ERD WORKING PAPER SERIES NO.

11
ECONOMICS AND RESEARCH DEPARTMENT

The European Social Model: Lessons for Developing Countries

Assar Lindbeck

May 2002

Asian Development Bank

ERD Working Paper No. 11

THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

Assar Lindbeck

May 2002

Assar Lindbeck is a Professor of International Economics at the Institute for International Economic Studies, Stockholm University. The author acknowledges Jakob Svensson and Peter Svedberg for useful comments on a draft of the paper, and Christina Lnnblad for improving the language. This paper was delivered as a keynote speech at the Conference on Poverty, Growth, and the Role of Institutions, 10-12 October 2001, Asian Development Bank.

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ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

Asian Development Bank P.O. Box 789 0980 Manila Philippines 2002 by Asian Development Bank May 2002 ISSN 1655-5252 The views expressed in this paper are those of the author(s) and do not necessarily reflect the views or policies of the Asian Development Bank.

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Foreword
The ERD Working Paper Series is a forum for ongoing and recently completed research and policy studies undertaken in the Asian Development Bank or on its behalf. The Series is a quick-disseminating, informal publication meant to stimulate discussion and elicit feedback. Papers published under this Series could subsequently be revised for publication as articles in professional journals or chapters in books.

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ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

Contents
Abstract I. II. III. IV. V. VI. General Lessons Childhood Income and Job Security during Working Age Sick-pay Insurance and Health Care Pensions and Old Age Care Conclusion References vii 1 4 5 7 9 11 12

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Abstract
Developing countries, in particular the least developed ones, probably have more to learn from social policies in Europe during the early 20th century than from the elaborate welfare-state arrangements after World War II. In addition to macroeconomic growth and stability, the main ambitions must be to fight human deprivation, including illiteracy, malnutrition, and poor access to water and sanitation; in some cases, also weak, incompetent, and/or corrupt governments. It is also important that informal systems in the fields of transfers and social services are not destroyed when developing countries embark on more formal systems in these fields in the future. The European experience also warns against the creation of social systems that are so generous that disincentives, moral hazard, and receding social norms seriously distort the national economy, including the labor market

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I. GENERAL LESSONS

n the early 20th century, many European countries still relied heavily on the family both for income protection and personal (human) services, such as child care and care for the elderly, and, to some extent, also for health care. Civil society, including so-called friendly societies, also contributed to income insurance, for instance in connection with sickness, old age, and unemployment (the latter often with the help of union-run insurance systems). Occupational pensions also played an important part for government employees. Besides this, government-created social arrangements consisted mainly of selective poverty relief (social assistance) and basic services in the fields of elementary education and health. In the late 19th and early 20th centuries, legislation was, however, also introduced for work injury compensation and basic, though quite modest (lump-sum or means-tested) pensions. In some countries, mainly on the European continent, the government was also involved in the organization of occupational pensions in the private sector, primarily in the case of large industrial firms. Comprehensive systems for income maintenancein the case of childbirth, single motherhood, unemployment, sickness, old age, etc.were not introduced in Western Europe (henceforth Europe) until the first decades after World War II, however. Secondary and tertiary mass education and comprehensive health care for the entire population were built up at about the same time. It is thus only from the 1960s and 1970s that it makes sense to talk about a welfare state in Europe. In other words, Europe was already quite rich, as compared to most contemporary developing countries, when elaborate welfare-state arrangements were created. Since welfare-state arrangements differ among European countries, talking about a common European social model is somewhat misleading. Naturally, this observation constitutes the background to the habit among scholars to classify European countries in terms of different welfare regimes. The most important difference among countries probably concerns the relative role of the state, the family, and the market for the provision of income protection and social services. Countries also differ in terms of the relative roles of universal benefits tied to citizenship, occupational benefits tied to work, and selective means-tested income support. There is also a considerable difference in the generosity of benefits and welfare services. As a result of the far-reaching social reforms after World War II, the social arrangements in Europe are today clearly more comprehensive than in other parts of the world. The achievements of these arrangements are well known: high-income security for the individual over the life cycle,

ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

considerably mitigated poverty, and ample provision of various types of social services. The weaknesses of these social arrangements are also well known today. It turned out that some of these arrangements were not very financially robust to various types of shocks, for instance, in terms of demography, productivity growth, and macroeconomic disturbances. The architects of the welfare state also neglected, or at least underestimated, undesirable behavior adjustments in response to changes in economic incentives, as a result of explicit and implicit marginal tax wedges and moral hazard in connection with various benefit systems. What, then, are the general lessons for developing countries of social policies in Europe? These countries, in particular the least developed ones, probably have more to learn from social policies in Europe during the early 20th century than from the elaborate welfare-state arrangements after World War II. The reason is, of course, that economic resources, socioeconomic structures, and informal welfare arrangements in the earlier period were more similar to the situation in todays developing countries than contemporary conditions. In most developing countries, trying to imitate contemporary welfare-state arrangements in Europe would be a serious mistake. In particular, this would be the case for transfer payments designed to provide protection against income losses for the population as a whole, since such protection is very expensive and also requires a highly developed administration. Instead, it is reasonable to give priority to the creation of an environment conducive to entrepreneurship, long-term economic growth, basic health and primary and (at least in some developing countries) secondary educationas was the case in Europe a century ago. The fine tuning of welfare-state arrangements in Europe today are often far from what is needed in developing countries. We have also learned how important macroeconomic stability is for social conditions. In addition to macroeconomic growth and stability, the main ambitions must be to fight human deprivation, including illiteracy, malnutrition, poor access to water and sanitation, and, in some cases, also weak, incompetent, and/or corrupt governments. It is also important to look at social policies in a broad context, and then identify the interaction among different types of economic and social variables. Myrdal (1944, appendix 3) often emphasized processes of cumulative causation, with vicious circles among various povertycreating forces: malnutrition damaging health, which in turn results in social exclusion and reduces the possibilities of acquiring education, which further lowers productivity and political influence, which goes back to square one by exacerbating malnutrition and social exclusion, etc. Dynamic processes of this type are well understood today among professional observers of poverty in developing countries. It is equally important to understand such processes when we try to turn vicious circles into virtuous ones. There are, of course, other important similarities among developing countries than their poverty. Most of these countries are also rural, and they have a young population. It is, however, also important to emphasize their differences in terms of socioeconomic conditions, administrative capacities, the role of informal welfare arrangements and economic and social policies. Presumably, the most important difference is the level of development and the degree of modernization which, to a considerable extent, is a result of the governments past emphasis on, or neglect of, long-term

Section I General Lessons

economic growth. For instance, governments and ethnic and social groups in some developing countries, not least in Africa, have clearly been more engaged in power struggles and rent seeking than in growth enhancing policies. In several South East Asian countries, by contrast, it is fair to say that concern for economic growth has indeed dominated, also over issues of income security. As we know, this has been reflected in a heavy emphasis on capital formation. Some of these countries have, however, also succeeded in combining fast economic growth with a fairly even distribution of income and wealth, thanks to early land reform and widespread elementary education. The emphasis on economic growth also shows up in the composition of infrastructure investment, which has been heavily concentrated on production-oriented structures such as harbors and roads and railways, rather than facilities directly servicing households, such as housing, sanitation and the environment in cities and the countryside. This emphasis on growth, of course, reflects an understanding among policymakers that mass poverty can never be replaced by mass affluence without sustained economic growth during many decades. This said, we should not forget that some social arrangements, not just spending on primary education, might be conducive to long-term economic growth, the most important examples perhaps being policies improving the nutrition status and the general health conditions of the poor, in particular children. Safety nets and systems for income protection may also, up to a point, be conducive to economic efficiency, since they may enhance political and social stability (Alesina and Rodrik 1994). But, in particular, we have learned over the years that highly selective social policies can make a big difference in the living conditions among the poorest sections of a society, also at a given level of per capita GDP (Sen 1983). I argued above that it is mainly the European experience of social policies before World War II, and even before World War I, that should be of interest for social policies in todays developing countries. For the more affluent ones, however, there are also lessons to be learned from the contemporary experience of social policies in developed countries. For other developing countries, the European experience after World War II is probably of interest mainly for contemporary discussions of social policies far ahead in the future. The latter observation is of some importance since it often takes a long time before social policy arrangements are in place and functioning properly. An extreme example is funded social insurance systems, including so-called provident funds la Malaysia and Singapore, since such systems mature very slowly. However, the most important message of the paper for developing countries is probably to avoid destroying existing informal systems. Empirical research suggests that these risks are real (Townsend 1994, Udry 1994). I will organize my discussion as a sightseeing tour in the welfare landscape, following the individual from the womb (and hence not just from the cradle) to the tomb.1

For a more detailed account of the role of welfare state arrangements over the individuals life cycle, though without discussion of the lessons for developing countries, see Lindbeck (2002).

ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

II. CHILDHOOD
Before World War II, the family and other relatives were in charge of most child care in Europe, though high- and middle-class families also hired helpers (usually girls) in the market. The main example of government intervention was mandatory and subsidized primary education. After World War II, three additional government interventions were launched, or greatly expanded: prenatal care, income transfers (or tax deductions) to families with children and, in some countries, also subsidized child care outside the family either in institutions (kindergarten) or in the homes of others (family daycare). It is generally agreed that the sharp drop in birth rates during the last two decades threatens the financial viability of various welfare-state arrangements in the long run. An obvious policy response would be to stimulate child bearing by redistributing income to families with children, in particular those with many children. Somewhat surprisingly, this has, so far, not occurred to any large extent, perhaps because families with children are today a highly heterogeneous minority among voters. There are, however, at least two arguments for more interventionist policy measures in the case of families with children. First, there is a second-best argument to subsidize child care outside the family, because of the existence of distortionary taxes favoring tax-free household work at the expense of taxed work in the labor market. Indeed, government policies in the Nordic countries have recently followed this second-best route through strong subsidies of child care outside the family, which is one important explanation for the high labor force participation of women in these countries. The other argument for government intervention in the lives of families with small children is, of course, that schooling has important implications for economic efficiency and the future distribution of factor income. It is controversial whether the same argument is relevant for child care of preschool children. In the case of poor families with little education, in particular families with severe social problems, it is, however, widely believed that child care outside the family enhances human capital formation and hence the future factor income of such children. This, of course, is the traditional head-start argument. Is any of this relevant for developing countries? The fertility problem is, of course, usually the reverse of the European one; about 40 per cent of the population in many developing countries are children. It is, however, hazardous (to say the least) to use this observation as an argument for turning the policy recommendation for Europe upside down for developing countries, hence recommending redistributions of income to the disadvantage of families with (many) children! We probably have to rely on traditional birth control policies and compulsory education to convince families in developing countries to restrict their number of children. As in Europe before World War II, it is natural to expect that child care in developing countries, for a long time to come, will be pursued by the family and other relativescombined with privately hired helpers in the case of high- and middle-class families. The most urgent policy

Section III Income and Job Security during Working Age

interventions in child raising in developing countries must be improved nutrition, fights against infective diseases for pregnant woman and small children, and primary education. The relevant methods are commonplace: information about high-nutrition food intake, subsidies of such food for the poorest section of the population, obstetric care, clean water, sanitation, immunization, and subsidized compulsory primary education. Indeed, studies in medicine and bio-demography have shown the importance of these factors for the physical and intellectual development of children (Behrman 1993, Scrimshaw 1996, United Nations 1997). In particular, the interaction between infectious diseases and malnutrition for children has turned out to be highly damaging; deficiencies in these respects are even transmitted to grandchildren. Usually, such policies are not very expensive as compared to many other types of government spending, for example infrastructure investment and military spending. It is also an area where technical and economic assistance from the outside world may be particularly useful. The head-start argument for child care outside the biological family is probably relevant mainly for orphans and street children in developing countries. What about education? In the poorest developing countries, there are both efficiency and distributional reasons to concentrate educational resources on primary schooling, as was the case in Europe during the first decades of the 20th century. There is, however, also an emerging consensus that a number of developing countries, for instance in Southeast Asia and Latin America, have reached a level of development where it is appropriate to allocate more resources to secondary and tertiary education. European experiences during the 20th century suggest that it then makes sense to put a strong emphasis on a combination of theoretical and vocational trainingalong the lines of the apprenticeship systems in Austria, Germany, and Switzerland. These countries have been successful both in creating a skillful labor force, at least in manufacturing, and in keeping down the level of youth unemployment.

III. INCOME AND JOB SECURITY DURING WORKING AGE

Only very few policy interventions directly designed to enhance income security and job security existed in Europe before the 1930s; modest unemployment benefits and limited public works programs during depressions being the main exceptions. Two reasonable explanations are perhaps that the main beneficiaries of such policies had little political power and that macroeconomic theories for rationalizing such policies did not exist before the Keynesian revolution. By contrast, macroeconomic policies have dominated the political agenda in Europe after World War II. Such policies were also quite successful for a while in the sense that the macroeconomic performance in Europe was excellent from the economic recovery during the early 1950s to the mid-1970s. The subsequent situation may be characterized as a continuation of good income security combined with dismal employment performance and hence, deteriorating job security for part of the labor force. An appropriate policy package to improve employment performance would have to include not only measures strengthening the attractiveness of outsiders in the labor market and

ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

activating their job search, but also measures reducing the market powers of insiders (Lindbeck 1996). What are the lessons, if any, for developing countries from the experience of employment policies and income protection in Europe? In most developing countries, unemployment benefits hardly exist, simply because some 60-80 percent of the population are in informal sectors (largely agriculture). In some of the more affluent developing countries, certain unemployment benefits do exist, but these are usually neither comprehensive nor generous. In some of the most advanced developing countries, including some countries in East Asia, there is, however, a quite detailed labor market legislation, including both minimum wages and job security legislation. But the implementation of the laws is usually weak or even nonexistent, which is, of course, a disadvantage for employees who would keep their jobs also with stricter implementation. However, poor implementation is an advantage for workers who would not have been hired if minimum wages and job security legislation had been strictly enforced. As a result of all this, European-type insider-outsider division has largely been avoided in developing countries, and highly persistent unemployment after negative macroeconomic shocks do not seem to be prevalent. There is, instead, often considerable segmentation between privileged employees in the public sector, and in some cases also in large firms, on the one hand, and less privileged employees in smaller firms, on the other hand. Moreover, some of the more affluent developing countries seem to be strongly exposed to negative macroeconomic shocks. This problem can probably be mitigated to some extent by floating exchange rates or, in some case, by membership in a large monetary union where the countrys trade is concentrated. Another macroeconomic problem is that both financial institutions and production firms have often neglected their balance sheets, which appears in low equity capital and much short-term borrowing (often also in the form of uncovered loans in foreign currencies). I understand this to have been an important factor behind the financial crisis in East Asia in the late 1990s. Tougher authorities in the field of financial inspection are thus called for. In view of the severe social problems in connection with recurring macroeconomic crises in developing countries, the first, and perhaps most important, line of defense for job and income security must be good macroeconomic institutions, well-consolidated firms, and a reasonably good macroeconomic policy, including an appropriate exchange rate system. Sooner or later, the population in developing countries will certainly demand a second line of defense, in the form of income protection. It is well known that systems of unemployment insurance do not easily spontaneously emerge via voluntary market transactions due to problems of adverse selection. Either the state or unions must intervene to create comprehensive unemployment benefit systems. It is then, of course, important to realize that the generosity and the duration for the benefits must be kept within certain bounds to mitigate moral hazard problems. In countries with a particularly low per capita income and quite a small formal production sector, ethical considerations probably point to a safety net solution, rather than comprehensive unemployment insurance, designed to provide income protection in proportion to previous income.

Section IV Sick-pay Insurance and Health Care

The purpose would be to secure elementary entitlements such as food, shelter, clothing, and basic health. Such safety nets could, of course, operate by quite different methods: public work programs; subsidized work in the private sector for unemployed workers; needs-based cash transfers (social assistance or welfare) to poor people in general; selective transfers in kind (food programs such as food stamps); or subsidies to basic consumption. Administrative feasibility, including the precision of targeting, is presumably a crucial aspect in the choice of method. The administrative difficulties in running such programs in developing countries are accentuated by the problem of knowing when the family is able and willing to provide income security to its members and when this is not the case. There may be some experiences from Southern Europe, for example Italy, on how to handle, or not handle, safety nets in societies with weak government administration and frequent cohabitation of parents and adult children. Moreover, considering the dominating role of agriculture in most developing countries, crop insurance programs are often more important than unemployment insurance. Local, so-called micro- and area-based, protection for small farmers is another example of income protection programs that should perhaps be relied on to a larger extent today and in the near future.

IV. SICK-PAY INSURANCE AND HEALTH CARE

In Europe before World War II, personal savings, support from relatives and friends, and individual insurance schemes dominated as methods for mitigating economic setbacks in connection with health problems. Mandatory sick-pay insurance, usually administrated by government agencies, is basically a post World War II phenomenon. Since these systems are quite generous today, with replacement rates often in the interval of 70-100 percent, governments in Europe have no doubt succeeded in reallocating income to periods when the individual is temporarily sick, and hence to protect consumption during such periods. In a considerable part of Europe, sick-pay benefits, like unemployment benefits, are, however, tied to previous earnings, which favors individuals with stable employment. This means that the insider-outsider division of the labor market is transmitted to periods of bad health. In several European countries, the sick-pay insurance systems have recently run into serious financial difficulties. One reason is moral hazard, for instance, when an individual calls sick when feeling tired on a Monday morning. The consequences of moral hazard may be accentuated by receding social norms against exploiting the systems, when individuals observe that others do this. To the extent that these factors explain the rising costs of sick-pay insurance, more waiting days, coinsurance, and stricter administration of the benefit system would be rational policy responses. In some countries, including Sweden, higher costs for sick-pay insurance are, however, more related to long-term than to short-term sick leave. Double work by women is probably a reason, since they still do the bulk of household work, including child care in the home, simultaneously with work in the labor market. In this sense, women have paid a high psychological

ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

price for their increased labor market participation. There is also some speculation in the general discussion to the effect that reorganization of work, with increased requirements of efficiency and individual responsibility, has contributed to the stress at work. If these are important explanations, the problems might be mitigated both by improvements in the work environment and by a greater responsibility for household work, including child care, among men. The first may be achieved by experience-rated insurance fees for firms (higher fees for firms with many sick days). It is more difficult to design policies that shift household work from women to men, since this would require that the government intervene in the lives of families. Such policies, however, already exist to some extent in Denmark and Sweden, since men are offered nontransferable rights to stay at home to take care of small children, without much loss of income. What about developing countries? In most of these, sick leave is basically financed as in Europe during the first decades of the 20th century, i.e., via relatives and civil society. In countries with more formal systems of health insurance, i.e., mainly the most affluent among developing countries, these systems are usually highly fragmented, with separate arrangements for different industries, professions and firms. If more elaborate sick-pay insurances are created in developing countries in the future, the European experience illustrates the importance of watching out for moral hazard and changes in social norms. For that reason, it is important to keep the generosity of the system within bounds, and make the administrative controls tight, not least to prevent physicians from being overly generous in certifying the needs for sick leave. What, then, is the experience of health care services in Europe? In general terms, the basic problem is how to combine insurance, incentives, and freedom of choice. All health care systems are today exposed to serious cost problems, since the third party pays. Insurance schemes, in particular when based on cost-plus financing, tend to generate particularly rapid increases in costs, which is strikingly illustrated by the experience in Germany and the United States. Canada has succeeded better in containing costs in its health care insurance systems by relying on fixed budgets for health providers and price control of services. Tax-financed health services of the UK National Health Service (NHS) type have typically been better at containing health care costs. But this has been achieved by strict rationing, i.e., queues and waiting lists (which also is a problem in Canada), and high stress levels at work for the personnel. Are there any lessons for developing countries from health care in developed countries? Most well informed observers probably agree that it makes sense for developing countries to emphasize fights against infectious diseases and malnutrition, not least for pregnant women and small children. This may mean that comprehensive treatments of heart disease, cancer, and other ailments characteristic of a rich and aging population, would have to be postponed. Concretely, this means information and subsidies in the field of sanitation and primary health care and probably also information about the importance of a healthy life style, including less smoking. The surveillance of public and private health care units, with very uneven qualities, is also of potential importance. In a somewhat longer perspective, there are also strong cases for mandatory health

Section V Pensions and Old-age Care

insurance for catastrophic health care, co-payments, and the mobilization of more resources for health care in the private sector. In many countries, it is also important to increase the salaries of doctors and nurses. Apart from this, it is important to allow and stimulate experimentation, which requires considerable freedom of entry of nongovernment health providersfor nonprofit as well as profit organizations. I then assume that it is better to allow decentralized experimentation, rather than keep existing systems intact or, as often occurs, have the government conduct full scale experiments for a whole country. It is also important to avoid destroying whatever nongovernment networks exist via families and civil society.2

V. PENSIONS AND OLD-AGE CARE

While mandatory pension systems in Europe have been instrumental for providing income security for the elderly, governments have played a much more modest role in the field of care for the elderly. As we know, both fields encounter serious problems today. To the extent that contemporary, and projected future, financial problems of the pension systems are caused by low birth rates in the past, conceivable remedies would be to boost nativity (with considerable time lag before the size of the labor force is influenced) and encourage the immigration of young individuals of working age. Unfortunately, it is not obvious that governments can do much about birth rates (except perhaps provide good child care outside the family), and there may be social limits to immigration because of the risks of ethnical tensions in the countries of immigration. To the extent that financial problems for pension systems are related to a higher longevity of individuals after retirement, raising the statutory pension age and removing subsidies to early retirement are instead natural remedies. But to avoid heavy unemployment among the elderly in connection with later retirement, it is also important to allow greater flexibility in relative wages (for workers of different ages) and increase the possibilities for retirees to individually choose the length of their work week. It is today also increasingly understood in Europe that the pay-as-you-go (PAYGO) pension systems create disincentive problems for work via implicit tax wedges. The reason is, of course, that the link between the contributions and the subsequent pension benefits for the individual is usually quite weak. An obvious way of mitigating this incentive problem is to tighten the link, hence making the pension systems more actuarial, or quasi-actuarial (since the return on mandatory pension saving would be lower than the return in financial markets). There is also a case for a partial shift to a funded pension system. The individual then would be able to enjoy a more diversified portfolio of pension claims than in either a pure PAYGO system, where the (risky) return depends on the growth rate of the tax base, or a pure funded system where the (risky) return depends on

The role of such networks in developing countries is still an under-researched field.

ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

developments in financial markets. The reason is, of course, that these two types of returns are not fully correlated, in particular if the pension funds invest in international capital markets. What is the relevance of all this for the financing of retirement in developing countries? In most such countries, informal systems, in particular via relatives, are likely to dominate for a long time to come. Sooner or later, there will, however, be a strong ethical case for government intervention to mitigate poverty among the elderlyan application of the safety net idea to the retirement period. A basic pension in the form of a lump sum payment, equal for all elderly, or means-tested pension benefits, are then obvious alternatives. This corresponds to the World Banks (1993) recommendation for a universal first-tier pension. An additional advantage of such a system, in principle, is that it is rather equitable if financed by tax payments that increase with income. But in many developing countries, only a few percent of the population pay income taxes, or can be exposed to payroll taxes, which, of course, means that the financing would be a serious administrative obstacle. In the long run, the expanding middle class will, however, hardly be satisfied with either a basic pension or means-tested pension benefits. This group is likely to ask for income protection in some proportion to previous income, as in todays developed countries, partly in response to a gradually reduced importance of transfers within families. As we know, some developing countries have already started to build up mandatory pension systems of this type: funded systems in Chile and Malaysia and some other countries in Latin American; while Korea, Philippines, and Thailand have chosen social security systems. Advocates of mandatory, funded pension systems in developed countries have often referred to the importance of boosting aggregate national saving, which is easiest if a funded system is created from scratch. While the argument for such a boost may be important for some developing countries, it hardly has much strength in developing countries with high national saving rates, such as some countries in East Asia. In the future, when comprehensive pension systems probably will exist in todays developing countries, the same financial problems as in todays developed countries are likely to occur. Falling fertility and increased longevity seem to be inevitable developments in the modern world, and even the fastest growing countries will sooner or later experience slower productivity growth. In the few developing countries where formal pension systems already exist, the pension age is usually quite low (relative to life expectancy). Thus, there is great room for defending, or improving, the financial position of these systems by raising the retirement age, for instance, from 55 to 67 or even 70. Some developing countries may also find it easier than many countries in Europe to accommodate the elderly in the labor market, since they have had arrangements for work for the elderly for a long time, and since relative wages are often more flexible than in Europe. It remains to be seen whether these conditions will prevail. Contemporary financial and organizational problems in the field of old-age care in developed countries are related to the demographic factors of the same type as those that have created problems for the pension system. The organizational difficulties are instead rather similar to the problems of health care: it is difficult to combine solidarity-oriented financing with production efficiency and

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Section VI Conclusion

freedom of choice. Old-age care is also hurt by Baumols Law (Baumol 1967), which explains why costs and prices tend to increase particularly fast in the case of labor intensive services like human care. Another issue concerns the freedom of choice of services for the elderly. Such freedom is, in principle, easy to bring about in the case of service in the elderlys homesshopping, cooking, cleaning etc.like in child care and care for the elderly. Service checks (vouchers) are an obvious tool. Vouchers are less useful in the case of institutionalized old-age care, since the needs for medical care vary enormously among patients. Still it would certainly be possible to offer considerable freedom of choice of service institution for the elderly. It will take some time before most developing countries encounter similar problems, not only because the population is still young, but also because the family is likely to supply care services to the elderly for a long time to come. But it may be a good idea at least to start thinking, and perhaps also experimenting, with alternative systems of care for the elderly before there is an acute need to expand formal systems in this field. In the long run, it is not likely that family members and other relatives can be relied on to service the elderly any more in todays developing countries than in Europe.

VI. CONCLUSION
The experiences of social policies during the first decades of the 20th century in Europe underline the important role of informal systems for income security and personal services at low levels of economic development. It is crucial, however, that informal systems are not destroyed when developing countries embark on more formal systems in these fields in the future. I have also emphasized that the European experience warns against the creation of social systems that are so generous that disincentives, moral hazard, and receding social norms seriously distort the national economy, including the labor market. These risks seem to be particularly important in the case of unemployment benefits, support to single mothers, sick leave, disability pensions and early retirement. If disincentives and moral hazard undermine the financial viability of governmentoperated systems, and these would therefore have to be cut back, many individuals may suddenly find themselves without both types of social systems.

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ERD Working Paper No. 11 THE EUROPEAN SOCIAL MODEL: LESSONS FOR DEVELOPING COUNTRIES

REFERENCES
Alesina, A., and D. Rodrik, 1994. Distributive Politics and Economic Growth. Quarterly Journal of Economics May:465-90. Baumol, W. J., 1967. The Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis. American Economic Review 57:415-26. Behrman, J. R., 1993. The Economic Rationale for Investing in Nutrition in Developing Countries. World Development 21:1749-71. Lindbeck, A., 1996. The West European Employment Problems. Weltwirtschaftliches Archiv December:3-31. , 2002. Improving the Performance of the European Social Model. Paper presented at a Conference at the IESE Business School, Barcelona, 27 November 2001. Myrdal, G., 1944. An American Dilemma. Carnegie Foundation, New York. Scrimshaw, N. S., 1996. Nutrition and Health from Womb to Tomb. Nutrition Today 31:55-67. Sen, A., 1983. Development: Which Way Now? The Economic Journal December:745-62. Townsend, R. M., 1994. Risk and Insurance in Village India. Econometrica 62(39):539-91. Udry, C., 1994. Risk and Insurance in Rural Credit Markets: An Empirical Investigation in Northern Nigeria. Review of Economic Studies 61:495-526. United Nations, 1997. Subcommittee on Nutrition. Geneva. World Bank, 1993. Averting the Old Age Crisis. Oxford: Oxford University Press.

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No. 1 No. 2 Capitalizing on Globalization Barry Eichengreen, January 2002 Policy-based Lending and Poverty Reduction: An Overview of Processes, Assessment and Options Richard Bolt and Manabu Fujimura January 2002 The Automotive Supply Chain: Global Trends and Asian Perspectives Francisco Veloso and Rajiv Kumar January 2002 International Competitiveness of Asian Firms: An Analytical Framework Rajiv Kumar and Doren Chadee February 2002 The International Competitiveness of Asian Economies in the Apparel Commodity Chain Gary Gereffi February 2002 Monetary and Financial Cooperation in East AsiaThe Chiang Mai Initiative and Beyond Pradumna B. Rana February 2002 No. 7 Probing Beneath Cross-national Averages: Poverty, Inequality, and Growth in the Philippines Arsenio M. Balisacan and Ernesto M. Pernia March 2002 Poverty, Growth, and Inequality in Thailand Anil B. Deolalikar April 2002 Microfinance in Northeast Thailand: Who Benefits and How Much? Brett E. Coleman April 2002 PovertyReduction and the Role of Institutions in Developing Asia Anil B. Deolalikar, Alex B. Brilliantes, Jr., Raghav Gaiha, Ernesto M. Pernia, Mary Racelis with the assistance of Marita Concepcion CastroGuevara, Liza L. Lim, Pilipinas F. Quising May 2002 The European Social Model: Lessons for Developing Countries Assar Lindbeck May 2002

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MONOGRAPH SERIES (Published in-house; Available through ADB Office of External Relations; Free of charge)
EDRC REPORT SERIES (ER)
No. 1 No. 2 ASEAN and the Asian Development Bank Seiji Naya, April 1982 Development Issues for the Developing East and Southeast Asian Countries and International Cooperation Seiji Naya and Graham Abbott, April 1982 Aid, Savings, and Growth in the Asian Region J. Malcolm Dowling and Ulrich Hiemenz, April 1982 Development-oriented Foreign Investment and the Role of ADB Kiyoshi Kojima, April 1982 The Multilateral Development Banks and the International Economys Missing Public Sector John Lewis, June 1982 Notes on External Debt of DMCs Evelyn Go, July 1982 Grant Element in Bank Loans Dal Hyun Kim, July 1982 No. 8 Shadow Exchange Rates and Standard Conversion Factors in Project Evaluation Peter Warr, September 1982 Small and Medium-Scale Manufacturing Establishments in ASEAN Countries: Perspectives and Policy Issues Mathias Bruch and Ulrich Hiemenz, January 1983 A Note on the Third Ministerial Meeting of GATT Jungsoo Lee, January 1983 Macroeconomic Forecasts for the Republic of China, Hong Kong, and Republic of Korea J.M. Dowling, January 1983 ASEAN: Economic Situation and Prospects Seiji Naya, March 1983 The Future Prospects for the Developing Countries of Asia Seiji Naya, March 1983 Energy and Structural Change in the AsiaPacific Region, Summary of the Thirteenth

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Pacific Trade and Development Conference Seiji Naya, March 1983 A Survey of Empirical Studies on Demand for Electricity with Special Emphasis on Price Elasticity of Demand Wisarn Pupphavesa, June 1983 Determinants of Paddy Production in Indonesia: 1972-1981A Simultaneous Equation Model Approach T.K. Jayaraman, June 1983 The Philippine Economy: Economic Forecasts for 1983 and 1984 J.M. Dowling, E. Go, and C.N. Castillo, June 1983 Economic Forecast for Indonesia J.M. Dowling, H.Y. Kim, Y.K. Wang, and C.N. Castillo, June 1983 Relative External Debt Situation of Asian Developing Countries: An Application of Ranking Method Jungsoo Lee, June 1983 New Evidence on Yields, Fertilizer Application, and Prices in Asian Rice Production William James and Teresita Ramirez, July 1983 Inflationary Effects of Exchange Rate Changes in Nine Asian LDCs Pradumna B. Rana and J. Malcolm Dowling, Jr., December 1983 Effects of External Shocks on the Balance of Payments, Policy Responses, and Debt Problems of Asian Developing Countries Seiji Naya, December 1983 Changing Trade Patterns and Policy Issues: The Prospects for East and Southeast Asian Developing Countries Seiji Naya and Ulrich Hiemenz, February 1984 Small-Scale Industries in Asian Economic Development: Problems and Prospects Seiji Naya, February 1984 A Study on the External Debt Indicators Applying Logit Analysis Jungsoo Lee and Clarita Barretto, February 1984 Alternatives to Institutional Credit Programs in the Agricultural Sector of Low-Income Countries Jennifer Sour, March 1984 Economic Scene in Asia and Its Special Features Kedar N. Kohli, November 1984 The Effect of Terms of Trade Changes on the Balance of Payments and Real National Income of Asian Developing Countries Jungsoo Lee and Lutgarda Labios, January 1985 Cause and Effect in the World Sugar Market: Some Empirical Findings 1951-1982 Yoshihiro Iwasaki, February 1985 Sources of Balance of Payments Problem in the 1970s: The Asian Experience Pradumna Rana, February 1985 Indias Manufactured Exports: An Analysis of Supply Sectors Ifzal Ali, February 1985 Meeting Basic Human Needs in Asian Developing Countries Jungsoo Lee and Emma Banaria, March 1985 The Impact of Foreign Capital Inflow on Investment and Economic Growth in Developing Asia Evelyn Go, May 1985 The Climate for Energy Development in the Pacific and Asian Region: Priorities and Perspectives V.V. Desai, April 1986 Impact of Appreciation of the Yen on

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Developing Member Countries of the Bank Jungsoo Lee, Pradumna Rana, and Ifzal Ali, May 1986 Smuggling and Domestic Economic Policies in Developing Countries A.H.M.N. Chowdhury, October 1986 Public Investment Criteria: Economic Internal Rate of Return and Equalizing Discount Rate Ifzal Ali, November 1986 Review of the Theory of Neoclassical Political Economy: An Application to Trade Policies M.G. Quibria, December 1986 Factors Influencing the Choice of Location: Local and Foreign Firms in the Philippines E.M. Pernia and A.N. Herrin, February 1987 A Demographic Perspective on Developing Asia and Its Relevance to the Bank E.M. Pernia, May 1987 Emerging Issues in Asia and Social Cost Benefit Analysis I. Ali, September 1988 Shifting Revealed Comparative Advantage: Experiences of Asian and Pacific Developing Countries P.B. Rana, November 1988 Agricultural Price Policy in Asia: Issues and Areas of Reforms I. Ali, November 1988 Service Trade and Asian Developing Economies M.G. Quibria, October 1989 A Review of the Economic Analysis of Power Projects in Asia and Identification of Areas of Improvement I. Ali, November 1989 Growth Perspective and Challenges for Asia: Areas for Policy Review and Research I. Ali, November 1989 An Approach to Estimating the Poverty Alleviation Impact of an Agricultural Project I. Ali, January 1990 Economic Growth Performance of Indonesia, the Philippines, and Thailand: The Human Resource Dimension E.M. Pernia, January 1990 Foreign Exchange and Fiscal Impact of a Project: A Methodological Framework for Estimation I. Ali, February 1990 Public Investment Criteria: Financial and Economic Internal Rates of Return I. Ali, April 1990 Evaluation of Water Supply Projects: An Economic Framework Arlene M. Tadle, June 1990 Interrelationship Between Shadow Prices, Project Investment, and Policy Reforms: An Analytical Framework I. Ali, November 1990 Issues in Assessing the Impact of Project and Sector Adjustment Lending I. Ali, December 1990 Some Aspects of Urbanization and the Environment in Southeast Asia Ernesto M. Pernia, January 1991 Financial Sector and Economic Development: A Survey Jungsoo Lee, September 1991 A Framework for Justifying Bank-Assisted Education Projects in Asia: A Review of the Socioeconomic Analysis and Identification of Areas of Improvement Etienne Van De Walle, February 1992 Medium-term Growth-Stabilization Relationship in Asian Developing Countries and Some Policy Considerations

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Yun-Hwan Kim, February 1993 Urbanization, Population Distribution, and Economic Development in Asia Ernesto M. Pernia, February 1993 The Need for Fiscal Consolidation in Nepal: The Results of a Simulation Filippo di Mauro and Ronald Antonio Butiong, July 1993 A Computable General Equilibrium Model of Nepal Timothy Buehrer and Filippo di Mauro, October 1993 The Role of Government in Export Expansion in the Republic of Korea: A Revisit Yun-Hwan Kim, February 1994 Rural Reforms, Structural Change, and Agricultural Growth in the Peoples Republic of China

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Bo Lin, August 1994 Incentives and Regulation for Pollution Abatement with an Application to Waste Water Treatment Sudipto Mundle, U. Shankar, and Shekhar Mehta, October 1995 Saving Transitions in Southeast Asia Frank Harrigan, February 1996 Total Factor Productivity Growth in East Asia: A Critical Survey Jesus Felipe, September 1997 Foreign Direct Investment in Pakistan: Policy Issues and Operational Implications Ashfaque H. Khan and Yun-Hwan Kim, July 1999 Fiscal Policy, Income Distribution and Growth Sailesh K. Jha, November 1999

ECONOMIC STAFF PAPERS (ES)

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International Reserves: Factors Determining Needs and Adequacy Evelyn Go, May 1981 Domestic Savings in Selected Developing Asian Countries Basil Moore, assisted by A.H.M. Nuruddin Chowdhury, September 1981 Changes in Consumption, Imports and Exports of Oil Since 1973: A Preliminary Survey of the Developing Member Countries of the Asian Development Bank Dal Hyun Kim and Graham Abbott, September 1981 By-Passed Areas, Regional Inequalities, and Development Policies in Selected Southeast Asian Countries William James, October 1981 Asian Agriculture and Economic Development William James, March 1982 Inflation in Developing Member Countries: An Analysis of Recent Trends A.H.M. Nuruddin Chowdhury and J. Malcolm Dowling, March 1982 Industrial Growth and Employment in Developing Asian Countries: Issues and Perspectives for the Coming Decade Ulrich Hiemenz, March 1982 Petrodollar Recycling 1973-1980. Part 1: Regional Adjustments and the World Economy Burnham Campbell, April 1982 Developing Asia: The Importance of Domestic Policies Economics Office Staff under the direction of Seiji Naya, May 1982 Financial Development and Household Savings: Issues in Domestic Resource Mobilization in Asian Developing Countries Wan-Soon Kim, July 1982 Industrial Development: Role of Specialized Financial Institutions Kedar N. Kohli, August 1982 Petrodollar Recycling 1973-1980. Part II: Debt Problems and an Evaluation of Suggested Remedies Burnham Campbell, September 1982 Credit Rationing, Rural Savings, and Financial Policy in Developing Countries William James, September 1982

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Small and Medium-Scale Manufacturing Establishments in ASEAN Countries: Perspectives and Policy Issues Mathias Bruch and Ulrich Hiemenz, March 1983 Income Distribution and Economic Growth in Developing Asian Countries J. Malcolm Dowling and David Soo, March 1983 Long-Run Debt-Servicing Capacity of Asian Developing Countries: An Application of Critical Interest Rate Approach Jungsoo Lee, June 1983 External Shocks, Energy Policy, and Macroeconomic Performance of Asian Developing Countries: A Policy Analysis William James, July 1983 The Impact of the Current Exchange Rate System on Trade and Inflation of Selected Developing Member Countries Pradumna Rana, September 1983 Asian Agriculture in Transition: Key Policy Issues William James, September 1983 The Transition to an Industrial Economy in Monsoon Asia Harry T. Oshima, October 1983 The Significance of Off-Farm Employment and Incomes in Post-War East Asian Growth Harry T. Oshima, January 1984 Income Distribution and Poverty in Selected Asian Countries John Malcolm Dowling, Jr., November 1984 ASEAN Economies and ASEAN Economic Cooperation Narongchai Akrasanee, November 1984 Economic Analysis of Power Projects Nitin Desai, January 1985 Exports and Economic Growth in the Asian Region Pradumna Rana, February 1985 Patterns of External Financing of DMCs E. Go, May 1985 Industrial Technology Development the Republic of Korea S.Y. Lo, July 1985 Risk Analysis and Project Selection: A Review of Practical Issues J.K. Johnson, August 1985 Rice in Indonesia: Price Policy and Comparative Advantage I. Ali, January 1986 Effects of Foreign Capital Inflows

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on Developing Countries of Asia Jungsoo Lee, Pradumna B. Rana, and Yoshihiro Iwasaki, April 1986 Economic Analysis of the Environmental Impacts of Development Projects John A. Dixon et al., EAPI, East-West Center, August 1986 Science and Technology for Development: Role of the Bank Kedar N. Kohli and Ifzal Ali, November 1986 Satellite Remote Sensing in the Asian and Pacific Region Mohan Sundara Rajan, December 1986 Changes in the Export Patterns of Asian and Pacific Developing Countries: An Empirical Overview Pradumna B. Rana, January 1987 Agricultural Price Policy in Nepal Gerald C. Nelson, March 1987 Implications of Falling Primary Commodity Prices for Agricultural Strategy in the Philippines Ifzal Ali, September 1987 Determining Irrigation Charges: A Framework Prabhakar B. Ghate, October 1987 The Role of Fertilizer Subsidies in Agricultural Production: A Review of Select Issues M.G. Quibria, October 1987 Domestic Adjustment to External Shocks in Developing Asia Jungsoo Lee, October 1987 Improving Domestic Resource Mobilization through Financial Development: Indonesia Philip Erquiaga, November 1987 Recent Trends and Issues on Foreign Direct Investment in Asian and Pacific Developing Countries P.B. Rana, March 1988 Manufactured Exports from the Philippines: A Sector Profile and an Agenda for Reform I. Ali, September 1988 A Framework for Evaluating the Economic Benefits of Power Projects I. Ali, August 1989 Promotion of Manufactured Exports in Pakistan Jungsoo Lee and Yoshihiro Iwasaki, September 1989 Education and Labor Markets in Indonesia: A Sector Survey Ernesto M. Pernia and David N. Wilson, September 1989 Industrial Technology Capabilities and Policies in Selected ADCs

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No. 48 nity

Hiroshi Kakazu, June 1990 Designing Strategies and Policies for Managing Structural Change in Asia Ifzal Ali, June 1990 The Completion of the Single European CommuMarket in 1992: A Tentative Assessment of its Impact on Asian Developing Countries J.P. Verbiest and Min Tang, June 1991 Economic Analysis of Investment in Power Ifzal Ali, June 1991 External Finance and the Role of Multilateral Financial Institutions in South Asia: Changing Patterns, Prospects, and Challenges Jungsoo Lee, November 1991 The Gender and Poverty Nexus: Issues and Policies M.G. Quibria, November 1993 The Role of the State in Economic Development: Theory, the East Asian Experience, and the Malaysian Case Jason Brown, December 1993 The Economic Benefits of Potable Water Supply Projects to Households in Developing Countries Dale Whittington and Venkateswarlu Swarna, January 1994 Growth Triangles: Conceptual Issues and Operational Problems Min Tang and Myo Thant, February 1994 The Emerging Global Trading Environment and Developing Asia Arvind Panagariya, M.G. Quibria, and Narhari Rao, July 1996 Aspects of Urban Water and Sanitation in the Context of Rapid Urbanization in Developing Asia Ernesto M. Pernia and Stella LF. Alabastro, September 1997 Challenges for Asias Trade and Environment Douglas H. Brooks, January 1998 Economic Analysis of Health Sector ProjectsA Review of Issues, Methods, and Approaches Ramesh Adhikari, Paul Gertler, and Anneli Lagman, March 1999 The Asian Crisis: An Alternate View Rajiv Kumar and Bibek Debroy, July 1999 Social Consequences of the Financial Crisis in Asia James C. Knowles, Ernesto M. Pernia, and Mary Racelis, November 1999

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OCCASIONAL PAPERS (OP)

No. 1 Poverty in the Peoples Republic of China: Recent Developments and Scope for Bank Assistance K.H. Moinuddin, November 1992 The Eastern Islands of Indonesia: An Overview of Development Needs and Potential Brien K. Parkinson, January 1993 Rural Institutional Finance in Bangladesh and Nepal: Review and Agenda for Reforms A.H.M.N. Chowdhury and Marcelia C. Garcia, November 1993 Fiscal Deficits and Current Account Imbalances of the South Pacific Countries: A Case Study of Vanuatu T.K. Jayaraman, December 1993 No. 5 No. 6 Reforms in the Transitional Economies of Asia Pradumna B. Rana, December 1993 Environmental Challenges in the Peoples Republic of China and Scope for Bank Assistance Elisabetta Capannelli and Omkar L. Shrestha, December 1993 Sustainable Development Environment and Poverty Nexus K.F. Jalal, December 1993 Intermediate Services and Economic Development: The Malaysian Example Sutanu Behuria and Rahul Khullar, May 1994 Interest Rate Deregulation: A Brief Survey of the Policy Issues and the Asian Experience Carlos J. Glower, July 1994

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Some Aspects of Land Administration in Indonesia: Implications for Bank Operations Sutanu Behuria, July 1994 Demographic and Socioeconomic Determinants of Contraceptive Use among Urban Women in the Melanesian Countries in the South Pacific: A Case Study of Port Vila Town in Vanuatu T.K. Jayaraman, February 1995 Managing Development through Institution Building Hilton L. Root, October 1995 Growth, Structural Change, and Optimal Poverty Interventions Shiladitya Chatterjee, November 1995 Private Investment and Macroeconomic Environment in the South Pacific Island Countries: A Cross-Country Analysis T.K. Jayaraman, October 1996 The Rural-Urban Transition in Viet Nam: Some Selected Issues Sudipto Mundle and Brian Van Arkadie, October 1997 A New Approach to Setting the Future Transport Agenda

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No. 22

Roger Allport, Geoff Key, and Charles Melhuish June 1998 Adjustment and Distribution: The Indian Experience Sudipto Mundle and V.B. Tulasidhar, June 1998 Tax Reforms in Viet Nam: A Selective Analysis Sudipto Mundle, December 1998 Surges and Volatility of Private Capital Flows to Asian Developing Countries: Implications for Multilateral Development Banks Pradumna B. Rana, December 1998 The Millennium Round and the Asian Economies: An Introduction Dilip K. Das, October 1999 Occupational Segregation and the Gender Earnings Gap Joseph E. Zveglich, Jr. and Yana van der Meulen Rodgers, December 1999 Information Technology: Next Locomotive of Growth? Dilip K. Das, June 2000

STATISTICAL REPORT SERIES (SR)

No. 1 Estimates of the Total External Debt of the Developing Member Countries of ADB: 1981-1983 I.P. David, September 1984 Multivariate Statistical and Graphical Classification Techniques Applied to the Problem of Grouping Countries I.P. David and D.S. Maligalig, March 1985 Gross National Product (GNP) Measurement Issues in South Pacific Developing Member Countries of ADB S.G. Tiwari, September 1985 Estimates of Comparable Savings in Selected DMCs Hananto Sigit, December 1985 Keeping Sample Survey Design and Analysis Simple I.P. David, December 1985 External Debt Situation in Asian Developing Countries I.P. David and Jungsoo Lee, March 1986 Study of GNP Measurement Issues in the South Pacific Developing Member Countries. Part I: Existing National Accounts of SPDMCsAnalysis of Methodology and Application of SNA Concepts P. Hodgkinson, October 1986 Study of GNP Measurement Issues in the South Pacific Developing Member Countries. Part II: Factors Affecting Intercountry Comparability of Per Capita GNP P. Hodgkinson, October 1986 Survey of the External Debt Situation in Asian Developing Countries, 1985 Jungsoo Lee and I.P. David, April 1987 A Survey of the External Debt Situation in Asian Developing Countries, 1986 Jungsoo Lee and I.P. David, April 1988 Changing Pattern of Financial Flows to Asian and Pacific Developing Countries Jungsoo Lee and I.P. David, March 1989 The State of Agricultural Statistics in Southeast Asia I.P. David, March 1989 A Survey of the External Debt Situation in Asian and Pacific Developing Countries: 1987-1988 Jungsoo Lee and I.P. David, July 1989 A Survey of the External Debt Situation in Asian and Pacific Developing Countries: 1988-1989 Jungsoo Lee, May 1990 A Survey of the External Debt Situation in Asian and Pacific Developing Countrie s: 1989-1992 Min Tang, June 1991 Recent Trends and Prospects of External Debt Situation and Financial Flows to Asian and Pacific Developing Countries Min Tang and Aludia Pardo, June 1992 Purchasing Power Parity in Asian Developing Countries: A Co-Integration Test Min Tang and Ronald Q. Butiong, April 1994 Capital Flows to Asian and Pacific Developing Countries: Recent Trends and Future Prospects Min Tang and James Villafuerte, October 1995

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SPECIAL STUDIES, COMPLIMENTARY (SSC) (Published in-house; Available through ADB Office of External Relations; Free of Charge)
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Improving Domestic Resource Mobilization Through Financial Development: Overview September 1985 Improving Domestic Resource Mobilization Through Financial Development: Bangladesh July 1986 Improving Domestic Resource Mobilization Through Financial Development: Sri Lanka April 1987 Improving Domestic Resource Mobilization Through Financial Development: India December 1987 Financing Public Sector Development Expenditure in Selected Countries: Overview January 1988 Study of Selected Industries: A Brief Report April 1988 Financing Public Sector Development Expenditure in Selected Countries: Bangladesh June 1988 Financing Public Sector Development Expenditure in Selected Countries: India June 1988 Financing Public Sector Development Expenditure in Selected Countries: Indonesia June 1988 Financing Public Sector Development Expenditure in Selected Countries: Nepal June 1988 Financing Public Sector Development Expenditure in Selected Countries: Pakistan June 1988 Financing Public Sector Development Expenditure in Selected Countries: Philippines June 1988 Financing Public Sector Development Expenditure in Selected Countries: Thailand June 1988 Towards Regional Cooperation in South Asia: ADB/EWC Symposium on Regional Cooperation in South Asia February 1988 Evaluating Rice Market Intervention Policies: Some Asian Examples April 1988 Improving Domestic Resource Mobilization Through Financial Development: Nepal November 1988 Foreign Trade Barriers and Export Growth September 1988 18. The Role of Small and Medium-Scale Industries in the Industrial Development of the Philippines April 1989 19. The Role of Small and Medium-Scale Manufacturing Industries in Industrial Development: The Experience of Selected Asian Countries January 1990 20. National Accounts of Vanuatu, 1983-1987 January 1990 21. National Accounts of Western Samoa, 1984-1986 February 1990 22. Human Resource Policy and Economic Development: Selected Country Studies July 1990 23. Export Finance: Some Asian Examples September 1990 24. National Accounts of the Cook Islands, 1982-1986 September 1990 25. Framework for the Economic and Financial Appraisal of Urban Development Sector Projects January 1994 26. Framework and Criteria for the Appraisal and Socioeconomic Justification of Education Projects January 1994 27. Guidelines for the Economic Analysis of Projects February 1997 28. Investing in Asia 1997 29. Guidelines for the Economic Analysis of Telecommunication Projects 1998 30. Guidelines for the Economic Analysis of Water Supply Projects 1999

15. 16. 17.

SPECIAL STUDIES, ADB (SS, ADB) (Published in-house; Available commercially through ADB Office of External Relations)
1. Rural Poverty in Developing Asia Edited by M.G. Quibria Vol. 1: Bangladesh, India, and Sri Lanka, 1994 $35.00 (paperback) Vol. 2: Indonesia, Republic of Korea, Philippines, and Thailand, 1996 $35.00 (paperback) External Shocks and Policy Adjustments: Lessons from the Gulf Crisis Edited by Naved Hamid and Shahid N. Zahid, 1995 $15.00 (paperback) Gender Indicators of Developing Asian and Pacific Countries Asian Development Bank, 1993 $25.00 (paperback) Urban Poverty in Asia: A Survey of Critical Issues Edited by Ernesto Pernia, 1994 $20.00 (paperback) Indonesia-Malaysia-Thailand Growth Triangle: Theory to Practice Edited by Myo Thant and Min Tang, 1996 $15.00 (paperback) Emerging Asia: Changes and Challenges Asian Development Bank, 1997 $30.00 (paperback) Asian Exports Edited by Dilip Das, 1999 $35.00 (paperback) $55.00 (hardbound) Mortgage-Backed Securities Markets in Asia Edited by S.Ghon Rhee & Yutaka Shimomoto, 1999 $35.00 (paperback) 9. Corporate Governance and Finance in East Asia: A Study of Indonesia, Republic of Korea, Malaysia, Philippines and Thailand J. Zhuang, David Edwards, D. Webb, & Ma. Virginita Capulong Vol. 1, 2000 $10.00 (paperback) Vol. 2, 2001 $15.00 (paperback) 10. Financial Management and Governance Issues Asian Development Bank, 2000 Cambodia $10.00 (paperback) Peoples Republic of China $10.00 (paperback) Mongolia $10.00 (paperback) Pakistan $10.00 (paperback) Papua New Guinea $10.00 (paperback) Uzbekistan $10.00 (paperback) Viet Nam $10.00 (paperback) Selected Developing Member Countries $10.00 (paperback) 11. Guidelines for the Economic Analysis of Projects Asian Development Bank, 1997 $10.00 (paperback) 12. Handbook for the Economic Analysis of Water Supply Projects Asian Development Bank, 1999 $15.00 (hardbound) 13. Handbook for the Economic Analysis of Health Sector Projects Asian Development Bank, 2000 $10.00 (paperback)

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Informal Finance: Some Findings from Asia Prabhu Ghate et. al., 1992 $15.00 (paperback) Mongolia: A Centrally Planned Economy in Transition Asian Development Bank, 1992 $15.00 (paperback) Rural Poverty in Asia, Priority Issues and Policy Options Edited by M.G. Quibria, 1994 $25.00 (paperback) Growth Triangles in Asia: A New Approach to Regional Economic Cooperation Edited by Myo Thant, Min Tang, and Hiroshi Kakazu 1st ed., 1994 $36.00 (hardbound) Revised ed., 1998 $55.00 (hardbound) Urban Poverty in Asia: A Survey of Critical Issues Edited by Ernesto Pernia, 1994 $18.00 (paperback) Critical Issues in Asian Development: Theories, Experiences, and Policies Edited by M.G. Quibria, 1995 $15.00 (paperback) $36.00 (hardbound) From Centrally Planned to Market Economies: The Asian Approach Edited by Pradumna B. Rana and Naved Hamid, 1995 Vol. 1: Overview $36.00 (hardbound) Vol. 2: Peoples Republic of China and Mongolia $50.00 (hardbound)

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