World Institute for Research

December 1998 No. 2/98

BY INVITATION , a Founder of UNU/WIDER, Why We Need a World Wins Nobel Prize Financial Authority by John Eatwell and Lance Taylor

utcher shops and banks make an interesting contrast, as the late Cuban-American economist Carlos Diaz- BAlejandro pointed out. Both may sell tainted products, and both are subject to public inspection and controls. The difference is that the butcher can only poison his customers, while the bank- er’s wares can be based on non-performing assets anywhere in the world. Their own failure can damage the economic health of us all. This is why national financial regulation is necessary to protect the system. The regulator must detect systemic risks arising from a position that an individual firm - say the Long Term Capital Management hedge fund in the United States a he director and staff of UNU/ few months ago - cannot cover. Thanks to good surveillance WIDER are delighted by the and a timely injection of liquidity, LTCM’s uncovered debts newsT that Professor Amartya Sen, a did not bring down Wall Street, although the fund’s erstwhile founder of the Institute, has been principals will have to live with their collapsed personal for- awarded the 1998 Nobel Prize for eco- tunes for quite some time. Effective regulation stemmed con- nomics. Professor Sen was a member of tagion. the original mission that established UNU/WIDER, and has made major con- The IMF and the World Bank were established 50 years tributions to the Institute’s research pro- ago to handle balance of payments and development gramme. problems worldwide. They are not the right organiza- tions to deal with today’s capital markets. His UNU/WIDER publications include a series of highly influential books on famine and its causes, together with stud- The surveillance, regulatory, and intervention capabilities on ies of India’s development, the quality view in the case of LTCM do not grow on trees. The develop- of life, and social security in developing ment of liberal financial markets in national economies, in- countries. Professor Sen, who is Master cluding the 19th century USA, was accompanied by exactly of Trinity College, University of Cam- the same sort of volatility and contagion currently afflicting bridge, is the fifth Nobel Prize winner the economies of Asia and Latin America. The response was to contribute to the work of UNU/ the establishment of national banking and securities regula- WIDER. The others are: Robert William tors, deposit insurance, and lenders of last resort. The creation Fogel, John C. Harsanyi, Douglass C. of these authorities permitted the growth of healthy financial North, and Robert Solow. markets, which would have been impossible without them. (continued on page 2)

The University (continued from front page) banks in the 1980s to which all 13 National regulators are neces- then BIS members agreed to ob- sary to maintain efficient na- serve, and to keep out of their mar- tional capital markets. A World The current global situation kets foreign banks not adhering to Financial Authority is necessary closely resembles that of indi- the requirements. for the survival of an efficient vidual industrialized economies international regime. in the past. Existing international The result was that more countries agencies are not up to the task of voluntarily signed on to BIS stand- regulating the system. The IMF ards in order to achieve market cred- and World Bank were established ibility. World Financial 50 years ago to handle balance of payments and development Recent events have demonstrated Reform: Key problems worldwide. They are that these first steps toward global Points not the right organizations to deal regulation were not adequate. First, with today’s capital markets. For- no link has been forged between ef- tunately, there is an organization fective regulation and ‘bail-outs’, a Effective regulation is es- that can do the job. It is the Bank vital precondition for minimization sential to avoid financial for International Settlements of ‘moral hazard’ or the temptation contagion (BIS) based in Basle, Switzer- that high-risk projects pose for in- land. vestors who think they can count on Transform the Bank for In- public financial support. Second, ternational Settlements into The BIS should be transformed surveillance powers are (as we all a World Financial Authority into a World Financial Authority, have seen) inadequate. Third, capi- (WFA) with major new powers to estab- tal requirements and best-practice lish best practice financial regu- Give the WFA powers to risk management techniques such as establish best practice fi- lation and risk management computer simulation of ‘worst case’ throughout international finan- nancial regulation across scenarios (an exercise that LTCM the world cial markets. Its mandate should apparently did not undertake) need be expanded by giving it new to be generalized from banks across WFA should enforce regu- powers and responsibilities be- the now seamless financial services latory standards backed by yond its present tasks of simply industry. high profile surveillance setting capital standards for WFA could monitor and banks and co-ordinating interna- If there had been a WFA to enforce mediate the imposition of tional regulation in investment regulatory standards, backed by capital controls and insurance markets. high-profile surveillance, then some of the horrors revealed in the Asian The WFA is needed because three collapse would have been picked up decades of international financial much earlier (many of them were in liberalization have removed al- fact flagged by the BIS, but its warn- most all distinctions between na- ings were ignored). John Eatwell and Lance Taylor are co- tional and international capital authors of ‘The Performance of Lib- markets. If liberal finance is to The WFA could also monitor and eralized Capital Markets’ (available thrive, the same regulatory tasks mediate the imposition of capital on the website www.newschool.edu/ required in national markets are controls by national governments. At cepa). John Eatwell is President of now needed internationally. That the moment, a rash of new controls Queens’ College at the University of is why the BIS pioneered inter- is spreading, and the end of the at- Cambridge, Chairman of the Institute of Public Policy Research in London, national financial regulation with tack on functioning markets is not and a member of the House of Lords. the formation of the Committee yet in sight. By negotiating the need Lance Taylor, the Arnhold Professor on Bank Supervision and Regu- for temporary measures, and adju- of International Cooperation and De- lation in 1975. It was that Com- dicating disputes, the WFA could velopment at the New School for So- mittee which formulated the capi- prevent the attack from escalating cial Research in New York, is also the tal adequacy requirements for into a beggar-my-neighbour disaster. Director of its Center for Economic Policy Analysis.

2 BY INVITATION Women Are the First Victims of the Asian Crisis by Noeleen Heyzer and Martin Khor

he debate on the Asian crisis continues. There areT two sets of reasons given to ex- plain why the ‘Asian Miracles’ have so quickly become crisis econo- mies, with rising poverty including hardship for women.

One view emphasises domestic causes; weak financial institutions and regulatory mechanisms; invest- ment in very risky projects (espe- cially real estate); weak corporate governance; and a credit boom, which led to very large foreign debts. Another viewpoint argues that the Asian Miracles were not Women Micro-entrepreneurs are severely affected by the crisis fatally flawed. The crisis arose out nied the turmoil in Indonesia ear- by creating jobs and supporting of an uncontrolled global financial lier this year. community initiatives have concen- system, and currency speculation. trated mainly on public works, ig- These factors led to large When societies experience such noring the sectors where most destabilizing flows of capital in the pressure, women face especially in- women work. Women are therefore Asian region. The quality of IMF tense demands to devise ways of doubly victimized: they are hardest policy advice in the initial stages of coping for their families and com- hit in a crisis not of their making and the crisis has also been questioned. munities. Yet women are the first to are by-passed by the economic re- be hit by economic crisis. The la- covery process. Whatever its causes, the Asian cri- bour of women is seen as ‘flexible’ sis has demonstrated the dangers of to the needs of a competitive global The Chinese character for crisis con- volatile capital flows to the eco- market (in the electronics and tex- sists of two components: an element nomic and social stability of devel- tile export sectors for example) and of danger and an element of oppor- oping countries. Small and me- they are often the first to be fired in tunity. We have experienced the dan- dium-sized enterprises (SMEs) a downturn. Women are the major- gers. How do we seize the opportu- have gone bankrupt due to high in- ity of owners and workers in SMEs, nity to move forward? We cannot terest rates, currency devaluation and are therefore hit by the contrac- wish away globalization. The chal- and the credit squeeze. The social tion of the SME sector. Women have lenge is therefore to understand and consequences include mass unem- the main responsibilities for chil- reshape the globalization process - ployment, return migration to the dren and the care of the sick and eld- trade, investment, finance and tech- rural areas, food riots, cutbacks in erly, and therefore they feel the im- nology - to make it more people- education and health services, mediate effects of cuts in basic serv- centred and sustainable. What kind shortages of basic goods, and ris- ices; this raises their workload and of globalization will support stable ing crime. The mutual support sys- can adversely affect their nutritional lives in healthy communities and a tems of communities have reached and health status, for example. world free from gender-based pov- breaking point, and the old fault erty and violence? It lines of ethnicity, class and gender Recovery strategies have generally have opened. Ethnic riots and the ignored women’s livelihoods. Ef- rape of Chinese women accompa- forts to cushion the impact of crisis (continued on page 4)

3 clearly cannot be a ‘champagne glass’ globalization where 20 per The Human Cost of cent of humanity controls 85 per cent of the world’s income and the Asia’s Crisis bottom 20 per cent survives on by Tony Addison and Giovanni Andrea Cornia only 1.45 per cent. The widening gap between the new super rich and the global poor, with a diminish- Asia’s Crisis Has Halted Social Progress ing middle class, must be ad- dressed. We need to rethink how markets and states best interact to he human development protect the of the poor improve human life chances and T indicators of East Asia and because, as in the case of Latin Ameri- how people can build their skills South-East Asia have shown dramatic ca’s crisis in the 1980s, damage to hu- and power to hold both the global improvement over the last thirty years, man capital is often irreversible. market and their states account- a product of the much-discussed able. ‘Asian Miracle’. But, deep recession Higher Mortality in Indonesia, Malaysia, South Korea The current kind of globalization and Thailand together with political Recent UNU/WIDER research shows must be transformed into one that turmoil now threaten these achieve- that in countries with histories of low allows small producers control ments. unemployment and weak social insur- over their economic and social en- ance systems, such as Eastern Europe vironment as they become eco- The region has little in the way of for- and the Former Soviet Union (FSU), nomic players in global markets. mal unemployment insurance, but has sudden job losses cause considerable In this regard, UNIFEM’s support instead relied on fast growth to avoid psycho-social stress. This in turn in- for the transnational network of creases the incidence of circulatory home-based workers is innovative unemployment and its social effects. in building capacity and power But now UNCTAD forecasts that diseases and suicides. In crisis, house- among women producers. growth in Asia will amount to only 1.8 holds turn to desperate coping strate- per cent in 1998 (compared with 5.9 gies (prostitution and crime both in- We need to use a rights-based ap- per cent in 1997). Consequently, un- crease) leading to the spread of dis- proach to development as a coun- employment is rising, and real wages ease, family breakdown, increased vio- ter-force to powerful interests and are falling. lence, and ethnic hatred. These effects as the ethics to guide a globalizing have contributed to the higher mortal- world. The leaders of civil society, The cost of living has also increased ity seen in Eastern Europe and the government, international agencies substantially. Many Asian currencies FSU. and the private sector must under- have fallen sharply since mid-1997, re- stand how to shape the globaliza- sulting in higher food prices. Indone- Asia’s countries have entered their cri- tion process in a constructive way sia is in the worst situation; inflation ses with stronger community ties than to move us forward. There is no is now above 50 per cent. Rioting in those that exist in Eastern Europe and luxury of choice. Too much dam- May also disrupted the food distribu- the FSU. But the depth of the crisis is age has already been done. tion system. severely testing these informal safety nets and Asia is now starting to expe- Noeleen Heyzer is the Executive Di- rience rising mortality. In South Ko- rector of the United Nations Develop- Asia’s educational achievements are ment Fund for Women (UNIFEM) and under threat; children (especially girls) rea, for example, the suicide rate Martin Khor is with the Third World drop out of school during recession. jumped by 36 per cent over 1997-98. Network. By damaging the human capital of the Moreover, UNU/WIDER research on poor, recession increases poverty. It the causes of humanitarian emergen- also lowers future cies shows that high inflation, rising since investment in education has high inequality of income and wealth, and returns. Every effort must be made to economic recession can ultimately

4 lead to social breakdown and con- to produce deeper recessions than led recovery) have combined with a flict. would be expected given Asia’s ini- sharp rise in import costs (induced by tial problems. devaluation) to cut domestic demand Reducing the Social and employment. Costs As a result, tax bases have contracted sharply along with the level of eco- The international community must give Asia needs to redress the lack of in- nomic activity (dramatically in the more support to Asian governments to stitutional investment in formal un- case of Indonesia). This increases the ensure that their macro-economic strat- employment insurance. Public works revenue problem of governments egies support an early return to growth. programmes, child feeding pro- precisely at the time that they need Otherwise, the region’s achievements in grammes, and other forms of tar- to be spending more on social safety human development will be endangered. geted assistance are also essential to nets. The IMF has belatedly realized provide income for the poor and to that countries in deep recession need protect their nutrition and health sta- a less restrictive fiscal policy. But, tus. Allowing the poor to cultivate the damage has been done. Minimizing the unused farm land can help to allevi- ate hunger and could absorb some A prolonged crisis will jeopardize Human Cost: of the urban unemployed as well. It Asia’s past success in developing in- Key Points is also critical to avoid any reduc- stitutions for poverty alleviation and tion in school enrolment. Indonesia the delivery of basic services. These is trying to keep children in school institutions might be able to with- Build formal safety nets by reducing and waiving school fees stand a temporary loss of funding, such as unemployment and providing more scholarships to but any sustained erosion in the real insurance poorer children. salaries of teachers, health operators, and other key personnel, will under- Target the poor through Inevitably this assistance has large mine service delivery (the outcome public works programmes and food transfers fiscal costs. Unlike Latin America’s in much of Latin America in the debt crisis in the 1980s, most Asian 1980s). Protect public spending governments entered the crisis in on basic social services 1997 with low fiscal deficits (and in Lessons some cases fiscal surplus). Asia’s cri- Avoid excessive fiscal sis did not originate in reckless pub- Asia’s past investments in human de- restraint and high interest lic spending. Therefore, at first sight velopment provide a capacity to shel- rates the deep cuts in public expenditures ter the most vulnerable people from Redesign macro- that characterized Latin America’s the worst effects of crisis, provided economic frameworks to crisis in the 1980s might be avoided. that swift action is taken and inter- ensure their compatibility national support is forthcoming. At with poverty reduction However, the IMF’s policy the start of 1998 it was therefore pos- conditionality at the start of the cri- sible to hope that Asia’s crisis would sis in 1997 has limited governments’ not be as severe as those of Latin ability to protect basic social expen- America in the 1980s or of Eastern ditures and increase spending on Europe and FSU in the 1990s. Giovanni Andrea Cornia is the Director safety nets. The IMF’s treatment of of UNU/WIDER and also the Director of the crisis on a nation-by-nation ba- the research project on ‘Rising Inequal- But now, the picture is much more sis (instead of dealing with the more ity and Poverty Reduction: Are they Com- uncertain. Asia was expected to stage patible?’ Tony Addison from Warwick fundamental problem of financial an export-led recovery. Instead, high University, UK, is the Director of the contagion), its insistence on a sharp real interest rates and bank failure research project on ‘Underdevelopment, rise in interest rates, and its require- Transition and Reconstruction (UTR) in (both of which constrain the invest- ments of fiscal restraint, combined Sub-Saharan Africa’. ment response necessary for export-

5 1998 Public Lectures

ne of the ways in which in the 1960s. This ‘growth tragedy’ creasingly connected by large UNU/WIDER tries to has contributed to high levels of flows of trade, finance, and invest- Ostimulate as much public debate as poverty and dismal human devel- ment. But not all economies ben- possible on development issues is opment indicators. However, there efit equally. Much depends on the through its public lecture series are some signs of better times access of countries to new tech- which are very popular. Details of ahead. For the past four years, the nologies, and their human capital past and future lectures can be average growth of output in SSA investments. Some people are left found on our website (http:// as a whole has been higher than the behind; the benefits of globaliza- www.wider.unu.edu). region’s population growth rate. In- tion for the poor of developing flation has come down. Botswana, countries are still uncertain. These, The World Food Situation: Mauritius, and Uganda have aver- and other aspects of globalization, were discussed at a public lecture Recent Developments, aged growth rates of 6-8 per cent on 10 June. The distinguished Emerging Issues, and Long- over the last decade. Do these glimmers of hope signal the start panel, chaired by Professor Term Prospects Although glo- of an African economic renais- Giovanni Andrea Cornia, consisted bal food production will probably sance? What obstacles must of Dr Jorma Ollila (President and exceed the growth of world food Africans overcome to secure eco- CEO, Nokia Corporation), Profes- demand during the next twenty- nomic and social progress? These sor Deepak Nayyar (Jawaharal five years, many millions of were just some of the issues dis- Nehru University, New Delhi), and people will still go hungry. Food cussed by UNU/WIDER Senior Professor Hans J.A. van Ginkel insecurity and malnutrition con- Research Fellow Professor (Rector, UNU). Professor Nayyar tinue to be among the most impor- tant problems facing us today, and are especially severe in Sub-Sa- haran Africa. Degradation of the natural resources which provide the basis for expanding food pro- duction still continues. Major challenges arise from urbanization in China and other developing countries. This raises food de- mand, changes consumption pat- terns, and alters the pattern of world food trade. The International Food Policy Research Institute (IFPRI) is a world leader in the analysis of food and hunger issues. IFPRI’s director, Dr Per Pinstrup At the public lecture on Governing Globalization, from left, Giovanni Andrea Andersen, discussed the results of Cornia, Deepak Nayyar, Hans J.A. van Ginkel, and Jorma Ollila recent IFPRI research on the world food situation at a public lecture Nguyuru H. I. Lipumba at a pub- is directing a recently launched on 2 April. lic lecture on 19 May. UNU/WIDER project on ‘New Has Africa Turned the Cor- Roles and Functions for the UNand the Bretton Woods Institu- ner? Sub-Saharan Africa (SSA) Governing Globalization Glo- tions’. has failed to fulfill its development balization is one of the most hotly potential; many countries now contested issues of our time. Na- have per capita incomes lower than tional economies are becoming in-

6 The Russian Crisis: Which Way News and Activities Out? On 6 October, Dr Robert McIntyre and Dr Vladimir Mikhalev, Pre-launch of 1998 Golley from Australia, Mr UNU/WIDER Project Directors, dis- Kang-Kook Lee from Korea, UNDP Human Mr Anthony Tsekpo from cussed the current crisis in Russia. Dr Development Report Ghana, Mr Paolo Verme from McIntyre focused on the means and Italy, and Ms Elena Zabelkina On 8 September, WIDER organ- outcomes of the privatization of state from Russia have all completed ized a pre-launch for the presen- owned enterprises, and Dr Mikhalev their research work success- tation of the 1998 UNDP Human discussed the social costs of the tran- fully and returned to their re- Development Report to UNU/ sition. Dr McIntyre emphasized a spective universities. WIDER staff. The report was in- stronger role for the state in control- troduced by the Director of the ling the privatization of enterprises and The Institute is in the process UNDP report team, Dr Sakiko of offering 3-5 internships for regulating the market. He was critical Fukuda Parr. The 1998 HDR re- of the role of international financial in- 1999 (applications are now port focused on changing con- closed). The internship pro- stitutions in the transformation of the sumption patterns and their im- gramme is for students work- Russian economy into a market pact on future world development. ing on their Ph.D. thesis on top- economy. Dr Robert McIntyre is the The Report emphasized environ- ics which are related to the cur- Director of the UNU/WIDER project mental impacts and the impor- rent research themes of the In- on Small and Medium Size Enterprises tance of raising consumption of stitute. The objective is to pro- in Transition Economies, (‘Transition the world’s poorest people. Pro- vide the students supervision fessor Tony Addison presented on their work and close inter- from Below: The Role of the New Pri- the report on behalf of UNDP to vate Sector’). Dr Vladimir Mikhalev action with the resident re- a meeting of the Advisory Board searchers. In addition to com- is the Director of the project on ‘In- for Relations with Developing come Distribution and Social Structure pleting independent research Countries at the Finnish Ministry reports, the interns also make during Transition’. for Foreign Affairs (KESU). presentations on their research findings. The Institute also The Impact of EMU On 26 Octo- aims to publish the work of the Launch of UNCTAD interns in its publication series. ber, Professor Charles Wyplosz dis- 1998 Trade and cussed the future role of the European Development Report Central Bank (ECB) and its manage- Sabbatical ment of European monetary policy. He On 16 September Professor Tony Programme argued that the ECB does not have Addison and Professor Giovanni enough power to direct European mon- Andrea Cornia presented Dr Daniele Checchi, Associate etary policy during a crisis. Professor UNCTAD’s Trade and Develop- Professor of Political Economy Wyplosz argued that it is wrong to as- ment Report 1998 to the media at from the University of Milan sume that European national central a launch organized in Helsinki. spent a period of about one banks will simply follow the will of This report examines the current month in October 1998 at performance and prospects in the UNU/WIDER as a sabbatical the ECB, especially during a crisis. He world economy with special ref- scholar. His research on ‘In- said that the main obstacle to ECB re- erence to the present financial tur- equality in Income and In- sponding rapidly to problems is the moil. The report discusses ways equality in Education: What is fact that it has so many decision mak- to regulate the world trade and fi- the Nexus?’, was presented at ers. Professor Wyplosz commented nancial systems, especially to a seminar. that the ECB’s main objective will be meet the development needs of to keep inflation low, the same prior- the poorer nations, including Sub- For the 1999 short-term sab- ity as the German Central Bank, but it Saharan Africa. batical programme, the Insti- should also pay more attention to the tute is in the process of invit- issue of unemployment in Europe. ing 3-4 visitors to contribute to Internship Programme its research programme. Professor Charles Wyplosz is the Di- rector of the research project on the The second 1998 internship pro- (continued on page 8) ‘Impact of EMU on Europe and De- gramme for Ph.D. students came veloping Countries’. to an end in November. Ms Jane

7 (continued from page 7) Dr Noeleen Heyzer, the Direc- tor of UNIFEM to discuss pos- Staff News sible areas for joint cooperation Donor (8 September). Contributions Professor Nguyuru H. I. Lipumba, the Co-Director of the Mr Peter Fisch from the Euro- pean Commission to discuss research project on the ‘Impact This year has seen an in- of Liberalization on Key Markets possible collaboration on crease in the number of in Sub-Saharan Africa’ left the WIDER research (10 Septem- Institute in July 1998, to return ber). donors providing finan- to Tanzania. cial contributions to Dr Luis de Mello from OECD UNU/WIDER research Dr Terry McKinley from the for discussions on research col- programmes. UNDP New York office joined laboration (18 September). the Institute as a visiting scholar The Institute gratefully in September 1998 for a period Dr Stefan Bogdan Salej, the acknowledges the fi- of one month. His research fo- President of Federacõ das nancial contributions to cus was on ‘Increasing Inequal- Indústrias do Estado de Minas its projects by the Gov- Gerais, Brazil, to explore re- ity and Changing Social Struc- ernments of Denmark search collaboration (18 Sep- ture in Rural China 1988-1995’, (Department for Devel- under the project on ‘Income tember). opment Cooperation, Distribution and Social Structure during Transition’. Mr Jagdish Saigal, Senior Pro- Royal Danish Ministry gramme Manager, UNCTAD of Foreign Affairs), Dr Laixiang Sun from the In- for discussions relating to WID- Finland (Ministry for ternational Institute for Applied ER’s involvement in the UNDP/ Foreign Affairs), Italy System Analysis (IIASA), UNCTAD project on (Directorate General for Laxenburg, Austria, joined the ‘Globalizaion, liberalization Development Coopera- and sustainable development’ Institute as a visiting researcher tion, Ministry of For- (13-14 October). in September 1998 for a period eign Affairs), Sweden of three months. His research (Swedish International work will contribute to the Professors Tapio Palokangas, project on ‘Small and Medium Erkki Koskela, Seppo Development Coopera- Size Enterprises in Transition Honkapohja, Pekka tion Agency - Sida), and Economies’. Ilmakunnas and Pertti the Haaparanta to discuss the fur- (Department for Inter- ther development of UNU/ national Development). Visitors to WIDER courses in develop- UNU/WIDER ment and transition economics The Institute has also re- at the University of Helsinki and ceived project contribu- Helsinki School of Economics Ms Yakin Ertürk, Director of tions from the Finnish (2 November). INSTRAW, for discussions on National Fund for Re- cooperation between INSTRAW Groups of students from the search and Develop- and UNU/WIDER (14 July). University of Helsinki, Univer- ment (SITRA), Oracle sity of Jyväskylä, University of Nordic (Finland), and Professor Derek Jones from Tampere, University of Turku the UN’s Department Hamilton College, New York, and the Helsinki UN Associa- for presenting a paper on ‘Small of Economic and So- tion visited the Institute during size enterprises in transition’ (7 cial Affairs, Division the autumn of 1998. August). for Social Policy and Development. Professor Bengt Holmström from MIT to discuss research work (24 August).

8 UNU/WIDER 1999 Calendar of Events (preliminary, subject to change)

Public Lectures 10-11 September, to discuss the 2 February, 15:00-17:00 hrs, 23-24 May (tentative dates), to discuss the drafts of papers on the drafts of papers on the project ‘In- public lecture on ‘A World Finan- project ‘New Roles and Functions stitutions and Development’ in Hel- cial Authority’ by Lord John for the UN and Bretton Woods Insti- sinki. Eatwell at the Finnish Film Foun- tutions’, in Helsinki. Project Directors, Professors dation, Helsinki. Project Director, Professor Deepak Judith Heyer, Frances Stewart and Nayyar. Rosemary Thorp 25 February, 15:00-17:00 hrs, public lecture on ‘The Asian Cri- 18-19 June, to discuss the drafts of sis: The End or the Beginning?’ by papers on the project ‘Small and Board Meeting Professor Jomo K. S., at Nautica Medium Enterprises in Transition: conference room, Marina Con- How Does Entrepreneurship De- 14-15 June 15th Session of the gress Center, Helsinki. velop in Post-Socialist States. (Tran- Board of UNU/WIDER in Helsinki. sition from Below: Small and Me- 25 March, 15:00-17:00 hrs, dium Term Enterprises)’, in Hel- public lecture on ‘Social and Po- sinki. litical Consequences of Project Director, Professor Robert University Lecture Series Globalisation’ by Professor Erik McIntyre. Allardt, at Nautica conference The Economics of Develop- room, Marina Congress Center, 23-24 June (tentative dates), to ment, at the University of Helsinki, Helsinki. discuss the first drafts of papers on 3 November - 10 December 1998 the project ‘European Monetary by Professors Giovanni Andrea Project Meetings Union (EMU) and its Impact on Eu- Cornia and Tony Addison. rope and the Developing Countries’, 8-9 January, to discuss the final in Helsinki. contributions and review the over- Project Director, Professor Charles The Economics of Develop- all conclusions of the project and Wyplosz. ment (Advanced Course) at the to formulate the project manuscript University of Helsinki of ‘Information Technology and Late June (tentative), to discuss 16 March - 22 April 1999, Tuesdays Growth’ in Helsinki. the first drafts of papers on the and Thursdays at Porthania 607, by Project Director, Professor Matti project ‘Rising Income Inequality Professors Tony Addison Pohjola. and Poverty Reduction: Are they and Richard Auty. Compatible?’, in Helsinki. 16-17 April, to discuss the first Project Director, Professor drafts of papers on the project ‘Un- Giovanni Andrea Cornia. The Economics of Transition derdevelopment, Transition and at the Helsinki School of Econom- Reconstruction in Sub-Saharan 2-3 July, to discuss the drafts of ics and Business Administration 8 Africa’, in Helsinki. papers on the project ‘Environmen- March - 30 April 1999, Mondays Project Director, Professor Tony tal, Export and Human Development and Fridays 12:00-14:00 hrs, by Addison. Problems in Natural Resource-based Professors Robert McIntyre and Growth Models’, in Helsinki. Vladimir Mikhalev. 14-15 May, to discuss the drafts Project Director, Professor of papers on the project ‘Income Richard Auty. Distribution and Social Structure during the Transition’, in Helsinki. Project Director, Dr Vladimir Mikhalev.

9 UNU/WIDER Publications New Titles July - December 1998

Research for Action WP150 State-Owned versus USD 8.00 / FIM 30.00 Township and Village Enter- Order Instructions prises in China by Enrico C. RFA44 Resource Abundance Perotti, Laixiang Sun and Liang and Economic Development: Zou, September 1998. The publication series are Improving the Performance of priced as indicated , post- Resource-Rich Countries by Ri- WP151 Unemployment, Labour age inclusive. chard M. Auty, September 1998. Policies and Health in Transi- tion: Evidence from Payment should be made Kazakhstan by Paolo Verme, by one of the following RFA45 Underdevelopment, methods: Transition and Reconstruction October 1998. in Sub-Saharan Africa by Tony (1) Bank draft in USD pay- Addison, October 1998. WP152 Computers and Labour able to UNU/WIDER; Markets: International Evi- (2) Credit card (Ameri- dence by Francis Kramarz, Octo- RFA46 Real Exchange Rate can Express, Eurocard, ber 1998 Policy and Non-Traditional Ex- Mastercard, OK, Visa). ports in Developing Countries by Please provide the follow- WP153 Information Technology Ibrahim A. Elbadawi, November ing details: card name and and Economic Development: An 1998. number, expiry date, and Introduction to the Research Is- card holder’s name and ad- sues by Matti Pohjola, November dress; 1998 (3) In FIM or in USD di- WP154 Costa Rica: Policies and rectly to UNU/WIDER Conditions for Export Diversi- bank account in Merita fication by Ennio Rodríguez, De- Bank Ltd, Olavinkatu 1, cember 1998 00100 Helsinki, Finland (FIM account 157330- 19447 - USD account Research in Progress 157352-11363). Please free of charge send us a copy of the pay- ment receipt. RIP17 Budgetary Institutions Please send your inquiries and Fiscal Consolidation in and orders to Ms Tuula Working Papers Ghana: Lessons for Transition Haarla, Publications Assis- Economies in Africa by Anthony tant, at the address pro- USD 5.00 / FIM 20.00 Tsekpo, September 1998 vided on the back page of this newsletter or to the WP148 Computers and Eco- RIP18 Rebuilding Post-Conflict following e-mail address: nomic Growth in Finland by Petri Africa: Reconstruction and Re- [email protected]. Niininen, August 1998. form by Tony Addison, Novem- ber 1998 WP149 The Role of Knowledge and Capital in Economic Growth by Sergio Rebelo, Sep- tember 1998.

10 Dissemination and Book Manuscripts Submitted Publication News to Publishers in 1998 new policy of UNU/WIDER he following manuscripts are outcomes of the UNU/WIDER is to encourage publication of Tresearch programme for 1996/97 with the exception of the Atranslations made of its studies, and manuscripts authored and edited by Aiguo Lu and Valentine M. the publication of its research results Moghadam, which result from the 1994/95 programme. The pub- in international economic journals lication details will be made available in due course. to enable wide and fast dissemina- tion. Please note that the titles given below are subject to change. To Catch Up: China and the Global Economy Since 1840 by Here are a few examples of devel- Aiguo Lu opments in this area in 1998. The Origins of Humanitarian Emergencies: War and Dis- MOCT-MOST The special issue of , placement in Developing Countries (Volume I), edited by E. Vol. 8, No. 1, 1998, entitled Ne- Wayne Nafziger, Frances Stewart and Raimo Väyrynen glected Key Issues in the Transition Debate edited by Giovanni Andrea Weak States and Vulnerable Economies: Humanitarian Emer- Cornia and Vladimir Popov, presents gencies in the Third World (Volume II), edited by E. Wayne results of research findings from the Nafziger, Frances Stewart and Raimo Väyrynen UNU/WIDER project on ‘Eco- nomic Theories and Strategies of the Short-Term Capital Movements and Balance of Payments Transition’. Crises edited by Stephany Griffith-Jones, Manuel F. Montes and Anwar Nasution The 1998 WIDER Annual Lecture, More Instruments and Broader The Transition Mortality Crisis edited by Giovanni Andrea Goals: Moving toward the Post- Cornia and Renato Paniccià Washington Consensus presented by Professor Joseph E. Stiglitz, has Transition and Long-Term Growth: The Role of Structural been or is being translated into the and Institutional Factors edited by Giovanni Andrea Cornia following lanaguages: Russia, Span- and Vladimir Popov ish and Polish. Transition and Gender in the Former Socialist World: Mar- The Russian translation was pub- ket Reforms, Women and Work edited by Valentine M. lished in the journal ‘Voprosy Moghadam Economiki’ (No. 8, 1998) issued by the Russian Academy of Sciences. New Patterns of Social Provision in Low Income Countries The Spanish translation, by the In- edited by Germano Mwabu, Cecilia Ugaz and Gordon White ternational Institute on Governance From Shock to Therapy: The Political Economy of Post-So- (IIG), Barcelona, Spain, was pub- cialist Transformation by Grzegorz W. Kolodko lished in the first issue of ‘Instituciones y Desarrollo’ (Octo- ber 1998) issued jointly by IIG and UNDP. The Spanish translation will also be published in the journal Working Papers on the Internet ‘Desarrollo Económico’ in Buenos Aires, Argentina. The Polish trans- UNU/WIDER publications will soon be available in elec- lation will be distributed at a public tronic format on the internet. Please visit the publications discussion on the topic, organized section of the Institute’s homepage at http:// by the Banking and Finance Re- www.wider.unu.edu., where you will find the appropriate search Institute-Learned Society in links. More information on this will be included in the next Krakow, Poland. issue of the Angle.

11 UNU/WIDER ’Habitat’ Volume Published by VATT

selection of papers produced within the ’Habitat’ project which was planned and coordinated jointly by UNU/ AWIDER and the Finnish Ministry for the Environment have been published by VATT – the Finnish Government Institute for Eco- WIDER Angle is the newsletter of the World nomic Research, Helsinki. The aim of the joint project was to Institute for Development Economics Re- elaborate new approaches to the challenges posed by the un- search of the United Nations University precedented growth of urban population, as a contribution to (UNU/WIDER). Published twice a year, the newsletter focuses on the Institute’s re- the UN Habitat II Conference held in Istanbul in 1996. search activities. It is distributed free of charge. The newsletter is also available on The volume, entitled Urbanization: Its Global Trends, Econom- the Institute’s website at: ics and Governance, edited by Reino Hjerppe with Pii Elina www.wider.unu.edu. Berghäll (VATT Publications 26), may be ordered from VATT. Editorial contents by Professor Tony Please contact Ms Tuula Torvi, Publications Secretary, tel. +358- Addison, Research Fellow, (e-mail: 9-703 2951, fax +358-9-703 2984, e-mail [email protected]. [email protected]), and Mr Ara Kazandjian, Senior Information Assistant, (e-mail: [email protected]). UNU/WIDER was established by the UNU as its first research and training centre and started work in Helsinki, Finland, in 1985. Through its research and related activities, UNU/WIDER seeks to raise unconventional and frontier issues and to provide insights and policy advice aimed at boosting the eco- nomic and social development of the poor- est nations.

UNU/WIDER UNU/INTECH Helsinki UNU/INRA Maastricht Finland Accra Ghana

UNU/ILA UNU UNU/IAS Amman Headquartes Tokyo Jordan Tokyo, Japan Japan

UNU/INWEH UNU/BIOLAC Ontario Caracas UNU/IIST Venezuela Canada Macau .

UNU/WIDER Katajanokanlaituri 6 B 00160 Helsinki, FInland Tel. (+358-9) 6159911 Fax (+358-9) 61599333 Telex 123455 unuei fi E-mail [email protected] Website www.wider.unu.edu

For further information on the Institute’s activities, please contact: Mr Ara Kazandjian, tel. (+358-9) 61599210, e-mail [email protected].

Printed at Forssa Printing House Ltd Finland, 1998, ISO 9002. ISSN 1230-9544

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