For sustained growth, a developing economy must provide productive employment opportunities in nonagricultural sectors. As the economy grows, employment shifts from the agricultural sector to industrial and service sectors. The move away from agriculture happens because of the decline in the...

A recent but rapidly growing empirical literature focuses on the relationship between public and private capital. But for the most part, it ignores the heterogeneity of public investment. In many countries, especially in the developing world, public investment includes not only basic...

The authors developed a framework for analyzing the relationship between domestic financial markets and the effects of trade liberalization and applied it to Sri Lanka's experience between 1977 and 1987. They found that the domestic financial market significantly affects the outcome of trade...

If the marginal gains from investment in physical capital depend positively on knowledge, but a household cannot hire skilled labor to compensate for low skills, then even if it has access to credit, the household will achieve lower returns than an educated household. If, as is common, the...

The increased volatility of exchange rates, interest rates, and primary commodity prices over the past two decades has highlighted the importance for developing countries of managing these risks. Asset and liability management - a risk-management technique to systematically control price risks...

For the evaluation of macroeconomic policies Colombian authorities rely heavily, if not exclusively, on the operational framework known as the Financial Programming Model developed by the International Monetary Fund in the 1950s. Based on this static framework, the formulation of fiscal policy...

Many agricultural regions in the developing world are subject to severe droughts, which can have devastating effects on household incomes and consumption, especially for the poor. To protect consumption, rural households engage in many different risk management strategies - some mainly...

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease the financing constraints of host country firms. But if incoming foreign investors borrow heavily from domestic banks, foreign direct investment...

The causal link between finance and growth is one of the most striking empirical macroeconomic relationships uncovered in the past decade. As this branch of the literature matures, the focus shifts from growth to other aspects of economic prosperity, and from financial depth to multidimensional...

The remarkable surge in private capital flow to developing countries since 1990 has greatly facilitated their rapid growth, at a time when OECD countries have been in, or passed through, recession. The importance of these flows to the current account of severallarge developing countries has...