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Compliance with the European Union’s budgetary, financial control and audit requirements is one of the basic obligations of EU membership. SIGMA examines this in two publications that chronicle the experiences of seven EU Member States, including its three newest adherents, in integrating EU budgetary, financial control and audit procedures and requirements with national ones. The publications also describe central regulations and procedures used by the European Commission and the European Court of Audit. The present publication complements SIGMA Paper No. 20 Effects of European Union Accession—Part 2, External Audit, on the impact of accession on external audit. The purpose of these publications is to assist central and eastern European countries that have applied for membership of the European Union in discerning the ideas at stake, to give comparative information on the various approaches and solutions used by Member States and to sum up the experiences gained and lessons learned. The approach is to provide an overview of the topic and analyse key issues for reflection and debate. The focus is on practical experiences gained and conclusions drawn by those who have been involved in the daily work of adaptation and development of the government administration in the seven countries. The two publications also provide insight into the implementation policies adopted and an overview of the regulations and procedures used. Appendices include lists of abbreviations and useful terms and a selection of EU

This paper synthesizes nine in-depth developing country (LDC) studies on the impact of trade upon wages. It is traditionally assumed that in LDCs trade liberalization lowers relative wage dispersion, while raising wage dispersion in DCs. Evidence from cross-sectional household data for Argentina, Chile, Costa Rica, Colombia, Malaysia, Mexico, the Philippines, Chinese Taipei and Uruguay show: first, counter to one model in Leamer (1995), for countries with diversified trade, labor supply shifts generally shift wages. Second, liberalization was accompanied by rising relative wages and labor demand. And third, trade liberalization often increases the inflow of machinery, and may partly explain positive relative demand shifts accompanying trade liberalization ...

Trade-policy reform is an essential feature of China’s economic transition to a market economy. On the one hand, the liberalisation and decentralisation of export activities has boosted exports. On the other hand, the reform of China’s import regime has been progressing much more slowly. This has two negative consequences. The persisting combination of high nominal protection rates and numerous tariff exemptions creates a dual regime: export-oriented firms enjoy free access to imports, while the domestic sector remains highly protected from international competition, which allows for continuing misallocation of resources. This incompleteness of trade reforms currently prevents China from joining the WTO, which might eventually hamper its further integration into the world economy ...

Citizens have a right to know the policies and activities of their government. In a well-functioning democracy, the government provides reliable and timely information to the public. Effective communications between the government and the public is especially important in countries in transition, where major changes in state institutions - indeed in all aspects of life - have left the citizenry uncertain about the new roles of the government and public administration, and how to convey their views to representatives of the state. This publication comprises six papers presented at the seminar by five experts in communications, three working in public administrations in Western Europe and Canada, and two journalists based in Budapest. A background issues paper which sets the stage for seminar discussions precedes these other papers. The annexes comprise sample codes of ethics for journalists and government communicators.

This publication reviews the recent evidence from programme evaluations on the effectiveness of active labour market policies (ALMPs) in helping unemployed individuals return to work. ALMPs differ widely in their objectives and their impacts, both across countries and within countries over time. Programme evaluations attempt to determine the impact of various ALMPs, both for the individual and on society at large. Individual impacts are usually measured in terms of post-programme earnings and/or employment performance. Societal impacts include an estimation of deadweight, displacement and substitution effects, along with some accounting for possible externalities. Recent evaluations suggest some ALMPs can help most groups of the unemployed. Many unemployed benefit from early intervention through the provision of counselling and job-search assistance. Others benefit through targeted employment subsidies, particularly in the private sector. The picture is more mixed with respect to ...

This paper examines the process of embodied technology diffusion in 10 OECD countries with the help of a methodology whereby the purchases of intermediate and capital goods act as carriers of technology across industries and countries. In terms of supply and demand of technology, it establishes that while innovations are developed mainly in a cluster of high technology manufacturing industries, a different cluster of industries in the services sector are the main acquirers of technologically sophisticated machinery and equipment. R&D performance is more concentrated (the top 5 industries account for between 60-80% of total) than technology use (the top 5 user industries account in most countries for 40-50% of total). In terms of the channels of technology diffusion, the share of technology obtained through capital investment is less than 50% of total acquired technology for every country, with the US leading in the diffusion of technology through capital investment. Imports are also an ...

Economic globalization is increasingly challenging traditional, closedeconomy intuition about linkages between demand, supply, and employment. In some parts of the world, substantial employment growth is arising from external demand while, in other areas, there is growing concern that domestic demand is being diverted to external sources of supply and employment. To better understand and predict how employment patterns will evolve with expanding international trade, the best of labor market theory must be brought into an empirical general equilibrium framework which can capture these complex interactions. The purpose of the present study is to review the innovative recent literature on labor markets and distill essential elements which can be implemented in a practical manner. The result is a taxonomy of new labor market theories and an agenda for new empirical research on wage and employment adjustment ...

This paper reviews the methods used for estimating potential output in OECD countries and the use of the resulting output gaps for the calculation of structural budget balances. The "split time trend" method for estimating trend output that was previously used for calculating structural budget balances is compared with two alternative methods, smoothing real GDP using a Hodrick Prescott filter and estimating potential output using a production function approach. It is concluded that the production function approach for estimating potential output provides the best method for estimating output gaps and for calculating structural budget balances, with the results obtained by smoothing GDP providing a cross check. New tax and expenditure elasticities, along with the potential output gaps, are used to derive structural budget balances ...

In recent years, there has been a rapid spread of economic instruments (EIs) in environmental policies of OECD Member countries. The application of EIs has gained wider political acceptability and, in a growing number of cases, they have come to have incentive rather than merely revenue-raising effects. In Sweden, eco-taxes have been introduced as part of a broad fiscal reform, while in other countries the approach is more piecemeal. Virtually without exception, EIs are employed in combination with regulations and other policy instruments.

Developing countries stand to learn from the OECD experience with EIs, but they often face unique challenges as well as opportunities in applying such instruments. Resource and other prices have historically been distorted in such economies, so correcting such distortions is a prerequisite to the effective use of EIs. Also, underdeveloped markets, public enterprises with soft budget constraints, and high rates of inflation can all undermine the ...

. Developing countries will account for almost all the increase in the world's labour force over the next 25 years; most countries, especially in Africa, will experience very rapid labour force growth. . Labour-intensive development has been spectacularly successful in some countries and others have begun to emulate them. Nevertheless, many countries still need to rethink policies and programmes in the light of the increasing urgency of employment creation. .The poor and the unemployed have much to gain from labour-intensive development, but fears about the short-term impact of reforms may cause them to oppose change. . Carefully targeted programmes of public works and food security measures implemented early in the reform process, plus improved incentives for farmers, may be essential for the popular support of reform.

Economic integration in the Pacific region — which includes the United States, Canada and Mexico — is rapidly occurring, primarily as a result of intra-regional capital flows. Private-sector business opportunities between the west and east coasts and the northern and southern rims of the Pacific region are stimulating ever-larger flows of goods, services, capital, technology, and people among these economies.

Seven trends in the world economy are likely to strengthen these regional business relationships. They are: (1) the evolution of US-Soviet relations from conflict to co-operation, (2) the collapse of communism in the Soviet Union and eastern Europe, (3) the reversal of the "locomotive" role of the United States, (4) the ascendancy of Japan as the world's banker, (5) the econornic integration of Europe, (6) the economic integration of North America, and (7) the declining relevance of the GATT. However, a regional trend, the growing friction between Japan and the United ...

Buoyant oil revenues in the 1970s provided Nigeria with the basis for large but unsustainable increases in incomes and public expenditure. Agriculture was neglected and the economy became heavily dependent on crude oil and more vulnerable to external shocks. These led to fundamental changes in the structure of the Nigerian economy. When the oil revenues collapsed following the glut in international oil market in the early 1980s, the country faced an acute economic crisis. Unable to shift gears in the face of changing economic fortunes the country resorted to external borrowing. Instead of adjusting, the government adopted a policy of deficit financing. The deficits were financed by borrowing from international capital markets (ICM), a drawn-down of external reserves, and by accumulation of arrears on external trade payments. The debt stock grew rapidly from $3.4 billion in 1980 to $17.3 billion in 1985 and $32.9 billion in 1990.

In 1986, the government adopted a structural ...

The present paper examines the trade development of Pacific-Asian economies during the past decade from the perspective of regional integration. Its main focus is on the development of intra-regional and intra-industry trade. It provides some statistical evidence for the often-heard argument that the remarkable development of Pacific-Asian trade in the 1980s should be seen as a case for the "flying-geese" pattern of trade development, which is basically of inter-industry type. It argues, however, that developments since the mid-1980s have provided a new dimension to the regional division of labour — increasing the opportunities for intra-industry trade (IIT) among the Pacific-Asian economies.

The empirical analysis based on the Grubel-Lloyd index of IIT in manufactures suggests that large increases in the level of IIT in the developing economies of the region is a consequence of "globalisation" of corporate activities in the United States and, more recently, in Japan and the ...

In response to the potential threat of global warming many countries are considering cost effective policies to reduce greenhouse gas emissions. In this context much attention has been paid to taxes levied on the carbon content of fuels (carbon taxes), since they are a potentially efficient economic instrument for reducing emissions of CO2, the main greenhouse gas. This paper first reviews the existing structure of fossil fuel prices and taxes and the relationship between energy prices and carbon emissions. It then analyses the economic cost of superimposing carbon taxes on top of current energy taxes. Finally, using a simple energy demand system, tax reform proposals are simulated including restructuring present energy taxation by the average implicit carbon tax and a carbon cum energy tax similar to the EC proposal ...

Taxes levied on the carbon content of fuels (carbon taxes) are being considered in many OECD countries as a possible policy instrument to reduce carbon dioxide emissions. This paper first reviews the policy response in Member countries to the threat of global warming. It then discusses the link between carbon emission intensities and current energy prices, touching also on the relative price effects of current energy policies and the implicit carbon taxes reflected in present energy taxation for different fuels. Finally, the likely size of carbon taxes and associated tax revenue is illustrated by simulations of OECD's GREEN model for equiproportionate emission cuts and a global permit trading system ...

The purpose of this paper is to set out a conceptual framework for policies to promote the diffusion of microelectronics in the context of developing countries. The author bases her discussion on the experience of Venezuela, a medium-sized Latin American economy which is currently trying to overcome an extreme dependence on oil export revenues and eliminate the over-protection of its industry in an effort to upgrade its international competitiveness. Current industrialisation policies are centred on three priority sectors: the modernisation of the existing petro-chemical complex; an expansion and upgrading of the mining and metallurgical sector (steel and aluminium); and, finally, aggressive export strategies for a select group of agro-industries, based on tropical agriculture and fisheries. Targeting the requirements of these three priority sectors should guide the formulation and implementation of a useroriented microelectronics strategy.

The electronics industry needs to be ...

The paper examines the desirability of exchange rate management in a commodity-exporting country, in which the terms of trade are driven by the world commodity price cycle. When the authorities are assumed to pursue an inflation objective, the usefulness of managing the rate depends on the relative importance of monetary versus terms of trade shocks. Empirical evidence suggests that floating rate regimes will normally be preferred for countries like Australia and New Zealand, although circumstances can be envisaged in which either leaning-against-the-wind or leaning-with-the-wind policies are required. A review of experience since the Korean War boom suggests that attempts to fix the exchange rate in the face of the commodity cycle are likely to be associated with inflation problems, while labour market asymmetries can lead to resource misallocation and to pressures for the protection of the non-commodity traded goods sector ...