' 7 A> ' 2> DEVELOPMENT IN PRACTICE -7L , 'A v Sustaining Rapid wJ7 Development -7 in East Asia and L the Pacific -7 a 17 AL ) L vL 7r 7 7>4 7 > A 7'd A WORLD BANK P U BLI- I C-DN D E V E L O P M E N T I N P R A C T I C E Sustaining Rapid Development in East Asia and the Pacific Sustaining Rapid Development in East Asia and the Pacific T HE W OR L D B AN K W A S H I N G T O N, D. C. © 1993 The Intemational Bank for Reconstruction and Development / THE WORLD BANK All rights reserved Manufactured in the United States of America First printing March 1993 The Development in Practice series publishes reviews of the World Bank's activities in different regions and sectors. It lays particular emphasis on the progress that is being made and on the policies and practices that hold the most promise of success in the effort to reduce poverty in the developing world. The findings, interpretations, and conclusions expressed in this study are entirely those of the authors and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The denominations, classifications, boundaries, and colors used in the map do not imply on the part of the World Bank any judgment on the legal or other status of any territory or any endorsement or acceptance of any boundary. Library of Congress Cataloging-in-Publication Data Sustaining rapid development in East Asia and the Pacific. p. cm. - (Development in practice) Includes bibliographical references. ISBN 0-8213-2386-5 1. East Asia-Economic conditions. 2. East Asia-Economic policy. 3. Pacific Area-Economic conditions. 4. Pacific Area-Economic policy. I. Intemational Bank for Reconstruction and Development. 11. Series: Development in practice (Washington, D.C.) HC460.5.S88 1993 338.95-dc2O 93-3075 ClP This report, prepared by the Office of the Vice President, East Asia and Pacific Region, is based on the economic and operational work in the region and other parts of the World Bank. The principal authors were Ramgopal Agarwala and Vinod Thomas. Important contributions were made by Brandon Carter, Jeffrey Hammer, Osamu Kawaguchi, Deena Khatkhate, Kali Kondury, and Vikram Nehru. The authors also drew on the work of Frida Johansen, Anthony Rowley, and Subroto Roy. The report was produced under the general guidance of Gautam Kaji. Many people in and outside the Bank provided valuable comments and con- tributions. Data from the International Economics Department were the basis for the regional development indicators. The support staff of the report included Carmencita Clay, Okie Moon Dorian, and Jae Shin Yang. Bruce Ross-Larson was the principal editor. Foreword THE countries of East Asia and the Pacific have been at the leading edge of economic development in many respects over the past quarter century. Progress on some fronts has been so remarkable that policymakers around the world are searching for the lessons of East Asia's successes. But equally, the region-which is home to two-fifths of the population of the developing world- also faces tough economic problems and growing challenges. Most of our work in the region is country-focused. Yet a regional survey such as this can bring out commonalities as well as differences that can inform country analysis. A regional assessment can also shed light on emerging prob- lems that have a regional or global dimension-be it trade and investment or infrastructure and the environment. A regional overview can bring perspectives that would help in the design and implementation of country strategies. And, indeed, this report brings out a number of such insights. First, despite the diversity among countries, East Asia has achieved re- markable performance in economic growth, poverty reduction, and social de- velopment, including a narrowing of the gender gap. And it has managed to do that not only during periods of substantial government interventions but even more spectacularly during the period of market reforms. Behind this perfor- mance lies a uniquely pragmatic and effective style of economic management that steers clear of theoretical abstracts and ideological extremes. This ap- proach to economic management characterizes the socialist economies in tran- sition such as China and Viet Nam as much as it does the market economies such as the Republic of Korea and Malaysia. The region now faces some difficult medium-term challenges, but I am confident that if policymakers in the region can continue their pragmatic management, East Asia will make history by being the first developing region to overcome the poverty problem. vii viii SU STAIN ING RA PI D DEV EL OP M ENT Second, this regional development review brings into sharp focus the chang- ing character of the region. Typically, one thinks of East Asia as a predomi- nantly market-oriented and middle-income region. However, 80 percent of East Asia's population lives in socialist economies in transition, three times as many as live in the socialist economies in Eastem Europe and the former Soviet Union (FsU). Accordingly, the analytical challenges as well as resource require- ments for the East Asia region during the 1990s will be enormous. Third, even though East Asian economies have been undergoing reforms during the 1980s, the remaining reform agenda is still large and complex. In particular, the region needs to make a breakthrough during the 1990s in enter- prise and financial sector reforms. Moreover, during the process of rapid growth, the region has accumulated serious problems of infrastructural bottlenecks, urban congestion, and pollution. And whereas East Asia is relatively successful in addressing some environmental concems such as clean water, it has a long way to go in confronting the severe environmental problems such as air pollu- tion, soil erosion, and deforestation. Fourth, the report shows a sharp change in the extemal financing needs of the region. During the past twenty-five years the region has, on average, run current account deficits of less than I percent of its gross domestic product (GDP), although there were large variations among countries. But emerging defi- cits are much larger. These trends may continue in the region during the 1990s as it tackles its infrastructure problems and environmental issues. Equally striking is the fact that the extemal resource requirements for the socialist economies in the region that are moving toward market orientation are increasing, much as they have in Eastem Europe and the FSU. Finally, the report emphasizes the interaction between domestic efforts and global developments. The extemal trade and resource requirements for growth highlight the crucial importance of greater openness in the regional and global environment for trade, investment, and capital flows. As pressures are mount- ing for regionalism and protectionism in the world, East Asia has a global leadership role to play in ensuring that the outward orientation of all parties is furthered. And within this region, the countries can gain substantially from con- certed efforts at promoting intraregional trade and foreign direct investment. This report is based on economic and sector work as well as operational work carried out in the region in recent years. In preparing the report, the authors have also drawn on views and analysis in the countries of the region. I expect that this report will be circulated and discussed widely within the region, and I look forward to a continuing process of interaction with our development partners in the region. Gautam Kaji Vice President East Asia and Pacific Region Contents EXECUTIVE SU MMARY Xiii I The Region's Economic Performance 1 2 An Evolving Taxonomy of Countries 11 3 Four Challenges for the 1990s 26 4 Global Perspectives and Regional Priorities 46 N O T E S58 B I B L I O G R A P H Y 59 REG ION AL DE V E LOP ME NT IN DICATO RS 61 ix x SUSTA INI NG RA P ID DEVELOP M E NT Figures 1.1 East Asia's performance edge 2 2.1 Average annual growth of GDP, 1980-90 12 2.2 Effective protection rates in manufacturing 22 2.3 Investment in state enterprises as a percentage of total investment 23 3.1 Environmental indicators 42 3.2 Incremental carbon dioxide emissions, 1990-2000 44 4.1 Productivity growth in the OECD, 1964-92 50 4.2 Growth in per capita GDP in industrial and developing countries, 1965-93 50 4.3 Shares of foreign direct investment to developing countries 53 4.4 Share of inward net flows of foreign direct investment, late 1980s 54 Map 121 Text Tables 1.1 GDP growth, 1965-92 3 1.2 Progress in meeting basic needs 7 2.1 Current acccount balance, 1988-91 16 4.1 Imports from developing countries as a share of consumption 51 4.2 Balances on current account 56 4.3 Changing pattem of Japanese exports 57 Boxes 1. 1 Poverty in East Asia 6 2.1 East Asia's prospects as seen in the 1950s 14 3.1 Urban transport: some win-win policies 30 4.1 Growing centrality of Japan in East Asian economies: a quiet transformation 48 Regional Development Indicators Tables A Selected Economic Indicators, 1991 63 I Basic Indicators 64 2 Growth of Production 66 3 Structure of Production 68 CONTENTS xl 4 Agriculture and Food 70 5 Commercial Energy 72 6 Structure of Manufacturing 74 7 Growth of Consumption and Investment 76 8 Structure of Demand 78 9 Central Government Expenditure 80 10 Central Government Current Revenue 82 11 Money and Interest Rates 84 12 Growth of Merchandise Trade 86 13 Structure of Merchandise Imports 88 14 Structure of Merchandise Exports 90 15 OECD Imports of Manufactured Goods: Origin and Composition 92 16 Balance of Payments and Reserves 94 17 Official Development Assistance: Receipts 96 18 Total Extemal Debt 98 19 Flow of Public and Private Extemal Capital 100 20 Total Extemal Debt Ratios 102 21 Terms of Extemal Public Borrowing 104 22 Population Growth and Projections 106 23 Demography and Fertility 108 24 Health and Nutrition 110 25 Education 112 26 Urbanization 114 27 Women in Development 116 28 Regional Performance Indicators, 1965-90 118 29 Classification of Economies by Income and Region, 1992-93 119 Executive Summary THE East Asia and Pacific region had a flying start to the 1990s with average output per capita expanding by 5.2 percent in 1990 and 5.6 percent in 1991, compared with a decline for the developing world on average. Over the past quarter century, per capita incomes in East Asia have nearly quadrupled, with a sharp reduction in poverty and notable progress in social development and in reducing the gender gap. Indeed, with absolute poverty now down to about 11 percent of the population, East Asia could almost eliminate poverty and close the social gap with the industrial countries within a generation or so- if it can meet the emerging challenges of the 1990s and sustain its rapid, broadly based growth and social development. The region's solid economic performance has as its basis a strong outward orientation and an emphasis on human resource development, in addition to very effective institutional frameworks. In the past twenty-five years, current account deficits of the region as a whole have been surprisingly small-less than I percent of gross domestic product (GDP). And development was largely self financed, although many countries required and benefited from large exter- nal capital inflows, including foreign direct investment. Compared with other regions, performance in East Asia was very good in the era of intervention (1965-80) and even better in the era of market reform (1980-90). East Asian governments are known to have intervened efficiently; less well known is the even greater success with market reforms in the 1980s. Both the state and the market have been important, with the state supporting markets, not supplanting them. This success has sparked interest among policymakers everywhere, who ask: how and why? East Asia is not a story of unqualified success, however. It would be a great mistake for the region to become complacent or for the development commu- xiii xiv SU STA IN ING RAP ID DE V EL O PM ENT nity to neglect the region's problems. Not all East Asian countries have done well, and the spectrum of performance is wide-wider than in South Asia. Moreover, even the good performers have made costly errors in their policy and investment decisions. Vigilance, pragmatism, and flexibility-the main features of East Asia's solid performers-must continue for success to be sustained. East Asia could almost eliminate poverty and close the social gap with the industrial countries within a generation or so-if.. An Evolving Taxonomy of Countries Despite the region's diversity, its problems for the 1990s can be analyzed by country groups and common challenges. Reflecting different stages of develop- ment and different development problems and prospects, the Bank's borrowers in East Asia fall into three groups. * The Asian tigers: Republic of Korea (hereafter Korea), Malaysia, and Thai- land. They have been growing rapidly over the past quaner century, and they now belong to the top third in the per capita income ranking of the developing world. For them the dominant question is how to sustain their dramatic growth. If they address issues of competitiveness, environment, infrastructure, and glo- bal trade, they have good prospects for sustaining their performance. * The socialist economies in transition: They have roughly 80 percent of the population of East Asia, and they belong to the poorest third in the per capita income ranking of the developing world. Their total population is nearly three times that in Eastem Europe including the former Soviet Union (FSU). Even excluding China, socialist economies in East Asia have a significantly larger population than the countries of Eastern Europe (excluding the FSU), which have received so much world attention in recent years. No country has finished its socialist transformation. China is probably the most successful thus far, but it too has to deal with serious problems in reforming state-owned enterprises, containing regional income inequalities, and further alleviating poverty. Oth- ers-the Lao People's Democratic Republic, Mongolia, and Viet Nam-are undertaking bold but difficult measures to achieve stability and sustained growth. EXEC UT I VE SUM MARY xv Their efforts will succeed only if their strong domestic reform efforts can be combined with substantial concessional assistance (10-15 percent of theircDP) during the 1990s. Myanmar and the Democratic People's Republic of Korea will also need similar assistance when they decide to launch their reform pro- grams-as will Cambodia. During the 1990s, these socialist economies in tran- sition will dominate the Bank's analytical work and lending operations in the region. * The island economies of the region, both large and small: Indonesia, the Philippines, Papua New Guinea, and the Pacific islands. Because of their geog- raphy, they face special development challenges-in particular, interisland trans- port is expensive. By and large, they belong to the middle third in per capita income ranking of the developing countries. With the important exception of Indonesia, these economies have had poor growth during the 1980s, and strong efforts are needed to achieve decent growth. Per capita growth in the Philip- pines during the 1980s was poorer than that of Sub-Saharan Africa. Other island economies, including Papua New Guinea, have also experienced declin- ing per capita incomes in the 1980s. In addition to sustained policy reforms, these countries will need external resources in the 1 990s on a scale much larger than they received during the 1980s. Indonesia's growth performance was im- pressive, but it too faces some difficult issues in maintaining stability in its internal and external balances. Duling the 1990s, these socialist economies in transition will dominate the Bank's analytical work and lending operations in the region. Four Challenges for the 1990s During the 1990s, the region will have to address several cross-cutting chal- lenges, four of which are highlighted in this report: removing bottlenecks in infrastructure, propelling the reform of state enterprises, completing the reform of the financial sector, and resolving environmental problems. Each is impor- tant for most of the countries of the region, but they differ somewhat in their intensity from country to country. * Most East Asian economies face infrastructure bottlenecks that can be over- come only with sizable investments. In some respects, this is a question of xvi SU STA I NI NG RA PI D DE VE LO PM ENT During the 1990s. the region will have to address several cross- cutting challenges, four of which are highlighted in this report: removing bottlenecks in infrastructure, propelling the reform of state enterprises, completing the reform of the financial sector, and resolving environmental problems. meeting the infrastructural demands of exceptionally rapid growth. In others, it is the result of past neglect. To meet this challenge, an enhanced role for the private sector and vigorously applied economic pricing principles must be combined with increased resource mobilization. * Public enterprise reform is-and will remain for the rest of this decade-an important priority for many countries of East Asia. This is true for socialist economies that are in transition from a centralized command system to a decen- tralized market system. And it is true for other countries with large public sectors and difficult public finance situations. The reform of state-owned enter- prises ought to be approached pragmatically and considered part of a larger package of enterprise development efforts. Among other measures in such a package are fostering private sector development and competition among en- terprises (public and private); privatizing state-owned enterprises and activities that were previously public monopolies; and strengthening the financial sector's ability to finance increased private sector capital requirements and to extend loans to state-owned enterprises on commercial terms, without government guarantees. In most countries of the region, sound strategies for enterprise reform need to address these three areas, with the emphasis depending on circumstances. m The important agenda for financial sector reforms is large and unfinished. Most East Asian countries launched some programs of financial liberalization in the 1980s. But in most cases, the passage has been rough, often with very high real interest rates and sometimes with disruptions in the corporate and financial sector. The reforms must be continued in the 1990s, and countries will have to coordinate them much more closely with macroeconomic stability and develop the capacity for prudent financial regulation. * Rapid growth generates resources for tackling environmental problems, and East Asia's growth has created just such opportunities. There has been EX EC UT IV E SUM MARY xvii good progress in addressing some environmental issues, such as clean water. But East Asia's environmental performance has generally been lagging. Among the developing regions, it has the highest rate of deforestation, the highest intensity of energy use per unit of GDP, and the highest emission rate of carbon dioxide per unit of GDP. It faces serious problems of sanitation in urban areas and of soil degradation in rural areas. Innovative actions now being initiated in the region need to be strengthened, and it is imperative that the government and the private sector seal a partnership to deal with the region's environmental challenges. Global Perspectives and Regional Priorities In view of East Asia's outward orientation, the sluggish outlook on global economic growth and trade is a matter of serious concem for the region. Global GDP declined in 1991. and the decline was expected to continue in 1992 with only a modest recovery in 1993. Moreover, the underlying long-term output growth in the world economy is now slower, and sluggish growth rates in the industrial countries are strengthening protectionist tendencies and regionalism. East Asia faces a choice: to form a regional bloc or to provide leadership in maintaining an open multilateral trade system. Given the diversity of countries in the region and the economic risks of looking inward, the East Asian coun- tries do not consider a regional bloc to be appropriate. Integration is taking place in the region without any institutional structure through market-oriented foreign direct investment and trade flows-a process to be encouraged. Fur- themiore, East Asia can strengthen such integration through concerted trade liberalization and promotion of foreign direct investment in the region within the framework of the multilateral trading system. Concerted liberalization would involve regional consultations leading to reformns by East Asian countries in tandem, but would not mean exclusionary trade restrictions. Such regional efforts at trade liberalization on the part of East Asia will be realistic and effective, however, only if regional groups in other parts of the world remain consistent with the General Agreement on Tariffs and Trade (GArr) and do not become exclusionary. Resources, both domestic and external, must be mobilized on a scale the region has not needed in the past-to meet the new challenge of socialist transition. xviii SU S TA IN ING RAP ID DE V EL O PM ENT Despite East Asia's success in recent decades, the 1990s are not going to be an easy time for the region. Difficult policy reforms must be deepened and sustained. Resources, both domestic and external, must be mobilized on a scale the region has not needed in the past-to meet the new challenge of socialist transition as well as other old and new structural problems. But with the deter- mination of its policymakers and the openness of its regional and global part- ners in development, there is every reason to believe that the 1990s will be another decade of solid performance. C H A P T E R O N E The Region's Economic Performance WITH per capita incomes nearly quadrupling in the past twenty- five years, the East Asia and Pacific region has set a development record with- out precedent. i And that record holds valuable lessons for the region's future- and for other countries striving for rapid progress. It should be emphasized, however, that the region is far from homogeneous. It has countries at the top of the developing world (Korea, with more than $5,OO02 in per capita income) and at the bottom (Lao P.D.R., with less than $200). And it has China, with more than 1.1 billion3 people, at one end and small island economies, with fewer than 100,000 people, at the other. Even within a single country, such as China or Indonesia, there are large regional variations. The emerging issues of the region are evident for three broad country groups (chapter 2). First are the high fliers-Korea, Malaysia, and Thailand- at the upper end of the developing country income group (at or above the 60th percentile in per capita income among the developing countries). The other high fliers-Hong Kong, Singapore, and Taiwan (China)-are not considered here, as they now belong to the high-income group. All these economies have been growing fast-and they can be expected during the 1990s to move rapidly toward higher incomes. The main question is how to sustain their dramatic growth. A second distinct group comprises socialist economies in transition- Cambodia, China, Lao P.D.R., Mongolia, and Viet Nam and, perhaps, the Demo- cratic People's Republic of Korea and Myanrmar. Most are at the lower end of the per capita income league, and all are undertaking a transition without prece- dent.4 The third consists of the island economies, large and small: Indonesia, Papua New Guinea, the Philippines, and smaller Pacific island economies. By 1 2 SU STA IN ING RAP ID DE V EL O PM ENT With per capita incomes nearlv quadrupling in the past twenty-five years, the East Asia and Pacific region has set a development recor-d without precedent. and large, they belong to the middle range (from the 30th to 60th percentile) of per capita income rankings among the developing countries. With the impor- tant exception of Indonesia, their per capita income growth rate in the 1 980s has been moderate or negative. They need to become more competitive in the 1 990s and to generate growth in per capita incomes. A Flying Start to the 1990s The region kicked off the 1990s with more of its spectacular performance (figure 1.1). Per capita growth in GDP for East Asia and the Pacific was about 5.2 percent in 1990 and 5.5 percent in 199 1, compared with a decline in average FIGURE 1.1 EAST ASIA'S PERFORMANCE EDGE East Asia has been resilient to global recessions. 6 1990 1991 5s6 2 b 5.2 5.2 c: -- 3 ... ...0000 ... .O_2 2 rzE IIi 3 0.~~~~~~~~~~~~~~~~~~~. ' -1 0.2 -0.1 I tan- ~~- CD )fl D. U Q rit5O sa E O E °(D U . E CO E °, co ~ ~ ~ ~ ~ ~ V C.) V I C I E E a. Includes former Soviet Union and Republic of South Africa; also includes East Asia and the Pacific. Source: World Bank staff estimates. THE REG ION 'S E CON OM IC PE RF OR MAN C E 3 output. the first in thirty years, for all developing countries. Preliminary indications are that 1992 will have seen a similar expansion in output for the region. At the beginning of 1990, the future looked very different. Growth of world output and trade, crucial to East Asia's performance, was slowing. Protection- ism was growing in industrial countries. And progress in the GATT negotiations was slow. There were domestic concerns, too. But excepting the Philippines, the region turned in a good perforrnance. Malaysia led the way, with GDP growth of 8.8 percent in 1991. China, Indonesia, Korea, and Thailand were close behind, with growth ranging from 6.4 percent to 8.4 percent (table 1.1). Even in a year that saw little growth in world trade, these countries saw double- digit growth in export volume, thanks to their outward-oriented policies, with significant diversification in products and markets, and to increased intraregional trade. Similar double-digit growth in exports was also expected for 1992, al- though there are limits to how much intraregional trade can compensate for global trade. Dramatic Socioeconomic Gains In the past twenty-five years, East Asia and the Pacific increased output at more than 7 percent a year and per capita output at more than 5 percent a year, with a near quadrupling of living standards. Korea doubled its per capita output in the eleven years from 1966 to 1977. China did the same in the ten years from 1977 to 1987. At roughly 9 percent a year, the region's exports in the past twenty-five years have risen twice as fast as those for the developing world as a group. As a result, exports quadrupled and accounted for about a third of GDP. Underlying TABLE 1.1 GDP GROWTH, 1965-92 (annual percentage change, constant local currency) East Asia maintains growth momentum, with some exceptions. Countrv 1965-90 1990 1991 1992a China 7.6 5.1 6.4 10.5 Indonesia 6.9 7.2 6.6 5.5 Korea 8.8 9.2 8.4 7.0 Malaysia 6.7 9.8 8.8 8.5 Thailand 7.1 10.3 8.0 7.5 Philippines 3.9 2.4 -1.0 2.0 a. Preliminary estimate. Source: World Bank staff estimates. 4 SU STAIN ING RAP ID DE V EL O PM ENT these trends was a deep structural transformation, with industry's share of GDP growing from a third to half. The already large gap between the economic perfomnance of East Asia and that of the rest of the developing world (save for South Asia, which also im- proved its perforrnance) widened in the 1980s. Compared with the average for developing countries, East Asia did much better during 1965-80. Its relative performance improved further (and spectacularly) in the 1980s for three indica- tors-GDP. investment, and exports. The already large gap between the economic performance of East Asia and that of the rest of the developing world widened in the 1980s, save for South Asia, which also improved its perfiormance. Underlying East Asia's growth were high levels of saving and investment. Its 1965 savings rate was about 22 percent of GDP. By 1991. it had risen to a spectacular 35 percent. roughly 60 percent more than the average for industrial countries. The savings rates are particularly high for China, Indonesia, Korea, Malaysia, and Thailand, and Korea's rates have reached the level of Japan's. Rapidly rising domestic saving enabled East Asia to increase investment without resorting to large foreign saving. Over the past twenty-five years, in- vestment rose at about 11 percent a year-roughly 50 percent faster than GDP growth. It is striking that for the region as a whole over this period, the net inflow of foreign saving was a modest 0.3 percent of GDP. There were, of course, variations in foreign capital inflows from year to year and from country to country. In many countries, the gross inflows of foreign capital (including direct foreign investment) were substantial, playing a crucial role in their devel- opment. Compared with countries elsewhere, East Asia had self-reliant growth- and that self-reliance contributed to its relative freedom from the debt crisis and from the painful adjustment programs typical for many other countries in the 1980s. The relatively good record on debt servicing helped in tum to sustain voluntary capital inflows when needed. The near-match of saving and invest- ment over time reflected the absence of large fiscal deficits or rapid monetary expansions. As a result, inflation was kept to single digits on average over the past twenty-five years, even when inflation in the rest of the developing world was in double digits. THE REG ION 'S E CON OM IC PER F OR MAN C E 5 To eliminate poverty is the overarching objective of development-and for many countries, a distant dream. Not so for East Asia, where the percentage of population below the absolute poverty line had fallen to about 10 percent by 1990. Over the past twenty-five years or so, absolute poverty has been brought down on average by more than one percentage point a year even as population expanded by some 2 percent a year. But the absolute number of poor is still large-about 180 million-and large numbers of people are estimated to be living just above the poverty line. Following present trends, the region could eliminate absolute poverty (as Korea and Malaysia have essentially done) within a generation or so, but only if rapid and broadly based growth can be sustained and inroads made into the more stubborn poverty areas (box 1.1). Progress has also been rapid in the social indicators of development-faster than in the rest of the developing world and fast approaching the levels of the industrial countries (table 1.2). Much of the progress in health, nutrition, and education is undoubtedly attributable to the rapid growth of income. But most of the countries in the region have also pursued deliberate policies to improve the quality of life and the accumulation of human capital. Basic public goods-such as water supply and sanitation services, pest control, and public health informa- tion campaigns-have contributed to improvements in the health of the popula- tion, as has the provision of primary health care. Immunization rates have in- creased as a result and constitute a major reason for the improvement in the infant mortality rates. Most of the countries have vigorously pursued the goal of uni- versal primary education, leading to enrollment rates that already match those of the high-income countries. And adult literacy rates will rise naturally with the next generation. Over the years, the gender gap has been narrowed in many areas of social development in the region. Life expectancy at birth in the region as a whole is estimated to be higher for women (70 years) than for men (67 years), and the mortality rate for children under five years old lower for girls (37 per 1.000 live births) than for boys (48). As most East Asian countries achieved universal primary education, enrollment ratios for girls have approached those for boys. However, the completion rate to grade 4 remains lower for girls than for boys. Also, the adult illiteracy rate is estimated to be more than 30 percent for women, about twice as high as that for men. Clearly, much remains to be done in reducing the gender gap further and in improving the status of women. Over the past twenty-five years or so. absolute poverty in East Asia has been brought down on average by more than one percentage point a year. 6 SU STAIN ING RAP ID DE VE LOP MEN T BOX 1.1 POVERTY IN EAST ASIA erty lines in China and Indonesia) or other food choices costing the same. High economic growth rates in East By this definition, there has been a dra- Asia in the 1980s contributed to equally matic decrease in absolute poverty in impressive reductions in absolute pov- East Asia's developing countries-from erty and improvements in social con- a third of the population in 1970 to a ditions. There were two distinguishing fifth in 1980 and a tenth in 1990. features of East Asian development The two countries with the most that contributed to sharp reduction in people, China and Indonesia, made the poverty. First, economic growth was most progress. Indonesia started the not only high-it was also broadly 1970s with more than half its people, based. Second, public expenditures some 70 million, in poverty, but by 1990 were effectively channeled to social this had fallen to 15 percent (27 mil- development and to assisting the poor. lion). Korea and Malaysia-having Theabsolutepoorarethosepeople made much progress by 1970- at or below an income that allows them reached out to the increasingly mar- to buy only subsistence levels in food ginal poor, many of whom are nor- and nonfood necessities (the absolute mally bypassed by overall economic poverty line). Official estimates are of- growth, and ended 1990 with fewer than ten based on widely different defini- 5 percent of their people in poverty. tions of the poverty line. To achieve Through the 1970s and 1980s, Thai- homogeneity in the definition of pov- land had some 9 million absolute poor, erty and derive meaningful regional ag- and the Philippines 13 million. But both gregates and trends, an equivalent countries reduced the incidence of ab- poverty line was used across coun- solute poverty by about a third, to 16 tries in a recent Bank study. The food percent in Thailand and 20 percent in budget included in that line allows the Philippines. Thailand's incidence is 2,150 calories per day per person, with estimated to be similar to that of Indo- 90 percent of the calories from grains nesia, even though its average gross that are the lowest-cost source of calo- national product (GNP) per capita is ries in East Asia (as in the official pov- some 2.5 times higher. EAST ASIA'S ESTIMATED REDUCTION IN ABSOLUTE POVERTY, 1970-90 Incidence Number Year (percent) (mil/lions) 1970 35 400 1980 23 300 1990 10 180 Note: These estimates are based on comparable poverty lines for Cambodia. China. Indonesia, Korea, Lao P.D.R., Malaysia, the Philippines. Thailand, and Viet Nam. Source: Johansen 1992. THE REG ION 'S E CONO MI C PER FORMAN C E 7 TABLE 1 2 PROGRESS IN MEETING BASIC NEEDS East Asia on average can close the social gap with the industrial countries within a generation. High-income East Asia and Pacific region countries Indicator 1965 1990 1990 Daily calorie supply (per capita) 1,939 2,617a 3,416a Enrollment rate in primary school (percent) 88 l00+ I 00+a Adult illiteracy rate (percent) - 24 4 Infant mortality rate (per thousand) 95 34 8 Total fertility rate (per woman) 6.2 2.7 1.7 Life expectancy at birth (years) 51 68 77 - Not available. a. Data are for 1989. Note: Recent estimates are lacking for many countries, so regional averages should be treated only as illustrative. Source: World Bank 1992d and 1992e. The 1980s have been a decade of impressive gains in family planning programs in East Asia. Today, knowledge and use of contraception are wide- spread in most East Asian countries, family planning services are often acces- sible, and many of the easiest-to-reach people are already served. The projected population growth between 1990 and 2030 is thus estimated at 50 percent, as against the doubling over the preceding forty years. In absolute terms, however, the number is large: an increase of about I billion people. Strong family plan- ning programs must thus be continued, particularly in countries at earlier stages of the fertility decline, such as Malaysia, Papua New Guinea. Thailand, and Viet Nam. Even more important now are factors that provide incentives to have smaller families: increased access for women to education and employment, and higher family incomes. The agenda in providing basic services to the poor is far from finished. Safe water and sanitation services need to be extended further. The changing re- quirements of the education system need to be addressed as countries achieve universal primary education and grapple with ways of attaining a skilled work force in a competitive world economy. Without underplaying the problems ahead, one can say that the progress in human resource development suggests that governments will meet the challenges. One problem that demands urgent attention is the growing threat of AIDS. While not yet reaching the disastrous proportions of the epidemic in Africa, the disease has been spreading rapidly in Asia, and the potential is great for much 8 SU STA IN ING RAP ID DE VE LOP MEN T worse to come. The World Health Organization predicts that by 2000, 40 mil- lion people will be infected with HIV worldwide, with half of these in Asia and over 6 million in Thailand alone. Governments should begin immediately to think of ways to head off the disease. The problem is already recognized as a crisis in Thailand, and the other countries in the region could face similar futures if it is not contained. The Search for Lessons from East Asia There is a widespread interest in knowing the secrets of East Asia's success. What policies contributed to East Asia's remarkable progress? Why were these policies adopted? Did policies similar to those adopted elsewhere produce better results-and if so, why? Political commitment, consensus building, the drive to participate in the global economy, the great effectiveness of institutional structures, and discipline, flexibility, and pragmatism in the approach to development- all of these were crucial to East Asia's overall performance. TIhe political comrnitment for putting priority on economic development, building consensus for designing economic policies, the drive to participate in the global economy, the great effectiveness of institutional structures, and dis- cipline, flexibility, and pragmatism in the approach to development-all of these were crucial to East Asia's overall performance. And perception is grow- ing today that East Asia not only adopted better policies-it also managed to get more mileage out of its policy framework. World Development Report 1991 (World Bank 1991) elaborated four gen- eral features of East Asian policies and interventions that are important for future development in the region and elsewhere. First, these economies were noted for their outward orientation. Either by design or necessity, economies such as Korea, Malaysia, and Thailand made a commitment to be players in the global economy. Striving to be a force in the global market encouraged disci- pline and efficiency-and provided valuable checks and balances to all inter- ventions. TH E R EGI ON 'S E C ON OM I C PE RF OR MAN CE 9 Second, East Asia made sizable and efficient investments in people. This was key not only to rapid economic growth, but also to extraordinary social progress. East Asia's quantity and quality of spending on education and health compare favorably with other regions-and, combined with the openness to the world, provided especially high payoffs. Third, the macroeconomic discipline of the public sector set an example for the entire economy. Public sector discipline in spending ensured that rents from government interventions were minimized. Some economies such as Thailand set legal limits on government deficits. Others-such as China, Korea, and Malaysia-were quick to respond to growing deficits with stabilization policies. And fourth, institutional development was crucial to the success. The state supported the market, rather than supplanting it. A large sample of countries shows that those with fewer macroeconomic and price distortions (such as East Asian countries) do better. But government interventions in the economy in this East Asian subgroup were by no means small. Government spending as a fraction of GDP, for example, was as high as the international averages. But the effectiveness of the spending, and of government intervention in general, was greater. The surge in interest in the region's accomplishment-and the role of pub- lic policy in this accomplishment-has prompted a major World Bank study, with Japanese collaboration, of the East Asian experience, scheduled for comple- tion in 1993. The focus of the study is the link between public policy and economic growth in high-performing East Asian economies and the replicability of the East Asian approach for other developing countries. The study has four main objectives: i To provide an overview of the process of growth in the high-performing East Asian economies by analyzing patterns of output growth, structural change, and productivity growth in each economy X To describe the strategic approaches of governments to promote rapid growth, the rationale for undertaking them, and the sequencing, objectives, and out- comes of individual policy measures * To evaluate how much the rate and pattern of growth are attributable to public policy * To assess whether successful interventions in the East Asian economies are replicable in other developing countries. 10 SU STA IN ING RA PI D DE V EL O PM ENT The research covers Indonesia, Japan, Korea, Malaysia, Singapore, and Thailand. One country case study is undertaken for each, except Japan, for which a collection of several essays on aspects of public policy in the rapid growth period is planned. In addition, comparative studies are undertaken inde- pendent of the country studies-to address trade and industrial policies, finan- cial markets and policies, human capital and labor markets, and institutional structures and innovations. C H A P T E R T W O An Evolving Taxonomy of Countries THE stellar performance of the East Asia region is cause for confi- dence, but not for complacency. The full story of East Asia is not one of undifferentiated success. Indeed, the performance variation is greater in East Asia than in South Asia. In the 1980s, GDP growth in South Asia was between 4.0 percent a year (Sri Lanka) and 6.3 percent (Pakistan). In East Asia, it was less than I percent a year in Myanmar and the Philippines, but 7 percent or more for the high fliers, such as China, Korea, and Thailand (figure 2. 1). Even among the high-performance economies in the 1980s-China, Indo- nesia, Korea, Malaysia, and Thailand-the variation was wide. A part of the strong performance of East Asia in the 1980s was due to China. If China is excluded, East Asia had slowdowns in the 1980s in growth of GDP, industry. investment, and exports-even though relativ,e to other regions, there was an improvement (see appendix table 28). On the basis of the stage of development, past trends, and current outlook for the future, the region can be divided into three groups of countries:6 * Asian tigers * Socialist economies in transition * Island economies, large and small. Asian Tigers With the graduation of Hong Kong. Singapore. and Taiwan (China) to high- income rank, the Asian tigers now consist of three dynamic countries of the region: Korea, Malaysia, and Thailand. Over the past twenty-five years. they 11 12 SU STAIN ING RAP ID DE V EL 0 PM ENT The full story of East Asia is niot one of undifferentiated success. Indeed, the performance variation is greater in East Asia than in South Asia. have made spectacular progress, though few credited them with such rosy pros- pects in the 1950s (box 2.1). They account for only 7 percent of the region's population, but because their incomes are so high, they greatly influence the regional averages of income. Combining rapid and broadly based growth with active social development programs, Korea and Malaysia virtually eliminated poverty by 1990 (see box 1.1). In Thailand there has been substantial poverty reduction in the past three decades, but progress has been slow in the 1 980s despite rapid economic growth. This is in part due to growing disparities in income in Thailand, discrimination against agriculture. and the lagging expenditures in social sectors in recent years despite large fiscal surpluses. These economies share commonalities of approach and are increasingly the subject of attention for other developing countries. But their policies have also FIGURE 2.1 AVERAGE ANNUAL GROWTH OF GDP, 1980-90 East Asia had a wide spectrum of growth in the 1980s-wider than in South Asia. Korea China =_ i::75~~~~~~~~~~~~~~. : . . . . . . . . . . . . ................: Fg0 ::V.. 95 Cina Thailand ' E ''- - i - 76 Indonesia 5.51 Malaysia Philippines Myanmar Pakistan : India Si :53 Nepal -4.6 Bangladesh 4.31 Sri Lanka 0 1 2 3 4 5 6 7 8 9 10 GDP growth (percent) Sourc e: World Bank 1992e: World Bank staffestimates. AN E V OLVI NG TAX ONO MY OF CO U NT RI ES 13 varied over time and among themselves. These variations relate to resource endowments, which affect macroeconomic balances and the role of govern- ment and of external capital inflows. The political systems also varied enor- mously. Korea was under military rule for most of the period. Malaysia was a politically stable democracy. Thailand was a constitutional monarchy with a democratically elected government, repeatedly overthrown by military coups. On the role of government, Korea was the most interventionist: the finan- cial sector was nationalized, import controls and import substitution were widely practiced, the public sector was a big part of the economy, and the govemment intervened heavily in private-sector investment and trade. In Malaysia and Thailand, the private sector was dominant in producing goods, whereas the government concentrated on social and physical infrastructure. Of the three, the Malaysian govemment intervened most to alter the distribution of income and wealth. Korea had high double-digit inflation during 1965-80, whereas Thailand and Malaysia kept inflation in low single figures. Although all three economies had an outward-oriented policy, growth of exports in relation to GDP during this period varied largely-in Korea, exports grew 2.7 times faster than GDP, whereas in Malaysia they grew slower than GDP. All three had high investment growth, but the sources of financing were different. In 1965-80, Korea's savings rate was the lowest (19 percent of GDP), and it relied heavily on extemal capital inflows (7 percent of GDP) but with very little foreign private investment. Ma- laysia and Indonesia had significant surpluses on their extemal resource bal- ance, while Thailand ran a modest deficit of about 3 percent of GDP. Despite their impressive performance over the long temm, all three Asian tigers need to continue their reform efforts and be vigilant about changing circumstances. One area of immediate concem is rising current account defi- cits. Until recently, these three countries were running a surplus in their current account ($14.3 billion in 1988), within three years, there was a $35 billion shift in their current account balance. By 1991, they were running a deficit of $21.1 billion (table 2.1). About a fifth of these inflows was funded by (non-debt- creating) foreign direct investment, but there has also been a sharp increase in short- and long-terrn debt flows. The debt service ratios for all three countries are low (about 10 percent), and there is no immediate cause for alarm. But these Despite their impressive performance over the long term, all three Asian tigers need to continue their reform efforts and be vigilant about changing circumstances. 14 SU STA IN ING RAP ID DE VE LOP ME NT BOX 2.1 EAST ASIA'S PROSPECTS sources and high level of literacy, other AS SEEN IN THE 1950S favorable factors are the growth of the labor force, the availability of manage- In the 1950s, the Philippines was the rial and technical skills, the high level best performer among East Asian of savings and investment, rather good economies and was widely regarded prospects for most of the Philippine ex- as the most promising for the long- ports, and considerable possibilities for run. The Bank's economic report pub- import substitution." lished in November 1957 concluded, Next most promising was Myanmar .. . The Philippines has achieved a (then Burma), an apparent success rapid rate of economic growth in the story in the making. In 1953, the Bank's post-war period, (since 1949). Produc- economic report concluded, 'Prospects tion has continued to grow at an an- appear favorable for steady economic nual rate of 7 percent, despite the dis- improvement. It seems reasonable to rupting effects of the HUK movement, expect an accelerated rate of progress which hampered economic activity until towards restructuring, diversifying and 1952... . By comparison with most expanding the economy." By 1958, underdeveloped countries, the basic Burma's record was impressive and the economic position of the Philippines is Bank's report became even more bull- favorable. It has a generous endow- ish. 'In her first 10 years of indepen- ment of arable land, forest resources, dence, Burma has made remarkable minerals and normal potential. Through economic progress. Aggregate output a comparatively high level of expendi- has grown at a high rate-5 percent ture on education, transport, commu- per year in the last five years-and a nications and industrial plant over the large share of resources has been set past 50 years, the Philippines has aside for capital formation.... Given achieved a position in the Far East the large amounts of readily available second only to Japan, both in respect material resources and the absence of to its level of literacy, and to per capita population pressure, given the high production capacity.... The prospects level of resources available for invest- of the Philippine economy for sustained ment, Burma's long-run potential com- long-term growth are good. [Apart from] pares favorably with those of other generous endowment of material re- countries in South East Asia." trends show that there is no room for complacency, and even the best of per- formers must remain vigilant. The three countries also face challenges in the areas of infrastructure, enter- prise reforms, financial sector liberalization, environmental protection, and the changing global trade environment-challenges common to most East Asian countries. All three tigers can be expected to continue their rapid growth during the 1990s and to reduce their reliance on extemal assistance during the latter part of this decade. Korea has submitted a graduation plan to the Bank to phase out lending by fiscal 1995, and it is expected to become a contributor to devel- AN EV O LVI NG TA XON OM Y OF CO U NT RI ES 15 At the other end of the spectrum was In between were Thailand and Ma- Indonesia. Its GDP growth in 1950-64 laysia. In the 1950s, the Thai economy was 1.5 to 2.0 percent a year. The out- appeared to be sound but with little look was one of declining per capita prospect of improvement in per capita income. The Bank's economic report incomes or industrial transformation. in 1968 concluded, 'Rather than at- The Bank's economic reports in 1955 tempttosayspecificallywherewethink and 1956 concluded, 'Basically the economy is heading at the end of Thailand's economy is sound. Popula- 10 years, it seems more profitable to tion pressure is not great; and the un- indicate what may be required to pro- developed resources of the country are duce a rate of growth at least above considerable. There are good reasons that of the population during the next for supposing that sound economic few years." policies within the long-run not only Korea was another country with poor maintain the standard of living of the prospects. In the 1950s, Korea's people but even raise it, despite the economy grew by 4 to 5 percent a growth of population. . . . No basic year, growth largely financed by for- changes in the structure of Thailand's eign aid. Domestic savings were barely economy have occurred for many years 3 percent of GNP, and exports were be- or appear to be in prospect. The low $30 million a year. Prospects for govemment's program to diversify the development were anything but bright. economy somewhat is not likely to al- The first plan prepared for 1962-66 ter substantially the traditional pattern projected growth of 7.1 percent a year of foreign trade or distribution of re- and a tripling of export earnings by the sources and incomes within Thailand end of the plan. The Bank mission at least within the next few decades." stated: 'There can be no doubt that The Bank's economic report on Ma- this development program by far ex- laysia published in 1958 concluded, 'it ceeds the potential of the Korean should be possible for the Federation economy. In the first place, the projec- to maintain a pace of economic ex- tions of domestic savings are ex- pansion at least equal to the prospec- tremely ambitious.... It is inconceiv- tive growth in population. There are, able that exports will rise as much as however, some uncertainties in this out- projected." look." opment fmance in the latter half of the decade. Nor do Malaysia and Thailand seek high levels of financial assistance from the Bank. Instead, they seek selec- tive lending and advice. Socialist Economies in Transition The dominant concern of the region during the 1990s will be the socialist economies in transition-Cambodia, China, Lao P.D.R., Mongolia, Viet Nam, and, perhaps in the future, the Democratic People's Republic of Korea and 16 SU STAIN ING RAP ID DEV EL O PM ENT TABLE2.1 CURRENTACCOUNTBALANCE, 1988-91 Even the best performers must remain vigilant about external deficits. Country 1988 1989 1990 1991 In billions of dollars Korea 14.2 5.1 -2.2 -8.8 Malaysia 1.8 -0.2 -1.7 -4.3 Thailand -1.7 -3.6 -8.4 -8.0 Total 14.3 1.3 -12.3 -21.1 As percentage of GDP Korea 8.3 2.4 -0.9 -3.0 Malaysia 5.2 -0.6 -3.9 -9.3 Thailand -2.8 -5.2 -10.3 -8.5 Source: World Bank staff es[irnates. Myanmar. Together, they account for more than 80 percent of the region's people-and three times the population affected by the socialist transition in Eastern Europe (including the former Soviet Union). Even if China is excluded, the other socialist economies would represent about 170 million people, 20 percent more than in East European economies (excluding the FSU). This group of countries is making a historic transition, with no past experi- ence to build on. As in Eastern Europe and the FSU, the transition in East Asia is far from easy. While the East Asian socialist economies face similar transition problems as in Eastern Europe and the FSU, the substantial differences in the structure of these economies are noteworthy. First, the East Asian socialist economies are at a much earlier stage of development. Second, while the econo- mies of Eastern Europe and the FSU are predominantly industrial, the East Asian socialist economies have a large agricultural sector-and small and medium- size industries play a key role in their industrial sector. These differences in initial conditions affect the pace and content of the reform processes in these countries. China has obtained solid results from reforms; others have a mixed record. China's program, started in 1979. has had four distinctive features: * Gradualisrm and erperimentation. Because of its large size, provincial struc- ture, and primary concern for stability, China has opted for spreading changes over several years, usually after experimentation and adaptation. AN EV O LVI NG TAX ONO MY OF CO U NT RI ES 17 Together, the socialist economies in transition account for mor-e than 80 percent of the region's people-and three times the population affected by the socialist transition in Eastern Europe (including the former Soviet Union). n Partial reforms within sectors. A two-tier price system allows marginal decisions based on market prices, and market skills can be leamed without economic dislocation. * Decentralization of decisionmaking. The decentralization of decisionmak- ing to enterprises, individuals, and local govemments has enhanced microeco- nomic incentives and created a strong interest group that favors continuing to deepen the reform. * Self-reinforcing reforms. Reforms in one area created pressures for match- ing reforms in other areas, and policymakers have generally seen their interests served best by meeting such pressures with new reforms (albeit sometimes with a considerable lag) rather than by invoking administrative protectionism. China's approach to reform has been relatively effective: * Output and welfare. GNP has grown about 50 percent faster during the reform period, especially in light industry and services. This has resulted in enormous improvements in consumption (it more than doubled over the de- cade) and in lifting an estimated 160 million people out of poverty since 1979. n Productivitrv. Growth has come through productivity gains, which were close to zero in 1949-79 but accounted for 3 to 4 percent of annual growth during the reforms. These gains could have been even greater with further reforms, for example, in state enterprises. * The r-ole of the state. The state used to account for most savings and invest- ment, but now, individuals and enterprises generate most savings; and invest- ment is financed largely by retained profits and bank loans. State-owned enter- prises used to account for almost all output in the prereform period. Today, nonstate industry employs almost 100 million people and produces 45 percent of industrial output. 18 SU STA IN ING RAP ID DE VE LO PM ENT * Trade. The share of trade in GNP has risen from just less than 10 percent in 1978 to more than 30 percent in 1990, and there are now more than 20,000 Sino-foreign joint ventures. The crucial challenge that China now faces is the reform of state enter- prises-in concert with reform in other areas of the economy. This is a tough issue for which proven solutions are not readily available in the context of a socialist economy. Other problems of transition in socialist economies are inflation and unem- ployment, particularly urban unemployment. The socialist economies have typi- cally minimized these problems at the cost of efficiency. During 1965-80 China had almost no inflation. With the freeing of markets, however, inflation was about 5 percent a year on average during the 1980s, reaching as high as 21 percent in 1988. Similar tradeoffs may be unavoidable in unemployment. Al- ready, millions are coming to urban areas in search of work but are remaining in the pool of the unemployed. There is a large degree of repressed migration in China. As restrictions on labor mobility are eased, migration to cities will accelerate. With rapid income growth in coastal China, the poor and the near poor from inland will be attracted there by the promise of high incomes, even if the probability of getting work is low. So, in easing its labor market restrictions, China might also have to address a transitional phase of growing urban unem- ployment. In Mongolia the government's reform program was launched in the face of several external shocks-a sharp decline in Soviet aid, collapse of trade among members of the socialist trading bloc, weak markets for Mongolia's hard- currency exports (cashmere, wool. and leather)-and a poor harvest. In 1991 external trade fell drastically, and shortages of key imported inputs, along with frequent electricity outages, led to a sharp decline in GDP and an alarming increase in urban unemployment. A tight monetary policy in 1991 was hurt by an inability to reduce the budget deficit. and, in stark contrast to decades-long price stability prior to 1990, inflation soared to between 120 and 150 percent. Lao P.D.R. and Viet Nam have freed virtually all prices, raised interest rates, and devalued the exchange rate. After satisfactory growth in 1988 and 1989, Viet Nam faced difficulties in 1990 and 1991 as Soviet aid, which once totaled $1 billion a year, was cut off. The industrial sector stagnated, and inflation accelerated to between 60 and 70 percent. Still, GDP-buoyed by expanding agricultural output, growth in services, and a vigorously emerging private sector-grew by about 3 percent in 1991. In 1992 GDP growth acceler- ated and the inflation rate came down. Viet Nam's success in making reforms and achieving income growth despite extemal shocks and without any signifi- cant external assistance is impressive. But its domestic saving has been low, AN E V OLV ING TA XO N OMY OF COUNT RI ES 19 and this, combined with negligible foreign development assistance, has meant that the investment rate has been only 12 percent of GDP in recent years-an inadequate foundation for sustained growth. Lao P.D.R., on the other hand, has received substantial external assistance and maintained GDP growth of about 5 percent in 1991, with inflation falling to 10 percent (from 68 percent in 1989). Cambodia faces an uphill struggle. Peace has returned, but the cost of twenty years of war has been high: assets have been demolished, communities dispersed, human resources destroyed, institutions debilitated, and incentives distorted. The economy needs to be stabilized, institutions built, and basic public services restored. Policy reforms need to be combined with substantial external assistance if the economy is to be revived. The authorities have initi- ated reforms, but these have been partial and ad hoc-and the results mixed. Food production has increased and informal industry and supporting services have been growing rapidly over the past three years. The resource crunch has been severe, however, leading to inflation of more than 100 percent a year in 1989-92. Foreign assistance from the now defunct Council for Mutual Eco- nomic Assistance (CMEA) ceased in 1990, and Westem and international donors have not yet been able to fill the gap. The budget is in a crisis, with more than 45 percent of total expenditures unfunded. The trend toward liberalization and privatization in the socialist countries is certainly a welcome development. During the transition period, however, the burdens of reform weigh heavily on the newly unemployed and other vulner- able groups. An increase in the inequality of income is a real possibility in many reforming countries. Both for promoting the welfare of the population and for the political sustainability of reform, maintaining essential social services and developing a reliable social safety net are required. Privatization efforts should follow good economic analysis and must rec- ognize priorities. Those sectors in which private markets work well, in which market failures are few, and which should never have been in public hands can safely be privatized. But many of the markets related to human resource devel- opment, particularly in health, are problem-ridden, and governments need to think through the implications of rapid privatization of such services. To tackle the social and economic problems of transition, the socialist economies in East Asia will require external resources in the 1990s on a scale far beyond what they have needed in the past. 20 SU STAINING RA PID DE V EL OPM ENT To tackle the social and economic problems of transition, the socialist economies in East Asia will require external resources in the 1990s on a scale far beyond what they have needed in the past. During the past twenty-five years, China achieved remarkable growth without any significant net external capital inflows. With the increased opening of the economy, imports are rising faster than exports. The repressed demand for consumer goods suggests that, with liberalization, the domestic savings rate might go down rather than up during the 1990s. Bank staff estimates indicate that China may need substantial extemal financial inflows (including foreign direct investment) during the 1990s, a significant departure from the past. For Cambodia, Lao P.D.R., and Viet Nam, the extemal resource require- ments in the 1990s are likely to be very large. While data on savings and investment in these economies are weak, they suggest that domestic savings are extremely low-ranging from 0 to 10 percent of GDP. Sustained growth in these economies will require investment rates of 20 to 25 percent of GDP during the 1 990s. Thus, even allowing for some improvements in domestic resource mobi- lization, extemal financing of 10 to 15 percent of GDP can be regarded as essential for these economies during the 1990s. Myanmar and the Democratic People's Republic of Korea have not yet launched their reform programs. If they do so during the 1990s, their external resource requirements could also be substantial. Island Economies, Large and Small The third group consists of the island economies, both large and small. They account for 16 percent of the region's population. Their geography imposes certain special constraints on development. Infrastructure costs are particularly high, and communications difficult. Indonesia, the dominant member of this group, has had relatively impres- sive performance, much better than seemed possible in the 1950s and early 1960s (see box 2.1). Over the twenty-five years since 1965, its per capita income has grown by 4.5 percent a year. And by 1990 it had succeeded in reducing the incidence of poverty to 15 percent, a remarkable achievement for its level of per capita income. Among the factors that contributed to this remarkable achievement are the following: * Focus on agriculture. In the early phase, the primary focus of the govermnent's strategy was improving the productivity of the rural economy and, in particular, attaining self-sufficiency in rice. Agriculture, including irri- gation, constituted more than one-third of the development budget during the first plan period, 1969-74. AN EV OLV ING TA XO N OM Y OF CO U NT RI ES 21 By 1990 Indonesia had succeeded in reducing the incidence of poverty to 15 percent, a remarkable achievement for its level of per capita income. * Public spending on social and pkvsical infrastructure. Since 1974, when public resources increased significantly, the governnent has expanded its pro- ductivity-enhancing outlays in rural areas: for agriculture, primary schools, health facilities, and roads. There has been little reliance on direct transfer prograins, consumer subsidies, or public employment. * Vigorous adjustments to external shocks. When oil prices dropped in the 1980s, the government moved quickly to introduce adjustment measures. In agriculture, exchange rate depreciations cushioned the effects of lower export prices. In the manufacturing and service sectors, the combination of trade and industrial deregulation and real exchange rate adjustments led to a surge in non- oil exports and a rapid recovery in manufacturing growth and investment, as well as an increase in real wages and employment levels. In reducing public expenditure, public consumption was preserved to the extent necessary to make productive use of the infrastructure created. And expenditures in poverty-re- lated sectors-agriculture, human resource development, and transfers to lower- level governments-were protected relative to public expenditures of less ben- efit to the poor (notably in industry and mining). As a result of these and other measures, the country's dependence on oil for budget revenues and exports has been sharply reduced. Maintaining macroeconomic stability is a key issue in Indonesia as policy- makers chart a narrow course between growth rapid enough to meet the aspira- tions of the people and growth that is too rapid for macroeconomic stability. Despite its large foreign-exchange earnings from oil and more recently from nontraditional exports, Indonesia has borrowed heavily from external sources. At the end of 1991 its external debt stood at $75 billion (66 percent of GDP), and its debt service ratio was 33 percent, comparable to countries with debt prob- lems. In 1991 inflation was moderate (the consumer price index rose by 9.2 percent). The current account deficit-which reached $4.5 billion (about 4 percent of GDP)-was financed by commercial borrowings at increasingly stiff terms (that is, shorter maturities and higher spreads). In addition, some public and quasi-public bodies were planning in early 1991 to raise external capital for some large projects. Faced with possible strains on debt-servicing capacity, the 22 SUSTAINING RAPID DEVELOPMENT government in September 1991 formed the Commercial Offshore Loan Team (COLT) for the coordination of all public and public-related borrowings. Subse- quently, the team deferred four big projects and laid down ceilings for public, quasi-public, and commercial bank borrowings, as well as guidelines for pru- dent private-sector borrowings and improved reporting requirements. The Bank of Indonesia also limited domestic banks' non-trade-related short-term borrow- ings from abroad to a percentage of their capital base. The Philippines' recent performance has not been impressive. In the 1 950s, it was thought to have the best potential in the region, second only to Japan (see box 2.1). It achieved impressive growth rates in the 1950s and 1960s but then suffered setbacks in the 1980s, with declines in per capita income sharper even than those in Sub-Saharan Africa and Latin America. The Philippines has been largely a private-sector-oriented economy. Its price distortions are relatively low; its effective protection is among the lowest in the region; it has a flexible exchange rate regime; and it has liberalized trade and the financial sector and privatized state-owned enterprises more than most of its well-performing neighbors. (See figure 2.2 for measures of effective protection rates in the Philippines compared with other major East Asian coun- tries; and figure 2.3 for measures of the share of state enterprise investment.) It also has an excellent supply of labor-both skilled and unskilled. Now the need is to restore credibility and confidence in the country's ability to stay the course and get positive results. Among the key issues are: FIGURE 2.2 EFFECTIVE PROTECTION RATES IN MANUFACTURING Some countries maintained their export competitiveness despite import protection. Korea (1982) 28 Indonesia (1990) 59 Malaysia (1982) Philippines (1984) ..~~~~~~~~~~~~~~~~~~..... Thailand (1988) _m 5 1 0 10 20 30 40 50 60 Effective protection rate (percent) Note: Because of the differences in coverage and defuiitions, cross-country comparisons have their limitations. Source: Bhattachaiya and Linn 1988; World Bank data. AN EV O LVI NG TAX ONO MY OF CO U NT RI ES 23 FIGURE 2.3 INVESTMENT IN STATE ENTERPRISES AS A PERCENTAGE OF TOTAL INVESTMENT The public sector's role varied enormously among countries and during periods with rapid growth. Indonesia (1990) Korea (early 1980s) 40 Korea (late 1980s) is Malaysia (early 1980s) B Malaysia (mid-1 980s) 20 Malaysia (late 1980s) _ 14 Philippines (1975-82) _ 1 Philippines (1983-90) -t 1 Thailand (early 1980s) wl .- I 0 5 10 15 20 25 30 35 40 Source: World Bank data. * Reviving investor confidence. Foreign direct investment with an export orientation has been an important element in maintaining growth in Southeast Asian countries in the 1980s. During the second half of the 1980s Thailand and Malaysia received foreign direct investment of more than $1 billion a year, whereas the Philippines received less than $500 million. * Rehabilitating infrastructure. Critical to reviving private investment is im- provement in infrastructure, particularly electricity and transport. Major changes are needed in pricing policies and investment programs. * Ensuring macroeconomic stability. Vigorous action is called for to increase tax revenue, which at 15 percent of GNP is lower than in other East Asian countries; lowering the high real interest rate of about tO percent; and reducing the continuing high debt, with a public debt-to-GDP ratio of 0.9. Now the need in the Philippines is to restore credibility and confidence in the country's ability to stay the course and get positive results. 24 SU STA INI NG RA PID DEVELOPM ENT During the 1990s the shared development challenge for the smaller Pacific islands lies in channeling resources to growth in the few areas with a clear comparative advantage. * Strengthening institutions. Economic efficiency suffers from serious insti- tutional weaknesses that cause implementation problems and from a lack of coordinated vision between government and business and between branches of government. * Reducing poverty. The official estimate of absolute poverty in the Philip- pines-more than 50 percent-is overstated because of the use of a rather high poverty line. Nevertheless, even a more realistic poverty line suggests a higher incidence of poverty than in many other countries of similar or even lower per capita income. Papua New Guinea and small Pacific island economies, accounting for about 0.3 percent of the region's population, present some special issues. Many belong to the middle-income group, but during the 1980s their per capita in- comes have been declining, despite a high level of assistance and mineral wealth. For most of the last decade, private nonmineral investment in these countries was low, gains in productivity were limited, and international com- petitiveness was declining. These economies must address difficult structural problems if they are to generate and sustain growth during the 1990s and beyond. During the run-up to independence, Papua New Guinea became saddled with a high-cost wage struc- ture, as legislated minimum wages outpaced productivity and the groundwork was laid for a costly civil service that continues to dominate formal sector employment. To restore competitiveness, it will be essential to adopt a produc- tivity-based wage-determination system to reduce real wages and narrow the urban-rural wage difference, a challenging task in view of sizable income and fiscal surpluses expected to arise from a boom in oil and mineral revenue starting in 1994. For the smaller Pacific island economies the development issues have been analyzed by the Bank in two regional economic reports. In general, these econo- mies have fallen short in stimulating private investment in productive sectors. During the 1990s their shared development challenge lies in channeling re- sources to growth in the few areas with a clear comparative advantage. Public AN E V O LV ING TA XO NO MY OF C OU NTRI ES 25 policy can help the private sector identify areas of comparative advantage and profitable niches in domestic and world markets. The external environment in the 1990s is expected to remain difficult, with further erosion in relative prices of primary commodities. In view of structural problems and the external envi- ronment facing these economies, more effective donor support will be essential for steady growth in productive investment in these economies. C H A P T E R T H R E E Four Challenges for the 1990s IF East Asia sustains its current pace of development, it will be the first developing region to eliminate absolute poverty. Such an outcome is far from automatic, however. The East Asian economies need to pursue their re- form programs vigorously, applying their pragmatic and flexible approaches to old and new problems. The intemational community, in tum, needs to continue its partnership in providing financial and nonfinancial assistance to the region. Several old concems-such as infrastructural development, enterprise reforms, and financial sector reform-will have to be addressed with new urgency. And new concems-the rising environmental threat and the changing international trade arrangements-will test East Asia's innovative capacities. These cross-cutting themes are the subject of this chapter. Human resource development, although a key issue in all countries, is not considered here as a special problem in view of the region's good performance. Urbanization, an- other major issue, is treated as part of infrastructural and environmental prob- lems. Addressing Infrastructural Bottlenecks The faster-growing economies of East Asia have been running into constraints in the vital infrastructural sectors of power, railways, ports, roads, telecommu- nications, water, and waste disposal. Shortages and inefficiencies in these sec- tors are especially damaging to growth, as these are necessary inputs for all other activities in the economy. In some countries of the region in the 1980s, there may have been a shortfall of investment of as much as 2 to 3 percent of 26 F O UR CH ALL EN GE S FOR T HE 1 99 OS 27 In some countries of the region in the 1980s, there may have been a shortfall of investment in infrastructure of as much as 2 to 3 percent of GDP. GDP, compounded by poor management of existing capacities and inefficient pricing of resources. In China infrastructural constraints are serious. Investment in transport, telecommunications, and energy has lagged behind that in industry. The link between the key sectors of transport and energy is especially close-transport- ing coal, which accounts for 70 percent of China's power generation, takes up a third of all railway freight capacity, and railways are the dominant mode of transport. In 1989 railway freight was estimated to constitute about 80 percent of the cost of coal delivered to the power sector. There are chronic shortages in transport services in the Chinese economy. The results: electric power short- ages (due to the lack of coal transport capacity) and little integration of markets, reducing efficiency. Inadequate communications infrastructure has also hin- dered the integration of the domestic market. The ill effects of underinvestment in infrastructure have been compounded with technological backwardness and distortions of consumption patterns re- sulting from subeconomic pricing of transport services and transport-intensive resources. For example, despite large tariff increases in 1989, long-distance coal transport is still underpriced by as much as 40 percent relative to long-run marginal costs, generating uneconomic demands and congestion. For energy, although free-market coal prices have risen rapidly in the past five years, the administered price is still below domestic supply costs. Electricity tariffs have not provided realistic incentives for producers or consumers until recently. However, recent reforms under the "new plant, new price" policy have resulted in major tariff increases, and it is expected that by the mid-1990s the average level of tariffs will be close to long-run marginal costs. In the Philippines the economic crisis of the early 1980s led to a drastic fall in public and private investment in infrastructure. Some public sector corpora- tions are close to insolvency, and in the power sector, recent pricing policy has been inconsistent with the joint objectives of improving the financial solvency of corporations and adjusting to world petroleum markets. Along with pricing reform, there has to be a significant increase in investment in infrastructure. Bank estimates for 1978-83 show that 4.7 percent of GDP was assigned to infrastructure investment (of which 1.1 percent is attributed to the Bataan Nuclear 28 SU STA INI NG RA PI D DE VE L OPM ENT Plant alone); this figure fell to 2.6 percent of GDP in 1983-90, with a low of 1.7 percent reached as recently as 1988. Of the public sector's eleven therrnal power plants, ten are more than twenty-five years old; maintenance is poor, and more than half have a reliability performance below 50 percent. Given the fiscal constraints facing the country, greater private sector par- ticipation is essential for increasing investment in the power sector. The gov- ernment has recently announced contracts for five new power plants-to add a projected 1,660 megawatts to total capacity. Even if half of this power comes on stream, it will provide only 20 percent of the increase in power generation needed during the 1990s. In transport, the asset base of the infrastructure has been seriously eroded because of lack of maintenance, poor management, and gross underfunding. The management of existing transport resources must be made more accountable. Local and provincial governments must become in- volved in handling road networks. And road user charges must be revised to cover costs and mobilize revenues for improving roads. Given the fiscal constraints facing the Philippines, greater private sector participation is essential for increasing investment in the power sector. In Indonesia, despite substantial infrastructure development over succes- sive five-year plans, large unmet demands remain. Only 16 percent of rural households have electricity in Indonesia, and only 30 percent of urban house- holds are connected to municipal water-as against 50 percent or more in comparably developed countries. Quality and efficiency of services remain low in communications and water supply. Pricing infrastructure services to reflect marginal costs of production and aligning petroleum prices with world prices as a means of promoting efficient energy use will be important in rationalizing demand and mobilizing resources for investment, operations, and maintenance. Urbanization in East Asia is proceeding rapidly, and urban transport prob- lems are particularly serious in the region (box 3.1). In Thailand dynamic economic growth in recent years has made infrastructural problems acute, espe- cially in the Bangkok metropolitan area. Investment in the infrastructure aver- aged 3.5 percent of GDP in the past decade. While urban population grew 3 to 5 percent, real fixed public investment declined steadily between 1985 and 1989- from 7.5 percent of GDP to 3.9 percent, and from 34.7 percent of gross domestic investment to 16.2 percent. The inadequacy of infrastructure was in part a result F O UR CH ALL EN GE S FOR THE 1 99 0S 29 of limited public investment during the 1980s, reflecting the earlier adjustment strategy that emphasized fiscal caution. By some Bank estimates, Thailand has been underinvesting in infrastructure by I to 2 percent of GDP each year over the past decade. That translates, at 1990 levels, to between $800 million and $1.6 billion. The Bangkok metropolitan region is choking with traffic congestion and air and water pollution. By one Bank estimate, 1.7 percent of the regional GDP iS being lost because wage-earners' commuting time to and from the area is so long. Demands for sewerage and water supply in urban areas far exceed the system's present capacity-indicators of inefficient pricing of scarce public resources. A significant bottleneck in Thailand arises from the institutional side of public finance. Local governments rely on national funding for three-quarters of their projects, and local revenues from property taxes have been inadequate to support the desired level of infrastructure-related services-particularly in Bangkok. Well-designed revenue-sharing schemes are necessary to permit a decentralized system of local public finance to function properly. In general, infrastructural sectors are characterized by technical or natural monopoly due to economies of scale in production.7 In such situations, the practice in East Asia and elsewhere in the developing world has been to resort to public sector monopoly. Experience suggests, however, that public sector monopolies have often led to politicization and rent-seeking by interest groups, dispensation of political patronage, poor management of resources, and ineffi- cient pricing of public utilities and factors of production. Alternatives are legis- latively regulated private sector monopolies and franchise contracts. An effec- tive regulatory framework is an essential precondition for private sector partici- pation. But private sector industries regulated by government bodies can also result in rent-seeking, political patronage, and barriers to entry and competi- tion. In some situations, it might be preferable to have a well-designed bidding process in which a large number of rival participants can be induced to bid competitively for limited-term public contracts. East Asian economies-like others in the developing world-have fre- quently given too little weight to the scarcity value of public resources. The right to use publicly owned resources such as roads and waterways involves the use of scarce resources, and the efficient pricing of such resources generally requires reflecting the opportunity costs of alternative uses. Price signals that reflect the marginal cost of production would promote efficiency in use by allocating available supplies to those valuing them most at the margin. Conges- tion and excess demand for public utilities are the results of pricing at lower than marginal costs-while excess capacity and wasteful production are the result of an opposite distortion. Better maintenance and better price signals for 30 SU STAIN ING RA PI D DEV E LO PM ENT BOX 3.1 URBAN TRANSPORT: SOME There are several examples of win-win WIN-WIN POLICIES policies that increase efficiency and have low or even negative public fund- Increased motorization accompanies ing costs. economic growth. Motorization rates Economic pricing and taxation. All are still relatively low in Asia, at one means should be considered to car per 67 persons compared with one achieve congestion pricing and charg- car per 2.5 persons in OECD countries. ing for externalities such as pollution. But many cities are already congested, This may require a combination of di- and vehicle fleets are growing at about rect pricing (through taxes on parking 10 percent a year in several countries, spaces and cordon pricing) and space with a heavy concentration in cities. In allocation (through decisions on num- the absence of improved policies, Asian ber and location of parking spaces to cities will be dirtier, noisier, and more be provided, on time allowed at me- congested, while they continue to grow tered street parking, on reversible rapidly. Better policies-to address lanes, and so on). Fares for public negative externalities without discour- transport, be it by rail or privately owned aging growth-could reduce the urban road vehicles or publicly owned buses, transport problem at low or no net cost. should cover full costs of infrastructure public utilities are pressing needs in East Asia. And better price signals would generate more resources to support maintenance, to invest in new capacity, and to provide incentives for the private sector to participate in supplying infrastructural services. There is also a need for strengthening public bodies to oversee project costs and procurement. Infrastructure investments involve large sums of money, and gestation lags can be long-providing incentives for overpricing. A sudden surge in infrastructure investments could thus lead to inflationary pressures and to large increases in external capital inflows and the risk of debt-service prob- lems. International financial agencies could assist in the scrutiny of projects and pricing policy-for projects they are financing and for the sector as a whole. In fiscal 1992 about 70 percent of the Bank's lending in the region-as against 30 percent for the rest of the Bank-has gone to infrastructure. This orientation will have to continue-with increasing focus on sectoral issues and, as dis- cussed later in this chapter, on environmental concerns in the infrastructural sector. Accelerating Enterprise Reform Enterprise reform is-and will remain for the rest of this decade-an important priority for East Asian countries. This is true for socialist economies in transi- FOUR CHALLENGES FOR T H E 1 9 9 0 S 31 use and externality taxes. Similarly, * Increase vehicle inspection for appropriate pricing (such as increased emissions, diesel prices) can encourage shifts to Nonmotorized vehicles are an effi- cleaner fuels. cient use of road space for both per- Regulations, standards, and public sonal mobility and freight transport, and investment Air pollution from motor- they also reduce fuel use and pollu- ized vehicles is causing increased in- tion. There is a need to improve atti- cidence of illnesses. The poorer urban tudes toward walking and bicycling. dwellers are the most exposed and the Among the measures that could help least able to afford remedies. There is, are: in addition to proper pricing, a need to: a Providing credit to buy bicycles * Increase standards of fuels and * Providing bicycle ways and park- vehicles-unleaded gasolines and low ing space for bicycles. sulfur diesels cost only a cent more An incremental strategy should be per liter than dirtier fuels and yet are followed for mass transit. Busways and rarely available; for motorcycles, two- segregated lanes might be a good first stroke engines are still allowed even phase; overpasses and fully elevated though four-stroke, cleaner engines are busways and light-rail systems might available at only a slightly higher cost. follow. tion from a centralized command system to a decentralized market system and for other countries with large public sectors and difficult public finance situa- tions. The reform of state-owned enterprises needs to be approached in a prag- matic manner and considered as part of a larger package of enterprise develop- ment efforts. These efforts would encompass measures to foster private sector development as well as competition between enterprises (public and private), privatize state enterprises and activities that were previously public monopo- lies, and strengthen the financial sector's ability to fmance increased private sector capital requirements and to lend to public or private enterprises on the basis of commercial criteria, without government guarantees to state enter- prises. The emphasis on these three areas will depend on specific circumstances in a given country. In China the current strategy is to reduce the relative role of state enterprises by allowing faster growth in nongovernment-owned enterprises, including joint ventures, rather than by privatizing the enterprises. State enterprises now account for about 55 percent of industrial output and remain a dominant feature of the economy. About a third of them are loss-makers. Their losses accounted for some two-thirds of China's fiscal deficit of about 2.6 percent of GDP in 1991. The overall financing provided to state enterprises is estimated to be a major contributor to the much larger quasi-fiscal deficit, which could be three times as high as the fiscal deficit. Enterprise reform is now a high-priority issue re- 32 SU STAIN ING RAP ID DEVELOP M ENT To fully expose state enterprises in China to hard budget constraints with attendant bankruptcies and unemployment, their 100-million-strong work force needs to be freed from its dependence on the "work unit" for housing, pensions, and income security. ceiving attention from the Chinese authorities. For one thing, to fully expose state enterprises to hard budget constraints with attendant bankruptcies and un- employment, their 100-million-strong work force needs to be freed from its de- pendence on the "work unit" for housing, pensions, and income security. For another, financial authorities and tax collectors ought not to be controlled by the same local authorities that own the enterprises. Complementary actions are also being contemplated. For example, formation of "enterprise groups" through mergers of state enterprises (including financial sector enterprises) that cut across geographical and administrative boundaries is expected to help in cre- ating market competition without privatization. In addition, an outward orien- tation and joint ownership with foreigners (including financial enterprises) are expected to contribute to market-oriented performance criteria for the state en- terprises. Viet Nam is less reliant than China on the state enterprise sector for either output or employment. As a result of reforms to eliminate direct subsidies, some efficiency gains have been made. Industrial distress has also emerged, with the government reluctant to allow many loss-making firms to close for fear of the social consequences. The performance of small and medium-size private firms has been a source of growth. Privatization and other forms of divestiture are now being openly discussed, and experimentation has begun because it is becoming increasingly clear that unlike China, Viet Nam does not have fiscal resources to subsidize the state enterprise sector. Small and medium-size state enterprises absorb more than half of the credit from the banking system-and yet make almost no contribution to the government budget. Privatization is the route to follow for them. But for large enterprises-there are relatively few of them-Viet Nam is likely to draw on the Chinese approach and put emphasis on strengthened management, altered incentives, foreign linkages, and, in some cases, divestiture. As in China, the crucial factor will be the imposition of a hard budget constraint and a willingness to allow liquidation of nonviable state enterprises, while taking steps to permiit rapid expansion of private investment. Mongolia, faced with the major shocks of collapse of Soviet aid and of trade with other socialist economies, adopted the more radical approach of F 0 UR CH ALL EN GE S FOR THE 1 99 0S 33 privatizing most state enterprises. But because of shortages of spare parts, raw materials, and energy, industrial output has had to be cut back. Moreover, reforms under way, such as price reforms and the conversion of profit remit- tances to taxes, have reduced old sources of fiscal revenue, while new ones are not yet fully effective. This has led to rapid expansion of money and credit, with consequent inflationary pressures. In Viet Nam as in China, the crucialfactor will be the imposition of a hard budget constraint and a willingness to allow liquidation of nonviable state enterprises, while taking steps to permit rapid expansion of private investment. In Cambodia the authorities accept privatization as an important part of enterprise reform along with a system of greater autonomy for enterprises that remain with the state. The foundation for private development is being estab- lished, and informal industry and supporting services have been growing rap- idly over the past three years. A problem of sequencing reforms has emerged, however. Enterprise reform combined with price and trade liberalization has slashed the economic rents formerly captured by public sector enterprises through price distortions and budget subsidies. Without appropriate instruments and administration, this revenue loss has not been made up by revenue from the emerging private sector. As a result, budget deficits have increased and essen- tial public expenditures for public investment and operations and maintenance have been reduced. State-owned enterprises played a relatively modest role in Malaysia until the early 1980s. lnvestment in nonfinancial public enterprises was less than 6 percent of gross investment, much lower than the regional average. But during 1981-85, this ratio shot up to 20 percent. Since then, the govemment has been trying to reduce the role of state enterprises both by privatization and by reduc- ing the level of investment in state enterprises. In the second half of the 1980s, this investment was reduced to about 14 percent of total investment, and the downward trend is expected to continue. The privatization program launched by the govemment included partial or total divestment of several govemment companies, corporatization of selected government departments, and leasing of several govemment facilities to the private sector. It also provided for manage- ment of govermnent-owned installations by private sector management con- tract and construction of new projects through build-own-operate or build- operate-transfer arrangements and through management buyouts of existing companies or facilities. The government intends to accelerate the pace of 34 SU STA IN ING RA PI D DEV E LOP M ENT privatization, and it is giving particular attention to strengthening the regulatory framework to govem the privatized entities, especially those having monopo- listic positions. At the same time, public enterprises will continue to be impor- tant in selected strategic and heavy industries-cement, automobiles, petro- chemicals, and iron and steel. In Thailand the state enterprise sector accounts for only about 5 percent of GDP and 11 percent of investment-small in comparison with the regional and global averages. Moreover, Thailand has avoided a heavy state presence in manufacturing and trade, and state enterprises are concentrated in power, wa- ter, transport, and communications, all sectors in which public ownership is common in most countries. These initial conditions enabled Thailand to follow a gradual approach to privatization and reform of state enterprises. The Thai approach involved putting ceilings on foreign borrowings by the state enter- prise sector and encouraging a higher percentage of self-financing for new investments and greater private sector involvement in the financing and man- agement of state enterprises. The accomplishments of these reforms have been impressive in terms of reduced foreign borrowing, lower deficits, and contract- ing out or leasing of peripheral activities of state enterprises. Korea had a large state sector that accounted for about 40 percent of total investment in the early 1 980s. Over the years, that share has been brought down to about 16 percent, and the shares of manufacturing and financial services have been brought down drastically. The government's approach was one of improv- ing state enterprise efficiency through legal and management reforms. A 1989 Bank mission concluded that the efficiency gains due to reforms have been con- siderable, with significant impact on the profitability of state enterprises. The bulk of improvement in Indonesia has come from removing constraints on the private sector rather than from privatizing and reforming state enterprises. In Indonesia, where state enterprises play a large role in the economy, improvements have also been gradual, though more modest. The number of state enterprises fell from 221 in 1982 to 211 in 1991, and their share in value added declined from 22 percent to 19 percent. The bulk of improvement has come from removing constraints on the private sector rather than from privatizing and reforming state enterprises. Reforms directed at state enterprises have fo- cused on increasing efficiency rather than privatizing ownership. Deregulation has increased competitive pressures across a range of manufacturing and finan- cial services. Employees of public enterprises are no longer allowed to remain F O UR CH ALL EN GE S F OR T HE 1 99 0S 35 in the civil service. Transfers to public enterprises for new investment have been curtailed, and enterprises are no longer allowed to borrow independently from foreign sources. Efforts have also been made to reduce reliance on the budget by allowing public enterprises greater flexibility in setting prices. A series of decrees from October 1988 through June 1989 established financial soundness indicators-covering profitability, liquidity, and solvency-which are used to rank individual enterprises. Corporate restructuring options that have been proposed range from changing the legal status of an enterprise to liquidation. Complementary changes require that public enterprises prepare five-year corporate plans and annual budgets and work programs for use by management and supervising authorities. Improvements in incentives and ac- countability are also being fostered by linking salaries to financial performance. Steps are under way to broaden the performance indicators for public enter- prises beyond financial measures to encourage greater efficiency. Profitability of public enterprises has shown some improvement in response to recent reform measures but still remains below potential. For the nonfinancial public sector, the average rate of return on assets is still about 5 percent. Do- mestic sales prices of major state enterprises remain distorted. Prices of petro- leum products and fertilizer in Indonesia are less than half those in Thailand and the Philippines. In the Philippines, despite the strong commitment to a private sector economy, the 1970s witnessed a significant expansion of state enterprises: from 64 in 1970 (including subsidiaries) to 296 in 1988. During 1975-82, invest- ments of state enterprises were about 5 percent of GDP, although they declined to about 2 percent during 1983-90. The government's reform program put emphasis on privatization, with the state enterprises to be retained or merged with others-just 31 percent in number and 40 percent in value of assets- representing a substantial reduction. For retained state enterprises the govern- ment has implemented programs of increased financial autonomy and improved management by developing multiyear corporate plans, setting annual perfor- mance targets, insulating state enterprises from political intervention, and in- stilling operating practices akin to those of the private sector. This review of state enterprise reform programs by East Asian countries over the past decade illustrates the diversity of approaches followed by these countries. Common issues deserving further attention include: e The need to establish and enforce hard budget constraints for state enter- prises u The establishment of efficient and socially acceptable mechanisms to close down loss-making enterprises (whether public or private), including bankruptcy procedures 36 SU STA IN ING RA PI D DEV E LOP M ENT * The reform of financial sector institutions that might be required to support an expanding private sector and an increasingly independent and accountable state enterprise sector * The introduction of competition in sectors that were formerly public mo- nopolies, and, in general, greater competition at the enterprise level through removal of barriers to entry and exit * A greater place for private participation, whether through outright divesti- ture, build-operate-transfer arrangements, leases, management contracts, or other privatization instruments. Continuing Financial Sector Reforms A related and important issue is reform of the financial sector. In the interven- tionist era of 1965-80, many East Asian market economies had negative real interest rates and financial repression. In the 1980s many of these economies launched sotne program of financial liberalization. The passage has been rough, but those that achieved some success did so by modifying the reform strategy to suit the requirements of their economies. Korea started its financial reform in 1981-82, Malaysia toward the end of 1978, the Philippines in 1980, and Indonesia in 1983. Although motivations varied according to circumstances, reform came when authorities realized that the interventionist regime was inefficient and ineffective-particularly when macroeconomic imbalances were stark and unsettling. Financial liberalization policies, although diverse, had similar goals, such as the attainment of positive real interest rates and enhanced competitiveness of the financial systems. But the degree of success varied among countries, depending on whether they were able to maintain macroeconomic stability and steadfastness in continuing the pace of reforms. The macroeconomic environment in Korea in the second half of the 1980s was propitious for the initiation of financial liberalization. With a favorable turn in its terms of trade, a stable inflation rate, appreciation of the real exchange rate, In the 1980s many of these economies launc-hed some program offinancial liberalization. The passage has been rough, but those that achieved some success did so by modifying the reform strategy to suit the requirements of their economies. F O UR CH ALL EN GE S F OR THE 1 99 0S 37 and restrained monetary policy, Korea adopted a strategy of introducing new financial products with relatively high interest rates that moved closely with mar- ket rates, rather than deregulating the rates on existing products. The band sys- tem for bank lending rates was introduced and further widened. A certificate of deposit was introduced with a market-determined interest rate. Entry barriers to the banking sector were lowered after the denationalization of the nationwide commercial banks, and the entry of foreign banks was sanctioned. Real interest rates turned positive because of the upward adjustment in ceilings on interest rates and because of the reduced inflation rate. But this period also witnessed the ballooning of nonperforming bank loans, and the government had to intervene partly to protect the solvency of the banking system. This and the high leverag- ing of Korean firms stymied efforts at interest rate deregulation. In December 1988 the government took major steps toward more effective deregulation of interest rates. Most bank and nonbank lending rates and some long-term lending rates were decontrolled except on some policy loans and short-term deposit rates (for fear of excessive competition among financial intermediaries). The government reversed this policy soon after, however, and interest rates tended to become more rigid. In November 1991 the government began a long-term plan to fully deregulate the interest rate structure by 1997. In Malaysia financial institutions initially operated under more competitive conditions than did those in other East Asian countries. The operations and management of commercial banks-including government-owned commercial banks-were largely autonomous, and there was considerable freedom of entry of new banks and branch expansion. Malaysia also had a relatively large secu- rities market. Although Malaysia had an administered system of interest rates, there was a wide range of financial instruments with interest rates determined by market conditions. Interest rate controls had been retained mainly to ensure the stability of domestic interest rates within a system with an open capital account and floating exchange rate and to promote the indigenous banks by limiting price competition with dominant foreign banks. Interest;rate deregulation, which permitted commercial banks to determine their own interest rates, thus meant a small change in the Malaysian financial system. In addition, in Malaysia's stable macroeconomic environment, full financial liberalization could succeed without untoward consequences. Malay- sia did, however, face the serious problem of nonperforming loans, but this was overcome with relative ease because of well-administered supervisory arrange- ments and effective prudential control. The Philippines' financial liberalization coincided with the emergence of severe macroeconomic imbalances. The balance of payments and fiscal deficits were large and persistent and the inflation rate and interest rates were high, exposing the underlying structural weakness of the economy. Financial liberal- 38 SU STAIN ING RAP ID DEV EL OPM ENT ization policy took various forms. Banking laws were amended in 1980 to permit the adoption of universal banking. To facilitate the change, the ceilings on deposit rates and on various categories of bank lending were relaxed and then removed. The last remnants of controls on interest rates-on deposits with a maturity of two years or less and on short-term loans-were eliminated by 1984. The interest rate subsidy on preferential credits was abolished in 1985. Banks that became unibanks were required to broaden their ownership base so that no one family or business could retain control. During the initial years of financial liberalization, 1980-84, developments in the financial sector reflected progress toward the intended goals. Real inter- est rates were positive, mainly because of decelerated inflation immediately after the reforms. After 1984, there was an upsurge in both nominal and real interest rates, which, because of their adverse impact on highly leveraged cor- porate borrowers, accounted for the large and growing volume of nonperform- ing bank loans. The government had to bail out some banks and take over others. But by 1990 the direct role of the govemment in commercial banking declined dramatically with the shrinkage of Philippine National Bank. The profitability of the banking system improved markedly, as did the capital and retained eamings of the system. But the balance sheet of the Central Bank of the Philippines suffered as a result. Indonesia undertook financial liberalization as part of its efforts to restruc- ture the economy following the oil-price shock of the 1980s. In the early phases of reform, the govemment deregulated interest rates of commercial banks, replaced credit ceilings'with a system of reserve money management, and adjusted interest rates on a simplified structure of directed subsidized credit. Between 1984 and 1985, new money market instruments were introduced along with a rediscount window at Bank Indonesia to strengthen control of monetary policies. The authorities introduced additional reforms in 1988-89: restrictions on entry and branching by foreign and domestic banks were lessened, and banks and nonbank financial intermediaries were allowed to issue certificates of deposit and to raise capital in the stock market. In 1990, the government reduced the size and scope of subsidized directed credit programs and again raised interest rates on those that remained. Since the emphasis of reforms was on credit evaluation and the proper pricing of loans and on financial management of assets based on profitability, a better environ- The Indonesian financial system responded well to liberalization, achieving positive real interest rates and higher growth and greater diversity of the financial system. FO UR C HA LLENG ES FOR THE 1 990 S 39 ment was created for the financial sector. The Indonesian financial system responded well to liberalization, achieving positive real interest rates and higher growth and greater diversity of the financial system. But Indonesia's progress on financial liberalization was complicated by attempts to lower domestic rates and by a boom in investment demand, both of which put pressures on the balance of payments. The government's subsequent tight monetary policy has kept interest rates high and increased levels of nonperforming loans. The government has responded by strengthening the bank- ing system through more effective supervision and by tightening fiscal policy, thereby creating room for lower interest rates without endangering external balance. Reforming the financial sector has high payoffs and deserves to be high on the policy agenda. As East Asian countries continue to address the unfinished agenda on financial sector reforms, they will need to draw lessons from their rich experience in the sequencing and methods of financial liberalization. First, it is important that the approach to interest rate policy and financial sector liberalization take into account the existing financial position of the private sector and the quality of prudential regulation of the financial system. If the macroeconomic environment is unstable and bank supervision is ineffec- tive, interest rate liberalization ought to be gradual to avoid possible disruptions to long-standing financial practices that can emerge from a sudden removal of interest rate regulations. The importance of strong banking regulations and supervisory policy needs to be underscored, not only because they ensure the Reforming thefinancial sector has high payoffs and deserves to be high on the policy agenda. viability and health of the banking industry, which is their traditional microeco- nomic justification, but also because interest rate liberalization would be inef- fectual without them. Second, institutional change should be in the forefront of financial sector reforms. This includes establishing a strong supporting infrastructure that will provide for adequate information flow, credit appraisal and rating, and legal and accounting systems and for the development of equity markets. Such institu- tional reformns will help reduce the dependence of firms on bank credit and ori- ent them toward equity financing. Firms' vulnerability to interest rate shocks would then be attenuated, allowing greater scope for full-scale interest rate lib- eralization at later stages. 40 SU STA INI NG RAP ID DEV EL OP ME NT Third, interest rate strategies must be tailored according to whether infla- tion is low or unacceptably high. A gradual program of interest rate liberaliza- tion that maintains positive real rates will be effective in low-inflation coun- tries, if banking supervision is strong and effectively enforced and if demand management and other policies are in place to maintain economic stability. Within that group, countries with relatively long periods of price stability achieved through sound and credible macroeconomic policies are good candi- dates for full interest rate liberalization subject to a strengthened system of prudential regulations over the banking system. In high-inflation countries, a strong and credible stabilization program and an equally strong set of prudential regulations are generally the best initial policy measures, followed by interest rate deregulation when the monetary situation has been stabilized and banking supervision strengthened. Stepping Up Environmental Protection World Development Report 1992 (World Bank 1992e) highlighted the link between growth and environment. In addition to achieving rapid income growth, East Asian countries have made progress in many environmentally important areas, including rural sanitation and availability of drinking water. The region's accumulated problems, however, in some respects are about the worst among the developing regions. These are in the areas of soil erosion, waterlogging, and salinization; urban environmental degradation; industrial pollution and energy sector emissions; and deforestation and loss of habitat. Soil degradation, widespread throughout East Asia, has multiple causes: erosion, waterlogging, salinization, and overgrazing. Soil degradation has led to significant reductions in cultivable land and pressure on remaining natural habitats as farmers continue to seek marginal lands. Although national-level data are not readily available, the extent of land degradation in Asia (20 percent of all vegetated land) exceeds the world average (17 percent). In addition, the suspended load per square kilometer of drainage basin in Asia, as an indication of soil erosion, is three to eight times the world average. Rapid population growth and urbanization in Asia, combined with inad- equate infrastructure, are leading to increasing environmental degradation in urban areas. Water pollution, caused by both untreated sewage and industrial effluents, is perhaps the most serious problem for health. Govemments have typically focused on water supply rather than on sanitation or sewage treatment. In most Asian cities, adequate sewerage infrastructure is available only in the more affluent neighborhoods, and virtually no sewage is treated. Data from the U.N. Global Environmental Monitoring System show that levels of fecal coli- form and dissolved mercury in Asian rivers exceed the recommended levels by F O UR CH ALL EN GE S F OR T HE 1 9 9 0S 41 50 to 100 times. Although lead levels in Asian rivers are generally within safe levels, other toxic wastes have contaminated the heavily fished coastal waters of China, Indonesia, and Thailand. Finally, groundwater resources, often used for urban supplies, are being rapidly depleted by overuse and contaminated by seepage of surface pollutants. Jakarta has so overused its groundwater that salt water has now contaminated shallow wells in a 5-to-10-kilometer-wide belt along the coast. Asian cities also have high levels of air pollutants that threaten human health, including particulate matter, lead, carbon monoxide, sulfur dioxide, ozone, and nitrogen oxide. World Health Organization (WHo) data show that nine of the fifteen cities with the highest particulate levels are East Asian:8 and six of the fifteen cities with the highest sulfur dioxide levels are East Asian.9 Ambient levels of particulate matter exceed WHo standards 100 days or more each year in Jakarta, Bangkok, and China's larger cities-compared with less than ten days in most developed countries. Similarly, sulfur dioxide air pollution exceeds WHO standards more than 50 days a year in some East Asian cities-among the high- est measures anywhere. In all cities, motor vehicles account for much of the air pollution, and the number of cars is growing at an astounding rate. Vehicle reg- istration in the greater Bangkok metropolitan area grew by 40 percent in 1990 alone. Elsewhere, the number of motor vehicles is growing by 10 percent or more a year, and doubling every seven years. In East Asia carbon dioxide emissions per unit of GDP are three times the level in Latin America, and energy used per unit of GDP is nearly double. In East Asia carbon dioxide emissions per unit of GDP are three times the level in Latin America. and energy used per unit of GDP is nearly double (figure 3.1). Technologies, product mix, energy pricing, and conservation practices have all contributed to the situation. Things could get worse. If past trends continue, East Asia will account for more than half of the world's incremental carbon dioxide and sulfur dioxide, except to the extent that cleaner technologies are used. China emits 16 times the amount of sulfur dioxide that Japan does ( 18 million tons, compared with 1.1 million tons), and this could increase by 50 to 100 percent in the next twenty years. Thailand spews out 3 million tons of sulfur dioxide. Throughout East Asia, accelerating natural resource degradation, especially deforestation, is threatening the region's biodiversity. Each year, East Asia 42 SU STA INI NG RA PI D DEV E LO PM ENT FIGURE 3.1 ENVIRONMENTAL INDICATORS East Asia achieved high efficiency in labor and capital use, but its environmental record is poor. Energy intensity, 1989 1.2 (D -X 1.0 a) ( 0.8 0 b 0.6 0.4 C03 to - || E 0.2 0.0 Carbon dioxide emissions, 1989 1,000 c9 800 934 -. . ..> ~~ . ....... . ........... Asian tigers Korea, Rep. 2311 21364 2679 9087 234 2450 4250 106 Malaysia 1198 1023 2582 1 1 436 1572 147 Thailand 1837 9948 97 387 95 59 365 106 Socalist economies in transition Cambodia .. 223 20 226 11 11 165 China 31821 100348 6033 13719 84 410 2619 133 Lao P.D.R. 53 54 8 29 2 3 114 Mongolia .. 390 28 57 .. .. 22 124 86 Myanmar 819 12667 26 9 21 86 93 VietNam 1854 204 64 72 513 841 127 Large island economies Indonesia 4340 23368 1919 1828 301 39 133 1166 123 PapuaNewGuinea 240 942 71 222 0 58 399 103 Philippines 1975 9686 817 2545 89 59 287 674 84 Pacific island economies Fiji 55 248 62 94 264 960 86 Kiribati 4 8 Maldives 6 26 3 97 Solomon Islands 5 13 82 Tonga 6 7 78 Vanuatu 27 6 7 87 Westem Samoa 6 11 1 96 Other Hong Kong 62 181 * 657 754 80 Japan 12467 74085 * 19557 27008 3547 4179 101 Singapore 44 97 682 737 0 2500 5600 69 MEMORANDUM ITEMS United States 27856 460 2217 816 985 92 EuropeanCommunity 26841w w 47042t 33430 t ..t t1880t 2419t 107w India 23916 78099 5261 447 1582 456 137 687 119 Bangladesh 3650 8721 1866 1726 2076 1134 157 993 96 Nigeria 4787 12582 389 502 7 2 121 106 Tanzania 483 1444* 431 73 148 22 31 93 88 Turkey 3383 17485 1276 3177 16 13 157 645 97 Hungary 1010 4091 408 503 1497 2463 113 Poland 8775 4185 1550 1582 1678 2052 109 Egypt,ArabRep. 1942 5771 3877 8580 610 1210 1312 4043 118 Argentiia 2693 12405 0 4 26 46 93 Brazil 4388 42288 2485 3421 31 20 186 430 115 Chile 557 1737 247 323 4 322 800 113 Mexico 4462 21074 2881 7648 341 232 728 102 -4 Table 5. Commercial Energy Average annual energy growth rate (percent) Energy consumption per capita Energy imports as a percentage Energy production Energy consumption (kilograms of oil equivalent) of merchandise exports Country or group 1965-80 1980-90 1965-80 1980-90 1965 1990 1965 1990 Low-income economies 10Ow 4.7 w 82w55w14w 339 w7w4w Middle-incomeeconomies 5.1 w 1.9 w 6.1 w 3.6 w 712 w 1357 w 8 w 14 w Low-and middle-inconme ecoit. 6.2 w 2.8 w 6.8 w 4.3 w 277 w 605 w 8 w 10Ow Sub-Saharan Africa 15.5w 2.8w 5.3w 2.6w 74w 103w 7w 28w East Asla &Paclfic 10 w 5.4 w 9.4 w 5.7 w 164 w 553 w 10Ow 8 w South Asia 5.8 w 7 w 5.7 w 6 w 90w 205 w 7w . Europe 3.3w 1.7w 5.2w 2 w 1372w 2677w 12w 19w Middle East &North Afnica 7.1 w 0.6 w 8.4 w 7.8 w 355 w 1102 w 3 w 20 w Latin Amenica &Caribbean 1.9 w 2.5 w 6.2 w 2.7 w 579 w 1057 w 8 w 5 w Asian digers Korea,Rep. 4.1 10.4 12.1812819 81 Malaysia 36.9 14.4 6.7 7.8 313 974 114 * Thailand 9 26.2 10.1 7.2 82 352 11 10' Socialist economies in transition Cambodia .. 4.9 7.6 2.5 19 59 .. .. China 10 5.5 9.8 5.6 178 598 .. 3 Lao P.D.R. .. 0.5 4.2 1.8 24 39 .. .. Mongolia 10.3 3 9.6 3.1 461 1277 .. .. Myanmar 8.4 4.4 4.9 4.8 39 82 4 4 * VietVNam 5.3 2.5 -2.6 2.6 97 100 .. 1 Large island economies Indonesia 9.9 1 8.4 4.1 91 272 3 6 Papua NewGuinea 13.7 5.9 13 2.4 56 233 7 w Philippines 9 7.5 5.8 2.3 158 215 12 17 * Pacific island economies Fiji .. .. 4.5 1.4 384 539 17 20 * Kiribati .. .. 4.2 -2.3 89 114 Maldives .. . 9.1 0 144 Solomon Islands .. .. 16.7 -22.8 305 180 .. 8 Tonga .. .. 9 2.5 54 182 Vanuatu .. .. 5.8 1.6 197 298 Western Samoa .. .. .. .. .. 423 6 95 Other Hong Kong .. .. 7.5 3.9 584 1717 6 6 Japan -0.4 4.2 6.1 2.1 1474 3563 19 16 Singapore .. .. 5.7 5.8 2214 5685 17 15 MEMORANDUM ITEMS UnitedStates 1.1 0.8 2.3 1.5 6535 7822 8 16 EuropeanCommunity 2.8w 1.4 w 3.1w Iw 2243w 3319w 13w 9w India 5.6 7 5.8 5.9 100 231 8 24 * Bangladesh .. 12.1 .. 7.9 0 57 .. 4 * Nigeria 17.3 0.2 12.9 4.8 34 138 7 4 * Tanzania 7.3 3.2 3.7 2 37 38 .. 4 * Turkey 4.3 8.5 8.5 6.9 257 857 12 28 Hungary 0.8 1.1 3.8 1.4 1825 3211 12 11 Poland 4 1.1 4.8 1.2 2027 3416 Egypt, Arab Rep. 10.7 4.8 6.2 5 313 598 11 10* Argentina 4.5 3.3 4.3 3.5 975 1801 8 5 * Brazil 8.6 7.9 9.9 4.9 286 915 14 14 * Chile 1.8 3.1 3 2.9 652 887 5 9 * Mexico 9.7 1.3 7.9 1.2 605 1300 4 4 -J Ca Table 6. Structure of Manufacturing Distribution of manufacturing value added (percent; current prices) Value added in manufacturinig Food, beverages, Textiles Machinery and (millions of current dollars) and tobacco and clothing transporl equipment Chemicals Country or grou(p 1970 1989 1970 1989 1970 1989 1970 1989 1970 1989 0IOWAEAGES Low-income economies 43830 w 243089 w Middle-income economies 67652 w 573015 w Low-and middle-income econ. 113627 w 815003 w Sub-Saharass Africa 3013 w .. w East Asia & Pacific 34582 w 274680 w South Asia 10545 w 54788 w Europe .. w .. w Middle East & North Africa 4813 w 38858 w Latin America & Caribbean 35434 w 255504 w EAS"T A IA ~AND PACOFI . .. ...*......... Asian tigers Korea,Rep. 1880 66215 26 12 17 14 11 30 11 9 Malaysia 500 .. 26 18 3 7 8 23 9 14 Thailand 1130 17635 43 29* 13 18 * 9 13 * 6 7* Socialist economies in transition Carnbodia .. .. .. .. .. .. China 27555 145646 .. 12 * 14 .. 26 * .. 12* Lao P.D.R. . .. .. .. .. Mongolia .. .. .. .. .. .. .. .. Myanmar 225 1546 .. .. .. .. .. .. Viet Nani .. .. .. .. Large island economies Indonesia 994 17272 65 .. 14 .. 2 .. 6 Papua New Guinea 35 392 23 I. i .. 35 .. 4 Philippines 1665 10728 39 41 8 8 8 9 13 10 Pacrf c island economies Fiji 27 111 61 .. 2 .. 3 .. 3 Kiribati ..I........... Maldives .. .. .. .. .. . .. Solomon Islands .. .. Tonga .. .. .. .. .. .. Vanuatu .. 8 .. .. .. .. Westem Samoa .. .. .. .. .. .. HongKong 1013 11034 4 6 41 38 16 22 2 2 Japan 73339 829238 8 9 8 5 34 39 11 10 Singapore 379 8463 12 5 5 4 28 53 4 11 ItANOUM -TE-S UnitedStates 254115 12 12 8 5 31 32 10 11 European Comrmunity 245554 w 1144878 w India 7928 44445 13 11 21 12 20 26 14 17 Bangladesh 527 1730 30 23 47 36 3 5 11 18 Nigeria 426 2365 36 .. 26 .. I .. 6 Tanzania 118 212 36 .. 28 .. 5 .. 4 Turkey 1930 18030 26 17 15 15 8 14 7 14 Hungary .. 8724 12 10 13 9 28 29 8 13 Poland .. .. 20 16 19 16 24 27 8 6 Egypt, Arab Rep. .. .. 17 31 35 16 9 9 12 8 Argentina 5523 .. 18 20 17 10 17 13 8 12 Brazil 10421 120845 16 12 13 12 22 24 10 12 Chile 2088 .. 17 24 12 7 11 4 5 8 Mexico 8449 51138 28 20 15 11 13 14 11 14 -4 or Table 7. Growth of Consumption and Investment Average annual growth rate (percent) General government con sumption Private consumption, etc. Gross domeszic invesiment Cotintv orgrottp 1965-80 1980-90 1965-40 1980-90 1965-80 1980-90 GROU AVERAAGES Low-incomeeconomies 5. w 6.4 w 4.2 w 4.7 w 7.6 w 7.4 w Middle-income economies 7.4w 3 w 5.9w 2.4w 8.6w -0.1 w Low-anid middle-income econ. 7 w 3.9 w 5.4 w 3.2 w 8.3 w 2.2 w Sub-Saliaran Africa 6.8 w 1.1 w 4.1 w I w 8.7 w -4.3 w East Asia & Pacific 7.5 w 6.2 w 6.2 w 6.2 w 11.1 w 10.6 w SouthAsia 4.6 w 8.5 w 3.1 w 5.1 w 4.1 w 4.6 w Europe ..w 1.8 w .w 2.7 w ..w -().1 w Middle East & North Afnca ..w .. w ..w .. w ..w .. w Latin America & Caribbean 6.5 w 5.5 w 5.9 w I w 8.2 w -2 w EAST. ASIA.ANDTPACIFIC . ... . Asian tigers Korea, Rep. 7.7 6 8 8 15.9 12.5 Malaysia 8.5 2.7 6.2 4.2 10.4 2.9 Thailand 9.5 4.3 6.4 6.5 8 8.7 Socialist economies in transition Cambodia China 6.2 9.5 6 6.8 10.7 13.7 Lao P.D.R. .. .. .. Mongolia Myanmar a a 3.5 0.8 5.6 -3.4 Viet Na... Large island economies Indonesia 11.4 4.6 5.2 4.5 16.1 7.1 PapuaNewGuinea 0.1 -0.3 5.3 1 1.4 -1.7 Philippines 7.7 0.4 5.2 2.4 7.6 -2.5 Pacific island economies Fiji 8.5 0.6 6.9 3.4 6.8 -6.6 Kiribati Maldives Solomon Islands .. 5.6* 5.1 . 35 Tonga Vanuatu Westem Samoa .. -3.3 .. 3.3 .. -2 Other Hong Kong 7.7 5.3 9 6.8 8.6 3.6 Japan 5.3 2.4 6.2 3.7 6.9 5.7 Singapore 10.2 6.6 .. 5.9 13.3 3.6 MEMORANIWtM ITEMS United States 1.3 3.3 3.3 3.4 2.1 4.4 EuropeanCommunity 3.4 w 1.8 w 3.9 w 2.6 w 2.5 w 3.1 w India 4.7 7.8 3.1 5.3 4.3 5 Bangladesh .. .. 2 3.7 0 -0.6 Nigeria 13.9 -3.6 6.2 -3.3 14.7 -10.2 Tanzania a 8.4* 4.5 3.3* 6.2 0.3 Turkey 6.1 3.1 5.4 5.9 8.8 3.8 Hungary .. 2.1 .. 0.8 9.1 -0.8 Poland I .. 1.3 ..I Egypt, Arab Rep. a 2.2 6.7 3.4 11.3 0.2 Argentina 3.2 5.4 2.9 -2.7 4.6 -8.3 Brazil 6.8 8.8 8.7 1.7 11.3 0.2 Chile 4 -0.1 0.9 1.7 0.5 4.3 Mexico 8.5 1.9 5.9 1.1 8.5 -3.4 a. Genieral government consunmption figures are not available separately; they are included in Private consumption, etc. vz2 Table 8. Structure of Demand Distribution of gross domestic product (percent) General government Private Gross domestic Gross domestic Exports ofgoods and consumption consumption, etc. investment savings nonfactor services Country or group 1965 1990 1965 1990 1965 1990 1965 1990 /965 1990 Low-incomeeconomies 9w llw 74w 65w 19 w 18w 30w w Middle-incomeeconomies l 1w 14w 67w 63w 21w 23w 22w 23w 18w . . w Low-andmiddle-incomeecon. lOw 13w 70w 63w 20w 26w 20w 25w 13w 24w Sub-SaharanAfrica llw 15w 77w 69w 15w 16w 13w 16w 22w 29w EastAsia&Pacific 8w lOw 69w 55w 22w 37w 22w 35w 8w 31w SouthAsia 9w 12w 77w 68w 17w 21w 14w 17w 6w 9w Europe .. w 14w .. w 65w . . w 25w .. w 21w .. w 29w Middle East & North Africa 15 w .. w 60w .. w 17 w .. w 22 w .. w 26w .. w LatinAAmerica&Cafibbean 9w 13w 70w 66w 21w 19w 21w 21w 14w 16w EAST AS:IA,AND PACIC ............... ..... ....... ..... Asian tigers Korea, Rep. 9 a 83 63 15 37 8 9 32 Malaysia 15 13 61 54 20 34 24 33 42 79 Thailand 10 10 72 57 20 37 19 34 16 38 Socialist economies in transition Cambodia 16 .. 71 .. 13 .. 12 .. 12 China 8 8 68 49 24 39 25 43 4 18 Lao P.D.R. 12 .. 89 .. 12 .. -2 .. 10 Mongolia 24 .. 73 .. 30 .. 3 .. 23 Myanmar a a 87 89 19 14 13 .. 14 3 Viet Nam . .. .. .. .. Large island economies Indonesia 5 9 87 54 8 36 8 37 5 26 PapuaNewGuinea 34 24 64 66 22 25 2 10 18 37 Philippines 9 9 70 75 21 22 21 16 17 28 Pacific island economies Fiji 13 16 75 67 20 19 12 17 46 63 Kiribati .. .. .. Maldives .. .. .. .. Solonion Islands .. Tonga .. .. .. .. .. Vanuatu .. .. WesternSaumoa 22 101 41 -23 .. 19 Other Hong Konig 7 8 64 59 36 28 29 33 71 137 Japan 8 9 59 57 32 33 33 34 11 11 Singapore 10 11 80 45 22 39 10 45 123 190 MEMORANDUM 11.-MS UnitedStates 17 18 63 67 20 16 21 15 5 10 EuropeanCommunity 15w 18w 61w 60w 25w 21w 25w 22w 19w 29w India 9 12 76 68 17 23 15 20 4 8 Bangladesh 9 9 83 89 11 12 8 2 10 8 Nigeria 7 11 83 59 15 15 10 29 11 39 Tanzaniia 10 .. 74 .. 15 .. 16 .. 26 Turkey 12 14 74 68 15 23 13 18 6 19 Hungary a I1 75 62 26 23 .. 27 .. 33 Poland .. 7 .. 54 .. 31 .. 39 .. 26 Egypt,ArabRep. 19 10 67 80 18 23 14 10 18 20 Argentina 8 4 69 80 19 8 22 16 8 14 Brazil 11 16 67 61 20 22 22 23 8 7 Chile 11 10 73 67 15 20 16 23 14 37 Mexico 6 11 75 70 20 20 19 19 8 16 a. General government consumption figures are not available separately; they are included in Private consumption, etc. -4 CD ° Table 9. Central Government Expenditure Percentage of total expenditure Housing amenities; Defense Education Health social security and welfare Economic services Country or group 1972 1990 1972 1990 1972 /990 1972 1990 1972 1990 ,~ ~ ~ ~ ~ ~ ~ ~~. .:4 ,,0Sggggggg:.:g::ggg:::-.-;,:E ,lg . ..... .............. ........: . .E .~~~~~~~~~~~~.. . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . .. . ... . Low-income economies Middle-income economies Low-and middle-income econ. Sub-Saharan Africa East Asia & Pacific South Asia Europe Middle East & North Africa Latin America & Caribbean Asian tigers Korea, Rep. 258 2.1.896 1.2 2.2 5.9 12.2 25.6 17 Malaysia 18.5 8.6 23.4 0 6.8 0 4.4 5.5 14.2 20.6 Thailand 20.2 17.3 19.9 20.1 3.7 6.8 7 5.8 25.6 22.1 Socialist economies in transition Cambodia ... .. .. .. .. .. ... China~ ~ ~ ~ ~~.... ............. .. . .. ... .... .. .. .... .... .. .. Lao P.D.R. .. .. .. .. .. .. .... Mongolia .. .. .. .. .. .. .. .. ..... Myanmar 31.6 # 24.7 * 15'# 16.8 * 6.1 ' 4.6 * 7.5 . 15.4 . 20.1 . 20.5 . Viet~~~~~~~~~~~.. ..am.. .. ... .......... . . . Large island economies Indonesia 18.6 ' 8 * 7.4 8.4*# 1.4*# 2 * 0.9'# 1.5*# 30.5*# 27.6'# Papua New Guinea .. .4.7 . .. 15.3 .. 9.4 .. 3.1 . 20.8 . Philippines 10.9 11 16.3 16.9 3.2 4.1 4.3 2.3 17.6 23.6 Pacific island economies Fiji 1.1 8.7 19.9 21 13.3 7.7 6.6 6.9 25.5 21.5 K iribati............... Maldives .. 0 .. 14.3 .. 18.4 .. 6.9 .. 22.8 Solomon Islands .. 0 * 22.4* .. 6.2* 3.4* 34.7 Tonga .. 0 .. 11.1 .. 7 .. 8 .. 42.5 Vanuatu .. 0 .. 14.8 .. 7.6 .. 0.1 .. 50 Western Sanoa .. .. .. .. .. Olher Hong Kong .. .. .. .. .. .. .. Japan............... Singapore 35.3 21.6 * 15.7 18.1 * 7.8 4.7 * 3.9 11.7 * 9.9 20 * -MEORANDUM f"S United States 32.2 22.6 3.2 1.7 8.6 13.5 35.3 28.2 10.6 10.2 European Conmmunity .. w .. w .. w .. w .. w .. w .. w .. w .. w .. w India 26.2* 17 2.3 * 2.5 1.5 * 1.6 3.2 * 6.9 19.9* 20.8 Bangladesh 5.1 ^ 10.1 * 14.8 * 11.2 * 5 * 4.8 9.8 * 8 * 39.3 * 34.4 Nigeria 40.2 .. 4.5 .. 3.6 .. 0.8 .. 19.6 Tanzania 11.9 .. 17.3 .. 7.2 .. 2.1 .. 39 Turkey 15.5 11.7 18.1 19.2 3.2 3.6 3.1 3.6 42 17.8 Hungary .. 3.6 .. 3.3 .. 7.9 .. 35.3 .. 22 Poland .. .. .. .. .. .. .. Egypt, Arab Rep. .. 12.7 * 13.4 * .. 2.8 * 17.8 .. 8.2 * Argentina .. 8.6* .. 9.3 .. 2 * .. 40.9* .. 20.5 * Brazil 0 4.2* 0 5.3 * 0 7.2* 0 20.1 * 0 6.9 * Chile 10 8.4 * 20 10.1 * 10 5.9* 40 33.9 * 0 8.8 * Mexico 4.5 2.4 16.4 13.9 4.5 1.9 25.4 13 35.8 13.4 is Table 10. Central Government Current Revenue Percentage of total current tax revenue Taxes on income, profit Social security Domeslic taxes on goods Taxes on international trade and capital gain contributions and services and transactions Other taxes Country or group 1972 1990 1972 1990 1972 1990 1972 1990 1972 1990 4~~~~RO,~~~~~~ ~~~.I..i~~~~~~~~~:....... Low-income economiesA007;XVt:0!!l -!tS;i00#V000;EliMlliESgE- l - !!iS!iE L00iX........ ... Low-income economies Middle-income economies Low-and middle-income econ. Sub-Saharan Africa East Asia & Paciflc South Asia Europe Middle East & North Africa Latin America & CaTibbean ASMASA AND PACIFIC,xxi~: Asian tigers Korea, Rep. 29 34 0.7 4.9 41.7 33.5 10.7 10.6 5.3 5.7 Malaysia 25.2 30.5 0.1 0.8 24.2 24.3 27.9 16.7 1.4 2.5 Thailand 12.1 24.2 0 0.1 46.3 41.4 28.7 22.1 1.8 4.3 Socialist economies in transition Cambodia .. .. .. .. .. .. .. China , .. .. .. .. Lao P.D.R. .. .. .. .. .. .. .. Mongolia .. .. .. .. . .. .. Myanmar 28.7* 9 * 0 * 0 * 34.2* 30.7 * 13.4 14.9 * 0 * 0 * Viet Nam .. .. .. .. .. Large island economies Indonesia 45.5 57.5 * 0 0 * 22.8 25.1 * 17.6 6 * 3.5 3 * Papua New Guinea ,. 44.6 * 0 * 10.5 * .. 24.9 * 1.8 * Philippines 13.8 28.3 0 0 24.3 30.7 23 25.1 29.7 2.9 Pacific island economies Fiji 34.3 37.2 0 0 11.5 14.6 41 32.2 -0.5 1 Kiribati . .. .. .. .. Maldives .. 1.2 ,. 0 .. 20 .. 34.6 ,. 4.2 Solomon Islands .. 31.7 .. 0 .. 3.4 .. 53.7 ,, -0.6 Tonga .. 10 .. 0 .. 0 .. 50.2 .. 7.7 Vanuatu .. 0 .. 0 .. 25.9 .. 56.5 .. 0 Western Samoa .. .. .. Other Hong Kong .. .. .. .. .. .. Japan 64.8 71.2 0 0 * 22.6 12 3.5 1.3 * 6.8 9.9 * Singapore 24.4 24.3 * 0 0 * 17.6 19.6 * 11.1 2.5 * 15.5 14.9 * MEMORANDUM Jo~. *. . ; - .- United States 59.4 51.6 23.6 34.6 7.1 3.2 1.6 1.6 2.5 1.1 European Community 24.3 w 27.7 w 33.5 w 35.8 w 30.7 w 27.7 w 1.5 w .. w 3.5 w 2 w India 21.3 * 15.4 0 * 0 44.5 * 35.5 20.1 * 28.8 0.9 * 0.4 Bangladesh 3.7 * 8.6 * 0 * 0 * 22.4 * 25.8 * 18 * 27.3 * 3.8 * 15.2* Nigeria 43 .. 0 .. 26.3 .. 17.5 .. 0.2 Tanzania 29.9 .. 0 .. 29.1 .. 21.7 .. 0.5 Turkey 30.8 43.3 0 0 31 32.1 14.6 6.2 6.1 3 Hungary .. 17.9 .. 29.2 31.3 .. 5.8 .. 0.2 Poland .. 30.4 * .. 21.4* . 30.4 * .. 6.2' .. 6.5* Egypt, Arab Rep. .. 15.9' .. 14.2* . 11.9 * 14 * .. 8.2* Argentina .. 4.3 * .. 43.4 * .. 22.4 * 11.4 * .. 10.3 * Brazil .. 5 .. 6 * .. 3.9 * .. 0.6* .. 0.8* Chile 14.3 23.3 28.6 6 * 28.6 37.1 * 14.3 9.8 * 0 -0.2* Mexico 37.3 36.5 18.6 13.6 32.2 56 13.6 4.6 -8.5 -18.3 03 ~ ~ ~ ~ ~ ~ ~ Table 11. Money and Interest Rates Monetary holdings, broadly defined Average Nominal interest rates of banks annual (average anntual percentage) Average aninual nominal Average outstanding iflation growth rate (percent) as a percentage of GDP (GDP deflator) Deposit rate Lending rate Country or group 1965-80 1980-90 1965 1980 1990 1980-90 1980 1990 1980 1990 Middle-income economies Low-and mniddle-income econ. Sub-Saharans Africa East Asia & Pacific South Asia Europe Middle East & North Afnica Latin America & Caribbean Asian tigers Korea, Rep. 35.5 21 11.1 31.7 53.2 5.1 19.5 10 18 10 Malaysia 21.5 12.6 * 26.3 69.8 .. 1.6 6.23 5.9 7.75 7.17 Thailand 17.9 18.8 23.6 37.4 71.5 3.3 12 12.25 i8 15 * Socialist economies in transition Cambodia .. .. .. .. . .. ... . China .. 25.4 ., 33.6 74.7 5.8 5.4 . . 5.04 1.1.15 * Lao P.D.R. .. .. .. .. .. .. 7.2 .. 4.8 Mongolia .. .. .. .. .. -1.3 .. .. .. .. Myanmar 11.5 11.2 * 29 23.9 .. 11.4 1.5 1.5 * 8 8 Viet Nam ~ ~ ~~ ~ ~~ ~ ~~~~ ~ ~~~~.. .......... . .. . .......... Large isand economies Indonesia 54.4 25.8 .. 13.2 36.2 8.4 6 17.3 .. 20.61 PapuaNewGuinea .. 8 .. 32.9 34 5.3 6.9 8.67 11.15 15.52 Philippnies .. .. .. .. .. 14.9 12.25 19.54 14 24.12 PacirWc island economies Fiji 17.2 10.9 34.3 32.2 43.6 6.1 4.5 4 12 11.86 Kiribati .. .. 5.5 .. Maldives .. 17.2 56.4 4.5 * 6 SolomonIslands .. 16.7 .. 40.8 31.3 10 , 10.5 .. 18 Tonga .. 14.4 * .. .. 36.6 7 * 6.25 7.25 10 13.5 Vanuatu .. 16.5 .. 73 .. 4.8 * , 7 17.33 Westen Samoa 15.4 17.1 .. 17.5 42.8 9.2 6.5 8.25 .. 13.25 Other Hong Kong .. .. .. 69.3 .. 7.2 .. Japan 17.2 9 106.7 134 183.1 1.5 5.5 4.08 8.35 6.95 Singapore 17.6 13.3 58.4 74.4 121.9 1.7 9.37 4.67 11.72 7.36 .MEMORANDUM ITEMS United States 9.2 8.4 63.8 58.8 66.6 3.7 .. 15.27 10.01 European Cornmunity India 15.3 16.7 23.7 36.2 44.7 7.9 .. .. 16.5 16.5 Bangladesh .. 21.6 .. 16.7 28.3 9.6 8.25 12 * 11.33 16 Nigeria 28.5 14.1 10.7 23.8 17.6 18.2 5.27 .. 8.43 Tanzania 19.7* 21.5* .. 37.2 .. 25.7 4 17 * 11.5 31 Turkey 27.5 51.9 23 17.2 21.3 43.2 8 47.6 25.67 Hungary .. .. .. .. .. 9 3 23 9 28 Poland .. 51.5 .. 58.4 22.4 54.3 3 27.8 8 101.42 Egypt,ArabRep. 17.7 21.9 35.3 52.2 93.2 11.9 8.33 12 13.33 19 Argentina 86.6 368.5 18.1 22.2 7.6 395.1 79.4 1585.96 .. 796725 * Brazil -22 .. 20621.3 18.4 .. 284.4 115 9387.5 Chile .. 30.3 * 16.3 21 .. 20.5 37.46 40.27 47.14 48.83 Mexico 21.9 62.4 25.1 27.5 20.4 70.4 20.63 31.24 28.1 Table 12. Growth of Merchandise Trade Merchandise trade (millions of dollars) Annual growth rate3 (percent) Exports Imports Exports Imports Terms oftrade (1987 = 100) Country or group 1990 1990 1965-80 1980-90 1965-80 1980-90 1985 *990 IWflWAVEUAGES . .' ,...~~~~~~~~~~..... ... ..... ...... ~~~~~~~~~~~~~~~~~~~~~~~~7 ....... .S:0 X l0 00fi0;0 0iiigi;; 0i:0ig00illi0;gigligig igg gig .|ggigig::li0itii:i 0 0illigigi;iigiiliti;i;;i; ;0;000000000il- 0 gg i g gigi.......... ..... Low-incomeeconomies 141181t 144431 t 5w 5.4w 4.5w 2.7w 107m lOOm Middle-incomeeconomies 491128 t 485897t 3.9w 3.8w 6.1w 0.9w l1Om 102m Low-andmiddle-incomeecon. 632309t 630328t 4.1 w 4.1 w 5.7 w 1.4 w 109m lOOm Sub-SaharanAfrica 34062t 32377t 5.9w 0.3w 4.9w -4.4w IlOm lOOm East Asia & Pacific 217030 t 224021 t 8.5 w 9.8 w 7.1 w 8 w 106 m 103 m South Asia 27699t 38217 t 1.8 w 6.8 w 0.6 w 4.1 w 101 m 95 m Europe 94082t 126493 t .. w .. w .. w .. w 94 m 103 m Middle East & North Africa 112644t 89842t 5.7 w -1.1 w 12.8 w -4.7 w 130 m 96 m LatinAmerica&Caribbean 123181t 101119t -1 w 3 w 4.1w -2.1w 111m 11m Asian tigers Korea, Rep. 64837 69585 27.2 12.8 15.2 10.8 103 108 Malaysia 29409 29251 4.6 10.3 2.2 5.6 117 94 Thailand 23002 33129 8.6 13.2 4.1 10.2 91 99 Socialist economies in transition Cambodia .. .. .. .. China 62091 53345 4.8 11 7.4 9.8 109 ill Lao P.D.R. .. .. .. .. Mongolia .. .. .. .. .. Myanmar 322 270 -2.1 -10.1 -4.4 -14.5 106 127 Viet Nam .. .. .. .. .. Large island economies Indonesia 25553 21837 9.6 2.8 13 1.4 134 111 Papua New Guinea 1140 1288 13 6.2 1.6 2.6 111 75 Philippines 8681 13080 4.6 2.5 2.9 2.3 93 93 Pacific island economies Fiji 531 741 -2.4 13 2.4 -0.5 94 130 Kiribati ,. .. .. .. Maldives .. .. .. .. Solomon Islands 70 92 .. .. Tonga 12 62 .. Vanuatu .. .. .. Westem Samoa 9 85 .. .. Other HongKong 29002 82495 9.1 6.2* 8.3 1 * 97 100* Japan 286768 231223 11.4 4.2 4.9 5.6 71 91 Singapore 52627 60647 4.7 8.6 7 6.7 99 100 .... N1UM ITEMS UnitedStates 371466 515635 6.4 3.3 5.5 7.6 100 100 EuropeanCommunity 1349971t 1405271 t 7.3w 4.1w 3.9w 4.2w 94m 102m India 17967 23692 3 6.5 1.2 4.2 96 96 Bangladesh 1674 3646 .. 7.6 .. 8 109 95 Nigeria 13671 5688 11.1 -1.6 14.6 -15.1 167 100 Tanzania 300 935 -4.2 -7.4 * 1.6 -0.5 * 101 108* Turkey 12959 22300 5.5 9.1 7.7 7 82 98 Hungary 9588 8646 .. 5.5 .. 1.3 104 87 Poland 13627 9781 .. 3 .. 1.2 94 103 Egypt, Arab Rep. 2985 10340 -0.1 2.1 3.6 -1.7 131 76 Argentina 12353 4077 4.7 1.4 1.8 -8.4 110 112 Brazil 31243 22459 9.3 4 8.2 -0.3 92 123 Chile 8579 7023 8 4.8 1.4 0.6 102 131 Mexico 26714 28063 7.7 3.4 5.7 -1.1 133 110 a. For details on how the growth rate is calculated, see World Bank 1992e, p. 293. co Table 13. Structure of Merchandise Imports Percentage share of mercltandise imports Other primars Machinery and Other Food Fuels commodities tranport equipment manufactures Country or group 1965 1990 1965 1990 1965 I990 1965 /990 1965 1990 .:GROUP AVERAGES:x~:~ |gggitl0evRAGES t :igl0000000000!:000. . i:t : : t t . . . . . . . . . ... .. . . . . . . . . . . . . . .. . . . . . . . .:il00;:0it ;i00;l:;t:g ::0;|g|.:00:iggt:g! 00igg:t0 it;i7i0:l: ; Low-income economies 17w lw 5 w 8 w 8w 8w 33w 35w 37w 37 w Middle-incomeeconomies 15w llw lOw 12w llw 8w 30w 34w 34w 35w Low-andmiddle-incomneecon. 15w 11w 9w llw lOw 8w 31w 34w 35w 35w Sub-SaharanAfrica 15w 16w 7w 14w 3w 4w 30w 29w 45w 37w East Asia & Paciflc 13 w 7 w 6 w 9 w 9 w low 32w 38 w 40 w 35w SouthAsia 25w 12w 4w 15w 11w 9w 34w 28w 27w 35w Europe 14w 11w 12w 17w 17w 9w 32w 34w 28w 34w Middle East & North Africa 24 w 17 w 5 w 6 w 7 w 6 w 24 w 33 w 40 w 37w Latin America & Caribbean 12 w 12 w 13 w 13 w 8 w 7 w 32w 31 w 35 w 35 w EAS:1 T ASIA AND PACIFIC . ........... . . Asian tigers Korea, Rep. 15 5 7 16 26 15 13 34 38 29 Malaysia 25 11 12 5 10 6 22 45 32 33 Thailand 6 5 9 9 6 8 31 41 49 37 Socialist economies in transition Cambodia 6 .. 7 2 .. 26 58 China 7 8 1 2 10 9 39 41 43 39 LaoP.D.R. 27 14 6 .. 19 .. 34 Mongolia .. .. .. Myanrar 15 9 4 3 5 2 18 40 58 46 Viet Nam .. .. .. .. Large island economies Indonesia 6 5 3 9 2 9 39 43 50 35 Papua New Guinea 23 17 4 8 3 2 25 40 45 34 Philippines 20 10 10 13 7 7 33 20 30 50 Pacific island economies Fiji 24 2(0 10 16 4 2 22 19 40 42 Kiribati............... Maldives .. .. .. .. SolomonIslands 24 18 6 15 4 5 31 29 36 34 Tonga 31 28 6 10 12 6 16 22 36 35 Vanuatu 28 .. 7 5 .. 21 .. 40 Western Samoai 33 22 4 17 12 4 14 23 37 35 Other Hong Kong 25 6 3 2 13 5 13 26 46 60 Japan 22 14 20 25 38 16 9 16 11 30 Singapore 23 5 13 16 19 5 14 42 30 32 MEMORANDUM ITEMS United States 19 6 1 0 13 20 5 14 40 36 36 EuropeanCommunity 22w lOw llw 9w 20w 8w 17w 33w 30w 41w India 22 7 5 Is 14 11 37 31 22 36 Bangladesh 30 14 .. 6 .. 17 .. 33 Nigeria 9 16 6 1 3 4 34 38 48 42 Tanzania 7 20 9 19 2 4 40 24 42 35 Turkey 6 7 10 21 10 I1 37 31 37 30 Hlungary 12 7 11 14 22 8 27 35 28 36 Poland 14 12 18 13 11 11 27 33 24 32 Egypti Arab Rep. 26 31 7 2 12 10 23 23 31 34 Argeiistia 6 4 10 9 21 11 25 33 38 44 Brazil 20 9 21 23 9 11 22 27 28 30 Chile 20 4 6 12 10 4 35 44 30 36 Mexico 5 16 2 4 10 7 50 36 33 37 co co Table 14. Structure of Merchandise Exports Percentage share ofmerchandise exports Fuels, minerals, Otherprimary Machinery and Other Textiles agd and metals commodities transport equipment manufactures clothing Country or group 1965 1990 1965 1990 1965 1990 1965 1990 1965 1990 Low-incomeeconomies 20w 27w 49w 20w 4w 9w 26w 44w 16w 21w Middle-incomeeconomies 38w 33w 39w 21w 11w 17w 14w 31w 3w 9w Low-andmiddle-incomeecon. 34w 31 w 42 w 21 w 9 w 15 w 17 w 34 w 6 w 12 w Sub-SaharanAfrica 31 w 64w 62w 28 w 0 w I w 6 w 7 w 0 w I w East Asia & Pacific 19w 13 w 47 w 18 w 7 w 22w 27w 47w 13 w 19 w SouthAsia 6 w 6 w 57w 25 w I w 5 w 36w 65 w 29w 33w Europe low 9 w 21 w 16 w 33 w 26w 32w 47 w 8 w 16 w Middle East & North Africa 74w 75 w 24 w 12 w 0 w I w 4 w 16 w 3 w 5 w Latin America&Caribbean 45w 38w 48w 29 w I w 11w 6 w 21 w I w 3 w iL:..AST ASIA:AND:PACIFIC .*. . . ...:: .... .. .. . : . Asian tigers Korea, Rep. 15 2 25 5 3 37 56 57 27 22 Malaysia 34 19 60 37 2 27 4 17 0 5 Thailand 11 2 86 34 0 20 3 44 0 16 Socialist economies in transition Cambodia 0 .. 99 .. 0 .. 0 .. 0 China 11 10 19 16 15 17 55 56 29 27 Lao P.D.R. 62 .. 32 .. 0 .. 6 .. 0 Mongolia .. .. .. .. .. .. .. Myanmar 5 4 94 93 0 0 3 0 0 Viet Nam............... Large island economies Indonesia 43 48 53 16 3 1 1 34 0 11 Papua New Guinea 0 61 90 34 .. 4 10 1 .. 0 Philippines 11 12 84 26 0 10 6 52 1 7 Pacific island economies Fiji 1 0 98 90 0 0 0 10 3 Kiribati 2 98 Maldives Solomon Islands 2 95 96 * 3 4 * Tonga 100 * 73' .. 2. 25 * 8 Vanuatu 26 74 0 0 WesternSamoa 0 89 * 98 0 11I 2 0' 0 Other Hong Kong I 1 5 3 7 23 87 73 52 39 Japan 2 1 7 1 31 66 60 32 17 2 Singapore 21 19 44 8 10 48 24 25 6 5 ,.-mS UnitedStates 8 6 27 16 37 47 28 31 3 2 EuropeanCommunity 8w 6w 16w 12w 33w 38w 43w 43w 8w 6w India 10 8 41 19 1 7 47 66 36 23 Bangladesh I 25 I 72 60 Nigeria 32 97 65 2 0 2 1 0 0 Tanzania 1 5 86 84 0 1 13 10 0 3 Turkey 9 7 89 25 0 7 2 61 1 37 Hungary 5 9 25 26 32 26 37 40 9 6 Poland 20 18 9 15 36 34 25 34 6 5 Egypt, Arab Rep. 8 41 71 20 0 0 20 39 15 27 Argentina 1 6 93 59 1 7 5 29 0 3 Brazil 9 16 83 31 2 18 7 35 1 3 Chile 89 57 7 33 1 1 4 9 0 1 Mexico 22 43 62 13 1 25 15 19 3 2 a. This category (textiles, yams, fabrics, and clothing) is a subgroup of Other manufactures. (0 Table 15. OECD Imports of Manufactured Goods: Origin and Composition VIalue of imports of manuzfacturgs, Composition o1f /990 imports of manufactures (percent) by or igini (millions of dollars) Textiles anid Electrical machiner) Transport Country or group 1970 1990 clothing Chericals andelectronics equiipmenit Others . ...... . .. Low-incomeeconomies 1259t 59379t 40.4w 4.9w 6.8w 2.7w 45.2w Middle-incomeeconomies 5006 t 175503 t 25 w 7.1 w 16.8 w 7.1 w 44 w Low-and middle-ihconte ecoii. 6266t 234882t 28.9w 6.5w 14.3w 6 w 44.3w Sub-Saharan Africa 193t 5237t 17.2w 7.9w 0.6w 21.8 w 52.6w East Asia & Pacific 1077 t 108021 t 28.8 w 3.5 w 18.7 w 2.6 w 46.4 w South Asia 755 t 14676 t 58 w 3 w 0.5 w 0.7 w 37.8 w Europe 2316t 47712t 37.6w 8.7w 8.1 w 6.5w 39.1 w Middle East & North Africa 315t 10103t 40 w 19.6 w 4.7 w 5.1 w 30.5 w Latin America & Caribbean 1285t 45896t 11.1 w 8.8w 19.3w 14 w 46.8w EAST ASIANAND PACfTC ....... .... Asian tigers Korea, Rep. 524 40773 24.1 2.9 19.7 5.5 47.8 Mailaysia 39 9703 15.1 2.9 52.7 1.2 28.1 Thailanid 32 10515 22 1.5 15.7 0.9 59.9 Socialist economies in transition Cambodia 1 2 40.8 0 4.5 0.1 54.7 China 243 34068 36.4 5.7 11.2 0.6 46.1 LaoP.D.R. 0 7 86.3 0 0.6 0 13.2 Mongolia 0 4 63.5 13.7 0.5 0 22.3 Myanmar 4 43 25.2 3.2 0.2 3.3 68.1 Viet Nam 0 78 76.7 3.3 0.4 0.4 19.2 Large island economies liidonesia 15 5827 35.5 2.3 1.8 0.5 60 Papua New Guinea 4 28 5.2 1.1 0.9 14.4 78.4 Philippines 108 5035 35.5 2.3 28.9 0.7 32.6 Pacific island economies Fiji 1 89 68.6 0.4 0.5 0.1 30.4 Kiribati 0 1 12 1.4 6.5 0 80 Maldives 0 22 94 0 0.8 1.1 4.1 Solomon Islands 0 7 0.4 0 1 0.5 98.1 Tonga 0 3 47.4 0 6.1 2.4 44.1 Vanuatu 0 4 11.7 0 9.1 2.5 76.7 Western Samoa 0 1 34.6 3.7 5.6 3.9 52.2 Other Hong Kong 1861 24331 41.8 0.7 13.5 0.6 43.4 Japan 8851 177815 1.2 3.4 19.4 29.8 46.2 Singapore 112 19504 5.4 5.6 30.3 2 56.8 MEMORANDTM ITEMS . .. United States 21215 206284 2 11.8 13 21.1 52.1 EuropeanCommunity 67309t 870227 t 8.1 w 15.4 w 8.9 w 17.3 w 50.3 w India 534 9182 44.4 4.5 0.6 1 49.4 Bangladesh 0 1212 86.9 0 0.2 0 12.9 Nigeria 13 269 5.6 15.5 1.6 1.3 76.1 Tanzania 9 47 59.9 1.6 0.6 2.4 35.5 Turkey 47 6709 69.7 3.7 4.7 1.8 20.1 Hungary 210 3433 22.9 17.8 10.4 3.5 45.3 Poland 287 4553 20.5 17.8 7.2 5.1 49.4 Egypt, Arab Rep. 33 799 52.5 4.5 1.3 17.5 24.2 Argentina 104 1715 10.3 18.4 1 4 66.3 Brazil 197 11001 7.] 9.7 5.1 13.4 64.7 Chile 15 611 10.6 28.7 0.5 0.8 59.3 Mexico 508 23704 4.8 4.5 33.5 17.4 39.7 a. Trade data are based on the UN Comtrade data base, Revision I SITC for 1970 and Revision 2 SITC for 1990. Ca Table 16. Balance of Payments and Reserves Current account balance (millions of dollars) After official Before official Net workers' remiltances Net direct private investment Gross international reserves transfers transfers (millions ofdoillars) (millions of dollars) (millions of dollars) Country or group 1970 1990 1970 1990 1970 1990 1970 1990 1970 1990 Low-income economies 379t 63863t Middle-incomeeconomies 16301.t 194139t Low-and middle-income econ. 20100 t 258002 t Sub-Saharan Africa 2028 t 12684 t East Asia & Pacific 2885 1 85907t South Asia 1453 t 8665 t Europe 2624 t 49920 Middle East & North Africa 4526 t 39533 t Latin America & Caribbean 5527 t 58710 t Asinn tigers Korea,Rep. -623 -2172 -706 -2181 . . 0' 66 -105 610 14916 Malaysia 8 -1672 2 -1733 .. .. 94 2902 667 10659 Thailand -250 -7053 -296 -7235 .. 74 43 2236 911 14258 Socialist economies in transition Cambodia .. .. .. .. .. .. .. .. .. .. China -81 12000 -81 11935 0 108 .. 2613 .. 34476 LaoP.D.R. .. -106 .. -148 .. .. .. .. 6 61 Mongolia .. -640 .. -647 .. 0 .. .. .... Myanmar -63 -163 ' -81 -204 ' .. 0*' .. 154 * 98 410 Viet.Nam .. -213 .. -323 .. .. .. .. 243 .. Large isncnd economies Indonesia -310 -2369 -376 -2430 .. 153 83 964 160 8657 PapuaNewGuinea -89 -352 -239 -566 .. 51 .. 231 .. 427 Philippines -48 -2695 -138 -3052 .. 262 -29 530 255 2036 Pacific island economies Fiji -14 7 -18 -18 .. 6 30 27 261 Kiribati .. .. .. .. Maldives 2 .. -10 -10 3 24 Solomon Islands .. -26 .. -59 -5 13 .. 18 Tonga -1 8 -1 -2 1* 15 .. 0 .. 31 Vanuatu 8 -21 2 .. 13 .. 38 Western Samoa -5 2 -5 -12 3 43 .. 5 69 Other Hong Kong 225 225 .. .. .. Japan 1990 35870 2170 40380 .. -260 -46290 4876 87828 Singapore -572 2350 -585 2445 .. 93 4489 1012 27748 MEMORANDUM ITEMS United States 2330 -92160 4680 -71710 -650 -1100 -6130 3750 15237 173094 European Community 35826t 438106t India -385 -9304 -591 -9828 80 1947 0 253 1023 5637 Bangladesh -114 -775 -234 -1541 0 761 0 660 Nigeria -368 5126 -412 5027 -14 205 588 223 4129 Tanzania -36 -426 -37 -955 .. 0 * 5 65 193 Turkey -44 -2616 -57 -3778 273 3246 58 681 440 7626 Hungary -25 230 -25 230 0* 337 1186 Poland 3067 2762 0 89 4674 Egypt,ArabRep. -148 -1425 -452 -2535 29 3744 136 165 3620 Argentina -163 1789 -160 1789 0- 11 2036 682 6222 Brazil -837 -2983 -861 -2983 407 510 1190 9200 Chile -91 -790 -95 -935 .. -79 587 392 6784 Mexico -1068 -5255 -1098 -6521 2020 323 2632 756 10217 (a (' Table 17. Official Development Assistance: Receipts Nct disbursemenis of ODA from all sources Per capita As percentage Millio,ts of dollars (dollars) of GNP Country ot group 1984 1985 1986 1987 1988 1989 1990 /990 1990 Low-income econiomlies 14476t 15896 t 18781 t 20555 t 23722t 23862t 29353t 9.6w 2.8w Middle-iicotne econiomiiies 9557 t 9756t 11438t 12607 t 11847 t 12446t 17882 t 18.7 w 0.7 w Low-andniiddle-incomeecon. 24033t 25653t 30219t 33162t 35570t 36307t 47235t 11.8w 1.4w Sub-Saharan Africa 7941t 9006t 11093t 125W0t 14077t 14505t 16810t 33.9w 9.6w East Asia & Pacific 3553 t 3577 t 4529 t 5548 t 6405 t 7053 t 7771 t 4.9 w 0.8 w SouthAsia 4585t 4655t 5888t 5630t 6615t 6118t 6174t 5.4w 1.6w Europe 376 t 348 t 543 t 522 t 461 t 285 t 1420 t 14.1 w 0.4 w Middle East & North Africa 4506 t 4668 t 4405 t 4745 t 3743 t 3622 t 9680 t 37.8 w 3.4 w Latin America & Caribbeani 3072 t 3400 t 3761t 4217 t 4269 t 4724 t 5380 t 12.3 w 0.4 w EAST ASIA AND PACIFIC::: Asian tigers Korea, Rep. -37 -9 -18 11 10 52 52 1.2 0 Malaysia 327 229 192 363 104 140 469 26.3 1.1 Thailand 475 481 496 504 563 739 805 14.4 1 Socialist economies in transition China 798 940 1134 1462 1989 2153 2076 1.8 0.6 Cambodia 17 13 13 14 18 31 42 4.9 LaoP.D.R. 34 37 48 58 77 140 152 36.6 17.5 Mongolia .. .. .. .. .. .. .. Myarmnmar 275 356 416 367 451 184 170 4.1 0.8 VietNamn 109 114 147 IIl 148 129 190 2.9 2.1 Large island economies Indonesia 673 603 711 1246 1632 1839 1724 9.7 1.6 PapuaNewGuinea 322 259 263 322 380 339 376 96.1 11.4 Philippines 397 486 956 770 854 844 1277 20.8 2.9 Pacific island economies Fiji 31 32 43 36 54 43 49 66.4 3.6 Kiribati 12 12 14 18 16 17 20 291.4 Maldives 6 9 16 19 27 28 22 103.3 21.9 Solomon Islanids 19 21 30 57 58 49 44 140.2 26.1 Tonga 16 13 15 21 19 25 31 312.1 32.6 Vanuatu 24 22 24 51 39 40 49 323.2 WestemnSamoa 20 19 23 35 31 31 51 307.3 44.1 Other llong Kong 14 20 18 19 22 40 37 6.4 0.1 Japan .. .. .. .. .. .. Singapore 41 24 29 23 22 95 -3 -1 0 MEMORANDUM ITEMS United States .. .. .. .. .. .. EuropeanrCommunity 109t IIlt 158t 991 137t 108t 102t 5w 0.1w India 1673 1592 2120 1839 2097 1895 1586 1.9 0.6 Bangladesh 1200 1152 1455 1635 1592 18(00 2103 19.7 9.2 Nigeria 33 32 59 69 120 346 234 2 0.7 Tanzania 558 487 681 882 982 920 1155 47.1 48.2 Turkey 242 179 339 376 267 140 1264 22.5 1.2 Hungary .. .. .. .. .. .. Poland .. .. .. .. Egypt, Arab Rep. 1794 1791 1716 1773 1537 1568 56(14 1 07.6 15.9 Argentina 49 39 88 99 152 211 172 5.3 0.2 Brazil 161 123 178 289 210 206 164 1.1 0 Chile 2 40 -5 21 44 61 94 7.1 0.3 Mexico 83 144 252 155 173 86 140 1.6 0.1 o Table 18. Total External Debt Long-term debt (millions of dollars) Public and Private Use of IMF credit Short-term debt Total external debt publicly guaranteed nonguaranteed (millions ofdollars) (millions ofdollars) (millions ofdollars) Country or group 1970 1990 1970 1990 1970 /990 1970 1990 1970 1990 Low-income economies Middle-income economies Low-and middle-income econ. Sub-Saharan Africa East Asia & Pacific South Asia Europe Middle East & North Africa Latin America & Caribbean EAST A~~~~~~~~~~~~~~~~~~~~~~4 Aim PACI~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~....... Asian tigers . ~ ~ . Korea, Rep. 1816 17814 175 5400 0 0 0 10800 1991 34014 Malaysia 390 16107 50 1489 0 0 0 1906 440 19502 Thailand 324 12572 402 4973 0 1 0 8322 726 25868 Socialast economies in transition Cambodia China 0 45319 0 0 0 469 0 6766 0 52555 Lao P.D.R. 8 1053 0 0 0 8 0 2 8 1063 Mongolia .. .. .. .. .. .. .. Myanmar 106 4447 0 0 17 0 0 229 123 4675 Viet Nam............... Large Island economies Indonesia 2497 44974 461 9405 139 494 0 13035 3096 67908 Papua New Guinea 36 1509 173 965 0 61 0 72 209 2606 Philippines 625 24108 919 1006 69 912 0 4431 1613 30456 Pac(frc island economies Fiji 12 292 0 95 0 0 0 12 12 399 Kiribati Maldives 0 64 0 0 0 0 0 14 0 78 SolomonIslands 0 105 0 0 0 1 0 17 0 123 Tonga 0 49 0 0 0 0 0 9 0 58 Vanuatu 1 31 0 0 0 0 0 10 1 40 Westem Samoa 3 92 0 0 0 1 0 0 3 93 Other Hong Kong Japan Singapore .MEMORAM S -.. .; United States .. European Community India 7838 61097 100 1488 0 2623 0 4908 7938 70115 Bangladesh 15 11464 0 0 0 626 0 156 15 12245 Nigeria 452 33709 115 391 0 0 0 1968 567 36068 Tanzania 180 5294 15 12 0 140 0 420 195 5866 Turkey 1846 38595 42 1054 74 0 0 9500 1962 49149 Hungary 0 18046 0 0 0 330 0 2941 0 21316 Poland 24 39282 0 0 0 509 0 9595 24 49386 Egypt, Arab Rep. 1517 34242 0 10)0 49 125 0 4518 1567 39885 Argentina 1880 46146 3291 1800 0 3083 0 10115 5171 61144 Brazil 3426 82098 1706 7771 0 1821 0 24483 5132 116173 Chile 2067 10339 501 4263 2 1157 0 3356 2570 19114 Mexico 3196 76204 2770 4409 0 6551 0 9645 5966 96810 to 'a g Table 19. Flow of Public and Private External Capital Disbursements Repayment ofprincipal (millions of dollars) (millions of dollars) Interest payments on orlog- termi public and puibliclv Long-term public and Private Long-term public and Private guaranteed (millions of publicly guiaranteed non guaranteed publicly guaranteed non guaranteed dollars) Country or grouip 1970 199) 1970 1990 1970 1990 1970 1990 1970 1990 GROUPAVVRAGES . : .i:.. ..)ii i l .... .. : :: jX Low-income economies Middle-income economies Low-and middle-income econ. Sub-Saharan Africa East Asia & Pacific South Asia Europe Middle East & North Africa Latin America & Caribbean EAST ASIA AND XxACWTCxjx Asian tigers Korea, Rep. 444 3198 32 1529 198 3539 7 2090 71 1267 Malaysia 45 1779 12 685 47 2220 9 470 22 1125 Thailand 51 1513 169 1149 23 2424 107 847 16 877 Socialist economies in transition Cambodia .. .. .. . . .. . China 0 9620 0 0 0 3371 0 0 0 2534 Lao P.D.R. 6 107 0 0 1 8 0 0 0 3 Mongolia .. .. .. .. .. .. Myanmar 22 122 0 0 20 45 0 0 3 13 VietNam .. .. .. .. .. .. . Large island economies Indonesia 441 4615 195 5533 59 4140 61 977 25 2536 PapuaNewGuinea 43 275 III 205 0 174 20 199 1 86 Philippines 141 2155 276 291 74 705 186 47 26 1471 Pacific island econtomies Fiji 2 16 0 14 2 55 0 18 1 24 Kiribati Maldives 0 13 0 0 o 6 0 0 0 1 Solomiion Islanids 0 7 ° 0 0 7 0 0 0 3 Tonga 0 l 0 0 0 1 ( 0 0 o Vanuaru ( 9 0 0 I 0 0 I Westem Samnioa 2 16 0 0 0 3 0 0 0 1 Other HIong Kong Japan .. Sinigaporc MEMORANDUM ITEMS United States European CoMMUnity India 883 5191 25 214 289 2162 25 318 187 3275 Bangladesh 0 1121 0 0 0 275 0 0 0 159 Nigeria 56 727 25 0 38 1205 30 15 20 1758 Tanizaniia 51 299 8 0 2 53 3 0 3 46 Turkey 331 4344 1 543 128 3426 3 283 42 2763 Hungary 0 2573 () 0 0 2233 0 0 0 1571 Poland 30 540 0 0 6 642 () 0 0 206 Egypt. Amab Rep. 199 2192 (1 102 227 1715 0 183 40 1054 Argentina 482 914 424 0 344 1664 428 0 121 2129 Brzlil 896 2686 90X) 875 256 2718 200 1008 135 2223 Chile 408 71)7 247 1545 166 474 41 271 78 1096 Mexico 772 79111 603 1484 475 2615 542 1046 216 5365 0 o Table 20. Total External Debt Ratios Total debt as a percentage of Total debt service as a percentage Interest payments asa percentage Exports of goods and services GNP of exports of goods and services of exports of goods and services Country or group 1980 1990 1980 1990 /980 1990 1980 1990 t000wAYEEGS t;00004;00-000.0 .... 000000000000t0 t;i;X::t;t0000ittl000 ilVi;;00;00 ;tt txxxxxxxx70F:0!:00 ...... . . ...........000000 .. ... . . . . ..~~~~~~~~~~~~~~~~~~~~~~~~~~. .. . . . ... . . ..~~~~~~~~~~~~~~...... ....... VER4GES . * ............ . ............. Low-incomeeconomies 105.1 w 218.5w 16.4w 41 w 10.3w 20.1 w 5.1 w 9.3w Middle-incomeeconomies 135.2w 155.6w 31.9w 39.9w 24.3w 19.1w 12.5w 8.3w Low-and middle-income econ. 127 w 171.3w 26.2w 40.2w 20.5w 19.4w 10.5w 8.5w Sub-Saharan Africa 96.8w 324.3w 28.5w 109.4w 10.9w 19.3w 5.7 w 8.9w East Asia & Pacific 88.8 w 91.1 w 16.8 w 26.9 w 13.5 w 14.6 w 7.7 w 5.8 w South Asia 162.9 w 281.5 w 17.3 w 30.7 w 12.2 w 25.9 w 5.2 w 13.1 w Europe 90.6w 125.7w 23.8w 41 w 15.9w 16.9w 7.1 w 6.8w Middle East & N.Africa 114.9w 180.3w 31.1 w 52.6w 16.4w 24.4w 7.4w 8.1 w LatinAmerica&Caribbean 196.8w 257.4w 35.2w 41.6w 37.3w 25 w 19.7w 13.3w Asian tigers Korea, Rep. 130.6 44 48.7 14.4 19.7 10.7 12.7 3.5 Malaysia 44.6 55.9 28 48 6.3 11.7 4 4 Thailand 96.8 82 26 32.6 18.9 17.2 9.5 6 Socialist economies in transition Cambodia .. .. .. .. .. China 21.2 77.4 1.5 14.4 4.4 10.3 1.5 4.6 LaoP.D.R. .. 1113.5 .. 123.3 .. 12.1 .. 3.2 Mongolia .. .. .. .. .. .. Myannmar 269.9 .. 26 21.1 25.4 .. 9.4 Viet Nam , .. .. .. .. .. Large island economies Indonesia 94.2 229.4 28 66.4 13.9 30.9 6.5 13.1 Papua New Guinea 66.1 168.6 29.2 83.9 13.8 36 6.6 11.7 Philippines 212.3 229.2 53.8 69.3 26.6 21.2 18.2 13 Pacific island economies Fiji 46.8 42.8 23.7 29.6 6 11.3 2.7 3.5 K iribati............ Maldives 39.6 45.7 108.2 86.4 0.9 5 0.9 1.6 Solomon Islands 22.8 121.1 18 72.4 0.4 11.9 0.4 3.9 Tonga 109.1 103.3 .. 59.9 0.6 4.2 0 2.8 Vanuatu .. 34.5 4.3 24.8 .. 2.1 .. 1.2 WestemrSamoa 135.5 105.9 .. 77 12.4 6.4 6.1 1.5 Other Hong Kong Japan Singapore M)EMORANUDM ITEMS United States .. .. .. .. .. European Conununity 99.5w 75.4w 40.5w 36.5w 18.3w 17.8w 10.5w 5.3w India 136 282.4 11.9 25 9.3 28.8 4.2 15.9 Bangladesh 345.6 448.2 31.3 53.8 23.2 25.4 6.4 7.7 Nigeria 32.2 242.7 10 110.9 4.2 20.3 3.3 12.1 Tanzania 317.8 1070.7 47.7 282 19.6 25.8 10 10.9 Turkey 332.9 195 34.3 46.1 28 28.2 14.9 13.3 Hlungary 95.9 188.6 44.8 67.8 18.9 37.9 10.8 15.2 Poland 54.9 251.5 16.3 82 17.9 4.9 5.2 1.6 Egypt, Arab Rep. 227.7 300.8 97.8 126.5 14.8 25.7 9.2 11 Argentinia 242.4 405.6 48.4 61.7 37.3 34.1 20.8 18.4 Brazil 304.9 326.8 31.2 25.1 63.1 20.8 33.8 8.2 Chile 192.5 181.3 45.2 73.5 43.1 25.9 19 16.8 Mexico 259.2 222 30.5 42.1 49.5 27.8 27.4 16.7 i Table 21. Terms of External Public Borrowing Public loans wiith variable Commitmients Average interest rate Average maturity Average grace period interest rates, as a (millions of dollars) (percent) (years) (years) percentage of public debt Coiuntry or group 1970 1990 1970 /990 1970 1990 1970 1990 1970 1990 GR0OUP AV ILESi Low-income economies 4823t 36364t 3.2 w 5.4 w 28.5 w 23.4 w 8.4w 6.5 w 0.1 w 19 w Middle-incomeecononfies 7300 t 56313 t 6.3 w 7.8 w 15.9 w 14.2w 4.1 w 4.8 w 2.9 w 47.6 w Low-and middle-income econ. 12123 t 92677t 5 w 6.8 w 20.9w 17.8 w 5,9w 5.4 w 1.7 w 37.8 w Sub-SaharanAfrinca 1890t 9577t 3.6w 3.9w 25.6w 26.1w 7.8w 7 w 0.9w 18.2w East Asia & Pacific 1689 t 25581 t 5 w 6.8 w 23.2 w 18.6 w 6.4 w 5.5 w 0.5 w 33.1 w South Asia 2052t 12223 t 2.7 w 4.4 w 32.1 w 25.8 w 9.7 w 7.8 w 0 w 12.9 w Europe 755t 14366t 4.6w 8.7w 18.5w 11.5w 5 w 4.9w 1.5w 51.2w Middle East & N.Africa 1366t 11429t 4.3w 7.7 w 17.2w 13.4w 4.6w 3.7w 0.6w 24.1 w Latin America & Caribbean 4372t 19501 t 7 w 8 w 14.4w 15 w 3.6w 4.6w 4 w 55.9w 9AST AIAXAND PACIFIC. .. Asian tigers Korea, Rep. 691 2027 5.8 7.1 19 13 6 7 1.2 22.7 Malaysia 84 2270 6.1 7.4 19 14 5 5 0 48.8 Thailand 106 1721 6.8 5.5 19 21 4 7 0 24.5 Socialist economies in transilion Cambodia .. .. .. .. .. .. .. China 0 9786 0 7.6 0 17 0 4 0 36.4 Lao P.D.R. 12 139 3 0.8 28 40 4 15 0 0 Mongolia .. .. .. .. .. .. .. Myanmar 48 0 4.1 0 16 0 5 0 0 0 Viet NiLm... ............ Large island economies Indoniesia 530 6071 2.6 6 34 22 9 6 0 28.4 Papua New Guinea 91 200 6.4 6.4 22 15 8 5 0 27.1 Philippines 171 3249 7.3 6 11 22 2 7 0.8 40.2 Paciric island economies Fiji 4 28 3.2 7.3 18 24 5 5 0 9.3 Kiribati... ............ Maldives 0 12 0 0.8 0 41 0 10 0 0 SolomonIslands I 0 0 0 29 0 13 0 0 10.4 Tonga 0 72 0 1 0 40 0 10 0 0 Vanuatu 0 0 0 0 0 0 0 0 0 2.6 WesterniSamoa I 17 5 0.9 20 38 6 10 0 0 Other Hong Kong .. .. .. .. .. .. Japan .. .. .. .. .. .. Singapore .. .. .. .. .. .. MZEM4RANDUM IUTMS United States .. .. .. .. .. .. .. European Community 59t 3573 t 4.3 w 8.3 w 16.9 w 16.3 w 3.9 w 5.1 w 0 w 29 w India 954 6896 2.5 4.8 34 25 8 8 0 17.5 Bangladesh 0 1325 0 2 0 34 0 9 0 0 Nigeria 65 2017 6 6.7 14 19 4 4 2.7 34.5 Tanzania 271 603 1 0.8 40 37 11 10 0 4.5 Turkey 489 3654 3.6 8.9 19 10 5 5 0.9 32.4 Hungary 0 3285 0 8.9 0 8 0 5 0 59.5 Poland 0 1474 0 8.3 0 14 0 5 0 67 Egypt, Arab Rep. 528 800 4.1 5.3 17 27 5 8 0 11.3 Argentina 494 459 7.3 8.5 12 9 3 2 0 80.3 Brazil 1439 1862 7 8.5 14 12 3 5 11.8 69.2 Chile 361 1041 6.8 7.8 12 17 3 4 0 65.6 Mexico 858 8004 7.9 8.6 12 13 3 4 5.7 46.3 vin S Table 22. Population Growth and Projections Average annual growth Hypothetical Age structure of population (percent) of population (percent) Population (millions) size ofstationary 0-14 years 15-64 years ____ ____ ____ ____ ____ ____ ___ ___ ____ ____ ____ ____ ____ ___ population _ _ _ _ _ _ _ _ _ _ Country or group 1965-80 1980-90 1990-2000 1990 200fa 2025? (thousands) 1990 2025? 1990 ti~ ~ ~ ~~~~~~~~~~~~~~~~o ..:^ B: ............... Low-incomeeconomies 2.3w 2 w 1.8w 3058t 3670t 5154 t 35.2 6.3w 60.3w Middle-incomeeconomies 2.3w 2.1w 1.9w 1087t 1311t 1878t 36 w 26.8w 59.1w Low-andmiddle-incomeecon. 2.3w 2 w 1.9w 4146t 4981t 7032t 35.4w 26.5w 60 w Sub-SaharanAfrica 2.7w 3.1 w 3 w 495t 668t 1229t 46.4w 36.9w 50.8w East Asia & Pacific 2.2 w 1.6 w 1.4 w 1577 t 1818 t 2276 t 29.5 w 21.6 w 65.2 w SouthAsia 2A4w 2.2w 1.8w 1148t 1377t 1896t 38.2w 25 w 57.7w Europe 1.1 w I w 0.8 w 200 t 217 t 252 t 26.3 w 20.4 w 64.6 w Middle East & N.Africa 2.8 w 3.1 w 2.9 w 256 t 341 t 615 t 43.3 w 34.1 w 53.4 w Latin America & Caribbean 2.5 w 2.1 w 1.8 w 433 t 516 t 699 t 36.2 w 23.4 w 59.3 w igigl;0B STI^giA ~ ~ i:::: 0: ...iigggtl0000000 :::::: t040200000000000000 . .. . ....: ......... ......-.. .... . . . . . . . . ...... . . :.::. . ..l zAs'I 49SZA ~~~~~~~~~ PAC~~~~I~~~1C ... . . :;.... . ...............x Asian tigers Korea, Rep. 2 1.1 0.9 43 47 33 56427 25.7 20.6 69.4 Malaysia 2.5 2.6 2.3 18 22 32 44300 38.3 23.9 58.1 Thailand 2.9 1.8 1.4 56 64 84 104691 33.9 21.9 63.1 Socialist economies in transition Cambodia 0.3 2.6 1.9 8 10 14 19868 34.8 26.1 62.3 China 2.2 1.4 1.3 1134 1294 1597 1889676 27 20.8 67.2 Lao P.D.R. 1.9 2.7 3.2 4 6 10 21436 44.8 37 53.3 Mongolia 2.6 2.8 2.5 2 3 4 6226 40.7 25.9 55.7 Myanmar 2.3 2.1 2 42 5i 70 96206 37.1 24 58.8 VietNam 2.3 2.1 2.1 66 82 116 159073 39.6 24.1 55.9 Large island economies Indonesia 2.4 1.8 1.6 178 209 275 359557 35.8 23 60.3 PapuaNewGuinea 2.4 2.5 2.3 4 5 7 11478 41.1 27.6 56.2 Philippines 2.8 2.4 1.8 61 74 101 137478 39.9 23.9 56.8 Pacific island economies Fiji 2.1 1.6 0.9 1 1 1 1279 37.2 23.1 59.7 Kiribati 1.7 1.9 1.8 0.1 .. .. 176 40 26.7 57.1 Maldives 3.1 3.3 3.3 0 0 1 1021 44.4 33.7 52.8 Solomon Islands 3.4 3 3.2 0 0 1 1167 45.6 28.2 51.6 Tonga 1.4 0.5 1.2 0 0 0 205 37.4 24 58.6 Vanuatu 3.1 2.7 3.1 0 0 0 577 44.4 29.3 53.6 Westem Samoa 1.2 0.6 1.6 0 0 0 425 39.4 25.9 56.4 Other HongKong 2 1.4 0.8 6 6 7 6191 21 15.4 70.2 lapan 1.2 0.6 0.3 124 128 128 113816 18.4 15.2 69.7 Singapore 1.6 2.2 1.2 3 3 4 4025 23.6 18.1 70.9 MEMORAIUM ITEMS ... UnitedStates I 0.9 0.8 250 270 307 317361 21.6 18.1 66.1 European Community 0.5w 0.3w 0.2w 344t 351t 353 18.2w 15.9w 67.3w India 2.3 2.1 1.7 850 1006 1348 1862082 36.9 24 58.7 Bangladesh 2.6 2.3 1.8 107 128 176 256545 42.9 25.7 54 Nigeria 2.5 3.2 2.8 115 153 255 452840 46.4 32.1 51 Tanzania 2.9 3.1 3.1 25 33 64 145644 46.7 40.2 50.3 Turkey 2.4 2.4 1.9 56 68 91 119916 34.8 23.1 60.9 Hungary 0.4 -0.2 -0.4 11 10 10 10112 19.5 17.5 67 Poland 0.8 0.7 0.4 38 40 44 50270 25.1 19.9 64.9 Egypt,ArabRep. 2.1 2.4 1.8 52 62 86 120472 39.2 24.4 56.6 Argentina 1.6 1.3 1 32 36 44 53534 29.8 21.5 61.1 Brazil 2.4 2.2 1.7 150 178 237 305007 35.4 22.8 60.2 Chile 1.7 1.7 1.3 13 15 19 22738 30.5 21.3 63.6 Mexico 3.1 2 1.8 86 103 142 184489 37.3 22.9 59 a. The projections use the same assumptions as in World Bank 1992e, World Development Indicators. co, Table 23. Demography and Fertility Assumed year Criude birth rate per Crude death rate per Women of childbearing age of reaching ihouisaid population thousandpopulation as a percenitage ofall women Totalfertility rate net Country or grotp 1965 1990 1965 1990 1965 1990 1965 1990 2000 rateof I E~OPAVERAGES.a reproductio Low-incomeeconomies 42w 30w 16w lOw 46w 51w 6.3w 3.8w 3.3w Middle-incomeeconomies 37w 29w 12w 8w 45w 49w 5.4w 3.7w 3.2w Low-andmiddle-incomeecon. 41w 30w 15w 9w 46w 50w 6.1w 3.8w 3.2w Sub-SaharanAfrica 48w 46 w 23 w 16w 45 w 44 w 6.6 w 6.5 w 5.9 w East Asia & Pacific 39 w 23 w 11w 7 w 45w 55w 6.2 w 2.7 w 2.2 w South Asia 45 w 32 w 20w 11 w 47w 49w 6.3 w 4.2w 3.3 w Europe 22w 19w lOw 9w 48w 49w 3.1 w 2 w 2.2w Middle East & N.Afnca 47 w 40w 20 w low 44w 46w 7.1 w 5.7 w 4.8 w LatinAmefica &Carihbean 39w 27 w 11 w 7w 45 w 51 w 5.8 w 3.3 w 2.6w EAST ASIA iAND PACIFICi;72;0;$0;00077:::::7!;::... ....... .... . Asian tigers Korea, Rep. 35 22 ] I 5 46 58 4.9 2.3 2.1 1995 Malaysia 40 30 12 5 44 50 6.3 3.8 3 2015 Thailand 41 22 10 7 44 54 6.3 2.5 2.1 1995 Socialist economies in transition Cambodia 44 38 20 15 47 54 6.2 4.5 3.5 2015 China 38 22 10 7 45 56 6.4 2.5 2.1 2000 Lao P.D.R. 45 47 23 16 47 45 6.1 6.7 6 2040 Mongolia 43 35 16 8 46 48 5.9 4.7 3.7 2020 Myanrmar 40 31 18 9 46 50 5.8 3.8 2.9 2010 VietNam 39 31 18 7 45 48 6 3.8 2.9 2010 Large island economies Indonesia 43 26 20 9 47 52 5.5 3.1 2.4 2005 PapuaNewGuinea 43 36 20 11 47 48 6.2 5.1 4 2020 Philippittes 42 29 12 7 44 50 6.8 3.5 2.7 2010 Pacific island economies Fiji 35 25 8 7 45 52 5.1 3.1 2.3 2005 Kiribati 41 33 8 12 .. 49 .. 4.2 3.5 2020 Maldives .. 43 .. 9 .. 44 .. 6.2 5.1 2035 Solomon Islands .. 38 .. 7 .. 45 .. 5.6 4.4 2025 Toniga 41 31 13 6 .. 50 .. 4 3.1 2015 Vaniuatu .. 39 .. 8 .. 47 .. 5.6 4.6 2030 Westeni Samloa .. 34 .. 7 .. 47 .. 4.6 3.6 2020 Other Hong Kong 27 13 6 6 45 56 4.5 1.5 1.5 2030 Japan 19 11 7 7 56 50 2 1.6 1.6 2030 Singapore 31 17 6 5 45 60 4.7 1.9 1.9 2030 MfEMORANDUM ITEMS United States 19 15 9 9 46 52 2.9 1.9 1.9 2030 EuropeanCoitimuniity 19w 12w IIv 10v.o 46w 49w 2.7w 1.5w 1.6w India 45 30 20 11 48 49 6.2 3.9 3 2015 Bangladesh 47 35 21 14 44 47 6.8 4.6 3.3 2015 Nigeria 51 43 23 14 45 45 6.9 6 5 2030 Tanzania 49 48 23 18 45 45 6.6 6.6 6.6 2045 Turkey 41 28 15 7 45 51 5.7 .. 2.7 2010 Hungary 13 12 11 13 48 47 1.8 1.8 1.8 2030 Polan(d 17 15 7 10 47 48 2.5 2.1 2.1 1990 Egypt, Arab Rep. 43 31 19 10 43 48 6.8 4 3.1 2015 Argentina 23 20 9 9 50 47 3.1 2.8 2.3 2005 Brazil 39 27 11 7 45 52 5.6 3.2 2.4 2005 Chile 34 22 11 6 45 53 4.8 2.5 2.1 2000 Mexico 45 27 11 5 43 52 6.7 3.3 2.4 2005 a. The projections use the samiie assumptions as in World Bank 1992e, World Development Indicators. to Table 24. Health and Nutrition Births Babies with Population per attended by low birth Infant mortality rate Daily calorie supply Physician Nursing persan health siaff weight (per thousand live births) (per capita) Physician Nursing person (percent) (percent) Country or group 1965 1984 1965 1984 1985 1985 1965 1990 1965 1989 ikOUP AVERAGES .. ... .. ............ .. . ... ....... . .. Low-incomeeconomies 9640w 5800w 5980w 2150w 124w 69w 1975w 2406w Middle-incomeeconomies 3910w 2250w 2140w 970w 94w 48w 2489w 2860w Low-andmiddle-incomeecon. 8170w 4980w 5010w 1850w 117w 63w 2108w 2523w Sub-SaharanAfrica 33310w 26670w 5420w 2180w 157w 107w 2074w 2122w East Asia & Pacific 5600 w 2390 w 4130 w 1530 w 95w 34w 1939 w 2617 w South Asia 6220 w 3460 w 8380 w 2650 w 147 w 93 w 1992 w 2215 w Europe 1260w 700w 510w 480w 71 w 30w 3069w 3433w Middle East & N.Africa 7740 w 2410w 6160 w 1800 w 151 w 79w 2153 w 3011 w Latin America & Caribbean 2380 w 1220 w 2100 w 1010 w 94 w 48w 2445 w 2721 w FAST. ASIA AN!) PACiInC .......... Asian tigers Korea, Rep. 2680 1160 * 2970 580-* 65 96226 2178.2852 Malaysia 6200 1930 F 1320 1010 F 82 9 55 16 2353 2774 Thailand 7160 6290*F 4970 710 F 33 12 88 27 2138 2316 Socialist economies in transition Cambodia 22410 .. 3670 .. .. .. 134 117 2292 2166 China 1600 1010 3000 1610 .. 6 90 29 1929 2639 Lao P.D.R. 24320 1360 4880 530 .. 39 148 103 2135 2630 Mongolia 730 .. 320 .. 99 10 113 62 2364 2479 Myanmar 11860 3740 11370 900 97 16 122 64 1897 2440 VietNamn .. 950F 14250' 590' .. 18 134 42 2041 2233 Large island economies Indonesia 31700 9410*F 9490 .. 43 14 128 61 1791 2750 Papua New Guinea 12640 6070 620 880 34 25 140 57 1996 2403 Philippines .. 6570 1140 2680' .. 18 72 41 1875 2375 Pacific island economies Fiji .. 890 59 24 2732 2887 Kiribati 1970 121 57 2170 2959 Maldives .. 70 1710 2386 Solomon Islands .. 7420 * 47 2253 2191 Tonga .. 550 57 22 2478 2983 Vanuatu 4990 * 1000 440 * .. .. 69 2533 2567 Westem Samoa 3600 * 1060 * 46 2056 2509 Other Hong Kong 2520 1070* 1250 240# .. 4 27 7 2486 2853 Japan 970 660 * 410 180 * 100 5 18 5 2668 2956 Singapore 1900 1410 * 600 .. 100 7 26 7 2285 3198 :MEMORANDUM1 .,. . United States 670 470 * 310 70 * 100 7 25 10 3234 3671 EuropeanComnniunity 1010w 360w 600w 280w 27w 8w 3130w 3427w India 4880 2520 * 6500 1700 * 33 30 150 92 2021 2229 Bangladesh 8100 6390 .. 8530 .. 31 144 105 1970 2021 Nigeria 29530 6410 * 6160 900* .. 25 162 98 2185 2312 Tanzania 21700 24970 * 2100 5480 * 74 14 138 115 1831 2206 Turkey 2900 1390 1030 78 7 169 60 2698 3236 Hungary 630 310 240 170 99 10 39 15 3134 3644 Poland 800 490 410 190 .. 8 42 16 3292 3505 Egypt, Arab Rep. 2300 770 * 2030 .. 24 7 145 66 2399 3336 Argentina 600 370* 610 980* ., 6 58 29 3163 3113 Brazil 2500 1080 * 3100 1210 * 73 8 104 57 2417 2751 Chile 2120 1230* 600 370* 97 7 98 17 2581 2581 Mexico 2080 .. 980 880 . 15 82 39 2570 3052 Table 25. Education Total enrollments as percentage of age group Primary Secondary Total Female Total Female Tertiary (total) Country or group 1965 1989 1965 1989 1965 /989 1965 /989 1965 1989 .. ........ . GkOU? AV~~~~~~~~A .~ .*........ ......... Low-incomeeconomies 73 w 105 w 47 w 96w 20w 38w 9 w 31 w 1.8 w 2.7 w Middle-income economies 93w 103 w 87 w 101 w 26w 55 w 23 w 57 w 6.5 w 17 w Low-and middle-income econ. 78w 105w 62w 97w 22w 43w 14w 37w 3 w 7.5w Sub-SaharanAfrica 41w 69w 31w 61w 4w 18w 2w 14w 0.2w 2.1w East Asla & Pacific 88 w 129 w 78w 124 w 23w 46w 16 w 42 w 1.1 w 4.8 w SouthAsia 68w 90w 52w 76w 24w 38w 12w 27w 4.1w 4.4w Europe 102w 102w 97w 100w 45w 73w 41w 70w 11.4w 16.5w Middle East & N.Africa 61 w 90w 43w 82 w 17 w 53w 9 w 45 w 3.4 w 11.6 w LatinAmerica&Caribbean 98w 107w 97w 107w 20w 49w 19w 54w 4.4w 17.7w ...........: .......,, :. .. .: :: : ..... ... h:.:::: :E:::E::ER:::.:::.f::::::. . . i ' T g g A P ^ e e ; i:l i: -::.i70 . ig. .0707707 ilig ECASSE..EEEEEEEEMEEEREEEEEE. ............. ....... ... . . . . . .. . . ..... ..igitigE;i0 -' & 'R:. ' .''."E..'..'.E .' 'E' :S: .........'.'.....:: ::.'." ..::"."::..'.:.:....:'.:::.... :::::'.::.'.. .:..:. ::::.'.:::., Asian tigers Korea, Rep. 101 108 99 109 35 86 25 84 6 38 Malaysia 90 96 84 96 28 59 22 59 2 6.6 * Thailand 78 86 74 .. 14 28 * 11 .. 2 16.1 Socialist economies in transition Cambodia 77 .. 56 .. 9 .. 4 ..I China 89 135 .. 128 24 44 .. 38 0.1 1.7 LaoP.D.R. 40 111 * 30 98' 2 27* 1 22* 0.1 1.6* Mongolia 98 98 97 100 66 .. 66 .. 8 Myanmar 71 103 * 65 100 * 15 24 * I1 23 * 1 4.8 * Viet Narn.m.. .... .. .. Large island economies Indonesia 72 118* 65 115 * 12 47 * 7 43 ' I Papua NewGuinea 44 73 35 67 4 13 2 10 Philippines 113 III 111 110 41 73 40 75 19 28.2' Pacific island economies Fiji 85 .. 82 .. 20 .. 15 Kifibati .. .. .. .. Maldives .. .. .. .. .. .. Solomon Islands .. .. .. .. .. .. .. Tonga .. .. .. .. .. .. .. Vanuatu .. .. .. .. .. .. .. Western Samoa .. .. .. .. .. .* Other Hong Kong 103 105* 99 104* 29 73 25 75* 5 Japani 100 102 100 102 82 96 81 97 13 30.7 Singapore 105 110 10( 109 45 69 41 71 10 MEMORANDUM ITEMS United States 100 .. .. .. .. .. .. .. 40 63.1 * EuropeanConununity 1lOw 106w 109w 105w 55w 91w 51w 93w 12.3w 30.3w India 74 98 57 82 27 43 13 31 5 Bangladesh 49 70 31 64 13 17 3 11 1 3.6 Nigeria 32 70 24 63 5 19 3 16 0.1 3.2* Tanzania 32 63 25 63 2 4 1 4 0.1 0.2 I'urkey 101 112 83 108 16 51 9 39 4 12.7 liungary 101 94 100 94 .. 76 .. 77 13 14.7 Poland 104 99 102 99 69 81 69 83 18 20.3 Egypt, Arab Rep. 75 97 60 89 26 81 15 71 7 19.6* Argentina 101 I1II 102 114* 28 74* 31 78 * 14 40.8* Brazil 108 105 108 .. 16 39 16 45 * 2 11.2 Chile 124 100 122 99 34 75 36 78 6 18.8 Mexico 92 114 90 112 17 53 13 53 4 14.6 Table 26. Urbanization Urban population Population in capital city Population in cities of I million or more As a percentage of total Average annual growth as a percentage of in 1990, as a percentage of popilation rate (percent) Urban Total Urban Total Country or group 1965 1990 1965-80 1980-90 1990 1990 1965 1990 1965 1990 Low-income economies 18w 38w 3.5w 9 w lw 3 1 1 w9 Middle-income economies 42w 60w 3.9w 3.4w 25w 14w 41 w 40w 17w 25w Low-and middle-income econ. 24w 44w 3.7w 6.6w 15w 6w 41 w 33w 10w 13w Sub-Saharan Afnica 14 w 29 w 5.8 w 5.9 w 32 w 9 w 30 w 29 w 4 w 9 w East Asia &Pacific 19 w 50 w 3 w 12 w 9 w 3 w 48 w 360w 9 w 11 w SouthAsia 18w 26w 3.9w 3.9w 8w 2w 35w 34w 6w 9w Europe 40w 60w 2.7w 2.6w 15w lOw 31w 27w 12w 16w MiddleEast&N.Africa 35w 51w 4.6w 4.4w 27w 13w 42w 42w 15w 21w Latin America &Caribbean 53 w 71 w 3.9 w 3 w 23 w 16 w 44 w 45 w 24 w 33 w Asian tigers Korea, Rep. 3275.3.36 2749240 Malaysia 26 43 4.6 4.9 22 10 16 22 4 10 Thailand 13 23 5.1 4.6 57 13 66 57 8 13 Socialist economies in transition Cambodia 11 12 -0.4 3.8 98 11 .. .. ..... China 18 56 2.3 14.9 2 1 49 27 9 9 Lao P.D.R. 8 19 5.3 6.1 53 10 .. .. ..... Mongolia 42 52 4 2.9 42 22 .. ........ Myanmar 21 25 3.2 2.4 32 8 23 32 5 8 VietNam 16 22 3.3 3.4 22 5 37 30 6 7 Large island economies Indonesia 16 31 4.8 5.1 17 5 42 33 7 10 Papsa New Guinea 5 16 8.2 4.5 32 5 .. .. . .. Philippines 32 43 4 3.8 32 14 28 32 9 14 Paciric island economies Fiji 33 44 3.3 3 61 27 .. Kiribat 20 36 4.7 3.3 95 34 .. Maldives 12 29 8 6.2 100 29 .. Solomon Islands 9 11 3.7 4.5 90 9 .. Tonga 21 21 0.9 0.9 123 25 .. Vanuatu I1 20 6.8 4 R2 17 .. Western Samoa 19 23 1.9 1.3 98 22 .. Other Hong Kong 89 94 2.1 1.7 100 94 90 99 81 93 Japan 67 77 2.1 0.7 19 15 37 36 25 27 Singapore 100 100 1.6 2.2 91 91 73 100 73 100 -MO0 ND LThS ."" --;. . . .::s; United States 72 75 1.2 1.1 2 1 49 48 35 36 EuropeanCommunity 71w 78w 0.9w 0.5w 17w lOw 30w 26w 21w 20w India 19 27 3.7 3.7 4 1 32 32 6 9 Bangladesh 6 16 6.8 6.2 38 6 50 47 3 8 Nigeria 17 35 5.7 6 19 7 23 24 4 8 Tanzania 5 33 11.3 10.5 21 7 38 18 2 6 Turkey 34 61 4.1 5.9 8 5 41 35 14 22 Hungary 43 61 1.9 1.2 33 20 43 33 19 20 Poland 50 62 1.9 1.3 9 6 32 28 16 18 Egypt,ArabRep. 41 47 2.7 3.1 37 17 53 52 22 24 Argentina 76 86 2.2 1.8 41 36 53 49 40 42 Brazil 50 75 4.3 3.4 2 2 48 47 24 35 Chile 72 86 2.6 2.3 42 36 39 42 28 36 Mexico 55 73 4.4 2.9 32 23 41 45 22 32 a'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Table 27. Women in Development Health and welfare Under-5 mortality rate Maternal Education (percentage of coliort (per 1,000 live hirths) Life expectancy at birth (years) mortality persisting to grade 4) Female Male Female Male (per 100,000 _______ ______ ______ _______ ______ ______ lire births)Fe a eM l Country or group 1990 1990 1965 1990 1965 1990 1980 1970 1985 1970 GRU VAGES .~........ Low-incomeeconomies 91 w 97 w 50w 62w 48w 61 w 389w 53w 73 w 58w Middle-income economies 56w 67 w 60 w 69 w 56 w 64w 158 w 78w 87 w 77w Low-and middle-income econ. 82w 89w 52w 64w 50w 62w 333w 61 w 77w 65w Sub-SaharainAfrica 160w 179w 43w 52w 41 w 49w 952w 66w 70w 69w East Asia & Pacific 37 w 48 w 55 w 70 w 52 w 67w 142 w 73 w 78 w 86w South Asia 126 w 119 w 45w 58w 46 w 59w 498 w 45w 47 w 48w Europe 34 w 40 w 68 w 74w 63 w 67 w 84w 90w 98w 93w MiddleEast&N.Affica 102w 117w 49w 62w 48w 60w 408w 81w 89w 85w LatinAmerica & Caribbean 52w 64 w 60w 71 w 56w 65 w 138 w 64 w 74 w 59w .EMST A XA~ANPC . .......i. Asian tigers Korea, Rep. 17 24 58 73 55 67 34 96 99 96 Malaysia 17 22 60 72 56 68 59 Thailand 28 38 58 68 54 63 270 71 69 Socialist economies in transition Cambodia 161 180 46 52 43 49 .. China 29 40 57 71 53 69 44 .. 76 LaoP.D.R. 159 179 42 51 39 48 .. Mongolia 76 91 51 64 49 61 140 Myanmar 78 94 49 64 46 59 140 39 .. 58 VietNam 46 59 51 69 48 64 110 Large island economies Indonesia 75 90 45 64 43 60 800 67 * 83 89 * Papua New Guinea 70 84 44 56 44 54 1000 76 .. 84 Philippines 45 57 57 66 54 62 80 .. 82 Pacific island economies Fiji 24 33 57 67 54 63 47 97 95 * 94 Kiribati 80 93 57 53 88 Maldives 88 105 63 60 Solomon Islands 63 75 65 64 Tonga 22 31 69 65 98 * Vanuatu 87 95 66 63 72 75 Western Samoa 53 66 69 64 Other Hong Kong 7 10 71 80 64 75 4 94 92 Japan 5 7 73 82 69 76 15 100 100 100 Singapore 7 10 68 77 64 71 I1 99 100 99 -MEMOROVUM ITEMS. United States 10 13 74 80 67 73 9 96 * EuropeanCommunity 9w 12w 74w 80w 68w 73w 11 w 93w 97w 91 w India 121 116 44 58 46 60 500 42 45 Bangladesh 160 142 44 51 45 52 600 40 Nigeria 152 171 43 54 40 49 1500 64 66 Tanzania 182 203 45 49 41 46 370 82 91 88 Turkey 73 80 55 69 52 64 207 76 98 81 Hungary 16 22 72 75 67 67 28 90 97 99 Poland 18 23 72 75 66 67 12 99 97 Egypt, Arab Rep. 95 110 50 62 48 59 500 85 93 Argentina 30 40 69 75 63 68 85 92 69 Brazil 62 75 59 69 55 63 150 56* 54* Chile 18 23 63 76 57 69 55 86 96* 83 Mexico 41 51 61 73 58 66 92 73 - Table 28. Regional Performance Indicators, 1965-90 Average annual growth rate (percent) "Intervention" era "Reform" era Region and indicator 1965 80 1980-90 GDP 7.3 7.8 Industry 10.8 10.2 Gross domesticilnvestmn 111. Exports8.98 Inflation9.60 Bg ' ' lgllllggg r '''''~~~~~~~~.t$: ri......... ... ..................... .... ..... ............ g i .......Eiiigggiii;E GDP 3.6 5.2 Industry 4.3 6.5 Gross domestic investment 4.1 4.6 Exports 1.8 6.8 Inflation 8.3 8.0 SUS-SAHARAN APRI . ..~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~............. GDP 4.2 2.1 Industry 7.2 2.0 Gross domestic Investment 8.7 -4.3 Exports 6.1 0.2 Inflation 11. 20.0 LAETIN AMARC N AIIA -:~~~~~~. . EEE E E EE: : :::: : : : : : : : : : i :: i : : E gEi : i E : # S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ::: S:j::;t04042220002424CCC;400 . . .;;:04;;: i0 GDP ..... 6.0 1.6 Industry I6.6 1.2 Gross domestic investment 8.2 -2.0 Exports -1.0 9. Inflation .314 6. : W-i^90IDZFE-iEEE iiE -i-- - ia a- sa -- .. . a. E. E. .E E E .. . . .. ..EEEEEEEEEEEiii: ...... LOW- ANt) MIt)DLE4NCOMR COUNIt .~~~~~~~~~~~~~~~........ ........ GDP 5.9 3.2 Industry 6.8 368 Gross domestic investment 8.3 2.3 Exports 4.1 4.1 Inflation 16.7 61.8 Source: World Bank 1 992e. 118 Table 29. Classification of Economies by Income and Region, 1992-93 iI 1.11.11', I I fi ' I | m l I , 1 q % .. . .... NMAl', N,,, ~ ~ ~ ~ ~~N I1 1,w > 'I rl~l3.1 *11.* e 4 1le.| '113 .. . Ni P, kII hI.ww I.g.s.w .rII.h,I.l,,,1 N I1. NI111113 I. ',l .11,1.1 I I 11 11 1 11111 4.1t,,I M 11,blulilt 11,1 141. 11 N,1 1.1 IIll, N,.,l, ;; 1;1s1 ..t.P11w1.1 1.t m 11..11 ,1 st~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Il I. T :m NUL, N T 119 Table 29 (continued) "''IYL N I -i $L ,i Ifl, A,, I fl .,, L h:11 .1 1. 'a, nmh I I h, ~,on I" I,_1,J ,,, ,, - I h I idd ......~~~~~~~~~~~~~~~~~~~~~~~~~~I.. 12 . e l1~~~~~~~~~~~~~~~~~~~~~~, . r .Itih k...,,aA II.~ ~ ~~~~~~~~~~~S ci I'.'' I 1 1 "' _ ? I _ ~~~~~~~~~~~~~~~~~~1,1 .1. I d .,,Ihcrc.cr,cii,,F, 11il?, /i. IL'i ii1 .! rc il,,, 3.121.1) * 1 cals cin, :nii,; ng ha2,)! au 2',,',ih.I1 i n,,j' nnc!rdia .'12''2 . ,,n)2. hcr,ii iI& m,! Ihaka' aercI,- cc hiin,c.l %hS,E hli',u.i .''2nC .11011 Il Iir 1l:,l choul 22 .,lcr,ati.c'. 120 Mongolio EAST ASIA AND PACIFIC REGION Rep. at China Korea Lao People' Dem. Rep. Myanmarr PACIFIC OCEAN Viet Nom Cambodia Philippines Thailand Marshall Thailand ~~~~~~~~~~~~~~~~~~Islands Federated States of Micronesic Malaysia Maldives Kiribati Papua Indonesia New Guinea Solomon INDIAN Islands Western OCEAN lslonds WSomoSan Vanuatu -Fiji Tongo I I I i THE WORLD BANK >7 < r i-. > reform, and financial sector reforrn-will have to be addressed with A r' < A > new urgency. And new concems-the rising environmental threat and L , v v changing intemational trade arrangements-will test the region's A L 74 > I innovative capacities. <-7>r 7 These themes are the subject of this booklet, the first in the Develop- < ^ ment in Practice series on the World Bank's activities in specific > 7 V r regions and sectors. The series emphasizes the policies and practices > L > > that hold the most promise for reducing poverty in the developing r. L, J- , world. > 1 In addition to numerous tables and figures in the text, the booklet - 74 4 V contains a comprehensive country-by-country statistical appendix. , < -4 A A v -1< 12386, DEV 080 0-8213-2386-5 SUSTAIWING RAPID DEVELOP 4 00000008073 C'over dtesigin by Joyce C. Westoni ISIIN 0-S2 13-2386-5