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This Working Paper presents a cross-Directorate Report on the economic, budgetary, regulatory and urbanpolicy implications of the earthquakes which struck the Marmara and Bolu areas of Turkey on 17 August and 12 November 1999. The earthquakes caused high casualties and significant material damage to property, with severe effects on economic activity. The Report traces the factors underlying Turkey’s vulnerability to earthquake damage, along a known active fault line, to deficiencies in risk identification procedures and risk-reduction methods, as well as to the absence of risk transfer and financing techniques. It suggests that these deficiencies may stem from the nature of recent Turkish economic development, which has been driven by the need to assimilate a mass migration from the countryside to the cities and has been associated with extremely high and variable inflation. Ensuring a more orderly future development requires both an overhaul of governance structures in ...

This paper discusses growth performance in the OECD countries over the past two decades. Special attention is given to developments in labour productivity, allowing for human capital accumulation, and multifactor productivity (MFP), allowing for changes in the composition and quality of physical capital. The paper suggests wide (and growing) disparities in GDP per capita growth, while differences in labour productivity have remained broadly stable. These patterns are explained by different employment growth rates across countries. In the most recent years, a rise in MFP growth in ICT-related industries has boosted aggregate growth in some countries (e.g. the United States) ...

One year ago most economic observers predicted that "fundamentals" were such that the euro was set to appreciate. In the event, the opposite has occurred. This has rekindled a debate on how well foreign exchange markets reflect fundamental determinants and led to calls for greater exchange rate stability, possibly through the introduction of formal exchange rate target zones. The first part of the paper focuses on these issues. It also looks at the euro’s prospects as an international currency. To give a better sense of perspective, the paper compares recent exchange rate movements and measures of volatility with longerterm trends. The article argues that the difference in cyclical conditions in the United States and the euro area seems to have been a dominant factor driving the sizeable euro depreciation since early 1999, although when evaluated against longer term trends it appears much less dramatic; the euro is presently at about its past 5-year average level expressed in nominal effective terms ...

This document examines Finland’s policy on natural and environmental resource management. In many fields, progress has been made and pollution curbed. However, there is still room for improvement with regard to cost-effectiveness. Economic evaluation of the measures planned in various fields should accordingly be more systematic. Until now, pollution abatement has been achieved largely through regulation; given the likelihood that very few least-cost options remain, it will be even more important to make wider use of economic instruments to minimise the cost of future measures. In order to ensure that Finnish enterprises remain competitive, energy and fuel taxes are heavier on households than on businesses (in particular the more energy-intensive ones, such as the wood and paper-pulp industries and the electricity sector). Restoring the balance in this area would bring about a marked improvement in the costeffectiveness of Finland’s policy to reduce CO2 emissions, and foster ...

This paper reports initial results from a Secretariat survey of recent unilateral liberalisation and facilitation measures relevant to the growth of Internet-based electronic commerce that have been undertaken by Governments in both OECD and non-OECD member economies.

The constitution establishes the principle of legal continuity of the Republic of Estonia, which was proclaimed independent on 24 February 1918, occupied by the Soviet Union on 17 June 1940 and subsequently annexed thereto on 6 August 1940. The constitution reflects the idea of legal restoration, which served as a basis for the return to independence and liberation from the Soviet Union on 21 August 1991. The Riigikogu has recently begun to consider the results of a review carried out by the government expert committee on constitutional revision. The committee’s proposals, if adopted, would not alter the basic principles of the constitution but would reinforce the parliamentary and constitutional system of government. The most important proposals are the establishment of a separate constitutional court, reinforcement of civil control over the defence forces, and attribution of the powers of an ombudsman to the legal chancellor. Moreover, amendments may have to be made in view of the accession of Estonia to the European Union; these amendments touch upon a basic principle of the constitution, the principle of sovereignty.

In this paper, a structural VAR model is estimated for 11 EU countries in order to assess the effect on the government deficit ratio of four independent economic disturbances: supply, fiscal, real private demand and monetary shocks. Based on the estimated distribution of these shocks, stochastic simulations are performed to derive estimates of cyclically-adjusted budget balances that would have to be maintained to avoid breaching the Stability and Growth Pact’s 3 per cent of GDP deficit limit over different time horizons and with varying degrees of confidence. In order to capture the movement in the deficit stemming from automatic stabilisation, fiscal policy shocks are turned off during the simulations. The results suggest that, for the majority of countries, if governments were to aim for a cyclically-adjusted budget deficit between 1.0 and 1.5 per cent of GDP, the actual deficit would, with a 90 per cent likelihood, remain within the 3 per cent limit over a three-year horizon ...

A basic feature of development dynamics is the reallocation of labour from low– productivity to higher–productivity activities (generally more capital–intensive and also often more skill–intensive). The expansion of skilled labour supply that accompanies rising per capita incomes is both cause and effect of this shift in skills demand. Over long periods, if skills supply and demand grow apace, skill premia would show little secular change; over shorter periods, however, inevitable lags may show up as growing or shrinking premia.

A policy reform like trade liberalisation can accelerate structural change in an economy, causing an exogenous shift in relative factor demands. For some developing countries, the result may be an increase in skills demand associated with the adoption of newly available foreign technology and lower cost imported capital goods. This demand shift may be permanent or only temporary, but in either case the skills supply should eventually increase in response to ...

We assess the prospects for growth of African economies up to the year 2010 by modelling structural and policy determinants of growth, under different scenarios for changes in the exogenous factors and economic policies which shape the projections. To this end we estimate a growth model for 39 African economies, during seven five-year periods from 1960 through 1995. The model emphasises two engines of growth: i) investment and ii) growth of exports. Using a composite indicator of “emerging economies” iiset up on the basis of the economic performance, quality of policies and political stability of African countries ppwe identify 14 African economies that stand better chances to achieve a lasting improvement in their policies and growth performance in the years ahead. These “emerging economies” can be mostly found in the Southern-Eastern and the Western parts of Africa. Our growth simulations involve two policy scenarios: a baseline scenario which extends policy trends observed ...

The Administrative Board of the Federal School Construction Programme (CAPFCE) has been in existence for 54 years, but it was only in 1977 that initial efforts were made to transfer responsibility for educational building to the administrations of the 32 states of Mexico. The CAPFCE is now a body that sets standards, exercises technical supervision and provides financial assistance.

A programme is currently underway in Korea to modernise and equip school buildings in order to better meet today’s teaching needs.

This paper attempts to identify the standards to which EU candidate countries are expected to conform in order to align their public administrations with those of EU Member States. Originating from SIGMA’s work on public administration reform in central and eastern European countries, in particular civil service development and administrative control, the paper describes an important part of the basis of the SIGMA methodology for assessing candidate countries’ public administration capacities.

This book represents one of the first analyses of the role of e-commerce in the broader economy, and addresses such issues as the impact of e-commerce on employment and on society as a whole, as well as its contribution to economic growth and efficiency.

The separability between efficiency and equity is an underlying assumption in most computable general equilibrium (CGE) models used to assess the costs of carbon abatement. Chichilnisky and Heal (1994) have generated a debate on both the analytical correctness of this hypothesis as well as its precise policy implications. This technical note aims to clarify the determinants of cost efficiency in standard CGE abatement models. Some simulations are provided illustrating the separability property between an efficient outcome and the distribution of income across countries. In the context of an optimal abatement model, it is also shown under which conditions equity and efficiency are not separable anymore ...

This paper presents an overview of the evolution of exchange-rate regimes in Africa and then attempts to assess empirically the impact of exchange-rate policy on manufactured export performance on a panel of major Sub-Saharan Africa countries over the 1970-92 period. We examine the impact of three exchange-rate policy indicators: real effective exchangerate changes, real exchange-rate volatility, and (model-based measures of) real exchange-rate misalignment. Export supply functions are estimated for three manufacturing industries (textile, chemicals, and metals) and two exchange-rate regimes: a fixed rates regime including six CFA Franc countries, and a more flexible regime represented by five non-CFA countries. Our findings show that exchange-rate management matters for export performance. This is evidenced both by the significant impact of changes in the real effective exchange rate and by the negative influence exerted independently by real exchange-rate misalignment. On the ...

Rapid technological advances in information and communication technologies and their widespread diffusion have led some to speculate about "frictionless" economies where transaction costs are nearly zero, barriers to entry and contestability disappear and markets clear instantly.

Egypt, the oldest and most populous country in the Arab world, and one of its most influential in the Southern Mediterranean region, is now moving into the global economy. During the 1990s the country has pursued successful macroeconomic stabilisation policies and has also begun the structural reform programmes needed to put the country onto an export-led, high-growth path. The main constraint for this is the need to introduce change at a pace which will not undermine political stability.

This paper reviews the results of the Uruguay Round Trade Agreements from the perspective of the Egyptian economy, examines the country’s economic relationships with the European Union in the context of the Europe-Mediterranean Partnership Initiative, and identifies main domestic policy challenges. It argues that the European Union could offer more technical assistance and better access for Egyptian agricultural products, while Egypt could further liberalise its trade regime, including ...

In principle, the sovereign credit rating industry could help mitigate the congestion externalities common to world capital markets that arise from the failure of market participants to internalise the social cost of external borrowings. This would require that modifications in ratings on government bonds convey new information to market participants, with changes in credit ratings leading to changes in country risk premia. Using panel data analysis and event studies this paper presents econometric evidence that changes in credit rating have a significant impact on international financial markets. In line with earlier studies, our event study finds a highly significant announcement effect when emerging-market sovereign bonds are put on review with negative outlook. Our findings imply that the sovereign rating industry has the potential to help dampen excessive private capital inflows into the emerging markets with negative rating announcements ...

Over the past decade, the European Commission, as the institution responsible for implementing the Community Budget, has taken an increasingly active interest in the effectiveness of the control measures applied by Member States to Community funds. Indeed, it is in the common interest of the Member States to exercise proper supervision of Community funds. The responses of EU Member States’ Supreme Audit Institutions (SAIs) to the Commission’s external audit procedures and requirements are divergent for various reasons, including legislative ones. This issue overview paper draws on the separate country papers which describe in more detail the different experiences of selected national SAIs in their co-operation with the Commission’s services and the European Court of Auditors (ECA). The present publication complements SIGMA Paper No. 19 Effects of European Union Accession — Part 1, Budgeting and Financial Control on the impact of accession on budgeting and financial control. In both cases, the approach adopted has been analysis of selected issues for reflection and debate.