Financial systems and development

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spectively. Since 1987 data are not available for for total current revenue and GNP in current dolmore than half the countries, by weighting, 1986 lars. Since 1987 data are not available for more data are used for the summary measures in Tables than half the countries, by weighting, 1986 data 11 and 12. are used for the summary measures for Tables 11 and 12. Table 12. Central government current revenue Table 13. Money and interest rates Information on data sources and comparability is The data on monetary holdings are based on the given in the note to Table 11. Current revenue by IMF's International Financial Statistics (IFS). Monesource is expressed as a percentage of total current tary holdings, broadly defined, comprise the monerevenue, which is the sum of tax revenue and non- tary and quasi-monetary liabilities of a country's tax revenue and is calculated from national curren- financial institutions to residents other than the cies. central government. For most countries, monetary Tax revenue comprises compulsory, unrequited, holdings are the sum of money (IFS line 34) and nonrepayable receipts for public purposes. It in- quasi-money (IFS line 35). Money comprises the cludes interest collected on tax arrears and penal- economy's means of payment: currency outside ties collected on nonpayment or late payment of banks and demand deposits. Quasi-money comtaxes and is shown net of refunds and other correc- prises time and savings deposits and similar bank tive transactions. Taxes on income, profit, and capital accounts that the issuer will readily exchange for gain are taxes levied on the actual or presumptive money. Where nonmonetary financial institutions net income of individuals, on the profits of enter- are important issuers of quasi-monetary liabilities, prises, and on capital gains, whether realized on these are also included in the measure of monetary land sales, securities, or other assets. Social security holdings. contributions include employers' and employees' The growth rates for monetary holdings are calsocial security contributions, as well as those of culated from year-end figures, while the average of self-employed and unemployed persons. Domestic the year-end figures for the specified year and the taxes on goods and services include general sales, previous year is used for the ratio of monetary turnover or value added taxes, selective excises on holdings to GDP. goods, selective taxes on services, taxes on the use The nominal interest rates of banks, also from IFS, of goods or property, and profits of fiscal monopo- represent the rates paid by commercial or similar lies. Taxes on international trade and transactions in- banks to holders of their quasi-monetary liabilities clude import duties, export duties, profits of ex- (deposit rates) and charged by the banks on loans port or import monopolies, exchange profits, and to prime customers (lending rate). They are, howexchange taxes. Other taxes include employers' ever, of limited international comparability partly payroll or labor taxes, taxes on property, and taxes because coverage and definitions vary, and partly not allocable to other categories. They may include because countries differ in the scope available to negative values that are adjustments, for instance, banks for adjusting interest rates to reflect market for taxes collected on behalf of state and local gov- conditions. ernments and not allocable to individual tax cate- Since interest rates (and growth rates for monegories. tary holdings) are expressed in nominal terms, Nontax revenue comprises receipts that are not a much of the variation between countries stems compulsory nonrepayable payment for public pur- from differences in inflation. For easy reference, poses, such as administrative fees or entrepreneur- the Table 1 indicator of recent inflation is repeated ial income from government ownership of prop- in this table. erty. Proceeds of grants and borrowing, funds arising from the repayment of previous lending by Table 14. Growth of merchandise trade governments, incurrence of liabilities, and proceeds from the sale of capital assets are not in- The statistics on merchandise trade, Tables 14 cluded. through 17, are primarily from the U.N. trade data Summary measures for the components of current system, which accords with the U.N. Yearbook of revenue are computed from group totals for reve- Intemnational Trade Statistics-that is, the data are nue components and total current revenue in cur- based on countries' customs returns. However, rent dollars; those for current revenue as a per- more recent statistics are often from secondary centage of GNP are computed from group totals sources, notably the IMF, as indicated in footnoted 238
cases. World Bank estimates are also reported. Sec- Tables 15 and 16. Structure of merchandise trade ondary sources and World Bank estimates are based on aggregated reports available before the The shares in these tables are derived from trade detailed reports submitted to the U.N. appear. In values in current dollars reported in the U.N. trade some cases, these permit coverage adjustments for data system and the U.N. Yearbook of International significant components of a country's foreign trade Trade Statistics, supplemented by other secondary not subject to regular customs reports. Such cases sources and World Bank estimates as explained in are identified in the country notes to the World the note to Table 14. Tables. Values in these tables are in current U.S. Merchandise exports and imports are defined in the dollars. note to Table 14. Merchandise exports and imports, with some excep- The categorization of exports and imports foltions, cover international movements of goods lows the SITC, series M, no. 34, revision 1. Estiacross customs borders. Exports are valued f.o.b. mates from secondary sources also usually follow (free on board) and imports, c.i.f. (cost, insurance, this definition. and freight), unless otherwise specified in the fore- In Table 16, fuels, minerals, and metals are the comgoing sources. These values are in current dollars; modities in SITC section 3 (mineral fuels and lubrinote that they do not indude trade in services. cants and related materials) divisions 27 and 28 The growth rates of merchandise exports and imports (minerals and crude fertilizers, and metalliferous are incostnttrm adreclclaedfores) and division 68 (nonferrous metals). Other areincontan i lts. s and Q m primary commodities comprise SITC sections 0, 1, 2, quantum indexes of exports or i- and 4 (food and live animals, beverages and totum indexes are obtained from the export or im- bacco, inedible crude materials, oils, fats, and port value index as deflated by the corresponding waxes) less divisions 27 and 28. Machinery and price index. To calculate these quantum indexes, th Wol Ban use it ow'rc ndxs hc transport equipment are the commodities in SITC the World Bank uses its own price indexes, which section 7. Other manufactures represent SITC secare based on international prices for primary commodities and unit value indexes for manufactures. tion 7 thr manufactures and SIon 68c tions 5 through 9 less section 7 and division 68. These price indexes are country-specific and disag- anTextiles and clothing, representing SITC divisions 65 and 84 (textiles, yarns, fabrics, and clothing), are gregated by broad commodity groups. This en- ' ' ' sures consistency between data for a groupo shwasaubrou of ote mauatrs countries and those for individual countries. Such In Table 15, food commodities are those in SITC daacountriestency those individuase counthe ori. Sh sections 0, 1, and 4 and division 22 (food and live data consistency will increase as the World Bank animals beverages oils and fats, and oilseeds and continues to improve its trade price indexes for an nuts less division 12 (tobacco). Fuels are the comincreasing number of countries. These growth rates can differ from those derived from national nuties ivision 3 (tob era) fuels, lubri- modities in SITC section 3 (mineral fuels, lubripractices because national price indexes may use cants and related materials). Other primary commoddifferent base years and weighting procedures ities comprise SITC section 2 (crude materials, from those used by the World Bank. excluding fuels), less division 22 (oilseeds and nuts) plus divisions 12 (tobacco) and 68 (nonfer- The terms of trade, or the net barter terms of rous metals). Machinery and transport equipment are trade, measure the relative movement of export the commodities in SITC section 7. Other manufacprices against that of import prices. Calculated as tures, calculated residually from the total value of the ratio of a country's index of average export manufactured imports, represent SITC sections 5 prices to its average import price index, this indica- through 9, less section 7 and division 68. tor shows changes over a base year in the level of The summary measures in Table 15 are weighted export prices as a percentage of import prices. The by total merchandise imports of individual counterms of trade index numbers are shown for 1985 tries in current dollars; those in Table 16, by total and 1987, where 1980 = 100. The price indexes are merchandise exports of individual countries in curfrom the source cited above for the growth rates of rent dollars. (See the note to Table 14.) exports and imports. The data is from the U.N., reported by high- income OECD countries, which are the OECD members excluding Greece, Portugal, and Turkey. The summary measures for the growth rates are calculated by aggregating the 1980 constant U.S. dollar price series for each year and then applying the least-squares growth rate procedure for the periods shown. Note again that these values do not include trade in services. Table 17. OECD imports of manufactured goods: origin and composition 239
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~~~~/ , -. \-E:-: - :: 0 0 - PUB768
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Oxford University Press NEW YORK OX
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countries' financial institutions i
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4 Financial sector issues in develo
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7.1 Shares of medium- and long-term
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* Fractional reserve banking. The p
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NTB Nontariff barrier * Growth rate
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and grew even faster in 1988 than i
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etter loan recovery procedures, mor
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l~ ~~~ ~ ~~~~~~~~~~~~~~~~~~~ ;:: ;
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The early years of the recovery wer
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Figure 1.4 Growth of export volume
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Figure 1.6 Saving and investment ra
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edly, in Argentina, Brazil, and Mex
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5~~~~ '~ ' S " ''t.*:'.: .:,0!3gft"
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Box 1.2 Debt concepts A variety of
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Table 1.1 Selected economic indicat
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Figure 1.8 Domestic and external li
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Box 1.3 Foreign equity investment E
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j Box 2.1 Life without money "Some
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other ways too. By imposing direct
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Box 2.2 Transaction costs and the s
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Box 2.3 Real interest rates and gro
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I Box 2.4 Swapping risk All economi
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Box 2.5 Deposit insurance Most high
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GOVERNMENT. As well as being regula
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and receivables, whereas developmen
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with the expansion of nonlocal trad
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over. Even so, bankers and industri
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Box 3.3 Financial swindles i Swindl
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Box 3.4 Financial underdevelopment
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Box 3.6 Universal banking One of th
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1960s. They speeded the internation
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4 Financial sector issues in develo
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Box 4.1 Directed credit in Turkey ,
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Box 4.2 Lending program for small e
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Box 4.4 The Botswana Development Co
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markets to finance their deficits,
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0~~~~~ = == X .. _- -- = -_ _ _ __
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Figure 4.3 Financial savings and th
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Box 4.8 Financial indexation in Bra
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Financial systems in distress Not s
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t !< 4> - !: e z u- >as uei- i.e_.S
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tem. They have succeeded in stemmin
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governments gave too little thought
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Box 5.4 The U.S. savings and loan c
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or take a step in the other directi
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have been even larger. The cost of
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~Foundations offinancial systems If
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(an issue closely related to the as
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several centuries. The spread of su
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Bankruptcy and reorganization monit
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Box 6.5 Elements of a bank supervis
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they attempted to discipline bank m
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Developing financial systems What s
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Figure 7.1 Shares of medium- and lo
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Box 7.3 The financial history of a
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Box 7.4 Housing finance The formal
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Box 7.5 Bank modernization: Indones
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DEVELOPMENT FINANCE INSTITUTIONS. T
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esources in government securities o
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strides in recent years in establis
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Issues in informal finance Small-sc
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Box 8.2 Rotating savings and credit
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original amount to the renter by th
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cooperatives' managers because it a
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Box 8.4 The Badan Kredit Kecamatan:
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Toward more liberal and open financ
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a brief period firms faced rapid ch
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Box 9.2 Financial reform in Korea K
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In the next stage, financial reform
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industry, policy reforms and the re
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Conclusions of the Report challenge
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tion "Risks and costs of finance" d
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Montes-Negret, Fernando. "The Decli
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D.C.: International Monetary Fund a
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Harberger, Arnold C. 1985. "Lessons
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croenterprises: Programs or Markets
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Douglas Graham, and J. D. Von Pisch
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Table A.2 Population and GNP per ca
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Table A.5 GDP structure of producti
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Table A.8 Growth of export volume,
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Table A.10 Growth of long-term debt
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Table A.12 Composition of debt outs
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Contents Key 157 Introduction and m
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Introduction The World Development
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Throughout the World Development In
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Population _ 0-15 million The color
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Table 1. Basic indicators __ GNP pe
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Table 2. Growth of production______
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Table 3. Structure of production __
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Table 4. Agriculture and food Value
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Table 5. Commercial energy ~~Energy
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Table 6. Structure of manufacturing
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Table 7. Manufacturing earnings and
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Table 8. Growth of consumption and
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Table 9. Structure of demand Distri
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Table 10. Structure of consumption_
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Table 11. Central government expend
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Table 12. Central government curren
Page 202 and 203: Table 13. Money and interest rates
Page 204 and 205: Table 14. Growth of merchandise tra
Page 206 and 207: Table 15. Structure of merchandise
Page 208 and 209: Table 16. Structure of merchandise
Page 210 and 211: Table 17. OECD imports of manufactu
Page 212 and 213: Table 18. Balance of payments and r
Page 214 and 215: Table 19. Official development assi
Page 216 and 217: Table 20. Official development assi
Page 218 and 219: Table 21. Total external debt Long-
Page 220 and 221: Table 22. Flow of public and privat
Page 222 and 223: Table 23. Total external public and
Page 224 and 225: Table 24. External public debt and
Page 226 and 227: Table 25. Terms of external public
Page 228 and 229: Table 26. Population growth and pro
Page 230 and 231: Table 27. Demography and fertility
Page 232 and 233: Table 28. Health and nutrition popu
Page 234 and 235: Table 29. Education Percentage ofag
Page 236 and 237: Table 30. Income distribution and I
Page 238 and 239: Table 31. Urbanization Urban popula
Page 240 and 241: Table 32. Women in development_____
Page 242 and 243: Technical notes This twelfth editio
Page 244 and 245: Box A.1. Basic indicators for count
Page 246 and 247: Box A.2. Selected indicators for no
Page 248 and 249: from the Food and Agriculture Organ
Page 250 and 251: Exports of goods and nonfactor serv
Page 254 and 255: The table reports the value of manu
Page 256 and 257: teed, and private nonguaranteed lon
Page 258 and 259: the Demographic and Health Surveys,
Page 260 and 261: also the one used within the global
Page 262 and 263: Bibliography Production and domesti
Page 264 and 265: Country classifications: World Deve
Page 266: I i
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