Abstract: This paper examines rural-urban labor migration in Heilongjiang Province China to gain an understanding of the nature and performance of labor markets in the area Data were based on micro-level data obtained in Harbin City and two rural villages Overall findings revealed that in the two sample villages between 30% and 50% of the population has migrated out to urban centers However rural-urban migration is not a homogenous phenomenon Different migration flows with migrants of different attributes run from rural areas of different income levels to different urban areas Moreover a significant wage differential between the rural labor markets and the entry labor markets in the urban informal sector can be seen as providing strong inducement for rural-urban migration Also labor markets in urban areas exist and function well though educational and legal restrictions segment some labor markets in the urban as well as in the rural sectors A further study on a wider scale is needed on the nature and workings of labor markets along the rural-urban continuum

Abstract: This paper focuses on the impact of Indonesia's economic crisis on small and medium-sized enterprises (SMEs). It shows how the performance of SMEs during the crisis varied widely even in the same industrial subsector, and found that the factors most affecting performance have been market orientation and the linkages that the SMEs have formed with the buyers of their products. Well-performing SMEs were found to have utilized putting-out linkages with wholesalers which enabled them to switch to products having better markets. On the other hand, the SMEs which had subcontracting linkages with assemblers or contracting linkages with user-factories (with the exception of SMEs having export-oriented linkages) suffered badly in the crisis because of specificity of products with little room for switching. The paper also found that exposure to debt due to borrowing for investment has been another factor affecting performance, but that enterprise size has had no linear correlation with performance.

Abstract: HE crisis in Asia has entered its third year. While neighboring East Asian economies such as the Republic of Korea and Thailand are showing signs of significant economic recovery, the prospects for the Indonesian economy in the short term remain the subject of conjecture and controversy, despite the major economic reform undertaken by the government with the help of multilateral agencies such as the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB). Progress in various aspects of reform such as on banking, corporate restructuring, and legal reform has been very slow. Uncertainty over Indonesian economic prospects appears to influence not only the business community engaged in assessing specific business risks and opportunities, but large multilateral lenders as well. Recently, the IMF went as far as to state that the estimate for this year’s (2000) economic growth of over 3 per cent should be interpreted with caution, since this anticipated growth in GDP is based on a consumption-driven recovery. There are, as yet, few signs of a turnaround in investment. Fortunately, the Indonesian economy survives due to the agricultural output and the performance of agricultural exports. The agricultural sector continues to play an important role in production and exports in Indonesia. Before the crisis, the value of exports of agriculture-related products doubled from around U.S.$6,500 million in 1988 to more than U.S.$15,000 million in 1997. This sector also plays a role in generating employment, supplying basic foods and inputs for industrial goods, and providing a substantial source of

Abstract: Economic development was from the very beginning the focus of classical political economy and presently retains its original human welfare mission and intellectual attraction through insightful anthropological, sociological, and historical investigations.1 Within the context of complex and constantly evolving sociospheres, the objective of a sustained better life for the masses is enhanced, according to Nobel Prize winner Amartya K. Sen (1983, 1988), by functionings and entitlements which cannot be implemented without a public commitment and a deep government involvement. Notwithstanding the inevitability of semantical differences, the real challenge of development does not lie in eliminating definitional disputes pertaining to the objective of development but in illuminating those pertinent instrumental relations which are relevant in each social milieu, and which, when properly activated, generate an internal development dynamic. Such a dynamic would exhibit characteristics of uniformity in countries with high degrees of similarity in human and natural resources, in institutions and in individual preferences. If advanced industrial countries converge toward similar patterns, the same cannot be observed in developing countries whose differences are more pronounced than their similarities. The task of establishing meaningful patterns of uniformity in the highly differentiated developing world is not easy, but if accomplished, it would guarantee substantial benefits in the formulation of effective strategies and policies. An area in which the search for such patterns goes on unabated is that of international trade and openness. Forces of dependence, autarky, balance of payments, international competition, vulnerability to external shocks affect the objective of developing countries to achieve some degree of balanced growth,2 and most certainly influence their patterns of trade. Although these forces are important, they are beyond the scope of this paper, which focuses on the investigation of possible trade patterns and their impact on growth. In the course of this investigation the paper is organized as follows. In the next section the role of openness is examined along with citations of empirical studies that analyze the impact of export growth and export growth volatility on the growth of GNP. In the third section the rationale of Granger causality, which constitutes the core of the paper, is presented, followed by short sections on unit root tests, cointegration tests, and volatility tests that are accompanied by a brief analysis of the respective statistical results. In the final section the conclusions of the paper are summarized.

Abstract: I. INTRODUCTION RADE has been an engine of growth for East Asia. The process began with Japan’s era of high growth based on exports in the 1960s, followed by the newly industrialized East Asian economies of the Republic of Korea, Hong Kong, Singapore, and Taiwan in the 1970s and 1980s, the ASEAN4 in the 1980s, and China in the 1990s. Economic growth in East Asia, which for decades was above that of other developing countries, was driven by an export-oriented industrialization policy. Policy usually began with industrial-policy type instruments specific to target sectors or more general export incentives, such as subsidized export credit, duty free imports for manufacturing export products, and encouraging export-oriented foreign investment. In more recent years, due to restrictions on the use of these instruments under the World Trade Organization (WTO) and changes in policy stance, more general incentive structures for reforming trade and investment regimes, appropriate exchange rates, and macroeconomic policies have been adopted (World Bank 1998). Indonesia embarked upon a strategy of export-oriented industrialization in the aftermath of the fall in oil prices in the mid-1980s. The government embarked upon a successful strategy to diversify the economic base away from oil, using both general export incentives and undertaking a substantive program of structural reform. The outcome was that the share of industrial exports in total exports increased from negligible in the early 1980s to close to 65 per cent by 1997 (including resourcebased exports, such as plywood and palm oil). Given the pattern of East Asian growth, when export growth declined a few years prior to the economic crisis of the late 1990s, there were concerns raised as to whether the East Asian countries were losing their competitiveness and whether the slowdown was cyclical or structural. Various studies since the crisis point out that the slowdown in exports and weakening of balance of payments positions increased vulnerability to the crisis, but did not cause it (see World Bank 1998, 2000; Ito 1999; Bhattacharya, Ghosh, and Jansen 1998). Furthermore, the research concluded

Abstract: HIS paper analyzes the impacts of the economic crisis on the industrial sector during the Krismon period based on the monthly time-series data (January 1996–December 1998) of the Indonesian economy. In Section I, I define the chronology of the three subperiods of Krismon. In Section II, I construct a surrogate variable of political (or noneconomic) shocks based on the disturbance term of the exchange rate equation. In Section III, I describe the changing trends of production levels of nine subsectors during the Krismon period. In Section IV, I analyze the impacts of the economic and noneconomic variables on these production indices and evaluate the damage caused by Krismon. Section V includes some simulation studies based on the estimated equations. In Section VI, I discuss the changes of the employment situation during the Krismon period. Section VII shows a tentative forecast until December 1999. Section VIII concludes the paper.

Abstract: I. THE SETTING IKE most East Asian countries, Indonesia experienced a booming economy in the early 1990s. When signs of overheating appeared, the government was forced to tighten the monetary policy. Massive capital inflows resulted in the appreciation of the exchange rate (low international interest rates contributed to the supply of “easy money” from abroad), hence reducing the country’s export competitiveness. Increased deposits and reserves due to capital flows inevitably resulted in a high growth of credit, a considerable portion of which was diverted to manufacturing investment. Indeed, one of the most dynamic growth sectors in the country has been the manufacturing sector which expanded persistently at a rate higher than that of the GDP until 1997 (Figure 1). However, credits, including those from abroad, also were increasingly allocated to the property and real estate sector, creating a bubble in the economy. Was this the cause of the 1997 crisis? Sachs, Tornell, and Velasco (1996) suggested that a combination of credit boom, real exchange rate appreciation, low foreign reserves, and massive capital flows is among the “fundamentals” that could contribute to a crisis. But this did not seem to be the case in Indonesia. The growth of credit and the size of capital flows were not excessively high (lowest among Southeast Asian countries), and even the real exchange rate was in fact depreciating. 1 As I argued elsewhere, it was the weakness of the country’s institutions, not the economic fundamentals, that played a major role in determining the country’s vulnerability that led to the crisis. 2 1 The bank’s credit growth from 1992 to 1996 was 17.8 per cent, compared to 25.9 per cent, 36.7 per cent, and 212.0 per cent in Malaysia, Thailand, and the Philippines, respectively. Using the consumer price index (CPI) as the deflator, between 1989‐93 and 1994‐96 the rupiah real exchange rate “depreciated” by 2.5 per cent, whereas the Philippines peso “appreciated” by 6.9 per cent during the same period. However, real appreciation could be detected (roughly by 6.8 per cent) when the wholesale price index (WPI) is used as the deflator. But, clearly, the combination referred to by Sachs, Tornell, and Velasco (1996) did not occur prior to the crisis.

Abstract: NDER its reform and openness policy initiated in 1978, the Peoples’ Republic of China has promoted reforms aiming at a transition from a governmentled socialist planned economy to a socialist market economy. These reforms began in the agricultural sector and in rural areas with various measures being implemented focusing on decentralization and the further development of a market economy. Decentralization in agriculture included the abolishment of collective farms under the people’s commune system, in favor of introducing the household production responsibility system. Farm household subcontracting, which accounted for no more than 1 per cent of total agricultural output in 1979, showed significant increases in 1982 as the result of government announcements that the people’s commune system was to be dismantled; and by 1984, almost all agricultural production was carried out under the household production responsibility system. The people’s communes, which had dominated agricultural production and agrarian life for some twenty years, were thoroughly dismantled in both name and substance by 1985, thus overcoming the problem of mal-equal income distribution stemming from the communal system. With the introduction of household production responsibility system, farmers were transformed from farm laborers to agricultural managers farming according to their own abilities and economic decisions. These reforms offered agrarian people greater work incentives and encouraged them to adopt new technologies that would lead to long-term growth in the agrarian economy. Between 1978 and 1984, over half of the increase in grain production

Abstract: HE APEC Food System (AFS) is an ambitious proposal originating from the APEC Business Advisory Council (ABAC 1998a). Its objective is to create a regional food system where “consumers have access to the food they desire at affordable prices; the productivity of the food sector is enhanced through regionwide availability of food-related technological advances and through efficient resource use; supply security is improved through co-operation and interdependence; [and] the vitality of rural communities is enhanced through improved infrastructural development and through access to viable non-farm employment and industry” (ABAC 1998b). The concept evolved from earlier calls for an open food system (U.S. National Center for APEC 1996). To achieve this objective, the proposal calls for a comprehensive approach to food and agriculture policy, in which four main elements can be distinguished: rural infrastructure development; dissemination of technological advances in food production; trade and investment liberalization in the food sector; and achieving food security. Within the first two elements, extensive scope is seen for capacitybuilding initiatives among APEC economies to complement the efforts of individual economy governments and multilateral agencies. The common purpose of these initiatives is to build capacity to ensure that the food sector develops in ways that contribute to the achievement of overall development objectives in APEC economies, and to ensure that liberalization contributes to those objectives through a wider spread of benefits both between and within economies. In the APEC context

Abstract: HE Asian currency crisis of 1997 and its reverberations in financial markets of developing countries around the world have intensified the debate over regulating the movement of capital, as capital flows to developing countries have grown rapidly since the early 1990s. One main feature of recent capital flows to developing countries is that private (bond and equity) flows, as opposed to official flows, have become a crucial source for financing large current account imbalances. The evolution and magnitude of capital movements have presented both opportunities and challenges to the developing countries. The degree of capital mobility has typically been assessed by the extent to which expected returns are equalized between domestic and foreign assets of the same type. The equalization of returns can be measured by simple interest arbitrage which typically focuses on the short-run relationship between capital flows and interest differentials. Capital mobility is defined as the absence of barriers to the movement of short-term capital across national boundaries. We can examine covered interest differentials for only a subset of countries with relatively well-developed forward markets, and many papers have looked at the mobility of financial capital for industrial countries. 1 Unfortunately, for a majority of countries that are liberalizing or contemplating liberalization, forward markets are either extremely thin or nonexistent, rendering covered interest parity tests irrelevant and making it difficult to judge the economic impact of capital account liberalization. Therefore, tests of uncovered interest parity conditions have been applied to examine the degree of capital mobility in most developing countries, although there is little evidence to show that uncovered interest parity conditions hold. This paper examines interest rate determination in two polar cases related to the degree of openness of the economy. If the economy under consideration is one that

Abstract: HE Indonesian economy had achieved a sustained growth in the past, and was included in the group of the “high-performing Asian-economies” in a World Bank report published in 1993 (World Bank 1993). However this growth ended in July 1997, when the Asian currency crisis which started in Thailand quickly reached other countries including Indonesia. At first the monetary aspect of the economy was largely affected as the exchange rate doubled and bad performing loans and debts accumulated until the end of 1997, but the real GDP still continued to grow. However, at the beginning of 1998, political instability worsened, and was mutually aggravated by the economic decline which eventually resulted in the downfall of the Suharto regime. Between January and June 1998, the real GDP decreased by 19 per cent, while the exchange rate skyrocketed to more than Rp 10,000 per U.S. dollar in January and June. After June 1998, economic stagnation continued up to 1999. This overall economic and social crisis was referred to as Krismon. The objective of this paper is to conduct a quantitative analysis of the impact of Krismon. Krismon was characterized by three basic features. First, the occurrence of shortterm drastic changes. Since the whole Krismon period (August 1997–December 1998) can be clearly subdivided into three subperiods, detailed analysis will be made based on this chronology. Considering the short-term character of Krismon, I prepared monthly time-series data for four years (January 1995–December 1998) and constructed a monthly econometric model based on the data for three years (January 1996–December 1998). The additional year (twelve months of 1995) was

Abstract: Providing price incentives to farmers is usually considered essential for agricultural development. Although such incentives are important, regarding price as the sole explanatory factor is far from satisfactory in understanding the complex realities of agricultural production in Africa. By analyzing the share contracts widely practiced in Ghana, this article argues that local institutions such as land tenure systems and agrarian contracts provide strong incentives and disincentives for agricultural production. Based on data derived from fieldwork in the 1990s, the study analyzes two types of share contracts and the incentive structures embedded in them. The analysis reveals that farmers' investment behavior needs to be understood in terms of both short-term incentive to increase yield and long-term incentive to strengthen land rights. The study concludes that the role of price incentives in agricultural production needs to be reconsidered by placing it in wider incentive structures embedded in local institutions.

Abstract: HANGE in age structure is one of the important factors affecting the long-term behavior of income inequality trends. Although literature on the relationship between age and income inequality has increased considerably since Paglin (1975), empirical studies regarding developing countries are still not adequate. Even though the demographic transition is rapid in these countries, longterm data on income distribution by age structure are not widely available. In this context, Sri Lanka is a special case. On the one hand, demographic transition in Sri Lanka started quite early in comparison to other low-income countries. Implementation of free health facilities reduced the death rate by one-third in the mid-1940s. Furthermore, legalization of family planning programs in the early 1970s led to a significant decline in the birth rate. In addition, expansion of educational facilities and other social development achievements also influenced the rapid demographic transition. On the other hand, data on income distribution by age groups have been available in Sri Lanka since the 1960s. However, to the best of this author’s knowledge, this paper is the first empirical illustration of the relationship between age and income inequality in Sri Lanka. Age structure affects the level and trends of income inequality in developing countries in several ways. First, the population pyramid no longer exists in many developing countries, including Sri Lanka. With the considerable decline in the birth rate during the past two decades, the bottom age proportion of the total population (infants) has become smaller than that of the child population. A declining fertility rate and less infant care has accelerated female participation in the labor force. By contrast, employment opportunities have increased at a very low speed in these countries. As a result, unemployment remains a vital issue and income inequality exists.