New Books and Working Papers

The Macroeconomics and Growth Division regrets that it is unable to provide the publications listed.

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).

Working Papers

Luca Barbone, Domenico Marchetti, Jr., and Stefano Paternostro, Structural Adjustment, Ownership Transformation, and Size in Polish Industry, Policy Research Working Paper 1624, July 1996, 25 p.

Significant adjustment took place in Polish manufacturing industries after Poland's 1990 reforms. The productive response of state enterprises was markedly different from that of private firms: Private firms outperformed state enterprises. Size also matters, at least among private firms. Generally, there seem to be increasing returns to scale for private firms, except for very large enterprises, many of which are previously state-owned and may need further restructuring.
To order: Cielito Pelegrin, Room H11-123, tel. (202) 458-5067, fax (202) 477-1692, E-mail: mpelegrin@world bank. org.

Simon Commander and Andrei Tolsto-piatenko, Restructuring and Taxation in Transition Economies, Policy Research Working Paper 1625, July 1996, 23 p.

In most transition countries insiders dominated the privatization process. Nevertheless, in Central and Eastern Europe, unemployment sharply rose. In countries of the former Soviet Union, both restructuring and unemployment have remained limited and subsidies to firms have continued to be high. The private sector has expanded, but chiefly in the gray (untaxed) area of the economy. Low taxes in the private sector can drive unemployment up rapidly as the state sector, without fiscal means, is forced to make massive layoffs. But low taxes can also help speed the transition by provoking a more rapid private sector response. Capturing the private sector in the "tax net" early in the transition could lead to its collapse and hence to the failure of restructuring.
To order: Latifah Alsegaf, Room M3-105, tel. (202) 473-6442, fax (202) 676-0965, E-mail: lalsegaf@worldbank.org.

Barry Friedman, Estelle James, Cheikh Kane, and Monika Queisser, How Can China Provide Income Security for Its Rapidly Aging Population? Policy Research Working Paper 1674, October 1996, 51 p.

Policymakers face key choices about China's pension system in the light of a rapidly aging population. By 2030, over one-quarter of the world's population over the age of 60 will live in China (22 percent of China's population). This will have far-reaching consequences. Socially, the family will be strained, perhaps more than in other countries, because of China's "one child" family planning policy. Economically, if current systems remain unchanged, rising payroll tax rates—needed to cover sharply increased medical and pension costs—could dampen China's growth in wages and employment, inducing evasion and escape to the informal sector, and will inevitably mean large intergenera-tional redistributions.

China is considering a number of reforms to prevent this from happening. Simple design changes—such as reducing the generous benefit rate, moving toward price indexing rather than wage indexing, and raising the retirement age—are necessary but not sufficient conditions for making the pension system sustainable. A multipillar system that includes a modest, mandatory tax-financed basic benefit and a mandatory fully funded defined-contribution (individual account) scheme must go hand in hand with reform of the financial sector and restructured investment procedures that emphasize the right mix of competition, diversification, and regulation. The transition to such a system can be accomplished with a long-term contribution rate of under 18 percent, considerably less than that imposed today in most Chinese cities. Of this total, 1.6 percent would be used to pay off the old pension debt, 7.3 percent would finance the basic benefit, and 8.5 percent would go into the individual accounts.
To order: Selina Khan, Room N8-024, tel. (202) 473-3651, fax (202) 522-1153, E-mail: skhan@ worldbank.org.

Branko Milanovic, Nations, Conglomerates, and Empires: The Tradeoff between Income and Sovereignty, Policy Research Working Paper 1675, October 1996, 47 p.

One apparent inconsistency in the break-up of such multinational states as the Soviet Union, Czechoslovakia, and Yugoslavia is that while many new states claimed that they wanted to increase (regain) their sovereignty, they also expressed a strong desire to join the European Union. Why would a country go through the ordeal of secession in order to quickly get rid of the very sovereignty that justified its secession? Full sovereignty (like the individual's full freedom) is neither attainable nor desirable for most countries—because greater sovereignty is often traded for reduced income. Nations usually have limited economic sovereignty in such areas as their exchange rate policy (determined by IMF rules, or by regional currency systems), trade policy (confined by WTO rules), labor and banking regulations, and accounting practices. There is a tradeoff curve between sovereignty and income. Countries choose a combination of income and sovereignty that allows them to maximize welfare:
• Larger countries (measured by their GDP) are able to choose more sovereignty per unit of income, because of their large domestic markets.
• Countries with abundant natural resources or very skilled labor (with high per capita human and natural wealth) tend to be more integrated internationally. For them, economic sovereignty is less important.
• More-democratic countries also tend to be better integrated internationally because the political elite, which often prefers not to be bound by international rules, is less powerful.

Testing these hypotheses on the 1993-94 data for 165 countries, the study finds a statistically strong impact of per capita wealth and democracy on international integration. The effect of country size is weaker. Democracies and relatively poor countries are more willing to join conglomerates (free trade associations). The willingness to join is high for small countries (whose sovereignty might actually increase because of the con-glomerate's sovereignty-sharing features) and for very large countries that may expect to play the role of core-states. The key gain for a relatively rich former member of a communist (poor) conglomerate is not economic sovereignty in itself, but the ability to switch to a rich conglomerate.
To order: Selina Khan, Room N8-024, tel. (202) 473-3651, fax (202) 522-1153, E-mail: skhan@world bank.org.

World Bank Technical Papers

Emily S. Andrews and Mansoora Rashid, The Financing of Pension Systems in Central and Eastern Europe: An Overview of Major Trends and Their Determinants, 1990-1993, World Bank Technical Paper 339, October 1996, 40 p.

The economic transformation in Central and Eastern Europe increased unemployment and pushed workers into early retirement. At the same time, the insolvency of enterprises and the growth of the informal sector reduced tax compliance and the number of contributors to the system. Contrary to common perception, the resulting increase in the ratio of pensioners to contributors did not translate into an increase in pension costs relative to GDP for all countries in the region. Many countries reduced the generosity of their pension systems (pension benefits/wages) to mitigate or completely overcome increases in system dependency rates, and pension costs remained fairly stable (the Czech Republic and Romania) or even declined (Albania and Croatia) over the first few years of the transition. Countries with high and increasing pension costs (Bulgaria, FYR Macedonia, Poland, and Slovakia) are therefore largely those that have either raised pension payments relative to wages, or have not been able to reduce pension generosity sufficiently to counteract increases in system dependency rates.

Three policy conclusions emerge:
• Reducing the level and rate of growth of pension costs will be the main instrument for reducing pension deficits. Tax compliance is a major problem in countries of the region and improving tax compliance will reduce pension deficits. Even with full compliance, high tax rates prevailing in the region would remain, distorting labor markets and dampening the prospects for economic growth.
• Reducing the sharp growth in pension costs in Bulgaria, FYR Macedonia, Poland, and Slovakia will require different approaches. Containing the growth of pension benefit expenditures in Poland requires a sharp reduction in pension fund generosity; Poland has already controlled the growth rate in new old age pensioners. An increase in the number of contributors should help contain growth in pension costs in Bulgaria and Slovakia. Replacement rates have declined in both countries and an increase in pensioners has been negligible. In FYR Macedonia, growth in pension costs can be reduced if the number of new pensioners entering the system is sharply restricted and the growth in the replacement rate is curtailed.
• Strategies to reduce pension costs cannot be generalized. Instead, pension reform should focus on the factors putting upward pressure on pension costs in each country. Policies to reduce pension costs need to focus primarily on reducing pension benefits in Croatia, FYR Macedonia, and Poland; restricting eligibility to the pension system in Albania, Bulgaria, Poland, Romania, and Slovakia; monitoring disability benefits in Poland and Romania, and curtailing the entry of new pensioners in Albania, Croatia, and FYR Macedonia.

Jan J. Rutkowski, Changes in the Wage Structure during Economic Transition in Central and Eastern Europe, World Bank Technical Paper 340, October 1996, 55 p.

Economic transition is associated with a uniform, substantial decline in real wages, although in some cases this fall has been exaggerated due to underestimation of the consumer price inflation rate. The fall in real wages has been so deep that, in majority of cases, all deciles of workers experienced wage losses. Low-paid workers, however, have suffered markedly more than high-paid workers. The earnings distribution, compressed under central planning, has widened significantly. The overall rise in earnings inequality has been moderate, and the level of inequality has become comparable to that of OECD countries. In the majority of CEE countries, the Gini coefficient for earnings ranges between 25 and 27.

Wage income has been transferred from the low-paid majority to the relatively well paid minority. Nearly 70 to 80 percent of workers lost wage share, while 20 to 30 percent gained. In a large number of transition economies, the incidence of low pay has become high even by OECD standards. In some countries, low-paid workers (defined as those earning less than two-thirds of the median wage) account for up to one-fifth of all workers. Returns to education have increased substantially in the course of transition, especially for college graduates. Wage differentials by educational attainment have become close to those prevailing in OECD countries.

Ellen Goldstein, Alexander S. Preker, Olusoji Adeyi, and Gnanaraj Chellaraj, Trends in Health Status, Services, and Finance: The Transition in Central and Eastern Europe, volume 1, World Bank Technical Paper 341, November 1996, 56 p.

Only a few transition countries have successfully downsized their health sectors or reallocated health spending in line with their diminished financial resources. Although many now spend 7 to 9 percent of their GDP for health services, long-run stagnation in life expectancy points to the ineffectiveness and inefficiency of many existing health services. While this problem can be traced to long-standing misallocation of resources and a lack of financial incentives for efficiency, it has been exacerbated by the pattern of fiscal adjustment in the health sector during the early phase of the transition.

There has been little to no reduction in public sector health personnel in most countries. Adjustment in the health sector has occurred through erosion of real wages, without recourse to mass layoffs. As in other types of enterprises, retaining workers at low wages without sufficient working capital—in this case for drugs, medical supplies, utilities, and so on—results in low productivity and low morale, that is inefficient and low-quality health services. In the medium term, however, the health systems of the transition countries need massive investment to replace and upgrade equipment and facilities that are often outmoded and (or) near the end of their economic life.

Most countries are moving very slowly with Croatia and Hungary as the front-runners—to introduce new reimbursement mechanisms that provide incentives for efficiency and cost containment, transfer ownership of some assets to the private sector, build management capacity, and provide necessary managerial autonomy. Little action has been taken to limit the scope of basic health insurance coverage and restructure the financial sustainability, efficiency, and effectiveness of health services. Until financial incentives are in place, restructuring and operational reforms are unlikely to take place.

Other World Bank Publications

Simon Commander, Qimiao Fan, and Mark E. Schaffer, Enterprise Restructuring and Economic Policy in Russia, EDI Development Study, 1996, 308 p.

Vietnam: Fiscal Decentralization and the Delivery of Rural Services, World Bank Country Study, November 1996.

With a per capita income of $250 and with 80 percent of the population living in rural areas, improving rural services (such as education, health care, infrastructure development, and social relief) is essential to sustained growth, poverty reduction, and improvements in social welfare. Vietnam has had success in providing such services as basic preventive and public health measures, literacy, and community social programs. Overall, however, the quality and delivery of these services in rural Vietnam is low, with regional disparities caused by lack of funds and leadership.

Greater decentralization increases the flexibility of the local units and enables them to respond efficiently to local needs and provide services at lower cost. A more effective central government could also help to improve the quality and distribution of rural services.

Further improvement could be achieved through opening information flows among provinces, districts, and communes; developing databases to improve targeting of technical assistance and additional resources; and changing the tax and transfer system to increase the flexibility of local and central administrators.

IMF Publications

To order: IMF Publication Services, 700-19th Street, N.W., Washington, D.C. 20431, United States, tel. 202-623-7430, fax 202-623-7201.

IMF Working Papers

Pierre L. Siklos, Capital Flows in a Transitional Economy and the Sterilization Dilemma: The Hungarian Case, Working Paper 96/86, August 1996, 26 p.

Michael J. Artis, How Accurate Are the IMF's Short-Term Forecasts? Another Examination of the World Economic Outlook, Working Paper 96/89, August 1996, 23 p.

Robert Holzmann, Pension Reform, Financial Market Development, and Economic Growth: Preliminary Evidence from Chile, Working Paper 96/94, August 1996, 47 p.

Natasha Koliadina, The Social Safety Net in Albania, Working Paper 96/96, August 1996, 55 p.

The social safety net system in Albania has played an important role during the initial period of transition, supporting the poorest groups of population with income transfers and administering social security benefits. Social expenditures remain high—more than 11 percent of GDP in 1994—and impose a significant burden on the central budget (7.7 percent of GDP in 1994, and an estimated 6.4 percent in 1995). It is unlikely that the financing demands on the social safety net would diminish in the short and medium term since widespread poverty and high levels of unemployment are likely to persist over the next few years. To contain the cost of the safety net while protecting the truly needy, introduction of social security numbers (or employee registration)—that is, a broadening of the tax base—and improved targeting of assistance will be important.

CEPII Publications

To order: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII), 9, rue Georges Pitard, 75740 Paris Cedex 15, France, tel. 4842-6464, fax 4842-5912.

Roumen Avramov and Jérôme Sgard, Bulgaria: From Enterprise Indiscipline to Financial Crisis, Working Paper 96-10, July 1996, 41 p.

Leuven Institute for Central and East European Studies Publications

To order: Katholieke Universiteit Leuven, Ch. Deberiostraat 34, 3000 Leuven, Belgium, tel. 3216-326-598, fax 3216-326-599.

Marvin Jackson, Labor Markets and Income Maintenance: A Survey of Transition, Working Paper 58/1996, June 1996, 11 p.

Valentijn Bilsen and Jozef Konings, Job Creation, Job Destruction and Growth of Newly Established Private Firms in Transition Economies: Survey Evidence from Bulgaria, Hungary and Romania, Working Paper 59/1996, June 1996, 36 p.

WIIW Publications

To order: The Vienna Institute for Comparative Economic Studies, Oppol-zergasse 6, A-1010 Vienna, Austria, tel. (431) 533-6610, fax (431) 533-6610-50, Internet: http://www.wsr.ac.at/wiiw-html.

Waltraut Urban, Leon Podkaminer, and others, Kräftiges Wachstum in Ost-Mitteleuropa, Weiterhin Rezession in der GUS, Research Report 163, May 1996, pp. 355-72.

Leon Podkaminer, Slower Growth in Central and Eastern Europe, Delayed Stabilization in Russia and Ukraine, Research Report 228, July 1996, 46 p.

Leon Podkaminer and others, Country Reports: Bulgaria, Croatia, Czech Republic, Hungary, FYR Macedonia, Poland, Romania, Russia, Slovakia, Slovenia, Ukraine, FR Yugoslavia, and China, Research Report 229, July 1996, 88 p.

Centre for the Study of Public Policy (CSPP) Publications

To order: CSPP, University of Strathclyde, Livingstone Tower, 26 Richmond Street, Glasgow G1 1XH, Scotland, tel. (44141) 552-4400, fax (44141) 552-4711.

Stephen White, Richard Rose, and Ian McAllister, How Russia Votes, ISBN 1-56643-037-2,1996.

Other Publications

Effective Communications between the Public Service and the Media, SIGMA Paper 9, France, 1996, 55 p.
To order: Head of Publications Service, SIGMA-OECD, 2, rue André-Pascal, 75775 Paris Cedex 16, France, tel. (331) 4524-7900, fax (331) 4524-1300, E-mail: sigma.info@oecd.org, Internet: http://www.oecd.org/puma/sigmaweb.

John S. Earle and Richard Rose, Ownership Transformation, Economic Behavior, and Political Attitudes in Russia, Stanford University, Center for International Security and Arms Control, August 1996.
To order: Institute for International Studies, tel. (415) 723-0710, fax (415) 723-0089, E-mail: earle@Leland.stanford.edu.

Gyorgy Eger and Josef Langer (eds.), Border, Region and Ethnicity in Central Europe, Klagenfurt, 1996.
To order: Norea Publisher, Linsengasse 59, A-9020 Klagenfurt, Austria, fax 43-463-55265-10; E-mail: josef.langer@ uni-klu.ac.at or Josef Langer, Univer- sitaet Klagenfurt, Universitaetstrasse 67, A-9020 Klagenfurt, 43-463-2700-471, fax 43-463-2700-467, E-mail: josef.langer@uni-klu.ac.at.

John Fingleton, Eleanor Fox, Damien Neven, and Paul Seabright, Competition Policy and the Transformation of Central Europe, Centre for Economic Policy Research, United Kingdom, 1996.

This book examines the implementation of competition policy during the 1990s in the Czech and Slovak Republics, Hungary, and Poland. It looks at the economic predicament of countries in transition, considering how far this has required the state actively to regulate the competitive process. It considers the extent to which initial economic and political conditions have constrained the state's involvement in such activity. It then analyzes the statutes of the countries and the structure of the institutions established to implement competition policy. A discussion of the case law and the experience of policy in practice is used to suggest lessons for the task of competition policy, both in these countries and in others undergoing the transition from central planning.
To order: CEPR, 25-28 Old Burlington Street, London W1X 1LB, United Kingdom, tel. (44171) 878-2900, fax (44171) 878-2999.

Jozef Konings and Stefan Janssens, How Do Western Companies Respond to the Opening of Central and East European Countries? Survey Evidence from a Small Open Economy-Belgium, Leuven institute for Central and East European Studies Working Paper 60/1996, October 1996, 24 p.
To order: Katholieke Universiteit Leuven, Leuven Institute for Central and East European Studies, Ch. Deberiotstraat 34, 3000 Leuven, Belgium.

Rustam Lalkaka and Jack Bishop, Business Incubators in Economic Development: An Initial Assessment in Industrializing Countries, United Nations Development Program, New York, 1996, 190 p.
To order: Bishop Associates, Consultants to Governments and Business, 1258 N. LaSalle Street, Chicago, Illinois 60610, United States, tel. (312) 787-6756, fax (312) 787-3136, E-mail: jetlag@mcs.com.

Marek Lubinski (ed.), Poland International Economic Report 1995-1996, World Economy Research Institute, Poland, 1996, 248 p.
To order: World Economy Research Institute, Warsaw School of Economics, 24, Rakowiecka Str. 02-554, Warsaw, Poland, tel. (4822) 49-12-51, fax (4822) 48-91-32.

Roy Prosterman, Tim Hanstad, and Li Ping, Large-Scale Farming in China: An Appropriate Policy? Rural Development Institute on Foreign Aid and Development, no. 90, July 1996, 31 p.

China should reexamine efforts to promote larger-scale and capital-intensive farms for several reasons:
• Empirical case for economies of scale in agricultural production is weak.
• Relationship between farm size and productivity per hectare is usually inverse—smaller farms are generally more productive than larger farms.
• In developed countries with large farms, such as the United States, size and capital intensity are not the cause of high agricultural productivity. Rather, large and capital-intensive farms are the effect of a dynamic, market-driven resource allocation process set in motion by the country's unique factor endowment.
• While many of the larger-scale farming efforts aim to achieve large-scale collective farms, the literature clearly demonstrates that family farms are generally more efficient and superior.
• Field observations of pilot large-scale farming experiments in China raise serious concerns.

The authors recommend:
• Use voluntary land market measures to facilitate the transition to larger farming.
• Emphasize principles of voluntariness, respect for existing land rights, and equal access when direct government intervention is used to promote large-scale farming.
• Provide long-term, transferable land rights to large-scale farmers.
• Conduct rigorous studies on the relative productivity of large-scale farms.
• Eliminate preferential subsidies to large-scale farmers.
• Allow large-scale farmers to choose the mode of farm organization.
To order: RDI, 1100 NE Campus Parkway, Seattle, Washington 98105, United States, tel. (206) 528-5880, fax (206) 528-5881, E-mail: rdi@u.washington.edu.

Regional Problems and Policies in the Czech Republic and the Slovak Republic, Centre for Cooperation with the Economies in Transition, OECD, 1996, 191 p. To order: OECD, Head of Publications, OECD, 2, rue Andre-Pascal, 75775 Paris Cedex 16, France. The Rebirth of Democracy: 12 Constitutions of Central and Eastern Europe, Council of Europe, October 1996, 445 p.

The second edition of this book groups together the constitutions of twelve central and eastern European states (Bulgaria, Croatia, Czech Republic, Estonia, FYR Macedonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, and Slovenia. This new edition includes recent amendments to the constitutions, clearly marked to provide a comparison with the original text. Also included are chronologies describing the recent history of each country that has led to the forming of these constitutions.
To order: Mrs. S. Lobey, Council of Europe Publishing, BookWorld Publications (a BWP-Media-group Company), P.O. Box 11089, 1516 Seagull Drive, Suite 309, Palm Harbor, Florida 34685, United States, tel./fax (3173) 612-3115, or tel./fax (813) 787-953; E-mail information: info@ bwp-mediagroup.com, (for Sales):sales@ bwp-mediagroup. com; WWW-site:http://www.bwp-media group.com/bookworld /homepage.htm.

Robert Skidelsky (ed.), Russia's Stormy Path to Reform, The Social Market Foundation, 1995, 145 p.
To order: The Social Market Foundation, 20, Queen Anne's Gate, London SW1H9AA, United Kingdom, tel. (0171) 222-7060, fax (0171) 222-0310.

Structural Change and Foreign Investment in the Russian Far East Gold Mining Industry, Russian Far East Update, Seattle, Washington, June 1996, 16 p.
To order: Russian Far East Update, P.O. Box 22126, Seattle, Washington 98122, United States, tel. (206) 447-2668, fax (206) 628-0979, E-mail: rfeupdate@russianfareast.com.

Ernesto Talvi, Exchange Rate-based Stabilization with Endogenous Fiscal Response, Inter-American Development Bank Working Paper 324, Washington, D.C., 1996, 29 p.
To order: Inter-American Development Bank, 1300 New York Avenue, N.W., Washington, D.C. 20577, United States.

Markku Tykkylainen, Local and Regional Development during the 1990s Transition in Eastern Europe, University of Joensuu, Finland, June 1995, 169 p.
To order: Ashgate Distribution Services, Gower House, Croft Road, Aldershop, Hants, GU113HR, England, tel. (01252) 331-551, fax (01252) 344-405.

Markku Tykkylainen (ed.), Russian Karelia: An Opportunity for the West, University of Joensuu, 1995, 114 p.
To order: Ashgate Distribution Services, Gower House, Croft Road, Aldershop, Hants, GU113HR, England, tel. (01252) 331-551, fax (01252) 344-405.

World Economic and Social Survey 1996: Trends and Policies in the World Economy, United Nations, New York, 1996, 353 p.

The survey reports strong economic growth continuing in Central and Eastern Europe. Domestic factors have been important sources of the economic growth in developing and transition economies. These countries are increasingly seen as important markets and potential stimuli to growth in the developed economies.
Information: Sergei L. Kambalov, Economic Policy Analysis, United Nations, tel. (212) 963-4751, fax (212) 963-1061, E-mail: kambalov@un hq3@un.org.

Newsletters

European Economic Perspectives, a publication of the Center for Economic Policy Research.
To order: CEPR, 25-28 Old Burlington Street, London W1X 1LB, United Kingdom, tel. (44171) 878-2900, fax (44171) 878-2999, E-mail: cepr@cepr.org.

Intereconomics: Review of International Trade and Development, a bimonthly publication of HWWA-Institut fur Wirtschaftsforschung-Hamburg.
To order: Verlagsgesellschaft mbH & Co. KG, Waldseestr. 3-5, D-76530 Baden-Baden, Germany, tel. (07221) 2 10 40, fax (07221) 21 04 27.

International Agriculture and Trade Reports: Former USSR—Situation and Outlook Series, a publication of the United States Department of Agriculture, Economic Research Service, WRS-96-1. May 1996 issue includes: "Russian Agriculture Could Remain Uncompetitive on World Market, Even If Reform Continues," "Additional FSU Countries Look to Join the World Trade Organization," "Rising Protectionism in Russia Could Affect U.S. Exports in Near Term," and "Special Report: Changing Consumption, Consumer Sovereignty and Poverty Policies."
To order: United States Department of Agriculture, 1301 New York Avenue, N.W., Washington, D.C. 20005-4789, tel. (800) 999-6779.

The Polish Legal Journal, journal covers legal developments, especially those linked to the economy.
Information: Prof. Leszek Leszczy, Editor- in-Chief, lesles@ram zes.umcs.lublin.pl.