Mongolia - Privatization and system transformation in an isolated economy

The authors examine the process of economic transformation in Mongolia, a huge, isolated, sparsely populated country. After identifying factors that led to formulation of a radical adjustment program in such an isolated country, they focus on Mongolia's innovative voucher privatization scheme, and the interplay between the speed of contraction in resource availability and that of the movement to a market economy. They show that the reform process was not smooth: that after the rapid formulation and implementation of major reforms, there was a marked slowdown, when reform timetables were revised and a more gradualist approach adopted. Later, reforms driven by the privatization program picked up momentum again. But one important lesson learned in Mongolia is that voters are likely to shy away from radical reformers when faced with growing shortages and a collapsing economy. In June 1922, the Mongolian People's Revolutionary Party (the former communist party) was returned to power in general elections, capturing 72 of 76 parliamentary seats. The authors identify factors related to speed versus caution: organization and institutional limitations; political considerations; whether a model of transformation exists; and a contracting resource envelope. Using a simple computable general equilibrium model, they analyze the impact of the cutoff of Soviet aid, which amounted to 30 percent of GDP, and of the disruption of trade. They conclude that preventing a decline in welfare of more than 20 percent - which is close to the decline in 1991 - would require aid flows of about 15 percent of GDP. Their model suggests that the rural sector is reasonably well insulated from external shocks, in sharp contrast with the urban sector. One response scenario explored by the model is that of massive reverse migration to rural areas. They point out that the more the resource envelope tightens and squeezes away the margin above subsistence, the harder it will be to sustain an orderly pattern of reform. In the extreme, this pattern may force the country to adopt a rationed wartime economy, despite intentions to shift to a market system.Economic Theory&Research,Banks&Banking Reform,Environmental Economics&Policies,Municipal Financial Management,Access to Markets

Enterprise isolation programs in transition economies : evidence from Romania

How should countries in transition to market economies handle the losses of large loss-making enterprises? Over the past six years several governments in transition economies have implemented isolation programs that combine features of reorganization under bankruptcy (as in industrial countries) with severance payments for employees and assistance with labor deployment. The author analyzes isolation programs for financially distressed firms in transition economies based on empirical evidence from Romania, the program that had the greatest coverage. The results indicate that Romania's isolation program fulfilled none of its intentions. Despite substantial costs, it neither delivered tangible improvements in operational performance nor improved the process of privatization or liquidation of large loss-making enterprises. Worse still, the program may have delayed restructuring by not imposing hard budget constraints. Firms included in the program faced softer budget constraints than their counterparts outside the program. Loss makers were not selected through objective criteria, and the agency in charge was not sheltered from politicalpressure in enforcing hard budget constraints. The author therefore questions the feasibility of creating special programs for enterprise restructuring under government auspices, with government agencies choosing beneficiaries and deciding on the scope of activity. His conclusion supports the insistence of international donor organizations that governments in transition economies privatize rapidly, without attempting first to restructure enterprises.Small and Medium Size Enterprises,Microfinance,Municipal Financial Management,Banks&Banking Reform,Small Scale Enterprise,Banks&Banking Reform,Municipal Financial Management,Private Participation in Infrastructure,Microfinance,Small Scale Enterprise

The economic impact of the mining boom on Indigenous and non-Indigenous Australians

This paper examines changes in Indigenous employment, income and housing costs to identify any localised ‘resource curse’ for Indigenous communities and the Australian population at large. Abstract Until the global financial crisis reduced Australian economic growth in late 2008, Indigenous employment had been increasing in both absolute and relative terms for over a decade. The effect of the international economic contraction has been mitigated by Australia’s booming mining sector, largely due to China’s growing demand for resources. Given that a substantial number of mining operations are on or near Indigenous land, the increase in mining investment may have disproportionately affected Indigenous communities. There are concerns that, in remote mining areas, the increases in housing costs generated by the mining boom mean that anyone who does not work in the mining industry, particularly those who rely on government benefits, will find it harder to afford housing. Localised inflationary tendencies can also affect people employed outside the mining sector, but one would expect that scarcity in the labour market would drive up wages in both mining and non‑mining jobs. This paper examines changes in Indigenous employment, income and housing costs to identify any localised ‘resource curse’ for Indigenous communities and the Australian population at large. The paper draws on data from recent censuses, the geographic location of mines and mining investment to identify some potentially important effects of the mining boom on Indigenous communities. The main finding is that the mining boom has improved employment and income outcomes, but increased average housing costs. While the average increase in income has generally offset the increase in costs, there is some evidence that housing stress for low-income households has increased as a result of the mining boom

Improving Russia's policy on foreign direct investment

Foreign direct investment brings host countries capital, productive facilities, and technology transfers as well as employment, new job skills, and management expertise. It is important to the Russian Federation, where incentives for competition are limited and incentives to becoming efficient are blunted by interregional barriers to trade, weak creditor rights, and administrative barriers to new entrants. The authors ague that the old policy paradigm of foreign direct investment (established before World War II and prevalent in the 1950s and 1960s) still governs Russia. In this paradigm there are only two reasons for foreign direct investment: access to inputs for production and access to markets for outputs. Such kinds of foreign direct investment, although beneficial, are often based on generating exports that exploit cheap labor or natural resources, or are aimed at penetrating protected local markets, not necessarily at world standards for price and quality. They contend that Russia should phase out high tariffs and non-tariff protection for the domestic market, most tax preferences for foreign investors (which don't increase foreign direct investment but do reduce fiscal revenues), and many restrictions on foreign investment. They recommend that Russia switch to a modern approach to foreign direct investment by: 1) Amending the newly enacted foreign direct investment law so that it will grant non-discriminatory"national treatment"to foreign investors for both right of establishment, and post-establishment operations, abolish conditions (such as local content restrictions) inconsistent with the World Trade Organization agreement on trade-related investment measures (TRIMs), and make investor-state dispute resolution mechanisms more efficient (giving foreign investors the chance to seek neutral binding international arbitration, for example). 2) Strengthening enforcement of property rights. 3) Simplifying registration procedures for foreign investors, to make them transparent and rules-based. 4) Extending guarantee schemes covering basic non-commercial risks.Environmental Economics&Policies,Labor Policies,International Terrorism&Counterterrorism,Economic Theory&Research,Payment Systems&Infrastructure,Environmental Economics&Policies,Foreign Direct Investment,Economic Theory&Research,National Governance,International Terrorism&Counterterrorism

From the mountains to the prairies : the banking environment in the Tenth Federal Reserve District

The Tenth Federal Reserve District consists of many types of markets within which District institutions operate. Since conditions in the District environment can vary from dynamic to slow-growing, these markets offer both challenge and opportunity that financial institutions must understand to be successful. But what is the level of change in the District environment and how might that change be materializing? This article considers the environment within the Tenth District and discernible trends within that environment. We highlight the major factors that influence bank behavior and condition, including demographic, economic and structural conditions and trends. The 2000 census information is used in conjunction with that of prior census surveys to describe where the District is today and from where it has evolved demographically. Economic data, including gross state product information, allows us to report the shifts in industrial focus for various markets and the District as a whole. The article also considers changes in the industry and describes how banking consolidation has evolved within the District. Finally, the article looks at potential future trends, to shed light on emerging environmental factors of which District banks may take into account in their planning process.Federal Reserve District, 10th

An evaluation of Skylab (EREP) remote sensing techniques applied to investigations of crustal structure

The author has identified the following significant results. Film positives (70mm) from all six S190A multispectral photographic camera stations for any one scene can be registered and analyzed in a color additive viewer. Using a multispectral viewer, S190A and B films can be projected directly onto published geologic and topographic maps at scales as large as 1:62,500 and 1:24,000 without significant loss of detail. S190A films and prints permit the detection of faults, fractures, and other linear features not visible in any other space imagery. S192 MSS imagery can be useful for rock-type discrimination studies and delineation of linear patterns and arcuate anomalies. Anomalous color reflectances and arcuate color patterns revealed mineralized zones, copper deposits, vegetation, and volcanic rocks in various locations such as Panamint Range (CA), Greenwater (Death Valley), Lava Mountains (CA), northwestern Arizona, and Coso Hot Springs (CA)

The Hazard of Merger by Absorption – Why Some Knappschaften Merged and Others Did not: 1861–1920

By the mid-19th century, following the Prussian mining reform, German miners‘ combined mutual health and pension funds took on the characteristics of social insurance and underwent a concentration process driven by mergers, liquidations, and unequal internal growth. This paper investigates the determinants of mergers by absorption among Prussian funds combined with quantitative evidence from a regression model, provides new insights into the first social-insurance merger wave in Germany. While most contemporary sources convey the impression that funds were merged to stabilize the entire insurance scheme by sorting out actuarially unviable and financially distressed funds, statistical evidence suggests that funds were absorbed over time primarily because they offered advantages to the absorbing fund and, hence, were quite attractive targets.Competing risk; financial distress; insurance; Knappschaft; liquidation; merger; mining