The authors examine the determinants of market access commitments in international financial services trade in the General Agreement on Trade in Services (GATS). Based on a theoretical model, they investigate empirically the role of domestic political economy forces, international bargaining considerations, and the state of complementary policy. The empirical results confirm the relevance of the authors' model in explaining banking and (to a somewhat lesser degree) securities services liberalization commitments. The findings imply that those who seek greater access to developing country markets for financial services must do more to counter protectionism at home in areas of export interest for developing countries.

Countries that fully liberalize their telecommunications and financial services sectors may be able to expect economic growth rates up to 1.5 percentage point higher than rates in other countries.

This book fills a large gap in the literature on trade in services. It focuses on the dynamics of trade and investment liberalization in a sector of considerable technical and regulatory complexity financial services. This volume chronicles the recent experiences of governments in Latin America that have successfully completed financial services negotiations through preferential trade agreements. One of the unique features of this book is the three in-depth country case studies Chile, Colombia, and Costa Rica all written by trade experts who led the negotiations of their respective countries in financial services. The authors offer analytical insights into the substantive content of the legal provisions governing financial market opening and the way such provisions have evolved over time and across negotiating settings. The studies describe how each of the three governments organized the conduct of negotiations in the sector, the extent of preparatory work undertaken before and during negotiations, and the negotiating road maps that were put in place to guide negotiators. Additional chapters complement the case studies by examining the evolving architecture of trade and investment disciplines in financial services and how best to prepare for negotiations in this sector. 'Financial Services and Preferential Trade Agreements' aims to provide practical lessons for policy makers, trade experts, and negotiators in developing countries who are involved in negotiating trade in financial services in the context of regional trade agreements. Academics and development practitioners interested in trade negotiations will also find the information valuable.

It is difficult to design and implement an effective safety net for banks, because overgenerous protection of banks may introduce a risk-enhancing moral hazard and destabilize the very system it is meant to protect. The safety net that policymakers design must provide the right mix of market and regulatyory discipline, enough to protect depositors without unduly undermining market discipline on banks.

Increasing returns to schooling and rising inequality are well documented for industrial countries and for some developing countries. The growing demand for skills is associated with recent technological developments. The authors argue that computers in the workplace represent one manifestation of these changes. Research in the United States and industrial countries documents a premium for computer use. But there is recent evidence suggesting that computer skills by themselves do not command a wage premium. The authors review the literature and use data from a survey of higher education graduates in Vietnam. The results support the unobserved heterogeneity explanation for computer wage premiums. They suggest that computers may make the productive workers even more productive. However, given the scarcity of computers in low-income countries, an operational strategy of increasing computer availability and skills would seem to offer considerable hope for increasing the incomes of the poor.

Voucher programs consist of three simultaneous reforms: (1) allowing parents to choose schools, (2) creating intense incentives for schools to increase enrollment, and (3) granting schools management autonomy to respond to demand. As a result, voucher advocates and critics tend to talk past each other. A principal-agent framework clarifies the argument for education vouchers. Central findings from the literature, including issues related to variance in the performance measure, risk aversion, the productivity of more effort, multiple tasks, and the value of monitoring are found relevant for an analysis of vouchers. An assessment of findings on voucher programs in industrial countries, as well as a review of voucher or quasi-voucher experiences in Bangladesh, Chile, Colombia, Côte d'Ivoire, and the Czech Republic support the usefulness of the analytic framework. Gauri and Vawda conclude that vouchers for basic education in developing countries can enhance outcomes when they are limited to modest numbers of poor students in urban settings, particularly in conjunction with existing private schools with surplus capacity. The success of more ambitious voucher programs depends on an institutional infrastructure challenging to industrial and developing countries alike. This paper--a joint product of Public Services, Development Research Group, and the Education Team, Human Development Network--is a background paper for the 2004 World Development Report.

The authors analyze the widespread effects of the financial crisis in Russia to explore the vulnerabilities of households in Moldova. They show that the crisis had differential impacts on households, affecting most the urban and better-off. Households' decisions about education and health resulted in decreased utilization and expenditures. The enrollment of young children from better-off households did not improve while others did. Secondary school enrollment of children from better-off households decreased after the crisis, in part because of the need to release labor supply. Health utilization decreased mainly for primary health care (not for hospitals), both for better-off households and in rural areas. Some of these changes are due to limited household resources (health), decreased public spending (health and education) or the need to increase households' labor supply (education of teenagers). Social benefits played a very limited role in mitigating these effects, solely in health care use. Households' assets helped to offset some of the negative effects of declining incomes.

The extent to which households should be allowed to transfer their land rights in post-socialist transition economies is of considerable policy interest. The authors use data from Vietnam, a transition country that allows rental and sales of land use rights, to identify factors conducive to the development of land markets and to assess the extent to which land transfers enhance productive efficiency and transfer land to the poor. They find that activity in both rental and sales markets has increased rapidly, enhanced by the possession of long-term use rights and off-farm employment, and contributing to greater equity and efficiency of land use. While there is evidence for distress sales by households that experience a shock (death), the scope for such sales is reduced by well-functioning credit markets. Well-defined land rights and appropriate safety nets will thus help transition economies to realize the benefits from the operation of land markets.

The authors evaluate the impact of farmer field schools, an intensive participatory training program emphasizing integrated pest management. Their evaluation focuses on whether participation in the program has improved yields and reduced pesticide use among graduates and their neighbors who may have gained knowledge from graduates through informal communications. The authors use panel data covering the period 1991-99 in Indonesia. Their analysis, employing a modified "difference-in-differences" model, indicates that the program did not have significant effects on the performance of graduates and their neighbors. The authors discuss several plausible explanations for this outcome and suggest recommendations for improvements.

Rutkowski seeks to determine the main factors behind poor labor market outcomes in Bulgaria. Unemployment in Bulgaria is high and of long duration. The accumulation of the unemployment stock has been caused by relatively high inflows into unemployment coupled with limited outflows. These features of the Bulgarian labor market are typical of other transition economies in Central Europe and exploring their sources is of broad interest. Rutkowski focuses on determinants of and constraints to job creation. He uses data on job creation and job destruction from a survey of employment in all registered firms. He finds that the source of large inflows into unemployment is intensive enterprise restructuring associated with a high pace of job reallocation. However, job creation falls short of job destruction. Three main factors account for the limited job creation and hiring, and thus for low outflows from unemployment: - The unfriendly business environment, reflected by a low rate of new firm formation, and a relatively small SME (small and medium enterprise) sector. - Labor market rigidities, including excessive hiring and firing costs. - Skill and spatial mismatches brought about by enterprise restructuring, as well as low skills and marginalization of the long-term unemployed who cannot successfully compete for new jobs. The author recommends a three pronged strategy to improve labor market performance: (1) removing bureaucratic constraints to entry and expansion of firms; (2) enhancing labor market flexibility through lowering hiring and firing costs; and (3) improving the educational system so as to equip workers with broad and portable skills. This paper - a product of the Human Development Sector Unit, Europe and Central Asia Region - is part of a larger effort in the region to examine labor market performance and its contribution to economic growth and poverty reduction.