Financial systems reform and corporate reform are deeply intertwined and thus are best addressed simultaneously and comprehensively. Indonesia is seeking to do this by developing rules, institutions, and mechanisms to achieve good corporate governance, while working to build an effectively functioning financial system that facilitates good corporate governance. This paper explores this quest in...

A windfall of natural resource revenue (or foreign aid) faces government with choices of how to manage public debt, investment, and the distribution of funds for consumption, particularly if the windfall is both anticipated and temporary. We show that the permanent income hypothesis prescription of an ever-lasting increase in consumption financed by borrowing ahead of the windfall and then accu...

This paper revisits the international portfolio diversiÞcation using recent high-frequency international stock return series based on the MSCI index funds. Despite considerable increase in foreign stock holdings by the U.S investor from 1% to 15% in the last 25 years, the traditional mean-variance approach still implies the presence of home bias. For the purpose of investigating the desirable p...

R ECENT studies (Borensztein and Ostry, 1996; Chow, 1993; and World Bank, 1997) document that the rapid growth in China since the early 1980s is accompanied by productivity increase in labour and capital. Evidence on the improvement in industrial productivity of state and collective sectors (Chen et al., 1988a and 1988b, Jefferson, 1989; and Jefferson, Rawski and Zheng, 1992 and 1994) was contr...

A large body of literature has arisen in economics and political science analyzing the apparent “resource curse”—the tendency of countries with high levels of natural resources to exhibit worse economic and political outcomes. The author examines the purported causal mechanisms underlying this “curse” and shows that they all center on the revenue that these resources generate for the government...

A growing and deepening divide has opened up between transition countries where economic development has taken off and those caught in a vicious cycle of institutional backwardness and macroeconomic instability. This “Great Divide” is visible in almost every measure of economic performance: GDP growth, investment, government finances, growth in inequality, general institutional infrastructure a...

Remittance inflows represent one of the most significant sources of foreign funding for most developing countries. These funds have also proven to be one of the most stable sources of external financing for developing countries during the past few decades and in the period of the last global crisis. They are much less responsive to economic cycles and economic shocks than foreign direct investm...