World Bank publications

To receive ordering and price information for World Bank publications, contact the World Bank, P.O. Box 960 Herndon, VA 20172, United States, tel.: 703-661-1580, fax: 703-661-1501, email: books@worldbank.org, Internet: http://www.worldbank.org/publications or visit the World Bank InfoShop in the United States, at 701 18th Street, NW, Washington, DC (tel: 202-458-5454).

World Development Indicators 2000 Print Edition 420 pp. and CD-ROM, March 2000.

The CD-ROM edition contains 500 time-series indicators for 206 countries and regional and income groups. It provides definitions, source information, and all the text from the print edition. Users can retrieve data into their own spreadsheet format, export data into many popular formats, save their queries, and create their own maps and graphs.

Voices of the Poor, in three volumes, co-publication of the World Bank and Oxford University Press.

Deepa Narayan, Raj Patel, Kai Schafft, Anne Rademacher, and Sarah Koch-Schulte, Can Anyone Hear Us?, March 2000, 360 pp.

Deepa Narayan, Robert Chambers, Meera Shah, and Patti Petesch, Crying Out for Change, forthcoming, June 2000, approximately 200 pp.

Deepa Narayan and Patti Petesch (editors), From Many Lands, forthcoming, August 2000, approximately 300 pp.

Far more effectively than any previous survey technique, Voices of the Poor provides a detailed picture of the life of the poor and explains the constraints that trap people in poverty. After listening to the destitute in many developing countries and transition economies around the world, the authors conclude that conventional measures of poverty, based on income, education, and health, should also measure empowerment.

World Bank Atlas 2000, forthcoming, April 2000.

The World Bank Atlas 2000 provides easy-to-read world maps, tables, and graphs highlighting key social, economic, and environmental data for 206 economies. The 32nd edition has been updated and improved with new material taken from the World Development Indicators 2000. There are six sections, including Global Links and World View, drawn from the corresponding sections in the World Development Indicators 2000.

The atlas provides the latest measures of purchasing power parities and data on relative prices for countries that participated in the most recent round of the International Comparison Program. Economic data also include gross national products, and for gross domestic products the shares of exports, agriculture, and investment are given. There are also figures on private investment, energy consumption, and population growth.

The Little Data Book 2000, forthcoming, April 2000.

The Little Data Book 2000 is a quick reference for users of the World Development Indicators and others interested in development data. This book presents data for 206 countries in an easy country-by-country reference format. It provides the latest information for World Bank members as well as other countries with populations of more than 30,000. The 13 summary pages of the book cover regional and income group aggregates.

Global Development Finance 2000 (Print edition and CD-ROM). Volume 1, Analysis and Summary Tables, 232 pp. Volume 2, Country Tables. CD-ROM: Single-user version, Spring 2000.

Growth in developing countries is starting to recover from the 1997-99 global financial crisis, but this time on the basis of stronger-than-anticipated and broadening growth in industrial countries , exceptional strength in the recovery of global trade, and the firming of commodity prices. The recovery is based on elements that permit more "self-financing" and a more sustainable path of recovery in developing countries than a selective and volatile recovery in international capital flows. Given the momentum of world recovery, growth forecasts for 2000 are revised upward.

Faster growth of exports, firming export prices, looser financial conditions, and the return of investor confidence should bolster developing country growth over the forecast period. Volume 1 reviews policy options to design and adopt safeguards that may help protect a country from volatile private capital flows. It concludes with a historical overview of the main lessons of a century of booms and busts of private capital flows to emerging markets.

Volume 2 provides statistical data for 137 countries reporting debt under the World Bank Debtor Reporting System and summary data for the country groups. The tables are designed to facilitate cross-country comparison of key statistics, including statistical tables for income and external debt.

Higher Education in Developing Countries: Peril and Promise, February 2000, 136 pp.

Technical Papers

Gloria La Cava and Rafaella Y. Nanetti, Albania: Filling the Vulnerability Gap, TP 460, February 2000, 88 pp.

During Albania’s economic transition, the number of vulnerable people has been swollen by deep social unrest, widespread poverty, uncontrolled migration, and the reemergence of clan-based loyalties. These people are more likely to be marginalized by the economic cycle, making it more difficult to ensure a successful transition. A strategy for social policy should apply a bottom-up approach when dealing with the vulnerable.

Zvi Lerman and Csaba Csaki, Ukraine: Review of Farm Restructuring Experiences, TP 459, January 2000, 80 pp.

Discussion Papers

Marnia Lazreg (editor), Making the Transition Work for Women in Europe and Central Asia, DP 411, January 2000, 120 pp.

John R. Hansen and Diana Cook, Economic Growth with Equity: Ukrainian Perspectives, DP 407, February 2000.

Since Ukraine declared its independence from the Soviet Union in 1991, it has undergone enormous changes on the road to reform. This report discusses the current policies, proposes a new framework for future policies, and makes recommendations for their implementation. It covers agriculture, education, energy, health care, fiscal policy, industry and trade, the shadow economy, and social protection.

The Private Sector and Power Generation in China, DP 406, February 2000, 84 pp.

In the early 1980s the Chinese Government began to ease restrictions on the power industry and encourage private participation in power sector development. This paper comprises the proceedings of a conference in Beijing in June 1999, sponsored by China’s Ministry of Finance and the World Bank and attended by government officials, representatives of provincial power companies, financial institutions, and private investors.

Working Papers

Nauro F. Campos, Institutional Change in Transition Context Is Everything: Measuring Economies, WPS 2269, January 2000, 38 pp.

Campos follows how institutions change with time, and compares institutions in central and eastern European with those in the former Soviet Union. The rule of law emerges as the most important influence on per capita income and school enrollment. For life expectancy, however, the quality of the bureaucracy is the most important. An important conclusion is that institutions do change with time and are by no means as immutable as the literature has suggested. The range of policy choices for changing institutions may be much wider than is often assumed.

To order: Jason Victor, Room MC4-362, tel.: 202-473-6549, fax: 202-522-1158, email: jvictor@worldbank. org. The author may be contacted at nauro.campos@cerge.cuni.cz.

Paul Glewwe, Michele Gragnolati,and Hassan Zaman, Who Gained from Vietnam’s Boom in the 1990s? An Analysis of Poverty and Inequality Trends, WPS 2275, January 2000, 55 pp.

Drawing on the Vietnam Living Standards Surveys for 1992–93 and 1997–98, the authors contend that Vietnam’s gains in poverty reduction were striking in the 1990s. Returns to education increased significantly during this period. Urban white-collar households were more successful at getting out of poverty than rural households. Nearly half of Vietnam’s rural population however, still lives below the poverty line, and poverty rates among ethnic minorities remain very high.

To order: Patricia Sader, Room MC3-556, tel.: 202-473-3902, fax: 202-522-1153, email: psader@worldbankorg. The authors may be contacted at pglewwe@ dept.agecon.umn.edu, mgragnolati @worldbank.org or hzaman@worldbank. org.

Arvind Panagariya, Evaluating the Case for Export Subsidies, WPS 2276, January 2000, 30 pp.

Under perfect competition, a country trying to retaliate against a trading partner’s export subsidies by instituting its own export subsidies will only hurt itself. The argument that export subsidies may be useful for neutralizing import tariffs is spurious. India’s experience shows export subsidies to have little impact on exports. Brazil and Mexico’s experience shows export subsidies to be a costly instrument of export diversification. Those who argue that pro-export interventions were important in East Asia have not provided convincing evidence of a causal relationship between the interventions and growth.

To order: Lili Tabada, Room MC3-333, tel.: 202-473-6896, fax: 202-522-1159, email: ltabada@worldbank.org. The author may be contacted at panagari@ econ.umd.edu.

Nina Budina and Tzvetan Mantchev, Determinants of Bulgarian Brady Bond Prices: An Empirical Assessment, WPS 2277, January 2000, 30 pp.

To order: Nina Budina, Room MC3-353, tel.: 202-458-2045, fax: 202-522-3518, email: nbudina@worldbank.org. Tzvetan Mantchev may be contacted at tmantchev @hotmail.com.

Nina Budina, Harry Garretsen, and Eelke de Jong, Liquidity Constraints and Investment in Transition Economies: The Case of Bulgaria, WPS 278, January 2000, 28 pp.

In Bulgaria and other transition economies, liquidity constraints and hence access to external funds must be seen in the context of soft budget constraints and the financial system’s failure to enforce the efficient allocation of funds. Liquidity constraints in Bulgaria may be seen as a sign of financial weakness.

To order: Nina Budina, Room MC3-353, tel.: 202-458-2045, fax: 202-522-3518, email: nbudina@worldbank.org.The other authors may be contacted at h.garretsen @bw.kun.nl or e.dejong@bw.kun.nl.

Hua Wang and Dale Whittington, Willingness to Pay for Air Quality Improvements in Sofia, Bulgaria, WPS 2280, January 2000, 27 pp.

To order: Roula Yazigi, Room MC2-533, tel: 202-473-7176, fax: 202-522-3230, email: ryazigi@worldbank.org. Hua Wang may be contacted at hwang1@world bank.org.

Hana Polackova Brixi, Sergei Shatalov, and Leila Zlaoui, Managing Fiscal Risk in Bulgaria, WPS 2282, January 2000, 46 pp.

Bulgaria’s Currency Board Arrangement has effectively imposed fiscal discipline, but leaves only limited room to accommodate fiscal shocks that could come from the collection ability of the social security agencies and the government’s environmental liabilities, investment requirements, and possible further involvement in off-budget programs, such as government guarantees.

The following measures are recommended: minimize the currency and interest rate risks in the government liability structures; reform the country’s pension and health care systems; build up adequate contingency reserves; introduce risk-sharing arrangements; prioritize and place strict limits on the amounts of new guaranteed obligations; and develop government capacity to analyze and manage risks.

To order: Leila Zlaoui, Room H4-317, tel.: 202-473-3100, fax: 202-522-2754, email: lzlaoui@worldbank.org. Other authors may be contacted at hpolackova@ worldbank.org or sshatalov@worldbank. org.

Daniela Klingebiel, The Use of Asset Management Companies in the Resolution of Banking Crises: Cross-Country Experience, WPS 2284, February 2000, 52 pp.

Asset management companies have been used to address the overhang of bad debt in a country’s financial system—by expediting corporate restructuring or rapidly disposing of corporate assets. The paper suggests that such companies tend to be ineffective at corporate restructuring and are good at disposing of assets only if there are liquid assets, professional management, political independence, adequate bankruptcy and foreclosure laws, appropriate funding, good information and management systems, and transparent operations and processes.

To order: Rose Vo, room MC9-624, tel.: 202-473-3722, fax.: 202-522-2031, email: hvo1@worldbank.org. The author may be contacted at dklingebiel@world bank.org.

Susmita Dasgupta, Benoît Laplante, Nlandu Mamingi, and Hua Wang, Industrial Environmental Performance in China: The Impact of Inspections, WPS 2285, February 2000, 25 pp.

Inspections have a statistically significant impact on firms’ environmental performance in the Chinese city of Zhenjiang, and citizens’ complaints have a significant impact on inspections. So stronger information and education campaigns may improve social welfare in the city.

To order: Yasmin D’Souza, Room MC2-622, tel.: 202-473-1449, fax: 202-522-3230, email: ydsouza@worldbank.org. The authors may be contacted at sdas gupta@worldbank.org, blaplante@world bank.org, or hwang1@worldbank.org.

Gil Mehrez and Daniel Kaufmann, Transparency, Liberalization, and Banking Crises, WPS 2286, February 2000, 33 pp.

To order: Diane Bouvet, Room J3-273, tel.: 202-473-5818, fax: 202-334-8350, email: dbouvet@worldbank.org. The authors may be contacted at gmehrez@worldbank.org or dkaufmann@worldbank.org.

Raj M. Desai and Itzhak Goldberg, The Vicious Circles of Control: Regional Governments and Insiders in Privatized Russian Enterprises, WPS 2287, February 2000, 23 pp.

How can one account for the behavior of insider managers in Russia, who, in stripping assets from the very firms they own, appear to be stealing from one pocket to fill the other? Desai and Goldberg suggest that such asset stripping and failure to restructure are the consequences of interactions between insiders (manager-owners) and regional governments in a particular property rights regime. In this regime, the ability to realize value is limited by uncertainty and illiquidity, so managers have little incentive to increase value.

As Russia’s central institutions ceded power to the regions, regional governments imposed various distortions on enterprises to protect local employment. Prospective outside investors doubt they can acquire the control they need to restructure firms and doubt they can avoid the distortions regional governments impose. The result is little restructuring and little new investment. Regional governments, knowing the firms’ taxable cash flows are reduced through cash flow diversion, collect revenues in kind.

To disentangle these vicious circles of control, Desai and Goldberg propose a pilot for transforming the ownership of insider-dominated firms by simultaneous tax-debt-for-equity conversion and resale through competitive auctions. The objective is to show regional governments that a more sustainable way to protect employment is to give managers incentives to increase enterprises’ value by transferring effective control to investors.

The proposed mechanism would provide cash benefits to insiders who agree to sell control to outside investors. The increased cash revenue (rather than in-kind or money surrogates) would enable regional governments to finance safety nets for the unemployed and to promote other regional initiatives.

To order: Sophia Cox, Room H6-033, tel.: 202-473-6633, fax: 202-522-0078, email address scox@worldbank.org. The authors may be contacted at desair@ gunet.georgetown.edu or igoldberg@ worldbank.org.

Charles Wyplosz, Ten Years of Transformation: Macroeconomic Lessons, WPS 2288, February 2000, 56 pp.

With hindsight, the old debate—big bang versus gradualism—was really a problem of feasibility, although many of the arguments in favor of the big bang have now been proven right. Once more, inflation has been found to be incompatible with growth and the importance of a good microeconomic structure—especially an effective banking system—has been confirmed. The decline of the state in transition economies is both spectacular and puzzling—with both desirable and dangerous features.

To order: Mani Jandu, Room MC4-386, tel.: 202-473-3103, fax: 202-522-0304, email: mjandu@worldbank.org. The author may be contacted at wyplosz@hei.unige.ch.

Howard J. Shatz and David G. Tarr, Exchange Rate Overvaluation and Trade Protection: Lessons from Experience, WPS 2289, February 2000, 27 pp.

More than half the world’s countries maintain fixed or managed exchange rates. Exchange rate management in many countries has resulted in overvaluation of the real exchange rate. About a quarter of the countries for which data are available have overvalued exchange rates, with black market premiums from 10 percent to more than 100 percent. Defending an overvalued exchange rate with protectionist trade policies would significantly retard the country’s growth and delay its integration into the world trading community. Better to have devaluation occur without debilitating losses in reserves and lost productivity because of import controls.

To order: Lili Tabada, Room MC3-333, tel.: 202-473-6896, fax: 202-522-1159, email: ltabada@worldbank.org. David Tarr may be contacted at dtarr@world bank.org.

Raymond Fisman and Roberta Gatti, Decentralization and Corruption: Evidence across Countries, WPS 2290, February 2000, 18 pp.

To order: Emily Khine, Room MC3-341, tel.: 202-473-7471, fax: 202-522-3518, email: kkhine@worldbank.org. The authors may be contacted at rf250@col umbia.edu or rgatti@worldbank.org.

Jérôme Foulon, Paul Lanoie, and Benoît Laplante, Incentives for Pollution Control: Regulation and Public Disclosure, WPS 2291, February 2000, 31 pp.

To order: Yasmin D’Souza, Room MC2-635, tel.: 202-473-1449, fax: 202-522-3230, email: ydsouza@worldbank.org. Benoît Laplante may be contacted at blaplante@worldbank.org.

Roumeen Islam, Should Capital Flows Be Regulated? A Look at the Issues and Policies, WPS 2293, March 2000, 35 pp.

To order: Roumeen Islam, Room MC4-327, tel.: 202-473-2628, fax: 202-522-1158, email: rislam@worldbank.org.

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IMF Working Papers

To order: IMF Publication Services, 700 19th Street, NW, Washington, DC 20431, United States, tel.: 202-623-7430, fax: 202-623-7201, email: publications@imf.org, Internet: http://www.imf.org.

Mark De Broeck and Vicent R. Koen, The "Soaring Eagle"-—Anatomy of the Polish Take-Off in the 1990s, WP 00/6, 2000.

Torsten Slok, Monetary Policy in Transition—The Case of Mongolia, WP 00/21, 2000.

Thomas Wolf and Emine Gurgen, Improving Governance and Fighting Corruption in the Baltic and CIS Countries— The Role of the IMF, WP 00/1, 2000.

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Bank of Finland Institute for Economies in Transition (BOFIT) Discussion Papers

Terri Ziacik, An Assessment of the Estonian Investment Climate: Results of a Survey of Foreign Investors and Policy Implications, BOFIT DP 3/2000.

Credible economic reform has played a key role in Estonia’s success in attracting significant amounts of foreign direct investment. Analyzing two years of data from a survey of foreign investors in Estonia, the author concludes that the labor force and market-related factors are the primary motivations for investors coming to Estonia, while bureaucracy, corruption, and labor quality are the greatest problems.

Rupinder Singh, Bank Regulation, Compliance and Enforcement, BOFIT DP 2/2000.

Victor Polterovich, Employment-Wage Decisions in the Insider-Owned Firm, BOFIT DP 1/2000.

Ville Kaitila, Trade and Revealed Comparative Advantage: Hungary, the Czech Republic, and the European Union, BOFIT DP 8/1999.

This study analyzes the trade of Hungary and the Czech Republic with their most important trading partner, the European Union, in 1997. The EU accounted for 70 percent of exports and 60 percent of imports in Hungary, and for 60 percent of both in the Czech Republic. Germany is their biggest EU partner, accounting for 45 percent of Hungary’s EU trade and 56 percent of the Czech Republic’s. Austria and Italy are their next two most important partners.

The most important goods are machines, electrical equipment, vehicles, and vehicle parts, all traded in both directions. The Czech Republic and Hungary are both, for example, deeply involved in the European car industry. Therefore much of their business with the EU—57 percent and 45 percent respectively—consists of a Czech or Hungarian industry trading with its European counterpart.

Hungary’s exports to the EU seem to be based more on human-capital intensive medium- to high-technology products while those of the Czech Republic are more labor intensive. The Czech car industry, however, is strong. The structure of both countries’ revealed comparative advantage is wide, which protects them from shocks in any one sector.

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Centre for Economic Policy Research (CEPR) Discussion Papers

Constantin Sonin, Inequality, Property Rights Protection, and Economic Growth in Transition Economies: Theory and Russian Evidence, DP 2300, November 1999.

Daniel Münich, Jan Svejnar, and Katherine Terrell, Returns to Human Capital Under the Communist Wage Grid and During the Transition to a Market Economy, DP 2332, December 1999.

Under communism, workers had their wages set according to a centrally-determined wage grid that maintained an extremely low rate of return on education. Following the system change, the return increased dramatically and equally in all ownership categories. Contrary to earlier studies, inter-industry wage structure changed substantially between 1989 and 1996.

Guido Friebel and Sergei M. Guriev, Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments, DP 2368, January 2000.

Workers who receive in-kind payments are less likely to move than workers who are paid in cash, because they cannot raise the money to move in search of better jobs. Firms tend to exploit workers whose options they have eliminated. Surprisingly, this happens even in regions where a number of firms compete for labor, because all the firms may use attachment strategies. Their workers receive no compensation for their foregone option to move.

Peter Bofinger and Timo Wollmershaeuser, Options for the Exchange Rate Policies of the EU Accession Countries (and Other Emerging Market Economies), DP 2379, February 2000.

Tito Boeri, Optimal Speed of Transition 10 Years After, DP 2384, February 2000.

Stefano Manzocchi and Gianmarco Ottaviano, Outsiders in Economic Integration: The Case of a Transition Economy, DP 2385, February 2000.

Jürgen von Hagen and Rolf Strauch, East Germany: Transition With Unification—Experiments and Experiences, DP 2386, February 2000.

German Union meant the extension of West Germany’s legal, administrative, and economic infrastructure to the five new Länder. The paper traces the economic changes since 1989 and assesses the convergence between West and East Germany during the last decade. Its three main conclusions:

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CASE-CEU Publications

To order: Center for Social and Economic Research, ul. Bagatela 14, 00-585 Warsaw, Poland, tel.: 4822-628-0912, fax: 4822-628-6581, email: case@case.com.pl, and Open Society Institute-Regional Publishing Center, 1051 Budapest, Oktober 6 u. 12, Hungary, tel.: 361-327-3014, fax: 361-327-3042.

Lucjan T. Orlowski, The Development of Financial Markets in Poland, 1999, 32 pp.

Andrzej Baniak, Unilateral Spillovers Between East and West and Quality Competition, 1999, 27 pp.

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Centre for the Study of Public Policy (CSPP)

To order: CSPP, University of Strathclyde, Livingstone Tower 26 Richmond Street, Glasgow G1 1XH, Scotland, tel. 44-141-548-3217, fax.: 44-141-552-4711.

Richard Rose, Young People in Politics: A Multi-Continental Survey, SPP 316, 1999.

While government today is in the hands of middle-aged and older people, young people of today will become voters tomorrow. This paper compares the political attitudes and behavior of young, middle-aged, and older people in more than 40 new democracies across western Europe, eastern Europe, and Latin America. It is based on unique surveys of the New Democracies and New Russia Barometer, the Latinorbarometer, and the European Commission’s survey of voting for the European Parliament. The results show that all age groups usually support democracy and reject undemocratic alternatives. Insofar as there are differences between social groups, economic prosperity and level of education are more important than age.

Richard Rose, What Does Social Capital Add to Individual Welfare? An Empirical Analysis of Russia, SPP 318, 1999.

Survey-based data about social capital networks in Russia indicate that in some circumstances they do produce some increase in individual welfare. However social capital should not be analyzed in isolation but as part of a portfolio of resources that individuals use to secure welfare.

Claire Wallace, Xenophobia in Post-Communist Europe, SPP 323, 1999.

This study of xenophobia is based on New Democracies Barometer V, a survey in Spring 1998 of Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Croatia, the Federal Republic of Yugoslavia, Bulgaria, Romania, Ukraine, and Belarus. Xenophobic attitudes were particularly strong in Hungary, Poland, the Czech Republic, and Slovakia. This may be a response to increasing immigration since the transition from Communism and their role as a migration "buffer zone" between East and West. Xenophobia was stronger among older people and those with low education. People who are xenophobic feel threatened by international powers—Russia, Germany, and the United States—as well as by internal minorities and migrants. Xenophobia is also associated with distrust of democratic institutions and reform regimes. Xenophobes are also likely to support authoritarian political alternatives. Xenophobia is strongly associated with national pride and with resistance to multiculturalism. Xenophobes prefer assimilation for minorities and rejection of international integration, seeing citizenship as inherited with nationality rather than based on place of birth.

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Innocenti Occasional Papers, UNICEF

To order: Innocenti Occasional Papers, UNICEF International Child Development Centre, Piazza Santissima Annuziata, 12, 50122, Florence, Italy, tel.: 39-055-20330, fax.: 39055-244-817, e-mail: ciusco@unicef-icdc.it, Internet: www.unicef-icdc.org

Bruce Bradbury and Markus Jantti, Child Poverty Across Industrialized Nations, Economic and Social Policy Series (EPS) 71, September 1999, 85 pp.

John Flemming and John Micklewright, Income Distribution, Economic Systems and Transition, EPS 70, May 1999, 94 pp.

The picture during transition, like that under socialism, is varied. Russia has experienced very sharp increases in measured inequality to well above the top of the OECD range. The Czech Republic, Hungary, and Poland have seen more modest rises.

John Micklewirght and Kitty Steward, Is Child Welfare Converging in the European Union?, EPS 69, June 1999, 129 pp.

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Macmillan Press Publications

To order: Fiona Woodruffe-Peacock, Macmillan Press, Houndmills, Basing-stoke, RG21 6XS, United Kingdom, fax.: 01256-330688, e-mail: f.woodruffe-peacock@macmillan.co.uk

Irwin Collier, Herwig Roggemann, Oliver Scholz, and Horst Tomann (editors), Welfare States in Transition, February 1999, 224 pp.

Hubert Gabrisch and Rudiger Pohl (editors), EU Enlargement and Its Macroeconomic Effects in Eastern Europe: Currencies, Prices, Investment and Competitiveness, January 1999, 256 pp.

Emil J. Kirchner (editor), Decentralization and Transition in the Visegrad: Poland, Hungary, the Czech Republic and Slovakia, May 1999, 256 pp.

Gregg S. Robins, Banking in Transition East Germany after Unification, December 1999, 272 pp.

Eckehard Rosenbaum, Frank Bonker, and Hans-Jurgen Wagener, Privatization, Corporate Governance and the Emergence of Markets, December 1999, 304 pp.

Johannes Stephan, Economic Transition in Hungary and East Germany, February 1999, 312 pp.

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Other Publications

King Banaian, The Ukrainian Economy Since Independence, Studies of Communism in Transition, Edward Elgar, United States, 1999, 173 pp.

If the cure for the Ukrainian economy is to be treatment rather than trauma, a few lessons seem to be available to guide reformers. First, a sequencing of reforms that was appropriate at the outset of transition is quite possibly not appropriate after transition has muddled along for several years. The losers from transition are by this time unlikely to be overwhelmed by a rush of reforms along all three fronts, as occurred in the shock therapies in central Europe. They have proven themselves willing to endure much to fight over the share of transformation’s costs that they will pay. By this time their positions are entrenched and reinforced. The time for shock therapy, then, has long passed.

Second, those who resist reforms may be willing to accept a degree of stabilization that gives the illusion that the reform process has started. Inflation alone will cause a transition to fail, but its relative absence will not alone cause a transition to succeed. If one can make a good case for Western donors’ reluctance to lend to Ukraine it is the recognition that the problem is no longer stabilization. The National Bank of Ukraine, for instance, is fully pledged to financial reforms and would not wish to turn back to hyperinflation even if the IMF never lent it another dollar. The problem for the IMF is that its most cost-effective operations are those involving reform of central banks. Changing attitudes toward monopoly and free prices is not a job to which it is well suited. Yet that is the problem it now must face if it still wishes to help Ukraine.

Third, attitudes change only slowly, and some attitudes toward a market economy have been gravely damaged by corruption. By privatizing slowly and favoring managerial/worker buyouts (particularly for enterprises desired by the various clans) the government has exposed itself to criticism of the whole concept of private enterprise. This has provided the left with leverage to slow and harass the privatization process. But 55 percent of state-owned enterprises still operated at a loss at the end of 1998, producing goods without markets, and thus relying on barter and arrears to finance their operations. Moving forward on privatization from here must mean redress of the issue of fairness in distribution of state property.

Last, if the shadow economy is as large as estimated, growth could be restored by bringing it out of the shadow. Oleg Soskin argues that the way to a new Ukraine is to bring a healthy shadow economy out by lowering taxes and clearing arrears using national debt. But tax holidays are only one aspect of bringing firms out of the shadows. The shadow market has operated effectively without access to formal credit markets. Creating effective private credit markets that provide equal access to private and state borrowers is a critical component of enterprise reform. Another is abolition of pricing boards that govern what firms can charge for goods and services.

Whether or not these treatments are taken, Ukraine will retain the attention of economists and political and other social scientists in years to come. A country as large and populous as France, Ukraine sits at a historical crossroad.

To order: Edward Elgar Publishing, 136 West Street, Suite 202, Northampton, Massachusetts 01060, United States, tel.: 413-584-5551, fax.: 413-584-9933, e-mail: rhenning@e-elgar.com, Internet: http://www.e-elgar.co.uk

Giuseppe Casale (editor), Social Dialogue in Central and Eastern Europe, International Labour Office, Hungary, 1999, 343 pp.

To order: International Labour Office, CH-1211 Geneva 22, Switzerland.

Petr Chadraba and Reiner Springer (editors), Proceedings of the 7th Annual Conference on Marketing Strategies for Central and Eastern Europe, December 1-3, 1999, Vienna, Austria.

To order: Gertrude.Seidelmann@wu-wien.ac.at

Cuba in Transition—Volume 9, 1999.

To order: ASCE Books, PO Box 7372, Silver Spring, Maryland 20907-7372, United States tel./fax.: 301-587-1664, e-mail: jalonso@erols.com.

Joze Pavlic Damijan, Efficiency of Free Trade Agreements: Did the Reduction of Trade Barriers Have Any Effect on Increasing Trade Between Slovenia and the CEFTA Countries?, Working Paper No. 4, 1999, 19 pp.

Trade liberalization as part of the Central European Free Trade Agreement did not have any direct impact on expansion of two-way trade. Increase of Slovenian exports to its CEFTA partners occurred independently of the agreement. Imports from these countries would have increased even if Slovenia had not entered into the agreement. With the imposition of barriers on trade with the former Yugoslav republics and the near complete suspension of bilateral trade that followed, Slovenia redirected its imports to the cost-effective markets of CEFTA countries.

To order: Institute for Economic Research, Kardeljeva pl. 17, 1000 Ljubljana, Slovenia, tel.: 061-1328-151, fax: 061-342-760, email: recnikm@ier.si, Internet: http://www.ier.si/

Fiscal Transition in Kazakhstan, Asian Development Bank, Philippines, February 1999, 367 pp.

This book evaluates several closely related aspects of fiscal transition in Kazakhstan, namely: tax reform, budgeting, and reform of intergovernmental fiscal relations. In tax reform, Kazakhstan has made more progress than other former Soviet states. The new tax code, which became effective on July 1, 1995, is comprehensive, modern, and investor-friendly. By comparison, budgeting and intergovernmental fiscal relations have hardly advanced beyond the Soviet system. Expenditure assignment is not specified by law. The budgetary system deprives district governments of control over the level and composition of public expenditures. It is inadequate for planning, monitoring expenditures, and evaluating performance.

The system of tax sharing lacks transparency, simplicity, and logic; both the assignment of taxes among districts and sharing rates set for regulating taxes are essentially irrelevant. Budgetary officials, both central and district, are under constant pressure to increase budgetary allocations to lower-level governments. The book contains specific proposals on expenditure assignment, formulation, and execution, and further control, audit, and evaluation of the budgetary process.

To order: Asian Development Bank, P.O. Box 789, 0980 Manila, Philippines.

Zoltan Hermann, Tamas M. Horvath, Gabor Peteri, and Gabor Ungvari, Allocation of Local Government Functions: Criteria and Conditions: Analysis and Policy Proposals for Hungary, FDICEE, 1999, 17pp.

Colin Lawson, Allister McGregor and Douglas Saltmarshe, Surviving and Thriving: Differentiation in a Peri-urban Community in Northern Albania, Occasional Paper 12, European Research Institute, United Kingdom, 1999, 37 pp.

Moldova in Transition: Economic Survey, Center for Strategic Studies and Reforms 4, 1999, 136 pp.

Many transition countries, including Moldova, had the illusion that it was possible to effectively combine, during the transition period, socialist paternalism (statism) with market self-regulation. The weakness of the state and the low level of political consent in Moldovan society did not allow the state to implement reforms. In particular, the state proved incapable of timely structural reforms, collecting taxes, or providing social support to the needy. The property reform, based on rapid voucher-privatization, was supposed to grant everybody "equal starting opportunities." In reality, it did little more than turn poor-quality assets over to a large number of poor owners and channel high-quality assets to the "agile and connected."

The populist privatization method and the slow pace of reform in the agro-industrial sector inhibited the emergence of "real owners" and good corporate governance. This in turn damped the export and employment potential of the real sector. On the macroeconomic front, the efforts to reduce inflation and the state budget deficit were not sustainable. Much of the success attained by Moldova by the mid-1990s in the area of macroeconomic stability was reversed by the 1998 financial crisis in Russia. At present, there is a critical shortage of state funds for the support of public services, particularly primary health care and basic education.

Noncompliance with the law has also led to the state’s inability to rein in the underground economy, which has greatly expanded , and now represents 50 percent of GDP. It has led to a vicious circle of corruption, hidden firm activity, reduced public revenues, and a dramatic increase of income inequality. Corruption and poverty are the two sides of the same coin. Corruption stifles private economic initiative and entrepreneurship.

To order: Center for Strategic Studies and Reforms, Str. Sfatul Tarii 27, Chisinau, Republic of Moldova, MD-2012, tel. 3732-237-116, fax.: 3732-237-104, email: cisr@un.md, Internet: http://cisr.home-page.org

Vedran Sosic and Michael Faulend, Is Unofficial Economy a Source of Corruption? Occasional Paper 9, November 1999, 19.

To order: Institute of Public Finance, Katanciceva 5, 10000 Zagreb, Croatia, tel.: 385-1481-9363, fax: 385-1481-9365, email: ured@ijf.hr.

Gao Shangquan, Two Decades of Reform in China, World Scientific, Hong Kong, 1999, 311 pp.

In setting up a socialist market economy, it is necessary to draw on the market economies’ successful experience and take into account the laws of modern economics. In a socialist market economy, all commodities and production factors go to the market and the market mechanism plays a basic role in the allocation of resources. Where interests conflict, property rights are clearly defined. Enterprises compete in the market and their managers are responsible solely for profit and loss. Further, it is necessary to establish a social security system in China that supports the unemployed, the elderly, and the sick, that avoids waste and overstaffing, and that is separate from the government administration.

To order: World Scientific Publishing Co., Ltd., P.O. Box 128, Farrer Road, Singapore 912805.

Stephen Wegren, Agriculture and the State in Soviet and Post-Soviet Russia, University of Pittsburgh Press, 1999.

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Special Publications

Tito Boeri, Michael C. Burda, and Janos Kollo, Mediating the Transition: Labour Markets in Central and Eastern Europe, Forum Report of the Economic Policy Initiative, Institute for EastWest Studies, United States, 1999, 135 pp.