Showing papers on "Purchasing power published in 2003"

Real and Distributive Effects of Petroleum Price Liberalization: The Case of Indonesia

Abstract: The impact of higher petroleum prices on the aggregate price level, real growth, and income distribution is appraised within a multisector computable general equilibrium (CGE) model. A reduction in the government subsidy raises petroleum prices and production costs throughout the economy. Consumer demand, production, and income decline as output prices increase and consumer purchasing power decreases. The model is applied to and calibrated for Indonesia. The simulated results predict a slight increase in price level and a slight decrease in output. An important result is that urban household groups will be the most significantly affected by the subsidy reduction.

Sending money home: are remittances always beneficial to those who stay behind?

Abstract: This paper examines the importance of remittances from international migrants to those who stay behind. The paper looks in particular at the Zimbabwean case, and argues that while money sent from the ‘other side’ has a beneficial effect on close kin, remittances can also undermine the purchasing power of those households without migrating members. This is in part a result of asset price inflation, and in part due to the inflationary effects of parallel currency markets. The situation for those excluded from benefiting from foreign currency inputs is aggravated by chronic scarcity in the availability of consumables. The paper argues that further research is required to understand the costs, as well as the benefits, of money sent home by migrants, in terms of assessing the class and social agency of different groups of remittance senders and receivers. The paper suggests that one non-economic, but significant effect, of remittance-underwritten parallel markets might be an undermining of inclusive governance and democratic state accountability in the long-run. © 2003 John Wiley & Sons, Ltd.

“The Net Generation”:Children and Young People, the Internet and Online Shopping

Abstract: Children have long been acknowledged as playing an important role within family purchasing decisions, with their ability to directly and indirectly influence family purchasing. In addition to their role within the family, children are seen as an important group of consumers in their own right due to their individual purchasing power. Over recent years the use of the Internet by children has increased and they are commonly portrayed as confident and able users of Internet technology. It is important to understand how the Internet will be used by children as an additional shopping medium and to explore the issues surrounding this use. This paper reports on data collected during an in-depth study exploring family purchasing behaviour and the role of the Internet. The findings discussed address a specific and important aspect of the data, namely the use of the Internet as a shopping medium by children for purchases for themselves. A number of important themes were identified including; use of the Internet as ...

On the Friedman Rule in Search Models with Divisible Money

Abstract: This paper studies the validity of the Friedman rule in a search model with divisible money and divisible goods where the terms of trades are determined endogenously. We show that ex post bargaining generates a holdup problem similar to the one emphasized in the labour-market literature. Buyers cannot obtain the full return that an additional unit of money provides to the match, which makes the purchasing power of money inefficiently low in equilibrium. Consequently, even though the Friedman rule maximizes the purchasing power of money, it fails to generate the first-best allocation of resources unless buyers have all the bargaining power.

Intellectual Property and the Availability of Pharmaceuticals in Poor Countries

Abstract: There continues to be widespread criticism of the extension of patent rights on pharmaceuticals in the developing world as required by World Trade Organization membership. This chapter examines arguments in favor and against this strengthening of worldwide patent protection. It emphasizes that these new pharmaceutical patents promise benefits and costs that differ according to the characteristics of diseases. Some diseases primarily affect poor countries. For these diseases, patents will not be sufficient to attract substantial private investment, because purchasing power is low. However, globally available and well-defined patent rights could increase the benefits derived from greater public financing of research on pharmaceutical products for the developing world. For major global diseases the justification for extending patents in poorer countries is less clear. Thus the optimal global framework for pharmaceutical patents might require differentiating the protection given to products in accordance with...

Who benefits and how much? : how gender affects welfare impacts of a booming textile industry

Abstract: Exports of textile products originating from Sub-Saharan African countries have grown dramatically in the past decade. Recent trade initiatives, such as the "African Growth Opportunity Act" and "Everything but Arms," along with low labor costs and improved integration into world markets, are giving further stimulus to the growth of the textile and apparel industry in Sub-Saharan African countries. Nicita and Razzaz explore the extent to which the poor are also beneficiaries of the export-led growth of particular economic sectors, or whether the poor are unable to reap any of the benefits and therefore fall further behind. They use a methodology that combines the matching methods literature (to identify individuals more likely to fill the new jobs of the expanding sector) with the industry wage premium literature (to quantify the gains of the individuals that move into the expanding sector). The results indicate that a sustained export-driven growth in Madagascar's textile and apparel industry will lead to a substantial increase in the income of poor households, with a consequent decrease in poverty. In a scenario simulating five years of expansion of the textile sector, the authors estimate that more than one million individuals will directly or indirectly receive some benefit. On average, households in which one or more members work in the textile sector get an increase in purchasing power of about 24 percent or US $14 a month. The results further show that benefits are unevenly distributed across male and female workers. Households in which a male member is employed in the textile and apparel industry increase their purchasing power by 36 percent or US $24.5 a month, compared with 22 percent or US $12.2 a month in the case of a female worker. This paper - a joint product of Trade, Development Research Group and the Gender Division, Poverty Reduction and Economic Management Network - is part of a larger effort in the Bank to study the linkages between trade and poverty.

Keynes and Commons on Money

Abstract: Post Keynesians and institutionalists share several common ideas. As Robert Keller showed, they have the same conception of time, money, and society (1983). Because time is historical, it implies that decisions are irreversible and that uncertainty matters and shapes the behavior of economic actors. This appears notably through the use of money, which permits the transfer of purchasing power from the future to the present (satisfaction of animal spirits) and the transfer of expected purchasing power in a safe form, from the present to the future (liquidity preference). Thus, sticky monetary contracts are essential in a monetary production economy to stabilize expectations induced by uncertainty. However, expectations and interests of each group in the society are not necessarily convergent. This implies that the creation and the enforcement of these contracts is a source of tension between groups with different economic power. Therefore, we live in a world in which relations of subordination and a concentration of economic power are the rule and "perfect" competition does not and cannot exist. If one looks more specifically at the writings of John Maynard Keynes and John R. Commons, it is possible to find many similarities as Glen Atkinson and Theodore Oleson (1998) have shown. Among these essential similarities are their conception of time and the way the economy works. Both consider time irreversible and that the economy is turned toward the future. In Commons' works, the concept of futurity expresses this idea: economic actors create and exchange property rights, the value of which depends on future expected incomes. Thus, agents live in an uncertain world and are subject to the "unseen pressure of society" to evaluate monetarily an "unseen future" (1959, 440). In Keynes, all this appears in his theory of investment and employment, according to which entrepreneurs try to calculate the marginal efficiency of capital and to fix the level of employment at the point of effective demand. Keynes and Commons

The Big Mac Index : Applications of Purchasing Power Parity

Abstract: Introduction Purchasing Power Parity: A Survey of the Issues The Growing Evidence on Purchasing Power Parity The Economics of the Big Mac Standard Burgernomics and the ASEAN Currency Crisis Big Macs and Wages To Go: Comparing the Purchasing Power of Earnings Around the World Professors and Hamburgers Index

Real and Distributive Effects of Petroleum Price Liberalization : The Case of Indonesia

Abstract: The impact of higher petroleum prices on the aggregate price level, real growth, and income distribution is appraised within a multisector computable general equilibrium (CGE) model. A reduction in the government subsidy raises petroleum prices and production costs throughout the economy. Consumer demand, production, and income decline as output prices increase and consumer purchasing power decreases. The model is applied to and calibrated for Indonesia. The simulated results predict a slight increase in price level and a slight decrease in output. An important result is that urban household groups will be the most significantly affected by the subsidy reduction.

On the Friedman Rule in search models with divisible money

Abstract: This paper studies the validity of the Friedman rule in a search model with divisible money and divisible goods in which the terms of trades are determined endogenously. We show that ex post bargaining generates a holdup problem similar to the one emphasized in the labor-market literature. Buyers cannot obtain the full return that an additional unit of money provides to the match, which makes the purchasing power of money inefficiently low in equilibrium. Consequently, even though the Friedman rule maximizes the purchasing power of money, it fails to generate the first-best allocation of resources unless buyers have all the bargaining power.

Who is Not Poor? Proposing a Higher International Standard for Poverty

Abstract: Poverty reduction is now, and quite properly should remain, the primary objective of the World Bank. But, when the World Bank dreams of a world free of poverty-what should it be dreaming? I argue in this essay that the dream should be a bold one, that treats citizens of all nations equally in defining poverty, and that sets a high standard for what eliminating poverty will mean for human well-being.I purpose a new standard for global income poverty for the World Bank's use. This poverty line is the weighted average of the poverty lines declared by its shareholders, where the declared poverty line is no lower than the country uses for its own citizens. I show this will imply a poverty line of around U.S.$15 a day in current purchasing power adjusted currency units?about ten times higher than the existing standard.

Motives for foreign direct investment in Oman

Abstract: This paper empirically examines the factors that influence foreign investors to engage in foreign direct investment (FDI) in Oman. One hundred and six foreign equity ventures participated in the study. The analysis of the data reveals that political and economic stability are the two most important motives for investing in Oman. Contrary to expectations, purchasing power of customers, market size, and availability of low-cost inputs are the least desirable factors, respectively. The statistical analysis indicates that all motives do not equally appeal to all foreign investors from different countries.

Analysis of Competition and Market Structure of Basic Telecommunication Services in India

Abstract: ) confirmed the existence of a feedback process whereby economic activity and growth stimulates demand for telecommunication services. Territories vary greatly in their level and distribution of income and industrial structure, especially in developing countries such as India. Income patterns decide disposable income levels and hence purchasing power levels for communication services. Population density, demographic shifts (joint to nuclear families, rural/hills to urban/planes), customer behavior patterns and network externalities have a significant influence over growth and demand for services (

Who benefits and how much? : how gender affects welfare impacts of a booming textile industry

Abstract: Exports of textile products originating from Sub-Saharan African countries have grown dramatically in the past decade. Recent trade initiatives, such as the"African Growth Opportunity Act"and"Everything but Arms,"along with low labor costs and improved integration into world markets, are giving further stimulus to the growth of the textile and apparel industry in Sub-Saharan African countries. Nicita and Razzaz explore the extent to which the poor are also beneficiaries of the export-led growth of particular economic sectors, or whether the poor are unable to reap any of the benefits and therefore fall further behind. They use a methodology that combines the matching methods literature (to identify individuals more likely to fill the new jobs of the expanding sector) with the industry wage premium literature (to quantify the gains of the individuals that move into the expanding sector). The results indicate that a sustained export-driven growth in Madagascar's textile and apparel industry will lead to a substantial increase in the income of poor households, with a consequent decrease in poverty. In a scenario simulating five years of expansion of the textile sector, the authors estimate that more than one million individuals will directly or indirectly receive some benefit. On average, households in which one or more members work in the textile sector get an increase in purchasing power of about 24 percent or US$14 a month. The results further show that benefits are unevenly distributed across male and female workers. Households in which a male member is employed in the textile and apparel industry increase their purchasing power by 36 percent or US$24.5 a month, compared with 22 percent or US$12.2 a month in the case of a female worker.

Towards a Quasi-market in Reintegration Services: First Assessment of the Dutch Experience

Abstract: The Netherlands has recently introduced market forces into the labour market reintegration services sector. In this paper, we examine the extent to which the emerging market-oriented Dutch reintegration services sector meets the conditions, established by Le Grand and Bartlett (1993), for the efficient functioning of quasimarkets. Le Grand and Bartlett define a 'quasi-market' as a market where independent agents compete with one another for custom from purchasers, but where purchasing power comes not directly from consumers but from the state. This study makes a first assessment of the Dutch experience with a market-oriented reintegration services sector for the period 2000-2002. The paper concludes that the key strength of the new Dutch reintegration services market lies in the way the market has been structured and the mechanisms by which providers and purchasers (on behalf of the clients) have been motivated to act in the best interests of clients. Information flow and transaction cost outcomes, two further key dimensions of an efficient quasi-market, are moving in a positive direction. There are, however, indications of risk-averse behaviour by providers. The question is how this may be tackled in further refinements to the tendering process.

Regional Output Differences in International Perspective

Abstract: Accurate regional estimates of output are desired as an indicator of level of development and as a variable used to explain internal migration, demand patterns, fertility and other aspects of behaviour. This chapter explores one often neglected aspect of regional income differences, namely that due to price differences or regional purchasing power parities. When nominal regional income measures are adjusted for these price level differences they are termed real regional incomes. The preferred method of estimating regional purchasing power parities by detailed price comparisons is discussed for Brazil, the United States and the European Union. The empirical thrust of the chapter is an investigation of different methods for estimating regional real incomes based on PPP data for 167 countries and nominal regional incomes and other data for about 870 administrative areas at the subnational level. Even in their present form we believe the real income estimates provided for the geographical units present opportunities for understanding the world economic structure.

Interstate comparison of output and productivity in the Australian agricultural sector, 1991 to 1999

Abstract: The paper examines the output and productivity performance of the Australian Agriculture sector by state from 1991 to 1999. The aim of the paper is two-fold. First, the paper is a pioneer in a series which compares the performance of each Australian state by sector starting with the Agriculture sector. Second, it introduces the Geary-Khamis (GK) method for derivation of appropriate currency converters or purchasing power parities (PPPs) to enable proper quantification of real output and productivity at the multilateral level. It is essential to use appropriate PPPs as the differences in prices of farm commodities across states pose the problem of aggregation of real output. For the benchmark year 1996-97, gross value of agricultural production reveal that Victoria was 73% of NSW level, based on Australian Bureau of Statistics data when price differentials are not taken into consideration. However, when appropriate PPPs were used, results showed that Victoria’s level had gone up to 88% of NSW level. In terms of value added, Victoria’s level with respect to NSW was 89% based on actual values and 106% based on Geary-Khamis PPPs.

IDA in UF : on the benefits of changing the currency denomination of concessional lending to low-income countries

Abstract: Developing countries tend to overwhelmingly denominate their external debt in a few major foreign currencies. This makes the domestic cost of debt service dependent on the real exchange rate, which is a price that tends to strengthen in good times and weaken in bad times, thus making debt service anti-cyclical, rising just when it is most difficult to pay. Countries have a good reason to borrow in foreign currency: domestic currency markets abroad are essentially non-existent. Even the International Bank for Reconstruction and Development (IBRD) window of the World Bank lends in dollars because it must fund itself in the same capital markets that do not accept local currency denominations. The International Development Association (IDA) window also lends in dollars but does not have this excuse. It is funded with fiscal resources and could be lent, in principle, in any unit it wished. The authors argue that it should lend in inflation-indexed domestic currency, or UFs, following Chile's Unidades de Fomento.

Spatial and supply/demand agglomeration economies: State- and industry-linkages in the U.S. food system

Abstract: Cost-impacts of spatial and industrial spillovers on economic performance are evaluated by incorporating activity level measures for nearby states and related industries into a cost function model. We focus on localization and urbanization economies for state level food processing industries, from activity levels of similar industries in neighboring states, agricultural input suppliers, and final product demand. We find significant cost-savings from proximity to other food manufacturing centers, and areas with high purchasing power. Cost savings from locating near an agricultural area are also evident, although it seems costly to be located within a rural agricultural state, implying thin market diseconomies. Marginal production costs instead appear higher in more urban, and lower in more rural, areas. These spillover patterns also have input composition implications; materials demand responses are the most closely tracked by the agglomeration cost effects, and capital and labor impacts vary.

The Indonesian Crisis: A Human Development Perspective

Abstract: Focusing on the impact of the 1997-99 economic crisis in Indonesia, the first part of this book discusses the economic situation in Indonesia, whilst the second elaborates on what happened to human capital during the crisis and the third examines its effect on purchasing power.

Confidence in Domestic Money and Currency Substitution

Abstract: I. INTRODUCTION The prevalence of currency substitution (CS), that is, the demand for foreign money by domestic residents, has been endemic in several Latin American and East European countries as well as some other parts of the world. Traditional explanations of the phenomenon tend to focus on its association with high levels of domestic inflation: Foreign money is a convenient hedge against the erosion of purchasing power over time. (1) Therefore, the degrees of CS experienced by different countries are theorized as the consequences of the different monetary policies in those countries. In particular, a stabilization policy, such as a decrease in domestic inflation, should lead to a decline or even the elimination of CS. This prediction, however, has not been observed empirically. In several instances, decreases in inflation to minimal levels subsequent to episodes of high inflation have not reversed the demand for foreign money. The persistence, or "hysteresis," in CS has been the subject of many theoretical and empirical studies. (2) On the other hand, interestingly, a complete and rapid elimination of local currency has been rarely observed even with high levels of domestic inflation. Some theoretical explanations of the observed irreversibility of CS in the literature have focused primarily on the transactions technology associated with the use of two monies. Guidotti and Rodriguez (1992) argue that there are costs associated with switching from the use of one currency to the other. Once an economy is dollarized, these costs deter the switch back to the use of domestic money after inflation has abated. Uribe (1997) elaborates a similar model of CS hysteresis in which the transactions costs are endogenous in that they are a decreasing function of the aggregate level of CS in the economy. Sturzenegger (1997) postulates a model in which inflation instigates financial adaptation (i.e., a move away from domestic money to the use of foreign money or other assets) and transactions costs associated with CS are assumed to decline with an increase in the denomination of purchases. In such a setting, certain sectors of the economy become dollarized, and reversion to the use of domestic money, subseq uent to a decline in inflation, need not occur. In more general terms, Dornbuschet al. (1990) characterize this process of financial adaptation as a shift in money demand: For every rate of inflation there is now a lower demand for domestic money, leading to hysteresis. Alternative explanations of CS have focused on public perceptions regarding various government policies. One argument is that stabilization policies--such as those leading to a decline in inflation--lack credibility and hence are ineffective in rooting out CS. Melvin and Fenske (1992) propose this as one explanation for the persistence of demand for foreign money in Bolivia, monetary reform in the late 1980s notwithstanding. A similar conclusion is reached in Clements and Schwartz (1993). However, this argument may imply that persistence in CS is, in all likelihood, a transitory phenomenon: The demand for domestic money will rise eventually as stabilization policies earn credibility. In Tandon and Wang (1999), yet another government policy--the imposition of costly capital controls--is brought to bear on the persistence of CS in an inflationary economy. In such an environment CS arises and persists from balancing between the expected cost of capital controls associated with foreign currency and the loss in purchasing power associated with inflationary domestic money. The principal contribution of the present article is the incorporation of agents' (subjective) expectations and beliefs as the key determinant underlying the relative demand for domestic and foreign currencies. We study a model in which the confidence in domestic money is partial, as in Weil (1987) and Bertocchi and Wang (1995) and extend the previous analysis to a two-money environment. …

Replacing the Income Tax with a Progressive Consumption Tax

Abstract: Shifting from an income tax to a consumption tax would offer major simplification advantages. Even if Congress created as many preferences and other special rules to what it has under the existing income tax, the massive set of complications that relate to realization and to the taxation of financial transactions would largely be eliminated. The main (though not the only possible) reason for opposing such a shift is the concern that it would require reducing progressivity. However, the capacity of a consumption tax to achieve progressivity comparable to that of an income tax is widely misunderstood, for two main reasons. First, a consumption tax purportedly exempts "capital income," seemingly raising the specter of its exempting the likes of Bill Gates and Warrant Buffett. As recent tax policy literature has shown, however, the only difference in theory between an income tax and a consumption tax pertains to the risk-free return to waiting, which historically has averaged less than one percent per year. The point made by this literature is by now familiar and well-accepted in some circles, but in others it remains unfamiliar or has been unduly dismissed. This article aims to win it wider acceptance. Second, many believe that wealthy people escape the burden of a consumption tax by deferring their consumption, and that advocates of such a tax ignore the effects of unconsumed wealth on one's security, political power, and social standing. The argument overlooks the fact that what makes wealth valuable is the real purchasing power that it commands. Otherwise, real money would be no different than Monopoly money. A consumption tax affects the purchasing power even of unspent wealth, and the burden it imposes generally is not reduced by deferring one's consumption. The article also discusses the choice between use of the origin basis and the destination basis in taxing cross-border transactions. A consumption tax can use either method, but an income tax is practically compelled to use the origin basis. Use of the destination basis would eliminate transfer pricing issues, although in their place it would create various problems that an origin basis tax avoids, such as the need for border adjustments (e.g., tax rebates for exports). Thoughtful consideration of the choice between the origin and destination basis upon shifting to a consumption tax requires dismissing a popular canard, which is that the destination basis, because it exempts exports, offers an "export subsidy" that would favor countries using it in international trade competition. Economists universally agree that well-functioning origin and destination basis systems have equivalent incentive effects on international trade once in place. This suggests that a destination basis consumption tax should neither be favored politically as a tool of trade war, nor subject to successful legal challenge under the GATT.

Extraversion strategies within a peripheral research community: Nigerian scientists' responses to the state and changing patterns of international science and development cooperation

Abstract: Labelled ‘giant of Africa’ in the 1970s on account of its promising human and natural resources, Nigeria entered in the early 1980s in an unprecedented period of recession following the domination of corruption over government operations, the fall of the oil market price and the introduction of a structural adjustment programme in 1986. Despite its potential wealth, Nigeria is ranked today as part of the world’s thirty least developed countries. This has, of course, had severe repercussions on institutions of higher learning and the scientific community through the twin effects of the deterioration of working conditions and that of the purchasing power of the academic staff. However, our study, based on visits in nine of the most prestigious research institutions and interviews with forty five scientists working there, reveals that, contrary to all expectations, research has not died. It has, rather, been transformed in various ways along the survival strategies evolved by scientists and the needs of the international community.

THE rice problem in the Philippines: trends, constraints, and policy imperatives

Abstract: Every political dispensation in recent decades has taken the view that the country has to be able to feed itself. For the country’s political leaders and the agriculture bureaucracy, this has meant that rice, the country’s staple food, has to be locally produced at quantity sufficient to meet the rice requirement of the burgeoning population. Indeed, rice self-sufficiency has been an objective enshrined in all government programs for the agricultural sector since the early 1960s. To achieve the objective, the Government has intervened, albeit in varying degrees, in the marketplace to affect virtually all segments of the supply chain, including importation, and of the demand spectrum. Yet, self-sufficiency has remained elusive. The population is far from being more food-secure now than a decade or two ago. Over the years, rice has become more expensive in the Philippines than in most developing countries of Asia. This has caused reduction in the purchasing power of the incomes of the poor, including landless farmers and urban poor workers whose spending on rice constitutes about 22% of their total household expenditure. Arguably, this could partly explain for the much higher incidence of absolute poverty in the Philippines than in Indonesia, Thailand, and even Vietnam. What has gone wrong? In this paper, we examine the performance of the rice sector over the last three decades. Our aim is to identify policy imperatives and investment options for the sector in the wake of globalization and population pressure. While a number of observations found in the paper are not new and have already been pointed out elsewhere, we move beyond the usual description of past performance to include as well an ex-ante assessment of the effects of trade policy reforms on the rice economy in the short and medium terms.

Facilitating small producers' access to high-value markets: lessons from four development projects

Abstract: Globalization creates opportunities as well as obstacles for small producers in the countries of the global South. This paper describes the attempts of four BDS initiatives ‐ AKILI (Kenya), USSIA (Uganda), SITE (Kenya) and SEEDS (Sri Lanka) ‐ to help small producers exploit emerging opportunities to reach new markets within and outside their countries. Considerable success was achieved in helping client producers access new, higher-value markets and to link up with private sector BDS providers, including packaging firms and standards certification agencies, thus enabling the producers to supply supermarkets and other nontraditional markets. However, such successes were often limited to the minority of more advanced small businesses, the so-called ‘ stars’ : more difficulties were encountered when working with the less sophisticated majority of microenterprises and small businesses (MSEs), especially where a significant leap in product quality was required for them to access the new markets. The greatest potential for widespread outreach and poverty alleviation lies in the adoption of sub-sector approaches, where there is greater potential for leverage. There is still an important role for support agencies to identify market opportunities thrown up by globalization, of which small producers are often unaware. IMPORTANT CHANGES ARE TAKING PLACE in the incentive structure facing small enterprises in the South, driven by the parallel processes of liberalization and globalization. Some doors can be seen to be closing, while others are opening wider. On the negative side, three major trends can be seen at work: m A lowering of tariff barriers has seen a substantial increase in the import into the South of many goods previously produced by smallscale enterprises, including clothing, food, soap and detergents, simple tools, equipment and so on. m The austerity measures accompanying structural adjustment have tended to eat into the purchasing power of the traditional clientele of small informal sector producers, the urban and rural poor. Depressed international prices for many agricultural commodities mean that even export crop-producing areas have often not escaped the economic downturn (Meagher and Yunusa, 1992).

From Accession to Cohesion: Ireland, Greece, Portugal and Spain and Lessons for the Next Accession

Abstract: This study presents a concise analysis of the macroeconomic developments in four cohesion countries (CCs) Greece, Ireland, Portugal and Spain, from 1960 to 2000. Special attention is being paid to the economic performance of these countries after their accession to the European Union (EU). The aim is to find out whether the new EU Accession Countries (ACs) from Central and Eastern Europe can learn from the experience of the CCs concerning future benefits and disadvantages resulting from accession.The study is divided into five major parts. The first part is devoted to methodological questions. In the second part the developments of major macroeconomic indicators for each CC for the period 1960 to 2000 are tracked and set in relation to each other. In doing this, we concentrate on the influence of exogenous demand factors (or injections) and so-called leakages that together determine the level of economic activity. Exogenous demand injections are private investment, government expenditures (for consumption and investment) and exports, whereas leakages contain private savings, net taxes (taxes net of subsidies and transfers) as well as imports. The third part deals in detail with the role that FDI and EU transfers played in the four CCs with respect to their influence on private investment, net exports and hence on economic growth as well as on the CCs' trade performance and external position. The fourth part focuses on the patterns of income catching-up of the four CCs in relation to the EU average; attention is drawn to the differences in growth records depending on whether GDP is measured in national currency terms or at purchasing power standards (PPS). The fifth part contains brief general remarks on the growth strategy of the ACs

Econometric model of services sector development and impact of tourism in latin american countries aguayo

Abstract: Over recent decades some Latin-American countries have experienced an important development due to the positive effect of tourism on the services sector. Our model relates tourism with the increase of Value-Added in services, taking into account other important variables which influence the evolution of this sector and explain the important differences among developed and less developed countries. Besides tourism the industrial evolution is also very important to improve the development of services through some intersectoral relations. The model suggests that some stagnation of services development in many countries is due largely to a lack of industrial investment, especially in countries with a low level of tourism. Our main conclusions are that both factors, industry and tourism, need to be increased generally to contribute to development of employment and production of the services sector. JEL Classification: C5, L80, O54 1.Introduction In this paper we present a vision of services sector development in 22 countries of the American continent, in order to highlight the importance of tourism. We consider two models, for the group of the world and of America, where we relate the value-added of the services sector, with the exports of this sector and with the value-added of both agriculture and industry sectors, in order to see the positive effect of tourism. The data, corresponding to 22 American countries, is collected from the Economic Development Report of the World Bank and from other international organisations, based on figures at constant prices and according to purchasing power parities of 1999. 2.Tourism in Latin American Countries Table 1 shows the world ranking of tourism destinations over the last few decades. At the beginning of the 1990s European countries occupied the top positions, from 1 to 6, with the exception of USA . We can observe that Mexico was the most visited country in Latin America. Aguayo, E.; Lamelas, N. and Exposito, P. Sector Services in Latin America 2 Table 1. World's Top Tourism Destinations Rank 195

A Socialist Market Economy in North Korea? Systemic Restrictions and a Quantitative Analysis

Abstract: The paper deals with the question of economic reforms in North Korea. In the first, theoretical part, it is attempted to highlight the serious restrictions for a clear-cut decision between the old system of state-controlled procurement and distribution on one side and a market economy on the other, offering a hybrid solution to the occurring dilemma. In the second part, the price reforms of July 2002 are analyzed quantitatively as an empirical case study, including their impact on purchasing power, savings, fiscal policy, inflation and their distributive effects. This factual evidence is supplemented by a third part, in which the theoretical and ideological attempts of North Korea to bring the changes in line with its official ideology are explored. In the final analysis, the price reforms are put in the context of a broad North Korean reform initiative, resulting in important policy implications for the international community.