Social inequality in the former Soviet republic of Moldova is comparable to that in Latin America, and poverty is still on the rise, notes Ruslan Yemtsov, Senior Economist at the Poverty Reduction and Economic Management Sector Unit of the World Bank. The Gini coefficient, a measure of income inequality, rose by a factor of 1.7 between 1990 and 1999, reaching 44.1 percent in 1999. In 1999 the revenues of the richest quartile of the population were 11 times those of the poorest. That figure fell to 10 during the first quarter of 2000. The poor account for just 4.5 percent of total revenues, while the rich account for 49.0 percent. Among the former Soviet republics the gap between rich and poor is largest in Armenia, Kyrgyzstan, Moldova, and the Russian Federation.

Assessments of the vulnerabilities and development needs of the financial sectors of the 36 countries targeted in the initial phases of a joint World Bank and IMF program are likely to be completed by the middle of 2001, according to Gerard Caprio, director of the Bank’s Financial Sector Strategy and Policy Group. As part of the Financial Sector Assessment Program, teams of financial sector specialists from the World Bank, the IMF, and cooperating national and international bodies perform detailed analyses of banking systems, a broad array of other financial institutions and markets, and financial infrastructure.

The program, begun partly in response to the international financial crises of 1997 and 1998, and partly to facilitate closer collaboration between the World Bank and the IMF in their financial sector monitoring and analysis. Over time, the program will include virtually all industrial economies and emerging markets. Twelve countries, including Estonia, Hungary, and Kazakhstan, were covered in the pilot phase; assessment of another 24 countries is underway or planned for the current fiscal year.

Corruption acts as a strong deterrent to foreign direct investment and forces investors to form joint ventures with local companies, according to a recent World Bank study. In fact, it may be as important to foreign investors as variations in labor costs or corporate tax rates. By placing a premium on local knowledge and the ability to bypass local bureaucracy, it may discourage high-technology companies from investing overseas, since businesses with more complex outputs tend to want to retain full control over production processes.

The study, "Corruption and Composition of Foreign Direct Investment: Firm-Level Evidence," was written by the World Bank’s Beata K. Smarzynska and the Brookings Institution’s Shang-Jin Wei (NBER Working Papers 7969, Web site: http://ideas.uqam.ca/ideas/data/Papers/nbrnberwo7969.html). The researchers compared foreign direct investment in 22 Eastern European and former Soviet bloc countries during the 1990s with various indices of corruption developed by private sector researchers and the World Bank.

A new Web site, http://russia.privatiza tionlink.com, designed to cast light on the often shady world of Russian privatization, was launched in October at the fourth annual U.S.-Russian Investment Symposium in Boston. The site—designed by the Multilateral Investment Guarantee Agency (MIGA), part of the World Bank Group, with the cooperation of the Russian Property Relations Ministry and the Canadian International Development Agency—was created to encourage new investment in the Russian Federation. The site’s main feature is an investment databank that profiles more than 100 state-owed firms slated for privatization.

The social costs of transition and the restructuring of economies in the Europe and Central Asia region have affected women more severely than men, concluded an international conference held in Warsaw in January. Women bear more of the brunt from reduced social expenditure, especially from the closing of day care centers and maternity clinics. Declining school attendance of girls in many Central Asian countries may erode prospects for economic growth. Female labor force participation fell more than 30 percent in Hungary and 25 percent in Latvia—a much sharper decrease than among men. Entrepreneurship may help improve women’s access to top managerial positions, higher incomes, and traditionally male-dominated areas of activity.