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Switzerland is a highly decentralised country with large spending and revenue-raising powers devolved to cantons and municipalities. The federal system, in combination with an extensive use of direct democracy, has contributed to keep public spending at a relatively low level in international comparison. It has also made it possible to tailor the provision of public services to citizens’ needs and willingness to pay and to experiment with a variety of policies. At the same time, several tensions have emerged and effective control of spending deteriorated during the 1990s. After identifying these tensions, this paper reviews recent policy initiatives and proposes options for further enhancing public spending effectiveness. These entail implementing a new fiscal rule which will allow the free play of the automatic stabilisers at the federal level and ensuring its consistency with other government levels’ behaviour; increasing transparency in public spending costs and ...

This document analyses the economic impacts of selected environmental policies in Austria with an emphasis on the use of economic instruments and incentives versus command-and-control measures. An important theme in a federation like the Austrian is the institutional complexity involved in many aspects of environmental policy, requiring a high degree of co-ordination between various layers of government, which could be furthered by a coherent ex ante and ex post evaluation system. Such a system could also be useful in the setting of abatement objectives and minimizing their associated cost. Greater use of properly designed instruments, examples being a unified taxation of fuels and the introduction of a CO2 tax, would improve the cost-effectiveness of policies to reach Austria’s ambitious CO2 emission reduction target. This would particularly be the case if economic instruments replace the widespread use of subsidies and command-and-control type measures. Such measures are found to ...

This paper analyses of some the key aspects of public expenditure policy in Denmark. The public expenditure to GDP ratio has abated markedly since the mid-1990s, reflecting both cyclical gains and the return on structural reforms. Nevertheless, the underlying upward pressure on government spending, notably from the demand for personal services, is generally perceived to be significant and expected to persist. The origins of such pressure, as well as means of containing it in the future, are discussed. With public consumption being very high by international standards, the paper advocates greater competition in the provision of services to individuals and more reliance on market signals such as client choice and user charges to enhance the efficiency of resource allocation. A particular feature of the Danish public sector is the fact that counties and municipalities have been assigned a wider range of responsibilities than in any other OECD country as well as extensive taxing ...

The following pages include articles describing recent developments in three Latin American countries to expand public education facilities. They are followed by a report on UNESCO’s recent seminar on architecture for an inclusive education. Chile, Brazil and Venezuela have undertaken various efforts related to building new schools. Chile, as part of its educational reform, is designing new learning spaces. In Brazil a new kindergarten network is being developed to meet demand for early childhood education. Similarly, in order to meet the demand for school places, Venezuela is studying construction costs of public schools. For Latin America and the Caribbean region, UNESCO is working toward the design and use of educational spaces that contribute to reducing inequalities and exclusion.

This document analyses aspects of natural resource and environmental policies in Australia, focusing on water resource management, salinity and climate change mitigation. The state and central governments have not made use of their taxation powers in these domains. The cap-and-trade system for water rights in the Murray Darling basin aims at better integration of economic and environmental reform. Still higher benefits could be reaped from trading if the various restrictions on trade were lifted, and if water pricing reform were accelerated in rural areas, so as to reflect economic and environmental costs. The rules for allocating flows for the environment also need to be clarified. To address dryland salinity, more co-ordination between the States and the Commonwealth is needed, for example to avoid the contradiction inherent in subsidising revegetation programmes while at the same time authorising further land clearing. Economic instruments could be used for intermediate ...

This document analyses aspects of environmental policy in Belgium. Some specific examples are drawn from policies on water in the different regions that make up the Belgian Federation (to whom much environmental policy is delegated), and transport and congestion policy in the Brussels region is discussed. The system of “ecotaxes” and some inconsistencies in the structure of taxation, from the environmental point of view - for example between petrol and diesel fuel - are also covered. An important theme is the institutional complexity involved in many aspects of environmental policy. Co-ordination is necessary between regional governments and the federal government, as well as with local governments, implementing policies which are often based on EU directives ...

This paper reviews several aspects of Poland’s environmental policies. Its main finding is that substantial progress has been made in dealing with the environmentally unfriendly legacy from the past. Poland has successfully combined emission permits based on environmental quality standards, emission fees and fines, public environmental subsidy schemes and widely publicised lists of the worst polluters. Other important factors of success were long-term time consistency, gradual tightening of enforcement and limited administrative discretion. Poland is now embarking on a fundamental revision of its instrument mix in order to respond to new environmental challenges typical of market economies, and to comply with the European Union environmental Directives. In this context, the challenge is to formulate a medium-term strategy that is both environmentally effective and market friendly. Pending legislative amendments, however, may not always live up to this challenge. New instruments ...

Due to the substantial rise in the share of Emerging Markets (EM) in foreigncurrency debt markets during the nineties, country risk in EM has become an issue of increasing concern for both new bond issues and rescheduled non-performing loans. However, as recent episodes show, financial volatility has tended to leave those countries more prone to contagion effects and balance-of-payments crises. Consequently, international bond investors have required higher risk premia to balance the risk-return equation. In order to make Emerging Markets less vulnerable to external shocks, exchange-rate corner solutions such as dollarisation have been proposed. One of the main arguments put forth by the dollarisation supporters is the expected decrease in sovereign spreads, as currency risk will no longer hold. According to this “optimistic” view, which also relies on a credibility spillover effect, such a decrease could begin improving solvency weaknesses while boosting economic growth ...

Clean air, clean water, fewer toxic emissions and less household waste are among the key environmental policy objectives that most OECD governments have been pursuing over the past three decades. This effort to take more account of the environmental costs of economic growth has been pursued in a variety of ways in different countries, and has evolved over time with policy instruments that may be technical standards, emission prohibition, tradable permits, taxes, voluntary agreements and many others. This paper surveys aspects of environmental and natural resource policy in a number of OECD countries paying particular attention to how countries succeed in conducting cost-effective and consistent policies in the environment and natural resource areas, not on environmental policy or outcomes per se. Four common themes emerged: attempts to design institutions or processes to achieve co-ordination across policies and sectors; certain sectors where policies make environmental objectives ...

This paper analyses aspects of natural resource policy and environmental policy in Canada. In the taxation of resource-based activities, the management of water supply and the Atlantic fisheries management, the paper finds that there are incentives that may lead to overexploitation, over-harvesting or over-use, with possible harmful environmental consequences. Water prices are kept low, especially for agricultural use, exacerbating water availability problems in some areas, whereas the ban on bulk water removal and exports reveals a high implicit valuation of water. The use of economic water pricing and transferable water rights in some areas would establish more consistent incentives. The evolution of the crisis in the Atlantic fisheries illustrated the problems of balancing short-term adjustment costs against long-term sustainability. A more precautionary approach in setting total allowable catches and the removal of incentives for labour to remain in the sector may ...

This paper analyses Sweden’s policies for addressing a range of key environmental challenges. Although Sweden has a deliberately comprehensive approach to establishing its environmental objectives and policies, some issues have received particular attention. These include acidification and climate change arising from harmful cross-border and global air emissions, damage to waterways stemming from nutrient run-off from farming, and solid waste management. This review concentrates on the scope for Sweden to refine and extend the use of economic instruments to achieve better environmental outcomes in each of these areas. At the same time, more systematic and rigorous use of cost-benefit analysis in designing policies and in evaluating measures that have been put in place, would help Sweden to achieve its desired environmental objectives in the least costly way, or alternatively, to achieve the best environmental results for a given economic sacrifice ...

This paper discusses links between policy settings, institutions and economic growth in OECD countries on the basis of cross-country time-series regressions. The econometric approach allows short-term adjustments and convergence speeds to vary across countries, imposing restrictions only on the long-run coefficients. In addition to the ‘primary’ influences of capital accumulation and skills embodied in the human capital, the results confirm the importance for growth of R&D activity, the macroeconomic environment, trade openness and well developed financial markets. They also confirm that many of the policy influences operate not only ‘directly’ on growth but also indirectlyviathe mobilisation of resources for fixed investment. The paper also reports some bivariate correlations between OECD indicators of product regulation and growth. They provide some supporting evidence that the negative impact of stringent regulations and administrative burden on the efficiency of product ...

This paper analyses aspects of US environmental policy, including, among others, policy on air and water quality, water supply in certain areas, climate change and greenhouse gas emissions. Particular attention is paid to certain policies in agriculture and road transport, sectors with an important influence on the environment, as well as to the use of cost-benefit analysis (and in some cases specific prohibitions on its use) and the role of the courts in designing and implementing policy. While “command and control” style regulations have produced significant improvements in environmental standards since the 1970s, increasing attention has been paid to the use of economic incentives - permit trading arrangements have been preferred to environmental taxes - and more flexibility in some regulatory policies. These trends towards more cost-effective policies should be extended to such areas as fuel economy, where increased fuel taxes would be more cost-effective than the “CAFE” ...

This paper analyses aspects of environmental policy in Denmark, including, among others, policy on surface water quality, clean air and support for renewable energy, waste disposal and transport policy. Environmental policies are an important priority in Denmark, with implementation often highly decentralised, but in some cases environmental objectives have been pursued at what seems a high price, perhaps through a wish to support the development of a domestic industry or to protect existing industry from loss of competitiveness. The paper criticises some of the arguments used in favour of this high cost approach in a number of contexts, including wind power subsidies, the carbon tax and the treatment of nutrient discharges from agriculture. The paper also discusses a number of innovative and efficient policies introduced or planned, for example the new approach to promoting renewable energy (including wind power) through tradable “green certificates” and a CO2 trading scheme in ...

1. Two of the most important questions facing health policy makers in OECD countries are:
   1. whether the increasing sums of money devoted to health care are yielding commensurate value in terms of improvements in health status; and
   2. whether different ways of financing and delivering health care -and, hence, health care reformsmake a difference to health.
2. This paper explores the effect of variations in the volume of health care and in certain characteristics of health systems on mortality across 21 OECD countries over the past 25 years, after controlling for certain other determinants of health status. It builds on previous research on the determinants of health outcomes in OECD countries (Or, 2000). In contrast to the earlier work, it concentrates on a non-monetary measure of health care supply – number of doctors – to avoid a number of measurement issues. It also uses a range of summary measures of mortality to assess the performance of health care systems and incorporates a ...

This paper provides a perspective from evolutionary economic theory on recent growth differences in the OECD area. The empirical analysis contained in the paper offers a number of findings. First, the United States seems to be diverging from the other OECD countries, while the latter are still, by and large, converging to the OECD average. Second, the estimated model of evolutionary growth suggests that convergence based on the assimilation of foreign technology is becoming a more active process. R&D now seems to be crucial for catching-up and is no longer an activity that is unequivocally associated with moving the world technological frontier. Third, differences between countries in terms of pure technological competencies, i.e. patenting, have become more important in explaining growth differentials. These trends suggest that the absorption of foreign technology requires more active efforts, and that technological differences between countries translate more easily ...

This document analyses certain economic aspects of environmental policy in France, focussing on greenhouse gas emissions, water pollution and discharges in city air. Like most other OECD countries, France has been endeavouring for some years to make its growth environmentally sustainable. These efforts have been based on the traditional instruments of environmental protection—regulatory standards, in particular. But this approach has lacked economic efficiency in that it has not allowed efforts to be concentrated on pollution sources with the lowest abatement costs. Aware of these inadequacies, the authorities have adopted a new approach that involves more extensive and more efficient use of economic analysis and instruments. However, the measure adopted to curb emissions of greenhouse gases — negotiation of voluntary agreements with industrial producers — will not serve to reduce greenhouse gas emissions significantly and at least cost, as international experience has shown. It ...

Using plant level panel data on Korean manufacturing during the 1990-98 period, this study tries to assess the role of entry and exit in enhancing aggregate productivity, both qualitatively and quantitatively. The main findings of this study are summarised as follows. First, plant entry and exit rates in Korean manufacturing seem quite high: they are higher than in both the United States and several developing countries for which comparable studies exist. Second, in line with existing studies on other countries, plant turnover reflects underlying productivity differentials in Korean manufacturing, with the “shadow of death” effect as well as selection and learning effects all present. Third, plant entry and exit account for as much as 45 and 65 per cent in manufacturing productivity growth during cyclical upturn and downturn, respectively. This study also shows that plant birth and death are mainly a process of resource reallocation from plants with relatively low and declining ...

In this paper, we analyse the potential contribution of the Internet and its commercial application to the development process in poor countries. In historical perspective, the Internet has diffused at a far faster rate than earlier generations of communications technology: from 1990 to early 2000, the estimated number of Internet users grew more than tenfold to roughly 300 million, affecting the way in which people communicate with each other, acquire information, learn, do business, and interact culturally. Our particular focus is on the opportunities e-commerce offers to small-scale entrepreneurs in developing countries and the challenges they face in exploiting e-commerce’s potential.

There is a risk that a “digital divide” will emerge, reinforcing existing income and wealth inequalities within and between countries. Yet, a major potential benefit of globalisation is the freer movement of technology, including information and communication technology (ICT), across borders. In ...

E-commerce -- an application of the Internet -- has expanded exponentially over the past 5 years and is widely expected to continue to develop rapidly in the medium-term. Much, however, remains to be done to fully exploit the opportunities offered by e-commerce. And as e-commerce develops, it could have profound impacts in individual sectors of the economy as well as for macroeconomic performance and economic policies. This paper assesses the potential outcomes and economic impacts of e-commerce in the business to business and business to consumer spheres; the forces underlying its expansion and the possible implications for structural and macroeconomic policy management ...