/ oo INDUSTRY AND ENERGY DEPARTMENT WORKING PAPER INDUSTRY SERIES PAPER No. 26 Cost Reduction, Product Development and the Real Exchange Rate Why Do Successful Industrializing Countries Experience Real Exchange Rate Appreciation? April 1990 J7 COST REDUCTION, PRODUCT DEVELOPMENT AND THE REAL EXCHANGE RATE Why Do Successfuly Industrializing Countries Experience Real Exchange Rate Appreciation? Sadao Nagaoka April 1990 Indust y Development Division Industry and Energ Department Policy, Research and External Affairs TABLE OF CONTENTS ABSTRACT ........... ............. L INTRODUCTION ................ ............ 1 IL PRICE ELASTICITY OF DEMAND AND COST REDUCTION .......... 5 Ill. A MONOPOLISTIC COMPERTION MODEL OF A SMALL OPEN ECONOMY 8 IV. BIASES IN PRODUCIVITY CHANGE AND REAL EXCHANGE RATE ... 12 A. Productivity Gain Biased toward Product Development and Real Ewdange Rate ............................... 12 B. Sectoral Bias In Productivity Change and Real Exchange Rate - General FAmula ........................... 14 C. Applications of General Formula ........................... 16 V. CONCLUDING COMMNIS ........... . . . . . . . . .......... 18 FIGURES AND TABLES REFERENCES This paper is one of the background papers for the IENIN research project on Productivity, Competitivenes and Economic Policy. ABSTRACT Countries with successful industrial development records tend to experience real appreciation of their curtecies not only in terms of the economy-wide price index but also in terms of the price Index of the Industriai sector. This has certainly been the case for Korea and Japan. However, this is exactly the opposite of what we generally expect from conventional trade theory, which holds that a fast-growth economy generally experiences terms-of-trade losses. Instead, it looks as though accessful industrialization prevents the tradeoff between growth and terms-of-trade gains. This finding may have mportant Implications for exchange rate policies as well as for industrial policy. Nagaoka conducts theoretical investigations of the possible causes of this puzzle, based on a monopolistic competition modeL He has found that: * jEquilibrium real exchange rates must appreciate when a positive correlation exists b-tween price elasticity of demand and changes in competitive positions across industrial sectors. If a country gains competitiveness mainly in highly competitive sectors, it can expand its market significantly so that the external balance requires a real appreciation of the domestic currency. * A positive correlation between price elasticity and the speed of cost reduction may arise naturally in the technological "catchup process since high price elasticity of demand is conducive to cost reduction. First, high price elasticity makes each firm in the sector more aggressive in expanding output, due to the smaller perceived effect on prices in individual fms. Second, low price-cost margins necessitate a large output from each firm for it to break even. Iarge output, In turn, makes the appropriability from cost reduction high. * Another potential source for real appreciation of domestic currency is productivity gain biased toward adopting new products and against cost reduction. The real exchange rate appreciates in proportion to the excess of productivity gain for product development over that for cost reduction. * Real exchange rate flexibility is essential in order to accommodate these changes without causing macro imbalances. One additional lesson at this stage may be the importance of conducting a disaggregated analysis of industrial performance with a focus on product development capability in evaluating the competitiveness position of a country's external trade. I. INTRODUCTION 1.01 Countries with successful development records in Industhial4ation tend to xperience real appreciation of their currencies not only In terms of the economy-wide price index but also In terms of the price Index of the industrial sector. As shown in Figure 1 for Japan, the yen has appreciated substantially over time, not only in terms of the economy-wide price fedex, such as the ODP deflator, but also in terms of the manufacturing value-added deflator or the unit labor cost of the manufacturing sector. Figure 2 tells the same story for Korea. The opposite story holds for those countries experiencing stagnant industrializa- tion and growth. In fact, it appears that successful industrialization may preclude the tradeoff between growth and terms of trade gas, which is implied by conventional trade theory. 1.02 The tendency for the appreciation cf the real exchange rate in high growth economtes in terms of the broad price index is not surprising. It has been well known since Balassa (1964) and Samuelson (1964) that the emciange rate diverges from purchasing power party (PPP) if the productivity differential between tradable and nontradable sectors differs across countries. Generally there Is more opportunity for technwoical catchup in the tradable sector than in the nontradable sector, such as for some services, in developing countries. Thus, we expect that the real exchange rae, in terms of the price index in the nontradable sector, or the economy-wide price indexes, would appreciate in successfully developing countries. 1.03 However, the puzling part Is the appreciation of the real exchange rate eve in terms of the price Indea of the Industrial sector in successfully industrializiog countries. Actu& ty, this Is exactly the opposite of what we generally expect from conventional trade theory. Unless growth has a strong Import- substituting blas, so that the import-Income ratio declines steadily over time, high-growth countries have to expand their exports faster than the income growth of the rest of the world. This is possible only when these economies lessen the prices of their exports. Consequently we are led to expect high-growth countries generally to experience real depreciation in terms of the price index of the tradable sector, I.e., there exists a tradeoff between growth and the teras of trade. 1.04 This puzzle gives rise to some policy questions, too. Irst, it may have implications for exchange rate policy. In succsfally industrializing countries, substantial real appreciation of their currencies may be necessary in order to prevent inflationary developments in their economies. This is certainly suggested by Japan's experience in the early 1970a and Korea's in the late 198s. On the other hand, continuous real depreciation may be necessary for those economies beset with stagnant Industry in order just to keep the econoiay competitive. Second, the exchange rate puzzle may have implications for industrial -2- policy. If government can assist the pattern of Industrialization leading to terms of trade gains or to avoid terms of trade loss, such an intervention would be welfare improving. Dorabush aud Park (1987) suggest that Korea's active industrial policy contributed to its high growth accompanied by improving terms of trade. 1.05 To understand this puzzle it is useful to examine changes in industrial structure or the absence of change after growth. The idea is most elegantly developed by Krugman (1989). He proposes considering the growth of an economy not as a homogeneous expansion of existing industries but as a continuous addition of new Industries. He has demonstrated that growth does not affect the real C Mange rate at all in the Dixit-Stigliz (1977) monopolistic competition modeL He also has presented evidence from industrialized countries supporting this view of growth. Evidence shows that rapidly growing developed countries show a sytematicaily high income elasticity for their exports (045-degree rule), thus more or less exactly offsetting the pressure for devaluation in these economies, which comes from rapidly growing imports. He regards high income elasticity of exports as reflecting the speed of adding new industries. Since product differentiation opportunities seem to be more abundant for industrial activities than for agricultural or mining activities, Krugma's analysis is also consistent with the obsrvation that terms of trade loss due to growth often has been the concern of primary commodity-ba- 4 developing countries rather than the developing countries with successful induirialization records. However, his analysis, at least in its original form, cannot explain why successfully industrializing economies experience terms of trade gains rather than constant terms of trade. 1.06 There exist several distinct (but possibly complementary) potential causes, induding the one newly offered in this paper. One explanation is Krugman's (1979), of course. In his paper, Industrialization in developing countries is formulated as the relocation of industries from developed countries to developing countries, caused by international technology diffusion. If such diffusion is more rapid than the creation of new industries in developed countries, terms of trade shift in favor of developing countries. This is because the aggregate expenditure pattern shifts in developing countries' favor.1 In Krugman's model, technology development in developing countries results only in the introduction of aew products or new industries. In this paper I extend this analysis by demonstrating that whether the real exchange rate approdates depends on the excess of the productivity gain for product development over the productivity gain for cost reduction. The fast industrial diversification of Korea Is considered by Dorabusch and Park (1987) to be a cause for the tendency toward appreciation of Korean unit labor costs in the manufacturing sector relative to the US and Japan. -3. 1.07 A second explanation conses f0m the eatension of the Balassa-Samuelson (1964) model to the *tradable sector. Some of the manufacturing subsectors do seem to produce nRostradable products such as consumer goods (e.g., traditional costUmes) catered to specific needs of a country. If these subsectors have smaller technological opportunities for productivity improvement than the rest of the manufacturing sector, industrial development leads to real appreciation in the average price of manufactured goods. This paper extends this analysis by demonstrating that real appreciation takes place when a positive correlation exists between the share of domestic Industry in world indusay and the productivity gain. 1.08 A third potential explanation for the appreciation of the real exchange rate in terms of the price index of the f.Justrial sector in industrialized countries comes from their high export income elasticity. If industries in a particular country produce highly incoore-elastic goods more systematically than the rest of the world, such a country will grow rapidly and experience terms of trade gain over time. It may be interesting to note in this regard that one of two targeting criteria suggested by a prominent industrial policy adviser in Japan in the 1950s and 1960s was income elasticity. However, this third explanation is close to a tautolog and may not be consistent with economic equilibrium. Since all enterprises would like to produce goods for which demand grows fastest, we would expect competition zo lead to a situation where o major difference exists in the income elasticities for exports of various countries-unless some systematic bias exists, such as a natural resource advantage for a particular industry or if there are international differences in capital costs. 1.09 A fourth explanation, newly offered In this paper, is the systematic correlation between price elasticity of demand and improvement of price competitivenessy As will be formally demonstrated later, when productivity gains or improvement in competitive position take place more rapidly in highly price- elastic sectors, output from these sectors expands at a disproportionately high rate. Thus, international trade does not balance unless wages go up more than the economy-wide average productivity gains. lis, terms of trade improve. Is there economic ground for such a correlation? As is demonstrated In Section II, high price elasticity is conducive to Investment toward cost reduction since private appropriability of such investment is high. Since developing countries with high technical capability are likely to have more room for cost reduction than industrialized countries, due to their late-comer advantage, it is not surprising If these countries catch up faster In the price-elastic sectors and experience real appreciation even in terms of tradable goods prices. 2f This explanation has been suggested by Kragman and Baldwin (1987) as a potential cause for the long-run tendency of the US real exchange rate to depreciate, although they did not articulate a formal model. -4- 1.10 The rest of the paper bs organied as follows. Section II demonstrates within the partial equlibri i framework that high price elasticity Is coducive to investment for ost reduction. Section III describes a simple generat equilbrium modet for a smalt open economy, basd on a monopolistic competition modet, whch is essea~y a mult-~ector eubension of Krugman (1989). Secton iV gist establishes that productivity g biased toward introducton of new products ead to roat apprciation, based on the modet devetoped In Soeton III. It aso devetops * genera formula tinking sectorat bias ip prodUctivity dange and reat echange rates. It then discusses varous Implications. A positive correlation between the price elasticity of demand and the improvement of price competiveness leads to reat appreciation. This soction also shows that the Balasa-amueson efect (tho second explanation) can be interpreted as a special cas under the general formula. Secton V gives conctuding comments. II PRICE ELASTICITY OF DEMAND AND COST REDUCION 2.01 This section demonstrates that the high price elasticity of demand Is conducive to cost reduction within the framewo* of a partlal or Industry equilibrium. I demonstrate this in the monopolistic competition Retting.N The reason for choosing the imperfect competition bameworl is a familiar one: perfect competition does not allow enterprises to recover iavestment for cost reduction when the marginal cost of production Is constant or declining. Thi would be Inconsistent with empirical observations that enterprises invest in technolo and that they have more or less constant or declining costs of production. I consider the following setting. There exist n firms in an industy. Each firm has a constant marginal cost c, which declines as the firm Increases investment for cost reduction L I assume that 8q/8f < 0 and OaG > 0. 2.02 First I regard n as exogenously determined. Each firm produces its own product, differentiated from others. But all firms are identical In other aspects. k Is elasticity of substitution among differentiated products Whe n Is large, k approximates elasticity of demand faced by each fL§i. If we denote the price set by each enterprise as P, the quantity supplied by x, and the constant marginal cost of investment f as r, the optimal conditions for production and investment decisions by each firm are given by (1) P = C(t)(1 - 1/k) (2) - C'(f)x r Equation (1) determines the price for a given cost, and equation (2) gives the investmunt for a given output. A larger output Increases the private appropriability from cost reduction and thereby encourages Investment for cost reduction. See Helpman and Krugman (1985 and 1989) for an excellent discussion of the recent developments in applying the monopolistic competition model to international trade theory and policy. 4/ The utility function is assumed to be approximated by constant elasticity of the substitution function (see Section II). See Helpman and Krugman (1985). -6- 2.03 I ftrther assume that total expenditure E for this Industry's products is fixed. In this case (3) nP x-E When price goes down, real expenditure (x) goes up, but nominal expenditure stays the same. Substituting equation (3) for equation (1) we have (4) x - (Wa) (1 - l/k)/C(f) We can regard this equation as determining output x for a given level of production cost. 2.04 Industry equilibrium (x) is given in equations (2) and (4). Its determination is illustrated in Figure 3. The line xx corresponds to equation (4), while the line it corresponds to equation (2). Both lines have positive slopes. Higher output expands the benefit of cost reduction and thereby increases investment for such purpose, while high investment for cost reduction reduces price and thereby expands demand. It also can be shown that the line f is steeper than the line xx given the second-order condition of profit marimation. 2.05 Now higher price elasticity of demand k shifts up xx lHe. Higher price elasticity of demand implies that each enterprise can expand output without worrying about its price-depressing effect. Consequently, Industry prices are low and industry output is high for a given level of fivestment. Since larger output is in turn conducive to investment, both output and Investment are larger for highly price elastic sectors (the equilibrium shifts from s to s' in Figure 3). More cost reduction takes place in highly price-elastic sectom. 2.06 In the free entry case, a is determined endogenously by the zero proft condition. If we denote operating profit by w, such a condition is given by (5) w = PX/k JEI(kn) = fr given equation (3). Equation (4) detemining output now becomes modified into When the upper-tier utility function can be approximated by the Cobb-Douglas function, this relationship holds (see Section III). - 7- (4') r(•1)() Conequently, the line = bcomes stpe. 2.07 The high prika eld~ty of demand shIRa up = line as b~fors. Asmuming that the line f Is still ateper than the line z (unss industy equibrium becoms unstabl), we cn derive the same condlslon as abo~e. 7e oconmc mechmnio~ In this cse is the folowing: the high prMo lasticity of demand reducs the pric~.cost margin and therefore the price for a given ~evel of cost-reducig investment f from equation (1). Only a Ora with aage output c break sven whn a low pu~co«cst margin, as well as low pre~s, prevals in the industry (equation (5). L.arg output Isi turn conducie to ost reducdon, which redus pris further and invites expansion of demand and output. HL A MONOPOLISTIC COMPETITION MODEL OF A SMALL OPEN ECONOMY 3.01 Tis section presents a simple g~neral equillbrum model of a smal open ecnomy based on the framework of monopolfstic competition. To simplify the analysis, this setion takes technical progre as eogenous. his model ss as an analytical fame~rk for the next section. 3.02 The eonomy consista of N indus . It is assumed that there edst Dixit-St~glitz type proúöt differentiation opportuites within each industry. In industry l there eist el domstic enterprises and ca freign enterprises, each of which produces only one vadety of producL 3.03 The utillty funcion of a representative individual is assumed to have a two-tier strucure, Cobb-Douglas ta the upper tier and CES In the seud tier: (6) U m t. Ui, Z,-,-* WI. 1 (7) U, = [EJ.1,1 d4-i"> + Ej .1~ d ~ k14 (kt->, kc > 1 where wi is the expenditure share for Industry 1, d is consumption of the domesticay produced vadety j of indusy 1, dr is consumpton of imported vadety j of Industry 1, and k, is the lasticity f substitutioa for cach pair of producs In Industy . 3.04 Idustry price Pd is then derived as foows: (8) P4 [EPf'l + zpäý-910'0 where P is the pdeo of the domesticaiy produced vadety j of industry 1, and Pir is the pdce of the imported variety j of Industry 1. We measure al pries in a common currency. 3.05 It is weil kown that the dea~d funcuion for each differentiated produc can then be given by (9) log dq = -kg logPgPa) + lgwPa .9. where E is the country's total spending. 3.06 I further assume that the home country Is small so that foreign spending, a number of foreign varieties of differentiated products in each Industry, and foreign prices of the products are taken as exogenous. If we denote foreign spending for industry i products as Eb the foreign demand for home variety j in industry I is given by (10) log %f = k log(Pe j) + log(EP) 3.07 For the production side, I assume a constant marginal cost of production. For simplicity, I assume one composite factor of production (call it labor). Total cost function is then (11) f w + wg with WO4 = dCdQ4 = -1 where f0 w is fland cost and C1 w is marginal cost, and w Is wage, 9p is efficiency for product development, and eg Is production efficiency. It Is natural for us to assume that both %1 w and Cu w are proportional to w since there is only one composite factor of production. 3.08 It is well known that when each industry is occupied by many firms producing different varieties of a product, the perceived elasticity of demand for the product j in industry I Is given by k Consequently, firmis that engage in monopolistic competition will set the prices so as to allow for constant markups. (12) P1 (1- 1/kg) = CVw The operating profit, defined as revenue minus variable production cost, is given by (13) wV - (Ps - CVw) xa 3.09 In the case where free entry exists, operating profits must be equal to fixed cost in equilibrium. (14) % = fw - 10 - 3.10 The equlibrium condition of the fctor maket is gven by (15) Z fu + Z C X - L where L Is total labor supply. 3.11 I analy only the symmetic equilibdum in each indutry, so that P8-Pa , Pq-Pa fø ff I ao de~a (16)Mi - 1- 1/k and (11) Xi lx 3.12 Given thc symmetry, tb equffibrum cnd"ition n labor marlets is (18) EfN + Z C ,- L Pdclag and profit equatios can be also simpl idto (19) P, - Cw/M (20) P4d - (na P146 + VgPitll)W«IO (21) 4-(i)/g-fw Jf free entry. - 11 - 3.13 The national budget constraint is, therefore, given by (22) E = (MPX + nr) - E (M + 1/k) PAx, - EPX a Y where Y is the domestic product. The product market equilibrium condition is given by (23) = (P& (wE/P + (PiP (E RIPg) (VPa (wE + BV)/Pa since domestic output is equal to the sum of domestic sales and exports. wA + E is the world spending on industry I products. 3.14 Welfare can be measured by the indirect utility function as follows: (24) log U - constant + log E - ., wj(1-k) log(a%pf' + a U ) It is clear from this equation that higher prices reduce welfare while larger product variety increases welfare .12- IV. BIASES IN PRODUCTIVIY CHANGE AND THE REAL EXCHANGE RATE 4.01 This section first presents an analysis of how the bias in productivity gains between cost reduction and product development causes the change In the equilibrium xchange rate. Thn it presents an analysis of how the productivity gain from cost reduction causes change in the real eachange rate, f fit is sectorally biased in terms of price elasticity of demand and shares of domestic Industries. A. Productivity Gain Biased toward Product Development and the Real Echn R 4.02 1 first describe the response of the economic model set up in the last section to technical progress and changes in foreign prices and apenditures. Equations (11) and (19) give the following price- setting equation: (25) dP/Pl - dww - de Equations (8) and (23) give the following demand function for each product of domestic industry L: (26) d&^x - -(k + th - kt) dPvP, + (k, - 1)(1 -th) dPtdPg - tda + el dE/ + (1 - eo) dEA where t is domestic industry's share of the world industry in sector I, and el is the share of domestic demand in the total sales of domestic industry L The zero profit condition (21) becomes (27) dP/P + dx dw/w - depi These three equations give the Industry equilibrium for given dE and dw/w, which In turn are determined by budget constraints and by the labor market equilibrium as follows. 4.03 Budget constraint (22) becomes (28) dFEB - D (dx^ + dna + dP/P) where s1 is the share of domestic Industry I in the domestic economy. The labor market equilibrium condition (18) becomes - 13- (29> aus (dn,ar1e) + a (dxA + nrdQd,) =0 (free ntby ase) (29') adxx1 = 0 (restrlcted enty case) where s (sa) is the share of the f~~ed-cost (varable-cost) component of employment in the domesti industry in the domestic economy. 4.04 In the rest of this secion I show that whether the rea exchang rate appreciates depends on whether the productivity gain favors cost reduction or product development. For simplicity, I assume the symmetry of all industries and focus on the response to productvty gan. Prod~uctivty gan is assumed to improve opportunites for cost reduction and for product development for all Industries In the same maner (25*) dP/P - dw/w - de* and (27) dP/P + dx - dwlw - de, If de, < d~,, then techical progress is b~ased toward product development The, budget constraint (28) gives dJE = dw/w - dop + (ItXde,p - dg,) - (k+t-kt)(dw/wd,)t+dE/E, since t = . Simp~yng this equaton, we get a concise fomula: (30) dw/w = de + (d, - dO)/k From equation (25) we have (31) dp/p = (dO, - dejlk Therefore, if the productivty galn is b~ased toward cost reducion (de < dej, tho reat echange ratoe depreciateL Conversely, If tecnical progress Is biased toward new products or new industry deveopments (de, > deJ, the ral echange rate appreciates. - 14 - I. Sectoral las in Prduedvity Change and the Re Exange Rat-Genral Ferna~ 4.05 1 fnt Unalyze the cas characterzed by restricted ently. It is possible to rewrite the bdget costidat and the labor market equilibrium condition as follows: (',2>) 1-,1v (k+t-kt-1)' i * IdPEE ,33) 1 -(k+t-kt)L dwlw =1 (k+t-kt-1)'{(do +(dp/Pjy}+(1-o)ydEg/E 0 Elasticity Effect: - [(1-eT)sT/gJde < 0 A/ Approximation is good when ki is large or uniform across sectors h/ sT is the share of tradable sector. £/ g, as defined for equation (34). t - t, Table 2: CORRELATION AND EIASTICITY EFFECTS ON REAL EXCHANGE RATE Tradable Sector Von-tradable Sector Average Nigh Elasticity Sector Low Elasticity Sector (t1 u 1) (t, a 0.1) (t1 a 0.1) 81sL 1/2 sT 1/2 s 1 - sT - dO, 3/2 dO 1/2 dG 0 sT dO e, ef eT 1 e-se,e + (1 - S) g, 3/2k+t-3/2 kt-e 1/2k+t-1/2kt-e 1-e g-sT(k+t-kt-1)+1-e Correlation: [sT(5/4k+t-5/4kt-e)/gIde > 0 Effect Elasticity: - [(l-eT)sT/g]de < 0 Effect 0:1 8 * 01 il 0 o 'I.' - o~ 0 0 - * 4> i -i 1W * .8 g 0 4> '.4 II e~d jij 0 0 L I '5 i,, ~ .PLhi ~Vi i lå! *1i - 23 - INDUSTRY SERIES PERS No. 1 Japanese Direct Foreign Investment: Patterns and Implications for Developing Countries, February 1989. No. 2 Emerging Patterns of International Competition in Selected Industrial Product Groups, February 1989. No. 3 Changing Firm Boundaries: Analysis of Technology-Sharing Alliances, February 1989. No. 4 Technological Advance and Organizational Innovation in the Engineering Industry, March 1989. No. 5 Export Catalyst in Low-Income Countries, November 1989. No. 6 Overview of Japanese Industrial Technology Development, March 1989. No. 7 Reform of Ownership and Control Mechanisms in Hungary and China, April 1989. No. 8 The Computer Industry in Industrialized Economies: Lessons for the Newly Industrializing, February 1989. No. 9 Institutions and Dynamic Comparative Advantage Eltctronics Industry in South Korea and Taiwan, June 1989 No. 10 New Environments for Intellectual Property, June 1989. No. 11 Managing Entry Into International Markets: Lessons From the East Asian Experience, June 1989. No. 12 Impact of Technological Change on Industrial Prospects for the LDCs, June 1989. No. 13 The Protection of Intellectual Property Rights and Industrial Technology Development in Brazil, September 1989. No. 14 Regional Integration and Economic Development, November 1989. No. 15 Specialization, Technical Change and Competitiveness in the Brazilian Electronics Industry. November 1989. - 24 - INDUSTRY SERIES PAPERS cont*d No. 16 Small Trading Companies and a Successful Export Response: Lessons From Hong Kong, December 1989. No. 17 Flowers: Global Subsector Study, December 1989. No. 18 The Shrimp Industry: Global Subsector Study, December 1989. No. 19 Garments: Global Subsector Study, December 1989. No. 20 World Bank Lending for Small and Medium Enterprises: Fifteen Years of Experience, December 1989. No. 21 Reputation in Manufactured Goods Trade, December 1989. No.22 Foreign Direct Investment From the Newly Industrialized Economies, December 1989. No. 23 Buyer-Seller Links for Export Development, March 1990. No. 24 Technology Strategy & Policy for Industrial Competitiveness: A Case Study of Thailand, February 1990. No. 25 Investment, Productivity and Comparative Advantage, April 1990. No. 26 Cost Reduction, Product Development and the Real Exchange Rate, April 1990. No. 27 Overcoming Policy Endogeneity: Strategic Role for Domestic Competition in Industrial Policy Reform, April 1990. No. 28 Conditionality in Adjustment Lending FY80-89: The ALCID Database, May 1990. No. 29 International Competitiveness: Determinants and Indicators, March 1990. No. 30 FY89 Sector Review Industry, Trade and Finance, November 1989. NqW For extra copies of these papers please contact Miss Wendy Young on extension 33618. Room S-4101 - 25 - ENERGY SERIES PAPERS No. 1 Energy Issues in the Developing World, February 1988. No. 2 Review of World Bank Lending for Electric Power, March 1988. No. 3 Some Considerations in Collecting Data on Household Energy Consumption, March 1988. No. 4 Improving Power System Efficiency in the Developing Countries through Performance Contracting, May 1988. No. 5 Impact of Lower Oil Prices on Renewable Energy Technologies, May 1988. No. 6 A Comparison of Lamps for Domestic Lighting in Developing Countries, June 1988. No. 7 Recent World Bank Activities in Energy (Revised October 1989). No. 8 A Visual Overview of the World Oil Markets, July 1988. No. 9 Current International Gas Trades and Prices, November 1988. No. 10 Promoting Investment for Natural Gas Exploration and Production in Developing Countries, January 1988. No. 11 Technology Survey Report on Electric Power Systems, February 1989. No. 12 Recent Developments in the US. Power Sector and Their Relevance for the Developing Countries, February 1989. No. 13 Domestic Energy Pricing Policies, April 1989. No. 14 F-mancing of the Energy Sector in Developing Countries, April 1989. No. 15 The Future Role of Hydropower in Developing Countries, April 1989. No. 16 Fuelwood Stumpage: Considerations for Developing Country Energy Planning, June 1989. No. 17 Incorporating Risk and Uncertainty in Power System Planning, June 1989. No. 18 Review and Evaluaton of Historic Electricity Forecasting Experience, (1960- 1985), June 1989. - 26 - ENERGY SERIES PAPERS cont'd No. 19 Woodfuel Supply and Environmental Management, July 1989. No. 20 The Malawi Charcoal Project - Experience and Lessons, January 1990. No. 21 Capital Expenditures for Electric Power in the Developing Countries in the 1990s, February, 1990. No. 22 A Review of Regulation of the Power Sectors in Developing Countries, February 1990. No. 23 Summary Data Sheets of 1987 Power and Commercial Energy Statistics for 100 Developing Countries, March 1990. No. 24 A Review of the Treatment of Environmental Aspects of Bank Energy Projects, March 1990. No. 25 The Status of Liquified Natural Gas Worldwide, March 1990. No. 26 Population Growth, Wood Fuels, and Resource Problems in Sub-Saharan Africa, March 1990. No. 27 The Status of Nuclear Power Technology - An Update, April 1990. No. 28 Decommissioning of Nuclear Power Facilities, April 1990. Note: For extra copies of these papers please call Ms. Mary Fernandez on extension 33637.