Stephen S. Everhart and Robert Duval-Hernandez, Leading Indicator Project: Lithuania, WPS 2365, June 2000, 18 pp.

To order: Michael Geller, Room I4-142, tel.: 202-458-5155, fax: 202-522-2019, email: mgeller@worldbank.org.

Harry G. Broadman and Francesca Recanatini, Seeds of Corruption: Do Market Institutions Matter? WPS 2368, June 2000, 31 pp.

Ten years into the transition, corruption is so pervasive that it could jeopardize the best-intentioned reform efforts. The authors provide preliminary evidence on the link between the development of market institutions and incentives for corruption. They highlight three statistically significant indicators: the intensity of barriers to the entry of new business, the effectiveness of the legal system, and the efficacy and competitiveness of services provided by infrastructure monopolies. A well-established system of market institutions, clear and transparent rules, fully functioning checks and balances (including strong enforcement mechanisms), and a robust competitive environment reduce opportunities for rent-seeking and hence incentives for corruption.

Simeon Djankov and Caroline Freund, Disintegration and Trade Flows: Evidence from the Former Soviet Union, WPS 2378, June 2000, 28 pp.

Patrick Belser, Vietnam: On the Road to Labor-Intensive Growth? WPS 2389, July 2000, 38 pp.

Monica Fong and Michael Lokshin, Child Care and Women’s Labor Force Participation in Romania, WPS 2400, July 2000, 30 pp.

Romanian mothers compare the price of child care with the potential market wage before deciding whether to stay at home or take a job and use out-of-home care. Reducing the cost of child care would increase the number of mothers in the labor force, reducing poverty in some households.

Paul Collier and David Dollar, Can the World Cut Poverty in Half? How Policy Reform and Effective Aid Can Meet International Development Goals, WPS 2403, July 2000, 50 pp.

Poverty in the developing world will decline by roughly half by 2015 if current growth trends and policies persist. But a disproportionate share of poverty reduction will occur in East and South Asia; poverty will decline only slightly in Sub-Saharan Africa, and it will increase in Eastern Europe and Central Asia. What can be done to change this picture? More effective development aid could greatly improve poverty reduction; even more potent would be significant policy reform in the countries themselves. A high level of aid to strong reformers may increase the likelihood of sustained good policy. Much more poverty reduction could be achieved by allocating aid on the basis of how poor countries are as well as on the basis of the quality of their policies.

Shang-Jin Wei, Natural Openness and Good Government, WPS 2411, August 2000, 29 pp.

If corruption and bad governance reduce international trade and investment more than domestic trade and investment, a naturally more open economy (as determined by its size, geography, and language) would devote more resources to building good institutions and would display less corruption in equilibrium. As globalization deepens, the natural openness of all countries increases, raising the opportunity cost of tolerating a given level of corruption and possibly providing new impetus for countries to fight corruption.

James Markusen, Thomas F. Rutherford, and David Tarr, Foreign Direct Investment in Services and the Domestic Market for Expertise, WPS 2413, August 2000, 45 pp.

Dimitri Vittas, Pension Reform and Capital Market Development "Feasibility" and "Impact" Preconditions, WPS 2414, August 2000, 22 pp.

Ian Alexander and Antonio Estache, Infrastructure Restructuring and Re-gulation: Building a Base for Sus- tainable Growth, WPS 2415, August 2000, 28 pp.

Monika Queisser and Dimitri Vittas, The Swiss Multi-Pillar Pension System: Triumph of Common Sense? WPS 2416, August 2000, 83 pp.

David Ellerman, The Indirect Approach, WPS 2417, August 2000, 36 pp.

Cevdet Denizer and Holger C. Wolf, The Savings Collapse During the Transition in Eastern Europe, WPS 2419, August 2000, 13 pp.

Anticorruption in Transition: Confronting the Challenge of State Capture, September 2000, 136 pp.

This report examines corruption in the transition economies, analyzing its potential repercussions on each country’s strategy. It distinguishes between state capture and administrative corruption, proposing strategies with which to prevent both.

Simeon Djankov and Peter Murrell, The Determinants of Enterprise Restructuring in Transition: An Assessment of the Evidence, September 2000, 48 pp.

Over the past decade, more than 150,000 large enterprises in 27 transition economies have undergone revolutionary changes in their political and economic environments. Some enterprises have responded to the challenge, others have not. To assess the effectiveness of the different reform and privatization strategies, this study examines enterprise-level data, including the degree of economic restructuring at state-owned and private firms, the role of managers, and the effect of government’s support to enterprises in distress.

From Commissars to Mayors: Cities in the Transition Economies, September, 2000, 48 pp.

Hidden Challenges to Education Systems in Transition Economies, September, 2000, 144 pp.

Strategies required to change the education system in the transition economies include realigning education systems with market economies and open societies; combating poverty by increasing educational fairness; providing financing for sustainability, quality, and fairness; spending resources more efficiently, and improving governance, management, and accountability.

Maintaining Utility Services for the Poor: Policies and Practices in Central and Eastern Europe and the Former Soviet Union, September, 2000, 80 pp.

Before the dissolution of the communist state, utility prices were driven by political priorities in Central and Eastern Europe and the former Soviet Union. Utility prices were kept artificially low until the early 1990s. When these price subsidies became unaffordable, one government after another decided to bring residential tariffs closer to supply costs. The resulting price adjustment process, however, turned out to be more painful than originally expected. The required increase in the prices of utility services coincided with a decline in household income: paying utility bills became a major challenge for the rapidly growing army of poor households. By the mid-1990s, utility companies started to experiment with various subsidy schemes aimed at low-income households. To help decisionmakers choose the mechanism best suited to their specific needs and priorities, this volume provides a conceptual framework and methodology for evaluating utility subsidy mechanisms. It also presents the results of applying this methodology in Poland and the Russian Federation.

Marjory-Anne Broomhead and Stephanie Abdulin, Natural Resources Management Strategy: Eastern Europe and Central Asia, September 2000, 136 pp.

Making Transition Work for Everyone: Poverty and Inequality in Europe and Central Asia, September, 2000, 524 pp.

Governments could reduce poverty and stem the increase in inequality by enhancing income-generating opportunities for all citizens, providing greater security by reforming safety nets and social insurance programs, and empowering the poor through institution building, at both the official and the community level.

Dena Ringold, Roma and the Transition in Central and Eastern Europe: Trends and Challenges, September, 2000, pp. 66.

Csaba Csaki and Laura Tuck, Rural Development Strategy: Eastern Europe and Central Asia, Technical Paper No. 484, September, 2000, 60 pp.

The transition process in agriculture is far more complex than originally envisaged by either the countries themselves or the international community, including the World Bank. Increased social problems and the alarming growth of poverty have added a new, unexpected dimension to the transition process. The region’s rural economy is still struggling to adjust to new economic realities, a problem that will require further adjustment of the Bank’s approach. This volume summarizes the revised World Bank assistance strategy for rural development in the region.

Rural, Environment and Social Development Strategies for the Europe and Central Asia Region, September, 2000, 80 pp.

Maureen Lewis, Who Is Paying for Health Care in Europe and Central Asia? September, 2000, 48 pp.

Informal payments in the health sector in Eastern Europe and Central Asia are a fundamental aspect of health care financing and a major impediment to health care reform. Private payments to public doctors, nurses, and other health care personnel represent an informal market for health care, outside the financial controls, policy rubric, and audits of national health care systems. This paper spells out the policy implications and proposes possible strategies for addressing the problem.

Neil Gregory, Stoyan Tenev, and Dileep M. Wagle, China’s Emerging Private Enterprises: Prospects for the New Century, September 2000, 88 pp.

Sanjeev Gupta, Hamid Davoodi, and Erwin Tiongson, Corruption and the Provision of Health Care and Education Services, WP/00/116, June 2000, 33 pp.

Armando Morales, Czech Koruna and Polish Zloty Currency Options: Information Content and EU-Accession Implications, WP 00/91, May 1, 2000, 52 pp.

Anuradha Dayal-Gulati and M. Aasim Husain, Centripetal Forces in China’s Economic Take-Off , WP 00/86, June 14, 2000.

Gonzalo Pastor and Ron van Rooden, Turkmenistan: The Burden of Current Agricultural Policies, WP 00/98, June 1, 2000.

Grzegorz Kolodko, Globalization and Catching-Up: From Recession to Growth in Transition Economies, WP 00/100, June 1, 2000.

Peter F. Christoffersen and Torsten Slok, Do Asset Prices in Transition Countries Contain Information about Future Economic Activity? WP 00/103, June 1, 2000, 26 pp.

Vito Tanzi and George C. Tsibouris, Fiscal Reform over Ten Years of Transition, WP 00/113, June 1, 2000.

Michael Keane and Eswar Prasad, Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland, WP 00/117, June 1, 2000, 52 pp.

Ke-young Chu, Hamid Davoodi, and Sanjeev Gupta, Income Distribution and Tax and Government Social Spending Policies in Developing Countries, WP/00/62, March, 2000.

This paper reviews income distribution in developing countries and transition economies in recent decades. Although their before-tax income distribution is less unequal than in industrial countries, developing countries have not been able to use tax and transfer policies effectively to reduce income inequality, which rose in many of these economies during the 1980s and 1990s. Health care and primary and secondary education programs are not well targeted.The authors may be contacted at kchu@imf.org, hdavoodi@imf.org, or sgupta@imf.org.

Katarzyna Zawalinska, Asset and Liability Management, The Institutional Approach to ALM by Commercial Banks in Poland: A Special Focus on Risk Management, No. 185, 2000, 44 pp.

Lubomira Anastassova, Institutional Arrangements of Currency Boards: Comparative Macroeconomic Analysis, No. 200, 1999, 40 pp. Malgorzata Jakubiak, Design and Operation of Existing Currency Board Arrangements, No. 203, 2000, 22 pp.

Polish Economic Outlook, Trends, Analyses, and Forecasts: Quarterly Publication, January 2000, 62 pp.

J. David Brown and John S. Earle, Competition and Firm Performance: Lessons from Russia, No. 2444, May 2000, 32 pp.

Sergei Guriev and Dmitry Kvassov, Barter for Price Discrimination? No. 2449, May 2000, 34 pp.

Vivek H. Dehejia and Douglas D. Dwyer, Output and Unemployment Dynamics in Transition, No. 2450, May 2000, 24 pp.

Philippe Aghion and Mark Schankerman, A Model of Market-Enhancing Infrastructure, No. 2462, May 2000, 28 pp.

Ariane Lambert-Mogiliansky, Constantin Sonin, and Ekaterina Zhuravskaya, Capture of Bankruptcy: Theory and Evidence from Russia, No. 2488, June 2000, 40 pp.

I.I. Korchagina, L.N. Ovcharova, and E.V. Turuntsev, Indicators of Poverty in Transitional Russia, No. 98/04, 2000, 54 pp.

Solomon Movshovich, Galina Krupenina, and Maria Bogdanova, The Marginal Excess Burden of Taxes in the Russian Transition, No. 98/05, 2000, 22 pp.

Irina Denisova, Credit Channel of Monetary Transmission: The Role of Industrial Interenterprise Arrears, No. 99/12, 2000, 51 pp.

Oksana Dynnikova, Real Appreciation and Output: Russia 1993–1997, No. 99/13, 2000, 55 pp.

Yuri Perevalov, Iiya Gimadi, and Vladimir Dobredey, Analysis of the Impact of Privatization on the Performance of Medium and Large-Size Industrial Enterprises in Russia, No. 2K/01, 2000, 81 pp.

Satu Kahkonen and Anthony Lanyi, eds., Institutions, Incentives, and Economic Reforms in India, Sage Publications, 2000, 516 pp.

Economic growth and development cannot be achieved simply by barring government interference in the economy. In several areas—including privatization, fiscal policy, agriculture, labor policy, and financial sector development—reform should overcome institutional factors and incentives that impede development. Areas that require attention include the relations between the center and states and their impact on policy; the poor incentive structures faced by both taxpayers and government officials; inadequate coordination among different levels of government, which results in the poor delivery of services; outdated marketing strategies, which impede agricultural growth; and the operations of the financial and labor markets.

Enrico C. Perotti and Stanislav Gelfer, Red Barons or Robber Barons? Governance and Financing in Russian Financial-Industrial Groups, University of Amsterdam, Netherlands, July 2000, 19 pp.

This study examines the governance role of Russia’s financial-industrial groups and their impact on the allocation of capital. It compares firms that belong to groups with a control set of firms in which ownership is dispersed or managers and employees are in control. It distinguishes between hierarchical financial-industrial groups, in which a bank is in firm control, and industry groups, which are looser alliances without a common control structure. Investment is sensitive to internal finance for independent firms and firms that belong to industry groups: the worse the internal financial situation, the less they will invest in branch companies. In contrast, in bank-led group firms, the correlation between the internal financial situation and investment is negative, suggesting extensive financial reallocation and the use of profitable firms as cash cows.The authors conclude that hierarchical group firms allocate capital better than other firms, presumably because the controlling bank has a stronger profit motive and authority. However, controlling shareholders often appropriate value.

Daniel Piazolo, Eastern Europe between Transition and Accession: An Analysis of Reform Requirements, Kiel Working Paper No. 991, Kiel Institute of World Economics, 2000.

Requirements for the transition toward a market economy overlap with the requirements for EU accession. The acceding transition economies still have substantial reform tasks ahead of them. Expanding EU membership also requires significant reforms within the EU to reduce the danger of standstill for European policymaking.

To order: Daniel Piazolo, Kiel Institute of World Economics, Duesternbrooker Weg 120, 24105 Kiel, Germany, fax: 49-431-8814-500, email: dpiazolo@ifw.uni-kiel.de, Web site: http://www.uni-kiel.de/IfW/pub/kap/2000/kap991.htm

Raymond Struyk and Sharon Cooley, Regional Economic Development in Eastern Europe: An Example from Poland, Urban Institute, Washington DC, July 2000, 32 pp.

Increasingly, small cities and towns are being recognized as key players in creating sustained economic development in Eastern Europe. Whether they are able to execute this central role will depend on their ability to undertake essential investments—which in turn requires the availability of finance and the strengthening of local administrative capacity.

This paper describes a series of actions—based on lessons learned in the EU and elsewhere—for promoting regional growth. Together these actions constitute a coherent program that national governments can undertake to improve the absorptive capacity of smaller local governments and the attractiveness of these communities for private investment. A communal credit program could be adopted throughout the region. The program consists of three closely related and mutually reinforcing elements: project preparation facilities, bond financing facilities, and matching grants for priority projects.

Philip Hanson and Michael Bradshaw, eds., Regional Economic Change in Russia, Edward Elgar Publishing, London, August 2000, 320 pp.

Is the Russian Federation a single economic area? Why are regional economic inequalities increasing? Are there significant regional differences in the economic regime? What influence do leaders have in their own regions and on federal economic policies? To what extent do central policymakers affect regional outcomes? How are Russian regions affected by their new openness to foreign trade and investment?

Based on research carried out by an international and interdisciplinary group of experts, this book examines these questions through case studies of eight regions and analysis of data from Russia’s 77 main administrative regions. It shows that regional average real income levels are still diverging, and that intraregional real income inequalities are even greater than differences between regions. The federal government is exerting little influence to reduce these inequalities: the scale of net transfers has been small and their effects weak. The study concludes that initial conditions have been a dominant factor in accounting for income differences across regions.

Clemens Schutte, Privatization and Corporate Control in the Czech Republic, Studies in Comparative Economic Systems, Edward Elgar Publishing, London, August 2000, 322 pp.

This book identifies the central problems with the Czech approach to privatization. First, the largest and most powerful strategic state enterprises were excluded from the program. Second, foreign direct investors, who were required to draft projects based on estimated current values, were at a disadvantage relative to domestic investors, who were permitted to draft projects based on book value. Third, privatization of the state banks was postponed. As a result, the banks did not adopt efficiency-oriented policies. Fourth, the sequencing of reforms was poorly planned: although privatization took place quickly, other institutional measures, such as the supervision and regulation of banks and capital markets, were adopted too slowly.

Boris Pleskovic, Anders Aslund, William Bader, and Robert Campbell, State of Arts in Economics Education and Research in Transition Economics, Comparative Economic Studies, Vol. 42, No. 2, Summer 2000, 65-108 pp.

To take an active role in the transition process, economic policymakers, business leaders, and government officials need a thorough grounding in market-based economics. This article describes five centers of excellence—the Central European University (Budapest), the Centre for Economic Research and Graduate Education (Prague), the New Economic School and the Economic Education and Research Consortium (Moscow), and the Economic Education and Research Consortium Master’s degree program (Kyiv)—that could serve as models for teaching and research in the Caucasus, Central Asia, and Southeast Europe.

Jens Hölscher, Financial Turbulence and Capital Markets in Transition Economies, Studies in Economic Transition, Palgrave Publishers Ltd., London, September 2000, 224 pp.

This book analyzes the policy responses of the Czech Republic, Hungary, Poland, and the Russian Federation to global financial turbulence.

World Disasters Report 2000: Focus on Public Health Disasters, International Federation of the Red Cross and Red Crescent Societies, Geneva, 2000, 240 pp., Web site: http://www.ifrc.org/.