ERD WORKING PAPER SERIES NO. 11 ECONOMICS AND RESEARCH DEPARTMENT

The European Social Model: Lessons for Developing Countries

Assar Lindbeck

May 2002

Asian Development Bank ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

Assar Lindbeck

May 2002

Assar Lindbeck is a Professor of International Economics at the Institute for International Economic Studies, Stockholm University. The author acknowledges Jakob Svensson and Peter Svedberg for useful comments on a draft of the paper, and Christina Lönnblad for improving the language. This paper was delivered as a keynote speech at the Conference on Poverty, Growth, and the Role of Institutions, 10-12 October 2001, Asian Development Bank.

13 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

Asian Development Bank P.O. Box 789 0980 Manila Philippines

2002 by Asian Development Bank May 2002 ISSN 1655-5252

The views expressed in this paper are those of the author(s) and do not necessarily reflect the views or policies of the Asian Development Bank.

14 Foreword

The ERD Working Paper Series is a forum for ongoing and recently completed research and policy studies undertaken in the Asian Development Bank or on its behalf. The Series is a quick-disseminating, informal publication meant to stimulate discussion and elicit feedback. Papers published under this Series could subsequently be revised for publication as articles in professional journals or chapters in books.

15 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

Contents

Abstract vii

I. General Lessons 1

II. Childhood 4

III. Income and Job Security during Working Age 5

IV. Sick-pay Insurance and Health Care 7

V. Pensions and Old Age Care 9

VI. Conclusion 11

References 12

16 Abstract

Developing countries, in particular the least developed ones, probably have more to learn from social policies in Europe during the early 20th century than from the elaborate welfare-state arrangements after World War II. In addition to macroeconomic growth and stability, the main ambitions must be to fight human deprivation, including illiteracy, malnutrition, and poor access to water and sanitation; in some cases, also weak, incompetent, and/or corrupt governments. It is also important that informal systems in the fields of transfers and social services are not destroyed when developing countries embark on more formal systems in these fields in the future. The European experience also warns against the creation of social systems that are so generous that disincentives, moral hazard, and receding social norms seriously distort the national economy, including the labor market

17 I. GENERAL LESSONS

n the early 20th century, many European countries still relied heavily on the family both for income protection and personal (“human”) services, such as child care and care for the elderly, Iand, to some extent, also for health care. Civil society, including so-called “friendly societies”, also contributed to income insurance, for instance in connection with sickness, old age, and unemployment (the latter often with the help of union-run insurance systems). Occupational pensions also played an important part for government employees. Besides this, government-created social arrangements consisted mainly of selective poverty relief (social assistance) and basic services in the fields of elementary education and health. In the late 19th and early 20th centuries, legislation was, however, also introduced for work injury compensation and basic, though quite modest (lump-sum or means-tested) pensions. In some countries, mainly on the European continent, the government was also involved in the organization of occupational pensions in the private sector, primarily in the case of large industrial firms. Comprehensive systems for income maintenance—in the case of childbirth, single motherhood, unemployment, sickness, old age, etc.—were not introduced in Western Europe (henceforth “Europe”) until the first decades after World War II, however. Secondary and tertiary mass education and comprehensive health care for the entire population were built up at about the same time. It is thus only from the 1960s and 1970s that it makes sense to talk about a “welfare state” in Europe. In other words, Europe was already quite rich, as compared to most contemporary developing countries, when elaborate welfare-state arrangements were created. Since welfare-state arrangements differ among European countries, talking about a common “European social model” is somewhat misleading. Naturally, this observation constitutes the background to the habit among scholars to classify European countries in terms of different “welfare regimes.” The most important difference among countries probably concerns the relative role of the state, the family, and the market for the provision of income protection and social services. Countries also differ in terms of the relative roles of “universal” benefits tied to citizenship, occupational benefits tied to work, and selective means-tested income support. There is also a considerable difference in the generosity of benefits and welfare services. As a result of the far-reaching social reforms after World War II, the social arrangements in Europe are today clearly more comprehensive than in other parts of the world. The achievements of these arrangements are well known: high-income security for the individual over the life cycle,

1 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES considerably mitigated poverty, and ample provision of various types of social services. The weaknesses of these social arrangements are also well known today. It turned out that some of these arrangements were not very financially robust to various types of shocks, for instance, in terms of demography, productivity growth, and macroeconomic disturbances. The architects of the welfare state also neglected, or at least underestimated, undesirable behavior adjustments in response to changes in economic incentives, as a result of explicit and implicit marginal tax wedges and “moral hazard” in connection with various benefit systems. What, then, are the general lessons for developing countries of social policies in Europe? These countries, in particular the least developed ones, probably have more to learn from social policies in Europe during the early 20th century than from the elaborate welfare-state arrangements after World War II. The reason is, of course, that economic resources, socioeconomic structures, and informal welfare arrangements in the earlier period were more similar to the situation in today’s developing countries than contemporary conditions. In most developing countries, trying to imitate contemporary welfare-state arrangements in Europe would be a serious mistake. In particular, this would be the case for transfer payments designed to provide protection against income losses for the population as a whole, since such protection is very expensive and also requires a highly developed administration. Instead, it is reasonable to give priority to the creation of an environment conducive to entrepreneurship, long-term economic growth, basic health and primary and (at least in some developing countries) secondary education—as was the case in Europe a century ago. The “fine tuning” of welfare-state arrangements in Europe today are often far from what is needed in developing countries. We have also learned how important macroeconomic stability is for social conditions. In addition to macroeconomic growth and stability, the main ambitions must be to fight human deprivation, including illiteracy, malnutrition, poor access to water and sanitation, and, in some cases, also weak, incompetent, and/or corrupt governments. It is also important to look at social policies in a broad context, and then identify the interaction among different types of economic and social variables. Myrdal (1944, appendix 3) often emphasized processes of “cumulative causation”, with vicious circles among various poverty- creating forces: malnutrition damaging health, which in turn results in social exclusion and reduces the possibilities of acquiring education, which further lowers productivity and political influence, which goes back to square one by exacerbating malnutrition and social exclusion, etc. Dynamic processes of this type are well understood today among professional observers of poverty in deve- loping countries. It is equally important to understand such processes when we try to turn vicious circles into virtuous ones. There are, of course, other important similarities among developing countries than their poverty. Most of these countries are also rural, and they have a young population. It is, however, also important to emphasize their differences in terms of socioeconomic conditions, administrative capacities, the role of informal welfare arrangements and economic and social policies. Presumably, the most important difference is the level of development and the degree of “modernization” which, to a considerable extent, is a result of the governments’ past emphasis on, or neglect of, long-term

2 Section I General Lessons economic growth. For instance, governments and ethnic and social groups in some developing countries, not least in Africa, have clearly been more engaged in power struggles and rent seeking than in growth enhancing policies. In several South East Asian countries, by contrast, it is fair to say that concern for economic growth has indeed dominated, also over issues of income security. As we know, this has been reflected in a heavy emphasis on capital formation. Some of these countries have, however, also succeeded in combining fast economic growth with a fairly even distribution of income and wealth, thanks to early land reform and widespread elementary education. The emphasis on economic growth also shows up in the composition of infrastructure investment, which has been heavily concentrated on production-oriented structures such as harbors and roads and railways, rather than facilities directly servicing households, such as housing, sanitation and the environment in cities and the countryside. This emphasis on growth, of course, reflects an understanding among policymakers that mass poverty can never be replaced by mass affluence without sustained economic growth during many decades. This said, we should not forget that some social arrangements, not just spending on primary education, might be conducive to long-term economic growth, the most important examples perhaps being policies improving the nutrition status and the general health conditions of the poor, in particular children. Safety nets and systems for income protection may also, up to a point, be conducive to economic efficiency, since they may enhance political and social stability (Alesina and Rodrik 1994). But, in particular, we have learned over the years that highly selective social policies can make a big difference in the living conditions among the poorest sections of a society, also at a given level of per capita GDP (Sen 1983). I argued above that it is mainly the European experience of social policies before World War II, and even before World War I, that should be of interest for social policies in today’s developing countries. For the more affluent ones, however, there are also lessons to be learned from the contemporary experience of social policies in developed countries. For other developing countries, the European experience after World War II is probably of interest mainly for contemporary discussions of social policies far ahead in the future. The latter observation is of some importance since it often takes a long time before social policy arrangements are in place and functioning properly. An extreme example is funded social insurance systems, including so-called provident funds à la Malaysia and Singapore, since such systems mature very slowly. However, the most important message of the paper for developing countries is probably to avoid destroying existing informal systems. Empirical research suggests that these risks are real (Townsend 1994, Udry 1994). I will organize my discussion as a “sightseeing tour” in the welfare landscape, following the individual from the womb (and hence not just from the cradle) to the tomb.1

1 For a more detailed account of the role of welfare state arrangements over the individual’s life cycle, though without discussion of the lessons for developing countries, see Lindbeck (2002).

3 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

II. CHILDHOOD

Before World War II, the family and other relatives were in charge of most child care in Europe, though high- and middle-class families also hired helpers (usually girls) in the market. The main example of government intervention was mandatory and subsidized primary education. After World War II, three additional government interventions were launched, or greatly expanded: prenatal care, income transfers (or tax deductions) to families with children and, in some countries, also subsidized child care outside the family either in institutions (kindergarten) or in the homes of others (family daycare). It is generally agreed that the sharp drop in birth rates during the last two decades threatens the financial viability of various welfare-state arrangements in the long run. An obvious policy response would be to stimulate child bearing by redistributing income to families with children, in particular those with many children. Somewhat surprisingly, this has, so far, not occurred to any large extent, perhaps because families with children are today a highly heterogeneous minority among voters. There are, however, at least two arguments for more interventionist policy measures in the case of families with children. First, there is a second-best argument to subsidize child care outside the family, because of the existence of distortionary taxes favoring tax-free household work at the expense of taxed work in the labor market. Indeed, government policies in the Nordic countries have recently followed this second-best route through strong subsidies of child care outside the family, which is one important explanation for the high labor force participation of women in these countries. The other argument for government intervention in the lives of families with small children is, of course, that schooling has important implications for economic efficiency and the future distribution of factor income. It is controversial whether the same argument is relevant for child care of preschool children. In the case of poor families with little education, in particular families with severe social problems, it is, however, widely believed that child care outside the family enhances human capital formation and hence the future factor income of such children. This, of course, is the traditional “head-start” argument. Is any of this relevant for developing countries? The fertility problem is, of course, usually the reverse of the European one; about 40 per cent of the population in many developing countries are children. It is, however, hazardous (to say the least) to use this observation as an argument for turning the policy recommendation for Europe upside down for developing countries, hence recommending redistributions of income to the disadvantage of families with (many) children! We probably have to rely on traditional birth control policies and compulsory education to convince families in developing countries to restrict their number of children. As in Europe before World War II, it is natural to expect that child care in developing countries, for a long time to come, will be pursued by the family and other relatives—combined with privately hired helpers in the case of high- and middle-class families. The most urgent policy

4 Section III Income and Job Security during Working Age interventions in child raising in developing countries must be improved nutrition, fights against infective diseases for pregnant woman and small children, and primary education. The relevant methods are commonplace: information about high-nutrition food intake, subsidies of such food for the poorest section of the population, obstetric care, clean water, sanitation, immunization, and subsidized compulsory primary education. Indeed, studies in medicine and bio-demography have shown the importance of these factors for the physical and intellectual development of children (Behrman 1993, Scrimshaw 1996, United Nations 1997). In particular, the interaction between infectious diseases and malnutrition for children has turned out to be highly damaging; deficiencies in these respects are even transmitted to grandchildren. Usually, such policies are not very expensive as compared to many other types of government spending, for example infrastructure investment and military spending. It is also an area where technical and economic assistance from the outside world may be particularly useful. The head-start argument for child care outside the biological family is probably relevant mainly for orphans and street children in developing countries. What about education? In the poorest developing countries, there are both efficiency and distributional reasons to concentrate educational resources on primary schooling, as was the case in Europe during the first decades of the 20th century. There is, however, also an emerging consensus that a number of developing countries, for instance in Southeast Asia and Latin America, have reached a level of development where it is appropriate to allocate more resources to secondary and tertiary education. European experiences during the 20th century suggest that it then makes sense to put a strong emphasis on a combination of theoretical and vocational training—along the lines of the apprenticeship systems in Austria, Germany, and Switzerland. These countries have been successful both in creating a skillful labor force, at least in manufacturing, and in keeping down the level of youth unemployment.

III. INCOME AND JOB SECURITY DURING WORKING AGE

Only very few policy interventions directly designed to enhance income security and job security existed in Europe before the 1930s; modest unemployment benefits and limited public works programs during depressions being the main exceptions. Two reasonable explanations are perhaps that the main beneficiaries of such policies had little political power and that macroeconomic theories for rationalizing such policies did not exist before the “Keynesian revolution.” By contrast, macroeconomic policies have dominated the political agenda in Europe after World War II. Such policies were also quite successful for a while in the sense that the macroeconomic performance in Europe was excellent from the economic recovery during the early 1950s to the mid-1970s. The subsequent situation may be characterized as a continuation of good income security combined with dismal employment performance and hence, deteriorating job security for part of the labor force. An appropriate policy package to improve employment performance would have to include not only measures strengthening the attractiveness of outsiders in the labor market and

5 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES activating their job search, but also measures reducing the market powers of insiders (Lindbeck 1996). What are the lessons, if any, for developing countries from the experience of employment policies and income protection in Europe? In most developing countries, unemployment benefits hardly exist, simply because some 60-80 percent of the population are in informal sectors (largely agriculture). In some of the more affluent developing countries, certain unemployment benefits do exist, but these are usually neither comprehensive nor generous. In some of the most advanced developing countries, including some countries in East Asia, there is, however, a quite detailed labor market legislation, including both minimum wages and job security legislation. But the implementation of the laws is usually weak or even nonexistent, which is, of course, a disadvantage for employees who would keep their jobs also with stricter implementation. However, poor imple- mentation is an advantage for workers who would not have been hired if minimum wages and job security legislation had been strictly enforced. As a result of all this, European-type insider-outsider division has largely been avoided in developing countries, and highly persistent unemployment after negative macroeconomic shocks do not seem to be prevalent. There is, instead, often considerable segmentation between privileged employees in the public sector, and in some cases also in large firms, on the one hand, and less privileged employees in smaller firms, on the other hand. Moreover, some of the more affluent developing countries seem to be strongly exposed to negative macroeconomic shocks. This problem can probably be mitigated to some extent by floating exchange rates or, in some case, by membership in a large monetary union where the country’s trade is concentrated. Another macroeconomic problem is that both financial institutions and production firms have often neglected their balance sheets, which appears in low equity capital and much short-term borrowing (often also in the form of uncovered loans in foreign currencies). I understand this to have been an important factor behind the financial crisis in East Asia in the late 1990s. Tougher authorities in the field of financial inspection are thus called for. In view of the severe social problems in connection with recurring macroeconomic crises in developing countries, the first, and perhaps most important, line of defense for job and income security must be good macroeconomic institutions, well-consolidated firms, and a reasonably good macroeconomic policy, including an appropriate exchange rate system. Sooner or later, the population in developing countries will certainly demand a second line of defense, in the form of income protection. It is well known that systems of unemployment insurance do not easily spontaneously emerge via voluntary market transactions due to problems of adverse selection. Either the state or unions must intervene to create comprehensive unemployment benefit systems. It is then, of course, important to realize that the generosity and the duration for the benefits must be kept within certain bounds to mitigate moral hazard problems. In countries with a particularly low per capita income and quite a small formal production sector, ethical considerations probably point to a safety net solution, rather than comprehensive unemployment insurance, designed to provide income protection in proportion to previous income.

6 Section IV Sick-pay Insurance and Health Care

The purpose would be to secure elementary entitlements such as food, shelter, clothing, and basic health. Such safety nets could, of course, operate by quite different methods: public work programs; subsidized work in the private sector for unemployed workers; needs-based cash transfers (“social assistance” or “welfare”) to poor people in general; selective transfers in kind (food programs such as food stamps); or subsidies to basic consumption. Administrative feasibility, including the precision of targeting, is presumably a crucial aspect in the choice of method. The administrative difficulties in running such programs in developing countries are accentuated by the problem of knowing when the family is able and willing to provide income security to its members and when this is not the case. There may be some experiences from Southern Europe, for example Italy, on how to handle, or not handle, safety nets in societies with weak government administration and frequent cohabitation of parents and adult children. Moreover, considering the dominating role of agriculture in most developing countries, crop insurance programs are often more important than unemployment insurance. Local, so-called “micro- and area-based”, protection for small farmers is another example of income protection programs that should perhaps be relied on to a larger extent today and in the near future.

IV. SICK-PAY INSURANCE AND HEALTH CARE

In Europe before World War II, personal savings, support from relatives and friends, and individual insurance schemes dominated as methods for mitigating economic setbacks in connection with health problems. Mandatory sick-pay insurance, usually administrated by government agencies, is basically a post World War II phenomenon. Since these systems are quite generous today, with replacement rates often in the interval of 70-100 percent, governments in Europe have no doubt succeeded in reallocating income to periods when the individual is temporarily sick, and hence to protect consumption during such periods. In a considerable part of Europe, sick-pay benefits, like unemployment benefits, are, however, tied to previous earnings, which favors individuals with stable employment. This means that the insider-outsider division of the labor market is transmitted to periods of bad health. In several European countries, the sick-pay insurance systems have recently run into serious financial difficulties. One reason is moral hazard, for instance, when an individual calls sick when feeling tired on a Monday morning. The consequences of moral hazard may be accentuated by receding social norms against exploiting the systems, when individuals observe that others do this. To the extent that these factors explain the rising costs of sick-pay insurance, more waiting days, coinsurance, and stricter administration of the benefit system would be rational policy responses. In some countries, including Sweden, higher costs for sick-pay insurance are, however, more related to long-term than to short-term sick leave. “Double work” by women is probably a reason, since they still do the bulk of household work, including child care in the home, simultaneously with work in the labor market. In this sense, women have paid a high psychological

7 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES price for their increased labor market participation. There is also some speculation in the general discussion to the effect that reorganization of work, with increased requirements of efficiency and individual responsibility, has contributed to the stress at work. If these are important explanations, the problems might be mitigated both by improvements in the work environment and by a greater responsibility for household work, including child care, among men. The first may be achieved by experience-rated insurance fees for firms (higher fees for firms with many sick days). It is more difficult to design policies that shift household work from women to men, since this would require that the government intervene in the lives of families. Such policies, however, already exist to some extent in Denmark and Sweden, since men are offered nontransferable rights to stay at home to take care of small children, without much loss of income. What about developing countries? In most of these, sick leave is basically financed as in Europe during the first decades of the 20th century, i.e., via relatives and civil society. In countries with more formal systems of health insurance, i.e., mainly the most affluent among developing countries, these systems are usually highly fragmented, with separate arrangements for different industries, professions and firms. If more elaborate sick-pay insurances are created in developing countries in the future, the European experience illustrates the importance of watching out for moral hazard and changes in social norms. For that reason, it is important to keep the generosity of the system within bounds, and make the administrative controls tight, not least to prevent physicians from being overly generous in certifying the needs for sick leave. What, then, is the experience of health care services in Europe? In general terms, the basic problem is how to combine insurance, incentives, and freedom of choice. All health care systems are today exposed to serious cost problems, since the “third party pays.” Insurance schemes, in particular when based on cost-plus financing, tend to generate particularly rapid increases in costs, which is strikingly illustrated by the experience in Germany and the United States. Canada has succeeded better in containing costs in its health care insurance systems by relying on fixed budgets for health providers and price control of services. Tax-financed health services of the UK National Health Service (NHS) type have typically been better at containing health care costs. But this has been achieved by strict rationing, i.e., queues and waiting lists (which also is a problem in Canada), and high stress levels at work for the personnel. Are there any lessons for developing countries from health care in developed countries? Most well informed observers probably agree that it makes sense for developing countries to emphasize fights against infectious diseases and malnutrition, not least for pregnant women and small children. This may mean that comprehensive treatments of heart disease, cancer, and other ailments characteristic of a rich and aging population, would have to be postponed. Concretely, this means information and subsidies in the field of sanitation and primary health care and probably also information about the importance of a healthy life style, including less smoking. The surveillance of public and private health care units, with very uneven qualities, is also of potential importance. In a somewhat longer perspective, there are also strong cases for mandatory health

8 Section V Pensions and Old-age Care insurance for “catastrophic health care”, co-payments, and the mobilization of more resources for health care in the private sector. In many countries, it is also important to increase the salaries of doctors and nurses. Apart from this, it is important to allow and stimulate experimentation, which requires considerable freedom of entry of nongovernment health providers—for nonprofit as well as profit organizations. I then assume that it is better to allow decentralized experimentation, rather than keep existing systems intact or, as often occurs, have the government conduct full scale experiments for a whole country. It is also important to avoid destroying whatever nongovernment networks exist via families and civil society.2

V. PENSIONS AND OLD-AGE CARE

While mandatory pension systems in Europe have been instrumental for providing income security for the elderly, governments have played a much more modest role in the field of care for the elderly. As we know, both fields encounter serious problems today. To the extent that contemporary, and projected future, financial problems of the pension systems are caused by low birth rates in the past, conceivable remedies would be to boost nativity (with considerable time lag before the size of the labor force is influenced) and encourage the immigration of young individuals of working age. Unfortunately, it is not obvious that governments can do much about birth rates (except perhaps provide good child care outside the family), and there may be “social limits” to immigration because of the risks of ethnical tensions in the countries of immigration. To the extent that financial problems for pension systems are related to a higher longevity of individuals after retirement, raising the statutory pension age and removing subsidies to early retirement are instead natural remedies. But to avoid heavy unemployment among the elderly in connection with later retirement, it is also important to allow greater flexibility in relative wages (for workers of different ages) and increase the possibilities for retirees to individually choose the length of their work week. It is today also increasingly understood in Europe that the “pay-as-you-go” (PAYGO) pension systems create disincentive problems for work via implicit tax wedges. The reason is, of course, that the link between the contributions and the subsequent pension benefits for the individual is usually quite weak. An obvious way of mitigating this incentive problem is to tighten the link, hence making the pension systems more actuarial, or “quasi-actuarial” (since the return on mandatory pension saving would be lower than the return in financial markets). There is also a case for a partial shift to a funded pension system. The individual then would be able to enjoy a more diversified portfolio of pension claims than in either a pure PAYGO system, where the (risky) return depends on the growth rate of the tax base, or a pure funded system where the (risky) return depends on

2 The role of such networks in developing countries is still an “under-researched” field.

9 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES developments in financial markets. The reason is, of course, that these two types of returns are not fully correlated, in particular if the pension funds invest in international capital markets. What is the relevance of all this for the financing of retirement in developing countries? In most such countries, informal systems, in particular via relatives, are likely to dominate for a long time to come. Sooner or later, there will, however, be a strong ethical case for government intervention to mitigate poverty among the elderly—an application of the safety net idea to the retirement period. A basic pension in the form of a lump sum payment, equal for all elderly, or means-tested pension benefits, are then obvious alternatives. This corresponds to the World Bank’s (1993) recommendation for a “universal first-tier pension.” An additional advantage of such a system, in principle, is that it is rather equitable if financed by tax payments that increase with income. But in many developing countries, only a few percent of the population pay income taxes, or can be exposed to payroll taxes, which, of course, means that the financing would be a serious administrative obstacle. In the long run, the expanding middle class will, however, hardly be satisfied with either a basic pension or means-tested pension benefits. This group is likely to ask for income protection in some proportion to previous income, as in today’s developed countries, partly in response to a gradually reduced importance of transfers within families. As we know, some developing countries have already started to build up mandatory pension systems of this type: funded systems in Chile and Malaysia and some other countries in Latin American; while Korea, Philippines, and Thailand have chosen social security systems. Advocates of mandatory, funded pension systems in deve- loped countries have often referred to the importance of boosting aggregate national saving, which is easiest if a funded system is created “from scratch.” While the argument for such a boost may be important for some developing countries, it hardly has much strength in developing countries with high national saving rates, such as some countries in East Asia. In the future, when comprehensive pension systems probably will exist in today’s developing countries, the same financial problems as in today’s developed countries are likely to occur. Falling fertility and increased longevity seem to be inevitable developments in the modern world, and even the fastest growing countries will sooner or later experience slower productivity growth. In the few developing countries where formal pension systems already exist, the pension age is usually quite low (relative to life expectancy). Thus, there is great room for defending, or improving, the financial position of these systems by raising the retirement age, for instance, from 55 to 67 or even 70. Some developing countries may also find it easier than many countries in Europe to accommodate the elderly in the labor market, since they have had arrangements for work for the elderly for a long time, and since relative wages are often more flexible than in Europe. It remains to be seen whether these conditions will prevail. Contemporary financial and organizational problems in the field of old-age care in developed countries are related to the demographic factors of the same type as those that have created problems for the pension system. The organizational difficulties are instead rather similar to the problems of health care: it is difficult to combine solidarity-oriented financing with production efficiency and

10 Section VI Conclusion freedom of choice. Old-age care is also hurt by Baumol’s Law (Baumol 1967), which explains why costs and prices tend to increase particularly fast in the case of labor intensive services like human care. Another issue concerns the freedom of choice of services for the elderly. Such freedom is, in principle, easy to bring about in the case of service in the elderly’s homes—shopping, cooking, cleaning etc.—like in child care and care for the elderly. Service checks (vouchers) are an obvious tool. Vouchers are less useful in the case of institutionalized old-age care, since the needs for medical care vary enormously among patients. Still it would certainly be possible to offer considerable freedom of choice of service institution for the elderly. It will take some time before most developing countries encounter similar problems, not only because the population is still young, but also because the family is likely to supply care services to the elderly for a long time to come. But it may be a good idea at least to start thinking, and perhaps also experimenting, with alternative systems of care for the elderly before there is an acute need to expand formal systems in this field. In the long run, it is not likely that family members and other relatives can be relied on to service the elderly any more in today’s developing countries than in Europe.

VI. CONCLUSION

The experiences of social policies during the first decades of the 20th century in Europe underline the important role of informal systems for income security and personal services at low levels of economic development. It is crucial, however, that informal systems are not destroyed when developing countries embark on more formal systems in these fields in the future. I have also emphasized that the European experience warns against the creation of social systems that are so generous that disincentives, moral hazard, and receding social norms seriously distort the national economy, including the labor market. These risks seem to be particularly important in the case of unemployment benefits, support to single mothers, sick leave, disability pensions and early retirement. If disincentives and moral hazard undermine the financial viability of government- operated systems, and these would therefore have to be cut back, many individuals may suddenly find themselves without both types of social systems.

11 ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

REFERENCES

Alesina, A., and D. Rodrik, 1994. “Distributive Politics and Economic Growth.” Quarterly Journal of Economics May:465-90. Baumol, W. J., 1967. “The Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis.” American Economic Review 57:415-26. Behrman, J. R., 1993. “The Economic Rationale for Investing in Nutrition in Developing Countries.” World Development 21:1749-71. Lindbeck, A., 1996. “The West European Employment Problems.” Weltwirtschaftliches Archiv December:3-31. ———, 2002. “Improving the Performance of the European Social Model.” Paper presented at a Conference at the IESE Business School, Barcelona, 27 November 2001. Myrdal, G., 1944. An American Dilemma. Carnegie Foundation, New York. Scrimshaw, N. S., 1996. “Nutrition and Health from Womb to Tomb.” Nutrition Today 31:55-67. Sen, A., 1983. “Development: Which Way Now?” The Economic Journal December:745-62. Townsend, R. M., 1994. “Risk and Insurance in Village India.” Econometrica 62(39):539-91. Udry, C., 1994. “Risk and Insurance in Rural Credit Markets: An Empirical Investigation in Northern Nigeria.” Review of Economic Studies 61:495-526. United Nations, 1997. Subcommittee on Nutrition. Geneva. World Bank, 1993. Averting the Old Age Crisis. Oxford: Oxford University Press.

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No. 1 Contingency Calculations for Environmental Impacts with Unknown Monetary Values —David Dole February 2002

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No. 1 Capitalizing on Globalization No. 7 Probing Beneath Cross-national Averages: Poverty, —Barry Eichengreen, January 2002 Inequality, and Growth in the Philippines No. 2 Policy-based Lending and Poverty Reduction: —Arsenio M. Balisacan and Ernesto M. Pernia An Overview of Processes, Assessment March 2002 and Options No. 8 Poverty, Growth, and Inequality in Thailand —Richard Bolt and Manabu Fujimura —Anil B. Deolalikar January 2002 April 2002 No. 3 The Automotive Supply Chain: Global Trends No. 9 Microfinance in Northeast Thailand: Who Benefits and Asian Perspectives and How Much? —Francisco Veloso and Rajiv Kumar —Brett E. Coleman January 2002 April 2002 No. 4 International Competitiveness of Asian Firms: No. 10 PovertyReduction and the Role of Institutions in An Analytical Framework Developing Asia —Rajiv Kumar and Doren Chadee —Anil B. Deolalikar, Alex B. Brilliantes, Jr., February 2002 Raghav Gaiha, Ernesto M. Pernia, Mary Racelis No. 5 The International Competitiveness of Asian with the assistance of Marita Concepcion Castro- Economies in the Apparel Commodity Chain Guevara, Liza L. Lim, Pilipinas F. Quising —Gary Gereffi May 2002 February 2002 No. 11 The European Social Model: Lessons for No. 6 Monetary and Financial Cooperation in East Developing Countries Asia—The Chiang Mai Initiative and Beyond —Assar Lindbeck —Pradumna B. Rana May 2002 February 2002

MONOGRAPH SERIES (Published in-house; Available through ADB Office of External Relations; Free of charge)

EDRC REPORT SERIES (ER)

No. 1 ASEAN and the Asian Development Bank No. 8 Shadow Exchange Rates and Standard —Seiji Naya, April 1982 Conversion Factors in Project Evaluation No. 2 Development Issues for the Developing East —Peter Warr, September 1982 and Southeast Asian Countries No. 9 Small and Medium-Scale Manufacturing and International Cooperation Establishments in ASEAN Countries: —Seiji Naya and Graham Abbott, April 1982 Perspectives and Policy Issues No. 3 Aid, Savings, and Growth in the Asian Region —Mathias Bruch and Ulrich Hiemenz, —J. Malcolm Dowling and Ulrich Hiemenz, January 1983 April 1982 No. 10 A Note on the Third Ministerial Meeting of GATT No. 4 Development-oriented Foreign Investment —Jungsoo Lee, January 1983 and the Role of ADB No. 11 Macroeconomic Forecasts for the Republic —Kiyoshi Kojima, April 1982 of China, Hong Kong, and Republic of Korea No. 5 The Multilateral Development Banks —J.M. Dowling, January 1983 and the International Economy’s Missing No. 12 ASEAN: Economic Situation and Prospects Public Sector —Seiji Naya, March 1983 —John Lewis, June 1982 No. 13 The Future Prospects for the Developing No. 6 Notes on External Debt of DMCs Countries of Asia —Evelyn Go, July 1982 —Seiji Naya, March 1983 No. 7 Grant Element in Bank Loans No. 14 Energy and Structural Change in the Asia- —Dal Hyun Kim, July 1982 Pacific Region, Summary of the Thirteenth

13 Pacific Trade and Development Conference Developing Member Countries of the Bank —Seiji Naya, March 1983 —Jungsoo Lee, Pradumna Rana, and Ifzal Ali, No. 15 A Survey of Empirical Studies on Demand May 1986 for Electricity with Special Emphasis on Price No. 36 Smuggling and Domestic Economic Policies Elasticity of Demand in Developing Countries —Wisarn Pupphavesa, June 1983 —A.H.M.N. Chowdhury, October 1986 No. 16 Determinants of Paddy Production in Indonesia: No. 37 Public Investment Criteria: Economic Internal 1972-1981–A Simultaneous Equation Model Rate of Return and Equalizing Discount Rate Approach —Ifzal Ali, November 1986 —T.K. Jayaraman, June 1983 No. 38 Review of the Theory of Neoclassical Political No. 17 The Philippine Economy: Economic Economy: An Application to Trade Policies Forecasts for 1983 and 1984 —M.G. Quibria, December 1986 —J.M. Dowling, E. Go, and C.N. Castillo, No. 39 Factors Influencing the Choice of Location: June 1983 Local and Foreign Firms in the Philippines No. 18 Economic Forecast for Indonesia —E.M. Pernia and A.N. Herrin, February 1987 —J.M. Dowling, H.Y. Kim, Y.K. Wang, No. 40 A Demographic Perspective on Developing and C.N. Castillo, June 1983 Asia and Its Relevance to the Bank No. 19 Relative External Debt Situation of Asian —E.M. Pernia, May 1987 Developing Countries: An Application No. 41 Emerging Issues in Asia and Social Cost of Ranking Method Benefit Analysis —Jungsoo Lee, June 1983 —I. Ali, September 1988 No. 20 New Evidence on Yields, Fertilizer Application, No. 42 Shifting Revealed Comparative Advantage: and Prices in Asian Rice Production Experiences of Asian and Pacific Developing —William James and Teresita Ramirez, July 1983 Countries No. 21 Inflationary Effects of Exchange Rate —P.B. Rana, November 1988 Changes in Nine Asian LDCs No. 43 Agricultural Price Policy in Asia: —Pradumna B. Rana and J. Malcolm Dowling, Issues and Areas of Reforms Jr., December 1983 —I. Ali, November 1988 No. 22 Effects of External Shocks on the Balance No. 44 Service Trade and Asian Developing Economies of Payments, Policy Responses, and Debt —M.G. Quibria, October 1989 Problems of Asian Developing Countries No. 45 A Review of the Economic Analysis of Power —Seiji Naya, December 1983 Projects in Asia and Identification of Areas No. 23 Changing Trade Patterns and Policy Issues: of Improvement The Prospects for East and Southeast Asian —I. Ali, November 1989 Developing Countries No. 46 Growth Perspective and Challenges for Asia: —Seiji Naya and Ulrich Hiemenz, February 1984 Areas for Policy Review and Research No. 24 Small-Scale Industries in Asian Economic —I. Ali, November 1989 Development: Problems and Prospects No. 47 An Approach to Estimating the Poverty —Seiji Naya, February 1984 Alleviation Impact of an Agricultural Project No. 25 A Study on the External Debt Indicators —I. Ali, January 1990 Applying Logit Analysis No. 48 Economic Growth Performance of Indonesia, —Jungsoo Lee and Clarita Barretto, the Philippines, and Thailand: February 1984 The Human Resource Dimension No. 26 Alternatives to Institutional Credit Programs —E.M. Pernia, January 1990 in the Agricultural Sector of Low-Income No. 49 Foreign Exchange and Fiscal Impact of a Project: Countries A Methodological Framework for Estimation —Jennifer Sour, March 1984 —I. Ali, February 1990 No. 27 Economic Scene in Asia and Its Special Features No. 50 Public Investment Criteria: Financial —Kedar N. Kohli, November 1984 and Economic Internal Rates of Return No. 28 The Effect of Terms of Trade Changes on the —I. Ali, April 1990 Balance of Payments and Real National No. 51 Evaluation of Water Supply Projects: Income of Asian Developing Countries An Economic Framework —Jungsoo Lee and Lutgarda Labios, January 1985 —Arlene M. Tadle, June 1990 No. 29 Cause and Effect in the World Sugar Market: No. 52 Interrelationship Between Shadow Prices, Project Some Empirical Findings 1951-1982 Investment, and Policy Reforms: —Yoshihiro Iwasaki, February 1985 An Analytical Framework No. 30 Sources of Balance of Payments Problem —I. Ali, November 1990 in the 1970s: The Asian Experience No. 53 Issues in Assessing the Impact of Project —Pradumna Rana, February 1985 and Sector Adjustment Lending No. 31 India’s Manufactured Exports: An Analysis —I. Ali, December 1990 of Supply Sectors No. 54 Some Aspects of Urbanization —Ifzal Ali, February 1985 and the Environment in Southeast Asia No. 32 Meeting Basic Human Needs in Asian —Ernesto M. Pernia, January 1991 Developing Countries No. 55 Financial Sector and Economic —Jungsoo Lee and Emma Banaria, March 1985 Development: A Survey No. 33 The Impact of Foreign Capital Inflow —Jungsoo Lee, September 1991 on Investment and Economic Growth No. 56 A Framework for Justifying Bank-Assisted in Developing Asia Education Projects in Asia: A Review —Evelyn Go, May 1985 of the Socioeconomic Analysis No. 34 The Climate for Energy Development and Identification of Areas of Improvement in the Pacific and Asian Region: —Etienne Van De Walle, February 1992 Priorities and Perspectives No. 57 Medium-term Growth-Stabilization —V.V. Desai, April 1986 Relationship in Asian Developing Countries No. 35 Impact of Appreciation of the Yen on and Some Policy Considerations

14 —Yun-Hwan Kim, February 1993 —Bo Lin, August 1994 No. 58 Urbanization, Population Distribution, No. 63 Incentives and Regulation for Pollution Abatement and Economic Development in Asia with an Application to Waste Water Treatment —Ernesto M. Pernia, February 1993 —Sudipto Mundle, U. Shankar, No. 59 The Need for Fiscal Consolidation in Nepal: and Shekhar Mehta, October 1995 The Results of a Simulation No. 64 Saving Transitions in Southeast Asia —Filippo di Mauro and Ronald Antonio Butiong, —Frank Harrigan, February 1996 July 1993 No. 65 Total Factor Productivity Growth in East Asia: No. 60 A Computable General Equilibrium Model A Critical Survey of Nepal —Jesus Felipe, September 1997 —Timothy Buehrer and Filippo di Mauro, No. 66 Foreign Direct Investment in Pakistan: October 1993 Policy Issues and Operational Implications No. 61 The Role of Government in Export Expansion —Ashfaque H. Khan and Yun-Hwan Kim, in the Republic of Korea: A Revisit July 1999 —Yun-Hwan Kim, February 1994 No. 67 Fiscal Policy, Income Distribution and Growth No. 62 Rural Reforms, Structural Change, —Sailesh K. Jha, November 1999 and Agricultural Growth in the People’s Republic of China

ECONOMIC STAFF PAPERS (ES)

No. 1 International Reserves: No. 14 Small and Medium-Scale Manufacturing Factors Determining Needs and Adequacy Establishments in ASEAN Countries: —Evelyn Go, May 1981 Perspectives and Policy Issues No. 2 Domestic Savings in Selected Developing —Mathias Bruch and Ulrich Hiemenz, March 1983 Asian Countries No. 15 Income Distribution and Economic —Basil Moore, assisted by Growth in Developing Asian Countries A.H.M. Nuruddin Chowdhury, September 1981 —J. Malcolm Dowling and David Soo, March 1983 No. 3 Changes in Consumption, Imports and Exports No. 16 Long-Run Debt-Servicing Capacity of of Oil Since 1973: A Preliminary Survey of Asian Developing Countries: An Application the Developing Member Countries of Critical Interest Rate Approach of the Asian Development Bank —Jungsoo Lee, June 1983 —Dal Hyun Kim and Graham Abbott, No. 17 External Shocks, Energy Policy, September 1981 and Macroeconomic Performance of Asian No. 4 By-Passed Areas, Regional Inequalities, Developing Countries: A Policy Analysis and Development Policies in Selected —William James, July 1983 Southeast Asian Countries No. 18 The Impact of the Current Exchange Rate —William James, October 1981 System on Trade and Inflation of Selected No. 5 Asian Agriculture and Economic Development Developing Member Countries —William James, March 1982 —Pradumna Rana, September 1983 No. 6 Inflation in Developing Member Countries: No. 19 Asian Agriculture in Transition: Key Policy Issues An Analysis of Recent Trends —William James, September 1983 —A.H.M. Nuruddin Chowdhury and No. 20 The Transition to an Industrial Economy J. Malcolm Dowling, March 1982 in Monsoon Asia No. 7 Industrial Growth and Employment in —Harry T. Oshima, October 1983 Developing Asian Countries: Issues and No. 21 The Significance of Off-Farm Employment Perspectives for the Coming Decade and Incomes in Post-War East Asian Growth —Ulrich Hiemenz, March 1982 —Harry T. Oshima, January 1984 No. 8 Petrodollar Recycling 1973-1980. No. 22 Income Distribution and Poverty in Selected Part 1: Regional Adjustments and Asian Countries the World Economy —John Malcolm Dowling, Jr., November 1984 —Burnham Campbell, April 1982 No. 23 ASEAN Economies and ASEAN Economic No. 9 Developing Asia: The Importance Cooperation of Domestic Policies —Narongchai Akrasanee, November 1984 —Economics Office Staff under the direction No. 24 Economic Analysis of Power Projects of Seiji Naya, May 1982 —Nitin Desai, January 1985 No. 10 Financial Development and Household No. 25 Exports and Economic Growth in the Asian Region Savings: Issues in Domestic Resource —Pradumna Rana, February 1985 Mobilization in Asian Developing Countries No. 26 Patterns of External Financing of DMCs —Wan-Soon Kim, July 1982 —E. Go, May 1985 No. 11 Industrial Development: Role of Specialized No. 27 Industrial Technology Development Financial Institutions the Republic of Korea —Kedar N. Kohli, August 1982 —S.Y. Lo, July 1985 No. 12 Petrodollar Recycling 1973-1980. No. 28 Risk Analysis and Project Selection: Part II: Debt Problems and an Evaluation A Review of Practical Issues of Suggested Remedies —J.K. Johnson, August 1985 —Burnham Campbell, September 1982 No. 29 Rice in Indonesia: Price Policy and Comparative No. 13 Credit Rationing, Rural Savings, and Financial Advantage Policy in Developing Countries —I. Ali, January 1986 —William James, September 1982 No. 30 Effects of Foreign Capital Inflows

15 on Developing Countries of Asia —Hiroshi Kakazu, June 1990 —Jungsoo Lee, Pradumna B. Rana, No. 47 Designing Strategies and Policies and Yoshihiro Iwasaki, April 1986 for Managing Structural Change in Asia No. 31 Economic Analysis of the Environmental —Ifzal Ali, June 1990 Impacts of Development Projects No. 48 The Completion of the Single European Commu- —John A. Dixon et al., EAPI, nity East-West Center, August 1986 Market in 1992: A Tentative Assessment of its No. 32 Science and Technology for Development: Impact on Asian Developing Countries Role of the Bank —J.P. Verbiest and Min Tang, June 1991 —Kedar N. Kohli and Ifzal Ali, November 1986 No. 49 Economic Analysis of Investment in Power No. 33 Satellite Remote Sensing in the Asian Systems and Pacific Region —Ifzal Ali, June 1991 —Mohan Sundara Rajan, December 1986 No. 50 External Finance and the Role of Multilateral No. 34 Changes in the Export Patterns of Asian and Financial Institutions in South Asia: Pacific Developing Countries: An Empirical Changing Patterns, Prospects, and Challenges Overview —Jungsoo Lee, November 1991 —Pradumna B. Rana, January 1987 No. 51 The Gender and Poverty Nexus: Issues and No. 35 Agricultural Price Policy in Nepal Policies —Gerald C. Nelson, March 1987 —M.G. Quibria, November 1993 No. 36 Implications of Falling Primary Commodity No. 52 The Role of the State in Economic Development: Prices for Agricultural Strategy in the Philippines Theory, the East Asian Experience, —Ifzal Ali, September 1987 and the Malaysian Case No. 37 Determining Irrigation Charges: A Framework —Jason Brown, December 1993 —Prabhakar B. Ghate, October 1987 No. 53 The Economic Benefits of Potable Water Supply No. 38 The Role of Fertilizer Subsidies in Agricultural Projects to Households in Developing Countries Production: A Review of Select Issues —Dale Whittington and Venkateswarlu Swarna, —M.G. Quibria, October 1987 January 1994 No. 39 Domestic Adjustment to External Shocks No. 54 Growth Triangles: Conceptual Issues in Developing Asia and Operational Problems —Jungsoo Lee, October 1987 —Min Tang and Myo Thant, February 1994 No. 40 Improving Domestic Resource Mobilization No. 55 The Emerging Global Trading Environment through Financial Development: Indonesia and Developing Asia —Philip Erquiaga, November 1987 —Arvind Panagariya, M.G. Quibria, No. 41 Recent Trends and Issues on Foreign Direct and Narhari Rao, July 1996 Investment in Asian and Pacific Developing No. 56 Aspects of Urban Water and Sanitation in Countries the Context of Rapid Urbanization in —P.B. Rana, March 1988 Developing Asia No. 42 Manufactured Exports from the Philippines: —Ernesto M. Pernia and Stella LF. Alabastro, A Sector Profile and an Agenda for Reform September 1997 —I. Ali, September 1988 No. 57 Challenges for Asia’s Trade and Environment No. 43 A Framework for Evaluating the Economic —Douglas H. Brooks, January 1998 Benefits of Power Projects No. 58 Economic Analysis of Health Sector Projects- —I. Ali, August 1989 A Review of Issues, Methods, and Approaches No. 44 Promotion of Manufactured Exports in Pakistan —Ramesh Adhikari, Paul Gertler, and —Jungsoo Lee and Yoshihiro Iwasaki, Anneli Lagman, March 1999 September 1989 No. 59 The Asian Crisis: An Alternate View No. 45 Education and Labor Markets in Indonesia: —Rajiv Kumar and Bibek Debroy, July 1999 A Sector Survey No. 60 Social Consequences of the Financial Crisis in —Ernesto M. Pernia and David N. Wilson, Asia September 1989 —James C. Knowles, Ernesto M. Pernia, and No. 46 Industrial Technology Capabilities Mary Racelis, November 1999 and Policies in Selected ADCs

OCCASIONAL PAPERS (OP)

No. 1 Poverty in the People’s Republic of China: No. 5 Reforms in the Transitional Economies of Asia Recent Developments and Scope —Pradumna B. Rana, December 1993 for Bank Assistance No. 6 Environmental Challenges in the People’s Republic —K.H. Moinuddin, November 1992 of China and Scope for Bank Assistance No. 2 The Eastern Islands of Indonesia: An Overview —Elisabetta Capannelli and Omkar L. Shrestha, of Development Needs and Potential December 1993 —Brien K. Parkinson, January 1993 No. 7 Sustainable Development Environment No. 3 Rural Institutional Finance in Bangladesh and Poverty Nexus and Nepal: Review and Agenda for Reforms —K.F. Jalal, December 1993 —A.H.M.N. Chowdhury and Marcelia C. Garcia, No. 8 Intermediate Services and Economic November 1993 Development: The Malaysian Example No. 4 Fiscal Deficits and Current Account Imbalances —Sutanu Behuria and Rahul Khullar, May 1994 of the South Pacific Countries: No. 9 Interest Rate Deregulation: A Brief Survey A Case Study of Vanuatu of the Policy Issues and the Asian Experience —T.K. Jayaraman, December 1993 —Carlos J. Glower, July 1994

16 No. 10 Some Aspects of Land Administration —Roger Allport, Geoff Key, and Charles Melhuish in Indonesia: Implications for Bank Operations June 1998 —Sutanu Behuria, July 1994 No. 17 Adjustment and Distribution: No. 11 Demographic and Socioeconomic Determinants The Indian Experience of Contraceptive Use among Urban Women in —Sudipto Mundle and V.B. Tulasidhar, June 1998 the Melanesian Countries in the South Pacific: No. 18 Tax Reforms in Viet Nam: A Selective Analysis A Case Study of Port Vila Town in Vanuatu —Sudipto Mundle, December 1998 —T.K. Jayaraman, February 1995 No. 19 Surges and Volatility of Private Capital Flows to No. 12 Managing Development through Asian Developing Countries: Implications Institution Building for Multilateral Development Banks — Hilton L. Root, October 1995 —Pradumna B. Rana, December 1998 No. 13 Growth, Structural Change, and Optimal No. 20 The Millennium Round and the Asian Economies: Poverty Interventions An Introduction —Shiladitya Chatterjee, November 1995 —Dilip K. Das, October 1999 No. 14 Private Investment and Macroeconomic No. 21 Occupational Segregation and the Gender Environment in the South Pacific Island Earnings Gap Countries: A Cross-Country Analysis —Joseph E. Zveglich, Jr. and Yana van der Meulen —T.K. Jayaraman, October 1996 Rodgers, December 1999 No. 15 The Rural-Urban Transition in Viet Nam: No. 22 Information Technology: Next Locomotive of Some Selected Issues Growth? —Sudipto Mundle and Brian Van Arkadie, —Dilip K. Das, June 2000 October 1997 No. 16 A New Approach to Setting the Future Transport Agenda

STATISTICAL REPORT SERIES (SR)

No. 1 Estimates of the Total External Debt of —Jungsoo Lee and I.P. David, April 1987 the Developing Member Countries of ADB: No. 10 A Survey of the External Debt Situation 1981-1983 in Asian Developing Countries, 1986 —I.P. David, September 1984 —Jungsoo Lee and I.P. David, April 1988 No. 2 Multivariate Statistical and Graphical No. 11 Changing Pattern of Financial Flows to Asian Classification Techniques Applied and Pacific Developing Countries to the Problem of Grouping Countries —Jungsoo Lee and I.P. David, March 1989 —I.P. David and D.S. Maligalig, March 1985 No. 12 The State of Agricultural Statistics in No. 3 Gross National Product (GNP) Measurement Southeast Asia Issues in South Pacific Developing Member —I.P. David, March 1989 Countries of ADB No. 13 A Survey of the External Debt Situation —S.G. Tiwari, September 1985 in Asian and Pacific Developing Countries: No. 4 Estimates of Comparable Savings in Selected 1987-1988 DMCs —Jungsoo Lee and I.P. David, July 1989 —Hananto Sigit, December 1985 No. 14 A Survey of the External Debt Situation in No. 5 Keeping Sample Survey Design Asian and Pacific Developing Countries: 1988-1989 and Analysis Simple —Jungsoo Lee, May 1990 —I.P. David, December 1985 No. 15 A Survey of the External Debt Situation No. 6 External Debt Situation in Asian in Asian and Pacific Developing Countrie Developing Countries s: 1989-1992 —I.P. David and Jungsoo Lee, March 1986 —Min Tang, June 1991 No. 7 Study of GNP Measurement Issues in the No. 16 Recent Trends and Prospects of External Debt South Pacific Developing Member Countries. Situation and Financial Flows to Asian Part I: Existing National Accounts and Pacific Developing Countries of SPDMCs–Analysis of Methodology —Min Tang and Aludia Pardo, June 1992 and Application of SNA Concepts No. 17 Purchasing Power Parity in Asian Developing —P. Hodgkinson, October 1986 Countries: A Co-Integration Test No. 8 Study of GNP Measurement Issues in the South —Min Tang and Ronald Q. Butiong, April 1994 Pacific Developing Member Countries. No. 18 Capital Flows to Asian and Pacific Developing Part II: Factors Affecting Intercountry Countries: Recent Trends and Future Prospects Comparability of Per Capita GNP —Min Tang and James Villafuerte, October 1995 —P. Hodgkinson, October 1986 No. 9 Survey of the External Debt Situation in Asian Developing Countries, 1985

17 SPECIAL STUDIES, COMPLIMENTARY (SSC) (Published in-house; Available through ADB Office of External Relations; Free of Charge)

1. Improving Domestic Resource Mobilization Through September 1988 Financial Development: Overview September 1985 18. The Role of Small and Medium-Scale Industries in the 2. Improving Domestic Resource Mobilization Through Industrial Development of the Philippines Financial Development: Bangladesh July 1986 April 1989 3. Improving Domestic Resource Mobilization Through 19. The Role of Small and Medium-Scale Manufacturing Financial Development: Sri Lanka April 1987 Industries in Industrial Development: The Experience 4. Improving Domestic Resource Mobilization Through of Selected Asian Countries Financial Development: India December 1987 January 1990 5. Financing Public Sector Development Expenditure 20. National Accounts of Vanuatu, 1983-1987 in Selected Countries: Overview January 1988 January 1990 6. Study of Selected Industries: A Brief Report 21. National Accounts of Western Samoa, 1984-1986 April 1988 February 1990 7. Financing Public Sector Development Expenditure 22. Human Resource Policy and Economic in Selected Countries: Bangladesh June 1988 Development: Selected Country Studies 8. Financing Public Sector Development Expenditure July 1990 in Selected Countries: India June 1988 23. Export Finance: Some Asian Examples 9. Financing Public Sector Development Expenditure September 1990 in Selected Countries: Indonesia June 1988 24. National Accounts of the Cook Islands, 1982-1986 10. Financing Public Sector Development Expenditure September 1990 in Selected Countries: Nepal June 1988 25. Framework for the Economic and Financial Appraisal 11. Financing Public Sector Development Expenditure of Urban Development Sector Projects January 1994 in Selected Countries: Pakistan June 1988 26. Framework and Criteria for the Appraisal 12. Financing Public Sector Development Expenditure and Socioeconomic Justification of Education Projects in Selected Countries: Philippines June 1988 January 1994 13. Financing Public Sector Development Expenditure 27. Guidelines for the Economic Analysis of Projects in Selected Countries: Thailand June 1988 February 1997 14. Towards Regional Cooperation in South Asia: 28. Investing in Asia ADB/EWC Symposium on Regional Cooperation 1997 in South Asia February 1988 29. Guidelines for the Economic Analysis 15. Evaluating Rice Market Intervention Policies: of Telecommunication Projects Some Asian Examples April 1988 1998 16. Improving Domestic Resource Mobilization Through 30. Guidelines for the Economic Analysis Financial Development: Nepal November 1988 of Water Supply Projects 17. Foreign Trade Barriers and Export Growth 1999

SPECIAL STUDIES, ADB (SS, ADB) (Published in-house; Available commercially through ADB Office of External Relations)

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19