQKRVWLOHZD\VWRWKLVXQLRQEHKDYLRXU DQGGRHYHU\WKLQJWRSUHYHQWXQLRQVIURPJHWWLQJDVROLGEDVHLQWKHLUHQWHUSULVH7KLVOHDGVWR DVFDWWHUHGSUHVHQFHRIXQLRQVDPRQJ ILUPV ,Q VRPH ILUPV WKH\ DUH YHU\ SRZHUIXO DQG WKLV PDNHV LW DWWUDFWLYH IRU HPSOR\HHV WR EHFRPH DQG VWD\ PHPEHU LQ RWKHU ILUPV WKH\ KDYH KDUGO\DQ\PHPEHUVDQGWKHPDQDJHPHQWRIWKHVHILUPVSUHYHQWVWKHPIURPJURZLQJ
,Q PRUH FRUSRUDWLVW VRFLHWLHV ZLWK FHQWUDOLVHG ZDJH EDUJDLQLQJ WKH VWUDWHJ\ RI XQLRQV LV
GLIIHUHQW7KH\KDYH DQ LQFHQWLYH WR PD[LPLVH WKH MRLQW VXUSOXV E\ EDUJDLQLQJ LQ ZD\V DV WR
SUHYHQWKROGXSSUREOHPV(PSOR\HUVFDUU\DEHQHYROHQWDWWLWXGHWRZDUGVWKHVHFRRSHUDWLYH
XQLRQVEHFDXVHWKHVHQHJRWLDWLRQVOHDGWRKLJKHUHIILFLHQF\RIWKHHFRQRP\7KHXQLRQVFDQ GHPDQG D SRUWLRQ RI WKH H[WUD UHQWV WKDW UHVXOW IURP WKH LQFUHDVHG HIILFLHQF\ LQ WKH IRUP RI
KLJKHU ZDJHV (FRQRPLHV WKDW DUH FKDUDFWHULVHG E\ FRRSHUDWLYH XQLRQV VKRZ D GLIIXVLRQ RI
XQLRQPHPEHUVRYHUDOOLQGXVWULHVEXW ZLWK ORZ DYHUDJH XQLRQ GHQVLW\ )UHHULGHU SUREOHPV DUHLQYROYHGZLWKWKLV7RSUHYHQWKROGXSSUREOHPVWKHUHVXOWVRIWKHQHJRWLDWLRQVDSSO\WR DOOHPSOR\HHVVRWKDWXQLRQPHPEHUVKLSGRHVQRWRIIHUWKH³FDUURW´RIDKLJKHUZDJH
$ VHFRQG VRXUFH RI GLIIHUHQW LQFHQWLYHV IRU WKHVH WZR W\SHV RI XQLRQV FRPHV IURP WKH
SUREOHP RI LQVLGHU SRZHU 8QLRQV IHHO WKH SUHVVXUH RI WKHLU PHPEHUV WR VWDUW SURPLVLQJ WKH HPSOR\HUVDFRRSHUDWLYHVWUDWHJ\ +RZHYHUDIWHUWKHVSHFLILFLQYHVWPHQWVKDYHEHHQPDGH
WKH\ DUH LQFOLQHG WR XVH WKHLU LQFUHDVHG EDUJDLQLQJ SRZHU WR GHPDQG D ODUJHU IUDFWLRQ RI WKH H[WUDUHQWVZKLFKZRXOGPHDQDVZLWFKWRDQWDJRQLVWLFSUDFWLFHV7KLV³LQVLGHUSRZHU´FDQEH
NHSWXQGHUFRQWUROZKHQPHPEHUVKLSLVVSUHDGRYHUYDULRXVLQGXVWULHVDVLVXVXDOO\WKHFDVH LQFRUSRUDWLVWVRFLHWLHV8QLRQPHPEHUVZRUNLQJLQGLIIHUHQWLQGXVWULHVDUHFRQIURQWHGZLWK
GLIIHUHQWLGLRV\QFUDWLFVKRFNV7KLVOHDGVWRDPLQRULW\RIPHPEHUVZKRZLVKZDJHLQFUHDVHV 7KLVPLQRULW\ZLOOEHUXOHGRXWE\DPDMRULW\RIPHPEHUVWKDWZDQWVWRVDYHWKHLUUHSXWDWLRQ
DQG NHHS RQ ZLWK PD[LPLVLQJ MRLQW VXUSOXVHV 7KLV PDNHV XQLRQV LQ FRUSRUDWLVW VRFLHWLHV FUHGLEOHDQGXQLRQVLQGHFHQWUDOLVHGFRXQWULHVLQFUHGLEOH LQWKHLUFRRSHUDWLYHVWDQFH
7UXVWLQYROYHG
7KHPHFKDQLVPE\ZKLFKKROGXSSUREOHPVDUHSUHYHQWHGLQFRUSRUDWLVWHFRQRPLHVUHTXLUHVD
VXEVWDQWLDO DPRXQW RI WUXVW EHWZHHQ WKH EDUJDLQLQJ SDUWLHV %RWK SDUWLHV HPSOR\HU DQG HPSOR\HH RUJDQLVDWLRQV FDQ IHHO WKH LQFHQWLYH WR FKHDW 7KLV SUREOHP FDQ EH VHHQ DVD
SULVRQHUV¶GLOHPPDSUREOHP7KHVRFLDORSWLPXPZRXOGEHWRFRRSHUDWHEXWWKHUHDUHVKRUW WHUPLQFHQWLYHVWRGHIHFW:K\ZRXOGSDUWLHVWUXVWHDFKRWKHU"$ILUVWUHDVRQFDQEHIRXQGLQ
WKHYDOXHRIDUHSXWDWLRQRIWUXVWZRUWKLQHVVIRUDSDUW\+DYLQJVXFKDUHSXWDWLRQFUHDWHVYDOXH
EHFDXVH LW VWLPXODWHV RWKHU SDUWLHV WR HQJDJH LQ PXWXDO EHQHILFLDO WUXVWUHODWHG WUDQVDFWLRQV 7KH KLJKHU WKH IUHTXHQF\ RI WKHVH WUDQVDFWLRQV DQG WKH HDVLHU LW LV WR UHFRJQLVH WKH
WUXVWZRUWKLQHVVRIWKHSOD\HUVWKHPRUHYDOXDEOHWKHUHSXWDWLRQEHFRPHV3OD\HUVZLOOWKXVEH YHU\FDUHIXOQRWWRZDVWHWKHLUUHSXWDWLRQ
$VHFRQGUHDVRQIRUPXWXDOWUXVWFRPHVIURPVRFLDOQRUPV7KHVHFDQKHOSWRVROYHWKHVH
FRRUGLQDWLRQSUREOHPVE\SURYLGLQJDIRFDOSRLQWLQWKHUH QHJRWLDWLRQVDERXWIXWXUHZDJHV
VHHDOVR7(8/,1*6$1' +$572* >@ 7KHQRUPVHQVXUHWKDWWKHEHOLHIVDERXWWKHRXWRI
HTXLOLEULXPEHKDYLRXURIRWKHUVDUHLQSODFHDQGWKHRWKHUVZLOOVWLFNWRWKHLPSOLFLWFRQWUDFW
GXULQJWKHUHQHJRWLDWLRQVSURFHVV6RFLDOQRUPVDOVRKDYHDQLPSRUWDQWIXQFWLRQLQPDNLQJWKH LQGLYLGXDOILUPVDQGZRUNHUVDFFHSWWKHFHQWUDOO\EDUJDLQHGDJUHHPHQWDVEHLQJDIRFDOSRLQW
7KH LQGLYLGXDO PHPEHUV PXVW WUXVW WKHLU UHSUHVHQWDWLYHV DW WKH FHQWUDO QHJRWLDWLRQV WR KDYH EDUJDLQHG WKH EHVW SRVVLEOH DJUHHPHQW IRU WKHP 7KH UHSUHVHQWDWLYHV PXVW WUXVW WKDW WKH LQGLYLGXDO PHPEHUV ZLOO VXSSRUW WKHLU EDUJDLQHG RXWFRPH :LWKRXW WKLV PXWXDO WUXVW WKH V\VWHP GRHV QRW ZRUN 7KHUH LV QR VHQVH LQ EDUJDLQLQJ DW D FHQWUDO OHYHO LI WKH LQGLYLGXDO HPSOR\HHVDQGHPSOR\HUVDUHQRWZLOOLQJWRDFFHSWWKHUHVXOWV
$ VSHFLILF QRUP WKDW FRXOG RIIHU VXFK D IRFDO SRLQW LV IDLUQHVV 7KH OLWHUDWXUH RQ
PLFURHFRQRPLF H[SHULPHQWV VKRZV WKDW XQIDLU EHKDYLRXU LV XVXDOO\ UHFLSURFDWHG E\ VHYHUH SXQLVKPHQWV HYHQ ZKHQ WKLV FUHDWHV VRPH FRVWV IRU WKH SXQLVKHUV WKHPVHOYHV VHH*h7+ 6&+0,77%(5*(5
$1' 6&+:$5=(
>@ DQG&$0(5(5 $1' 7+$/(5 >@ IRU ILQGLQJV RI
QHJDWLYH UHFLSURFLW\ LQ XOWLPDWXP JDPHV DQG267520 >@ IRU ILQGLQJV LQ SXEOLF JRRG H[SHULPHQWV 7KHUHIRUHWKHEDUJDLQHGODERXUFRQGLWLRQVZLOOKDYHWREHFRQVLGHUHGDVIDLU
7KH VRXUFH RI WKH QRUPV RI IDLUQHVV GLIIHUV EHWZHHQ GHFHQWUDOLVHG DQG FRUSRUDWLVW
HFRQRPLHV,QGHFHQWUDOLVHGHFRQRPLHVWKHIRFXVLVHQWLUHO\SXWRQZKDWKDSSHQVDWWKHOHYHO
RI WKH ILUP VLQFH LQIRUPDWLRQ DERXW VKRFNV WKDW RFFXU DW WKH DJJUHJDWH OHYHO LV QRW RU LQVXIILFLHQWO\ NQRZQ 6R WKH IRFDO SRLQWZLOO EH SHUFHLYHG DW WKH OHYHO RI WKH ILUP DQG UHQW
VKDULQJDWWKLVOHYHOEHFRPHVWKHQRUP,QFRUSRUDWLVWVRFLHWLHVWKHIRFDOSRLQWLVDWWKHPDFUR OHYHOZKHUHFRUSRUDWLVWRUJDQLVDWLRQVEDUJDLQRYHUWKHLU³FHQWUDODJUHHPHQWV´:LWKWKLVIRFDO
SRLQWRIIDLUQHVVLWLVYHU\ GLIILFXOWIRUILUPVWRGHYLDWH DQGVHWWKHLURZQVWDQGDUGV ZLWKRXW IDFLQJWKHULVNRIUHWDOLDWLRQ
7KH ILQGLQJV RI *25'21 >@ FDQ EH UHODWHG WR WKLV +H SURYLGHV VRPH HYLGHQFH WKDW
DQWDJRQLVWLFODERXUUHODWLRQVFDQEHDVVRFLDWHGZLWKGHFHQWUDOLVHGHFRQRPLHVDQGFRRSHUDWLYH UHODWLRQV ZLWK FRUSRUDWLVW VRFLHWLHV ,Q GHFHQWUDOLVHG HFRQRPLHV WKH VXSHUYLVLRQ LQWHQVLW\ LV VXEVWDQWLDOO\ KLJKHU WKDQ LQ FRUSRUDWLVW HFRQRPLHV ,Q WKH IRUPHU WKH EDUJDLQLQJ SRZHU RI LQGLYLGXDO HPSOR\HHV LV SUREDEO\ SXW LQ FKHFN E\ VXSHUYLVLRQ PHDVXUHV ZKHUHDV LQ FRUSRUDWLVWVRFLHWLHVVRFLDOQRUPVDQGWKHGHOHJDWLRQRISRZHUWRKLJKHUOHYHOVIXOILOWKLVWDVN
7KHKROGXSSUREOHPRQFHDJDLQZK\LVLWLPSRUWDQW"
7KH SURSRVLWLRQ RI WKLV VHFWLRQ LV WKDW WUXVW FDQ PLWLJDWH KROGXS SUREOHPV 2IFRXUVH WKLV
DUJXPHQWLVRQO\PHDQLQJIXOZKHQKROGXSSUREOHPVUHDOO\H[LVWLQJHQHUDO ZKHQWKH\DUH
VXEVWDQWLDOO\ODUJHDQGZKHQWKH\DUHUHOHYDQWIRUWKH'XWFKFDVHLQSDUWLFXODU:HDGPLWWKDW
LWLVUDWKHUGLIILFXOWWRVKRZLQJHQHUDOWKDWWKHPDLQQHFHVVDU\FRQGLWLRQIRUKROGXSSUREOHPV
DVVHW VSHFLILFLW\ KROGV 7KHUH LV KRZHYHU DPSOH HPSLULFDOOLWHUDWXUH ZKLFK VXJJHVWV WKDW
KROGXSSUREOHPVGRH[LVWLQSUDFWLFH:HILUVWVKRUWO\GLVFXVVWKHVHHYLGHQFHVDQGWKHQVKRZ KRZWKH'XWFKLQVWLWXWLRQDOIUDPHZRUNLVUHODWHGWRWKHLPSOLFDWLRQVRIWKHKROGXSPRGHO
$ PDMRU UHDVRQ ZK\ ZH FRQVLGHU WKH KROGXS SUREOHP UHODWHG WR WUXVW IRUPDWLRQ LV WKDW
FRUSRUDWLVWZDJHVHWWLQJLVEHWWHUDEOHWRGHDOZLWKXQH[SHFWHGSULFHVKRFNVWKDQGHFHQWUDOLVHG ZDJHVHWWLQJ EHFDXVH RI XQGHUO\LQJ KROGXS SUREOHPV 7KH UHVXOWV RI +2/0/81'
$1'
=(77(5%(5* >@FRQILUPWKLV7KHLUVWXG\RIUHDOZDJHJURZWKIRUVHYHUDOFRXQWULHVDQG
VHYHUDO LQGXVWULHV UHYHDOV WKDW XQH[SHFWHG LQIODWLRQ KDV RQO\ D VLJQLILFDQW LQIOXHQFH RQ UHDO ZDJHVLQWKHWZRPRVWGHFHQWUDOLVHGFRXQWULHV&DQDGDDQGWKH8QLWHG6WDWHV
$VHFRQGSUHGLFWLRQRIWKHKROGXSPRGHOLVWKDWWKHOHQJWKRILQGLYLGXDOFRQWUDFWVZLOOEH
ORQJHULQGHFHQWUDOLVHGHFRQRPLHV,QWKLVZD\WKHFRQWUDFWLQJSDUWLHVWU\WRDYRLGWKHKROGXS SUREOHPE\FRQWUDFWLQJLWDZD\IRUVHYHUDO \HDUV ,QFRUSRUDWLVWHFRQRPLHV FRQWUDFWVFDQEH
DGMXVWHGWRFKDQJLQJFLUFXPVWDQFHVE\KLJKHUOHYHORUJDQLVDWLRQVZLWKRXWWKHGDQJHURIKROG XSSUREOHPV7KHUHIRUHWKHUHLVQRQHHGWRXVHORQJWHUPFRQWUDFWV6KRUWWHUPFRQWUDFWVKDYH
WKH DGYDQWDJH RI NHHSLQJ LQ WRXFK ZLWK H[WHUQDO GHYHORSPHQWV DQG DUH WKHUHIRUH SUHIHUUHG /$@SUHVHQWVRPHHYLGHQFHWKDWFRQWUDFWVRIWKUHH\HDUVRU ORQJHUDUHPRUHSURPLQHQWLQWKH8QLWHG6WDWHVWKDQLQFRUSRUDWLVW(XURSHDQFRXQWULHV
7KLUGO\ WKH KROGXS PRGHO LPSOLHV WKDW MREWRMRE PRELOLW\ ZLOO EH ORZHU LQ FRUSRUDWLVW
VRFLHWLHV 7KLV FRUUHVSRQGV ZLWK WKH ILQGLQJV RI $%5$+$0 $1' +286(0$1 >@ ZKR
FRPSDUH DGMXVWPHQWV LQ WKH HPSOR\PHQW RI SURGXFWLRQ ZRUNHUV LQ WKH 8QLWHG 6WDWHV DQG
*HUPDQ\ ,Q WKH VKRUW UXQ WKH PRUH GHFHQWUDOLVHG 8QLWHG 6WDWHV KDV KLJKHU DGMXVWPHQWV LQ HPSOR\PHQW WKDQ WKH PRUH FRUSRUDWLVW *HUPDQ\7(8/,1*6 $1' +$572* >@ VKRZ RQ
EDVLVRI2(&'ILJXUHVDERXWGLVWULEXWLRQRIWHQXUHIRUGLIIHUHQWFRXQWULHVWKDWWKHSURSRUWLRQ RIORQJMREGXUDWLRQLVKLJKHULQFRUSRUDWLVWFRXQWULHVZKLOHVKRUWWHQXUHVDUHPRUHFRPPRQ LQ GHFHQWUDOLVHG HFRQRPLHV +RZHYHU RI WKH WZHOYH FRXQWULHV FRQVLGHUHG LQ WKLV UHVHDUFK
RQO\WKHWHQXUHGLVWULEXWLRQLQ7KH1HWKHUODQGVGRHVQRWILWZHOOLQWKHH[SHFWHGUHODWLRQVKLS 7KHDXWKRUVGRQRWH[SODLQWKLVRXWOLHU
$IRXUWKFRQVHTXHQFHRIKROGXSSUREOHPVLVWKDWVSHFLILFLQYHVWPHQWVLQKXPDQFDSLWDORU
SK\VLFDO FDSLWDO ZLOO EH ORZHU LQ PRUH GHFHQWUDOLVHG VRFLHWLHV 7KHUH DUH PXFK GDWD PHDVXUHPHQWDQGFRPSDULVRQSUREOHPVZLWKWKHVHLVVXHVLQYROYHG+RZHYHU7(8/,1*6$1'
+$572* >@VHH³VWURQJLQGLFDWLRQVWKDWWKHLQFLGHQFHRI WUDLQLQJ LV ORZ LQ WKH 8QLWHG6WDWHVDVFRPSDUHGZLWKRWKHU2(&'FRXQWULHV´/@ILQGVWKDWZRUNHUVLQ
$PHULFDQ SODQWV UHFHLYH KRXUV RI WUDLQLQJ ZKLOH ZRUNHUV LQ -DSDQHVH SODQWV UHFHLYH
KRXUV:LWKUHVSHFWWRLQYHVWPHQWLQSK\VLFDOFDSLWDODQG5 '+,56&+ >@ILQGVDVWURQJ QHJDWLYHUHODWLRQZLWKXQLRQLVDWLRQIRUVHYHUDOLQGXVWULHVLQWKH8QLWHG6WDWHV
7KHVHIRXUILHOGVRIHYLGHQFHWRJHWKHUZLWKWKHUHVHDUFK2) %($8'5@ $ILUVWFRUUHVSRQGLQJDVSHFWLVWKDWWKHFRQWUDFWVDUHZULWWHQ LQQRPLQDOWHUPV
7KHVHFRQGUHVHPEODQFHLVWKHGHFRPSRVLWLRQRIWKHZDJHLQFUHDVHVLQWKUHHSDUWV7KHILUVW
SDUW FRQFHUQV WKH FRQWUDFWXDO H[SHULHQFH DQG WHQXUH SURILOH 8VXDOO\ HYHU\ HPSOR\HH JHWV D \HDUO\ ZDJH ULVH EHFDXVH HYHU\ DGGLWLRQDO \HDU RI WHQXUH ULVHV KLP RQH VWHS DW D VSHFLILHG IL[HGZDJHVFDOH7KLVSDUWRIWKHZDJHLQFUHDVHFDQEHVHHQDVWKHFRQWUDFWHGZDJHLQFUHDVH LQSHULRGIRUSHULRGZKHQQRVKRFNVRFFXU7KHVHFRQGFRPSRQHQWRIWKHZDJHLQFUHDVHLV
QHJRWLDWHGE\WKHFRUSRUDWLVWRUJDQLVDWLRQVDQGFRQVLVWVRIDIL[HGSHUFHQWDJHLQFUHDVHIRUDOO
ZDJHVFDOHV7KLVLVFDOOHGWKHFRQWUDFWXDOLQLWLDOLQFUHDVHDQGFDQEHVHHQLQWKHPRGHODVDQ DGMXVWPHQWWRDJJUHJDWHVKRFNVWKDWFDQEHEHWWHUKDQGOHGE\FRUSRUDWLVWRUJDQLVDWLRQVWKDQE\ QHJRWLDWLRQV DW WKH ILUP OHYHO 7KH ODVW SDUW RI WKH ZDJH LQFUHDVH FRQFHUQV WKH LQFLGHQWDO
LQFUHDVHVSDUWRIZDJHGULIW ZKLFKLVWKHVHWRILQFUHDVHVQRWH[SODLQHGE\FRPSRQHQWVRQH DQGWZR7KHVHFKDQJHVDUHQHJRWLDWHGDWWKHPLFUROHYHO1RWLFHWKDWWKLVFRPSRQHQWLV]HUR IRUWZRWKLUGVRIDOOZRUNHUVZKLFKLVLQOLQHZLWKWKHLPSOLFDWLRQVRIWKHKROGXSPRGHO
7KHIDFWWKDWHPSOR\HUVDUHIUHHWRVHWZDJHVIRUQHZKLUHVDOVRDGGVWRWKHHYLGHQFHIRUWKH
UHOHYDQFH RI WKH KROGXS PRGHO LV :DJHV IRU QHZ KLUHV DUH DOPRVW QHYHU VHW DW WKH ORZHVW
SRVVLEOH ZDJH VFDOHV VSHFLILHG E\ FROOHFWLYH ODERXU DJUHHPHQWV EXW EDVHG RQ WKH VXEMHFWLYH LQWHUSUHWDWLRQRIWKHFDSDFLWLHVRIWKHQHZKLUHE\WKH HPSOR\HU:KHQWKHQHZ HPSOR\HHLV
VHWWOHG LQ D VSHFLILF ZDJH VFDOH KH IROORZV WKH \HDUO\ LQFUHDVHV DV LV FRQWUDFWHG E\ WKH
FRUSRUDWLVWRUJDQLVDWLRQVRQWKHLQGXVWU\OHYHO,QWHUPVRIWKHPRGHOWKHPLFUROHYHOLVEHVW
VXLWHGWRYDOXHVRPHRQH VSDUWLFXODUFDSDFLWLHVDKLJKHUOHYHOLVEHVWVXLWHGWRGHWHUPLQHWKH DSSURSULDWHZDJHLQFUHDVHVDVUHDFWLRQWRDJJUHJDWHVKRFNV
2WKHUDVSHFWVRIWKHPRGHOWKDWDUHVLPLODUWRWKH'XWFKSUDFWLFHDUHWKHORQJWHUPFROOHFWLYH ODERXUDJUHHPHQWVDQGH[WHQVLRQVZKLFKDUHYHU\FRPPRQLQ7KH1HWKHUODQGV7KH\IRUPDQ LQVWLWXWLRQDO VWUXFWXUH LQ ZKLFK HPSOR\HU DQG HPSOR\HH RUJDQLVDWLRQV FDQ PDNH ORQJWHUP DJUHHPHQWVRQWKHGHYHORSPHQWRIZDJHFRVWV,QWKHGLVFXVVLRQRIVSHFLILFLQYHVWPHQWVZH KDYH VHHQ WKDW LW IDFLOLWDWHV PXWXDOO\ DGYDQWDJHRXV WUDGH LI H[SRVW EDUJDLQLQJ SRZHULV
DOORFDWHGWRWKHSDUW\WKDWFDUULHVRXWLPSRUWDQWQRQFRQWUDFWLEOHLQYHVWPHQWV$SSO\LQJWKLVWR WKH OLWHUDWXUH RI VHDUFK PRGHOV LQ ZKLFK VSHFLILF LQYHVWPHQWV RFFXU LQ WKH FUHDWLRQ RI
YDFDQFLHV DQG VHDUFKLQJ IRU MREV WKH +RVLRV FRQGLWLRQ WHOOV XV ZKHQ WKH VHDUFK LQWHQVLW\ RI ZRUNHUV DQG ZHOIDUH RI VRFLHW\ DUH PD[LPLVHG +26,26 >@ %221( $1' %29(1%(5*
>@ 7KLV SURFHVV KLQJHV RQ WKH UHODWLYH EDUJDLQLQJ SRZHU RI ZRUNHUV DQG HPSOR\HUV
ZKLFKUHVXOWVLQWKHUHODWLYHGLVWULEXWLRQRIWKHUHQWV7RRORZEDUJDLQLQJSRZHUIRUZRUNHUV LPSOLHV ORZ VHDUFK DFWLYLW\ EHFDXVH RI ORZ ZDJHV ZKLOH WRR KLJK EDUJDLQLQJ SRZHU GLVFRXUDJHV HPSOR\HHV IURP ORRNLQJ IRU D MRE EHFDXVH WKH SUREDELOLW\ RI ILQGLQJ RQH
GLPLQLVKHVZKHQZDJHVULVH6WDWLQJ WKH GLYLVLRQ RI UHQW LQ ORQJWHUP FRQWUDFWV SUHYHQWV WKH HPSOR\HUVDQGHPSOR\HHVIURPHQODUJLQJWKHLUEDUJDLQLQJSRZHU6XFKDFKDQJHLQEDUJDLQLQJ SRZHUZRXOGPHDQWKDWWKHH[SRVWOHYHORIEDUJDLQLQJSRZHUZRXOGGLIIHUIURPWKHH[DQWH
RSWLPDOOHYHORIEDUJDLQLQJSRZHUZLWKFRQVHTXHQWO\DGLVWXUEDQFHRIWKHRSWLPDOGLVWULEXWLRQ RIUHQWV
7UXVWDQGWKH'XWFKSUDFWLFH
$IWHU WKH H[WHQVLYH DWWHQWLRQ WR WKH KROGXS SUREOHP LQ WKH SUHYLRXV VHFWLRQ WKLV VHFWLRQ
FRQWLQXHV ZLWK VWHS RI RXU WZRVWHS DSSURDFK H[SODLQLQJ KRZ WUXVW UHVXOWHG LQ VRXQG
PDFURHFRQRPLF SROLFLHV 7KH SUHYLRXV VHFWLRQ DUJXHV WKDW WKH KROGXS SUREOHP FDQ LQ WKH ZDJHVHWWLQJSURFHVVEHVHHQDVDSULVRQHUV¶GLOHPPDSUREOHPZKLFKFRXOGEHPRUHHDVLO\ VROYHGZKHQWUXVW LV DURXQG:KHUHDV WKH GLVFXVVLRQ RQ WKH EHQHILWV RI WUXVW LQ WKH SUHYLRXV
VHFWLRQWDNHVDUDWKHUWKHRUHWLFDOSHUVSHFWLYHWKHSUHVHQWVHFWLRQFRQFHQWUDWHVRQWKHFRQFUHWH PHDVXUHV WKDW ZHUH WDNHQ E\ WKH SROLF\ PDNHUV DQG WKDW FRQWULEXWHG WR WKH WUDQVLWLRQ WR WKH 'XWFK PLUDFOH 7KHVH PHDVXUHV FDQ EH XQGHUVWRRG DV WKH VRXQG RXWFRPHV RI FROOHFWLYH
DFWLRQSUREOHPV$VWUXVWOHDGVWRWKHEHWWHUVROYLQJRIWKHVHNLQGRISUREOHPVWKLVVWURQJO\ VXJJHVWV WKDW WUXVW ZDV DQ LPSRUWDQW FRQGLWLRQ IRU WKHVH PHDVXUHV WR EH WDNHQ DQG WKHLU SRVLWLYH HIIHFWV RQ PDFURHFRQRPLF YDULDEOHV $OWKRXJK ZH EHOLHYH WKDW RQ EDODQFH WKH
LQVWLWXWLRQDOWUXVWHQKDQFLQJVHWXSRIWKHSROGHUPRGHOKDVEHHQEHQHILFLDOWRPDFURHFRQRPLF
SHUIRUPDQFH WKH PRGHO DOVR KDV LWV GUDZEDFNV7KHUHIRUH WKLV VHFWLRQ HQGV ZLWK D VKRUW GLVFXVVLRQRIWKHFULWLFLVPVWKDWWKHSROGHUPRGHOUHFHLYHG
:DVVHQDDU$JUHHPHQW
7KHPRVWIDPRXVDJUHHPHQWWKDWWKH67$5SURGXFHGLVWKHFHQWUDODJUHHPHQWRI:DVVHQDDU LQ7KLVDJUHHPHQWZKLFKFRXSOHVZDJHPRGHUDWLRQWRODERXUWLPHUHGXFWLRQLVVHHQDV
DVWDUWLQJSRLQWLQWKHWXUQIURPWKH'XWFKGLVHDVHWRWKH'XWFKPLUDFOH,WPDUNVWKHPRPHQW
WKDWXQLRQVDQGHPSOR\HUDVVRFLDWLRQVVWDUWHGUHDOLVLQJWKDWWKH\KDGWRFRRSHUDWHLQRUGHUWR ILQGDZD\RXWRIWKHHFRQRPLFFULVLV$OWKRXJKWKH:DVVHQDDUDJUHHPHQWZDVPD\EHQRWKLQJ PRUHWKDQDEHDFRQRIFKDQJHDIWHULWPXWXDOWUXVWGHYHORSHGTXLFNO\DQGWKHDJUHHPHQWZDV
IROORZHGE\DVWULQJRIRWKHUFHQWUDODJUHHPHQWV,WPDUNHGWKHEHJLQQLQJRIDQ³LGHRORJLFDO SDFLILFDWLRQ´EHWZHHQVRFLDOSDUWQHUV9$1%277(1%85* >@
+RZGLGWKHDJUHHPHQWFRPHLQWREHLQJ"7KHHFRQRPLFVLWXDWLRQLQWKHEHJLQQLQJRIWKH
V ZDV XQVXVWDLQDEOH 7KH XQLRQV ZHUH QRW LQ D IDYRXUDEOH SRVLWLRQ 7KH\ ZHUH ORVLQJ
PHPEHUVLQDIDVWZD\DQGWKHJRYHUQPHQWZDVWKUHDWHQLQJWRXVHZDJHPHDVXUHVWRJHWULGRI WKH DXWRPDWLF SULFH FRPSHQVDWLRQ UXOH 9$1 %277(1%85* >@ (VSHFLDOO\ WKH WKUHDW RI
WKH JRYHUQPHQW WR LQWHUYHQH VHHPV WR KDYH IXQFWLRQHG DV D WULJJHU PHFKDQLVP IRU VRFLDO
SDUWQHUV WR UHDFK DQ DJUHHPHQW 7KH XQLRQV UHDVRQHG WKDW WKH\ ZRXOG JDLQ QRWKLQJ LI WKH JRYHUQPHQWLQWHUYHQHGEXWWKDWWKH\FRXOGH[SHFWVRPHWKLQJLQH[FKDQJHLIWKH\ZRXOGUHDFK
DQDJUHHPHQWZLWKWKHHPSOR\HUV7KHFRPSHQVDWLRQWKHXQLRQVVRXJKWDQGJRW LQ WKH HQG
ZDVDUHGLVWULEXWLRQRIZRUN7KLVUHGLVWULEXWLRQJLYHQVKDSHDVODERXUWLPHUHGXFWLRQKDGDV DSXUSRVHWRILJKWXQHPSOR\PHQW
,W LV QRWLFHDEOH WKDW QRW RQO\ WKH XQLRQV KDG DQ LQFHQWLYH WR SUHYHQW JRYHUQPHQW
LQWHUYHQWLRQ LQ WKH ZDJH GHYHORSPHQW$OVR WKH HPSOR\HU DVVRFLDWLRQV ZDQWHG WR NHHS WKH
JRYHUQPHQW RXW RI WKH UHDOP RI ODERXU PDUNHW QHJRWLDWLRQV DOWKRXJK WKH\ KDG D GLIIHUHQW
PRWLYDWLRQ 7KH HPSOR\HUV ZHUH ZDU\ DERXW WKH OHYHO RI DPELWLRQ WKH JRYHUQPHQW ZRXOG
DWWDLQWRORZHUXQHPSOR\PHQW7KH\IHDUHGWKDWWKHJRYHUQPHQWZRXOGFRS\SROLF\PHDVXUHV
LPSOHPHQWHGLQ)UDQFHDQG%HOJLXPZKHUHJRYHUQPHQWVDQQRXQFHGFROOHFWLYHMRESODQVDQG REOLJDWRU\ZRUNLQJWLPHUHGXFWLRQVHHDOVR9,66(5$1'+(0(5,-&. >@
1RWLFHKRZHYHUWKDWWKHFHQWUDODJUHHPHQWVVLJQHGE\WKHFKDLUPHQRIWKHHPSOR\HUDQG
HPSOR\HHIHGHUDWLRQVDUHQRWELQGLQJIRUPHPEHUXQLRQVDQGDVVRFLDWLRQVQRUIRULQGLYLGXDO
PHPEHUV7KH\MXVWIXQFWLRQDVDIRFDOSRLQWIRUQHJRWLDWLRQVDERXWODERXUVWDQGDUGVDWORZHU
OHYHOV7KLVLVUHIOHFWHGLQWKHQDPHVJLYHQWRWKHFHQWUDODJUHHPHQWV7KH\YDU\IURP³FHQWUDO
UHFRPPHQGDWLRQV´ WR ³FRPPRQ SROLF\ IUDPHZRUN´ ³VRFLDOHFRQRPLF SROLF\ RULHQWDWLRQV´ DQG³DJHQGDIRUWKHGLVFXVVLRQRQFROOHFWLYHODERXUDJUHHPHQWV´
$OWKRXJK WKHVH FHQWUDO DJUHHPHQWV RI WKH 67$5 MXVW SXW PRUDO SUHVVXUH RQ QHJRWLDWLQJ
SDUWLHVDWLQGXVWU\RUILUPOHYHOVWKLVPRUDOSUHVVXUHKDVSURYHGWREHVWURQJHQRXJKWRFKDQJH WKHRXWFRPHVRIODERXUQHJRWLDWLRQVWRDODUJHH[WHQW7KHDJUHHPHQWRI:DVVHQDDURILV
LOOXVWUDWLYH 7KH :DVVHQDDU DJUHHPHQW VWDWHG WKH LPSRUWDQFH RI UHVWRULQJ ILUP SURILWDELOLW\ WKURXJK ZDJH PRGHUDWLRQ 7RJHWKHU ZLWK ODERXU WLPH UHGXFWLRQ WKLV VKRXOG HQFRXUDJH LQYHVWPHQWV LQ HPSOR\PHQW 7KH DJUHHPHQW ZDV YHU\ VKRUW ZULWWHQ LQ YDJXH WHUPV DQG QRW OHJDOO\ ELQGLQJ 7KH UHVXOWV KRZHYHU ZHUH LPSUHVVLYH ,Q UHDFWLRQ WR WKH :DVVHQDDU
DJUHHPHQWWKHJRYHUQPHQWHQDFWHGDODZWKDWPDGHLWSRVVLEOHWRRSHQDOOH[LVWLQJFROOHFWLYH
ODERXUDJUHHPHQWVDQGWRSRVWSRQHWKHDXWRPDWLFSULFHFRPSHQVDWLRQ,QRQH\HDUDERXWWZR WKLUGV RI DOO FROOHFWLYH ODERXU DJUHHPHQWV KDG EHHQ UHQHJRWLDWHG 2Q DYHUDJH WKH SULFH FRPSHQVDWLRQZDVSRVWSRQHGIRUWZR\HDUVDQGWKHDYHUDJHZRUNLQJWLPHGHFOLQHGZLWKILYH
SHUFHQW %HWZHHQ DQG WKH DYHUDJH ZDJH GHFUHDVHG LQ UHDO WHUPV E\ QLQH SHUFHQW 9,66(5 $1' +(0(5,-&. >@ 7KH ODERXU LQFRPH UDWLR GHFUHDVHG IURP SHUFHQW LQ WRSHUFHQWLQ
$QDGGLWLRQDOVWLPXOXVWRWKHLQVWUXPHQWRIZDJHPRGHUDWLRQFDPHIURPWKH&3%$VZKDW
FDQEHVHHQDVDFRLQFLGHQFHWKH&3%EDVHGLWVHFRQRPLFSROLF\DQDO\VHVDWWKHHQGRIV RQDYLQWDJHPRGHOLQZKLFKWKHIDYRXUDEOHHIIHFWVRIZDJHPRGHUDWLRQRQHPSOR\PHQWZHUH PXFK VWURQJHU WKDQ WKH QHJDWLYH LQFRPH HIIHFWV '(1 %877(5 >@ $FFRUGLQJ WR WKH
PRGHO ORZHU ODERXU FRVWV ZRXOG KDYH D VWURQJ SRVLWLYH HIIHFW RQ WKH HFRQRP\ EHFDXVH LW
LQFUHDVHGWKHUHWXUQRQFDSLWDODQGZRXOGWKHUHIRUHSRVWSRQHWKHUHSODFHPHQWRIPDFKLQHU\E\ PRUHODERXUH[WHQVLYHRQHV7KHUHIRUHWKH&3%DOUHDG\KDG³LQVWUXFWHG´VRFLDOSDUWQHUVDQG JRYHUQPHQWIRUVRPH\HDUVWKDWZDJHPRGHUDWLRQZRXOGEHWKHPRVWDSSURSULDWHPHDVXUHWR UHYLYHWKHHFRQRP\,WPDUNHGWKHHQGRI.H\QHVLDQGHPDQGSROLF\
$WKLUGLPSRUWDQWUHVXOWRIWKHDJUHHPHQWRI:DVVHQDDUEHVLGHVWKHVWLPXOXVWRIXUWKHUFR
RSHUDWLRQ EHWZHHQ VRFLDO SDUWQHUV DQG WKH VWDUW RI D SROLF\ RI ZDJH PRGHUDWLRQ DQG ZRUN UHGLVWULEXWLRQ ZDV WKH UHWUHDW RI JRYHUQPHQW IURP WKH UHDOP RI ODERXU PDUNHW QHJRWLDWLRQV
7KLVLPSOLHGDGUDVWLFEUHDNZLWKWKHSDVW%HIRUHWKHJRYHUQPHQWLQWHUYHQHGRIWHQDQG
LQDGLUHFWPDQQHU,QWKHQLQH\HDUVEHIRUHWKH:DVVHQDDUDJUHHPHQWWKHJRYHUQPHQWGLUHFWO\ LQWHUYHQHG ZLWK ZDJH PHDVXUHV LQ VL[ UHVSHFWLYH \HDUV ,Q WKH SHULRG DIWHU WKH
JRYHUQPHQW DEVWDLQHG IURP LQWHUIHUHQFH ,W DOZD\V IROORZHG WKH GHYHORSPHQWV LQ ODERXU
VWDQGDUGVFORVHO\EXWXVHGWKHSRVVLELOLW\RI ZDJHPHDVXUHVRQO\ DVDWULJJHUPHFKDQLVPWR
PDNH VXUH WKDW VRFLDO SDUWQHUV ZRXOG UHDFK UHDVRQDEOH QHJRWLDWLRQ UHVXOWV E\ WKHPVHOYHV
$OWKRXJK WKH JRYHUQPHQW GRHV QRW LQWHUYHQH DQ\PRUH LQ D GLUHFW ZD\ LQ WKH ILHOG RI ODERXU
VWDQGDUGV LW VWLOO LQIOXHQFHV DQG VXSSRUWV GHYHORSPHQWV WKDW LW FRQVLGHUV IDYRXUDEOH IRU WKH HFRQRP\)RUH[DPSOHWKHJRYHUQPHQWVXSSRUWHGWKHSROLF\RIZDJHPRGHUDWLRQWKDWVRFLDO
SDUWQHUVKDGDJUHHGRQE\ORZHULQJWD[HVDQGSUHPLXPVIRUVRFLDOVHFXULW\,QWKLVZD\WKH GHFOLQH LQ SXUFKDVH SRZHU RI IDPLOLHV ZDV VRIWHQHG ZKLFK PDGH WKH DJUHHPHQW PRUH
DFFHSWDEOHIRUZRUNHUV$QRWKHUH[DPSOHLVWKDWZKHQVRFLDOSDUWQHUVDJUHHGRQUHGLVWULEXWLRQ RIZRUNDQGRQJRLQJOLEHUDOLVDWLRQRIWKHODERXUPDUNHWWKHJRYHUQPHQWUHVSRQGHGZLWKDODZ RQ IOH[LELOLW\ LQ ODERXU UHODWLRQV WKHUHE\ DGDSWLQJ WKH ODZ WR WKH FKDQJLQJ SUHIHUHQFHV IRU IOH[LEOHZRUNLQJKRXUV
$EDFNJURXQGIRUWKHFUHDWLRQRIWKH:DVVHQDDUDJUHHPHQWFDQEHIRXQGLQWKH³VHQVHRI
XUJHQF\´IHHOLQJV WKDW DURVH LQ WKH EHJLQQLQJV RI WKH HLJKWLHV 7KH :55 DQG VHYHUDO
FRPPLWWHHV ZURWH DODUPLQJ UHSRUWV DERXW WKH VWDWH RI WKH HFRQRP\ $ FRQWULEXWLQJ IDFWRU WR
WKHVH³VHQVHRIXUJHQF\´IHHOLQJVLVWKHIDFWWKDWSROLF\PDNHUVNQRZWKDW7KH1HWKHUODQGVDUH D VPDOO RSHQ HFRQRP\ DQG WKHUHIRUH UDWKHU YXOQHUDEOH LQ DQ LQWHUQDWLRQDO HFRQRPLF FRQWH[W VHH.$7=(167(,1 >@ 7KHSROLF\PDNHUVDUHDZDUHRIWKHIDFWWKDWWKH\GRQRWKDYHWKH SRVVLELOLW\RISURWHFWLRQLVPWRJXDUGWKHLULQGXVWULHV7KH1HWKHUODQGVDUHWRRVPDOOWRKDYHDQ
LPSDFW RQ ZRUOG HFRQRP\ VR LW LV WKH 'XWFK ZKR ZLOO KDYH WR FKDQJH ZKHQ WKH HFRQRPLF HQYLURQPHQWFKDQJHV7KLVIRUPVDQRWKHUHOHPHQWWKDWIRUFHGWKH'XWFKWRGHYHORSSUREOHP VROYLQJ ZD\V RI GHFLVLRQ PDNLQJ DQG LQWHU RUJDQLVDWLRQDO FRRSHUDWLRQ EHWZHHQ JRYHUQPHQW
DQG VRFLDO SDUWQHUV LQ RUGHU WR UHDFK FRQVHQVXV DERXW DGMXVWLQJ WR FKDQJLQJ HFRQRPLF HQYLURQPHQWVLQIOH[LEOHZD\V
3ROLF\PHDVXUHV
,W LV LQWHUHVWLQJ WR VHH KRZ WKH WKHRUHWLFDO FRQVLGHUDWLRQV UHJDUGLQJ WKH PRGHO RI WKH ODERXU PDUNHWRIVHFWLRQUHODWHWRWKHWKUHHPDLQSROLF\PHDVXUHVWKDWDUHKHOGUHVSRQVLEOHIRUWKH
'XWFK PLUDFOH )LUVWO\ WKH PRVW LPSRUWDQW DV VWDWHG EHIRUH ZDV WKH SROLF\ RI ZDJH
PRGHUDWLRQLQFRPELQDWLRQZLWKWKHSURPLVHRIHPSOR\HUVWRLQYHVWLQHPSOR\PHQW7KLVFDQ EH VHHQ DV WKH FOHDUHVW H[DPSOH RI D ORQJWHUP YLHZ RI VRFLDO SDUWQHUV DQG RI D VLWXDWLRQ LQ
ZKLFK EDUJDLQLQJ SRZHU KDV QRW EHHQ XVHG WR GLVWXUE WKH GLVWULEXWLRQ RI UHQWV 7KH IDFW WKDW
6LQFHWKHJRYHUQPHQWVWLOOKDVWKHULJKWWRSURFODLPDFHLOLQJRQZDJHULVHVEXWWKHODZRQO\DOORZVIRU
WKHVH ZDJH LQWHUYHQWLRQV LQ FDVH WKH LQWHUHVWV RI WKH QDWLRQDO HFRQRP\ UHTXLUH LQWHUYHQWLRQ EHFDXVH RI VXGGHQ H[WHUQDOVKRFNVWRWKHHFRQRP\
VRFLDOXQUHVWLQWKHIRUPRIVWULNHVZDVH[WUHPHO\ORZE\LQWHUQDWLRQDOVWDQGDUGVVHHILJXUH FDQ EH VHHQ DV D SURRI WKDW ODERXU UHODWLRQV ZHUH KHDOWK\ HYHQ DIWHU WZR GHFDGHV RI VXVWDLQHGZDJHPRGHUDWLRQ
)LJXUH
$QQXDODYHUDJHRISURGXFWLRQGD\VORVWE\VWULNHVSHUZRUNHUV
'D\VRISURGXFWLRQORVW
*UHHFH
6SDLQ
,WDO\
)LQODQG
,UHODQG
'HQPDUN
8.
)UDQFH
3RUWXJDO
6ZHGHQ
%HOJLXP
*HUPDQ\
1HWKHUODQGV
6RXUFH&%6LQGLFDWHVPLVVLQJGDWDIRU LQGLFDWHVPLVVLQJGDWDIRU
7KHDWWHPSWVWRPDNHWKHODERXUPDUNHWPRUHIOH[LEOHDUHFRQVLGHUHGDVWKHVHFRQGEHQHILFLDO
SROLF\ PHDVXUH /LNH WKH FRQVHQW RQ ZDJH PRGHUDWLRQ WKLV PHDVXUH DOVR IRXQG VXSSRUW RU PD\EH HYHQ RULJLQDWHG LQ WKH :DVVHQDDU DJUHHPHQW 7UDGH XQLRQV XVHG WR RSSRVH IOH[LEOH
ZRUN EHFDXVH WKH\ ZHUH DIUDLG WKDW RWKHU WKDQ IXOOWLPH MREV ZRXOG GLPLQLVK WKH ULJKWV RI HPSOR\HHV +RZHYHU GXULQJ WKH HLJKWLHV DQG QLQHWLHV WKH 'XWFK XQLRQV UHDFKHG DJUHHPHQW ZLWKWKHHPSOR\HURUJDQLVDWLRQVRQKRZWRRUJDQLVHWKHULJKWVDQGGXWLHVRI³IOH[ZRUNHUV´,Q
DODZRQ³)OH[LELOLW\DQGVHFXULW\´ FDPHLQWRIRUFHZKLFKSURYLGHVDOHJDOSURWHFWLRQ
IRUIOH[ZRUNHUV7KLVDWWLWXGHRIZLOOLQJQHVVWRDGDSWWRDFKDQJLQJHQYLURQPHQWLVRQHRIWKH UHDVRQV WKDW IOH[ ZRUN WRRN D KLJK IOLJKW LQ 7KH 1HWKHUODQGV %HWZHHQ DQG WKH
QXPEHURISDUWWLPHMREVLQFUHDVHGZLWKPLOOLRQWRPLOOLRQDQGWKHQXPEHURIIOH[LEOH
MREVLQFUHDVHGZLWKLQWKLVSHULRGZKHUHDVWKHQXPEHURIIXOOWLPHMREVVWDELOLVHGDW PLOOLRQ+$572* >@ 7KHRSSRUWXQLW\ IRUIOH[ZRUNSDUWWLPHMREV WKXVHQDEOHG D
FRQVLGHUDEOH SDUW RI WKH LQFUHDVH LQ ODERXU SDUWLFLSDWLRQ $JDLQ FRQVHQVXV EHWZHHQ VRFLDO SDUWQHUVDQGJRYHUQPHQWZHUHWKHEDVLVRIWKLVGHYHORSPHQW
7KH UHIRUPV LQ VRFLDO VHFXULW\DUH FRQVLGHUHG DV WKH WKLUG NLQG RI SROLF\ PHDVXUHV WKDW
GLUHFWO\ FRQWULEXWHG WR WKH 'XWFK PLUDFOH 7KH\ ORZHUHG WKH UHSODFHPHQW UDWH DQG WKXV VWLPXODWHG WKH VHDUFK IRU ZRUN )XUWKHUPRUH WKH\ KDG D SRVLWLYH LPSDFW RQ JRYHUQPHQW
ILQDQFHVDQGWKHUHE\RQWD[HVDQGLQVXUDQFHSUHPLXPV7KHORZHULQJRIWD[HVDQGSUHPLXPV ZDV XVHG DV VXSSRUW IRU WKH SROLF\ RI ZDJH UHVWUDLQW 1RW DOO SUREOHPV UHJDUGLQJ VRFLDO VHFXULW\ZHUHVROYHGKRZHYHU7KLVLVHODERUDWHGLQWKHQH[WVXEVHFWLRQ
7KHRWKHUVLGHRIWKHFRLQ
$VWKLVSDSHUSXUSRUWVWRLOOXVWUDWHWKDWWKHVRFDOOHGSROGHUPRGHODQGLWVLQKHUHQWPXWXDOWUXVW DPRQJLWVPDLQDFWRUVDUHWREHVHHQDVDQHVVHQWLDOFRQGLWLRQIRUWKH'XWFKPLUDFOHZHKDYH XSWRQRZVWUHVVHGWKHSRVLWLYHIHDWXUHVRIWKHPRGHO@
&RQFOXVLRQ
,Q DQ LQWHUQDWLRQDO SHUVSHFWLYH WKH 'XWFK HFRQRP\ KDV VKRZQ D UHPDUNDEOH UHFRUG RI HPSOR\PHQWDQGZHOIDUHJURZWKVWDUWLQJLQWKHEHJLQQLQJRIWKHHLJKWLHV7KLVSDSHUDUJXHV
WKDW WKH 'XWFK FXOWXUH RI FRQVHQVXV IRUPDWLRQ FRQVWLWXWHG D PDMRU GULYLQJ IRUFH IRU WKLV
PLUDFXORXV HFRQRPLF UHFRYHU\ 7KH LQVWLWXWLRQDO IUDPHZRUN IRU VRFLDOHFRQRPLF SROLF\ SUHSDUDWLRQ GLVSOD\V YDULRXV IHDWXUHV WKDW DUH LQ OLQH ZLWK WKHRULHV DERXW WUXVWIRUPDWLRQ LQ QHWZRUNV 7UXVW EHWZHHQ WKH IRUHPHQ RI JRYHUQPHQW DQG VRFLDO SDUWQHUV KDYH OHG WR FR
RSHUDWLYH ORQJWHUP YLHZV RQ WKH HFRQRPLF SUREOHPV ZKLFK SURYLGHG DPSOH VRFLHWDO DQG
SROLWLFDOVXSSRUWIRUGUDVWLFSROLF\PHDVXUHV,QWKLVZD\WKH'XWFKLQVWLWXWLRQDOIUDPHZRUN
ZLWKLWVVSHFLILFIRUPDODQGLQIRUPDOFRQVXOWDWLRQVWUXFWXUHKDVIXQFWLRQHGDVDQLQWHUPHGLDU\ EHWZHHQWUXVWDWWKHPLFUROHYHODQGPDFURHFRQRPLFSHUIRUPDQFHRIWKHFRXQWU\7KHZD\LQ ZKLFK WKH LQWHUDFWLRQ EHWZHHQ VFLHQWLILF HFRQRPLF DQDO\VHV DQG SROLF\ PDNLQJ LV RUJDQLVHG
FRQWULEXWHGWRDPDMRUH[WHQWWRWKHIRUPDWLRQRIWUXVWDQGKHQFHWRVRFLHWDOVXSSRUWIRUSROLF\ PHDVXUHVWKDWZHUHLQVWUXPHQWDOLQWKHHFRQRPLFUHFRYHU\
2IFRXUVHRXUSDSHULVQDUUDWLYHLQWKHVHQVHWKDWLWGHVFULEHVWKHOLQNEHWZHHQWKHVXFFHVV
RIWKHSROGHUPRGHODQGWKHUROHRIQHWZRUNVWUXVWDQGLQVWLWXWLRQVE\DRQHFDVHVWXG\RQO\ 6R RXU VWXG\ FDQQRW EH UHJDUGHG DV DQ HPSLULFDO WHVW RI WKH UHOHYDQFH RI WKH WKHRUHWLFDO
DUJXPHQWDWLRQ$FWXDOO\VXFKDQHPSLULFDOWHVWVHHPVQRWIHDVLEOHDQ\KRZLQGLVFXVVLRQVRI WKH LQIOXHQFH RI LQVWLWXWLRQV RQ PDFURHFRQRPLF SHUIRUPDQFH 7KHUH DUH QR ³ZLQQLQJ´
LQVWLWXWLRQDOPRGHOVDVWKHVRFLDODQGKLVWRULFDOEDFNJURXQGLVGLIIHUHQWIRUHDFKFRXQWU\VHH )5((0$1 >@
5HIHUHQFHV
$%5$+$0 .* $1' 61 +286(0$1 >@ -RE 6HQLRULW\ LQ $PHULFD /HVVRQV IURP *HUPDQ\%URRNLQJV,QVWLWXWLRQ:DVKLQJWRQ'&
%($8'5@³7KH(IIHFWRI,PSOLFLW&RQWUDFWVRQWKH0RYHPHQWRI :DJHV RYHU WKH %XVLQHVV &\FOH (YLGHQFH IURP 0LFUR 'DWD´ -RXUQDO RI 3ROLWLFDO (FRQRP\
%2*$$5'$$9$1'(5 >@&RQILJXULQJWKH(FRQRP\7KH(PHUJHQFHRID0RGHOOLQJ 3UDFWLFHLQ7KH1HWKHUODQGV7KHOD7KHVLV$PVWHUGDP
%221(-$1' $/%29(1%(5* >@³2SWLPDO/DERU7D[DWLRQDQG6HDUFK´'LVFXVVLRQ 3DSHU7LOEXUJ8QLYHUVLW\&HQWHUIRU(FRQRPLF5HVHDUFK
%277(1%85*09$1 >@µ$DQGHQDUEHLG¶,QGH:DQGHOJDQJHQYDQGH6WLFKWLQJYDQGH $UEHLG%HUW%DNNHU$PVWHUGDP
%285',(83>@³)RUPVRI&DSLWDO´SSLQ-*5LFKDUGVRQHG +DQGERRNRI 7KHRU\DQG5HVHDUFKIRUWKH6RFLRORJ\RI(GXFDWLRQ*UHHQZRRG3UHVV:HVWSRUW&7
%29(1%(5*$/>@³2QWKH&XWWLQJ(GJHEHWZHHQ3ROLF\DQG$FDGHPLD&KDOOHQJHV IRU3XEOLF(FRQRPLVWV´'H(FRQRPLVW
%86.(169:>@6RFLDO1HWZRUNVDQG7UXVW7KHVLV8WUHFKW
&$0(5(5 &) >@ ³3URJUHVV LQ %HKDYLRUDO *DPH 7KHRU\´ -RXUQDO RI (FRQRPLF 3HUVSHFWLYHV
$1' 5 + 7+$/(5 >@ ³8OWLPDWXPV 'LFWDWRUV DQG 0DQQHUV´-RXUQDO RI (FRQRPLF 3HUVSHFWLYHV
&2/(0$1-6>@)RXQGDWLRQVRI6RFLDO7KHRU\+DUYDUG8QLYHUVLW\3UHVV&DPEULGJH
'$6*837$3$1' ,6(5$*(/',1 HGV >@6RFLDO&DSLWDOD0XOWLIDFHWHG3HUVSHFWLYH :RUOGEDQN:DVKLQJWRQ'&
'(1 %877(5)$*>@³0DFURHFRQRPLF0RGHOOLQJDQGWKH3ROLF\RI5HVWUDLQWLQ7KH 1HWKHUODQGV´(FRQRPLF0RGHOOLQJ
>@³7KHYDOXHRI&3%¶V$VVHVVPHQWRIWKH(OHFWLRQ3URJUDPPHV´LQ--*UDDIODQG DQG$5RVHGV &DOFXODWHG&KRLFHVWREHSXEOLVKHGE\.OXZHU
DQG &$ +$=(8
>@ ³%HVFKlIWLJXQJ XQG ,QVWLWXWLRQHOOH 5HIRUPHQ LP
1LHGHUOlQGLVFKHQ 3ROGHU0RGHOO 6WUDWHJLVFKH $OWHUQDWLYHQ IU GLH %HLGHQ 1lFKVWHQ
-DKU]HKQWH³ LQ 8 %OLHQ DQG )$* GHQ %XWWHU HGV %HVFKlIWLJXQJVHQWZLFNOXQJ XQG $UEHLWVORVLJNHLW GLH 1LHGHUODQGH XQG 'HXWVFKODQG LP ,QVWLWXWLRQHOOHQ 9HUJOHLFK WR EH SXEOLVKHGE\,QVWLWXWIU$UEHLWVPDUNWXQG%HUXIVIRUVFKXQJ1UQEHUJ
DQG 0 6 025*$1 >@ ³:KDW 0DNHV WKH 0RGHOV3ROLF\ ,QWHUDFWLRQ 6XFFHVVIXO"´ (FRQRPLF0RGHOOLQJ
'21 ) - + >@ ³'H 3RVLWLH YDQ KHW &HQWUDDO 3ODQEXUHDX´(FRQRPLVFK 6WDWLVWLVFKH %HULFKWHQ
)(+5( $1' 6*b&+7(5 >@³)DLUQHVVDQG5HWDOLDWLRQWKH(FRQRPLFVRI5HFLSURFLW\´ -RXUQDORI(FRQRPLF3HUVSHFWLYHV
)5((0$15% >@³:DURIWKH0RGHOV:KLFK/DERXU0DUNHW,QVWLWXWLRQVIRUWKHVW &HQWXU\"´/DERXU(FRQRPLFV
*25'21 ' >@ ³%RVVHV RI 'LIIHUHQW 6WULSHV $ &URVVQDWLRQDO 3HUVSHFWLYH RQ 0RQLWRULQJ DQG 6XSHUYLVLRQ´$PHULFDQ (FRQRPLF 5HYLHZ 3DSHUV 3URFHHGLQJV
*h7+ : 5 6&+0,77%(5*(5 $1' % 6&+:$5=( >@ ³$Q ([SHULPHQWDO $QDO\VLV RI 8OWLPDWXP%DUJDLQLQJ´-RXUQDORI(FRQRPLF%HKDYLRUDQG2UJDQL]DWLRQ
+$572* - >@ ³7KH 1HWKHUODQGV 6R ZKDW¶V VR 6SHFLDO DERXW WKH 'XWFK 0RGHO"´ ,/2 (PSOR\PHQWDQG7UDLQLQJ3DSHUV
+$6+,0272 0 >@ ³)LUPVSHFLILF +XPDQ &DSLWDO DV D 6KDUHG ,QYHVWPHQW´$PHULFDQ (FRQRPLF5HYLHZ
+,56&+ %7 >@ ³)LUP ,QYHVWPHQW %HKDYLRU DQG &ROOHFWLYH %DUJDLQLQJ 6WUDWHJ\´ ,QGXVWULDO5HODWLRQV
+2/0/81' %
$1'
- =(77(5%(5* >@ ³,QVLGHU (IIHFWV LQ :DJH 'HWHUPLQDWLRQ
(YLGHQFHIURP)LYH&RXQWULHV´(XURSHDQ(FRQRPLF5HYLHZ
+26,26 $ - >@ ³2Q WKH (IILFLHQF\ RI 0DWFKLQJ DQG 5HODWHG 0RGHOV RI 6HDUFK DQG 8QHPSOR\PHQW´5HYLHZRI(FRQRPLF6WXGLHV
./$0(5$>@ 9HU]XLOGH'URPHQ-DDU6(58LWJHYHULM%DODQV$PVWHUGDP
.1$&. 6 $1' 3 .(()(5 >@ ³'RHV 6RFLDO &DSLWDO +DYH DQ (FRQRPLF 3D\RII"´ 4XDUWHUO\-RXUQDORI(FRQRPLFV
.12(67(5 $ >@ (FRQRPLVFKH 3ROLWLHN LQ 1HGHUODQG 6WHQIHUW .URHVH /HLGHQ ± $QWZHUSHQ
/$ 3257$5)/23(='(6,/$1(6$6+/(,)(5$1' 5:9,6+1@³7UXVWLQ/DUJH 2UJDQL]DWLRQV´$PHULFDQ(FRQRPLF5HYLHZ3DSHU3URFHHGLQJV
/$@ 8QHPSOR\PHQW 0DFURHFRQRPLF
3HUIRUPDQFHDQGWKH/DERXU0DUNHW2[IRUG8QLYHUVLW\3UHVV2[IRUG
/@³,QWURGXFWLRQ´SSLQ/0/\QFKHG 7UDLQLQJDQGWKH3ULYDWH 6HFWRU&KLFDJR8QLYHUVLW\3UHVV&KLFDJR
0$&/(2' : % $1' - 0 0$/&20621 >@ ³,QYHVWPHQWV+ROGXS DQG WKH )RUP RI 0DUNHW&RQWUDFWV´$PHULFDQ(FRQRPLF5HYLHZ
1227(%220%>@7UXVW)RUPV)RXQGDWLRQV)XQFWLRQVDQG)DLOXUHV(GZDUG(OJDU &KHOWHQKDP
267520 ( >@ ³&ROOHFWLYH $FWLRQ DQG WKH (YROXWLRQ RI 6RFLDO 1RUPV´-RXUQDO RI (FRQRPLF3HUVSHFWLYHV
$1' -:$/.(5 >@³1HLWKHU0DUNHWVQRU6WDWHV/LQNLQJ7UDQVIRUPDWLRQ3URFHVVHVLQ &ROOHFWLYH $FWLRQ $UHQDV´ SS LQ ' & 0XHOOHU HG 3HUVSHFWLYHV RQ 3XEOLF &KRLFH$+DQGERRN&DPEULGJH8QLYHUVLW\3UHVV&DPEULGJH
3871$05'>@0DNLQJ'HPRFUDF\:RUN3ULQFHWRQ8QLYHUVLW\3UHVV3ULQFHWRQ
>@ %RZOLQJ $ORQH WKH &ROODSVH DQG 5HYLYDO RI $PHULFDQ &RPPXQLW\ 6LPRQ DQG 6FKXVWHU1HZ@ &RUSRUDWLVP RU &RPSHWLWLRQ" /DERXU &RQWUDFWV
,QVWLWXWLRQV DQG :DJH 6WUXFWXUHV LQ ,QWHUQDWLRQDO &RPSDULVRQ &DPEULGJH 8QLYHUVLW\ 3UHVV&DPEULGJH
9,66(5 - $1' $ +(0(5,-&. >@ $ 'XWFK 0LUDFOH $PVWHUGDP 8QLYHUVLW\ 3UHVV $PVWHUGDP
:(//,1.$+(0$1'3$'&$9(/$$56 >@³'H2QWZLNNHOLQJYDQGH1HGHUODQGVH (FRQRPLH =LMQ GH 3ROGHULQVWLWXWLHV .ODDU YRRU GH 7RHNRPVW"´SS LQ 5+0- *UDGXVHWDOHGV 1HGHUODQGNHQQLVODQG"6WHQIHUW.URHVH*URQLQJHQ
:,//,$0621 2(>@7KH(FRQRPLF,QVWLWXWLRQVRI&DSLWDOLVP)UHH3UHVV1HZ