The reform of mechanisms for foreign exchange allocation : theory and lessons from sub-Saharan Africa

Administrative exchange allocation has been common in developing countries, especially in sub-Saharan Africa. Steps to dismantle or modify these control mechanisms have been carried out through traditional schemes. The authors draw lessons from sub-Saharan Africa's historical experience useful both to African former socialist economies. Exchange regime reform should be given highest priority for its role in reducing anti-export bias. Although many sub-Saharan countries have attempted to reform their allocation mechanisms, only a few have made the transition to market allocation (virtually convertible currency, at least on the current account.) Failure to do so is the major shortcoming of most adjustment packages. Both gradual and rapid approaches have succeeded. On purely economic grounds (given the problems of such intermediate steps as auctions), speed is preferable but it is not always politically or institutionally feasible. The transition must be accompanied by a coherent set of fiscal and monetary policies and a willingness to allow the exchange rate to seek a true market-clearing level. Some lessons regarding the specific mechanisms, discussed in approximate order of their proximity to convertibility, are as follows. The most rudimentary transition mechanism is the own-funds scheme, which is no more than a beginning of reform. Own-funds schemes should be accompanied by liberalization of the rules governing exports, or illegal exports and the black market premium may increase. Export retention schemes can minimize the adverse effects on exporters of foreign exchange shortages, reduce the implicit export tax, and fund a legal private exchange market. But the retained funds must be saleable, the retention rates substantial, and traditional exports must be included to adequately fund the legal private exchange market. Open general licensing (OGL) and similar schemes can be a useful intermediate step in liberalizing import and exchange allocation regimes. But in practice the benefits are limited by two features. First, consumer goods competing with local production, whose imports were restricted the most, have usually been excluded, at least initially. Moreover, OGL has no endogenous price-setting mechanism for the exchange rate. The OGL rate should generally be connected to, but lower than, the parallel rate. An auction incorporates a pricing mechanism, which is an important advantage. But the pricing mechanism must be allowed to work, which has not always been the case. Auction rules should be clear (should not allow discretionary disqualification of bids, for example), should minimize participation costs, and allow wide participation. Marginal, rather than the more common Dutch, pricing system is preferred. The use of a reservation price may reduce volatility but may also impede the full disbursement of funds. The shortcomings of transitional schemes to dismantle or modify foreign exchange controls become more important the longer they are in place. A strong case can be made for avoiding delay in moving to full currency convertibility.Environmental Economics&Policies,Economic Theory&Research,Economic Stabilization,Access to Markets,Markets and Market Access

A Configurable Matchmaking Framework for Electronic Marketplaces

E-marketplaces constitute a major enabler of B2B and B2C e-commerce activities. This paper proposes a framework for one of the central activities of e-marketplaces: matchmaking of trading intentions lodged by market participants. The framework identifies a core set of concepts and functions that are common to all types of marketplaces and can serve as the basis for describing the distinct styles of matchmaking employed within various market mechanisms. A prototype implementation of the framework based on Web services technology is presented, illustrating its ability to be dynamically configured to meet specific market needs and its potential to serve as a foundation for more fully fledged e-marketplace frameworks

Regulating privatized rail transport

Traditionally, transport regulation has been viewed as an exercise in second-best optimization, acknowledging the existence of huge information problems. Then the rail industry was deeply restructured worldwide to halt erosion of the sector's share of transportation markets. Restructuring took different forms in different countries, ranging from simple reorganization measures to extreme restructuring -with the private sector increasingly participating in the sector and with the provision of infrastructure separated from the provision of services. The authors argue that regulation of the rail industry cannot remain unaffected by these changes. New regulatory scenarios and issues have emerged. For example, contracts have to be defined for private participation and quality surveillance instruments must be defined. Traditional price controls have to be adapted to, and mechanisms designed to manage and plan infrastructure investments in, the new environment. Restructuring has brought new problems, too. Where licenses have been used, for example, several concessionaires have been unable to meet the objectives spelled out in the concession contract. Contracts should be flexible enough to take account of novel situations that may affect company performance. And yet, for the system to be credible, there cannot be systematic, unjustified deviations from the franchise objectives. Regulation of the sector should be simple and flexible, with license contracts designed to include the private sector and with industry organization adapted to local circumstances. Regulation should be governed by principles that foster competition and market mechanisms, wherever possible. At the same time, it should provide a stable legal and institutional framework for economic activity. Otherwise, regulators should refrain from intervening in the market-unless the goal of economic efficiency (subject to the socially demanded levelof equity) is in jeopardy.Municipal Financial Management,Banks&Banking Reform,Decentralization,Enterprise Development&Reform,Public Sector Economics&Finance,Railways Transport,Banks&Banking Reform,Municipal Financial Management,Water and Industry,Public Sector Economics&Finance

Bid-Centric Cloud Service Provisioning

Bid-centric service descriptions have the potential to offer a new cloud service provisioning model that promotes portability, diversity of choice and differentiation between providers. A bid matching model based on requirements and capabilities is presented that provides the basis for such an approach. In order to facilitate the bidding process, tenders should be specified as abstractly as possible so that the solution space is not needlessly restricted. To this end, we describe how partial TOSCA service descriptions allow for a range of diverse solutions to be proposed by multiple providers in response to tenders. Rather than adopting a lowest common denominator approach, true portability should allow for the relative strengths and differentiating features of cloud service providers to be applied to bids. With this in mind, we describe how TOSCA service descriptions could be augmented with additional information in order to facilitate heterogeneity in proposed solutions, such as the use of coprocessors and provider-specific services

Increasing access to credit through reforming secured transactions in the MENA Region

This paper provides a comparative summary of secured transactions systems related to the use of movable property as collateral in the MENA region vis a vis international practices in countries with modern secured transactions systems. The paper sets out the importance of introducing reforms in the area of secured transactions with the objective of increasing access to credit for businesses, particularly SMEs. The MENA region clearly lags behind all other regions in the introduction of secured transactions reforms. The paper summarizes many of the weaknesses common across the region. The two main critical areas that need urgent reforms are the creation of modern secured transactions laws and electronic movable collateral registries, and the need to improve enforcement mechanisms for security interests in movable property.Debt Markets,Bankruptcy and Resolution of Financial Distress,Access to Finance,Emerging Markets,E-Business