Why FDI Instead of Portfolio Investment?

FDI has two faces: as a method of pursuing higher returns than can be obtained from domestic instruments and as a substitute for or complement to exports and imports.

In trade theory, foreign investment occurs because one country that is relatively short of capital, with abundant labor, would import capital from another country that is relatively abundant in capital. Foreign investment will occur until the returns to capital in different countries are equalized. However, this does not explain why the investment has to be “direct” and take a controlling interest in firms. Obtaining securities—that is, portfolio investment—would suffice to gain access to high-return markets. Major reasons for investment in order to take controlling interest may be that domestic private (capital) markets are inefficient in transforming capital inflows into productive resources, or that managerial know-how is hard to transplant in a different country.

On the other extreme, if market infrastructure (such as the capital markets) or managerial skills are deficient in the host countries, why not export (or import) the products instead of producing goods in the host country? There are several reasons why FDI is favored over trade. Usual explanations include building factories in a country with lower wages when labor mobility is limited, and building assembly lines for products where tariffs and quotas limit imports. In the following paragraphs, these explanations will be elaborated.¹⁴

The early literature on FDI focused on market size and on the desire to access new markets to extend monopolistic power, to penetrate tightly oligopolistic foreign markets, and to retaliate or preempt foreign competitors’ entry (see, for instance, Kindle-berger, 1969, andCaves, 1971). The focus of many multinational firms on the acquisition of leading brands, particularly in the food and consumer product industries, is consistent with this theory. Subsequent research has focused more on firm-specific advantages attributable to greater cost efficiency or product superiority, deriving from economies of scale, multiplant economies, advanced technology and product cycles, or marketing (Vernon, 1974; Dunning, 1974; and Porter, 1986). According to this view, multinationals find it cheaper to expand directly in a foreign country because many of their cost and product advantages rely on internal, indivisible assets, such as organizational and technological know-how. The large share of FDI in industries where research and development and knowledge play a crucial role, such as pharmaceutical and electronics, is consistent with the predictions of this theory. Finally, the need for vertical integration to ensure quality control of production has also received attention.

The recent literature has also considered economies of scale arising from the need to incur marketing costs to promote exports, emphasizing the symbiotic character of FDI and trade (see, for instance, Baldwin and Krugman, 1989, and Dixit, 1989). In the Japanese context, Kojima (1978; see also Kojima and Ozawa, 1984) observed that FDI was “trade-oriented.” He hypothesized that Japan invested in countries and sectors that complemented its trading positions. For example, as some exporting industries of Japan lost competitive advantage because of rising wages, the industries invested abroad. He has also argued that U.S. FDI operated in a rather different manner, acting as a substitute rather than a complement to trade, although this conclusion is not universally shared.¹⁵ These issues are clearly relevant for the APEC region, where Japan and the United States are major contributors of FDI. Others (see, for instance, Errunza and Senbet, 1981) have noted that international operations allow wealth diversification when individual investors are constrained by legal and informational barriers. Related research has emphasized the role of multinational operations in reducing the probability of bankruptcy (Shaked, 1986), and the role of internal liquidity in determining FDI.

Distortions induced by government policies are another major explanation for FDI. Tariffs, quotas, and other import-substituting policies (such as taxes and subsidies) can create conditions under which it is more profitable to produce in—rather than export to—a foreign country (a motivation for FDI often labeled “tariff-jumping”). Preferential tax treatment of foreign investors, specific regulations aimed at favoring foreign investment in specific industries, the use of foreign plants for transfer pricing, and other policy-induced distortions may also contribute to increasing after-tax returns to FDI and, hence, to raising the level of FDI itself. Thus, observed trends in FDI may reflect changes in these regulations, including changes in the rules on the repatriation of earnings, legal reforms that provide a clearer definition of property rights, political changes that alter the likelihood of nationalization, labor market reforms, and fiscal developments that foster changes in the taxation of capital. Political instability may also be an important factor in certain cases. Again, these factors are clearly relevant for the APEC region.

The host countries generally receive benefits from FDI. In addition to employment opportunities for workers, factories managed by foreign firms are often sources for the learning of managerial skills and the transfer of technology. Many countries prefer foreign companies producing on their soil to imports of the same products. FDI is also generally preferred to portfolio investment by host countries, since direct investment is regarded as a long-run commitment rather than “hot money” that can be withdrawn quickly, often leaving the country’s capital market in crisis.

It is also true, however, that host countries often limit possibilities of FDI by banning it altogether in certain industries or capping the share of foreign interest in firms of certain industries. Developing countries often fear, rightly or wrongly, that foreign capital will take over key sectors of the country. Sometimes, restrictions on FDI are also motivated by protection of domestic vested interests. In general, APEC developing countries have become increasingly favorable toward FDI, as can be seen from the upward trend in such investment evident in many countries (see Figure 4-1).

Empirical evidence in support of the determinants of FDI listed above is ample, particularly in support of the link between FDI and economies of scale owing to the ownership of knowledge capital and policy-induced distortions (see Harris and Ravenscraft, 1992, and Klein and Rosengren, 1994, for reviews). These theories are not very helpful, however, in explaining the behavior of FDI over shorter horizons and across countries that exhibit similar characteristics. For instance, foreign acquisitions in the United States fell by 60 percent in 1983, more than doubled between 1986 and 1988, and then fell by 30 percent by 1990 (Harris and Ravenscraft, 1992). The cyclical volatility of FDI is simply too large to be explained by slow-moving structural factors such as those discussed above. To explain the movement of FDI in relation to its historical trend, it is necessary to consider cyclical factors that affect costs and returns to investment. Exchange rates, as main determinants of the relative price of domestic and foreign goods and production factors, are prime candidates for this task.

Effect of Exchange Rates on FDI

Much of the traditional and modern analysis of the effects of exchange rates on FDI reflects a partial equilibrium perspective, based on the effects of exogenous shifts in real exchange rates on FDI flows. As discussed below, different types of disturbances may produce different links between FDI and exchange rates.

Among the suggested links between the real exchange rate and FDI, the effect of exchange rate changes on asset prices and costs of domestic labor and capital has received the greatest attention. An exchange rate depreciation contributes to FDI by lowering the cost of domestic assets to foreign investors. If the depreciation is perceived to be temporary in real terms (as may be the case for a nominal depreciation that is expected to feed rapidly into local factor and output prices), FDI is likely to include a greater fraction of acquisitions of land and of other existing assets, as foreigners take advantage of bargain prices. Depreciations that are regarded as more permanent in real terms are likely to increase the weight of greenfield investment, through their effect on factor costs, as foreign capital, for instance, seeks to combine with cheaper domestic labor.

A depreciation of the real exchange rate can also lead to an increase in direct investment inflows through its effect on relative wealth across countries (see, for instance, Froot and Stein, 1991, and Klein and Rosengren, 1994). By increasing the relative wealth of foreign firms, a change in the exchange rate can make it relatively easier for those firms to use internal financing, thereby lowering the relative cost of investing. Thus, an exchange rate depreciation would increase foreign firms’ wealth relative to domestic firms and spur an FDI inflow.

When one considers the effect of exchange rate changes on FDI coming through its effects on government policy, an opposite effect to that outlined above may be envisioned. To the extent that exchange rate depreciations improve a country’s trade balance, they may soften protectionist policies and, with it, reduce the incentive for tariff jumping. Further ambiguities arise when one goes beyond the examination of the effects on FDI of exogenous shocks that cause exchange rates to fall below their long-run trend. Indeed, one must recognize that exchange rates are themselves endogenous variables that respond to a variety of shocks. Depending on the effects of these underlying shocks on the long-run equilibrium exchange rate itself, empirical analysis may uncover quite different linkages between exchange rate changes and FDI flows.

Despite these sources of potential ambiguity, several studies looking largely at industrial countries have provided empirical evidence of a link between exchange rate depreciations and increased FDI inflows—including Cushman (1985, 1987), Caves and Mehra (1986), Culem (1988), Froot and Stein (1991), and Klein and Rosengren (1994). In addition, Harris and Ravenscraft (1991) showed that buyers from strong-currency countries were willing to pay significantly higher premiums than domestic buyers for the acquisition of U.S. assets during 1970–87.

Attention has also been devoted in the literature to the effects of greater exchange rate volatility on FDI. Reasons for greater exchange rate volatility to both stimulate and hinder FDI have been pointed out in the literature. Some authors (for example, Caves and Mehra, 1986) have emphasized the first possibility, based on the view that FDI provides insurance against exchange rate changes by allowing a firm to shift production across countries. From this viewpoint, greater exchange rate uncertainty is likely to cause more FDI (see also Aizenman, 1994, for a discussion of these issues). In contrast, the view that exchange rate volatility may reduce FDI has been emphasized by those noting the irreversible nature of FDI (see Dixit, 1989), which causes investors to be wary of potential exchange rate reversals when undertaking a foreign investment project that involves an unrecoverable outlay. This particular channel is more likely to apply when investment is of a green-field nature, or with certain types of investment undertaken in support of trade (for example, the cost of setting up a foreign plant, of developing a distribution network, or of establishing brand recognition). It has also been noted that some of the diversification motives applying to portfolio investment may extend to FDI (see Black, 1977). Exchange rate volatility should reduce portfolio investment and, by similarity (or if FDI remains in broadly constant proportion to portfolio investment), also FDI. This presumption is subject to qualifications, however. Countries whose exchange rates are negatively correlated with global returns to capital (for instance, oil-exporting countries), may actually benefit from their role as portfolio hedges. An increase in these countries’ exchange rate volatility may actually raise their FDI inflows on diversification grounds.

Empirical evidence on the link between exchange rate volatility and FDI is limited but tends to favor a positive link between exchange rate volatility and FDI inflows (see, for instance, Cushman, 1985, and Caves and Mehra, 1986). In response to greater exchange rate risk, multinationals appear to reduce exports to a foreign country but to offset this somewhat by increasing capital inputs and production in the country.

Empirical Evidence for the APEC Region

To investigate the links between FDI inflows and medium-term changes in the real exchange rate, we present regression results using annual data drawn from the APEC economies.¹⁶ The starting date of this empirical study is 1974, which marked the beginning of the current flexible exchange rate regime. It is well documented that this change in the nominal exchange rate regime also led to a significant change in the behavior of real exchange rates. The dependent variable in these regressions is the ratio of direct investment inflows (the sum of lines 45, 46, and 47 in the IMF’s Balance of Payments Statistics Year-book) to host-country GDR Data on investment out-flows were not used because they were not available for all economies.

The preceding discussion implies that the relationship between changes in the real exchange rate and direct investment inflows is ambiguous. A real depreciation may stimulate such flows by increasing the relative wealth of potential investors and by lowering costs in the host country. An appreciation of the exchange rate can be associated with increased FDI if the appreciation reflects a general surge in capital flows or if it increases protectionist pressures. The regression results will only be able to identify the general relationship between FDI and changes in the exchange rate. More disaggregated data on direct investment and other factors would be needed to help further distinguish among these potential channels.

The regressions relate the ratio of inflows of FDI to the level of the real exchange rate. To isolate the effect of the real exchange rate from some other possible factors that might be correlated with direct investment, two other independent variables were included in the initial regressions. The first was the growth of real output in the host country (measured as the change in the logarithm of real GDP from the previous year to the current year). The second was a time trend, so as to control for secular changes in inward FDI relative to GDP. Because the trend was found to be insignificant in most regressions, it was only included in the final specification when it was statistically significant.

Two specifications of the regressions are reported, and they differ according to the type of real exchange rate variable used. The regressions in Table 4-4 use the multilateral effective real exchange rate for each country. This variable has the advantage of representing the real exchange rate of the host country with respect to a broad range of other countries. The shortcoming of the multilateral effective real exchange rate is that the weights used to construct it are based on trade flows rather than on capital flows. Therefore, in Table 4-5 results are presented that used two separate bilateral real exchange rates, those against the United States and Japan, the major sources of direct investment for other APEC economies. Estimation was generally by ordinary least squares; however, in those cases where the residuals appeared to be significantly serially correlated, an autocorrelation adjustment was used, as indicated in the final columns of the tables. Finally, a panel regression was run in which the data from all of the available countries were included in a single specification (without an autocorrelation adjustment or a time trend). The results from these regressions can be thought of as representing evidence on the average behavior across the whole sample of countries.

Table 4-4.

Results from FDI Regressions Using Real Effective Exchange Rates

$(\mathrm{FDI}/\mathrm{GDP}{)}_t=\alpha +\mathrm{\beta \Delta log}\left(Y_t\right)+\mathrm{\Psi log}\left(E_t\right)$

Note: One and two asterisks indicate that the coefficient is significant at the 5 and 1 percent levels, respectively. Time trends were included in the regressions for Japan, Mexico, and Singapore.

Table 4-4.

Results from FDI Regressions Using Real Effective Exchange Rates

$(\mathrm{FDI}/\mathrm{GDP}{)}_t=\alpha +\mathrm{\beta \Delta log}\left(Y_t\right)+\mathrm{\Psi log}\left(E_t\right)$

APEC Member	Growth in GDP	Real Effective Exchange Rate	R2	Adjusted for Autocorrelation
Panel of all countries	0.061*	–0.024**	0.79	No
Australia	–0.087	–0.013	0.17	Yes
Canada	0.064	–0.021	0.13	Yes
Chile	–0.026	–0.042**	0.58	No
Indonesia	–0.041	–0.006	0.10	Yes
Japan	–0.004	–0.001*	0.15	No
Korea	0.014	–0.003	0.43	Yes
Mexico	–0.022	–0.009	0.61	Yes
Malaysia	0.034	–0.030	0.20	Yes
Philippines	0.047*	–0.032**	0.62	No
Singapore	0.323	–0.030	0.61	Yes
Thailand	0.101	0.027	0.19	Yes
United States	0.023	–0.009	0.10	Yes

Note: One and two asterisks indicate that the coefficient is significant at the 5 and 1 percent levels, respectively. Time trends were included in the regressions for Japan, Mexico, and Singapore.

View Table

Table 4-4.

Results from FDI Regressions Using Real Effective Exchange Rates

$(\mathrm{FDI}/\mathrm{GDP}{)}_t=\alpha +\mathrm{\beta \Delta log}\left(Y_t\right)+\mathrm{\Psi log}\left(E_t\right)$

APEC Member	Growth in GDP	Real Effective Exchange Rate	R2	Adjusted for Autocorrelation
Panel of all countries	0.061*	–0.024**	0.79	No
Australia	–0.087	–0.013	0.17	Yes
Canada	0.064	–0.021	0.13	Yes
Chile	–0.026	–0.042**	0.58	No
Indonesia	–0.041	–0.006	0.10	Yes
Japan	–0.004	–0.001*	0.15	No
Korea	0.014	–0.003	0.43	Yes
Mexico	–0.022	–0.009	0.61	Yes
Malaysia	0.034	–0.030	0.20	Yes
Philippines	0.047*	–0.032**	0.62	No
Singapore	0.323	–0.030	0.61	Yes
Thailand	0.101	0.027	0.19	Yes
United States	0.023	–0.009	0.10	Yes

Note: One and two asterisks indicate that the coefficient is significant at the 5 and 1 percent levels, respectively. Time trends were included in the regressions for Japan, Mexico, and Singapore.

Table 4-5.

Results from FDI Regressions Using Real Bilateral Exchange Rates

$(\mathrm{FDI}/\mathrm{GDP}{)}_t=\alpha +\beta \mathrm{\Delta log}\left(y_t\right)+{\mathrm{\Psi }}_1\log \left(E_{\mathrm{USt}}\right)+{\mathrm{\Psi }}_2\log \left(E_{\mathrm{JAt}}\right)$

Note: One and two asterisks indicate that the coefficient is significant at the 5 and 1 percent level, respectively. Time trends were included in the regressions for Singapore and Thailand.

Table 4-5.

Results from FDI Regressions Using Real Bilateral Exchange Rates

$(\mathrm{FDI}/\mathrm{GDP}{)}_t=\alpha +\beta \mathrm{\Delta log}\left(y_t\right)+{\mathrm{\Psi }}_1\log \left(E_{\mathrm{USt}}\right)+{\mathrm{\Psi }}_2\log \left(E_{\mathrm{JAt}}\right)$

APEC Member	Growth of Real GDP	U.S. Real Exchange Rate	Japanese Real Exchange Rate	R2	Adjusted for Autocorrelation
Panel of all countries	0.051	0.007	–0.023**	0.80	No
Australia	–0.071	0.016	–0.019**	0.34	No
Canada	0.099	0.023	–0.018**	0.35	No
Chile	–0.057	0.010	–0.045	0.42	Yes
Indonesia	0.058	0.009	–0.011	0.13	Yes
Japan	–0.005	–0.000	…	0.15	No
Korea	0.013	–0.002	–0.001	0.41	Yes
Mexico	–0.034	0.003	–0.010**	0.67	No
Malaysia	0.040	–0.059	0.012	0.21	Yes
Philippines	0.068*	–0.016	–0.011	0.63	No
Singapore	0.346	0.028	–0.011	0.68	No
Thailand	0.159	0.015	0.017	0.45	Yes
United States	0.014	…	–0.006	0.11	Yes

Note: One and two asterisks indicate that the coefficient is significant at the 5 and 1 percent level, respectively. Time trends were included in the regressions for Singapore and Thailand.

View Table

Table 4-5.

Results from FDI Regressions Using Real Bilateral Exchange Rates

$(\mathrm{FDI}/\mathrm{GDP}{)}_t=\alpha +\beta \mathrm{\Delta log}\left(y_t\right)+{\mathrm{\Psi }}_1\log \left(E_{\mathrm{USt}}\right)+{\mathrm{\Psi }}_2\log \left(E_{\mathrm{JAt}}\right)$

APEC Member	Growth of Real GDP	U.S. Real Exchange Rate	Japanese Real Exchange Rate	R2	Adjusted for Autocorrelation
Panel of all countries	0.051	0.007	–0.023**	0.80	No
Australia	–0.071	0.016	–0.019**	0.34	No
Canada	0.099	0.023	–0.018**	0.35	No
Chile	–0.057	0.010	–0.045	0.42	Yes
Indonesia	0.058	0.009	–0.011	0.13	Yes
Japan	–0.005	–0.000	…	0.15	No
Korea	0.013	–0.002	–0.001	0.41	Yes
Mexico	–0.034	0.003	–0.010**	0.67	No
Malaysia	0.040	–0.059	0.012	0.21	Yes
Philippines	0.068*	–0.016	–0.011	0.63	No
Singapore	0.346	0.028	–0.011	0.68	No
Thailand	0.159	0.015	0.017	0.45	Yes
United States	0.014	…	–0.006	0.11	Yes

Note: One and two asterisks indicate that the coefficient is significant at the 5 and 1 percent level, respectively. Time trends were included in the regressions for Singapore and Thailand.

The regression results in Table 4-4 indicate that depreciations of the multilateral real exchange rate are generally associated with an increase in inward direct investment relative to GDP (all real exchange rate variables were defined such that an increase represents an appreciation). The coefficient on the real effective exchange rate is negative in the panel regression and in 11 of the 12 regressions for individual economies, although it is significant at conventional levels only in the panel regression and in 3 of the individual regressions. The coefficient of –0.024 in the panel regression indicates that for every 1 percent appreciation in the real effective exchange rate, FDI is lowered by 0.024 percentage point of GDP. Although this may appear small, it has to be gauged against both the relatively large movements in real effective exchange rates across economies and the low ratios of investment inflows as a percentage of output. For example, a 10 percent appreciation in the real effective exchange rate would lower FDI by almost ¼ of 1 percent of GDP, which is a significant proportion of the underlying inflows into many APEC economies (see Table 4-1).

The exchange rate coefficients for individual economies are generally similar in magnitude to the panel results, except in the case of Japan, where the coefficient is significantly lower. This presumably reflects the relatively low ratio of inward FDI in Japan. The coefficients for income growth are generally small, insignificant, and of variable sign, implying a weak link between growth and FDI (although the panel regression has a significant positive coefficient).¹⁷

Table 4-5 presents results from the same basic regression, but where the real effective exchange rate for each host country was replaced by two bilateral real exchange rates, those with respect to the United States and with respect to Japan. (The regressions for Japan and the United States, of course, include only one bilateral real exchange rate.) The results from these regressions confirm many of those found in the previous regressions using effective exchange rates. The coefficients on the growth of real GDP are generally insignificant, while there appears to be a significant negative relationship between real exchange rates and FDI. This negative relationship is clear in the case of the real exchange rate with respect to Japan, where both the panel regression and all but one of the individual regressions have negative coefficients, and the coefficient estimate in the panel regression is highly significant. The results for bilateral rates with respect to the United States, however, show little pattern. None of the regression coefficients is significantly different from zero, and many of them, including that in the panel regression, are positively signed.

This last result suggests a potential difference in the behavior of FDI from the United States and from Japan with respect to the exchange rate. To investigate this possibility further, data on bilateral flows of FDI from the United States and Japan to eight developing countries in the APEC region (Chile, Korea, Indonesia, Mexico, Malaysia, Philippines, Singapore, and Thailand) were collected.¹⁸ Unfortunately, the longest period for which consistent data could be obtained was 1980–93, which is rather too short for reliable estimation of regressions for individual economies. Instead, panel regressions were estimated, as reported below, relating the ratio of the bilateral flow of U.S. (Japanese) FDI to the GDP of the recipient country to the growth of real GDP in the host country (ΔY), and to the bilateral real exchange rate (E) for the U.S. dollar (yen):¹⁹

These regressions also indicate a difference in behavior between FDI coming from Japan and the United States. The coefficient on the real bilateral exchange rate in the panel regression for FDI from Japan was –0.004 and significant at the 5 percent level (although somewhat smaller than the corresponding coefficient on the corresponding real exchange rate in the panel regression reported in Table 4-5), while that on the bilateral real exchange rate in the panel regression for FDI from the United States was 0.002 and insignificant. Another contrast is that real GDP growth in the recipient country appears to matter for U.S. FDI flows but not for their Japanese counterpart.

Concluding Perspectives

Most of the factors affecting FDI flows are secular, as befits an activity that is long term by nature. This does not mean, however, that short-term factors have no influence in such decisions. In particular, a depreciation of the real exchange rate may stimulate inflows of direct investment by increasing the relative wealth of the investor and reducing the costs of domestic assets and factors of production. In contrast, an appreciation of the real exchange rate could also be associated with increased FDI if the appreciation reflects the impact of a general surge in capital flows or if it decreases protectionist pressures.

Earlier empirical work has found that capital inflows are generally associated with exchange rate depreciations, which is consistent with the idea that the wealth and cost channels predominate. The empirical work reported here for countries in the APEC region confirms this finding. There is, however, some evidence that foreign investment flows from the two largest economies in the region behave somewhat differently in this regard, with investment from the United States being less dependent on changes in the real exchange rate than the corresponding flows from Japan.²⁰ This difference might indicate that the factors driving U.S. and Japanese FDI are rather different, although more work would be required to sustain such a conclusion.

Recent Occasional Papers of the International Monetary Fund

145. Exchange Rate Movements and Their Impact on Trade and Investment in the APEC Region, by Takatoshi Ito, Peter Isard, Steven Symansky, and Tamim Bayoumi. 1996.

144. National Bank of Poland: The Road to Indirect Instruments, by Piero Ugolini. 1996.

143. Adjustment for Growth: The African Experience, by Michael T. Hadjimichael, Michael Nowak, Robert Sharer, and Amor Tahari. 1996.

142. Quasi-Fiscal Operations of Public Financial Institutions, by G.A. Mackenzie and Peter Stella. 1996.

141. Monetary and Exchange System Reforms in China: An Experiment in Gradualism, by Hassanali Mehran, Marc Quintyn, Tom Nordman, and Bernard Laurens. 1996.

140. Government Reform in New Zealand, by Graham C. Scott. 1996.

139. Reinvigorating Growth in Developing Countries: Lessons from Adjustment Policies in Eight Economies, by David Goldsbrough, Sharmini Coorey, Louis Dicks-Mireaux, Balazs Horvath, Kalpana Kochhar, Mauro Mecagni, Erik Offerdal, and Jianping Zhou. 1996.

138. Aftermath of the CFA Franc Devaluation, by Jean A.P. Clement, with Johannes Mueller, Stephane Cosse, and Jean Le Dem. 1996.

137. The Lao People’s Democratic Republic: Systemic Transformation and Adjustment, edited by Ichiro Otani and Chi Do Pham. 1996.

136. Jordan: Strategy for Adjustment and Growth, edited by Edouard Maciejewski and Ahsan Mansur. 1996.

135. Vietnam: Transition to a Market Economy, by John R. Dodsworth, Erich Spitaller, Michael Braulke, Keon Hyok Lee, Kenneth Miranda, Christian Mulder, Hisanobu Shishido, and Krishna Srinivasan. 1996.

134. India: Economic Reform and Growth, by Ajai Chopra, Charles Collyns, Richard Hemming, and Karen Parker with Woosik Chu and Oliver Fratzscher. 1995.

133. Policy Experiences and Issues in the Baltics, Russia, and Other Countries of the Former Soviet Union, edited by Daniel A. Citrin and Ashok K. Lahiri. 1995.

132. Financial Fragilities in Latin America: The 1980s and 1990s, by Liliana Rojas-Suárez and Steven R. Weisbrod. 1995.

131. Capital Account Convertibility: Review of Experience and Implications for IMF Policies, by staff teams headed by Peter J. Quirk and Owen Evans. 1995.

130. Challenges to the Swedish Welfare State, by Desmond Lachman, Adam Bennett, John H. Green, Robert Hagemann, and Ramana Ramaswamy. 1995.

129. IMF Conditionality: Experience Under Stand-By and Extended Arrangements. Part II: Background Papers. Susan Schadler, Editor, with Adam Bennett, Maria Carkovic, Louis Dicks-Mireaux, Mauro Mecagni, James H.J. Morsink, and Miguel A. Savastano. 1995.

128. IMF Conditionality: Experience Under Stand-By and Extended Arrangements. Part I: Key Issues and Findings, by Susan Schadler, Adam Bennett, Maria Carkovic, Louis Dicks-Mireaux, Mauro Mecagni, James H.J. Morsink, and Miguel A. Savastano. 1995.

127. Road Maps of the Transition: The Baltics, the Czech Republic, Hungary, and Russia, by Biswajit Banerjee, Vincent Koen, Thomas Krueger, Mark S. Lutz, Michael Marrese, and Tapio O. Saavalainen 1995.

126. The Adoption of Indirect Instruments of Monetary Policy, by a staff team headed by William E. Alexander, Tomás J.T. Baliño, and Charles Enoch. 1995.

125. United Germany: The First Five Years—Performance and Policy Issues, by Robert Corker, Robert A. Feldman, Karl Habermeier, Hari Vittas, and Tessa van der Willigen. 1995.

124. Saving Behavior and the Asset Price “Bubble” in Japan: Analytical Studies, edited by Ulrich Baumgartner and Guy Meredith. 1995.

123. Comprehensive Tax Reform: The Colombian Experience, edited by Parthasarathi Shome. 1995.

122. Capital Flows in the APEC Region, edited by Mohsin S. Khan and Carmen M. Reinhart. 1995.

121. Uganda: Adjustment with Growth, 1987–94, by Robert L. Sharer, Hema R. De Zoysa, and Calvin A. McDonald. 1995.

120. Economic Dislocation and Recovery in Lebanon, by Sena Eken, Paul Cashin, S. Nuri Erbas, Jose Martelino, and Adnan Mazarei. 1995.

119. Singapore: A Case Study in Rapid Development, edited by Kenneth Bercuson with a staff team comprising Robert G. Carling, Aasim M. Husain, Thomas Rumbaugh, and Rachel van Elkan. 1995.

118. Sub-Saharan Africa: Growth, Savings, and Investment, by Michael T. Hadjimichael, Dhaneshwar Ghura, Martin Muhleisen, Roger Nord, and E. Murat Ucer. 1995.

117. Resilience and Growth Through Sustained Adjustment: The Moroccan Experience, by Saleh M. Nsouli, Sena Eken, Klaus Enders, Van-Can Thai, Jörg Decressin, and Filippo Cartiglia, with Janet Bungay. 1995.

116. Improving the International Monetary System: Constraints and Possibilities, by Michael Mussa, Morris Goldstein, Peter B. Clark, Donald J. Mathieson, and Tamim Bayoumi. 1994.

115. Exchange Rates and Economic Fundamentals: A Framework for Analysis, by Peter B. Clark, Leonardo Bartolini, Tamim Bayoumi, and Steven Symansky. 1994.

114. Economic Reform in China: A New Phase, by Wanda Tseng, Hoe Ee Khor, Kalpana Kochhar, Dubravko Mihaljek, and David Burton. 1994.

113. Poland: The Path to a Market Economy, by Liam P. Ebrill, Ajai Chopra, Charalambos Christofides, Paul Mylonas, Inci Otker, and Gerd Schwartz. 1994.

112. The Behavior of Non-Oil Commodity Prices, by Eduardo Borensztein, Mohsin S. Khan, Carmen M. Reinhart, and Peter Wickham. 1994.

111. The Russian Federation in Transition: External Developments, by Benedicte Vibe Christensen. 1994.

110. Limiting Central Bank Credit to the Government: Theory and Practice, by Carlo Cottarelli. 1993.

109. The Path to Convertibility and Growth: The Tunisian Experience, by Saleh M. Nsouli, Sena Eken, Paul Duran, Gerwin Bell, and Zuhtu Yucelik. 1993.

108. Recent Experiences with Surges in Capital Inflows, by Susan Schadler, Maria Carkovic, Adam Bennett, and Robert Kahn. 1993.

107. China at the Threshold of a Market Economy, by Michael W. Bell, Hoe Ee Khor, and Kalpana Kochhar, with Jun Ma, Simon N’guiamba, and Rajiv Lall. 1993.

106. Economic Adjustment in Low-Income Countries: Experience Under the Enhanced Structural Adjustment Facility, by Susan Schadler, Franek Rozwadowski, Siddharth Tiwari, and David O. Robinson. 1993.

105. The Structure and Operation of the World Gold Market, by Gary O’Callaghan. 1993.

104. Price Liberalization in Russia: Behavior of Prices, Household Incomes, and Consumption During the First Year, by Vincent Koen and Steven Phillips. 1993.

103. Liberalization of the Capital Account: Experiences and Issues, by Donald J. Mathieson and Liliana Rojas-Suárez. 1993.

102. Financial Sector Reforms and Exchange Arrangements in Eastern Europe. Part I: Financial Markets and Intermediation, by Guillermo A. Calvo and Manmohan S. Kumar. Part II: Exchange Arrangements of Previously Centrally Planned Economies, by Eduardo Borensztein and Paul R. Masson. 1993.

101. Spain: Converging with the European Community, by Michel Galy, Gonzalo Pastor, and Thierry Pujol. 1993.

100. The Gambia: Economic Adjustment in a Small Open Economy, by Michael T. Hadjimichael, Thomas Rumbaugh, and Eric Verreydt. 1992.

Note: For information on the title and availability of Occasional Papers not listed, please consult the IMF Publications Catalog or contact IMF Publication Services.